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CNX’s 4Q15 Operational Performance, Management Strategies

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Consol Energy’s 4Q15 operational performance

For 4Q15, Consol Energy’s (CNX) E&P (exploration and production) division reported total production of ~95.5 Bcfe (billion cubic feet equivalent), which is within its 4Q15 production guidance range of 92 Bcfe to 97 Bcfe.

CNX’s 4Q15 E&P production is higher by ~35% when compared with its 4Q14 E&P production of ~70.5 Bcfe. Sequentially, CNX’s 4Q15 E&P production is higher by ~11% when compared with 3Q15.

For 2015, CNX’s E&P division reported total production of ~329 Bcfe, which is within its 2015 production guidance range of 325 Bcfe to 330 Bcfe, and it is higher by ~40% when compared with 2014. Marcellus Shale contributed ~51% to CNX’s total E&P production for 2015.

For the coal division, CNX reported 2015 sales of ~29.2 million tons, which is within its 2015 sales guidance range of 28.9 million–29.9 million tons. CNX’s 2015 coal production is lower by ~10% when compared with 2014 coal production of ~32.2 million tons.

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S&P 500 (SPY) upstream companies Occidental Petroleum (OXY) and EOG Resources (EOG) are expecting ~0.6% and ~1% quarter-over-quarter decline in their 4Q15 total production, respectively. However, Noble Energy (NBL) is expected to report ~4% quarter-over-quarter increase in its 4Q15 total production.

CNX’s free cash flow focus

In 4Q15, CNX reported approximately -$25 million in free cash flow, which is slightly below its own guidance of being free cash flow–neutral in 4Q15. In 4Q15, CNX reported an ~49% quarter-over-quarter reduction in its total capital expenditures.

CNX’s costs reduction focus

For 4Q15, CNX reported gas and liquids total production cost of $2.45 per Mcfe (million cubic feet equivalent), which is ~23% lower when compared with 4Q14. For 4Q15, CNX reported LOE (lease operating expenses) of $0.24 per Mcfe, which is in line with the company’s guidance and ~44% lower when compared with 4Q14.

For its Coal division, CNX reported 4Q15 total production cost of $41.97 per ton, which is ~7% lower when compared with 4Q14.

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