CNX Resources Corp
For the period ended Sep 30, 2024. Filed Oct 24, 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.
Sep 30, 2024 · Filed Oct 24, 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 2024-06-30; filed 2024-07-25.
0001070412-24-000039
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-24.
0001070412-24-000061
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 248 previous paragraphs and 240 current paragraphs.
147 unchanged; 77 reworded; 13 added; 19 removed; 5 previous and 3 current paragraphs rearranged.
Tables are not compared: 33 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 (13)
Current report
Net Income
Current report
•Transportation, gathering and compression expense increased on a per unit basis primarily due to higher processing fees related to the increase in NGL volumes offset, in part, by lower repairs and maintenance expense. The per unit increase was also due to the overall decrease in total sales volumes.
Current report
•CBM lease operating expenses were $5 million for both the three months ended September 30, 2024 and 2023. The increase in unit costs was primarily due to the decrease in CBM sales volumes.
Current report
•Other includes multiple one-time items in the period-to-period comparison including expenses related to our previously announced radical transparency program. In the current period, these one-time items include the reversal of a $3 million estimated charge related to a prior-year pipeline tariff filing that was recorded in the first quarter of 2024 due to a change in the circumstances from the time of the original estimate.
Current report
Results of Operations -Nine Months Ended September 30, 2024 Compared with Nine Months Ended September 30, 2023
Current report
Net Income
Current report
•Transportation, gathering and compression expense increased on a per unit basis primarily due to higher processing fees related to the increase in NGL volumes, an increase in electrical compression expense offset, in part, by lower repairs and maintenance expense.
Current report
Total operating costs and expenses for the Shale segment were $587 million for the nine months ended September 30, 2024 compared to $552 million for the nine months ended September 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 $36 million for the nine months ended September 30, 2024 compared to $31 million for the nine months ended September 30, 2023. The increase in total dollars and unit costs 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
The CBM segment had a loss before income tax of $18 million for the nine months ended September 30, 2024 compared to earnings before income tax of $1 million for the nine months ended September 30, 2023.
Current report
Total operating costs and expenses for the CBM segment were $112 million for the nine months ended September 30, 2024 compared to $106 million for the nine months ended September 30, 2023. The increase in total dollars and unit costs for the CBM segment were due to the following items:
Current report
•Other increased in the period-to-period comparison primarily due to higher professional services and consulting fees, as well as increased software costs.
Current report
•Net income decreased $1,153 million in the period-to-period comparison.
Removed paragraphs (19)
Previous report
At the beginning of the second quarter, CNX announced two strategic initiatives related to our New Technologies group:
Previous report
•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 report
•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 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.
Previous report
Net (Loss) Income
Previous 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.
Previous report
•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 report
•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 report
•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.
Previous report
•Other decreased in the period-to-period comparison due to various one-time items, none of which were individually material.
Previous report
Results of Operations -Six Months Ended June 30, 2024 Compared with Six Months Ended June 30, 2023
Previous report
Net (Loss) Income
Previous report
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 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:
Previous 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.
Previous 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.
Previous 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:
Previous report
•Other increased primarily due to an increase in professional services and consulting fees related to cyber security, legal matters and regulatory reporting.
Previous report
•Net income decreased $1,197 million in the period-to-period comparison.
Reworded paragraphs (77)
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 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.
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 announcements by the Organization of the Petroleum Exporting Countries that impact oil production, 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
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.
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. 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 third quarter of 2024 is 108.4 Bcf. CNX's annual gas hedge position is shown in the table below:
Current wording
Total hedged natural gas production for the fourth quarter of 2024 is 114.9 Bcf. CNX's annual gas hedge position is shown in the table below:
Previous wording
1 Includes actual settlements of 178.5 Bcf.
Current wording
1 Includes actual settlements of 256.7 Bcf.
Previous 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.
Current wording
For the three and nine months ended September 30, 2024, CNX recognized $25 million and $71 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 nine months ended September 30, 2024, CNX incurred$4 million and $11 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
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.
Current wording
CNX reported net income of $66 million, or earnings per diluted share of $0.37, for the three months ended September 30, 2024, compared to net income of $21 million, or earnings per diluted share of $0.12, for the three months ended September 30, 2023.
Previous 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.
Current wording
Included in earnings for the three months ended September 30, 2024 was an unrealized loss on commodity derivative instruments of $6 million and a net gain on asset sales and abandonments of $11 million. Included in earnings for the three months ended September 30, 2023 was an unrealized loss on commodity derivative instruments of $54 million and a net gain on asset sales and abandonments of $6 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 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 wording
The 8.9 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.
Previous wording
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 wording
The decrease in Sales of Natural Gas, NGL and Oil, including Cash Settlements, a Non-GAAP Financial Measure was primarily due to the 8.9 Bcfe decrease in total sales volumes and the impact of the change in the realized gain on commodity derivative instruments - cash settlement related to the Company's hedging program. The decrease was offset, in part, by the $0.09 per Mcf increase in natural gas sales price, when excluding the impact of hedging and $1.86 per Bbl increase in NGL prices.
Previous 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.
Current wording
The Shale segment had earnings before income tax of $145 million for the three months ended September 30, 2024 compared to earnings before income tax of $146 million for the three months ended September 30, 2023.
Previous wording
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 wording
The Shale segment had natural gas, NGLs and oil/condensate revenue of $237 million for the three months ended September 30, 2024 compared to $227 million for the three months ended September 30, 2023. The $10 million increase was primarily due to a 9.0% increase in the average sales price for natural gas and a 9.7% increase in the average sales price of NGLs offset, in part, by a 6.6% decrease in total Shale sales volumes. The decrease in total Shale sales volumes was primarily due to normal production declines and the timing of when new wells were turned-in-line offset, in part, by an increase in NGL sales volumes due to an increase in ethane recoveries.
Previous wording
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 wording
The increase in total average Shale sales price was primarily due to a $0.14 per Mcf increase in average natural gas sales price, a $0.31 per Mcfe increase in the average NGL sales price, and a $0.01 per Mcf change in the realized gain on commodity derivative instruments. The notional amounts associated with these financial hedges represented approximately 96.0 Bcf of the Company's produced Shale gas sales volumes for the three months ended September 30, 2024 at an average gain of $0.91 per Mcf hedged. For the three months ended September 30, 2023, these financial hedges represented approximately 105.3 Bcf at an average gain of $0.89 per Mcf hedged.
Previous wording
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 wording
Total operating costs and expenses for the Shale segment were $198 million for the three months ended September 30, 2024 compared to $192 million for the three months ended September 30, 2023. The increases in total dollars and unit costs for the Shale segment were due to the following items:
Previous 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.
Current wording
•Shale transportation, gathering and compression costs were $80 million for the three months ended September 30, 2024 compared to $79 million for the three months ended September 30, 2023. The increase in total dollars and unit costs was primarily due to an increase in processing costs due to the increase in NGL sales volumes offset, in part, by lower repairs and maintenance expense. The increase in unit costs was also due to the overall decrease in Shale sales volumes.
Previous 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.
Current wording
•Depreciation, depletion and amortization costs attributable to the Shale segment were $101 million for the three months ended September 30, 2024 compared to $95 million for the three months ended September 30, 2023. These amounts included depletion on a units of production basis of $0.70 per Mcfe and $0.60 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
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 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 $18 million for the three months ended September 30, 2024 compared to $16 million for the three months September 30, 2023.
Previous wording
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 wording
The CBM segment had a loss before income tax of $9 million for the three months ended September 30, 2024 compared to a loss before income tax of $1 million for the three months ended September 30, 2023.
Previous 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.
Current wording
The CBM segment had natural gas revenue of $22 million for the three months ended September 30, 2024 compared to $28 million for the three months ended September 30, 2023. The $6 million decrease was primarily due to a 19.2% decrease in the average sales price for natural gas in the current period and a 2.0% decrease in CBM sales volumes due to normal production declines.
Previous 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.
Current wording
The total average CBM sales price decreased $0.53 per Mcf primarily due to a $0.52 per Mcf decrease in average gas sales price and a $0.01 per Mcf change in the realized gain on commodity derivative instruments. The notional amounts associated with these financial hedges represented approximately 7.9 Bcf of the Company's produced CBM sales volumes for the three months ended September 30, 2024 at an average gain of $0.90 per Mcf hedged. For the three months ended September 30, 2023, these financial hedges represented approximately 8.5 Bcf at an average gain of $0.87 per Mcf hedged.
Previous 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:
Current wording
Total operating costs and expenses for the CBM segment were $38 million for the three months ended September 30, 2024 compared to $36 million for the three months ended September 30, 2023. The increases in total dollars and unit costs for the CBM segment were due to the following items:
Previous 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.
Current wording
•Depreciation, depletion and amortization costs attributable to the CBM segment were $15 million for the three months ended September 30, 2024 compared to $12 million for the three months ended September 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 $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 wording
The Other Segment had a loss before income tax of $53 million for the three months ended September 30, 2024 compared to a loss before income tax of $126 million for the three months ended September 30, 2023. The increase in total dollars is discussed below.
Previous wording
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 wording
For the three months ended September 30, 2024, the Other Segment recognized an unrealized loss on commodity derivative instruments of $6 million. For the three months ended September 30, 2023, the Other Segment recognized an unrealized loss on commodity derivative instruments of $54 million. The unrealized loss 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
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 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 $27 million for the three months ended September 30, 2024 compared to $11 million for the three months ended September 30, 2023. Purchased gas costs were $27 million for the three months ended September 30, 2024 compared to $10 million for the three months ended September 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.
Previous wording
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 wording
SG&A includes 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.
Previous wording
•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 wording
•Other increased in the period-to-period comparison primarily due to higher professional services and consulting fees, as well as increased software costs.
Previous wording
•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 wording
•CNX pursues legal recoveries when certain circumstances arise. The increase in litigation recoveries 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.
Previous wording
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 wording
A net gain on asset sales and abandonments of $11 million was recognized in the three months ended September 30, 2024 compared to a net gain of $6 million in the three months ended September 30, 2023. The net gain recognized during both the three months ended September 30, 2024 and 2023 primarily relates to the sale of various non-core assets (rights-of-way, surface acreage and other non-core oil and gas interests). The gain in three months ended September 30, 2023 was offset, in part, by a loss that was recorded as part of the final adjustments to the sale of various non-operated oil and gas assets that occurred in the second quarter of 2023 (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
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.
Current wording
The $3 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 lower 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 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.
Current wording
The effective income tax rates for the three months ended September 30, 2024 and 2023 were 20.6% and (11.1)%, respectively. The effective rate for the three months ended September 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 September 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 a change in West Virginia tax law). 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
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 wording
CNX reported net income of $54 million, or earnings per diluted share of $0.32, for the nine months ended September 30, 2024, compared to net income of $1,207 million, or earnings per diluted share of $6.24, for the nine months ended September 30, 2023.
Previous wording
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 wording
Included in earnings for the nine months ended September 30, 2024 was an unrealized loss on commodity derivative instruments of $149 million and a net loss on asset sales and abandonments of $9 million. Included in earnings for the nine months ended September 30, 2023 was an unrealized gain on commodity derivative instruments of $1,231 million and a net gain on asset sales and abandonments of $121 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.
Previous 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.
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 $0.37 per Mcf decrease in natural gas sales price, when excluding the impact of hedging, the 4.6 Bcfe decrease in total sales volumes and the $0.36 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.
Previous wording
SEGMENT ANALYSIS for the six months ended June 30, 2024 compared to the six months ended June 30, 2023:
Current wording
SEGMENT ANALYSIS for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023:
Previous wording
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 wording
The Shale segment had earnings before income tax of $449 million for the nine months ended September 30, 2024 compared to earnings before income tax of $479 million for the nine months ended September 30, 2023.
Previous 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.
Current wording
The Shale segment had natural gas, NGLs and oil/condensate revenue of $746 million for the nine months ended September 30, 2024 compared to $869 million for the nine months ended September 30, 2023. The $123 million decrease was due primarily to a 16.0% decrease in the average sales price for natural gas, a 0.8% decrease in total Shale sales volumes and a 1.7% decrease in the average sales price of NGLs. The decrease in total Shale sales volumes was primarily due to normal production declines and the timing of when new wells were turned-in-line offset, in part, by an increase in NGL sales volumes due to an increase in ethane recoveries.
Previous 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.
Current wording
The increase in total average Shale sales price was primarily due to a $0.38 per Mcf change in the realized gain on commodity derivative instruments. The notional amounts associated with these financial hedges represented approximately 285.6 Bcf of the Company's produced Shale gas sales volumes for the nine months ended September 30, 2024 at an average gain of $0.84 per Mcf hedged. For the nine months ended September 30, 2023, these financial hedges represented approximately 293.6 Bcf at an average gain of $0.38 per Mcf hedged. These increases were offset, in part, by a $0.34 per Mcf decrease in average natural gas sales price and a $0.06 per Mcfe decrease in the average NGL sales price.
Previous wording
•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 wording
•Shale transportation, gathering and compression costs were $236 million for the nine months ended September 30, 2024 compared to $233 million for the nine months ended September 30, 2023. The increase in total dollars and unit costs was primarily related to an increase in processing costs due to higher processing fees related to the increase in NGL volumes, an increase in electrical compression expense offset, in part, by lower repairs and maintenance expense.
Previous wording
•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 wording
•Depreciation, depletion and amortization costs attributable to the Shale segment were $298 million for the nine months ended September 30, 2024 compared to $270 million for the nine months ended September 30, 2023. These amounts included depletion on a unit 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
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.
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 $50 million for the nine months ended September 30, 2024 and 2023.
Showing the first 40 of 77 pairs. Open the source sections for the rest.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Unrealized Loss on Commodity Derivative Instruments
Current report — wording carried from elsewhere
The 4.6 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 — wording carried from elsewhere
•Inventory adjustments represent required adjustments made to record inventory at the lower of cost or net realizable value.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
•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.
Previous report — wording carried elsewhere
Unrealized (Loss) Gain on Commodity Derivative Instruments
Previous report — wording carried elsewhere
•Water income increased in the period-to-period comparison due to higher third-party sales in the current period.
Previous report — wording carried elsewhere
•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.
Previous report — wording carried 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).