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Item 1. Business

2022-02-10 compared with 2021-02-09 · 127 added, 132 removed, 381 unchanged (40% of the section changed)

CNX Resources Corporation (“CNX”, the “Company,” or “we,” “us,” or “our”) is an independent oil and natural gas company engaged in the exploration, development, production and acquisition of natural gas properties primarily in the Appalachian Basin.

CNX Resources Corporation (“CNX,” the “Company,” or “we,” “us,” or “our”) is a premier independent natural gas and midstream company engaged in the exploration, development, production and acquisition of natural gas properties in the Appalachian Basin.

The majority of our operations are centered on unconventional shale formations, primarily the Marcellus Shale and Utica Shale, in Pennsylvania, Ohio and West Virginia.

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These values are the foundation of CNX's identity and are the basis for how management defines continued success.

We believe CNX's rich resource base, coupled with these core values, allows management to create long-term per share value.

CNX believes that natural gas is central to a low-cost, reliable, secure, lower-carbon energy future.

Widespread and immediate fuel switching to natural gas is the fastest and most cost-effective means to addressing climate concerns, improving air quality in the developing world and meeting the increasing demand for cleaner forms of energy.

Natural gas is more than a short-term “bridge” fuel that is useful in the transition from more carbon-intensive energy sources to renewables, it is inextricably linked to the long-term success of renewable energy.

With the benefit of a more than 155-year legacy and a substantial asset base amassed over many generations, the Company deploys a strategy focused on responsibly developing its resources to create long-term per share value for its shareholders, employees, and the communities where it operates.

CNX believes that natural gas is central to a low-cost, reliable, secure, lower-carbon energy future that benefits American consumers, workers and the environment.

2021 Operational Highlights and Outlook

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• 98.5% operated;

• A reserve life ratio of 18.69 years (based on 2020 production).

In 2022, CNX expects capital expenditures of approximately $470 million to $500 million.

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Our Shale properties represent our primary operating and growth area in terms of reserves, production, and capital investment .

We have the rights to extract natural gas from Shale formations in Pennsylvania, West Virginia, and Ohio from approximately 524,000 net Marcellus Shale acres and approximately 610,000 net Utica Shale acres at December 31, 2020.

We have rights to extract natural gas from Shale formations in Pennsylvania, West Virginia, and Ohio from approximately 526,000 net Marcellus Shale acres and approximately 610,000 net Utica Shale acres at December 31, 2021.

Approximately 348,000 Utica Shale acres coincide with Marcellus Shale acreage in Pennsylvania, West Virginia, and Ohio.

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Coalbed Methane (CBM)

We have the rights to extract CBM in Virginia from approximately 283,000 net CBM acres in Central Appalachia.

We have rights to extract CBM in Virginia from approximately 282,000 net CBM acres in Central Appalachia.

We produce CBM natural gas primarily from the Pocahontas #3 seam and still have a nominal drilling program.

The CBM natural gas we extract would otherwise be vented into the atmosphere during normal mining operations.

We also have the rights to extract CBM from approximately 1,896,000 net CBM acres in other states including West Virginia, Pennsylvania, Ohio, Illinois, Indiana, and New Mexico with no current plans to drill CBM wells in these areas.

We have the rights to extract natural gas from other shale and shallow oil and gas positions primarily in Illinois, Indiana, New York, Ohio, Pennsylvania, Virginia, and West Virginia from approximately 1,017,000 net acres at December 31, 2020.

We also have rights to extract CBM from approximately 1,733,000 net CBM acres in other states including West Virginia, Pennsylvania, Ohio, Illinois, Indiana, and New Mexico with no current plans to drill CBM wells in these areas.

We have rights to extract natural gas from other shale and shallow oil and gas positions primarily in Illinois, Indiana, New York, Ohio, Pennsylvania, Virginia, and West Virginia from approximately 1,006,000 net acres at December 31, 2021.

The majority of our shallow oil and gas leasehold position is held by third-party production and all of it is extensively overlain by existing third-party natural gas gathering and transmission infrastructure.

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(1) Percent developed is calculated as net proved developed reserves divided by net proved reserves, measured in MMcfe.

(2) Net proved undeveloped acres represent undrilled locations and can only be classified as having proved undeveloped reserves if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances justify a longer time (See glossary of oil and gas terms for additional information)

(3) Net acres include acreage attributable to our working interests in the properties.

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Producing Gas Wells (including gob wells) - Working Interest 4,716 4,432

Producing Oil Wells - Working Interest — —

Producing Gas Wells - Royalty Interest 2,031 —

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Gob wells and wells drilled by operators other than our primary joint venture partners at that time are excluded from net development wells and represents less than 0.5 net wells for each year.

In 2020, there were 17.0 net development wells and no exploratory wells drilled but uncompleted.

As of December 31, 2021, there were 13.0 net development wells and no exploratory wells drilled but uncompleted.

The Company includes drilled and uncompleted net development wells in proved undeveloped reserves and the Company intends to complete and turn-in-line the wells within five years of the initial disclosure.

There were no net dry development wells in 2021 or 2020 and 1.0 net dry development well in 2019.

As of December 31, 2020, there are 24.0 gross completed developmental wells ready to be turned in-line.

As of December 31, 2021, there were no gross completed developmental wells ready to be turned in-line.

The following table illustrates the net wells drilled by well classification type:

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Exploratory Wells (Net)

There were 2.0 and 5.0 net exploratory wells drilled during the years ended December 31, 2020 and 2019, respectively.

There were no net exploratory wells drilled during the year ended December 31, 2021.

As of December 31, 2020, there is 1.0 net exploratory well in process.

There were 2.0 and 5.0 net exploratory wells drilled during the years ended December 31, 2020 and 2019, respectively.

As of December 31, 2021, there are no net exploratory wells in process.

The following table illustrates the exploratory wells drilled by well classification type:

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Total Exploratory Wells (Net) — — — — — 2.0 4.0 — 1.0

* Still evaluating in 2020 includes two wells that were drilled, completed, and were in process of being connected to production facilities at the end of the year and were turned in-line in early 2021.

The company is still currently evaluating the partially constructed 2019 well to determine the most economic approach to access the natural gas reserves.

The company expects to make a determination in 2021 to either finalize the well or to access the natural gas reserves from an alternative location.

* Still evaluating in 2020 included two wells that were drilled, completed, and were in process of being connected to production facilities at the end of the year and were turned in-line in early 2021.

**Still evaluating in 2019 included one well that was partially constructed and the Company was trying to determine the most economic approach to access the natural gas reserves.

During the year-ended December 31, 2021, the Company determined it would be more economical to access the underlying reserves from a different location and the costs associated with this well were recorded to Exploration and Production Related Other Costs in the Consolidated Statements of Income.

The following table shows our estimated proved developed and proved undeveloped reserves.

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Proved developed and proved undeveloped reserves are defined by the Securities and Exchange Commission (SEC).

Net Reserves (Million of Cubic Feet Equivalent) As of December 31,

Net Reserves (Millions of Cubic Feet Equivalent) As of December 31,

2021 2020 2019

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Total Proved Developed and Undeveloped Reserves (1) 9,625,730 9,549,758 8,425,667

(1) For additional information on our reserves, see Other Supplemental Information–Supplemental Gas Data (unaudited) to the Consolidated Financial Statements in Item 8 of this Form 10-K.

(1) For additional information on our reserves, see Note 22 – Supplemental Gas Data (unaudited) to the Consolidated Financial Statements in Item 8 of this Form 10-K.

Discounted Future Net Cash Flows

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(Dollars in millions)

NYMEX Natural Gas Prices (MMbtu) $ 1.985 $ 2.578 $ 3.100

Average Henry Hub Price ($/MMBtu)(1) $ 3.598 $ 1.985 $ 2.578

Future Cash Inflows $ 31,839 $ 16,578 $ 19,490

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Standardized GAAP Measure(3) $ 5,882 $ 2,636 $ 3,070

(1) Based on the average, first day-of-the-month price.

(2) Future Development costs for 2021 include $406 million of plugging and abandonment costs and $185 million of Midstream capital on an undiscounted pre-tax basis.

On a PV-10 pre-tax discounted basis, these amounts equate to $7 million and $154 million, respectively.

The addition of Midstream capital is the result of the Merger that occurred on September 28, 2020 (See Note 4 - Acquisitions and Dispositions in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K).

Future development costs for 2020 include $402 million of plugging and abandonment costs and $287 million of Midstream capital on an undiscounted pre-tax basis.

On a PV-10 pre-tax discounted basis, these amounts equate to $18 million and $232 million, respectively.

The increase from 2019 was primarily due to the addition of Midstream capital as a result of the Merger that occurred on September 28, 2020 (See Note 4 - Acquisitions and Dispositions in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K).

(3) For additional information on our reserves, see Note 22 – Supplemental Gas Data (unaudited) to the Consolidated Financial Statements in Item 8 of this Form 10-K.

Gas Production

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Shale 396 250 195

Other 14 8 35

Total 400 264 203

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*Oil, NGLs, and 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.

2018 production includes approximately 27 Bcfe of production related to assets that were sold during that year.

For additional information, see Note 4 - Acquisitions and Dispositions in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K, which is incorporated herein by reference.

**See Part II.

“Management's Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K for a breakdown of sales volume variances.

CNX expects 2022 annual natural gas production volumes to be approximately 575-605 Bcfe.

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Average Sales Price - Gas (Mcf) $ 3.55 $ 1.71 $ 2.48

Gain (Loss) on Commodity Derivative Instruments - Cash Settlement- Gas (Mcf)* $ 0.78 $ 0.14 $ (0.15)

(Loss) Gain on Commodity Derivative Instruments - Cash Settlement- Gas (Mcf)* $ (0.98) $ 0.78 $ 0.14

Average Sales Price - NGLs (Mcfe)** $ 5.65 $ 2.29 $ 3.20

Average Sales Price - Oil (Mcfe)** $ 6.55 $ 8.13 $ 9.89

Average Sales Price - Condensate (Mcfe)** $ 5.85 $ 7.47 $ 8.43

Average Sales Price - Oil/Condensate (Mcfe)** $ 9.39 $ 5.98 $ 7.50

Total Average Sales Price (per Mcfe) Including Effect of Derivative Instruments* $ 2.79 $ 2.49 $ 2.66

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$ 33.90 $ 13.74 $ 19.20

Average Sales Price - Oil (Bbl)

$ 39.30 $ 48.78 $ 59.34

Average Sales Price - Condensate (Bbl)

$ 35.10 $ 44.82 $ 50.58

Average Sales Price - Oil/Condensate (Bbl) $ 56.34 $ 35.88 $ 45.00

*Excludes the effect of hedge monetizations.

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CNX's hedging strategy and information regarding derivative instruments used are outlined in Part II.

"Qualitative and Quantitative Disclosures About Market Risk" and in Note 19 - Derivative Instruments in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K.

“Quantitative and Qualitative Disclosures About Market Risk” and in Note 19 - Derivative Instruments in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K.

Midstream Gas Services

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In addition, over time CNX has acquired extensive gathering assets through acquisitions.

CNX now owns or operates approximately 2,600 miles of natural gas gathering pipelines as well as a number of natural gas processing facilities.

As a result of the Merger that occurred on September 28, 2020 (See Note 4 - Acquisitions and Dispositions in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K), CNX owns substantially all of its Shale gathering

systems in Pennsylvania and West Virginia.

CNX owns or operates approximately 2,600 miles of natural gas gathering pipelines as well as a number of natural gas processing facilities.

With respect to CNX's Shale wells in Ohio, CNX primarily contracts with third-party gathering services.

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CNX has developed a diversified portfolio of firm transportation capacity options to support its production.

CNX plans to selectively acquire firm capacity on an as-needed basis, while minimizing transportation costs and long-term financial obligations.

selectively acquire firm capacity on an as-needed basis, while minimizing transportation costs and long-term financial obligations.

Optimization of our firm transportation portfolio may also include, from time to time and as appropriate, releasing firm transportation to others.

CNX also benefits from the strategic location of our primary production areas in southwestern Pennsylvania, northern West Virginia and eastern Ohio.

These areas are currently served by a large concentration of major pipelines that provide us with access to major gas markets without the necessity of transporting our natural gas out of the region, and it is expected that recently-approved and pending pipeline projects will increase the take-away capacity from our region.

These areas are currently served by a large concentration of major pipelines that provide us with access to major gas markets without the necessity of transporting our natural gas out of the region.

In addition to firm transportation capacity, CNX has developed a processing portfolio to support produced volumes from its wet gas production areas and has the operational and contractual flexibility to potentially convert a portion of currently processed wet gas volumes to be marketed as dry gas volumes, or vice-versa, as economically appropriate.

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This allow us more flexibility in bringing wells online at qualities that meet interstate pipeline specifications.

Substantially all of our natural gas is sold at market prices primarily under short-term sales contracts and is subject to seasonal price swings.

The principal markets for our natural gas are in the Appalachian Basin where we sell natural gas to industrial customers, local distribution companies, gas marketers and power generation facilities.

CNX also supplies turn-key solutions for water sourcing, delivery and disposal for our natural gas operations and supplies solutions for water sourcing as well as delivery and disposal for third parties.

In coordination with our midstream operations, CNX works to develop solutions that coincide with our midstream operations to offer gas natural gathering and water delivery solutions in one package to third parties.

Substantially all of our natural gas is sold at market prices primarily under short-term sales contracts and is subject to seasonal and general market price swings.

The principal markets for our natural gas are in the Appalachian Basin where we sell natural gas to gas marketers, industrial customers, local distribution companies, and power generation facilities.

Our extensive hedge position mitigates unpredictability in pricing on hedged volumes.

We also incur gathering, processing and transportation expenses to move our natural gas production from the wellhead to our principal markets in the United States.

We also incur gathering, compression, processing, and transportation expenses to move our natural gas production from the wellhead to our principal markets in the United States.

Although we own midstream facilities, we also gather, process, and transport our natural gas to market by utilizing pipelines and facilities owned by others where we have long-term contractual capacity arrangements or use purchaser-owned capacity under both long-term and short-term sales contracts.

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We also derive value from this surface control by granting rights of way or development rights to third-parties when we are able to derive appropriate value for our shareholders.

Water Division

Human Capital Management

At December 31, 2020, CNX had 451 employees, none of whom are subject to a collective bargaining agreement.

CNX recognizes that our future success depends on the services of our key employees.

CNX, is emphatic about the health and safety of not only our employees and service providers, but also the communities in which we operate.

As of December 31, 2021, CNX had 441 employees, none of whom are subject to collective bargaining agreements.

CNX recognizes that our future success depends on the expertise and services of our key employees.

CNX is firmly committed to the health and safety of not only our employees and service providers, but also the communities in which CNX operates.

Training and Education .

CNX has a variety of programs dedicated to ensuring our employee and contractor workforce are appropriately trained and aligned on expectations regarding safety and environmental performance.

These programs utilize behavior-based techniques which embrace a partnership among management, employees and the service provider workforce to continually focus attention and actions on daily safety behavior.

This is accomplished through an evergreen approach with constant evaluation and adaptation for employee, safety and business needs.

Fundamentally, the daily safety meetings, job safety analyses (JSA) and empowerment to stop work foster a culture of Health, Safety, and Environmental (HSE) awareness and accountability embraced at all levels of CNX;

from individual contributors and service providers to management and executive leadership.

In addition to our culture of continual assessment, CNX expects all employees and service providers to meet HSE expectations and CNX empowers our employees to make adjustments or stop work as needed in order to correct, or prevent, adverse safety or environmental conditions.

CNX expects all of our service providers to meet the training requirements outlined by OSHA and other governing agencies.

The safety training content is published on the corporate website to allow service providers constant access to CNX’s message of empowerment and accountability.

CNX has a variety of initiatives dedicated to ensuring our employee and contractor workforce are appropriately trained and aligned on expectations regarding safety and environmental performance.

These programs utilize behavior-based techniques which embrace a collaboration between management, employees, and the service provider workforce to continually focus attention and actions on appropriate daily safety behaviors.

This is accomplished through an evergreen approach with constant evaluation and adaptation for workforce, safety, and business objectives.

Fundamentally, daily on-site safety meetings, job safety analyses (JSA) and the universal expectation for any employee or contractor to stop work if a risk is identified help foster a cultural focus on Health, Safety, and Environmental (HSE) awareness, also known as Operational Excellence.

Accountability is an expectation at all levels of the Company—from individual contributors and service providers to management and executive leadership.

In addition to continual analysis and assessment, CNX empowers its employees and contractors to take corrective action or stop work immediately if adverse safety or environmental conditions are identified.

CNX expects all of its employees and service providers to meet the training requirements outlined by OSHA, and all other appropriate regulatory entities, and to always conduct our daily business consistent with our core values of Responsibility, Ownership and Excellence.

CNX also provides the opportunity for all employees to obtain certification in First Aid, CPR, and AED administration.

The Company’s safety training content is published on its corporate website to afford service providers ready access to CNX’s expectation of individual empowerment and accountability.

Diversity and Inclusion .

CNX values diversity throughout the organization.

We recognize that a diverse, extensive talent pool provides the best opportunity to acquire unique perspectives, experiences, ideas and solutions that help drive our business forward.

Though no significant hiring occurred during an extraordinary 2020, we replaced a departing Section 16 officer with a diverse candidate, maintaining 30 percent diversity within our executive management team, the highest proportion among our peer group.

Of the limited new hires in 2020, 38 percent were diverse.

The Company knows that a diverse, talented team working together in an inclusive culture is key to achieving long-term goals.

In addition to prioritizing diversity within recruiting and hiring practices, CNX also believes in cultivating a culture sensitive to the importance of diversity in the workplace.

In 2021, the Company provided Diversity and Inclusion training which was completed by 100% of its employee population.

This course combined scenarios, personal interviews, discussion and exploration questions, exercises, and instruction content.

Employees were exposed to potential cultural experiences of individuals with identities that may be different from their own, and had the opportunity to learn how others may experience the same workplace in very disparate ways.

CNX intends to continue and expand Diversity and Inclusion training in 2022.

Finally, a Diversity & Inclusion Advisory Council and cross-training rotational program for diverse employees were established to help support and augment the Company’s broader talent management and diversity goals.

Employee Attraction and Retention .

CNX recognizes the importance of attracting and retaining the best employees to make the most of its assets.

While there is great talent in the current pool of industry workers, CNX sees the value in tapping into the potential of recent graduates within the region as well.

In recent years, CNX has gone to great lengths to establish relationships with local colleges and universities, increasing interest in our organization and industry amongst upcoming graduates.

The continued success of CNX is not only contingent upon seeking out the best possible candidates, but retaining and developing the talent that lies within the organization as well.

CNX is proud to offer opportunities for employees to improve their skills to achieve their career goals, including continuing education assistance for employees pursuing advanced education, certifications, or skill building.

CNX recognizes the importance of attracting and retaining top talent to help drive the Company’s strategy forward.

The Company is committed to attracting, developing, engaging, retaining, and rewarding a diverse team of highly skilled individuals dedicated to accountability, fairness, and respect.

The continued success of CNX is not only contingent upon seeking out the best possible candidates, but, more importantly, retaining and developing the Company’s existing talent.

CNX is proud to offer opportunities for employees to improve their skills and help achieve individual career goals, including continuing education assistance and professional development for employees pursuing advanced education, certifications, or skill building.

Goal attainment and outstanding achievements contribute to the year-end discretionary incentive pay awarded to employees that perform above expectations.

Additionally, our Human Resources department retains personalized career development plans for every CNX employee aimed at outlining career goals and paths to reach those goals, as well as career ladders to outline growth paths for each role in the organization.

Quality Management Systems.

CNX is committed to fostering a culture of accountability and continuous improvement.

In 2019, CNX began the implementation of a new Quality Management System (QMS), which strengthens accountability across the enterprise, and reinforces our core values of Responsibility, Ownership, and Excellence.

The QMS provides all employees, visitors, contractors and subcontractors who operate on our behalf with a practical, easily accessible system that defines clear expectations, responsibilities and standards of accountability for quality and excellence in all aspects of our business.

The Quality Management System allows for continual identification, development of documentation control, and standardization of all processes and procedures throughout the organization.

The QMS includes CNX’s robust ISO (International Organization of Standardization) conforming Health and Safety, and Environmental Management Systems.

CNX is committed to fostering a culture of accountability and continuous improvement through the utilization of a Quality Management System (QMS), which strengthens accountability across the enterprise, and reinforces our core values of Responsibility, Ownership, and Excellence.

QMS provides all employees, visitors, contractors and subcontractors who operate on our behalf with a practical, easily accessible system that defines clear expectations, responsibilities and standards that provide the basis of accountability for quality and excellence in all aspects of our business.

QMS allows for continual identification, development of documentation control, and standardization of all processes and procedures throughout the organization.

The elements of health, safety, environmental and quality control are housed in a unified system that allows for widespread utilization and measurement.

By taking ownership of our actions, CNX has formalized our approach in these areas to deliver results that are consistently safe, predictable and environmentally responsible.

CNX will conduct regular internal and external audits to ensure compliance, adherence to best-in-class processes and continuous improvement, as we relentlessly strive to be the most responsible and

efficient operator in the industry.

CNX’s management expectation is that the QMS will serve as the platform through which the senior leadership manages and measures excellence in all operational aspects.

CNX has formalized our approach in these areas to deliver results that are consistently safe, predictable and environmentally responsible.

CNX will conduct regular internal and external audits to ensure compliance, adherence to best-in-class processes and continuous improvement, as we relentlessly strive to be the most responsible and efficient operator in the industry.

CNX’s management expectation is that QMS will serve as the platform through which the senior leadership manages and measures excellence in all operational aspects.

Health and Safety.

No job or activity is considered a success if we compromise the safety of our employees.

Everyone working at CNX locations is empowered to stop work if they feel their safety or that of a coworker is at risk.

No job or activity is considered a success if CNX compromises the safety of its employees and contractors.

Everyone working at CNX locations is empowered to stop work if they feel their safety or that of a coworker is at

CNX’s approach to employee stop work empowerment, while reactive when necessary, includes proactive measures such as procedural enhancements and communication.

We promote empowerment through new employee on-boarding, CNX Hazard Training and reinforcement, including an employee recognition program.

CNX promotes empowerment through new employee on-boarding, CNX Hazard Training compliance, and verification of contractor training and short service employee (SSE) program.

Our safety professionals provide support throughout all phases of operation with education, training, policy development, audits and emergency preparedness and response.

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Additionally, Operations executive management is kept up to date on safety-related items during weekly scheduled meetings.

The HSE Committee of the Board of Directors is kept apprised of safety related matters as needed and with monthly updates and quarterly meetings.

CNX employs safety and health professionals with a variety of safety certifications such as occupational health nurses, emergency medical technicians and emergency medical responders.

The Environmental, Safety and Corporate Responsibility (ESCR) Committee of the Board of Directors is kept apprised of safety related matters as needed and with monthly updates and quarterly meetings.

CNX employs safety and health professionals with a variety of safety certifications such as an Occupational Health Nurse, Emergency Medical Technicians and Emergency Medical Responders.

Emergency Preparedness and Response.

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These exercises range from tabletop exercises to internal drills, up to and including events involving external resources.

CNX works hand-in-hand with local municipalities and emergency responders to ensure they are fluent in our plan and procedures.

CNX provides emergency responder training to volunteer fire departments, and county emergency management, including tours of various phases of operation they may encounter during an event.

CNX actively engages with local municipalities and emergency responders to ensure they are aware of our planned activities.

This helps to familiarize emergency response resources with CNX personnel, facilities and operations.

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reclamation and restoration of properties after natural gas operations are completed;

handling, storage, transportation and disposal of materials used or generated by natural gas operations;

handling, storage, transportation, treatment and disposal of materials used or generated by natural gas operations;

the calculation, reporting and payment of taxes on gas production;

gathering of natural gas production.

In addition to a variety of laws and regulations governing our natural gas operations, we are also subject to laws and regulations with respect to our employees, including health and safety regulations, and various financial and regulatory laws and regulations relating to our status as a public company, and our participation in derivative markets.

and gathering of natural gas production.

In addition to a variety of laws and regulations governing our natural gas operations, CNX is also subject to laws and regulations with respect to our employees, including health and safety regulations, and various financial and regulatory laws and regulations relating to our status as a public company, and our participation in derivative markets.

Additionally, the electric power generation industry, which consumes significant quantities of natural gas, remains subject to extensive regulation regarding the environmental impact of its power generation activities, which could impact demand for our natural gas.

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The CFTC has adopted and implemented final rules that impose regulatory obligations on all market participants, including the Company, such as recordkeeping, certain reporting obligations and other regulations relevant to natural gas hedging activities.

However, it is still not possible at this time to predict the full extent of the impact of the regulations on the Company's hedging program or regulatory compliance obligations.

We endeavor to conduct our natural gas and midstream operations in compliance with all applicable federal, state and local laws and regulations.

However, it is still not possible at this time

to predict the full extent of the impact of the regulations on the Company's hedging program or regulatory compliance obligations.

CNX endeavors to conduct our natural gas and midstream operations in compliance with all applicable federal, state and local laws and regulations.

However, because of extensive and comprehensive regulatory requirements against a backdrop of variable geologic and seasonal conditions, exceedances and violations of permits and other regulatory requirements during operations can and do occur.

Such exceedances and violations generally result in fines or penalties but could make it more difficult for us to obtain necessary permits in the future.

Such exceedances and violations generally result in fines or penalties but could also make it more difficult for us to obtain necessary permits in the future.

The possibility exists that new legislation or regulations may be adopted which would have a significant impact on our operations or on our customers' ability to use our natural gas and may require us or our customers to change our or their operations significantly or incur substantial costs.

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Environmental Laws

Many of the laws and regulations referred to above are state-level environmental laws and regulations, which vary according to the state where we are operating.

Our natural gas and midstream operations are also subject to numerous federal level environmental laws and regulations.

Many of the laws and regulations referred to above are state-level environmental laws and regulations, which vary according to the state where CNX is operating.

Our natural gas and midstream operations are also subject to numerous federal environmental laws and regulations.

In addition to routine reviews and inspections by regulators to confirm compliance with applicable regulatory requirements, CNX has established protocols for ongoing assessments to identify potential environmental exposures.

These assessments take into account industry and internal best management practices and evaluate compliance with laws and regulations and include reviews of our third-party service providers, including, for instance, waste management transporters and facilities.

Hydraulic Fracturing Activities.

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Environmental Protection Agency (EPA) has asserted certain regulatory authority over hydraulic fracturing and has moved forward with various regulatory actions, including the issuance of regulations requiring green completions for hydraulically fractured wells, and has disclosed its intent to develop regulations to require companies to disclose information regarding the chemicals used in hydraulic fracturing.

Some states, including states in which we operate, have adopted regulations that could impose more stringent disclosure and/or well construction requirements on hydraulic fracturing operations, or otherwise seek to ban some or all of these activities.

Some states, including states in which CNX operates, have adopted regulations that could impose more stringent disclosure and/or well construction requirements on hydraulic fracturing operations, or otherwise seek to ban some or all of these activities.

Additionally, these and other federal requirements and proposals may be subject to further review and revision by the EPA.

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In December 2016, the EPA released its final report on the impacts of hydraulic fracturing on drinking water.

While the language was changed and included the possibility of negative impacts from hydraulic fracturing, it also included the guidance to industry and regulators on how the process can be performed safely.

We cannot predict whether any other legislation or regulations will be enacted and, if so, what its provisions will be.

CNX cannot predict whether any other legislation or regulations will be enacted and, if so, what its provisions will be.

Clean Air Act .

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This affects natural gas production and processing operations.

Various activities in our operations are subject to air quality regulation, including pipeline compression, venting and flaring of

natural gas and hydraulic fracturing and completion processes, as well as fugitive emissions from operations.

We obtain permits, typically from state or local authorities, to conduct these activities.

Additionally, we are required to obtain pre-approval for construction or modification of certain facilities, to meet stringent air permit requirements, or to use specific equipment, technologies or best management practices to control emissions.

Various activities in our operations are subject to air quality regulation, including pipeline compression, venting and flaring of natural gas and hydraulic fracturing and completion processes, as well as fugitive emissions from operations.

CNX obtains permits, typically from state or local authorities, to conduct these activities.

Additionally, CNX is required to obtain pre-approval for construction or modification of certain facilities, to meet stringent air permit requirements, or to use specific equipment, technologies or best management practices to control emissions.

Further, some states and the federal government have proposed that emissions from certain proximate and related sources should be aggregated to provide for regulation and permitting of a single, major source.

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For example, the EPA sets National Ambient Air Quality Standards for certain pollutants and changes to such standards could cause us to make additional capital expenditures or alter our business operations in some manner.

See “Risk Factors - Climate change legislation, litigation and regulation of greenhouse gas emissions at the federal or state level may increase our operating costs and reduce the value of our natural gas assets and such regulation, as well as uncertainty concerning such regulation and public policy pressures that may arise, could adversely impact the market for natural gas, as well as for our securities” for additional discussion regarding certain laws and regulations related to air emissions and related matters.

See “Risk Factors - Climate change risk, legislation, litigation and regulation of greenhouse gas emissions at the federal or state level may increase our operating costs and reduce the value of our natural gas assets and such regulation, as well as uncertainty concerning such regulation and public policy pressures that may arise, could adversely impact the market for natural gas, as well as for our securities” for additional discussion regarding certain laws and regulations related to air emissions and related matters.

Clean Water Act .

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Endangered Species Act .

The Endangered Species Act and related state regulation protect plant and animal species that are threatened or endangered.

The Endangered Species Act and related state laws and regulation protect plant and animal species that are threatened or endangered.

Some of our operations are located in areas that are or may be designated as protected habitats for endangered or threatened species, including the Northern Long-Eared and Indiana bats, which has a seasonal impact on our construction activities and operations.

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Natural gas pipelines serving our operations are subject to regulation by the U.S.

Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (“PHMSA”) pursuant to the Natural Gas Pipeline Safety Act of 1968, (“NGPSA”), as amended by the Pipeline Safety Act of 1992, the Accountable Pipeline Safety and Partnership Act of 1996, the Pipeline Safety Improvement Act of 2002 (“PSIA”), the Pipeline Inspection, Protection, Enforcement and Safety Act of 2006 and the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (the “2011 Pipeline Safety Act”).

Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to the Natural Gas Pipeline Safety Act of 1968, (NGPSA), as amended by the Pipeline Safety Act of 1992, the Accountable Pipeline Safety and Partnership Act of 1996, the Pipeline Safety Improvement Act of 2002 (PSIA), the Pipeline Inspection, Protection, Enforcement and Safety Act of 2006 and the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011.

The NGPSA regulates safety requirements in the design, construction, operation and maintenance of natural gas pipeline facilities, while the PSIA establishes mandatory inspections for all U.S.

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These statutes and related regulations may be revised or amended which may lead to additional safety requirements.

See “ Risk Factors -- CNX may incur significant costs and liabilities as a result of pipeline operations and/or increases in the regulation of gas gathering pipelines ” for additional discussion regarding gas transmission and gathering pipelines.

See “ Risk Factors -- CNX may incur significant costs and liabilities as a result of pipeline operations and/or increases in the regulation of natural gas gathering pipelines ” for additional discussion regarding gas transmission and gathering pipelines.

Resource Conservation and Recovery Act .

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On December 28, 2016 the EPA entered into a consent order to resolve outstanding litigation brought by environmental and citizen groups regarding the applicability of RCRA to wastes from oil and gas development activities.

In April 2019, the EPA issued a report concluding that revisions to the federal regulations for the management of exploration and production wastes under RCRA were not necessary at the time the report was issued.

We cannot predict whether the EPA may change its conclusion at some point, or whether any other legislation or regulations will be enacted and if so, what its provisions will be.

In April 2019, the EPA issued a report pursuant to the consent order concluding that revisions to the federal regulations for the management of exploration and production wastes under RCRA were not necessary at the time the report was issued.

CNX cannot predict whether the EPA may change its conclusion at some point, or whether any other legislation or regulations will be enacted and if so, what its provisions will be.

Federal Regulation of the Sale and Transportation of Natural Gas

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However, the distinction between federally unregulated gathering facilities and FERC-regulated transmission facilities is a fact-based determination, and the classification of such facilities may be the subject of dispute and, potentially, litigation.

We own certain natural gas pipeline facilities that we believe meet the traditional tests which the FERC has used to establish a pipeline's status as a gatherer not subject to the FERC jurisdiction.

CNX owns certain natural gas pipeline facilities that CNX believes meet the traditional tests which the FERC has used to establish a pipeline's status as a gatherer not subject to the FERC jurisdiction.

Natural gas prices are currently unregulated, but Congress historically has been active in the area of natural gas regulation.

We cannot predict whether new legislation to regulate natural gas sales might be enacted in the future or what effect, if any, any such legislation might have on our operations.

CNX cannot predict whether new legislation to regulate natural gas sales might be enacted in the future or what effect, if any, any such legislation might have on our operations.

Health and Safety Laws

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Our natural gas operations are subject to regulation under the federal Occupational Safety and Health Act (OSHA) and comparable state laws in some states, all of which regulate health and safety of employees at our natural gas operations.

Additionally, OSHA's hazardous communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and comparable state laws require that information be maintained about hazardous materials used or produced by our natural gas operations and that this information be provided to employees, state and local governments and the public.

Additionally, OSHA's hazardous communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and comparable state laws and regulations require that information be maintained about hazardous materials used or produced by our natural gas operations and that this information be provided to employees, state and local governments and the public.

Climate Change Laws and Regulations

Climate change continues to be a legislative and regulatory focus.

There are a number of proposed and final laws and regulations that limit greenhouse gas emissions, and regulations that restrict emissions could increase our costs should the requirements necessitate the installation new equipment or the purchase of emission allowances.

Climate change continues to be an area of legislative and regulatory focus.

There are a number of proposed and final laws and regulations intended to limit greenhouse gas emissions, and regulations that restrict emissions could increase our costs should the requirements necessitate the installation new equipment or the purchase of emission credits or allowances.

These laws and regulations could also impact our customers, including the electric generation industry, making alternative sources of energy more competitive.

Additional regulation could also lead to permitting delays and additional monitoring and administrative requirements, as well as to impacts on electricity generating operations.

See “Risk Factors - Regulation of greenhouse gas emissions at the federal or state level may increase our operating costs and reduce the value of our natural gas assets and such regulation, as well as uncertainty concerning such regulation, could adversely impact the market for natural gas, as well as for our securities” for additional discussion regarding certain laws and regulations related to climate change, greenhouse gas and related matters.

Title to Properties

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The legal requirements of such ownership or leasehold rights generally are established by state statutory or common law.

As is customary in the natural gas industry, we have generally conducted only a summary review of the title to oil and gas rights that are not yet in our development plans, but which we believe we control.

As is customary in the natural gas industry, CNX has generally conducted only a summary review of the title to oil and gas rights that are not yet in our development plans, but which CNX believes it controls.

This summary review is conducted at the time of acquisition or as part of a review of our land records.

Prior to the commencement of development operations on natural gas and CBM properties, we conduct a thorough title examination and perform curative work with respect to significant title defects.

Our discovering title defects which we are unable to cure may adversely impact our ability to develop those properties and we may have to reduce our estimated gas reserves including our proved undeveloped reserves.

In accordance with the foregoing, we have completed title work on substantially all of our natural gas and CBM properties that are currently producing and believe that we have satisfactory title to our producing properties in accordance with standards generally accepted in the industry.

See “Risk Factors - We may incur losses as a result of title defects in the properties in which we invest or the loss of certain leasehold or other rights related to our midstream activities.”

Prior to the commencement of development operations on natural gas and CBM properties, CNX conducts a thorough title examination and perform curative work with respect to significant title defects.

Our discovering title defects which CNX is unable to cure may adversely impact our ability to develop those properties and CNX may have to reduce our estimated gas reserves including our proved undeveloped reserves.

In accordance with the foregoing, CNX has completed title work on substantially all of our natural gas and CBM properties that are currently producing and believe that CNX has satisfactory title to our producing properties in accordance with standards generally accepted in the industry.

See “Risk Factors - CNX may incur losses as a result of title defects in the properties in which CNX invests or the loss of certain leasehold or other rights related to our midstream activities.”

Available Information

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Exchange Act, are filed with the Securities and Exchange Commission (the SEC ).

We are subject to the informational requirements of the Exchange Act, and we file or furnish reports, proxy statements and other information with the SEC.

Such reports and other information we file with the SEC are available free of charge at our website www.cnx.com when such reports are available on the SEC’s website.

CNX is subject to the informational requirements of the Exchange Act, and we file or furnish reports, proxy statements and other information with the SEC.

Such reports and other information CNX files with the SEC are available free of charge at our website www.cnx.com when such reports are available on the SEC’s website.

The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov .

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Risks Related to Economic Conditions and our Industry

• Prices for natural gas and NGLs are volatile, and an extended decline in the prices we receive for our natural gas and NGLs will adversely affect our business, operating results, financial condition and cash flows.

• If natural gas prices decrease or drilling efforts are unsuccessful, we may be required to record write-downs of our proved natural gas properties.

• Prices for natural gas and NGLs are volatile and can fluctuate widely based upon a number of factors beyond our control, including supply and demand for our products.

• If natural gas prices decrease or drilling efforts are unsuccessful, CNX may be required to record write-downs of our proved natural gas properties.

• Competition and consolidation within the natural gas industry may adversely affect our ability to sell our products and midstream services or other parts of the business.

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• Our hedging activities may prevent us from benefiting from price increases and may expose us to other risks.

• Negative public perception regarding our company or industry could have an adverse effect on our operations, financial results or stock price.

• Negative public perception regarding our Company or industry and changing investor sentiment towards climate change and fossil fuels could have an adverse effect on our operations, financial results or stock price.

• Events beyond our control, including a global or domestic health crisis, may result in unexpected adverse operating and financial results.

• Increasing attention to environmental, social and governance (ESG) matters may adversely impact our business.

Risks Related to our Business Operations

• The disruption of, capacity constraints in, or proximity to pipeline systems could limit sales of our natural gas and NGLs and cash flows from operations.

• Uncertainties exist in the estimation of economical recovery of natural gas and natural gas liquid reserves.

• The disruption of, capacity constraints in, or proximity to pipeline and processing systems could limit sales of our natural gas and NGLs and cash flows from operations, and any decrease in availability of pipelines or other midstream facilities could adversely affect our operations.

• Uncertainties exist in the estimation of economical recovery of oil and natural gas reserves.

• Developing, producing, and operating natural gas wells is a high-risk activity, and is subject to operating risks and hazards that could increase expenses, decrease our production levels and expose us to losses or liabilities.

• Our identified drilling locations are scheduled over multiple future years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their actual development.

• Our development and exploration projects, as well as our midstream development projects, require substantial capital expenditures and are subject to regulatory, environmental, political, legal and economic risks.

• Our identified development locations are scheduled over multiple future years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their actual development.

• Our capital projects require substantial capital expenditures and are subject to regulatory, environmental, political, legal and economic risks and if CNX fails to generate sufficient cash flow, obtain required capital or financing on satisfactory terms or respond to regulatory and political developments, our natural gas reserves may decline and our operations and financial results may suffer.

• CNX may not be able to obtain required personnel, services, equipment, parts and raw materials in a timely manner, in sufficient quantities or at reasonable costs to support our operations.

• If CNX cannot find adequate sources of water for our use or we are unable to dispose of or recycle water produced from our operations at a reasonable cost and within applicable environmental rules, our ability to produce natural gas economically and in sufficient quantities could be impaired.

• Failure to successfully replace our current natural gas and natural gas liquid reserves through economic development of our existing or acquired assets or through acquisition of additional producing assets, would lead to a decline in our natural gas and natural gas liquid production levels and reserves.

• We may incur losses as a result of title defects in the properties in which we invest or the loss of certain leasehold or other rights related to our midstream activities.

• If CNX cannot find adequate sources of water for our use or CNX is unable to dispose of or recycle water produced from our operations at a reasonable cost and within applicable environmental rules, our ability to produce natural gas economically and in sufficient quantities could be impaired.

• Failure to successfully replace our current natural gas, NGL and oil reserves through economic development of our existing or acquired assets or through acquisition of additional producing assets, would lead to a decline in our natural gas, NGL and oil production levels and reserves.

• CNX may incur losses as a result of title defects in the properties in which CNX invests or the loss of certain leasehold or other rights related to our midstream activities.

Legal, Environmental and Regulatory Risks

• Climate change risk, legislation, litigation and regulation of greenhouse gas emissions at the federal or state level may increase our operating costs and reduce the value of our natural gas assets and such regulation, as well as uncertainty concerning such regulation and public policy pressures that may arise, could adversely impact the market for natural gas, as well as for our securities.

concerning such regulation and public policy pressures that may arise, could adversely impact the market for natural gas, as well as for our securities.

• Environmental regulations can increase costs and introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities.

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• CNX may incur significant costs and liabilities as a result of pipeline operations and/or increases in the regulation of natural gas gathering pipelines.

• Changes in federal or state tax laws focused on natural gas exploration and development could cause our financial position and profitability to deteriorate.

• Changes in federal or state tax laws focused on natural gas exploration and development could cause our financial position and profitability to deteriorate and future tax liability may be greater than anticipated.

• CNX and its subsidiaries are subject to various legal proceedings and investigations, which may have an adverse effect on our business.

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• The capped call transactions may affect the value of the Convertible Notes and our common stock.

• We are subject to counterparty performance risk with respect to the capped call transactions.

• CNX is subject to counterparty performance risk with respect to the capped call transactions.

• Conversion of the Convertible Notes may dilute the ownership interest of existing stockholders or may otherwise depress the price of our common stock.

• We may be unable to raise the funds necessary to repurchase the Convertible Notes for cash following a fundamental change, or to pay any cash amounts due upon conversion.

• CNX may be unable to raise the funds necessary to repurchase the Convertible Notes for cash following a fundamental change, or to pay any cash amounts due upon conversion, and our other indebtedness may impact our ability to repurchase the Convertible Notes or pay cash upon their conversion.

• The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results.

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Risks Related to Strategic Transactions

• Strategic determinations, including the allocation of capital and other resources to strategic opportunities, are subject to risks and uncertainties.

• We do not completely control the timing of divestitures that we plan to engage in, and they may not provide anticipated benefits.

• Strategic determinations, including the allocation of capital and other resources to strategic opportunities, are subject to risk and uncertainties, and our failure to appropriately allocate capital and resources among our strategic opportunities may adversely affect our financial condition.

• CNX does not completely control the timing of divestitures that CNX plans to engage in, and they may not provide anticipated benefits.

• There is no guarantee that CNX will continue to repurchase shares of our common stock under our current or any future share repurchase program at levels undertaken previously or at all.

• CNX may operate a portion of our business with one or more joint venture partners or in circumstances where we are not the operator, which may restrict our operational and corporate flexibility.

• CNX may operate a portion of our business with one or more joint venture partners or in circumstances where CNX is not the operator, which may restrict our operational and corporate flexibility.

• In connection with the separation of our coal business, CONSOL Energy has agreed to indemnify us for certain liabilities, and we have agreed to indemnify CONSOL Energy for certain liabilities.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business