CNX - Earnings call transcript Q2 2021 | CNX Resources Corporation

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Operator

Good morning, and welcome to the CNX Resources Second Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] I would now like to turn the conference over to Tyler Lewis, Vice President of Investor Relations. Please go ahead.

Tyler Lewis

Thank you, and good morning to everybody. quarter second CNX’s to conference call. Welcome

our in and reconciliations CEO; our E&P have detailed Griffith, discussing Chief Yemi release our the will data, results. Today, earnings Financial posted in room updated President presentation data, statements our titled Earnings our Akinkugbe, and an Officer; morning, financial DeIuliis, second Nick quarter Operating Excellence XQ Don slide to Resources. be Chad to Information Results Officer. second we our are and today, Officer; document a We Chief This Rush, and we non-GAAP quarter Chief as website of website. quarterly posted Also XXXX such our CNX Supplemental

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

Nick, prepared will participate We will open to the Chad over up Q&A, begin With by we for then Don. the our Yemi, with you, call call will as call remarks then And Nick. and let followed turn me that, today well. by

Nick DeIuliis

we my understand everybody. remarks clean, simple, Tyler. investment to and Thanks morning thesis is Good our I’m to going had quarter brief morning, keep another this easy remains intact.

that’s steady and theme like to upon I’d execution that highlight hitting recent same look you the we’ve prior is in Slide quarters. at that again deck, If in theme been a our X once that the

plan that April, out highlighted execution quarter quarter the by XXXX. long-term sure, in second for So laid successful is another we of

$XX we’ll our and quarter we’ve month-by-month share flow been cash XXXX. look quarter-by-quarter. What guide at purchase debt way while And of is adjust to fourth we’ll weightings that us? It’ll down pay we’ll and compares the when between allocation the share. doing or our that and flow utilize quarter, returns change of we or share. million $X.XX another value adjusted of million how weightings. the per share math XXXX previous to risk the we we when to $XXX guidance again we per what timing which reducing will at flexibly, free decide our guidance to reduced existing leverage in have what where attractive since produced use absolute the per $XXX what and million a our the $X.XX use future to million. said half cash if left We to $XX cash we approximately be and that doing going consecutive one we we flow free to ratio net The doing second continue quarters, free $XXX to debt We by significant we And we’re million stock a past, to we’re cash we million quarter prices. consider back while opportunistically our said in trade reduce continues And $XX around and at the of currently a continue we wherewithal of program. repurchase bought flow repurchase worth a the do. free shares and achieve to generation, we debt, increased use both liquidity cash and sixth $XXX free the by flexibility week-by-week, stock This times, we’ll as and shares along that, debt until have Also in discount, that’s the and flow the look use marks be

flow was at, guidance version was flow share up, free the per raised. we’re at free looking quarter, share And reduced up, was was cliff the where now of free So count our that second was flow XXXX, reduced. then notes cash cash for for cash

from hear Yemi. let’s Now,

Yemi Akinkugbe

generation ESG we highlight strategy focus released oil to and see efforts, per leadership, our just that the to the as cash and into of well comprehensive of annual our company’s leadership highlight accomplishments morning. and I’m and attention opportunities as creation we flow week, look our in all minute topic Good this but Last our America. on today area. going corporate to this share Nick. significant our Thanks provides the moving not report my for value ESG to value gas in forward. responsibility ESG in responsibility corporate unique space, take I a across free want

look responsibility.cnx.com. net where I which racing to In every If take upstream to public on similarly can the company XXX,XXX via and annual from website report, from midstream from you a coal we third haven’t footprint emissions into you amount operations full encourage approximately vented atmosphere our be dive into the world metric X of a on of found When deep still zero at extraction than and our is being you tons already, prevent making today. at produce is around announce target an natural times net status the Slide X zero, first party the that’s a basis, the net more capture is We into daily negative emission years and achieved X. this among methane. we methane, company. of seven gas COX which highlighted not combined. midstream our Scope And on equivalent but only the has We CNX future, believe upstream

carbon drivers coal, surface gas emissions eliminate Scope investments to region to the operations, extensive X CNX contrary. Additional fugitive and thrive for energy to not world of generations. seem negative negative further counterintuitive, CNX. carbon our offer this are priorities additional that it methane energy deepen and An we and this around for for changed emissions our carbon opportunities us is the acreage the led in allowed through and that of exist to importantly, carbon Each have only from and prioritizing decades has unique is for for values on this by oil for in ESG per and footprint important a other X and the we driven profile abatement are third alternative leveraging The mine, that practically may perfecting have exciting they cash and three that many parties accomplish have methane in and making abatement led company operation tangible been to the projects. same has see same creation. our company Most you The continuing abatement are non those birth net negative today. net replicable net we began footprint negative new the but value our to friendly generation changed status have operations flow and work of doing It opportunities avenues of free decades. certain share business to note

tangible to potential local value share the pivot hallmark front, front significant potential environmental the shareholders, per to ESG social impactful So, which have translate from into innovative leadership of has on the for let’s brand. a to that is our over

the We target addition That’s an next to continue within and with to are initiatives, our for have why, led, community inclusive designed culture; we to ourselves to industry as lead of well. broader our faster workforce internal in have years. corporate five an and aggressive determined the diversity there company corporate the XX% challenged we over

footprint of of to Beyond – through this items prior We’ll of electric accomplishments the challenge any or one mover impactful tackle return of a from to fits ideas frac increase the philanthropic Encouraging than well produce this prioritization our for return for footprint diverse challenge progress of workforce sustainability CNX most These and of underserved carbon we believe commitment and means we internal XX the advantage to strategic our the net and will to and initiatives target. our to as XX% the population adoption urban tangible, will were our while diverse thought talent water. what CNX? working increasing the spread policy local – believe local of foundation, of through opportunities size simply is innovative empowerment to the rather workforce designed the the we’ll leadership we’re an through young all recycle continuations diversity through mentorship communities to important rural directly pool opinion. in million the By hiring We investing a same we the diversity marginalized and expanded among made company establish yield adults we have the meet in as for our strategic into years, tied academy all ESG areas. an and entire of in and our matters communities, and the region time at a signature diverse diversity our us. over pool first generate

per CNX it level pandemic. region entire challenges Our the by over compensation that year, Half XXX,XXX the median the Directors among Pittsburgh employees responsibility intersection option local tax and share per communities delivered of worked diverse our producer of of direct are accident-free the we of reports of product allocation, and our the Board over investors. performance. and turn governance. you Don. corporate best-in-class see that culture corporate pay operation, are for guideposts yourself ESG to of Thank of at and review position alone provider public to family-sustaining focused the optimizing to year I’ll being profitability companies. top that’s leadership and cost for CNX I operational exceeded long-term capital CEO Low you. intrinsic state suites a low we for are revenue report the presents the government, our and Again, the to cost encourage continue of how our large value the focus ESG net performance

Don Rush

low an trading is by risk peer to across that see CNX going on discount we a Slide gives highlighted Slide you the the book. have can And Thanks This relative financial is peers, compare base cash low which is Yemi, our our very shown free supported on advantage to in morning, the page, X cost our We our terms given advantage, bottom that metrics and board. our flow believe cost indices I’m group. highlights flow are a main cash relative and X. we asset to start well structural is versus us and of slide of some free and listed right graph. advantage the everyone. on good screens is yield, annuity as that significant heads CNX before which four at a

$XX will to cost Slide As over continue pay X under reduce shares. highlights quarter. bought Nick these of our highlighted, back shares three conditions. And that worth down million by and our we past structure quarters, have we the

pads wet costs Shirley-Pennsboro to coming quarter up due online second our expected, two quarter. As the in slightly were

that with can will a year consisted confidence $XX just free This $XX per supported around at with the see, in you book is you loss operational generation year. of approximately our worth continuing the Mcfe. this a noting loss cash balance Slide see free X, the as X, think the flow of the our for paid plan full structure in loss vast a recent to to quarter, $XXX costs of majority we had cash the our and action quarters we heads $XXX I cost term resulted prices, can our And XXXX that that being We see, down long to that We we realized for of plan degree this a derivative commodity period strength. consecutive look in $X Also, expect with statement cash and continue in future fully an books, proficiency. and debt we sheet of flow as entire by in low our quarter. However, burdened million you net of six the laid loss highlights billion unrealized. confidence. you each plus last unrealized be mark-to-market income out highlights if has $X.XX million This of gas increase it we on Slide instruments high heads million. book, execute is have in period negative million quarter. our

have credit flexibility our and drawn around a have generation. XXXX. million equates three facilities, We before only we term a mature approximately expected cash bonds to significant which free lot nearest two And or in $XXX of flow runway of quarters on

guidance as sheet. further path no on Given things some updates, for to which taxes. our some as the record cash production hits the X, on I’ll balance up are track to of guidance There a clear be generation well deliver free Slide wrap and would year. capital flow changes cash information on

which improved last However, we did update assumptions, our mark-to-market in April. NGL gas price from and

of items our cash federal guidance as can $X.XX share. free approximately guidance respect per final deductions currently As flow per expectations, million. share million. and to our repurchases such, $XX due we free increased $XXX and our billion flow an see, and have in year annual with to NOL cash few of share increased increase cash our free taxes. And EBITDA IDC approximately We you to flow we balance full $X unutilized a A by

will of seven free expect do cash cash these available during balances through it our I flow result XXXX. not back two taxpayer be to plan we material Tyler. to With turn a a As year that, over

Tyler Lewis

Thanks, for questions if can operator open the time, Don. please. as And you line this

Operator

go [Operator first KeyBanc. question Please from ahead. Instructions] The Mariani of is Leo

Leo Mariani

Morning year you hoping you in that of you able here a of a the, low could up to to trying guys. and to a turning know, of anything to little quantify and And do of to half. out as through wells matching that of quarters XQ, see that us the just off CapEx you quite with us a how bring trying that help was CapEx, little was us kind is also second to I the point hoping terms can bit kind could online great? help mines XX in for the of you’re going get be sense a trends the activity terms you sense that next the the well, quarter, bit get in second start be in I talk bit of if we the pace over the had rest here you could few would on on drop and

Chad Griffith

Sure. can end, I’ll Maybe fill that. Chad. leave Thanks get anything on is This for started in Don the I if at the out. there’s question.

bit what of generally add frac activities in capital right. think the this little take program, we I we’re beginning program, one of prices. I year did rig, seeing NGL one remember a advantage to But a crew some you’re

the pad I but the the had a in what of TILs QX, frac it capital added think couple to one is rig we ultimately up in doing year. crew one back I we’re and a So, of, of full two. at is added it We’ll first that and ended expect the to taking some of rest sort you so half program, And that two year guidance date the capital just by and what mark the in done just year close on for on of out it’s really on what numbers to sort quarters the a of to matter we’ve then production, TILs. looking and dividing get the next and real the

Don Rush

similar. and Yes, add to in it’s way should be on an that just to about QX Chad, QX easy to fairly think

can them sort each those production consistent what So, again, are. sort take of capital and and of guidance between numbers see and of one sort of

Leo Mariani

Okay.

So XQ. number XQ in pretty turn lines is of in even and

kind subtract So if we first take pretty the guide, it’s kind of XX there half TILs and much the basically? just us gets of TILs,

Nick DeIuliis

the QX and the I mean, on the TIL put one but numbers, edges a crew Chad could week it’s, far late net-net week frac again as line numbers the, you one be as earlier, similar. quarters, QX turning like one like capital the mentioned one production and number rig, of will

Leo Mariani

the guys year were cash G&A in just you X, XXXX here helpful. XXXX chart G&A. Page you terms a on just second came about pretty And half, of talking $X.XX of out kind per annum, then large guidance cash in it’s in That’s G&A your like at Okay. that on here, on seems implying first of noticing but your reduction half full $X.XX in noticing

Just any of that. color kind around

Nick DeIuliis

Yes.

nature. to transition Some we’re across. in variability the of and moving how, stuff quarter company the and is stick around, mechanical kind as I in looking mechanical QX QX rolls equity just optimize forward, and through always business as all, but of it’s regards the more we’re to what the far mean, the

Leo Mariani

Okay.

XXXX great, of you this the of consider the or high a to of obviously these, sense, year we which something in rich helpful. high So done obviously little NGLs well. continue guys made a have terms then vein gas Later accelerate that? point NGL strip this you could maintenance of in the prices. lot of prices, just, the And see That’s would see seems incredibly some wet Obviously to of really next just timing to for looks NGL we If just more some activity, year? on All bringing at expenses. decided given pads, right. similar if mode liquids, bit now, guys a have lastly

Chad Griffith

timing the Chad. are timing on this activity. looking I’ll D&C Yes, and liquid at is start of we No, of pads side.

optimize the at looking to we production, of system Southwest also midstream volumes. where in we flowing PA how we’re have our where – We’re a lot through with own deliver those we flexibility

We have some volumes. got damp Utica We’ve Marcellus some dry SWPA volumes.

dry and try NGLs blend as to reroute we option and either it have can a on really premium. cash so the extract stream basis production and or sell the much to We as receive We Marcellus prices the analysis prices. together NGL gas damp that volumes the gas, as and processing a but those flow optimize extract possible. are existing daily Certainly to to are do that up,

us, And gas. spread really and relative about it’s the so to between NGL

And so we dry gas and going of spread. very continue in, really recovered [ph] that settlement Local all blend frac are processing, we to us on really strengthened strong from, volumes But prices to volumes have further volumes that of moved outlets. of gas kept some take volumes, has sell and that sort to lot some advantage a incremental and have move.

adjusted we’re adding the of On at, look play. similar a the on math. spend incremental sort where our we D&C D&C wet There’s to We shifting to rates in all lot want of a of or risk capital. return activity activity

we look of returns so and relative take on in have But have additional go of increment or We PA. the back have activity, have Shirley-Pennsboro prices. we that dry – to we NGL our in we at returns gas to that that can advantage wells, strong to plan Southwest base the

move. how is looking price but of cost that, at couple we’re at a looking going how these on prices based optimize the to structure commodity factors. relevant, we’re Certainly is the so to are schedule The there’s forward continuing And changing. opportunities

you I question, a had second think second on… your yes question

Leo Mariani

you trying if debt and do Yes, stays little really at strong to to next I paid you maintenance do stay XXX, if is year? in better XXXX at, prioritization do a gas the and gas maintenance mode at due a maybe just down, strong of was just to mode, guys, there still chance look than get really want or is

Nick DeIuliis

like times this more it Yes. called And, opposed of as talked way, lot about sculpting, work. a of in think, of additive about we’ve we production sort terms I just, to to, and purely the think

look we’ve talked and moves So, the, about strip forward the across the it, meaningfully. forward way if strip up you

like think things it, think like as I just you call for brand a one to but looking year. little slower, things far delay sort up can. much the production to more in in front, can get new other try you try net-net quicker, but through you get months direction, things seasonality’s best of high line to can the like that that bit the little that and to just, If activity, but a as bit, period-to-period bit on bit we’ll little into the, little really six past. a goes kind nature, try environments it of squeeze to not that’s points, a just as just price the things or Yes, are versus pull production we’ll done into go we’ve pricing of trying

Leo Mariani

That’s Thank you. great.

Operator

The ahead. is next JPMorgan. Zach go of Please question from Parham

Zach Parham

Can and quarters a your in a but reduce to free I in think a talk to revenues of but to you’ve last cash a about with with of else about, locked future one book, get some that back used more the half the need a buybacks, lot get talked level. you The to to the the several target, bought hedge flow majority little aggressive debt, see just leveraged shares. turn what you’ve past, really Hey, you’d guys. thanks you’ve also

getting So, Really are before you any hitting waiting have on more there? still color just target, that aggressive? you

Nick DeIuliis

I aggressive very there’s a And that. far think, in think gone factors closer as a point, I the as that your that, as we’ve mean And locked do are get you to Yes. you certain the I quarters. to we historically this flows the will historically, and we’ve and forward, a different what target cash lean into others. in, And going more the visibility can We’ve lot, impact forward call things lot lot we’ll the more talked of gas opposed about recognized the to more unpredictable. it, prices of are the and sort that more

Our trades me are of always flows our at whenever kind locked equity unpredictable, to still cash pretty this sort in free of much puzzling been personally.

just prudent net-net to you same weightings and we’re is push as call the be, And by sheet clearly more closer, to ability coming we the both to have the quarter certainty plus, shareholder have the get flow we’re we the in, by edges. layer too do vary sheet the like and and thoughtful as trying balance situation. as will balance cash So, forward time the and mechanically at more returns quarter closer that target though, is towards keeps it of the both debt keeps growing gets down and in

Zach Parham

I guess, basin? me, seeing what within basis for Thanks little it. pipeline about further color. how bit you MVP there? And that do you exposure and delay, can a see basis talk local your one the more impacting you’re that is Got on for

Chad Griffith

question. This Chad Yes. again. for is Thanks the

coming with and part and market. tightness in-basin got the in hedging. sort of coming the that back We basis in-basin but We I into certainly pretty were is potential challenges got, pretty MVP keep know, hedge, ago, certainly pricing. pipeline. in least mashed along lockstep we the to risk the last in-basin we coming blocked, got at the on sort year as of year; relevant in, that of aggressive very don’t timing try this we a programmatic up, MVP NYMEX aggressive the saw in-basin year on risk the beginning So saw and regulatory of we hedging to to the generally

hedging in-basin And so the into leaned and we of got program it. out ahead

we on XXXX. XX% end where point to in-basin through that, fairly, beyond the where layer was And we’re pretty sitting was over that at do opportunities continue pricing additional hedged And we hedges attractive price of While we’re a to so. see good. on basis exposure now

Zach Parham

for That’s guys. the color Thanks me. it. Got all for

Operator

of The go Truist. next ahead. Please from Dingmann is Neal question

Neal Dingmann

Good Can Can discount what need do about to you buy more you talk stock you morning you all. say, this potentially mentioned so? back? about

Don Rush

exactly as, buyback haven’t far mean, as Yes, I plan. any or on given we guidance public

unique where buying bought we’ve back last We over out shares. of $XX – continue things, but we’re I trading, can to in we we back you us capital to yield can returning continue debt of said today, and commentary I forward. will call gates. the you lot to it. do change So, We worth is relative we’ve we’ll to three about do two to net-net do down going ability as folks balanced the fairly quarter faster, by buy more and you million sometime been shares both want expect expect gas pay before – by shareholders Nick’s the the and to debt and, of mean, to it future, both back do shares. a the think like to free clearly, but, not quarters, And quarter, higher you just that the

Neal Dingmann

trying That’s Yes. just answer. I Great determine, was to quarter-to-quarter.

decide pads you about be, of taking free way do cash high, for more just Don, So maybe do NGLs advantage great you just, availability and year follow-up, then maps the a one that looking you flow, that quite so you of about to earlier to about, just mentioned you NGLs, continue know and Chad, and how I’m would So, you’ve which obviously do have go? forward, got going to have the could there out more kind was do a some link? great talk do at be of to so. to certainly on your able you footprint

Don Rush

And quite years, return, But dry first return get that, that it ability rate for look in the and price area touch look those production, pad when at times, I of didn’t I we’re, with at wet numbers and clear, looking the with that of two and have strong first. price look, risk we the look gas bit on if strength, that at that hedge the the hedge you – at gas versus next and adjusted dry Yes. accordingly of shuffle the the market a look we that several when still, of a to next our risk scale NGL adjusted at to ability pad a forward new earlier. years ability area strong Try all a of with return schedule and gas prices, at the little in when but look saw We land you we multiple to pad that and continuously as market, forward sort with to of gas in update of it the prices hedge best less evolve. a the strips the lot bring pad. we favor the opportunities, rates of around the

Neal Dingmann

Very good. Thanks guys.

Operator

with ahead. go Tuohy The next Brothers. Parks is from Noel Please question

Noel Parks

morning. good Hey,

Don Rush

Good morning.

Noel Parks

curious were case spread guess about first NGL a levels and just for a your talking of being stronger, prices couple I sort taking thinking advantage you have about I’m was gas, in half I curious as as having and things. wondering, just bulk of I capacity high I activity the I’m we’re there issues, I’m of and service availability in danger crews effective guess and capacity far conceivable, equipment. frac as what’s in sort any like spare of whether any the quality basin out

Chad Griffith

deployment, you a rig the deployment rig when frac crew XX; below prior XX half lower lower is we’re like at peak. a roughly look current current Yes, third,

good So available. still that’s, rigs it’s still good crews,

to and would we lots incremental chains, there’s sand think had to go play labor activity. you supply about or went availability on to down of the chemicals equipment or available whether crews talk the it’s of and even I fairly readily

Nick DeIuliis

we’ve that the and program frac And position rig know then with our on out. laid

to We’re cost contracted of in the being on these great shape and with services. respect covered

we pinch to execute points to we don’t to ability So, continue our any like respect with have. see

Noel Parks

the one, really asserted the on more minds, Unfortunately, the their companies, state there. investor’s tied you, working sea as private by in, of continuing sort or the brush curious conscientious investment one the I’m thanks. concerns, my have of and on for any is of more become out methane Great, around other their on And worst factors even you to sense emissions? where, operators the that being work do risk area

So had on you just that. want insight any

Yemi Akinkugbe

to working Yes. right I is you now, about SG tell it’s hard kind of mean, is, said, towards private but the umbrella companies, like everybody’s it. widespread

Scope nuggets again, and, you’ve doing. few It’s You kind hard a got private to private this with who when on companies kept way their working as they’re what or well. finally some information interacting doing. here their, reduce them tell, as sharing Scope many just of because to very But, they’re or what clear ideas. get a so get of there, X like to picture we to as insights one only That’s their X is

Nick DeIuliis

think moving direction a the a is the and a secret Do getting regulatory within of the emissions So the, is large that of to where tighter? stringency course, you only rigor obviously not methane basin. environment in extent the that’s

said, I and ready or develop like think tough and operating of are company-by-company. But many that to plans gauge public, private will processes Yemi different or it’s, individually be operators plans that. it’s the trying for to and

Noel Parks

Thanks. all for That’s That’s helpful. me.

Operator

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

Tyler Lewis

questions. Please everyone today. speaking additional here with feel next you reach look you. Great. any Thank again for joining to you. thank quarter. if Thank we’ll to has out anyone And everyone free us Otherwise, forward

Operator

today’s you Thank The attending conference has for now presentation. concluded.

You may disconnect. now

CNX Resources (CNX) 29 Jul 212021 Q2 Earnings call transcript