CONSOL Energy Inc. EnerCom s The Oil & Gas Conference

Transcription

1 CONSOL Energy Inc. EnerCom s The Oil & Gas Conference

2 Cautionary Language This presentation contains statements, estimates and projections which are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended). Such statements include estimates of reserves and resources, projections and estimates concerning the timing and rates of return of future projects, and our future production, revenues, income and capital spending. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those statements, estimates and projections. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of future actual results. Factors that could cause future actual results to differ from the forward-looking statements are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in CONSOL Energy Inc. s annual report on Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange Commission (SEC), as updated by any subsequent Form 10-Qs. The forwardlooking statements in this presentation speak only as of the date of this presentation; we disclaim any obligation to update the statements unless required by the securities laws, and we caution you not to rely on them unduly. The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible oil and gas reserves that a company anticipates as of a given date to be economically and legally producible and deliverable by application of development projects to known accumulations. We may use certain terms in this press release, such as EUR (estimated ultimate recovery), unproved reserves and total resource potential, that the SEC's rules strictly prohibit us from including in filings with the SEC. These measures are by their nature more speculative than estimates of reserves prepared in accordance with SEC definitions and guidelines and accordingly are less certain. We also note that the SEC strictly prohibits us from aggregating proved, probable and possible reserves in filings with the SEC due to the different levels of certainty associated with each reserve category. Except for proved reserve data, the information this presentation is based on a summary review of the title to the gas rights we hold, as well as a summary review of the title to the coal from which many of our coalbed methane rights derive. As is customary in the gas industry, prior to the commencement of gas drilling operations on our properties, we conduct a thorough title examination and perform curative work with respect to significant defects. We are typically responsible for curing any title defects at our expense. This curative work may include the acquisition of additional property rights in order to perfect our ownership for development and production of the gas estate. This presentation does not constitute an offer to sell or a solicitation of offers to buy securities of CONSOL Energy Inc. 2

3 CONSOL Energy Inc Corporate Profile The leading diversified fuel producer in the Eastern United States Headquartered in Pittsburgh, Pennsylvania Founded in 1860 Approximately 8,600 Employees Current Market Capitalization of $8.4 Billion 2010 Revenue of $5.2 Billion 3

4 CONSOL Energy - Overview CONSOL Energy Inc. Coal Over 4.4 billion tons of proven and probable coal reserves 2011 estimated coal exports of approximately 10.0 million tons 2011 Production Guidance of million tons Natural Gas Over 3.7 Tcfe of proved reserves Approx. 750,000 acres the Marcellus Shale Approx. 200,000 acres prospective for the Ohio Utica / Point Pleasant 2011 Production Guidance of billion cubic feet Other CNX Land Resources, Inc. Manages land assets of the Company Research & Development R&D facility devoted exclusively to coal and energy utilization and production Fairmont Supply Company Distributor of mining, drilling, and industrial supplies River & Dock Services Fleet of 620 barges, 22 towboats and 5 harbor boats CNX Marine Terminals, Inc. Baltimore Port with capacity to load 14 million tons of coal per year 4

5 Strength in Product Diversity COAL Low-Vol Coal High-Vol Coal PCI Coal Thermal Coal GAS Marcellus Shale Utica Shale Coalbed Methane 5

6 Coal Division s Growth Strategy Growing Production Amonate - 400,000 tons in 2012 ramping to 800,000 per year in 2015 BMX - 5 million tons annually beginning in 2014 Growing Exports 2010 Exports of 6.8 million tons 2011 Exports expected to be 10 million tons Expanding Baltimore Port in 2012 Growing Margins Fully Participating in record Low-Vol Pricing Rebranding Thermal coal as Met Coal Exporting Thermal Coal to Europe Re-pricing domestic coal in 2012 Coal Capital Expenditures of $615 Million Reserves by Coal Type (million tons) 4,401 Million Tons Thermal 3,839 87% 2010 Coal Revenue by Coal Type ($ mm) $3,853 Million Thermal 3,001 78% High Vol % Low Vol 146 3% High Vol 172 4% Low Vol % 6

7 Strength in Market Diversity Coal Cash Generation by Coal Type ($ mm) Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Thermal High Vol Low Vol 7

8 Expanding our Exports to 10 million tons in Coal Exports by Geography (million tons) 6.8 Million Tons Europe % Asia % S. America % 8

9 CONSOL s Industry Leading Coal Margins Quarter Ended June 30, 2011 Low-Vol Met High-Vol Met Thermal Total Coal Sales (millions of tons) Average Realized Price Per Ton Company Produced $ $81.75 $59.24 Total Cost Per Ton, before DD&A $62.13 $43.31 $45.71 DD&A Per Ton $6.65 $6.22 $6.07 Total Cost Per Ton Company Produced $68.78 $49.53 $51.78 Average Margin Per Ton, before DD&A $ $38.44 $13.53 Sales (millions of tons) times Average Margin Per Ton, before DD&A ($ MM) $203 $58 $183 9

10 Gas Division s Growth Strategy Development Program Marcellus Drilling - $335 Million Exploration Drilling Program Utica Shale - $35 Million Maintenance of Production CBM - $60 Million Chattanooga Shale - $25 Million Conventional - $0 Midstream Build-Out of $200 Million Total Proved Reserves by Gas Type (Bcfe) 3.7 Trillion Cubic Feet Proved Reserves by Category (Bcfe) 3.7 Trillion Cubic Feet Marcellus % CBM 1,789 48% Other Shale 100 3% PD 1,931 52% PUD 1,800 48% Conventional % 10

11 Basin Economics and Production 100% 90% 2010 Est Cum Production % of Total 2013 Est Cum Production % of total 10% Wellhead IRR (Before Tax) and % Of Production 80% % of Cumulative Gas Production 70% 60% 50% 40% 30% 20% 10% $5/mcf $6/mcf $6.50/mcf 0% Marcellus Eagle Ford Haynesville Fayetteville Shale San Juan/ Raton Wind River Woodford Conv Arkoma Unita GOM Shelf Other CO WY UT Permian NM GOM Deepwater Permian Texas California Other NE KS Barnett Pinedale/ Jonah Woodford Shale Gulf Coast Southeast US DJ Basin E.TX / N. LA Other TX & OK Fayetteville Conv South Texas Powder River Appalachia Antrim Anadarko Piceance Other ND SD MT $8/mcf Tudor Pickering Holt & Company July

12 Notable Achievements in Shale Formations CONSOL Energy was the second E&P company to produce from a horizontal well in the Marcellus Shale (October 2008). CONSOL Energy was the first E&P company to announce a discovery in the Utica Shale (October 2010). 12

13 CONSOL s Marcellus Shale Position 750,000 Acres 13

14 Central Pennsylvania Looks Very Promising, too 14

15 Layout of Hutchinson Pad, in Central Pennsylvania 15

16 CONSOL s Rig Deployment Schedule, as of October 1, Utica Rig 5 Marcellus Rigs 16

17 Lease Expirations Are Not Driving the Drilling Program (1) CONSOL Acreage Status (Net Acres) Lease Expiration 13% Fee / HBP 87% Lease Expiration Acreage Wells Needed to HBP Acreage 3,508 29,050 26,094 19,442 6,831 1, (1) As of May 1,

18 Access to Markets with Firm Transportation 18

19 CONSOL s Marcellus Well Results Show Steady EUR Improvements Increasing Marcellus EURs Selected 2009 Wells Selected 2010 Wells Bcfe 6.0 Bcfe CONSOL SW PA Type Curve 2009 Wells 2010 Wells Type Curve Avg. EUR 2.77 Bcfe 5.5 Bcfe 6.4 Bcfe Avg. Lateral Length 1,528 Feet 3,409 Feet 4,000 Feet 19

20 Industry-Leading Low-Cost E&P Operator 2010 Drill Bit F&D Cost / Mcfe $1.20 $1.00 $0.80 $0.65 $0.77 $0.85 $1.00 $1.07 $1.07 $1.08 $0.60 $0.54 $0.40 $0.41 $0.20 $- CNX XCO RRC REXX NFG UPL CHK COG SWN 2010 Lifting Costs / Mcfe $1.60 $1.45 $1.40 $1.20 $1.00 $0.91 $0.94 $0.97 $1.01 $1.05 $1.18 $0.80 $0.60 $0.66 $0.68 $0.40 $0.20 $- Source: Public filings UPL CNX RRC SWN XCO CHK COG EOG NFG 20

21 CONSOL s Utica Shale Position 200,000 Acres +300,000 Acres 13% Interpretation based on very limited data 21

22 Barnesville #1 Statistics Encountered the Utica Shale at a depth of 8,450 feet Utica Shale was 200 feet thick Well was unstimulated, but open flowed at 1.5 MMcf over a 24-hour period 22

23 Investment Summary & Highlights Growth Drivers in Coal and Gas Divisions. Asset Base and Operational Capabilities that will allow CONSOL to be a low cost producer of both fuels. CONSOL Coal Division s industry leading assets, margins and cash flows will allow the Gas Division to reach a critical mass and become self funding. CONSOL Gas Division s advantaged acreage position and lease terms will allow positive IRRs even in a low gas market. 23

24 CONSOL Energy Inc. Thank You. 24