March 5, Raymond James 35 th Annual Institutional Investors Conference

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Transcription:

March 5, 2014 Raymond James 35 th Annual Institutional Investors Conference

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 are described in detail under (i) the captions "Forward Looking Statements" in our earnings press release issued today and (ii) "Risk Factors" in CONSOL Energy Inc. s annual report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission (SEC), as updated by any subsequent Form 10-Qs. The forward-looking statements in this presentation speak only as of the date of this presentation; we disclaim any obligation to update the statements, 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 included in 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. A registration statement relating to the securities of the MLP that would be sold in the offering has not been filed with the Securities and Exchange Commission or become effective. This presentation does not constitute an offer to sell or a solicitation of offers to buy securities of CONSOL Energy Inc. This presentation is being made pursuant to, and in accordance with, Rule 135 under the Securities Act of 1933. 2

Appalachian E&P Transformation Creating Value CONSOL acquires 90,000 acres in W. Va. CONSOL announces gas reserves increase 44% CONSOL announces sale of five mines CONSOL recruits new COO Gas CONSOL announces possible structural changes CONSOL announces Upper Devonian success Premier E&P entity backed by best-in-class coal free cash flow generator. 3

2013 Was a Year of Accomplishment Upgraded the C-suite with three executives having skill sets needed for the company s transformation Ended 2013 with a record eight rigs running in the Marcellus Shale Improved our capital efficiencies Reduced drilling cost per thousand lateral feet by nearly 30% Implemented enhanced well completion techniques Rebalanced our asset portfolio Sold five West Virginia mines for $4.5 billion in value Meaningfully de-levered our balance sheet Invested nearly $1 billion in gas 4

Strong Liquidity Position of $2.1 Billion Cash on hand of $327 million Accounts receivable securitization and revolving credit facilities of $1.8 billion Amount/ Amount Letters Amount December 31, 2013 ($ in million) Capacity Drawn of Credit Available Cash and Cash Equivalents $327 $0 $0 $327 Accounts Receivable Securitization $115 $0 $66 $49 Revolving Credit Facilities $2,000 $0 $295 $1,705 Total $2,442 $0 $361 $2,081 For 2014, CONSOL s liquidity could benefit from: A cash tax refund of $100-150 million in 1H 2014 A joint venture drilling carry of up to $220 million, if NYMEX remains above $4.00 per MMBtu The monetization of midstream assets 5

Pittsburgh Airport: ~9,000 Contiguous Acres Marcellus Shale, Upper Devonian, and Dry Utica Shale Potential Economics justified on 6 pads with up to 49 Marcellus Shale wells. Additional value from potential Upper Devonian and Utica Shale wells. First Marcellus Shale well to be drilled by February 2015. 6

Dominion Transmission: ~90,000 Contiguous Acres West Virginia Racket- Newberne: ~9,000 net acres (wet gas) Fink-Kennedy ~46,000 net acres (wet gas) Lost Creek ~33,000 net acres (dry gas) Farm-in acquired for only $2,000 per acre. Acreage allows for +350 Marcellus Shale wells, with stacked play potential. CONSOL now has 228,000 net acres in this portion of West Virginia. 7

Projected Dual Pay - The Appeal of Monroe County ~11k highly contiguous acres 100% WI to CONSOL Energy Acquired for dual wet Marcellus and dry Utica development Very close to water, pipelines, and gas processing Multiple cost sharing opportunities include: Roads Locations Pipelines Water Systems Built in ethane solution Marcellus 5,700 TVD Utica 10,200 TVD 11k acres effectively becomes 22k acres! Valuable land position built by CONSOL from projecting Marcellus Shale and early Utica Shale results. 8

Recent IP rates in and around Monroe County, OH 30.3 MMcf/d Avg 24-hr rate 32.5 MMcf/d Avg 24-hr rate Recent nearby Utica Shale and Marcellus Shale IP rates have been very encouraging. 9

Recent West Virginia Results are Impressive PHL13 (*completed using RCS/SSL) 6 wells 7,999 average length 13.0 MMcfd 24 hr IP on first two wells, all wells IP d greater than 10.0 MMcfd AUD3 1 well 8,396 6.95 MMcfd 24 hour IP CENT3 1 well 7,470 8.5 MMcfd 24 hour IP Recent results by CONSOL Energy have significantly de-risked the area. 10

Improved Marcellus Drilling and Completion Results Drilling Summary 2011 2012 2013 Wells TD'd 78 64 46 Lateral Ft 300,466 328,428 366,615 Total MD 92,264' 794,098' 730,316' Average Lateral 3,853' 5,514' 7,970' Average TMD 11,824' 13,280' 15,876' Average Drill Cost $180/ft $220/ft $190/ft Average Lateral Cost $552/ft $529/ft $378/ft Completions Summary 2011 2012 2013 Wells Completed 57 51 59 Lateral Ft Completed 188,800 270,256 333,895 Total Stages 684 940 1,527 Average Stg/Well 12 18 26 Average Stage Cost $205k $184k $193k CONSOL was able to drill an 8,000-ft lateral in 2013 for the same cost as a 5,500-ft. lateral in 2012, while average stages per well have more than doubled. 11

Pre vs. Post RCS/SSL Results SWPA are actual results - Seeing 10mmcf/d 30-day average production results in area W.Va. results are for the PHL pad - Only 2 wells of data due to curtailment resulting from too much production In CPA, post RCS/SSL results are theoretical since program has been focused on SWPA and W.Va. CPA W.Va. SWPA Without RCS/SSL Average 24-hr IP (mmcf/d) 6.7 7.9 8.4 EUR / 1,000 feet 1.2 1.3 1.6 With RCS / SSL Average 24-hr IP (mmcf/d) 9.5 11.0 12.0 EUR / 1,000 feet 1.4 1.7 2.0 CONSOL Energy s proved reserves at year-end 2013 assume very little from these enhanced completion techniques. 12

Upper Devonian Exploration Well NV39F 5 Underlying Marcellus Wells on Pad OH PA CONSOL Nineveh Core WV Area MD Washington County, PA Drilled lateral length of 4,889 Frac d 17 stages in Burkett Shale Tested 3.0 MMcfd, TIL 6/21/13 Currently producing 2.9 MMcfd VA Wet Gas Dry Gas Great impact on underlying Marcellus wells that tested 10.0 MMcfd and 9.0 MMcfd Planning 5+ Burkett Shale and at least two Rhinestreet Shale wells in 2014 CONSOL was perhaps the first to drill a Burkett well and perform a zipper frac with neighboring Marcellus Shale wells. 13

Upper Devonian Burkett Shale Sweet Spot CONSOL is well situated within what could be the best part of the Burkett fairway, with an estimated 345,000 net acres of potential. 14

Increased Proved Reserves by 44% (in Bcfe) 6,000 1,633 172 105 (172 ) 5,731 5,000 4,000 3,993 3,000 2,000 1,000 44% increase in proved reserves 87% increase in Marcellus Shale proved reserves 948% reserve replacement 0 YE 2012 Extensions & Discoveries Performance Revisions Price Revisions & Plan Changes Production YE 2013 CONSOL adds 1.63 Tcfe from drilling in 2013; achieves drill bit finding cost of $0.42 per mcfe. Upside potential in 2014 from enhanced completion techniques. Source: CONSOL filings. 15

Achieving 30% Gas Production Growth Hired Timothy Dugan as COO Gas 30 years experience in shales: Barnett Utica Marcellus Operational roles at: Chesapeake Cabot EQT Experience in: Reservoir Engineering Field Operations Airport acreage drilling Tim will ensure that CONSOL is in the forefront of applying technology, while squeezing efficiencies from existing operations. 16

2014 Strategy: Grow Gas Production by 30% (in Bcfe) 400 Gas Production +30% 300 +30% 215.0-235.0 200 127.9 153.5 156.3 172.4 100 44.5 48.6 48.4 56.1 58.2 76.6 94.4 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E 2016E 2014 Marcellus Shale production expected to grow 87%. Source: Company filings. Note: Acquired ~23 Bcfe of Conventional gas production from Dominion E&P in 2010. Divested ~11 Bcfe through the Marcellus JV with Noble Energy and the Antero Royalty Interest transactions in 2011. 17

2014 Marcellus Shale Drilling Program: 162 wells Large Acreage Position within Marcellus Fairway: approximately 446,000 net acres NBL Operated 170,000 Gross Acres 87% of Acreage HBP Allowing for Development Flexibility 50% of approximately 690,000 gross acres Approximately 100,000 net acres outside of JV Average NRI of ~88% CONSOL Operated 520,000 Gross Acres Continue to look for bolt-on acreage opportunities 8 rigs currently operating in the Marcellus Note: Townships are shown in yellow where CONSOL holds 3,000 or more acres as of 12/31/2013. The 162 gross wells expected to be drilled in 2014 include 1 planned non-jv Marcellus Shale in Monroe County, Ohio. 18

000 MMBtu CNX Active Hedge Program Actively Monitored Hedge Program: Recently increased hedge position for 2014 and will add incremental hedges for 2015 - For 2014: - 55 Bcf in swaps added at approximately $4.36 per MMBtu - 9 Bcf added in collars, floor of $4.25 per MMBtu, cap of $4.88 per MMBtu - Brings hedge position to 71% Future hedges will use SWAPS and Collars Add basis hedges when possible - Basis hedges represent 34% of total in 2014 Protects cash flows from commodity price risk Ensures positive economics for 30% growth 2013 Hedge Positions 1,000,000 100% 80% 60% 40% 20% 800,000 600,000 400,000 200,000 - - Production Coal Production Hedge + Priced Coal 84% Hedged 748,235 174,954 174,954 Peer 1 Peer 2 Peer 3 Peer 4 CNX Gas CNX Tot 2014 Competitor and CNX Hedge Positions (As Percent of Total Production compared to 2013) Swaps Collars Priced Coal 2013 Hedge + Priced Coal 75% 77% 64% 62% Hedged 59% Hedged 51% 5% 74% Hedged 75% 50% 51% Hedged 71% 4% 90% Hedged + Priced 75% 60% 75% 13% 46% 25% 67% 15% Peer 1 Peer 2 Peer 3 Peer 4 CNX Gas CNX Total 19

MMBtu/d Firm Transportation and Firm Sales Total Marcellus/Utica Shale, CBM and Conventional 1,200,000 1,000,000 800,000 600,000 400,000 200,000-2014 2015 2016 Columbia Dominion Texas Eastern East Tennessee Texas Eastern Firm Sale #1 Texas Eastern Firm Sale #2 CONSOL is currently long FT and is in discussions to add more to meet our production ramp. 20

MCF/d Processing Position: Marcellus / Utica CONSOL s current position has allowed for the development of Marshall County, W.Va. acreage, in partnership with Noble Energy Future processing capacity under negotiation and expansion rights will allow for significant growth of liquids-rich Marcellus/Utica production CONSOL is anchoring an expansion at MarkWest s Majorsville facility, due online in Q1 2015 700,000 600,000 500,000 400,000 300,000 200,000 100,000-2014 2015 2016 MarkWest - Majorsville Williams - Marshall County, WV Additional Capacity Under Negotiation/Consideration CONSOL is matching our processing capacity additions with our production ramp. 21

Coal Segment Successfully concluded expansion: Completed BMX Mine Completed Enlow Fork overland belt project Completed new Buchanan Mine portal Segment should begin producing substantial cash flow: Low-Vol High-Vol Thermal Coal Margins 2014E Sales Guidance 4.2-4.7 2.3+ 23.8+ Q4 2013 Total Cost Per Ton $68.89 $45.35 $46.72 Q4 2013 DD&A Per Ton $9.12 $5.50 $5.23 Q4 2013 Total Cash Costs Per Ton $59.77 $39.85 $41.49 CONSOL Energy has five longwalls producing up to 28 million tons from a single complex. This concentrated footprint generates economies of scale that result in a very competitive cost structure. 22

Summary We have the team We have the assets We have the balance sheet We have the culture and value system, and We have the skill set to be successful Our Assets, Strategy, and People Create An Investment Opportunity. 23