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An extended decline in the prices CNX receives for our natural gas and NGLs will adversely affect our business, operating results, financial condition and cash flows.
−Removed: Our financial results are significantly affected by the prices we receive for our natural gas and NGLs.
−Removed: Natural gas, NGLs, oil and condensate prices are very volatile and can fluctuate widely based upon supply from energy producers relative to demand for these products and other factors beyond our control.
+Added: Our financial results are significantly affected by the prices we receive for our natural gas and NGLs (which includes oil and condensate).
+Added: Natural gas and NGL pricing is very volatile and can fluctuate widely based upon supply from energy producers relative to demand for these products and other factors beyond our control.
In particular, the U.S.
−Removed: natural gas industry faces oversupply due to the success of domestic shale development, associated natural gas produced by oil producers, and other North American shale gas plays that impact domestic pricing.
+Added: natural gas industry faces oversupply due to the success of domestic Shale development, associated natural gas produced by oil producers, other North American Shale gas plays, and an outpacing of demand that impact domestic pricing.
This oversupply of natural gas, beginning in 2012, has resulted in depressed domestic prices for most of that period.
Development has continued in these plays, despite these lower gas prices, as producers continue to become more efficient.
−Removed: Evidence of volatility was present during 2022 as natural gas prices were significantly higher primarily due to lower domestic production and increased LNG export demand.
+Added: Evidence of volatility was present during 2022 and 2023 as natural gas prices spiked in the first half of 2022 due to lower domestic production, lower storage levels, and
+Added: increased LNG export demand, but thereafter retreated to the depressed prices that we have witnessed over the past ten years.
CNX expects continued volatility of natural gas prices in the future.
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This discount, or negative basis, to the Henry Hub price is forecasted to continue in future years for all Appalachian Basin producers.
−Removed: While new interstate pipeline projects could reduce this discount, it could increase further if production in the basin continues to grow and projects to move gas out of the basin are cancelled, delayed or denied for any reason, such as permitting and regulatory issues or environmental lawsuits.
+Added: While new interstate pipeline projects could reduce this discount, it could increase further if production in the basin continues to grow and projects to move natural gas out of the basin are cancelled, delayed or denied for any reason, such as permitting and regulatory issues or environmental lawsuits.
For example, in July 2020, the Atlantic Coast Pipeline project, which was designed to move produced natural gas out of the northeast, was cancelled by its partners after nearly six years of work;
−Removed: and in January 2022, the Mountain Valley Pipeline, which was to move produced natural gas from northwestern West Virginia through southern Virginia and into North Carolina, had its permits to pass through the Jefferson National Forest invalidated by the U.S.
−Removed: Court of Appeals for the Fourth Circuit.
−Removed: Our development plans and operations also include some activity in areas of shale formations that may also contain NGLs, condensate and/or oil.
−Removed: The prices for NGLs, condensate and oil are also volatile for reasons similar to those described above for natural gas.
−Removed: Although the Company is able to hedge natural gas benchmarks and local basis differentials, it generally does not hedge its relatively minor quantities of NGL, condensate and oil.
−Removed: In addition, similar to natural gas, increased drilling activity by third parties in formations containing NGLs may led to a decline in the price CNX receives for our NGLs.
+Added: and the Mountain Valley Pipeline, which is to move produced natural gas from northwestern West Virginia through southern Virginia and into North Carolina, has experienced numerous delays.
+Added: Our development plans and operations also include some activity in areas of Shale formations that may also contain NGLs.
+Added: The price for NGLs is also volatile for reasons similar to those described above for natural gas.
+Added: Although the Company is able to hedge natural gas benchmarks and local basis differentials, it generally does not hedge its relatively minor quantities of NGLs.
+Added: In addition, similar to natural gas, increased drilling activity by third parties in formations containing NGLs may lead to a decline in the price CNX receives for our NGLs.
International demand and storage levels also affect NGL prices.
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Any disruption in those means of transportation could have a further detrimental impact on the price CNX receives for our NGLs.
−Removed: Our results of operations may be adversely affected by a depressed level of, or downward fluctuations in, NGLs, condensate and oil prices.
+Added: Our results of operations may be adversely affected by a depressed level of, or downward fluctuations in the price for NGLs.
Apart from issues with respect to the supply of products CNX produces, demand can fluctuate widely due to a number of matters beyond our control, including:
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Lack of market demand could result in temporarily shut-in wells due to low commodity prices and it is possible that some of our wells may be shut-in in the future or sales terms may be less favorable than might otherwise be obtained should demand for our products decrease and/or prices decrease.
−Removed: If natural gas prices decrease or operational efforts are unsuccessful, CNX may be required to record write-downs of our proved natural gas properties.
+Added: If natural gas prices decrease or operational efforts are unsuccessful, CNX may be required to record write-downs of the quantity and value of our proved natural gas properties.
Additionally, changes in assumptions impacting management’s estimates of future financial results as well as other assumptions related to the Company's stock price, weighted-average cost of capital, terminal growth rates and industry multiples, could cause goodwill and other intangible assets CNX holds to become impaired and result in material non-cash charges to earnings.
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CNX is required to perform impairment tests on our assets at least annually or whenever events or changes in circumstances lead to a reduction of the estimated useful life or estimated future cash flows that would indicate that the carrying amount may not be recoverable, indicate a potential impairment in the carrying value of goodwill or intangible assets as defined by GAAP, or whenever development plans change with respect to those assets.
−Removed: In the past CNX has had to record an impairment charge related to certain assets and CNX may incur impairment charges in the future, which could have an adverse effect on our results of operations in the period taken.
−Removed: For the year ended December 31, 2020, CNX recognized certain indicators of impairments specific to our Southwest Pennsylvania (SWPA) CBM asset group and determined that the carrying value of that asset group was not recoverable.
−Removed: The fair value of the asset group was estimated by discounting the estimated future cash flows using discount rates and other assumptions that market participants would use in their estimates of fair value.
−Removed: As a result, an impairment of $62 million was recognized and is included in Impairment of Exploration and Production Properties in the Consolidated Statements of Income.
−Removed: The impairment was related to an economic decision to temporarily idle certain CBM wells and the related processing facility during the first quarter of 2020.
−Removed: There were no impairments for the year ended December 31, 2022 and 2021.
+Added: In the past CNX has had to record an impairment charge related to certain assets and CNX may
+Added: incur impairment charges in the future, which could have an adverse effect on our results of operations in the period taken.
+Added: There were no impairments for the years ended December 31, 2023, 2022 and 2021.
Future acquisitions may lead to the acquisition of additional goodwill or other intangible assets.
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Midstream, transmission and processing consolidation in the industry could lead to a less competitive environment for CNX to find partners for projects needed to support development, which could increase costs.
−Removed: Many of the companies with which CNX competes are larger and have more resources to deploy,
−Removed: and if CNX were unable to compete, our company, our operating results, financial position or other parts of the business may be adversely affected.
+Added: Many of the companies with which CNX competes are larger and have more resources to deploy, and if CNX were unable to compete, our company, our operating results, financial position or other parts of the business may be adversely affected.
In addition, CNX competes with larger companies to acquire new natural gas properties for future exploration, limiting our ability to replace the natural gas CNX produces or to grow our production.
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All of these competitive pressures could materially adversely affect our business, results of operations, financial condition and cash flows.
−Removed: Deterioration in the economic conditions in any of the industries in which our customers operate, a domestic or worldwide financial downturn, or negative credit market conditions can have a material adverse effect on our liquidity, results of operations, business and financial condition that CNX cannot predict.
−Removed: Economic conditions in a number of industries in which our customers operate, such as electric power generation, have experienced substantial deterioration in the past, resulting in reduced demand for natural gas.
+Added: Deterioration in the economic conditions in any of the industries in which our customers and their customers operate, a domestic or worldwide financial downturn, or negative credit market conditions can have a material adverse effect on our liquidity, results of operations, business and financial condition that CNX cannot predict.
+Added: Economic conditions in a number of industries in which our customers and their customers operate, such as electric power generation, have experienced substantial deterioration in the past, resulting in reduced demand for natural gas.
Renewed or continued weakness in the economic conditions of any of the industries CNX serves or that are served by our customers, or the increased focus by markets on carbon-neutrality or alternative energy sources, could adversely affect our business, financial condition, results of operation and liquidity in a number of ways.
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• increased inflationary pressure in the broader macro-economic environment may impact our business by increasing costs and tightening the supply of critical goods and services needed to support our operations.
−Removed: In addition, the continuing repercussions of the coronavirus (COVID-19) pandemic, and the governments’ response thereto, has materially and adversely impacted many businesses, industries and economies.
−Removed: For further detail regarding the risks to our business resulting from COVID-19, see the Risk Factor titled “Events beyond our control, including a global or domestic health crisis, may result in unexpected adverse operating and financial results.”
+Added: In addition, the repercussions of the coronavirus (COVID-19) pandemic, and the governments’ response thereto, materially and adversely impacted many businesses, industries and economies.
+Added: For further detail regarding the risks to our business resulting from COVID-19 or a similar or separate pandemic, see the Risk Factor titled “ Events beyond our control, including a global or domestic health crisis or global instability and actual and threatened geopolitical conflict, may result in unexpected adverse operating and financial results.
Our hedging activities may prevent us from benefiting from price increases and may expose us to other risks.
To manage our exposure to fluctuations in the price of natural gas, CNX enters into hedging arrangements with respect to a portion of our expected production.
−Removed: As of January 5, 2023, CNX expects these transactions will represent approximately 429.7 Bcf of our estimated 2023 production at an average price of $2.47 per Mcf, 381.3 Bcf of our estimated 2024 production at an average price of $2.38 per Mcf, 373.2 Bcf of our estimated 2025 production at an average price of $2.37 per Mcf, 321.7 Bcf of our estimated 2026 production at an average price of $2.61 per Mcf, and 140.4 Bcf of our estimated 2027 production at an average price of $3.35 per Mcf.
+Added: As of January 5, 2024, CNX expects these transactions will represent approximately 434.2 Bcf of our estimated 2024 production at an average price of $2.53 per Mcf, 375.1 Bcf of our estimated 2025 production at an average price of $2.41 per Mcf, 339.0 Bcf of our estimated 2026 production at an average price of $2.53 per Mcf, and 216.2 Bcf of our estimated 2027 production at an average price of $3.35 per Mcf.
To the extent that CNX engages in hedging activities, CNX may be prevented from realizing the near-term benefits of price increases above the levels of the hedges.
−Removed: If CNX chooses not to engage in or otherwise reduce our future use of hedging arrangements or are unable to engage in hedging arrangements due to lack of acceptable counterparties, CNX may be more adversely affected by changes in natural gas prices than our competitors
−Removed: who engage in hedging arrangements to a greater extent than CNX does.
+Added: If CNX chooses not to engage in or otherwise reduce our future use of hedging arrangements or is unable to engage in hedging arrangements due to lack of acceptable counterparties, CNX may be more adversely affected by declines in natural gas prices than our competitors who engage in hedging arrangements to a greater extent than CNX does.
Increases or decreases in forward market prices could result in material unrealized (non-cash) losses or gains on commodity derivative instruments resulting in volatility in reported earnings.
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These actions may cause operational delays or restrictions, increased operating costs, additional regulatory burdens and an increased risk of litigation that may negatively impact our future financial results or our stock price.
−Removed: Moreover, governmental authorities exercise considerable discretion in the timing and scope of permit issuance and the public may engage in the permitting process, including through intervention in the administrative process in the courts.
+Added: Moreover, governmental authorities exercise considerable discretion in the timing and scope of permit issuance and the public may engage in the permitting process, including through intervention in the administrative process or in the courts.
This could cause the permits CNX needs to conduct our operations to be withheld, delayed, or burdened by requirements that restrict our ability to profitably conduct our business.
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As a result, some capital markets participants have reduced or ceased lending to, or investing in, companies that operate in industries with higher perceived environmental exposure, such as the energy industry.
−Removed: If divestment efforts continue, the price of our common stock or debt securities, and our ability to access capital markets or to otherwise obtain new investment or financing, may be negatively impacted and have a material adverse effect on our business, financial condition, results of operations and cash flows.
−Removed: Events beyond our control, including a global or domestic health crisis, may result in unexpected adverse operating and financial results .
−Removed: While CNX has not incurred significant disruptions to its operations during the years ended December 31, 2022 and 2021 as a direct result of the COVID-19 pandemic, the continuation of the COVID-19 pandemic may materially and adversely affect, our business, operating and financial results and liquidity in the future.
−Removed: While the full impact of COVID-19 outbreak and the long-term worldwide reaction to it and impact from it remains unknown at this time, disruptions in our supply chain (including necessary contractors and materials) may lead to a disruption in our resource acquisition or permitting activities and may cause disruption in our relationship with our customers.
−Removed: Additionally, the COVID-19 outbreak has significantly impacted economic activity and markets around the world, and COVID-19 or another similar outbreak could negatively impact our business in numerous ways, including, but not limited to, the following:
−Removed: • our revenue may be reduced if the outbreak results in an economic downturn or recession, to the extent it leads to a prolonged decrease in the demand for natural gas and liquefied natural gas (LNG) and, to a lesser extent, NGLs and oil;
−Removed: • the operations of our midstream service providers, on whom CNX relies for the transmission, gathering and processing of a significant portion of our produced natural gas, NGLs, oil and condensate, may be disrupted or suspended in response to containing the outbreak, and/or the difficult economic environment may lead to the bankruptcy or closing of the facilities and infrastructure of our midstream service providers, which may result in substantial discounts in the prices CNX receives for our produced natural gas, NGLs, oil and condensate or result in the shut-in of producing wells or the delay or discontinuance of development plans for our properties.
−Removed: To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks set forth in this Risk Factors section of this Form 10-K, such as those relating to our financial performance and debt obligations.
−Removed: We are unable to provide any prediction as to the ultimate adverse impact of COVID-19 on our business, which will depend on numerous evolving factors and future developments, including its effect on the demand for natural gas, LNG, NGLs, oil and condensate, the response of the overall economy and the financial markets as well as the effect of governmental actions taken in response thereto.
−Removed: Any of these outcomes could have a material adverse effect on our business, operations, financial results and liquidity.
+Added: If divestment efforts continue, the price of our common
+Added: stock or debt securities, and our ability to access capital markets or to otherwise obtain new investment or financing, may be negatively impacted and have a material adverse effect on our business, financial condition, results of operations and cash flows.
+Added: Events beyond our control, including a global or domestic health crisis or global instability and actual and threatened geopolitical conflict, may result in unexpected adverse operating and financial results .
+Added: While CNX has not incurred significant disruptions to its operations during the past three fiscal years as a direct result of the COVID-19 pandemic or geopolitical conflict, including the ongoing war in Ukraine, the resulting global instability and any similar disruptions may materially and adversely affect, our business, operating and financial results and liquidity in the future.
+Added: As the pandemic and global instability has significantly impacted economic activity and markets around the world, similar pandemics and conflicts could negatively impact our business in numerous ways, including, but not limited to, the following:
+Added: • our revenue may be reduced if there is a resulting economic downturn or recession, to the extent it leads to a prolonged decrease in the demand for or disruption in the global supply of natural gas and liquefied natural gas (LNG) and, to a lesser extent, NGLs and oil;
+Added: • the operations of our midstream service providers, on whom CNX relies for the transmission, gathering and processing of a significant portion of our produced natural gas, NGLs, oil and condensate, and our other service providers and suppliers may be disrupted or suspended in response to containing the outbreak, geopolitical instability and/or the difficult economic environment may lead to the bankruptcy or closing of service providers, facilities and infrastructure or delays or disruptions in our supply chain, which may result in substantial discounts in the prices CNX receives for our produced natural gas, NGLs, oil and condensate or result in the shut-in of producing wells or the delay or discontinuance of development plans for our properties.
+Added: To the extent events were to adversely affect our business and financial results, it may also have the effect of heightening many of the other risks set forth in this Risk Factors section of this Form 10-K, such as those relating to our financial performance and debt obligations.
+Added: Any of these disruptions or outcomes could have a material adverse effect on our business, operations, financial results and liquidity.
Increasing attention to environmental, social and governance (ESG) matters may adversely impact our business.
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Such diversion could have a negative impact on our stock price and our access to and costs of capital.
+Added: Additionally, increased governmental attention to ESG matters, including rules promulgated by the SEC, as well as state actions such as, for example, California’s Climate Corporate Data Accountability Act and its Climate-Related Financial Risk Act, may require the production and public reporting of additional data for investors’ evaluation of investment and voting decisions.
+Added: This could lead to negative investor sentiment toward us and to the diversion of their investment away from the fossil fuel industry to other industries.
+Added: Such diversion could have a negative impact on our stock price and our access to and costs of capital.
Risks Related to our Business Operations
−Removed: 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.
−Removed: Although CNX owns midstream facilities, we also use third party facilities to gather, process and transport our natural gas to market.
+Added: Our dependence on third party pipeline and processing systems could adversely affect our operations and limit sales of our natural gas and NGLs as a result of disruptions, capacity constraints, proximity issues or decreases in availability of pipelines or other midstream facilities.
+Added: Although CNX owns midstream facilities, we also depend on third party facilities to gather, process and transport our natural gas to market.
Reductions, limitations or disruptions (including force majeure events) in pipeline, gathering, or processing facility capacity could force us to reduce our production, reduce our sales or transportation of natural gas and/or NGLs or purchase higher cost replacement gas, negatively affecting our profitability, and causing our unit costs to increase.
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Further, if pipeline quality standards change or we cannot meet applicable standards, we might be required to install additional processing equipment which could increase our costs.
−Removed: Pipelines could also curtail our flows until the natural gas delivered to their pipeline is in compliance with predetermined gas quality specifications.
+Added: Pipelines could also curtail our flows until the natural gas delivered to their pipeline is in
+Added: compliance with predetermined gas quality specifications.
Any reduction in our production of natural gas or increase in our costs could materially adversely affect our business, financial condition, results of operations and cash flows.
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Reductions in our drilling program may result in insufficient production to fully utilize these arrangements or otherwise use our full firm transportation and processing capacity, reducing our cash flow from operations, which may require us to reduce or delay our planned investments and capital expenditures or seek alternative means of financing, all of which may have a material adverse effect our business, financial condition, results of operations and cash flows.
−Removed: Our investment in midstream infrastructure development and maintenance programs is intended, among other items, to connect our wells to other existing gathering and transmission pipelines and can involve significant risks, including those relating to timing, cost overruns and operational efficiency.
+Added: Our continuing investment in midstream infrastructure development and maintenance programs is intended, among other items, to connect our wells to other existing gathering and transmission pipelines and can involve significant risks, including those relating to timing, cost overruns and operational efficiency.
Significant portions of our natural gas production are dependent on a small number of key compression and processing stations.
An operational issue at any of those stations would materially impact our production, cash flow and results of operation.
−Removed: Uncertainties exist in the estimation of economic recovery of oil and natural gas reserves.
−Removed: With these uncertainties, estimates of revenues, operating and development costs and profitability may be inaccurate.
−Removed: Oil and natural gas reserves are economically recoverable when the price at which they are expected to be sold exceeds their expected cost of development and production.
−Removed: Estimating reserves requires the use of assumptions concerning natural gas and liquid hydrocarbon prices, production levels, recoverable reserve quantities and operating and development costs.
−Removed: For example, a significant amount of our proved oil and natural gas reserves are identified as proved undeveloped reserves and may be more susceptible to positive and negative changes in reserve estimates than our proved developed reserves.
−Removed: Also, we make certain assumptions regarding natural gas and liquid hydrocarbon prices, production levels and operating and development costs that may prove to be incorrect.
−Removed: Any significant variance from these assumptions to actual figures could greatly affect our estimates of our natural gas and natural gas liquid reserves, the economically recoverable quantities of natural gas and natural gas liquids attributable to any particular group of properties, the classifications of natural gas reserves based on risk of recovery and estimates of the future net cash flows.
−Removed: The PV-10 measure of pre-tax discounted future net cash flows and the standardized measure of after-tax discounted future net cash flows from our proved reserves included within this Form 10-K are not necessarily the same as the current market value of our estimated natural gas and liquid reserves.
−Removed: Actual future net cash flows from our proved and unproved natural gas and natural gas liquid properties may be affected by factors such as:
+Added: Uncertainties exist in the estimation of economic recovery of natural gas reserves.
+Added: Due to these uncertainties, estimates of revenues, operating and development costs and future profitability may prove to be inaccurate.
+Added: Natural gas reserves are economically recoverable when the revenue expected to be generated from the products sold exceeds their expected cost of development and production.
+Added: Estimating reserves requires the use of assumptions concerning natural gas and liquid hydrocarbon prices, production levels, recoverable reserve quantities, production and ad valorem taxes and operating and development costs.
+Added: For example, a significant amount of our natural gas reserves are identified as proved undeveloped reserves and may be more susceptible to positive or negative changes in reserve estimates than our proved developed reserves.
+Added: Also, we make certain assumptions regarding natural gas and liquid hydrocarbon prices, production levels, production and ad valorem taxes and operating and development costs that may prove to be incorrect.
+Added: Any significant variance from these assumptions to actual figures could greatly affect our estimates of our natural gas reserves, the economically recoverable quantities of oil and natural gas attributable to any particular group of properties, the classifications of natural gas reserves based on risk of recovery and estimates of the future net cash flows.
+Added: The PV-10 measure of pre-tax discounted future net cash flows and the standardized measure of after-tax discounted future net cash flows from our proved reserves included within this Form 10-K are not necessarily the same as the current market value of our estimated natural gas reserves.
+Added: Actual future net cash flows from our proved and unproved oil and natural gas properties may be affected by factors such as:
• geological conditions;
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In addition, the prescribed 10% discount factor used when calculating discounted future net cash flows may not be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with us or the oil and natural gas industry in general.
−Removed: If natural gas prices decline by $0.10 per Mcf, then the pre-tax present value using a 10% discount rate of our proved natural gas reserves as of December 31, 2022 would decrease from $14.5 billion to $14.3 billion.
−Removed: Developing, producing and operating natural gas wells is subject to operating risks and hazards that could increase expenses, decrease our production levels and expose us to losses or liabilities.
+Added: If natural gas prices decline by $0.10 per MMBtu, then the pre-tax present value using a 10% discount rate of our proved natural gas reserves as of December 31, 2023 would decrease from $4.2 billion to $4.0 billion.
+Added: Developing, producing and operating natural gas wells is subject to operating risks and hazards that could increase expenses, decrease our production levels and expose us to losses or liabilities that may not be fully covered under our insurance policies.
The development of natural gas involves numerous risks, including the risk that an encountered well does not produce in sufficient quantities to make the well economically viable.
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In addition, we use multi-well pads instead of single-well sites.
−Removed: The use of multi-well pad
−Removed: drilling increases some operational risks because problems affecting the pad, or a single well could adversely affect production from all of the wells on the pad.
+Added: The use of multi-well pad drilling increases some operational risks because problems affecting the pad, or a single well could adversely affect production from all of the wells on the pad.
Pad development can also make our overall production, and therefore our revenue and cash flows, more volatile, because production from multiple wells on a pad will typically commence simultaneously.
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Our management team has specifically identified and scheduled certain locations as an estimation of our future multi-year development activities on our existing acreage which represent a significant part of our development strategy.
−Removed: Our ability to develop these locations may be dependent on a number of factors, including natural gas, NGL and oil prices, the availability and cost of capital, drilling and production costs, obtaining required regulatory permits, the acquisition on acceptable terms of any leasehold interests we do not control but that are necessary to complete the drilling unit (including potentially through third-party swap transactions), availability of drilling services and equipment, drilling results, lease expirations for the failure to timely develop or otherwise, transportation constraints, regulatory and zoning approvals and other factors.
+Added: Our ability to develop these locations may be dependent on a number of factors, including natural gas, NGL and oil prices, the availability and cost of capital, drilling, completions and production costs, obtaining required regulatory permits, the acquisition on acceptable terms of any leasehold interests we do not control but that are necessary to complete the drilling unit (including potentially through third-party swap transactions), availability of drilling services and equipment, drilling results, lease expirations for the failure to timely develop or otherwise, transportation constraints, regulatory and zoning approvals and other factors.
Because of these uncertain factors, we do not know if the numerous development locations we have identified will ever be drilled.
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Any development activities we are able to conduct on these locations may be unsuccessful, which may result in our inability to add additional proved reserves or may result in a downward revision of our estimated proved reserves, which could materially adversely affect our business and results of operations.
−Removed: 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.
+Added: Our exploration and development projects and midstream development 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.
As part of our strategic determinations, CNX expects to continue to make substantial capital expenditures in the development and acquisition of natural gas reserves and the maintenance, purchase or construction of midstream systems.
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The gas gathering agreements that we have with third parties may impose obligations on us to invest capital in our midstream systems which are not fully protected against volumetric risks associated with lower-than-forecast volumes flowing through our gathering systems.
−Removed: To the extent our customers are not contractually obligated to, and determine not to, develop their properties in the areas covered by these acreage dedications, or otherwise sell, exchange, farm-out or otherwise dispose of all of, or an undivided interest in, the development of the dedicated acreage, the resulting decrease in the development of reserves by our midstream customers could result in reduced volumes serviced by us and a commensurate decline in revenues and cash flows.
+Added: If our customers fail to develop their properties in the areas covered by these acreage dedications, or otherwise sell, exchange, farm-out or otherwise dispose of all of, or an undivided interest in, the development of the dedicated acreage, the resulting decrease in the development of reserves by our midstream customers could result in reduced volumes serviced by us and a commensurate decline in revenues and cash flows.
Additionally, the construction of additions or modifications to our existing midstream systems involves numerous regulatory, environmental, political and legal uncertainties beyond our control and may require the expenditure of significant amounts of capital.
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There is no assurance that CNX will have sufficient cash from operations, borrowing capacity under our credit facilities, or the ability to raise additional funds in the capital markets to meet our capital requirements.
−Removed: If cash flow generated by our operations or available borrowings under our credit facilities are not sufficient to meet our capital requirements, or CNX is unable to obtain additional financing, CNX could be required to curtail the pace of the development of our natural gas properties and midstream activities, which in turn could lead to a decline in our reserves and production, and could adversely affect our business, financial condition and results of operations.
+Added: Without sufficient capital, CNX could be required to curtail the pace of the development of our natural gas properties and midstream activities, which in turn could lead to a decline in our reserves and production, and could adversely affect our business, financial condition and results of operations.
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.
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We also utilize third-party contractors to provide land acquisition and related services to support our land operational needs.
−Removed: The demand for these services, equipment and personnel can fluctuate significantly, often in correlation with natural gas, NGL and oil prices, causing periodic shortages.
−Removed: Weather may also play a role with respect to the relative availability of certain materials.
−Removed: Historically, there have been shortages of drilling and work-over rigs, pipe, compressors and other equipment as demand for rigs and equipment has increased along with the number of wells being drilled.
+Added: The demand for these services, equipment and personnel can fluctuate significantly, often in correlation with natural gas and NGL prices, causing periodic shortages.
+Added: Historically, there have been shortages of drilling and work-over rigs, pipe, compressors and other equipment as demand for rigs and equipment has grown, along with the number of wells being drilled and/or completed.
The costs and delivery times of equipment and supplies are substantially greater in periods of peak demand, including increased demand for plays outside of our area of geographic focus.
+Added: Weather may also play a role with respect to the relative availability of certain materials.
In addition, accelerated levels of inflation may lead to price increases beyond CNX’s control that could lead to CNX incurring increased costs for contractors and/or materials.
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Accordingly, CNX cannot be assured that we will be able to obtain necessary services, drilling and completions equipment and supplies in a timely manner or on satisfactory terms, and CNX may experience shortages of or quality assurance issues with, or increases in the costs of, drilling and completions equipment, crews and associated supplies, equipment and field services used in the support of our operations.
+Added: Our future success depends to a large extent on the services of our and our service providers’ key employees.
+Added: The loss of one or more of these individuals could materially adversely affect our business.
+Added: Furthermore, competition for experienced technical and other professional personnel, as well as diverse candidates which bring with them valuable perspectives and experiences, remains strong.
+Added: If CNX and our service providers cannot retain our current personnel or attract additional experienced personnel, our ability to compete could be adversely affected.
+Added: Also, the loss of experienced personnel could lead to a loss of technical expertise.
+Added: Continued service and equipment provider consolidation poses a potential risk to CNX of increasing the likelihood of key personnel turnover within our service providers.
+Added: Service provider consolidation also poses the risk of individuals or equipment being relocated to another basin based on the service provider’s business plan.
Shortages may lead to escalating prices, poor service, inefficient operations and increase the possibility of accidents due to the hiring of less experienced personnel and overuse of equipment by contractors.
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CNX attempts to mitigate the risks involved with increased natural gas production activity by entering into “take or pay” contracts with well service providers which commit them to provide field services to us at specified levels and commit us to pay for field services at specified levels even if we do not use those services.
−Removed: However, these types of contracts expose us to
−Removed: economic risk during a downturn in demand or during periods of oversupply.
+Added: However, these types of contracts expose us to economic risk during a downturn in demand or during periods of oversupply.
Having to pay for services we do not use decreases our cash flow and increases our costs.
−Removed: In addition, the lingering effects of the COVID-19 pandemic have materially and adversely impacted many businesses, industries, supply chains and economies.
−Removed: For further detail regarding the risks to our business resulting from COVID-19, see Risk Factor titled “ Events beyond our control, including a global or domestic health crisis, may result in unexpected adverse operating and financial results.
+Added: Global politics can also create additional risk to CNX.
+Added: This could lead to shortages in raw materials or finished goods which ultimately impact CNX’s pricing and availability.
+Added: In addition, global transportation can be impacted which can affect CNX’s ability to receive material in a timely manner, while also increasing cost.
If CNX cannot find adequate sources of water for our use or if 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 .
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Further, our operations generate significant volumes of wastewater that must be treated, reused or disposed.
−Removed: This waste can be generated from various aspects of our operations, including from drilling fluids, completions activities and normal production over the life of the well, and are associated with all types of natural gas wells.
+Added: This produced water or wastewater can be generated from various aspects of our operations, including from drilling fluids, completions activities and normal production over the life of the well, and are associated with all types of natural gas wells.
A significant portion of this water can be recycled for use in other hydraulic fracturing operations.
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Our inability to obtain sufficient amounts of water with respect to our Shale operations or to dispose of or recycle water and other wastes produced from our Shale and our CBM operations in an economically efficient manner, could increase our costs and delay our operations, which will adversely impact our cash flow and results of operations.
−Removed: 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.
−Removed: Producing natural gas, NGL and oil reservoirs generally are characterized by declining production rates that vary depending upon reservoir characteristics and other factors.
+Added: Failure to successfully replace our current natural gas reserves through economic development of our existing or acquired undeveloped assets or through acquisition of additional producing assets, would lead to a decline in our natural gas, NGL and oil production levels and reserves.
+Added: Producing natural gas and oil reservoirs generally are characterized by declining production rates that vary depending upon reservoir characteristics and other factors.
The rate of decline can change if production from our existing wells is different than what has been estimated, operating conditions change, or other circumstances arise that affect our ability to produce the wells.
−Removed: Thus, our future natural gas, NGL and oil reserves and production and, therefore, our cash flow and income are highly dependent on our estimates and our success in efficiently developing and selling our current reserves and economically finding or acquiring additional economically recoverable reserves.
−Removed: CNX may not be able to develop, find or acquire additional economically recoverable reserves to replace our current and future production at acceptable costs.
+Added: The ability to offset the declining production or natural gas reserves is dependent upon our success in efficiently developing and selling our current reserves and economically finding or acquiring additional economically recoverable reserves.
+Added: CNX may not be able to develop, find or acquire additional economically recoverable reserves to replace our current and future production at acceptable costs, which would negatively impact our future cash flows and income.
In addition, the level of natural gas, NGL and condensate volumes handled through our midstream systems depends on the level of production from natural gas wells feeding into such midstream systems, which may be less than expected and which will naturally decline over time.
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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.
−Removed: As is common in the oil and gas industry, it is our practice when CNX acquires natural gas leases or interests not to conduct a comprehensive chain of title examination to the mineral interest.
+Added: As is common in the oil and natural gas industry, it is our practice when CNX acquires natural gas leases or interests not to conduct a comprehensive chain of title examination to the mineral interest.
Prior to the drilling of a well, however, it is the normal practice in our industry for the operator to obtain a complete title review to ensure there are no obvious defects in title to the underlying property interest.
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On August 20, 2018, the EPA issued the proposed “Affordable Clean Energy Rule.” On June 19, 2019, the EPA issued the final Affordable Clean Energy Rule, replacing the Clean Power Plan.
−Removed: The Affordable Clean Energy Rule was vacated by the United States Court of Appeals for the D.C.
+Added: Affordable Clean Energy Rule was vacated by the United States Court of Appeals for the D.C.
Circuit on the last day of the Trump administration in January 2021.
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For example, the Biden administration re-entered the United States in the Paris Climate Accord, and the EPA adopted a new Climate Adaptation Action Plan in October of 2021.
+Added: Additionally, in 2022, President Biden signed the Inflation Reduction Act (IRA) which could accelerate the transition to a lower carbon economy.
+Added: The IRA provides incentives for the development of renewable energy, clean hydrogen, clean fuels and supporting infrastructure and carbon capture and sequestration.
+Added: In addition, the IRA amends the federal Clean Air Act to impose a fee on the emission of methane from sources required to report their GHG emissions to the EPA, including those sources in natural gas production and gathering.
+Added: The methane emissions charge would be imposed on emissions above specified limits and would start in calendar year 2024 at $900 per ton of methane, increase to $1,200 in 2025, and be set at $1,500 for 2026 and each year after.
+Added: The methane charge and the incentives for renewable energy infrastructure development could impose additional costs on our operations and further accelerate the transition of the economy away from the use of natural gas towards lower- or zero-carbon emissions alternatives.
+Added: This could decrease demand for natural gas and consequently adversely affect our business and results of operations.
The EPA has adopted regulations under existing provisions of the federal Clean Air Act that establish Prevention of Significant Deterioration, or PSD, construction and Title V operating permits for large stationary sources.
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Thereafter in September 2018, the EPA proposed revisions to the 2016 New Source Performance Standards for the oil and natural gas industry.
−Removed: Additional revisions were proposed in August 2019 and August 2020.
+Added: Additional revisions were proposed in August 2019, August 2020 and November 2021.
As these proposed rules and any replacements or updates thereto are adopted, changed, rescinded or modified, these rules may result in increased costs for permitting, equipping, and monitoring methane emissions or otherwise restrict operations or increase the costs thereof.
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In December 2021, the Pennsylvania Attorney General approved a proposed regulation which would allow Pennsylvania to join RGGI;
−Removed: however, the Pennsylvania
−Removed: General Assembly issued a concurrent regulatory review resolution process disapproving the proposed regulation.
−Removed: The regulation is currently subject to challenges pending in Pennsylvania appellate courts.
+Added: however, the Pennsylvania General Assembly issued a concurrent regulatory review resolution process disapproving the proposed regulation.
+Added: The regulation has been subject to challenges pending in Pennsylvania appellate courts, with one of Pennsylvania’s intermediate appellate courts ruling in November 2023 against the regulation as an improperly imposed tax in violation of the Pennsylvania Constitution.
Most of these types of programs require major sources of emissions or major producers of fuels to acquire and subsequently surrender emission allowances, with the number of allowances available being reduced each year until a target goal is achieved.
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While new laws and regulations that are aimed at reducing GHG emissions will increase demand for natural gas, they may also result in increased costs for permitting, equipping, monitoring and reporting GHGs associated with natural gas production and use.
−Removed: In addition, spurred by increasing concerns regarding climate change, the oil and gas industry face growing demand for corporate transparency and a demonstrated commitment to sustainability goals.
+Added: In addition, spurred by increasing concerns regarding climate change, the oil and natural gas industry faces growing demand for corporate transparency and a demonstrated commitment to sustainability goals.
Environmental, social and governance (ESG) goals and programs, which typically include extralegal targets related to environmental stewardship, social responsibility, and corporate governance, have become an increasing focus of investors and stakeholders across the industry.
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CNX utilizes pipelines extensively for its operations.
−Removed: Stream encroachment and crossing permits from the Army Corps of Engineers (ACOE) are often required for the location of or certain impacts these pipelines cause to streams and wetlands.
+Added: Stream encroachment and crossing permits from the states in which we operate and/or the Army Corps of Engineers (ACOE) are often required for the location of or certain impacts these pipelines cause to streams and wetlands.
The EPA and the ACOE have developed a rule that revised the definition of “waters of the United States” under the Clean Water Act.
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On August 4, 2021, the EPA and ACOE announced a rulemaking process to revise the definition of “waters of the United States.” On December 30, 2022, the EPA and ACOE announced a final rule for a “Revised Definition of ‘Waters of the United States’” which will be effective sixty days after publication in the Federal Register.
−Removed: While CNX cannot at this time predict how this rule will be enforced by the new Biden administration, such
−Removed: rulemaking, its enforcement, and future revisions to, or replacement of, the rulemaking could lead to additional mitigation costs and severely limit CNX’s operations.
+Added: On January 18, 2023, the EPA and ACOE published the final rule, which became effective on March 20, 2023.
+Added: While CNX cannot at this time predict how this rule will be enforced by the Biden administration, such rulemaking, its enforcement, and future revisions to, or replacement of, the rulemaking could lead to additional mitigation costs and severely limit CNX’s operations.
The foregoing and other regulations applicable to the natural gas industry are under constant review for modification, amendment or expansion at both the federal and state levels.
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For example, currently CNX’s gathering operations are exempt from regulation by the FERC under the Natural Gas Act (NGA).
−Removed: Although FERC has not made any formal determinations with respect to any of our gathering facilities, CNX believes that the natural gas pipelines in our gathering systems meet the traditional tests FERC has used to establish that a natural gas pipeline is a gathering pipeline not subject to FERC jurisdiction.
−Removed: However, this issue has been the subject of substantial litigation, and if FERC were to consider the status of an individual facility and determine that it is not exempt from FERC regulation under the NGA, the rates for, and terms and conditions of, services provided by such facility would become subject to regulation by FERC.
+Added: Although the FERC has not made any formal determinations with respect to any of our gathering facilities, CNX believes that the natural gas pipelines in our midstream systems meet the traditional tests the FERC has used to establish that a natural gas pipeline is a gathering pipeline not subject to the FERC jurisdiction.
+Added: However, this issue has been the subject of substantial litigation, and if the FERC were to consider the status of an individual facility and determine that it is not exempt from FERC regulation under the NGA, the rates for, and terms and conditions of, services provided by such facility would become subject to regulation by the FERC.
Such regulation could decrease revenue, increase operating costs, and depending upon the facility in question, could adversely affect results of operations and cash flows.
Additionally, some states have adopted more stringent regulation and oversight of natural gas gathering lines than is currently required by federal standards.
−Removed: Pennsylvania, under Act 127 of 2011, authorized Public Utility Commission (PUC) oversight of Class I gathering lines, and required standards and fees for Class II and Class III pipelines.
+Added: Pennsylvania, under Act 127 of 2011, authorized Public Utility Commission (PUC) to oversee Class I gathering lines, and required standards and fees for Class II and Class III pipelines.
The State of Ohio also moved to regulate natural gas gathering lines in a similar manner pursuant to Ohio Senate Bill 315 (SB315).
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For additional detail regarding the risks to our business resulting from governmental regulation, see Risk Factor titled, “ 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.
−Removed: Any such regulation that may be implemented, as well as uncertainty concerning
−Removed: such regulation and public policy pressures, could adversely impact the market for natural gas, as well as for our securities ” ( See Note 20 – Commitments and Contingent Liabilities in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for further discussion of pending legal proceedings).
−Removed: CNX may incur significant costs and liabilities as a result of pipeline operations and/or increases in the regulation of natural gas pipelines and gathering facilities.
+Added: Any such regulation that may be implemented, as well as uncertainty concerning such regulation and public policy pressures, could adversely impact the market for natural gas, as well as for our securities” (See Note 20 – Commitments and Contingent Liabilities in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for further discussion of pending legal proceedings).
+Added: CNX may incur significant costs and liabilities as a result of pipeline operations and/or increases in the regulation of natural gas pipelines and midstream facilities.
The Pipeline and Hazardous Materials Safety Administration (PHMSA) has adopted safety, transportation and operational regulations applicable to pipeline operators.
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In October 2019, PHMSA issued a final rule, effective July 2020, regarding hazardous pipeline safety regulations that significantly extends the integrity management requirements to previously exempt pipelines and imposes additional obligations on hazardous liquid pipeline operators that are already subject to the integrity management requirements.
+Added: A further amendment of the rule addressing, among other things, integrity management provisions, pipeline corrosion control requirements, and addressing repair criteria for high consequent and non-high consequence areas became effective May 5, 2023.
In October 2019, PHMSA published a final rule that significantly modifies existing regulations related to reporting, impact, design, construction, maintenance, operations and integrity management of gas transmission and gathering pipelines.
Compliance with the rule could materially adversely affect our operations.
−Removed: In May 2020, PHMSA proposed additional amendments to Federal Pipeline Safety Regulations.
+Added: In May 2020, PHMSA proposed additional
+Added: amendments to Federal Pipeline Safety Regulations.
In November 2021, PHMSA published a final rule in the Federal Register with an effective date of May 15, 2022, expanding certain federal pipeline safety requirements to all onshore gas gathering pipelines.
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Changes in federal or state tax laws focused on natural gas exploration and development could cause our financial position and profitability to deteriorate.
−Removed: Additionally, our future tax liability may be greater than expected if our net operating loss (“NOL”) carryforwards are limited, CNX does not generate expected deductions, or tax authorities challenge certain of our tax positions.
CNX is subject to extensive tax laws and regulations, including federal and state income taxes and transactional taxes such as excise, sales/use, severance, payroll, franchise and ad valorem taxes.
New tax laws and regulations and changes in existing tax laws and regulations are continuously being enacted that could result in increased tax expenditures in the future.
−Removed: The passage of future legislation or any other changes in U.S.
−Removed: federal or state income tax laws could eliminate or postpone certain tax deductions that are currently available with respect to natural gas exploration and development.
−Removed: Any such changes could negatively affect our financial condition and results of operations.
+Added: Any passage of future legislation or any other changes in U.S.
+Added: federal or state income tax laws that would eliminate or postpone certain tax deductions that are currently available with respect to natural gas exploration and development could negatively affect our financial condition and results of operations.
For example, previous tax law legislation decreased the regular U.S.
−Removed: federal income tax rate, limited the ability of corporations to take certain interest deductions, increased the limitation on deductibility of executive compensation, and have eliminated a corporation’s ability to take deductions for income attributable to domestic production activities.
−Removed: Any future tax law legislation could adversely impact our financial position, current and deferred federal and state income tax liabilities and cash flows.
+Added: federal income tax rate, limited the ability of corporations to take certain interest deductions, increased the limitation on deductibility of executive compensation, and eliminated a corporation’s ability to take deductions for income attributable to domestic production activities.
Additionally, legislation has been proposed from time to time in the states in which we operate - primarily Pennsylvania, Ohio, Virginia and West Virginia - that would impose additional taxes or increase taxes on the production from our wells.
The proposed tax rates have varied but would represent a greater financial burden on the economics of the wells we drill in these states.
−Removed: Such changes in the rates of existing production taxes could adversely impact our earnings, cash flows and financial position.
+Added: Such changes in the rates of existing production taxes could adversely impact our earnings, capital allocation, cash flows and financial position.
+Added: Our future tax liability may be greater than expected if our net operating loss (“NOL”) carryforwards are limited, CNX does not generate expected deductions, or tax authorities challenge certain of our tax positions.
As of December 31, 2023, CNX has U.S.
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Additionally, any significant variance in our interpretation of current income tax laws, including as result of the release of any Treasury Regulations or other interpretive guidance or a challenge of one or more of our tax positions by the IRS or other tax authorities could affect our tax position.
−Removed: While CNX expects to be able to utilize our NOL carryforwards and generate deductions to offset our future taxable income, in the event that deductions are not generated as expected, one or more of our tax positions are successfully challenged by the IRS (in a tax audit or otherwise), or our NOL
−Removed: carryforwards are subject to future limitations, our future tax liability may be greater than expected.
+Added: While CNX expects to be able to utilize our NOL carryforwards and generate deductions to offset our future taxable income, in the event that deductions are not generated as expected, one or more of our tax positions are successfully challenged by the IRS (in a tax audit or otherwise), or our NOL carryforwards are subject to future limitations, our future tax liability may be greater than expected.
+Added: We may be unable to qualify for existing federal and state level environmental attribute credits and new markets for environmental attributes are currently volatile, and otherwise may not develop as quickly or efficiently as we anticipate or at all.
+Added: We expect environmental attributes (including but not limited to carbon credits, air quality credits, renewable or alternative energy credits, alternate energy credits, methane capture credits, methane performance certificates, emission reductions, differentiated energy attribute tokens, offsets and/or allowances) to continue to grow as a source of future revenue.
+Added: These new markets are volatile and have significant risk associated with current market conditions.
+Added: We have limited experience in marketing and selling environmental attributes and as such, our ability to sell environmental attributes or credits is currently dependent on third parties to market them on our behalf.
+Added: Furthermore, there can be no assurance that our environmental attributes will generate significant revenue, as pricing continues to be volatile and program qualification requirements can change.
+Added: Additionally, the value of environmental attributes may fluctuate based on the quantities and types of environmental attributes we sell and the associated revenue can vary depending on a number of factors, including the market for these credits, changes to the various voluntary or compliance programs under which the credits are generated and sold, and our ability to strictly comply with the programs under which the attributes can be sold.
+Added: CNX also does not have control over the availability of environmental attributes, competition for those attributes, markets for those attributes, or pricing and other terms related to
+Added: such attributes.
+Added: The value of environmental attributes may also be adversely affected by legislative, agency, or judicial determinations.
+Added: These and other factors could impact our future results of operations and cash flows.
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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Responding to investigations or defending these actions, especially purported class actions, can be costly and can distract management.
−Removed: For example, CNX is a defendant in pending purported class action lawsuits dealing with claimants’ alleged entitlements to, and accounting for, natural gas royalties.
−Removed: Additionally, CNX is a party to four climate change lawsuits being pursued by communities against fossil fuel producers relating to climate change, which are beginning to gain prevalence in the courts.
+Added: For example, CNX is a party to four climate change lawsuits being pursued by communities against fossil fuel producers relating to climate change, which are beginning to gain prevalence in the courts.
There is also the possibility that CNX may become involved in future investigations or suits regarding its business activities.
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Financing, Investment and Indebtedness Risks
−Removed: Our current long-term debt obligations, and the terms of the agreements that govern that debt, including debt of our subsidiaries, and the risks associated therewith, could adversely affect our business, financial condition, liquidity and results of operations.
−Removed: As of December 31, 2022, CNX’s total long-term indebtedness was approximately $2.2 billion, excluding unamortized debt issuance costs, of which approximately (i) $500 million was under our 7.375% Senior Notes due 2031 less $6 million of unamortized discount, (ii) $500 million of 6.00% Senior Notes due 2029, (iii) $400 million of 4.75% Senior Notes due 2030 issued by our midstream business, less $4 million of unamortized bond discount (CNX is not a guarantor of these notes), (iv) $350 million of 7.25% Senior Notes due 2027 plus $2 million of unamortized bond premium, (v) $331 million of 2.25% Convertible Senior Notes due 2026 less $7 million of unamortized discount and issuance cost, (vi) $154 million in outstanding borrowings under our midstream revolver (CNX is not a guarantor of this revolving credit facility), and (vii) no borrowings under our senior secured credit facility (the “Credit Facility”).
+Added: Our current long-term debt obligations, and the terms of the agreements that govern that debt and the risks associated therewith, could adversely affect our business, financial condition, liquidity and results of operations.
+Added: As of December 31, 2023, CNX’s total long-term indebtedness was approximately $2.2 billion, excluding unamortized debt issuance costs, of which approximately (i) $500 million was under our 7.375% Senior Notes due 2031 less $5 million of unamortized discount, (ii) $500 million of 6.00% Senior Notes due 2029, (iii) $400 million of 4.75% Senior Notes due 2030 issued by our midstream business, less $4 million of unamortized bond discount (CNX is not a guarantor of these notes), (iv) $350 million of 7.25% Senior Notes due 2027 plus $2 million of unamortized bond premium, (v) $331 million of 2.25% Convertible Senior Notes due 2026 less $5 million of unamortized discount and issuance cost, (vi) $105 million in outstanding borrowings under our midstream revolver (CNX is not a guarantor of this revolving credit facility), and (vii) $52 million in outstanding borrowings under our senior secured credit facility (the “Credit Facility”).
The degree to which CNX is leveraged could have important consequences, including, but not limited to:
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• limiting our ability to implement our business strategy.
−Removed: Our senior secured Credit Facility and the indentures governing our 7.25% Senior Notes due 2027, 6.00% Senior Notes due 2029 and 7.375% Senior Notes due 2031 limit the incurrence of additional indebtedness unless specified tests or exceptions are met, subject our operations to compliance with certain financial covenants on a quarterly basis, and impose a number of restrictions upon us, such as restrictions on granting liens on our assets, making investments, paying dividends, stock repurchases, selling assets and engaging in acquisitions.
+Added: Our senior secured revolving credit facility and the indentures governing certain of our Senior Notes limit the incurrence of additional indebtedness unless specified tests or exceptions are met, subject our operations to compliance with certain financial covenants on a quarterly basis, and impose a number of restrictions upon us, such as restrictions on granting liens on our assets, making investments, paying dividends, stock repurchases, selling assets and engaging in acquisitions.
Failure to comply with these covenants could result in an event of default that, if not cured or waived, could materially adversely affect us.
−Removed: Further, CNX Midstream Partners LP’s (CNXM) existing $600 million revolving credit facility and CNXM’s $400 million of 4.75% Senior Notes, neither of which are guaranteed by CNX, subjects CNXM to similar financial and/or other restrictive covenants and other restrictions.
+Added: Further, CNX Midstream Partners LP’s (CNXM) existing $600 million revolving credit facility and $400 million of 4.75% Senior Notes, neither of which are guaranteed by CNX, subjects CNXM to similar financial and/or other restrictive covenants and other restrictions.
If our cash flows and capital resources are insufficient to fund our debt service obligations, including repayment of such obligations at maturity, CNX may be:
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In the absence of such operating results and resources, CNX could face substantial liquidity problems and might be required to sell material assets or operations to attempt to meet our debt service and other obligations;
−Removed: however, our existing debt documents restrict our ability to sell assets and the use of the proceeds from the sales, such that we may not be
−Removed: able to consummate those sales or to obtain the proceeds which we could realize from them and these proceeds may not be adequate to meet any debt service obligations then due.
−Removed: Our borrowing base under our senior secured credit facility could decrease for a variety of reasons including lower natural gas prices, declines in natural gas proved reserves, asset sales and lending requirements or regulations.
+Added: however, our existing debt documents restrict our ability to sell assets and the use of the proceeds from the sales, such that we may not be able to consummate those sales or to obtain the proceeds which we could realize from them and these proceeds may not be adequate to meet any debt service obligations then due.
+Added: Our borrowing base under our senior secured revolving credit facility could decrease for a variety of reasons including lower natural gas prices, declines in natural gas reserves, asset sales and lending requirements or regulations.
Significant reductions in our borrowing base below $2.3 billion could materially adversely affect our results of operations, financial condition and liquidity.
−Removed: Our ability to borrow and have letters of credit issued under our $1.3 billion senior secured Credit Facility is generally limited to a borrowing base.
+Added: Our ability to borrow and have letters of credit issued under our $1.4 billion senior secured revolving credit facility is generally limited to a borrowing base.
Our borrowing base is determined by the required number of lenders in good faith calculating a loan value of the Company’s proved natural gas reserves.
−Removed: The borrowing base under our Credit Facility is currently $2.3 billion.
+Added: The borrowing base under our senior secured revolving credit facility is currently $2.3 billion.
Our borrowing base is redetermined by the lenders twice per year, and the next scheduled borrowing base redetermination is expected to occur in the Spring of 2024.
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CNX may not be able to consummate those sales or to obtain the proceeds which CNX could realize from them, and those proceeds may not be adequate to meet any debt service obligations then due.
−Removed: The capped call transactions may affect the value of the Convertible Notes and our common stock.
−Removed: In connection with the pricing of the Convertible Notes, CNX entered into capped call transactions with certain financial institutions.
−Removed: The capped call transactions are expected generally to reduce the potential dilution to our common stock upon any conversion of the Convertible Notes and/or offset any potential cash payments CNX is required to make in excess of the principal amount of converted Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap.
−Removed: In connection with establishing their initial hedges of the capped call transactions, these financial institutions or their respective affiliates purchased shares of our common stock and/or entered into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the Convertible Notes.
−Removed: These financial institutions or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions following the pricing of the Convertible Notes and prior to the maturity of the Convertible Notes (and are likely to do so during any observation period related to a conversion of Convertible Notes).
−Removed: This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the Convertible Notes.
−Removed: The potential effect, if any, of these transactions and activities on the price of our common stock or the Convertible Notes will depend in part on market conditions and cannot be ascertained at this time.
−Removed: Any of these activities could adversely affect the value of our common stock.
−Removed: CNX is subject to counterparty performance risk with respect to the capped call transactions.
−Removed: The counterparties to the capped call transactions are financial institutions or affiliates of financial institutions, and CNX will be subject to the risk that they might default under the capped call transactions.
−Removed: Our exposure to the credit risk of the counterparties will not be secured by any collateral.
−Removed: Global economic conditions have from time to time resulted in the actual or perceived failure or financial difficulties of many financial institutions.
+Added: The capped call transactions may affect the value of the Convertible Notes and our common stock, and subject CNX to counterparty performance risk.
+Added: Concurrently with the pricing of the Convertible Notes, CNX entered into capped call transactions with certain financial institutions, which are expected generally to reduce the potential dilution to our common stock upon any conversion of the Convertible Notes and/or offset any potential cash payments CNX is required to make in excess of the principal amount of converted Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap.
+Added: In connection with establishing their initial hedges of the capped call transactions, these financial institutions or their respective affiliates purchased shares of our common stock and/or entered into various derivative transactions with respect to our common stock, and they may modify their hedge positions by entering into or unwinding various derivatives and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Convertible Notes (and are likely to do so during any observation period related to a conversion of Convertible Notes).
+Added: Further, CNX will be subject to the unsecured risk that the financial institutions might default under the capped call transactions.
If a counterparty becomes subject to insolvency proceedings with respect to such counterparty’s obligations under the relevant capped call transaction, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under our transactions with that counterparty.
Our exposure will depend on many factors, but, generally, the increase in our exposure will be positively correlated to the increase in the market price and in the volatility of our common stock.
+Added: The potential effect, if any, of these transactions and activities on the price of our common stock or the Convertible Notes will depend in part on market conditions and cannot be ascertained at this time.
In addition, upon a default by a counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock.
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In addition, applicable law, regulatory authorities and the agreements governing our other indebtedness may restrict our ability to repurchase the Convertible Notes or pay the cash amounts due upon conversion.
−Removed: Our inability to satisfy our obligations under the Convertible Notes could harm our reputation and affect the trading price of our common stock.
−Removed: Our failure to repurchase the Convertible Notes or to pay the cash amounts due upon conversion when required will constitute a default under the indenture.
+Added: Our failure to repurchase the Convertible Notes or to pay the cash amounts due upon conversion when required would constitute a default under the indenture.
A default under the indenture or the occurrence of the fundamental change itself could also lead to a default under agreements governing our other indebtedness, which may result in that other indebtedness becoming immediately payable in full.
CNX may not have sufficient funds to satisfy all amounts due under the other indebtedness and the Convertible Notes.
+Added: The occurrence of any of these events as a result of our inability to satisfy our obligations under the Convertible Notes could also negatively affect our reputation and affect the trading price of our common stock.
The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results.
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Our future growth prospects are dependent upon our ability to identify optimal strategies for investing our capital resources to produce superior rates of return.
−Removed: In developing our business plan, we consider allocating capital and other resources to various aspects of our businesses including well development, reserve acquisitions, exploratory activity, corporate items
−Removed: (including share and debt repurchases) and other alternatives, including investments into new proprietary technologies and strategies surrounding the generation and monetization of environmental attributes from our operations, including but not limited to carbon credit offsets.
+Added: In developing our business plan, we consider allocating capital and other resources to various aspects of our businesses including well development, reserve acquisitions, exploratory activity, corporate items (including share and debt repurchases) and other alternatives, including investments into new proprietary technologies and strategies surrounding the generation and monetization of environmental attributes from our operations, including but not limited to carbon credit offsets.
We also consider our likely sources of capital, including cash generated from operations and borrowings under our credit facilities.
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If CNX fails to identify optimal business strategies, optimize our capital investment and capital raising opportunities, use our other resources in furtherance of our business strategies, make appropriate capital investment decisions, or anticipate regulatory, policy and market changes associated with any of our strategic determinations, our financial condition and future growth may be adversely affected.
−Removed: Moreover, economic or other circumstances may change from those contemplated by our business plan, and our failure to recognize or respond to those changes may limit our ability to achieve our objectives.
−Removed: CNX does not completely control the timing of divestitures that CNX plans to engage in, and they may not provide anticipated benefits.
+Added: Moreover, economic or other circumstances may change from those contemplated by our
+Added: business plan, and our failure to recognize or respond to those changes may limit our ability to achieve our objectives.
+Added: CNX does not completely control the timing of any divestitures that CNX may engage in, and they may not provide anticipated benefits.
Additionally, CNX may be unable to acquire additional properties in the future and any acquired properties may not provide the anticipated benefits.
10 unchanged sentences
Any determinations to repurchase shares of our common stock will be at the discretion of our board of directors based upon a review of all relevant considerations.
−Removed: CNX currently has a repurchase program in place authorized by our board of directors, which is not subject to an expiration date, and for which $430 million remains available for repurchases as of January 17, 2023.
+Added: CNX currently has a repurchase program in place authorized by our board of directors, which is not subject to an expiration date, and for which $1.1 billion remains available for repurchases as of February 6, 2024.
The repurchase program does not require us to acquire any specific number of shares.
Our board of directors determination to repurchase shares of our common stock will depend upon market conditions, applicable legal requirements, contractual obligations and other factors that the board of directors deems relevant.
−Removed: Based on an evaluation of these factors, our board of directors may determine not to repurchase shares or to repurchase shares at reduced levels from those anticipated by our shareholders.
−Removed: See Note 5 – Stock Repurchase in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for further discussion.
+Added: Based on an evaluation of these factors, our board of directors may determine not to repurchase shares or to repurchase shares at reduced levels from those anticipated by our shareholders See Note 5 – Stock Repurchase in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for further discussion.
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.
As is common in the natural gas industry, CNX may operate one or more of our properties with a joint venture partner, or contract with a third-party to control operations.
−Removed: These relationships could require us to share operational and other control, such that CNX may no longer have the flexibility to control completely the development of these properties.
+Added: These relationships could require us to share operational and other control, such that CNX may no longer have the flexibility to control completely the development and operation of these properties.
If CNX does not timely meet our financial commitments in such circumstances, our rights to participate may be adversely affected.
If a joint venture partner is unable or fails to pay its portion of development costs or if a third-party operator does not operate in accordance with our expectations, our costs of operations could be increased.
−Removed: CNX could also incur liability as a result of actions taken by a joint venture partner or third-party operator.
+Added: CNX could also incur liability as a result of actions taken or not taken by a joint venture partner or third-party operator.
Disputes between us and the other party may result in litigation or arbitration that would increase our expenses, delay or terminate projects and distract our officers and directors from focusing their time and effort on our business.
6 unchanged sentences
Although CONSOL Energy agreed to indemnify us to the extent that we are called upon to pay any of these liabilities, there is no assurance that CONSOL Energy will satisfy its obligations to indemnify us in these situations.
−Removed: For example, we could be liable for liabilities assumed by Murray Energy and its subsidiaries (Murray Energy) in connection with the disposition of certain mines to Murray Energy in 2013 in the event that both Murray Energy and CONSOL Energy are unable to satisfy those liabilities.
Indemnities that CNX may be required to provide CONSOL Energy are not subject to any cap, may be significant and could negatively impact our business.
7 unchanged sentences
Cyber-incidents targeting our systems, oil and natural gas industry systems and infrastructure, or the systems of our third-party service providers could materially adversely affect our business, financial condition or results of operations.
−Removed: Cyber-incidents, including cyber-attacks, may significantly affect us, third party operators on whom we depend, or the operations of our customers and business partners, as well as impact general economic conditions, consumer confidence and spending and market liquidity.
+Added: Cyber-incidents, including cybersecurity incidents, data misuse and ransomware attacks, continue to proliferate and become more sophisticated, and could significantly affect us, third party operators on whom we depend, or the operations of our customers and business partners, as well as impact general economic conditions, consumer confidence and spending and market liquidity.
Strategic targets, including energy-related assets, may be at greater risk of future incidents than other targets in the United States.
2 unchanged sentences
Our insurance may not protect us against all such occurrences.
−Removed: The oil and natural gas industry has become increasingly dependent upon digital technologies, including information systems, infrastructure and cloud applications and services, to operate our businesses, process and record financial and operating data, communicate with our employees and business partners, analyze seismic and drilling information, estimate quantities of natural gas reserves, monitor and control our field equipment and assets and perform other activities related to our businesses.
+Added: The natural gas industry, and our business partners have become increasingly dependent upon digital technologies, including information systems, infrastructure and cloud applications and services, and third-party risk management and oversight to operate our businesses, process and record financial and operating data, market our natural gas, arrange transportation, communicate with our employees and business partners, analyze geologic and operational information, estimate quantities of natural gas reserves, monitor and control our field equipment and assets and perform other activities related to our businesses.
Our business partners, including vendors, service providers and financial institutions, are also dependent on digital technology.
3 unchanged sentences
Our technologies, systems, networks, data centers and those of our business partners and suppliers may become the target of cyber-incidents or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of proprietary and other information, or other disruption of our business operations.
−Removed: In addition, certain cyber
−Removed: incidents, such as surveillance, may remain undetected for an extended period.
+Added: In addition, certain cyber incidents, such as surveillance, may remain undetected for an extended period.
Deliberate attacks on our assets, or security breaches in our systems or infrastructure, the systems or infrastructure of third-parties or off-premise service providers could lead to corruption or loss of our proprietary data and potentially sensitive data, delays in production or delivery, difficulty in completing and settling transactions, challenges in maintaining our books and records, environmental damage, communication interruptions, damage to our reputation, other operational disruptions and third-party liability, including the following:
2 unchanged sentences
• a cyber-incident impacting a communications network or power grid could cause operational disruption resulting in impact to our production;
+Added: • A cyber-incident affecting an interstate pipeline company could result in an inability to deliver our natural gas to certain markets;
• a deliberate corruption of our financial or operational data could result in events of non-compliance which could lead to regulatory fines or penalties;
4 unchanged sentences
Cyber-attacks continue to evolve in frequency and complexity.
−Removed: While no industry is immune, Industrial Networks have come under increased targeted attacks recently (examples, Colonial Pipeline and JBS Foods Group).
+Added: While no industry is immune, industrial networks have come under increased targeted attacks recently (such as, Colonial Pipeline and JBS Foods Group).
This has led to increased scrutiny by cyber insurance carriers.
1 unchanged sentence
Our ability to obtain insurance to mitigate the financial impact of cyber incidents may be challenged by the future prevalence and nature of incidences experienced by companies and insurance markets willingness to underwrite this risk.
−Removed: Our success depends on key members of our management and our ability to attract and retain experienced technical and other professional personnel.
−Removed: Our future success depends to a large extent on the services of our key employees.
−Removed: The loss of one or more of these individuals could materially adversely affect our business.
−Removed: Furthermore, competition for experienced technical and other professional personnel, as well as diverse candidates which bring with them valuable perspectives and experiences, remains strong.
−Removed: If CNX cannot retain our current personnel or attract additional experienced personnel, our ability to compete could be adversely affected.
−Removed: Also, the loss of experienced personnel could lead to a loss of technical expertise.
Terrorist activities could materially adversely affect our business and results of operations.
3 unchanged sentences
Our insurance may not protect us against such occurrences.
−Removed: Unresolved Staff Comments
−Removed: See “Detail of Operations” in Part I.
−Removed: Item 1 of this Form 10-K for a description of CNX's properties.
−Removed: Legal Proceedings
−Removed: The first three paragraphs of “Note 20 – Commitments and Contingent Liabilities” in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K are incorporated herein by reference.
−Removed: Mine Safety Disclosures
−Removed: Not applicable.
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.