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CNX Announces Increase in Proved Reserves to 7.9 Tcfe

PITTSBURGH, Feb. 7, 2019 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or "the company") announced today total proved reserves of 7.9 Tcfe, as of December 31, 2018, which is a 4% increase, compared to the previous year, despite selling approximately 825 Bcfe in proved reserves in the year through the divestiture of the company's shallow oil and gas and Ohio Utica joint venture assets. Pro forma for asset divestitures in 2018, reserves grew 15% compared to the previous year.

During 2018, CNX added 960 Bcfe of proved reserves through extensions and discoveries, which resulted in the company replacing 189% of its 2018 net production of 507 Bcfe.

In 2018, drilling and completion costs incurred directly attributable to extensions and discoveries were $490 million. When divided by the extensions and discoveries of 960 Bcfe, this yields a drill bit F&D cost of $0.51 per Mcfe.

Future development costs for proved undeveloped reserves (PUDs) are estimated to be approximately $1.434 billion, or $0.42 per Mcfe.

The following table shows the summary of changes in reserves:

Summary of Changes in Proved Reserves (Bcfe)

Balance at December 31, 2017




Extensions and discoveries                              




Sale of reserves in-place


Acquisition of reserves in-place


Balance at December 31, 2018           


Note: The proved reserve estimate as of December 31, 2018, was prepared by CNX Resources and audited by Netherland, Sewell & Associates, Inc.

During the year, total net revisions were positive 349 Bcfe. The revisions included 151 Bcfe of reductions primarily due to less planned development in the company's Virginia coal-bed methane (CBM) field; 28 Bcfe positive pricing revision from increased natural gas prices compared to year-end 2017, and 472 Bcfe positive revisions due to improved well performance in both proved developed and proved undeveloped reserves. Sales of reserves in-place totaled 825 Bcfe and were partially offset by 322 Bcfe of additions resulting from miscellaneous leasehold acquisitions.

Proved developed reserves of 4,494 Bcfe in 2018 comprised 57% of total proved reserves, compared to 58% in 2017. PUDs were 3,386 Bcfe at December 31, 2018, or 43% of total proved reserves, compared to 42% at year-end 2017. PUDs at year-end 2018 represent 34% of the total wells the company expects to drill over the next five years. The low PUD to five-year plan percentage implies meaningful future upside in both the Marcellus and Utica Shales in Pennsylvania and West Virginia.

During 2018 in the Marcellus Shale, CNX turned-in-line (TIL) 46 gross wells with an average completed lateral length of approximately 8,300 feet and expected ultimate recoveries (EURs) ranging between 1.7 and 3.5 Bcfe per thousand feet of completed lateral. Production and completion optimization initiatives continued to drive performance increases in the Marcellus shale throughout the year. These performance increases have allowed the company to book Marcellus Shale PUDs with average EURs of over 2.4 Bcfe per thousand feet of completed lateral, compared to 2.3 Bcfe per thousand feet booked during the previous year. CNX will continue to explore optimization possibilities with an ongoing review of development processes and employ new technology that could provide EUR uplift relative to current estimates. As of December 31, 2018, the Marcellus Shale proved reserves were 5,595 Bcfe, which included 3,030 Bcfe of proved developed reserves.

During 2018 in the Utica Shale, CNX TIL 17 gross wells with an average completed lateral length of approximately 8,200 feet and EURs averaging over 2.5 Bcfe per thousand feet of completed lateral. In 2018, the company's type curves that were applied to PUDs increased from the previous year due to production and completion optimization initiatives along with performance repeatability, which allowed the company to book Utica Shale PUDs with EURs averaging over 3.2 Bcfe per thousand feet of completed lateral, compared to 2.6 Bcfe per thousand feet of completed lateral during the previous year. In 2018, CNX booked 1,068 Bcfe of Utica Shale proved reserves after accounting for the reduction of 342 Bcfe due to the sale of Ohio Utica joint venture reserves-in-place. The company was able to modestly increase total reserves year-over-year despite the asset divestiture due to continued drilling success in the deep dry Utica Shale in Pennsylvania.

As of December 31, 2018, CNX has total proved, probable, and possible reserves (also known as "3P reserves") of 12.8 Tcfe, which are comprised only of reserves expected to be developed in the company's five-year plan. There are an additional 111 Tcfe of recoverable resources in the Other Resource Potential that the company expects to develop beyond the five-year plan. The company continues drilling and completing Marcellus wells and testing dry Utica Shale potential in Pennsylvania and West Virginia and believes that these areas will provide additional opportunities for the company's proved reserves over time. The company's 3P reserves have been determined in accordance with the guidelines of the Society of Petroleum Engineers Petroleum Resources Management System.

The following table shows the breakdown of reserves, in Bcfe, from the company's current development and exploration plays:







Total 3P





















































(1) Marcellus includes 50 Bcfe of Proved Developed and 26,062 Bcfe of Other Resource Potential attributed to the Upper Devonian formations.

(2) Other includes Conventional and Other Shale formations.

Definition: Total Reserve & Resource includes total 3P and other resource potential outside of 3P. 

The estimates of reserves and future revenue were prepared in accordance with the definitions and guidelines of the SEC Regulation S-X Rule 4.10(a).

The table below summarizes the Securities and Exchange Commission (SEC) pricing as of December 31, 2018:


Pricing (1)

Benchmark Pricing:

WTI Oil Price ($/Bbl)


NYMEX Natural Gas Price ($/MMBtu)


C2+ Natural Gas Liquids ($/Bbl)(2)


Condensate ($/Bbl) (3)


(1) The SEC rules require that the proved reserve calculations be based on the first day of the month unweighted arithmetic average prices over the preceding twelve months. 

(2) NGL Pricing is 42.1% of WTI, which includes regional market differentials.

(3) Condensate Pricing is 78.5% of WTI, which includes regional market differentials.

Based on these prices adjusted for quality, hedges, transportation costs, and basis differentials ($3.28 per Mcf, $27.58 per barrel of natural gas liquids, $51.49 per barrel of condensate and $60.56 per barrel of crude oil, respectively), the pre-tax discounted (10%) present value ("PV-10") of the company's proved reserves was $6.17 billion for 2018, compared to $4.14 billion at year-end 2017.

Standardized Measure of Discounted Future Net Cash Flows

The following information was prepared in accordance with the provisions of the Financial Accounting Standards Board's Accounting Standards Update No. 2010-03, "Extractive Activities-Oil and Gas (Topic 932)." This topic requires the standardized measure of discounted future net cash flows to be based on the average, first-day-of-the-month price for the year ended December 31, 2018. Because prices used in the calculation are average prices for that year, the standardized measure could vary significantly from year-to-year based on the market conditions that occurred.

The projections should not be viewed as realistic estimates of future cash flows, nor should the "standardized measure" be interpreted as representing current value to CNX. Material revisions to estimates of proved reserves may occur in the future; development and production of the reserves may not occur in the periods assumed; actual prices realized are expected to vary significantly from those used and actual costs may vary. CNX's investment and operating decisions are not based on the information presented, but on a wide range of reserve estimates that include probable as well as proved reserves and on different price and cost assumptions.

The standardized measure is intended to provide a better means for comparing the value of CNX's proved reserves at a given time with those of other gas producing companies than is provided by a comparison of raw proved reserve quantities.

Reconciliation of PV-10 to Standardized Measure 

December 31,

(Dollars in millions)




Future cash inflows

$      26,610

$      19,262

$      11,303

Future production costs




Future development costs (including abandonments)




Future net cash flows (pre-tax)




10% discount factor




PV-10 (Non-GAAP measure) (1)




Undiscounted income taxes




10% discount factor




Discounted income taxes




Standardized GAAP measure

$        4,655

$        3,131

$        955


We calculate our present value at 10% (PV-10) in accordance with the following table. Management believes that the presentation of the non-Generally Accepted Accounting Principle (GAAP) financial measure of PV-10 provides useful information to investors because it is widely used by professional analysts and sophisticated investors in evaluating oil and gas companies. Because many factors that are unique to each individual company impact the amount of future income taxes estimated to be paid, the use of a pre-tax measure is valuable when comparing companies based on reserves. PV-10 is not a measure of the financial or operating performance under GAAP. PV-10 should not be considered as an alternative to the standardized measure as defined under GAAP. We have included a reconciliation of the most directly comparable GAAP measure-after-tax discounted future net cash flows.

About CNX Resources
CNX Resources Corporation is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2018, CNX had 7.9 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at

Cautionary Statements

We are including the following cautionary statement in this press release to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of us.  With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act")) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending. When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "estimate," "plan," "predict," "project," "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: prices for natural gas and natural gas liquids are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas and natural gas liquids affecting our operating results and cash flows; our dependence on gathering, processing and transportation facilities and other midstream facilities owned by CNXM and others; disruption of, capacity constraints in, or proximity to pipeline systems that could limit sales of our natural gas and natural gas liquids, and decreases in availability of third-party pipelines or other midstream facilities interconnected to CNXM's gathering systems; uncertainties in estimating our economically recoverable natural gas reserves, and inaccuracies in our estimates; the high-risk nature of drilling natural gas wells; our identified drilling locations are scheduled out over multiple years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling; challenges associated with strategic determinations, including the allocation of capital and other resources to strategic opportunities; our development and exploration projects, as well as CNXM's midstream system development, require substantial capital expenditures; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and for our securities; environmental regulations can increase costs and introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities; our operations are subject to operating risks that could increase our operating expenses and decrease our production levels which could adversely affect our results of operations. Our operations are also subject to hazards and any losses or liabilities we suffer from hazards, which occur in our operations may not be fully covered by our insurance policies; decreases in the availability of, or increases in the price of, required personnel, services, equipment, parts and raw materials in sufficient quantities or at reasonable costs to support our operations; if natural gas prices decrease or drilling efforts are unsuccessful, we may be required to record write-downs of our proved natural gas properties; changes in assumptions impacting management's estimates of future financial results as well as other assumptions such as movement in the Company's stock price, weighted-average cost of capital, terminal growth rates and industry multiples, could cause goodwill and other intangible assets we hold to become impaired and result in material non-cash charges to earnings; a loss of our competitive position because of the competitive nature of the natural gas industry, consolidation within the industry, or overcapacity in the industry adversely affecting our ability to sell our products and midstream services, which could impair our profitability; deterioration in the economic conditions in any of the industries in which our customers operate, a domestic or worldwide financial downturn, or negative credit market conditions; hedging activities may prevent us from benefiting from price increases and may expose us to other risks; existing and future government laws, regulations and other legal requirements and judicial decisions that govern our business may increase our costs of doing business and may restrict our operations; significant costs and liabilities may be incurred as a result of pipeline operations and related increase in the regulation of gas gathering pipelines; our ability to find adequate water sources for our use in shale gas drilling and production operations, or our ability to dispose of, transport or recycle water used or removed in connection with our gas operations at a reasonable cost and within applicable environmental rules; failure to find or acquire economically recoverable natural gas reserves to replace our current natural gas reserves; risks associated with our debt; our borrowing base could decrease for a variety of reasons including lower natural gas prices, declines in natural gas proved reserves, asset sales and lending requirements or regulations; changes in federal or state income tax laws; cyber-incidents could have a material adverse effect on our business, financial condition or results of operations; construction of new gathering, compression, dehydration, treating or other midstream assets by CNXM may not result in revenue increases and may be subject to regulatory, environmental, political, legal and economic risks; our success depends on key members of our management and our ability to attract and retain experienced technical and other professional personnel; terrorist activities could materially and adversely affect our business and results of operations; we may operate a portion of our business with one or more joint venture partners or in circumstances where we are not the operator, which may restrict our operational and corporate flexibility and we may not realize the benefits we expect to realize from a joint venture; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; there is no guarantee that we will continue to repurchase shares of our common stock under our current or any future share repurchase program at levels undertaken previously or at all; negative public perception regarding our industry could have an adverse effect on our operations; CONSOL Energy may fail to perform under various transaction agreements that were executed as part of the separation, including with respect to indemnification obligations; CONSOL Energy may not be able to satisfy its indemnification obligations in the future and such indemnities may not be sufficient to hold us harmless from the full amount of liabilities for which CONSOL Energy has been allocated responsibility; and the separation could result in substantial tax liability.. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission, as supplemented by our quarterly reports on Form 10-Q.


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