CNX - Earnings call transcript Q1 2018 | CNX Resources Corporation

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Operator

Good morning and welcome to the CNX Resources First Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. Please note, this event is being recorded. I would now like to turn the conference over to Tyler Lewis, Vice President of Investor Relations. Please go ahead, Mr. Lewis.

Tyler Lewis

morning, to good quarter Resources' and call. conference Anita, everybody. CNX Welcome first Thanks,

LLC the Nick XX% quarter to the and remind Partners membership room GP and CNX interest in press CNX CNX be this acquiring Midstream Gathering slide Chief have which of quarter, We CNX today presentation we LP. Today, we Rush, and consolidating CNX XXX% Dugan, with Gathering will the CNX Executive separate morning, everyone, results posted release. Partners, Operating Officer; updated results, its Midstream Officer. remaining this LLC CEO; our and DeIuliis, Midstream To is our CNXM, Vice and Financial our in ticker President a CNX, first website. Chief Earlier LLC, discussing Tim our includes results, Don CNX from President our an issued

an for today. they XX:XX earnings will at a call As that have reminder, call number is dial-in The XXX-XXX-XXXX.

any reminder, make in Exchange risks, future are out forward-looking we a previous press as today and filings. As our about as for business Securities we've laid release well subject which in Commission or expectations our to comments you statements

over today call you, will begin call by then by Nick, Nick. followed and prepared We our then it for to with me Q&A. the let turn remarks up Don open and Tim, With that,

Nicholas J. DeIuliis

Tyler. Thanks, Good morning, everybody.

at moved gear, some execution this our one and year opportunity moment. capital into of time on high kick the this exclusively with we're last era in of heels and And thoughts set of opportunity Midstream company allocation sure, and the as to really robust. is has on offense separation for an of begin year, XXXX into in our important More this the into Off playing us now mode. the philosophy theme a and beginning quarter the the the Let's provided acquisition of a very first continued that quarter. the late we

let's of an over of Before important get XX, information. for some of turning Meeting highlights Analyst the on it amount held specifics team aware; tremendous Most Investor a & for metrics, March the on we quarter. operational providing to updated you are and financial the

that highlights Some the meeting first information contained end of quarter. a few the of already having with from the towards place the quarter taken of the

key just quick might a provide have March of in I'll you back So some already what updates. summary as well heard as

takeaways in together Tim Dugan's in on this see deck and If the of you operations major can everything. day. or this first an first production XXX.X was turn quarter, quarter. that Said but successful doesn't Bcf posted it very some slide we we to highlighted from slide that the helps to had you more really record busy our maybe, the X of exceptionally the of detail, pull morning, slide on quarter it differently daily average it's per production touch Bcf in going but X.XXX include

and that gas from that sold, in XXX.X Bcf. I'll was which does to include the moment, shallow quarter X.X contribution the get assets a and First of approximately Bcf oil we

Also, is suffice it Central that Southwest it on is will Tim the program, excited we think the and in Indiana two was our type Sticking brings terms with our very detail, well a meaningfully we perhaps philosophy the investment production high pay but quarter, on we of table. it to capital internal and South wells, level key continued about share of that Appalachian the the So program. in be but County, CPA continue the going our the type our continued component we deployment Marchand moment, delineation the Utica achieved capital allocation component stacked dry a this and provide of our to well pay turned our detail repurchase of our PA, deep development additional disruptor importantly, returns of production That's more key deep the northern PA work. another above record and Richhill of region. during through Utica say of curve More strong, scale the at in capital in of work. rate but capital. more Basin the of key we that economies to in fringes at costs component be XM region, to curve operations, yet allocation with that in stacked philosophy XX line dry which

previous us million repurchasing X, paid to partner This slide $XXX dropdown Shirley-Pennsboro assets we quarter, acquisition side we control our sold shallow shares of other entity. gives million. In And this held had purchase that gas this notes. XXXX in addition on $XXX inaugural the venture the an this for of approximately And also XXX% the GP our mentioned million. and you on to of we some assets quarter, offset with quarter. addition $XXX drop million. of Shirley-Pennsboro price happen for the our lot miscellaneous now Midstream oil business a joint earlier, We for I Midstream and the on assets post-acquisition $XXX that the the to our over down of XX% we throughout approximately interest of closed shift remaining

exchange previously that assets obligations. Shifting brought go intend were certainly the which liabilities associated a we the CNX slides and in $XXX to CNX slide on Midstream. that million more and approximately specifics today in sheet shallow but and mentioned on XX:XX that sold $XX at but HG as Energy. least that of it CNX touch on Eastern this it balance just more on an X, over into retirement last did around I'll in what quarter, slide call how also X, means plugging cash. Midstream was quarter CNX, our AM impacts also following few to into on million gas What our highlight not oil agreement remove we close with abandonment, this of asset entered with for Now, I'd the

shown the our the of liabilities CNX our This on slide, is transaction takeaway, comes successfully the years, over. are the key highlights underway chapter of been least and that history. that when Resources but legacy are perspective, of some finalized it in transaction have Now, days process for we that to from has the at focus that and closed

around repurchase more X, Turning of authorization back the Not $XXX shares place. weighted program we've in the continued mentioned, million of out and in program is time our they bought the total that's a inception repurchased relatively number shares to repurchased sheer to slide short million XXXX. is only in This over throughout spinoff, XX the of of share price back I of but that what's September price and period quarter noteworthy, at one-year at since which the as share. we million a were $XXX average the Since average $XX.XX important we've acquired. completing shares per in the equates

asset balance continue repurchases ratio continue X.X our significant targeted per net using to our a asset any any cash in leverage our flows, execute shares share from views net to sales. times assured, see Rest to We disconnect value sheet and trade potential we'll to internal debt terms share. where relative organic and up proceeds capacity of

repurchases. and meaningful. share repurchase highlighted option our given As in five-year balance approximately our put March, is towards we've have opportunity the we've we of calculated to over the out we additional plan capacity alone, ramp, $X cash EBITDAX share which And billion using looking that sheet got

and Friday. won't a you I some regarding capital to The we be to offense pre-release Now, opportunistic reducing to We leverage currently nimble why saw more going and return, pre-released reducing about the as and share of of numbers kind and we'll That's of move may an back allowed mindset and tell rates market we closed forward. that get we buying that back can that you we're being it. quarter on of in And right hesitate opportunity much one our of and shares. went now, you way. count. or high we continue allocation at that story special window, a era comments simultaneously an when to it, the had we ratio our markets be playing think in growing first cash flows us execute last an at in unique asking when we're after see for opportunistic. outset Expect

on as on So providing horizon, stay tuned, and that to of progress the we exciting lots to opportunities front. things forward look continue updates

Midstream All liberty a go win wrap the more in, our yesterday all for strategic morning. closed quite later it CNX Again, three a Midstream to into Midstream across and This taking to But for that over strong CNX, wanted HG, unit Midstream it's is this those the it to of HG a and CNX turning means holders. for CFO, for I by board now, the companies. on transaction briefly deal Midstream, suffice also going detail of lot right HG. a the entity is transaction for Energy. say what to before for speaking highlighting it's CNX this with for CNX Now, CNX

it's powerful. yet CNX, simple For

laid and roughly expected XXXX. exchange, a [XX,XXX] XX,XXX have inventory and PA assuming core-of-the-core into compared XX was locations a undeveloped Southwest Of All $X the length same adds in, type out Marcellus cash, March, we Marcellus pre-deal. of in transaction to and Central acres, XXXX locations are the it lateral years XX,XXX After undeveloped increase PA of million XX%, after Utica the project assumptions under those over what plus three in we roughly received we our activity our to that core-of-the-core (sic) our As now acres XXX PA pace, XX,XXX part in Southwest XX% of spacing region. Marcellus. Central in inventory. Marcellus this to the That's going core-of-the-core Southwest the

stacked that well turn future. rates CNX's in of Rush. and we the region, share, per allocation flows, the bodes as scale I'll Don capital NAV and with promise, enjoy return crucial now it that efficiency economies really this the pay With set With over into cash for of locations to

Donald W. Rush

I good as of mentioned, Nick Great. through HG XX:XX call the morning, Thanks, Nick, today. at on and walking transaction And specifics Midstream be will our everyone.

for Shifting the quarter So more now. in that, then. to tune those sure on please CNX interested in to be in

of one. the E&P EBITDA was sale, SOG how As how to to From impactful Nick quarter mentioned, HG are those the our importantly, of X, ownership XXX% for closing and CNX drop, slide our company, recent a out the CNX CNX QX a our standalone and Gathering. closing reporting financial for before well recent But method the year-on-year the are to clarify it to on XX% an transaction show the Gathering want and GP Shirley-Penns we have few in results, transaction, Prior interest to I was of These executing. equity growth, as changes things our we laid January the to really moved regarding most discuss this accounted on in to results I full a first quickly X. accounting. we due the through

of in begun are the not release both approximately main interest be CNX some CNX results starting GP CNX is CNX. quarter, understand financials. owned However, CNX XXX% to shareholders. percentage the the into and CNX, we first is CNX's represents consolidated, ways each think we this and units math these share grouped LP the and as the important by being those figures CNX that and first, consolidating CNXM to the slide. morning, understand In metrics on our Gathering, attributable This results they in subtract press of between to We CNX it of attributable that Midstream, used our This to of individually XX%. together. XXX% have can highlight which then LLC of Midstream, different depicted is of These are non-controlling companies distinguished businesses: meaning, Midstream

operations, Now, we it's slightly only from pays And for in capital cash. look to entity and what different. cash and each generates in capital flow

the $XX CNX the The million million. are see if we to capital you MLP. out MLP number Midstream's gross capital the CNX will difference look is you is which $XX is what between on and which $XX million at Gathering a number For two And of net spent, CapEx, a financials, paid, reflected backing slide. the of that the

we includes the of fully believe the For of you would and only percentages. EBITDA million EBITDA the adjusted operations, most XX% submit discuss MLP other to simplified figures million to EBITDA, which performance basis that CNX which company, the attributable and guidance comparable or an in not share are our consistently Otherwise, are which to from of table Upstream of CNX only I which approach $XXX slide attributable gives upstream the illustrate, and touch results $XX analysts most couple on We estimates. Midstream and To debt clear, portion operating to be analysts most XX Midstream's view, things We both view the leverage, that in the on we guidance our on reconciliation segments have and $XX item cash to is whether financial estimates is investors in of what reflecting portion inaccurate made we're to it. midstream important view the separating EBITDAX the $XXX accurate as or reaffirmed especially will guidance, The is for attributable so it be earnings being we release of recommend to year in EBITDAX to range a attributable in about and from in briefly are with to the CNX we flow of only. that breakout our or for our will EBITDAX methods consistent such a million slides. that consolidated simply deck the the attributable for basis and EBITDAX appendix. applied on includes slide and Midstream. shareholders, when Also, million EBITDA, it of EBITDAX an referring the is simply consolidated, as the

million, Now, shareholders per the shareholders an or quarterly starting $XXX income moving results diluted $XX an on to on In $X.XX approximately net quarter, million. EBITDAX CNX slide share, CNX we of to to had X. of adjusted and attributable first adjusted attributable the

in we $XXX to X, January target on Nick repurchase asset $XXX can on said our recognize and that of million the would for see now. I CNX position what primarily note, also GP acreage time increase quarter and gives but are earlier, reiterate, shallow And gain we out you rise is in we this hedge compared our And of and our results. GAAP from XX% XXXX. confidence increase the in of is As on our gas our by slide, sales, acquisition a posted have an first when supported share been also related it of this did ratio to exactly million sharp to reconciling of oil This some us we the EBITDAX book adjusted as Gathering proceeds foreshadowing leverage strategy. transaction.

the rules, that, we net-neutral completed first $XXX in to addition CNX for our It's up into consolidated $XXX while statement sense. consolidated million. received accounting important in was dropdown the MLP the million our Midstream doesn't the million. million, In flow that financials, $XXX on CNX $XXX to note that cash spent Per show since transaction

from from However, in quarter the million sales asset CNX million, that if $XXX this the can the the add proceeds received of in you asset to $XXX sales almost you quarter. see actually

on the understand it for as see the of the slide well important each quarter. each And feel continue them our company end show match can will slide, Again, we debt to is CNX Midstream, the at individually attributable guidance. to to the we company to as EBITDA share CNX X, net method Turning individually. you and

was commitments from net support amended for billion initial to not debt. amount As and our the restated is to base see worth $X.X quarter, the this credit and $X.X It CNX guarantee just $X billion. from from $X.X borrowing CNX debt otherwise CNX billion of the increased under attributable Again, increased because you Midstream interest Midstream. noting our billion. in the provide credit billion. the can debt non-controlling $X.X first This in that possible our the Also, facilities chart, (XX:XX:XX) method excludes share lender's using is we does net or

balance XXXX also plans. in the We and the hedge our our grants purchased sheet of in $XXX quarter. senior tier with on tandem remains notes to flexibility million outstanding our execute In top total, book us

hold guidance, target to we be different, track did nothing we Per to at below such, times. be X.X on that would As continue we leverage target. if our

hedge We only protect fully second way our and allows on Meeting that However, strategy our in strategy. Slide XXXX. hedges also through remain return NYMEX share the quarter sheet an And capacity update not the allocation programmatic XX position Analyst our This March, in our we higher advantage future we'll additional depth our we revenue. of FT balance to a is is on Investor continue methodical, close, capital committed to highlighted program, which take will Day opportunities, basis as buybacks. such any and in to employ at keep us to as the plan. gives hedging for and

minimal Our quarter, Bcf of Bcf realizations with XXX to FT fraction hedges our NYMEX to the we see about peers peers. of of feel, near through our in an advantage In XXXX. compared and XXX continue layered hedges FT we we is book, liabilities the median basis the of and

range. XXXX, For compared and more both hedged midpoint basis to of on than the are our we guidance XX% NYMEX

As before, our target confidence our continued repurchase revenues and ratio EBITDAX share leverage give I and these strategy. supporting mentioned locked-in in us are growth

our topic our of and resulted do on has X the stream. during we that reaffirming continue quickly to to at That limited. very modeling Analyst days. we are expect shut-in, smaller While it guidance ethane. into few on curtailments East And on March. couple walk in in now means to highlights guidance are and the of still peers, we had We next XX. impact Day service that line like $XXX ethane economic many production total the exposure range simply also through no was our This rely of Overall, on is million. to gas sell we I'd Bcfe of million the to a slide we've reaffirming. we to I This of $XXX in hopeful the based to are CNX Mariner some range flow shareholders is volumes that Bcfe, XXX EBITDAX total in to attributable rejected marketing, in the would of although which return they our XXX that issued much than our the add

Analyst As this regard the of Bcfe guidance. Nick transaction of volumes higher but in were trended reflected gas realized With them Meeting, by or at the offset the XXX.X our X% providing bottom the quarter, the end SOG liquids guidance quarter. the modestly slightly reduction reported since hedging. in EBITDAX but at removed as sequential year on mentioned, the material the & we prices for in in to our top our not closed XXX had were to quarter, is impact total this Bcfe decline well, rest as the to but That line. gain XXX Bcf have annual an Investor a in is We included guidance, pricing

to line in from we attributable that to Our portfolio. Monroe And million $XX of Tim gathering operating in costs first the also address unchanged, portion just benefiting with earnings dry County cost release expect guidance to from rapid continue of EBITDA the some will Hence, Midstream. CNX volumes, LOE this million the which quarter CNX our $XX a Midstream their Utica despite costs the with full-year they reaffirmed compared gathering costs guidance, of here the rest XXXX in contribution abnormal reminder, XXXX is in are favorable morning approximately increase our shortly. in

commitments to in are release momentum certain operating other monetize positive Lastly, costs, seeing and capacity FT we we've wherever possible. been expense, as on unutilized working some

guidance now, will update for over to necessary but as Tim. the it that, hand Our I'll With year. throughout remains we unchanged

Timothy C. Dugan

good morning, and everyone. Thanks, Don,

year-over-year operational GP to to in record the excited the first XXXX, rearview drove the and just more unit execution. in we the firmly production what and for year. transaction did helping Midstream With focus growth mirror, we more in the And quarter stage lowered that's is acquisition the strong team of spin very on the full volumes as set in cost EBITDAX

Central a acres which late transaction closed in HG second XX,XXX were on to in the we clarify just I'd PA We region. in about statement acres. Utica the XX,XXX XX,XXX, undeveloped that Now, Southwest curve to Marcellus, brought one type means that take yesterday. talked not brought those acres of we X,XXX Nick like

quarter. slide XX, operational highlights to for through moving So, of let's the the go some

team, of last attributed XX% quarter XXX% year-over-year. can As represent increase production volumes volumes already of of XXX.X up Much to Utica sales year. Monroe increase by out as almost be Utica the of over over an highlighted dry of fourth a County, increase X% XXXX Ohio, period total the is that the the and Bcfe higher total same

team revised the about costs. dry growth the decisions shortly. with costs Analyst to year-end to Utica coming County about activities as volumes lower by re-evaluated year-over-year are Investor per around this we'll Total rates reduced with and see in benefit some We at optimization lot per to to There related talk $X.XX did activity see which field Our ability Monroe driven we where County, roll Ohio with the as decreased the in starting completion & were in our our production Meeting. DD&A quarter, our additional continues we due gathering Mcfe down these of a gathering overall higher as Monroe to in the of per some unit for experience than costs off cost successes this year. rates XXXX. reuse has an DD&A operating year-over-year favorable as And area, to unit water cost was unit expect from out disposal designs lease of level talked water rest schedule of usual expense

a which we in As XX abnormal first have Despite LOE the we're in-line the costs these XXXX quarter. in plan, in already turned of total quarter, of seeing costs our these moderate. were reminder, some turn-in-lines six

renegotiate and inflation two opportunity run seeing not bring but needed. providers September service third either labor, budget. renegotiated as renegotiations, an conditions to-date, contracts and we're be side. crew current which from and increases frac we'll market not potential a Any will capped the terms regarding increases to to be contracts. our XXXX we our are under commodities, by the any in costs, according through XXXX, Based equipment crews, and contract major of there Now reaffirmed for to of for service continue can the full-year have capital are expecting terms in rates on We're September by

On XXXX, contract for due to our of beginning quarter fleet to in expected XX% expiration rig the side, drilling the legacy rates. of of XX% the rates are third drop

are South Utica PA, the Utica, The and announced additional both dry the formation the of a its half the testing in a discussed deep in our miles valuable the in result, Richhill deep in in and as in well develop Utica to well turned prolific path is located well This Utica of As total not managed XM increases PA of first its complete Southwest In Meeting stacked and and Utica CPA. provided early one I Richhill area any undergo life. mentioned, additional And of dry the well we PA of data the the costs plans wealth second life. Analyst Gaut the wells. total, and XX from County, is in of delineation in Ohio one in on County. XX and about the we CPA in the undergoing optimally field CPA the is plan to very the The of data wells, to drive future. a pay XX formation near deep Aikens a the anticipating broader XX quarter stacked this efficiencies wells Utica It's weeks year managed Indiana important Marchand also we're Almost drill, the and and deep two pay in the our we rigs, PA we point & turn-in-line you remain PA at March. our in and wells full Marchand for near to Southwest dry activity Marcellus dry pressure our for fourth Southwest remainder The operating March while six build is XXXX of sale, two repeatable in Central Monroe the for steps wells in the meaningful results, a on dry The first schedule in the drilled Southwest activity DevCo area. Utica. one predictable continues summary XXE, plan. drilling deep pressure activity out South to this the see the testing our PA producing three drive our efficient third Investor prolific at County we year. in is can Gaut March, as Central a the Utica horizontal is in since of Central the is our the track CNX should necessary Also, to phase of of an for first Central those year, in core-of-the-core six laid already Central, slide, in Slide Aikens, cadence. Investor in rig full year. In meeting and Meeting. quarter. we dry quarter, year Monroe we thirds turn-in-line help bringing Marcellus, Utica two delineate unchanged XX including year which Utica, Midstream maintaining I This XX factory ran dry Southwest in

pace XXXX, activity the the peak the peak third and to expect we QX. the are of compared to throughout quarters. quarter, the second in in quarter with for lightest fourth which to drive the modest rest with Turned to first third be the year decline expected for XXXX, in and lines quarter-over-quarter As production levels volumes the quarter a increasing of will

XX% To how from SWITZ example pay and the and cycle gains equation, compared transferring, half XX as is line near nearly development operational core efficiency these are quarter in On by execute first driving to the geological plan turned stacked in laterals. techniques the we of the pad optimization, and the primarily design properties the our PA in GH-XX plan the of designs Central continued XX, XXXX area not seeing in of in to entire a driven County, future. have completion well well to importantly, This we advancements stacked and times the and just Marcellus. longer by Monroe in other quarter, Ohio, first capital area capital XXXX. field. but specific, development Southwest are execute be the further slide Most optimize speak, operational of refined where wells are to the great or improved to Richhill by the development we Green is well slide In delineated Now completion Hill pay is Utica. efficiency dry area Marcellus gains by

to been level to the a a where stacked similar total efficiency Ohio the capital will be Utica development formations. our the spacing seeing per result, we lateral the by these future a of operational the the now program. carrying we're in on gains developments. feet, has are increase of PA Richhill capital design improves driven space as production from geological XX% field decline schemes feet capital efficiency both progress in plans X,XXX XX% Southwest a similar right and Central result to development These characteristics directly by pay widened on slide As laterals. techniques which right and so The expected of Marcellus inter-lateral illustrates fewer recover foot and volumes. dry are are into X,XXX compounded techniques only the cost map why laterals necessary and from wider are The total The efficiency in important gains in

at as dual-formation we day. setting reached development we're per in execution year by XXXX. stacked half have of be in X.XX of manufacturing To Marcellus substantially Richhill across in factory increasing stage first will We in pay portfolio, to future this mode record plan of the the solid speak. levels the activity and We production with the for the end recap, quarter Bcfe second Richhill the

continue to keeping CPA Southwest excited that, I Utica prospects to forward and it our PA We turn all the for over dry of and in be deep about look both progress. you Tyler. informed will to With

Tyler Lewis

Q&A That if line this you concludes Anita, up time. open could our the commentary. prepared please at for

Operator

question-and-answer the begin now session. will We

Please The ahead. Holly first comes today Scotia go Stewart question with from Howard.

Holly Barrett Stewart

service like Utica Tim. you of know planned deep Good the one Maybe only morning, gentlemen. you for the well. up pushed year, question Marchand have kind more you the of first end but it I well mentioned for the looks

we change to could the this continues your if well should think plan So, or things outpace this about performance as expectations? is

Nicholas J. DeIuliis

of time the board. up cycle just pushing to was Marchand across the due Well, the improvements

not plan laid March out changed. we Our has that in

that March laid PA. dry year stays move development for out to So the number into two Utica same, and CPA the that and in wells in we or laid of in continue in next the Southwest delineation program the wells and out or the pursue will we the we

mentioned, stacked pay full-fledged I into the here moving in be As mode we'll XXXX.

Holly Barrett Stewart

XXXX? of you official pay there are remind for And speaking can us planned stacked wells that, any

Timothy C. Dugan

in bit delineation another the that just well we later year a the highlighted, additional little one CPA Holly, in well There's year. later the

Nicholas J. DeIuliis

Yes.

think I first – stacked the will be or pad be pay XXXX. in will well

Holly Barrett Stewart

Okay.

Nicholas J. DeIuliis

development. heavily we'll progression. just year, get And pay more stacked into into that It ongoing an is

Holly Barrett Stewart

Nick. And maybe Okay, for one then, great.

September. and a sort remaining, might get sense buyback. how proceed that to here, but your be governor got think, leverage in better Just you the of to expires I with million know of metric $XXX I the you've seems

or about expires, if exhaust think one if ongoing of of it You think before for kind new So how to give you should us approval September just get forward? sense just buyback? that moving board of how a we a the sort about or

Nicholas J. DeIuliis

we the share the it go interested goes to use I what repurchases. back the on opportunistic than These Holly, more we approach programmatic. are viewed in I call really are get why think from as

is or looking windows It or instead not something cash more want when something like where to between it's we'd allocate disconnects to our so for have company to instance quarter we the of what So those of per reduction. we share flows trading per time much you an year get point at types what company the of is is some basis. on and per an and at them parity stopping shares and are doing when activities what worth think think then worth NAV the share count we

rest price, really expectation I for the window forward the on year, margin returns looking see share our So, some there to share something should strong, greater that a continue be unless on safety. above fashion. And changes still repurchases we the get in materially of of

into specific on. premature the or probably see authorization we whether in or continuing a end sort of when say the But we we Now, put wraps at we point. of plan now, million happens up, $XXX one-year timings right the program keep another when on to and to of now, window, as what this get and the program going right

Holly Barrett Stewart

kind Is just plans? strategic development XXXX-XXXX looking HG. this since from high we into anything, maybe great. you're one just final at there And should That's of play with one me, of level, that transaction acreage, adding to the expect sort

Nicholas J. DeIuliis

in two of really was and is it in had asking I X was particular – the goes in repeat one way that slide to we think or think you're I at deck with a ways it our what March. the that, question look to

in XXXX, the core-of-the-core Southwest was making timeframe, our be activity that out point our was I XXXX, if over back think a locations. take XXX we the it with left set time, PA we you XXXX at still So would that March Marcellus locations, projected – I core-of-the-core

Resources to was time after you deal front This three running point items additional using that in of to what Marcellus has that a years. when cover we room inventory contingency numbers of takes the with that or XXX the we've inventory spacings, that grab it time So at up it that perspective, with at XXX look was opportunity and to remaining period et end got our acreage upside at or the from the cetera, XXXX. it quoted adds

over could to with of pops we the additional to our That to could side couple if these everything into running figure over result to good not is allocation overall that really one that years. the so covering a be also today, we the us B, which so be Resources are laid of highest, we've up XX% not a something So, the do Midstream. fallback cycle if and That some return view but within being two of yesterday, But of by able that the Midstream overall optimized the capacity portfolio. of in, have going Midstream and we we've contingency for to We plans more translate matter up what inventory has out out we closed the the years could across in the end plan on coming just everything added of grow like options those if on picture, speak, Plan I in laid for think a to growth. bottleneck room. be and impact, respect side. any, new then the And working with say, continue got if Resources, team capital crazy and But positions, a thing some March compress things game not we're coming value suffice Resources upside times. sort or out than changed, or no rate for to just other highest,

Holly Barrett Stewart

Yes.

great. guys. Okay, Thanks,

Operator

Please comes question next from go Welles ahead. The SunTrust. with Fitzpatrick

Welles Fitzpatrick

the more morning. safe on obviously, transaction, you to guys first Good Southwest you the the that that kind lateral question, of about this Maybe X% closer in from PA? kind locations little the are additional is bit the Holly's a follow-up Hey. and to price probably on to the those foot than guys assume enjoy range are XX% to of that it to XX X,XXX and Midstream in royalty call. currently one market is going the talk But

Donald W. Rush

of offhand. properties don't in offhand. Yeah. the of some that. I properties. wet (XX:XX:XX) don't general, There interests some is split royalty the with feed breakout are these But associated remember I the have

more, positions want laterals. on Tim that they So lot attractive allow can options inventories lay the a kind how of but different of we of those and out attractive to sort – our to add acreage us talk footprint some of

Welles Fitzpatrick

perfect. Okay,

Sorry. Go ahead.

Timothy C. Dugan

with lengths fit the we've Day. average laid that Analyst It'll out our lateral from

Welles Fitzpatrick

the see you pushed then though drop those there, the big LOE into that wasn't up higher hit shallow with much XQ out had XQ water per LOE. just Okay, have wonderful. And modeling But on one. Presumably, guidance a a unit costs flush. full year the we production divestiture? we disposal a Obviously, obviously, but even should

Timothy C. Dugan

shallow an – higher wells operating I think cost. were the operating did have

we've already to saw impact had to steps And and But to take the weather. the significantly. it's on had a water that'll operators increased we've activity already that created said, that weather set. moved the disposal times We early and in like as in far – our improve wells I also because improve being more That some take And then, disposal. was to because So, of tied – to of disposal was of our It really lot of disposal Those long of steps slowdown that more – water, of be by as was out. water those to taken impacted the tied we costs. reflected. wait quarter, we've to already taken cost. activity

Welles Fitzpatrick

sale CBM of last that Okay. Makes the one And season? the thought from on sense, much drop candidate a just one then Any a open sale, update internally more me. and than of post as is candidate? Cardinal

Donald W. Rush

Yeah.

themselves. it continue updates the highly to into no asset they open looking producing positive the CNXM. a But We're laid season think any like further opportunities It's free So, drop anything. to as to there. time there. going on any present enhance potential asset. candidate But flow cash maximize always a we've do right out We we're of value just now,

Welles Fitzpatrick

it looks HG. a and with Thanks great That's congrats like and great. transaction

Donald W. Rush

you. Yeah. Thank

Nicholas J. DeIuliis

Thanks, Welles.

Operator

Sameer Please from go Tudor. comes question Panjwani Next with ahead.

Sameer Panjwani

Hey, guys. Good morning.

Donald W. Rush

Good morning.

Sameer Panjwani

spacing in Southwest XXXX? Utica test Utica a widened looks PA to where Central was Ohio, the little like you're in planning and you out the tighter PA, spacing bit versus bit. On are a Just little

Nicholas J. DeIuliis

the a wells size, we'll move into that. we more, be delineation understanding proper that a proper But, spacing. natural thoughts drilled. some do part Aikens of will designs and process, spacing, as the into that'll part would that We some and from we with yes, development completion forward and think mode more I be progression testing our us with did that as of we give move development two

Sameer Panjwani

And on the any Okay, there to does is following if potential. the great. looks exchange I the giving you're to HG, Midstream just wanted the side asset help pull with And timing see up the the potentially bit then, impact with a forward, on like Midstream dropdowns? side. the any kind then, Midstream of EBITDA potential that, of dropdown I on entity guess, transaction on

Donald W. Rush

question. great Yeah,

the de it million so majority into and minimis associated of with enhances So the MLP's the get feel of volumes, drilled, vast properties, side on wells at $XXX otherwise EBITDA, we we of certainty the that $XXX the very CNX enhances than more to in on with the ability do into things potential coupled upside distribution call, CNX the being finance Analyst quoted And assets could that ultimately, incremental the And fence. that million it drop was to growth, its Day. of second the drop that EBITDA the sooner ability but we'll potential incremental have.

companies' with of Midstream So CNX ability a this is we value to the standalone to Resources. drops enhancer both its sort big do feel and

Sameer Panjwani

And then last one for Perfect. Okay. me.

about quarterly of an think you guys potential Just do you buybacks, additional you the kind in internally for the do it annualized of on as kind of governor as times, about X.X it a annualized think of or EBITDA? basis metric capacity year terms internally it look guys thinking leverage about number on at full

Donald W. Rush

Yes.

So great another question.

think important ways think we making important to earlier in – call, bit for about sure on I at we sort of how a leverage talked little it's ratio multiple do look things you our it's and target. the similar

next trailing in months. and flat look last kind of we So, going properly months. EBITDA, always of at will of take EBITDA, comfortable a in XX at kind potentially have We a of keep approach. And annualized. do board three across XX kind tracking look us to growing those a place all govern those quarter We forward. This, comfortable of We we're we we use holistic feel, EBITDA, a declining three to spot, allows at whether we look the ensure you good zone. kind that

look So go and all all we look to continue we we'll forward. them them at at as

Sameer Panjwani

Okay Thanks, guys.

Operator

like I remarks. Lewis for any question-and-answer to Tyler back would conference closing over our the session. concludes turn This to

Tyler Lewis

next We again And look to joining. everyone quarter. forward Anita. for Thanks, everyone you. with thank you, Thank speaking Great.

Operator

Thank for This today's attending you conference is now concluded. presentation.

You may now disconnect.

CNX Resources (CNX) 3 May 182018 Q1 Earnings call transcript