CNX Resources Corp
For the period ended Jun 30, 2024. Filed Jul 25, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 25, 2024
CNX$34.92-1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-25.
0001070412-24-000027
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-25.
0001070412-24-000039
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 181 previous paragraphs and 248 current paragraphs.
105 unchanged; 61 reworded; 51 added; 13 removed; 2 previous and 31 current paragraphs rearranged.
Tables are not compared: 18 previous and 33 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (51)
Current report
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Current report
At the beginning of the second quarter, CNX announced two strategic initiatives related to our New Technologies group:
Current report
CNX believes these initiatives will help catalyze the Company’s entry into new markets and generate meaningful free cash flow over the next several years. As these initiatives were just announced at the beginning of the second quarter, there was no material impact to the financial results for the three and six months ended June 30, 2024.
Current report
Net (Loss) Income
Current report
The 0.2 Bcfe decrease in total sales volumes in the period-to-period comparison was primarily due to normal production declines and the timing of when new wells were turned-in-line after the 2023 period offset, in part, by an increase in NGL volumes primarily due to an increase in ethane recoveries.
Current report
•Lease operating expense increased on a per unit basis primarily due to an increase in water disposal costs as more water was taken to disposal instead of being reused in well completions.
Current report
•Transportation, gathering and compression expense increased on a per unit basis primarily due to the three months ended June 30, 2023 containing a transportation refund that was received in connection with an interstate pipeline rate case settlement. No such refund occurred in the current period. The increase was also due to an increase in processing costs related to the higher NGL sales volumes in the current period.
Current report
The increase in Sales of Natural Gas, NGL and Oil, including Cash Settlements, a Non-GAAP Financial Measure was primarily the result of the 2.8 Bcfe increase in NGL sales volumes, the $0.60 per Bbl increase in NGL prices, and the impact of the change in the realized gain on commodity derivative instruments - cash settlement related to the Company's hedging program. The increase was offset, in part, by the $0.20 per Mcf decrease in natural gas prices, when excluding the impact of hedging and the 2.8 Bcfe decrease in natural gas sales volumes.
Current report
The Shale segment had natural gas, NGLs and oil/condensate revenue of $216 million for the three months ended June 30, 2024 compared to $234 million for the three months ended June 30, 2023. The $18 million decrease was primarily due to a 11.9% decrease in the average sales price for natural gas offset, in part, by a 3.1% increase in the average sales price of NGLs and a 0.2% increase in total Shale sales volumes. The increase in total Shale sales volumes was primarily due an increase in NGL sales volumes due to an increase in ethane recoveries offset, in part, by normal production declines and the timing of when new wells were turned-in-line.
Current report
Total operating costs and expenses for the Shale segment were $191 million for the three months ended June 30, 2024 compared to $172 million for the three months ended June 30, 2023. The increases in total dollars and unit costs for the Shale segment were due to the following items:
Current report
•Shale transportation, gathering and compression costs were $76 million for the three months ended June 30, 2024 compared to $71 million for the three months ended June 30, 2023. The increase in total dollars and unit costs was primarily due to the 2023 period containing a transportation refund that was received in connection with an interstate pipeline rate case settlement. No such transactions occurred in the current period. The increase was also due to an increase in processing costs due to the increase in NGL sales volumes.
Current report
The CBM segment had a loss before income tax of $9 million for the three months ended June 30, 2024 compared to a loss before income tax of $5 million for the three months ended June 30, 2023.
Current report
•CBM transportation, gathering and compression costs were $16 million for the three months ended June 30, 2024 compared to $17 million for the three months ended June 30, 2023. The decrease in total dollars and unit costs was primarily due to a decrease in repairs and maintenance expense offset, in part, by an increase in electrical compression expense.
Current report
•Water income increased in the period-to-period comparison due to higher third-party sales in the current period.
Current report
•Environmental attribute fees represent costs related to the sale of environmental attributes that are included in Other Operating Income. The increase in fees in the period-to-period comparison relates to the increase in sales above.
Current report
•Virginia flood expense includes costs to cleanup and repair areas that were impacted by flooding that occurred in Buchanan County, Virginia in July 2022. The income in the current period relates to an insurance reimbursement for prior expenses incurred.
Current report
•Other decreased in the period-to-period comparison due to various one-time items, none of which were individually material.
Current report
Other (Income) Expense
Current report
Results of Operations -Six Months Ended June 30, 2024 Compared with Six Months Ended June 30, 2023
Current report
Net (Loss) Income
Current report
CNX reported a net loss of $11 million, or a loss per diluted share of $0.07, for the six months ended June 30, 2024, compared to net income of $1,185 million, or earnings per diluted share of $6.09, for the six months ended June 30, 2023.
Current report
Non-GAAP Financial Measures
Current report
Non-GAAP Financial Measures Reconciliation
Current report
•Lease operating expense increased on a per unit basis primarily due to an increase in water disposal costs as more water was taken to disposal instead of being reused in well completions.
Current report
Average Realized Price Reconciliation
Current report
SEGMENT ANALYSIS for the six months ended June 30, 2024 compared to the six months ended June 30, 2023:
Current report
SHALE SEGMENT
Current report
The Shale segment had earnings before income tax of $304 million for the six months ended June 30, 2024 compared to earnings before income tax of $333 million for the six months ended June 30, 2023.
Current report
Total operating costs and expenses for the Shale segment were $389 million for the six months ended June 30, 2024 compared to $359 million for the six months ended June 30, 2023. The increase in total dollars and unit costs for the Shale segment were due to the following items:
Current report
•Shale lease operating expenses were $24 million for the six months ended June 30, 2024 compared to $20 million for the six months ended June 30, 2023. The increase in total dollars was primarily due to an increase in water disposal costs as more water was taken to disposal instead of being reused in well completions.
Current report
COALBED METHANE (CBM) SEGMENT
Current report
The CBM segment had a loss before income tax of $9 million for the six months ended June 30, 2024 compared to earnings before income tax of $2 million for the six months ended June 30, 2023.
Current report
The CBM segment had natural gas revenue of $53 million for the six months ended June 30, 2024 compared to $71 million for the six months ended June 30, 2023. The $18 million decrease was due to a 19.4% decrease in the average sales price for natural gas in the current period and an 6.3% decrease in CBM sales volumes due to normal production declines.
Current report
The total average CBM sales price decreased $0.11 per Mcf due to a $0.67 per Mcf decrease in average natural gas sales price, offset in part by a $0.56 per Mcf change in the realized gain on commodity derivative instruments resulting from the Company's hedging program. The notional amounts associated with these financial hedges represented approximately 14.7 Bcf of the Company's produced CBM sales volumes for the six months ended June 30, 2024 at an average gain of $0.81 per Mcf hedged. For the six months ended June 30, 2023, these financial hedges represented approximately 15.6 Bcf at an average gain of $0.09 per Mcf hedged.
Current report
Total operating costs and expenses for the CBM segment were $74 million for the six months ended June 30, 2024 compared to $70 million for the six months ended June 30, 2023. The increase in total dollars and unit costs for the CBM segment were due to the following items:
Current report
•CBM lease operating expenses were $11 million for the six months ended June 30, 2024 compared to $10 million for the six months ended June 30, 2023. The increase in total dollars and unit costs was primarily due to an increase in well tending and water disposal costs.
Current report
OTHER SEGMENT
Current report
The Other Segment had a loss before income tax of $304 million for the six months ended June 30, 2024 compared to earnings before income tax of $1,230 million for the six months ended June 30, 2023. The decrease in total dollars is discussed below.
Current report
Purchased Gas Revenue and Costs
Current report
Other Operating Income
Showing the first 40 of 51 passages. Open the source sections for the rest.
Removed paragraphs (13)
Previous report
Net Income
Previous report
•Production, ad valorem and other fees decreased on a per unit basis primarily due to decreased realized prices on natural gas.
Previous report
•Transportation, gathering and compression expense decreased on a per unit basis primarily due to a decrease in production in areas that are subject to higher gathering rates, a decrease in repairs and maintenance expense and an increase in volumes. The decrease was offset, in part, by an increase in processing costs due to rate escalations and the overall increase in NGL volumes.
Previous report
Total operating costs and expenses for the Shale segment were $198 million for the three months ended March 31, 2024 compared to $188 million for the three months ended March 31, 2023. The increase in total dollars and unit costs for the Shale segment were due to the following items:
Previous report
The CBM segment had a nominal loss for the three months ended March 31, 2024 compared to earnings before income tax of $7 million for the three months ended March 31, 2023.
Previous report
•CBM production, ad valorem and other fees were $2 million for the three months ended March 31, 2024 compared to $3 million for the three months ended March 31, 2023. The decrease in total dollars and unit costs were primarily due to decreased realized prices on natural gas.
Previous report
•Short-term compensation increased $1 million due higher projected payouts for the current period.
Previous report
•Long-term equity-based compensation (non-cash) decreased in the period-to-period comparison due to a decrease in equity awards.
Previous report
•Salaries, wages and employee benefits decreased in the period-to-period comparison primarily due to a decrease in corporate head-count related expenses.
Previous report
Other Expense
Previous report
•Net income decreased $704 million in the period-to-period comparison.
Previous report
•Proceeds from asset sales decreased $2 million primarily due to the timing of sales of various non-core assets (See Note 4 – Acquisitions and Dispositions in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information).
Previous report
Commitments and Significant Contractual Obligations
Reworded paragraphs (61)
Previous wording
CNX continually monitors factors that could cause actual results of operations to differ from historical results or current expectations. Examples include global events such as the conflict between Russia and Ukraine and the announcement by the Organization of the Petroleum Exporting Countries (OPEC) to extend cuts in production through the second quarter of 2024, both of which have had an impact on global commodity prices. These and other factors could affect the Company’s operations, earnings and cash flows for any period and could cause such results to not be comparable to those of the same period in previous years. The results presented in this Form 10-Q are not necessarily indicative of future operating results.
Current wording
CNX continually monitors factors that could cause actual results of operations to differ from historical results or current expectations. Examples include global events such as the conflict between Russia and Ukraine and the announcement by the Organization of the Petroleum Exporting Countries to extend cuts in production through the end of 2024 and into 2025, both of which have had an impact on global commodity prices. These and other factors could affect the Company’s operations, earnings and cash flows for any period and could cause such results to not be comparable to those of the same period in previous years. The results presented in this Form 10-Q are not necessarily indicative of future operating results.
Previous wording
Heightened levels of inflation, primarily related to steel, diesel fuel and labor, continue to present risk for CNX and the broader natural gas industry. If inflation increases materially for any extended period of time, and CNX is unable to successfully mitigate the impact, our costs could increase further, thus having a greater impact on our financial position. Rising interest rates increased our costs on borrowings under our Credit Facility in 2023, but it is currently anticipated that the Federal Reserve will make cuts to relevant interest rates later in 2024. CNX remains committed to our ongoing efforts to increase the efficiency of our operations and improve costs, which may, in part, offset any additional cost increases from inflation.
Current wording
The inflationary environment over the last few years, primarily related to steel, diesel fuel and labor, continues to present a risk for CNX and the broader natural gas industry. If inflation were to increase materially for any extended period of time, and CNX is unable to successfully mitigate the impact, our costs could increase further, thus having a greater impact on our financial position. Higher interest rates increased our costs on borrowings under the CNX Credit Facility in the first half of 2024, but it is currently anticipated that the Federal Reserve will make cuts to relevant interest rates later in 2024. CNX remains committed to our ongoing efforts to increase the efficiency of our operations and improve costs, which may, in part, offset any additional cost increases from inflation.
Previous wording
Total hedged natural gas production for the second quarter of 2024 is 109.7 Bcf. CNX's annual gas hedge position is shown in the table below:
Current wording
Total hedged natural gas production for the third quarter of 2024 is 108.4 Bcf. CNX's annual gas hedge position is shown in the table below:
Previous wording
1 Includes actual settlements of 101.1 Bcf.
Current wording
1 Includes actual settlements of 178.5 Bcf.
Previous wording
For the three months ended March 31, 2024, CNX recognized $13 million of sales of environmental attributes which includes items such as (but is not limited to): carbon credits, air quality credits, renewable or alternative energy credits, methane capture credits, methane performance certificates, emission reductions, offsets and/or allowances. These sales are included as part of Other Revenue and Operating Income in the Other Segment. For the three months ended March 31, 2024, CNX incurred $2 million of environmental attribute fees which represent costs related to the sale of environmental attributes and are included in Other Operating Expense in the Other Segment.
Current wording
For the three and six months ended June 30, 2024, CNX recognized $33 million and $46 million, respectively of sales of environmental attributes which includes items such as (but is not limited to): carbon credits, air quality credits, renewable or alternative energy credits, methane capture credits, methane performance certificates, emission reductions, offsets and/or allowances. These sales are included as part of Other Revenue and Operating Income in the Other Segment. For the three and six months ended June 30, 2024, CNX incurred$5 million and $7 million, respectively of environmental attribute fees which represent costs related to the sale of environmental attributes and are included in Other Operating Expense in the Other Segment.
Previous wording
As previously disclosed, CNX continues to devote resources to the development of unique, proprietary technologies to further enable vertical and horizontal business growth. This includes the development and use of proprietary technology to enhance and alter manufacturing processes for the extraction and delivery of natural gas through the development and commercialization of emerging technologies, as well as the development and sale of environmental attributes from our operations. CNX is also focusing on forging strategic partnerships for the use of low carbon intensity feedstocks and creation of derivative products.
Current wording
CNX continues to devote resources to the development of unique, proprietary technologies to further enable vertical and horizontal business growth. This includes the development and use of proprietary technology to enhance and alter manufacturing processes for the extraction and delivery of natural gas through the development and commercialization of emerging technologies, as well as the development and sale of environmental attributes from our operations. CNX is also focusing on forging strategic partnerships for the use of low carbon intensity feedstocks and creation of derivative products.
Previous wording
CNX recently announced two new strategic efforts related to our New Technologies group. On April 22, 2024, CNX announced a collaboration with NuBlu Energy to deploy compressed natural gas (CNG) and liquified natural gas (LNG) technology solutions that represent advancements in the scale and efficiency in which CNG and micro-scale LNG can be produced, while lowering costs and carbon emissions. By leveraging advanced processes and proprietary technologies, NuBlu and CNX aim to drive a transition in the CNG and LNG market to displace conventional, foreign-sourced liquid fuels with a locally sourced, cleaner-burning, more cost-effective option. CNX believes these technologies will help catalyze the company’s entry into downstream energy markets that are currently priced at a significant premium to traditional pipeline natural gas on an energy equivalent basis.
Current wording
•On April 22, 2024, CNX announced a collaboration with NuBlu Energy to deploy compressed natural gas (CNG) and liquified natural gas (LNG) technology solutions that represent advancements in the scale and efficiency in which CNG and micro-scale LNG can be produced, while lowering costs and carbon emissions. By leveraging advanced processes and proprietary technologies, NuBlu and CNX aim to drive a transition in the CNG and LNG market to displace conventional, foreign-sourced liquid fuels with a locally sourced, cleaner-burning, more cost-effective option.
Previous wording
On April 24, 2024, CNX announced a joint venture with Deep Well Services (DWS) to launch AutoSep Technologies, a new oilfield service company providing a first-of-its-kind alternative to conventional flowback operations. As a standalone company operated by DWS, AutoSep Technologies will have the flexibility and autonomy to provide automated flowback solutions to the oil and gas industry. As the first product offering, the partnership brings an automated flowback system for modern, high rate, and erosive unconventional shale wells. The new, highly compact system can be deployed in a fraction of the time and requires less labor, while reducing overall costs, improving safety, and lowering the environmental impact associated with conventional flowback operations. The market potential for this product solution across domestic and international oil and gas basins is significant. Each year 20,000 wells are flowed back in the United States, and 60,000 wells are flowed back globally. As such, CNX believes that this joint venture company has the potential to grow to be a meaningful free cash flow contributor over the next several years as producers fully adopt and implement this groundbreaking technology.
Current wording
•On April 24, 2024, CNX announced a joint venture with Deep Well Services (DWS) to launch AutoSep Technologies, a new oilfield service company providing a first-of-its-kind alternative to conventional flowback operations. As a standalone company operated by DWS, AutoSep Technologies will have the flexibility and autonomy to provide automated flowback solutions to the oil and gas industry. As the first product offering, the joint venture brings an automated flowback system for modern, high rate, and erosive unconventional shale wells. The new, highly compact system can be deployed in a fraction of the time and requires less labor, while reducing overall costs, improving safety, and lowering the environmental impact associated with conventional flowback operations. We believe the market potential for this product solution across domestic and international oil and gas basins can be significant.
Previous wording
CNX reported net income of $7 million, or earnings per diluted share of $0.04, for the three months ended March 31, 2024, compared to net income of $710 million, or earnings per diluted share of $3.61, for the three months ended March 31, 2023.
Current wording
CNX reported a net loss of $18 million, or a loss per diluted share of $0.12, for the three months ended June 30, 2024, compared to a net income of $475 million, or earnings per diluted share of $2.47, for the three months ended June 30, 2023.
Previous wording
Included in the earnings for the three months ended March 31, 2024 was an unrealized loss on commodity derivative instruments of $47 million and a net loss on asset sales and abandonments of $20 million. Included in the earnings for the three months ended March 31, 2023 was an unrealized gain on commodity derivative instruments of $823 million and a net gain on asset sales and abandonments of $9 million. See Note 4 – Acquisitions and Dispositions in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information related to the loss (gain) on asset sales and abandonments.
Current wording
Included in the net loss for the three months ended June 30, 2024 was an unrealized loss on commodity derivative instruments of $96 million and a net gain on asset sales and abandonments of $1 million. Included in net income for the three months ended June 30, 2023 was an unrealized gain on commodity derivative instruments of $463 million and a net gain on asset sales and abandonments of $106 million. See Note 4 – Acquisitions and Dispositions in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information related to the gain on asset sales and abandonments.
Previous wording
The Shale segment had earnings before income tax of $161 million for the three months ended March 31, 2024 compared to earnings before income tax of $180 million for the three months ended March 31, 2023.
Current wording
The Shale segment had earnings before income tax of $143 million for the three months ended June 30, 2024 compared to earnings before income tax of $153 million for the three months ended June 30, 2023.
Previous wording
The decrease in total average Shale sales price was primarily due to a $1.04 per Mcf decrease in average natural gas sales price and a $0.59 per Mcfe decrease in the average NGL sales price. These decreases were offset in part by a $0.92 per Mcf change in the realized gain (loss) on commodity derivative instruments. The notional amounts associated with these financial hedges represented approximately 92.2 Bcf of the Company's produced Shale gas sales volumes for the three months ended March 31, 2024 at an average gain of $0.55 per Mcf hedged. For the three months ended March 31, 2023, these financial hedges represented approximately 84.3 Bcf at an average loss of $0.67 per Mcf hedged.
Current wording
The increase in total average Shale sales price was primarily due to a $0.27 per Mcf change in the realized gain on commodity derivative instruments and a $0.10 per Mcfe increase in the average NGL sales price. These increases were offset in part by a $0.21 per Mcf decrease in average natural gas sales price. The notional amounts associated with these financial hedges represented approximately 97.4 Bcf of the Company's produced Shale gas sales volumes for the three months ended June 30, 2024 at an average gain of $1.04 per Mcf hedged. For the three months ended June 30, 2023, these financial hedges represented approximately 103.9 Bcf at an average gain of $0.70 per Mcf hedged.
Previous wording
•Shale lease operating expenses were $12 million for the three months ended March 31, 2024 compared to $11 million for the three months ended March 31, 2023. The increase in total dollars was primarily related to an increase in water disposal costs, as more water was taken to disposal instead of being reused in well completions.
Current wording
•Shale lease operating expenses were $12 million for the three months ended June 30, 2024 compared to $9 million for the three months ended June 30, 2023. The increase in total dollars was primarily due to an increase in water disposal costs as more water was taken to disposal instead of being reused in well completions and an increase in repair and maintenance expense.
Previous wording
•Depreciation, depletion and amortization costs attributable to the Shale segment were $99 million for the three months ended March 31, 2024 compared to $88 million for the three months ended March 31, 2023. These amounts included depletion on a unit of production basis of $0.65 per Mcfe and $0.59 per Mcfe, respectively. The increase in the units of production depreciation, depletion and amortization rate in the current period is primarily due to a higher annual depletion rate for 2024. The increase in rate is primarily attributable to downward reserve revisions due to adjustments to the five-year development plan that lowered proved undeveloped reserves, price changes, and the sale of various non-operated producing oil and gas assets The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.
Current wording
•Depreciation, depletion and amortization costs attributable to the Shale segment were $98 million for the three months ended June 30, 2024 compared to $87 million for the three months ended June 30, 2023. These amounts included depletion on a units of production basis of $0.67 per Mcfe and $0.59 per Mcfe, respectively. The increase in the units of production depreciation, depletion and amortization rate in the current period is primarily due to a higher annual depletion rate for 2024. The increase in rate is primarily attributable to downward reserve revisions due to adjustments to the five-year development plan that lowered proved undeveloped reserves, price changes, and the sale of various non-operated producing oil and gas assets. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.
Previous wording
The CBM segment had natural gas revenue of $33 million for the three months ended March 31, 2024 compared to $48 million for the three months ended March 31, 2023. The $15 million decrease was due to a 25.1% decrease in the average sales price for natural gas in the current period and an 8.7% decrease in CBM sales volumes due to normal production declines.
Current wording
The CBM segment had natural gas revenue of $20 million for the three months ended June 30, 2024 compared to $23 million for the three months ended June 30, 2023. The decrease was due to a 5.4% decrease in the average sales price for natural gas in the current period and a 4.0% decrease in CBM sales volumes due to normal production declines.
Previous wording
The total average CBM sales price decreased $0.30 per Mcf due to a $1.16 per Mcf decrease in average natural gas sales price, offset in part by a $0.86 per Mcf change in the realized gain (loss) on commodity derivative instruments resulting from the Company's hedging program. The notional amounts associated with these financial hedges represented approximately 6.9 Bcf of the Company's produced CBM sales volumes for the three months ended March 31, 2024 at an average gain of $0.55 per Mcf hedged. For the three months ended March 31, 2023, these financial hedges represented approximately 7.2 Bcf at an average loss of $0.65 per Mcf hedged.
Current wording
The total average CBM sales price increased $0.11 per Mcf due to a $0.25 per Mcf change in the realized gain on commodity derivative instruments resulting from the Company's hedging program, offset in part by a $0.12 per Mcf decrease in average gas sales price. The notional amounts associated with these financial hedges represented approximately 7.8 Bcf of the Company's produced CBM sales volumes for the three months ended June 30, 2024 at an average gain of $1.05 per Mcf hedged. For the three months ended June 30, 2023, these financial hedges represented approximately 8.3 Bcf at an average gain of $0.72 per Mcf hedged.
Previous wording
Total operating costs and expenses for the CBM segment were $37 million for the three months ended March 31, 2024 compared to $36 million for the three months ended March 31, 2023. The increase in total dollars and unit costs for the CBM segment were due to the following items:
Current wording
Total operating costs and expenses for the CBM segment were $37 million for the three months ended June 30, 2024 compared to $34 million for the three months ended June 30, 2023. The increases in total dollars and unit costs for the CBM segment were due to the following items:
Previous wording
•Shale production, ad valorem and other fees were $6 million for the three months ended March 31, 2024 compared to $7 million for the three months ended March 31, 2023. The decrease in total dollars was primarily due to decreased realized prices on natural gas.
Current wording
•CBM lease operating expenses were $6 million for the three months ended June 30, 2024 compared to $4 million for the three months ended June 30, 2023. The increase in total dollars and unit costs was primarily due to an increase in well tending costs.
Previous wording
•Depreciation, depletion and amortization costs attributable to the CBM segment were $14 million for the three months ended March 31, 2024 compared to $12 million for the three months ended March 31, 2023. These amounts included depletion on a unit of production basis of $0.85 per Mcfe and $0.64 per Mcfe, respectively. The increase in the units of production depreciation, depletion and amortization rate in the current period is primarily the result of a higher 2024 annual depletion rate. The increase in rate is primarily attributable to downward reserve revisions due to higher operating costs and price changes. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.
Current wording
•Depreciation, depletion and amortization costs attributable to the CBM segment were $14 million for the three months ended June 30, 2024 compared to $13 million for the three months ended June 30, 2023. These amounts included depletion on a units of production basis of $0.85 per Mcfe and $0.64 per Mcfe, respectively. The increase in the units of production depreciation, depletion and amortization rate in the current period is primarily the result of a higher 2024 annual depletion rate. The increase in rate is primarily attributable to downward reserve revisions due to higher operating costs and price changes. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.
Previous wording
The Other Segment had a loss before income tax of $155 million for the three months ended March 31, 2024 compared to earnings before income tax of $741 million for the three months ended March 31, 2023. The decrease in total dollars is discussed below.
Current wording
The Other Segment had a loss before income tax of $149 million for the three months ended June 30, 2024 compared to earnings before income tax of $489 million for the three months ended June 30, 2023. The decrease in total dollars is discussed below.
Previous wording
For the three months ended March 31, 2024, the Other Segment recognized an unrealized loss on commodity derivative instruments of $47 million. For the three months ended March 31, 2023, the Other Segment recognized an unrealized gain on commodity derivative instruments of $823 million. The unrealized loss or gain on commodity derivative instruments represents changes in the fair value of all the Company's existing commodity hedges on a mark-to-market basis.
Current wording
For the three months ended June 30, 2024, the Other Segment recognized an unrealized loss on commodity derivative instruments of $96 million. For the three months ended June 30, 2023, the Other Segment recognized an unrealized gain on commodity derivative instruments of $463 million. The unrealized loss or gain on commodity derivative instruments represents changes in the fair value of all the Company's existing commodity hedges on a mark-to-market basis.
Previous wording
The $1 million increase in total interest expense was primarily due to higher borrowings on the CNX revolving credit facility and higher principal balances related to the long-term debt that was issued in February 2024. See Note 10 – Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.
Current wording
The $4 million increase in total interest expense was primarily due to higher borrowings on the CNX Credit Facility at higher interest rates and higher principal balances related to the long-term debt that was issued in February 2024. The increase was offset, in part, by lowering borrowings on the CNXM Credit Facility. See Note 8 – Revolving Credit Facilities and Note 10 – Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.
Previous wording
The effective income tax rates for the three months ended March 31, 2024 and 2023 were (8.4)% and 23.4%, respectively. The effective tax rate for the three months ended March 31, 2024 and 2023 differs from the U.S. federal statutory rate of 21% primarily due to the impact of equity compensation, federal tax credits, and state taxes.
Current wording
The effective income tax rates for the three months ended June 30, 2024 and 2023 were (19.8)% and 25.4%, respectively. The effective rate for the three months ended June 30, 2024 differs from the U.S. federal statutory rate of 21% primarily due to the impact of equity compensation, federal tax credits and state taxes. The effective rate for the three months ended June 30, 2023 differs from the U.S. federal statutory rate of 21% primarily due to the impact equity compensation, federal tax credits and state taxes primarily due to a West Virginia tax law change. See Note 5 – Income Taxes in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.
Previous wording
The 4.5 Bcfe increase in volumes in the period-to-period comparison was primarily due to new wells turned-in-line throughout 2023 and the first quarter of 2024 and an increase in ethane recoveries. The increase was offset, in part, by normal production declines.
Current wording
The 4.4 Bcfe increase in volumes in the period-to-period comparison was primarily due to an increase in ethane recoveries and new wells turned-in-line throughout 2023 and the first half of 2024. The increase was offset, in part, by normal production declines.
Previous wording
The decrease in natural gas, NGLs and oil revenue was primarily the result of the $1.05 per Mcf decrease in natural gas prices, when excluding the impact of hedging and the $3.54 per Bbl decrease in NGL prices. These decreases were offset, in-part, by the impact of the change in the gain (loss) on commodity derivative instruments - cash settlement related to the Company's hedging program and the 4.5 Bcfe increase in sales volumes.
Current wording
The decrease in Sales of Natural Gas, NGL and Oil, including Cash Settlements, a Non-GAAP Financial Measure was primarily due to the $0.62 per Mcf decrease in natural gas prices, when excluding the impact of hedging and the $1.68 per barrel decrease in NGL prices. These decreases were offset, in-part, by the impact of the change in the gain on commodity derivative instruments - cash settlement related to the Company's hedging program and the 4.4 Bcfe increase in total sales volumes.
Previous wording
The Shale segment had natural gas, NGLs and oil/condensate revenue of $292 million for the three months ended March 31, 2024 compared to $407 million for the three months ended March 31, 2023. The $115 million decrease was due primarily to a 33.5% decrease in the average sales price for natural gas and a 12.9% decrease in the average sales price of NGLs. The decrease was partially offset by the 4.3% increase in total Shale sales volumes. The increase in total Shale sales volumes was primarily due to new wells turned-in-line throughout 2023 and the first quarter of 2024 and an increase in ethane recoveries offset, in part, by normal production declines.
Current wording
The Shale segment had natural gas, NGLs and oil/condensate revenue of $508 million for the six months ended June 30, 2024 compared to $641 million for the six months ended June 30, 2023. The $133 million decrease was due primarily to a 25.1% decrease in the average sales price for natural gas and a 7.2% decrease in the average sales price of NGLs. The decrease was partially offset by the 2.2% increase in total Shale sales volumes. The increase in total Shale sales volumes was primarily due to an increase in ethane recoveries and new wells turned-in-line throughout 2023 and the first half of 2024. The increase was offset, in part, by normal production declines.
Previous wording
•Shale transportation, gathering and compression costs were $81 million for the three months ended March 31, 2024 compared to $82 million for the three months ended March 31, 2023. The decrease in total dollars was primarily related to a decrease in production in areas that are subject to higher third-party gathering rates and a decrease in repairs and maintenance expense. The decrease was offset, in part, by an increase in processing costs due to normal rate escalations and an increase in ethane recoveries. The decrease in unit costs was primarily due to the increase in total Shale sales volumes.
Current wording
•Shale transportation, gathering and compression costs were $156 million for the six months ended June 30, 2024 compared to $153 million for the six months ended June 30, 2023. The increase in total dollars was primarily related to an increase in processing costs due to normal rate escalations, an increase in ethane recoveries and an increase in electrical compression expense. The increase was offset, in part, by lower repairs in maintenance and expense. The decrease in unit costs was primarily due to the increase in total Shale sales volumes.
Previous wording
Total Shale other revenue and operating income relates to natural gas gathering services provided to third parties. The Shale segment had other revenue and operating income of $16 million for the three months ended March 31, 2024 compared to $17 million for the three months ended March 31, 2023. The decrease in the period-to-period comparison was primarily due to lower third-party gathering volumes due to normal production declines.
Current wording
Total Shale other revenue and operating income relates to natural gas gathering services provided to third parties. The Shale segment had other revenue and operating income of $32 million for the six months ended June 30, 2024 compared to $34 million for the six months ended June 30, 2023. The decrease in the period-to-period comparison was primarily due to lower third-party gathering volumes due to normal production declines.
Previous wording
•CBM transportation, gathering and compression costs were $16 million for the three months ended March 31, 2024 and 2023. The increase in unit cost was primarily due to the decrease in total CBM volumes.
Current wording
•CBM transportation, gathering and compression costs were $32 million for both the six months ended June 30, 2024 and 2023. The increase in unit cost was primarily due to the decrease in total CBM volumes.
Previous wording
Purchased gas volumes represent volumes of natural gas purchased at market prices from third parties and then resold in order to fulfill contracts with certain customers and to balance supply. Purchased gas revenue was $14 million for the three months ended March 31, 2024 compared to $37 million for the three months ended March 31, 2023. Purchased gas costs were $13 million for the three months ended March 31, 2024 compared to $34 million for the three months ended March 31, 2023. The period-to-period decrease in purchased gas revenue was primarily due to a decrease in purchased gas sales volumes.
Current wording
Purchased gas volumes represent volumes of natural gas purchased at market prices from third parties and then resold in order to fulfill contracts with certain customers and to balance supply. Purchased gas revenue was $25 million for the six months ended June 30, 2024 compared to $46 million for the six months ended June 30, 2023. Purchased gas costs were $24 million for the six months ended June 30, 2024 compared to $43 million for the six months ended June 30, 2023. The period-to-period decrease in purchased gas revenue was primarily due to a decrease in purchased gas sales volumes.
Previous wording
•Sales of environmental attributes includes items such as (but are not limited to): carbon credits, air quality credits, renewable or alternative energy credits, methane capture credits, methane performance certificates, emission reductions, offsets and/or allowances. The quantities and types of environmental attributes we sell and the associated revenue can vary depending on a number of factors, including the market for these credits, changes to the various voluntary or compliance programs under which the credits are generated and sold, and our ability to strictly comply with the programs under which the attributes can be sold.
Current wording
•Sales of environmental attributes includes items such as (but are not limited to): carbon credits, air quality credits, renewable or alternative energy credits, methane capture credits, methane performance certificates, emission reductions, offsets and/or allowances. The quantities and types of environmental attributes we sell and the associated revenue can vary depending on a number of factors, including the market for these credits, changes to the various voluntary or compliance programs under which the credits are generated and sold, and our ability to strictly comply with the programs under which the attributes can be sold. The increase in the period-to-period comparison was due to an increase in the amount of environmental attributes sold.
Previous wording
•Equity income from affiliates primarily represents CNX’s share of earnings from a 50% interest in a power plant located within CNX’s CBM field. Power generated from the facility is sold into wholesale electricity markets during times of peak energy consumption. Due to the plant consuming coal mine methane gas, the plant qualifies for Pennsylvania Tier I Renewable Energy Credits.
Current wording
•Equity (loss) income from affiliates primarily represents CNX’s share of earnings from a 50% interest in a power plant located within CNX’s CBM field. Power generated from the facility is sold into wholesale electricity markets during times of peak energy consumption. Due to the plant consuming coal mine methane gas, the plant qualifies for Pennsylvania Tier I Renewable Energy Credits.
Previous wording
•Lease expiration costs relate to leases where the primary term expired or will expire within the next 12 months. The decrease in the three months ended March 31, 2024 was primarily due to a decrease in the number of acres that were allowed to expire.
Current wording
•Lease expiration costs relate to leases where the primary term expired or will expire within the next 12 months. The decrease in the six months ended June 30, 2024 was primarily due to a decrease in the number of acres that were allowed to expire.
Previous wording
•Environmental attribute fees represent costs related to the monetization of environmental attributes that are included in Other Operating Income.
Current wording
•Environmental attribute fees represent costs related to the monetization of environmental attributes that are included in Other Operating Income. The increase in fees in the period-to-period comparison relates to the increase in sales above.
Previous wording
A net loss on asset sales and abandonments of $20 million was recognized in the three months ended March 31, 2024 compared to a net gain of $9 million in the three months ended March 31, 2023. The net loss recognized in the three months ended March 31, 2024 primarily relates to a $26 million loss on the sale of a non-core pipeline to a third party offset, in part, by the sale of various other non-core assets (primarily rights-of-way, surface acreage and other non-core oil and gas interests). The net gain recognized in the three months ended March 31, 2023 primarily relates to the sale of various other non-core assets (primarily rights-of-way, surface acreage and other non-core oil and gas interests).
Current wording
A net loss on asset sales and abandonments of $20 million was recognized in the six months ended June 30, 2024 compared to a net gain of $115 million in the six months ended June 30, 2023. The net loss recognized in the six months ended June 30, 2024 primarily relates to a $26 million loss on the sale of a non-core pipeline to a third party offset, in part, by the sale of various other non-core assets (primarily rights-of-way, surface acreage and other non-core oil and gas interests). The net gain recognized in the six months ended June 30, 2023 primarily relates to the sale of various non-operated oil and gas assets (See Note 4 – Acquisitions and Dispositions in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information).
Previous wording
A loss on debt extinguishment of $7 million was recognized in the three months ended March 31, 2024 in connection with CNX's purchase of $350 million of the 7.25% Senior Notes due March 2027 at an average price equal to 101.9% of the principal amount. See Note 10 – Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information. No such transactions occurred in the prior period.
Current wording
A loss on debt extinguishment of $7 million was recognized in the six months ended June 30, 2024 in connection with CNX's repurchase of $350 million of the 7.25% Senior Notes due March 2027 at an average price equal to 101.9% of the principal amount. See Note 10 – Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information. No such transactions occurred in the prior period.
Previous wording
CNX generally has satisfied its working capital requirements and funded its capital expenditures and debt service obligations with cash generated from operations and proceeds from borrowings. CNX currently believes that cash generated from operations, asset sales and the Company's borrowing capacity will be sufficient to meet the Company's working capital requirements, anticipated capital expenditures (other than major acquisitions), scheduled debt payments, anticipated dividend payments, if any, and to provide required letters of credit for the current fiscal year. Nevertheless, the ability of CNX to satisfy its working capital requirements, to service its debt obligations, to fund planned capital expenditures, or to pay dividends will depend upon future operating performance, which will be affected by prevailing economic conditions in the natural gas industry and other financial and business factors, some of which are beyond CNX’s control.
Current wording
CNX generally has satisfied its working capital requirements and funded its capital expenditures and debt service obligations with cash generated from operations and proceeds from borrowings. CNX currently believes that cash generated from operations, asset sales and the Company's borrowing capacity will be sufficient to meet the Company's working capital requirements, anticipated capital expenditures (other than major acquisitions), scheduled debt payments, anticipated dividend payments, if any, and to provide required letters of credit for at least the next twelve months and the foreseeable future thereafter. Nevertheless, the ability of CNX to satisfy its working capital requirements, to service its debt obligations, to fund planned capital expenditures, or to pay dividends will depend upon future operating performance, which will be affected by prevailing economic conditions in the natural gas industry and other financial and business factors, some of which are beyond CNX’s control.
Previous wording
•The Company’s cash on hand and access to additional liquidity. Cash and cash equivalents were $2 million as of March 31, 2024 and nominal as of December 31, 2023.
Current wording
•The Company’s cash on hand and access to additional liquidity. Cash and cash equivalents were $4 million as of June 30, 2024 and nominal as of December 31, 2023.
Previous wording
•Accounts and notes receivable - trade as of March 31, 2024 and December 31, 2023 were $91 million and $116 million, respectively. Our accounts and notes receivable balance may fluctuate as of any balance sheet date depending on the prices we receive for our natural gas and NGLs and the volumes sold.
Current wording
•Accounts and notes receivable - trade as of June 30, 2024 and December 31, 2023 were $108 million and $116 million, respectively. Our accounts and notes receivable balance may fluctuate as of any balance sheet date depending on the prices we receive for our natural gas and NGLs and the volumes sold.
Previous wording
•Capital expenditures are expected to range between $525 million to $575 million for the year ended December 31, 2024. For the three months ended March 31, 2024, CNX had capital expenditures of $168 million.
Current wording
•Capital expenditures are expected to range between $525 million to $575 million for the year ended December 31, 2024. For the six months ended June 30, 2024, CNX had capital expenditures of $320 million.
Showing the first 40 of 61 pairs. Open the source sections for the rest.
Rearranged current paragraphs (31)
Current report — wording carried from elsewhere
Total Shale other revenue and operating income relates to natural gas gathering services provided to third parties. The Shale segment had other revenue and operating income of $16 million for the three months ended June 30, 2024 compared to $17 million for the three months June 30, 2023.
Current report — wording carried from elsewhere
Purchased gas volumes represent volumes of natural gas purchased at market prices from third parties and then resold in order to fulfill contracts with certain customers and to balance supply. Purchased gas revenue was $11 million for the three months ended June 30, 2024 compared to $9 million for the three months ended June 30, 2023. Purchased gas costs were $10 million for the three months ended June 30, 2024 compared to $9 million for the three months ended June 30, 2023. The period-to-period increase in purchased gas revenue was due to an increase in purchased gas sales volumes, offset in part by a decrease in average sales price.
Current report — wording carried from elsewhere
•Sales of environmental attributes includes items such as (but are not limited to): carbon credits, air quality credits, renewable energy credits, methane capture credits, methane performance certificates, emission reductions, offsets and/or allowances. The quantities and types of environmental attributes we sell and the associated revenue can vary depending on a number of factors, including the market for these credits, changes to the various voluntary or compliance programs under which the credits are generated and sold, and our ability to strictly comply with the programs under which the attributes can be sold. The increase in the period-to-period comparison was due to an increase in the amount of environmental attributes sold.
Current report — wording carried from elsewhere
•Equity income from affiliates primarily represents CNX's share of earnings from a 50% interest in a power plant located within CNX’s CBM field. Power generated from the facility is sold into wholesale electricity markets during times of peak energy consumption. Due to the plant consuming low carbon intensity coal mine methane gas, the plant qualifies for Pennsylvania Tier I Renewable Energy Credits.
Current report — wording carried from elsewhere
•Other increased in the period-to-period comparison primarily due to an increase in professional services and consulting fees related to cyber security, legal matters and regulatory reporting.
Current report — wording carried from elsewhere
Gain on Asset Sales and Abandonments, net
Current report — wording carried from elsewhere
A net gain on asset sales and abandonments of $1 million was recognized in the three months ended June 30, 2024 compared to a net gain of $106 million in the three months ended June 30, 2023. The net gain recognized during the three months ended June 30, 2024 primarily relates to the sale of various non-core assets (rights-of-way, surface acreage and other non-core oil and gas interests). The net gain recognized during the three months ended June 30, 2023 primarily relates to the sale of various non-operated oil and gas assets (See Note 4 – Acquisitions and Dispositions in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information).
Current report — wording carried from elsewhere
Included in the net loss for the six months ended June 30, 2024 was an unrealized loss on commodity derivative instruments of $143 million and a net loss on asset sales and abandonments of $20 million. Included in the net income for the six months ended June 30, 2023 was an unrealized gain on commodity derivative instruments of $1,287 million and a net gain on asset sales and abandonments of $115 million. See Note 4 – Acquisitions and Dispositions in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information related to the loss (gain) on asset sales and abandonments.
Current report — wording carried from elsewhere
CNX's management uses certain non-GAAP financial measures for planning, forecasting and evaluating business and financial performance, and believes that they are useful for investors in analyzing the Company. Although these are not measures of performance calculated in accordance with GAAP, management believes that these financial measures are useful to an investor in evaluating CNX because these metrics are widely used to evaluate a natural gas company’s operating performance. Sales of Natural Gas, NGL and Oil, including cash settlements is a non-GAAP measure that excludes the impacts of changes in the fair value of commodity derivative instruments prior to settlement, which are often volatile, and only includes the impact of settled commodity derivative instruments. Sales of Natural Gas, NGL and Oil, including cash settlements also excludes purchased gas revenue and other revenue and operating income, which are not directly related to CNX’s natural gas producing activities. Natural Gas, NGL and Oil Production Costs is a non-GAAP measure that excludes certain expenses that are not directly related to CNX’s natural gas producing activities and are managed outside our production operations (See Note 14 – Segment Information in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information). These expenses include, but are not limited to, interest expense, other operating expense and other corporate expenses such as selling, general and administrative costs. We believe that Sales of Natural Gas, NGL and Oil, including cash settlements, Natural Gas, NGL and Oil Production Costs and Natural Gas, NGL and Oil Production Margin (which is derived by subtracting Natural Gas, NGL and Oil Production Costs from Sales of Natural Gas, NGL and Oil, including cash settlements) provide useful information to investors for evaluating period-to-period comparisons of earnings trends. These metrics should not be viewed as a substitute for measures of performance that are calculated in accordance with GAAP. In addition, because all companies do not calculate these measures identically, these measures may not be comparable to similarly titled measures of other companies.
Current report — wording carried from elsewhere
1 Natural Gas, NGL and Oil production costs consists primarily of lease operating expense, production ad valorem and other fees, transportation, gathering and compression and production related depreciation, depletion and amortization.
Current report — wording carried from elsewhere
Selected Natural Gas, NGL and Oil Production Financial Data
Current report — wording carried from elsewhere
The following table presents a summary of our total sales volumes, sales of natural gas, NGL and oil including cash settlements, natural gas, NGL and oil production costs and natural gas, NGL and oil production margin related to our production operations on a total company basis (See Non-GAAP Financial Measures Reconciliation above for the reconciliation to the most directly comparable financial measures calculated and presented in accordance with GAAP):
Current report — wording carried from elsewhere
*NGLs and Oil/Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of NGL, condensate, and natural gas prices.
Current report — wording carried from elsewhere
Changes in the average costs per Mcfe were primarily related to the following items:
Current report — wording carried from elsewhere
•Depreciation, depletion and amortization expense increased on a per unit basis primarily due to a higher annual depletion rate for 2024. The increase in rate is primarily attributable to downward reserve revisions due to adjustments to the five-year development plan that lowered proved undeveloped reserves, price changes, and the sale of various non-operated producing oil and gas assets.
Current report — wording carried from elsewhere
The following table presents a breakout of liquids and natural gas sales information and settled derivative information to assist in the understanding of the Company’s natural gas production and sales portfolio and information regarding settled commodity derivatives:
Current report — wording carried from elsewhere
NGLs and Oil/Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGL, condensate, and natural gas prices.
Current report — wording carried from elsewhere
The decrease in total average Shale sales price was primarily due to a $0.61 per Mcf decrease in average natural gas sales price and a $0.28 per Mcfe decrease in the average NGL sales price. These decreases were offset in part by a $0.58 per Mcf change in the realized gain on commodity derivative instruments. The notional amounts associated with these financial hedges represented approximately 189.6 Bcf of the Company's produced Shale gas sales volumes for the six months ended June 30, 2024 at an average gain of $0.80 per Mcf hedged. For the six months ended June 30, 2023, these financial hedges represented approximately 188.3 Bcf at an average gain of $0.09 per Mcf hedged.
Current report — wording carried from elsewhere
•Depreciation, depletion and amortization costs attributable to the Shale segment were $197 million for the six months ended June 30, 2024 compared to $174 million for the six months ended June 30, 2023. These amounts included depletion on a unit of production basis of $0.66 per Mcfe and $0.59 per Mcfe, respectively. The increase in the units of production depreciation, depletion and amortization rate in the current period is primarily due to a higher annual depletion rate for 2024. The increase in rate is primarily attributable to downward reserve revisions due to adjustments to the five-year development plan that lowered proved undeveloped reserves, price changes, and the sale of various non-operated producing oil and gas assets The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.
Current report — wording carried from elsewhere
•Depreciation, depletion and amortization costs attributable to the CBM segment were $29 million for the six months ended June 30, 2024 compared to $25 million for the six months ended June 30, 2023. These amounts included depletion on a unit of production basis of $0.85 per Mcfe and $0.64 per Mcfe, respectively. The increase in the units of production depreciation, depletion and amortization rate in the current period is primarily the result of a higher 2024 annual depletion rate. The increase in rate is primarily attributable to downward reserve revisions due to higher operating costs and price changes. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.
Current report — wording carried from elsewhere
The Other Segment includes nominal shallow oil and gas production which is not significant to the Company. It also includes the Company's purchased gas activities, unrealized gain or loss on commodity derivative instruments, New Technologies, exploration and production related other costs, as well as various other expenses that are managed outside the Shale and CBM segments such as SG&A, interest expense and income taxes.
Current report — wording carried from elsewhere
Unrealized (Loss) Gain on Commodity Derivative Instruments
Current report — wording carried from elsewhere
For the six months ended June 30, 2024, the Other Segment recognized an unrealized loss on commodity derivative instruments of $143 million. For the six months ended June 30, 2023, the Other Segment recognized an unrealized gain on commodity derivative instruments of $1,287 million as well as cash settlements received of $1 million. The unrealized loss or gain on commodity derivative instruments represents changes in the fair value of all the Company's existing commodity hedges on a mark-to-market basis.
Current report — wording carried from elsewhere
•Excess firm transportation income represents revenue from the sale of excess firm transportation capacity to third parties. The Company obtains firm pipeline transportation capacity to enable gas production to flow uninterrupted as sales volumes increase. In order to minimize this unutilized firm transportation expense, CNX is able to release (sell) unutilized firm transportation capacity to other parties when possible and when beneficial. The revenue from released capacity helps offset the Unutilized Firm Transportation and Processing Fees in Total Other Operating Expense.
Current report — wording carried from elsewhere
Exploration and Production Related Other Costs
Current report — wording carried from elsewhere
SG&A costs include costs such as overhead, including employee labor and benefit costs, short-term incentive compensation, costs of maintaining our headquarters, audit and other professional fees, charitable contributions and legal compliance expenses. SG&A costs also include non-cash long-term equity-based compensation expense.
Current report — wording carried from elsewhere
•Unutilized firm transportation and processing fees represent pipeline transportation capacity obtained to enable gas production to flow uninterrupted as sales volumes increase, as well as additional processing capacity for NGLs. In some instances, the Company may have the opportunity to realize more favorable net pricing by strategically choosing to sell natural gas into a market or to a customer that does not require the use of the Company’s own firm transportation capacity. Such sales would result in an increase in unutilized firm transportation expense. The Company attempts to minimize this expense by releasing (selling) unutilized firm transportation capacity to other parties when possible and when beneficial. The revenue received when this capacity is released (sold) is included in Excess Firm Transportation Income in Other Operating Income.
Current report — wording carried from elsewhere
•CNX pursues legal recoveries when certain circumstances arise. The increase in litigation recovery in the period-to-period comparison was the result of various recoveries that occurred in the current period. No such transactions occurred in the prior period.
Current report — wording carried from elsewhere
The $5 million increase in total interest expense was primarily due to higher borrowings on the CNX Credit Facility at higher interest rates and higher principal balances related to the long-term debt that was issued in February 2024. The increase was offset, in part, by lowering borrowings on the CNXM Credit Facility. See Note 8 – Revolving Credit Facilities and Note 10 – Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.
Current report — wording carried from elsewhere
The effective income tax rates for the six months ended June 30, 2024 and 2023 were (27.9)% and 24.2%, respectively. The effective tax rate for the six months ended June 30, 2024 differs from the U.S. federal statutory rate of 21% primarily due to the impact of equity compensation, federal tax credits, and state taxes. The effective tax rate for the six months ended June 30, 2023 differs from the U.S. federal statutory rate of 21% primarily due to the impact of equity compensation, federal tax credits, and state taxes primarily due to a West Virginia tax law change. See Note 5 – Income Taxes in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.
Current report — wording carried from elsewhere
Note 4 – Acquisitions and Dispositions in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information).
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
•CBM lease operating expenses were $5 million for the three months ended March 31, 2024 and 2023. The increase in unit cost was primarily due to the decrease in total CBM volumes.
Previous report — wording carried elsewhere
See Note 5 – Income Taxes in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.