What changed in this filing

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Item 1. Business

2025-02-11 compared with 2024-02-08 · 51 added, 50 removed, 481 unchanged (17% of the section changed)

CNX Resources Corporation (“CNX,” the “Company,” or “we,” “us,” or “our”) is a premier independent low carbon intensity natural gas development, production, midstream and technology company centered in the Appalachian Basin.

CNX Resources Corporation (“CNX,” the “Company,” or “we,” “us,” or “our”) is a premier independent ultra-low carbon intensity natural gas development, production, midstream and technology company centered in the Appalachian Basin.

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

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• 99.1% operated.

On January 27, 2025, the Company completed the acquisition of the natural gas upstream and associated midstream business of Apex Energy II, LLC (“the Apex Transaction") for total cash consideration of approximately $505 million, subject to certain post-closing adjustments.

See Note 22 – Subsequent Event in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for more information.

In 2025, CNX expects capital expenditures to be between $450 million and $500 million.

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CNX also has rights to extract CBM from approximately 1,863,000 net CBM acres, and rights to capture CMM from various active and abandoned mines in other states including West Virginia, Pennsylvania, Ohio, Illinois, Indiana, and New Mexico;

however, the Company has no current plans to drill CBM wells or capture CMM in these areas.

however, although the Company has very limited activity in some of these areas, there are no current plans to drill additional CBM wells or capture CMM in these areas.

The Company may reevaluate plans as opportunities present themselves.

We have rights to extract natural gas from other Shale and shallow oil and gas formations primarily in Illinois, Indiana, New York, Ohio, Pennsylvania, Virginia, and West Virginia from approximately 938,000 net acres at December 31, 2024.

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

Additional adjustments (either increases or decreases) may be required as we further develop title to and further confirm our rights with respect to our various

properties in anticipation of development.

Additional adjustments (either increases or decreases) may be required as we further develop title to and further confirm our rights with respect to our various properties in anticipation of development.

We believe that our assumptions and methodology in this regard are reasonable.

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There were no net dry development wells in 2024, 2023 or 2022.

As of December 31, 2023, there were no net completed developmental wells ready to be turned in-line.

As of December 31, 2024, there were 9.0 net completed developmental wells ready to be turned in-line.

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

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Total 8,825 7,410 6,333

Sales Volume (MMcfe)

Shale 52,949 44,460 37,995

Total 52,949 44,460 37,995

Oil and Condensate*

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Total 158 206 246

Sales Volume (MMcfe)

Shale 928 1,215 1,441

Other 16 23 37

Total 944 1,238 1,478

Total Sales Volume (MMcfe)

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

CNX expects 2024 annual sales volumes to be approximately 570-590 Bcfe (This includes approximately 15-18 Bcfe of coal mine methane.

See New Technologies below for more information).

CNX expects 2025 annual sales volumes to be approximately 605-620 Bcfe.

Average Sales Price and Average Lifting Cost

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Across all volumes, when excluding the impact of hedging, sales of liquids added $0.17 per Mcfe, $0.12 per Mcfe, and $0.02 per Mcfe for 2024, 2023, and 2022, respectively, to average gas sales prices.

CNX expects to continue to realize a liquids uplift benefit as additional wells are turned-in-line, primarily in the liquid-rich areas of the Marcellus Shale.

We continue to sell the majority of our NGLs through the large midstream companies that process our natural gas.

This approach allows us to take advantage of the processors’ transportation efficiencies and diversified markets.

CNX directly markets certain NGLs taken “in-kind” pursuant to processing contracts that provide for the ability to take our NGLs “in-kind.” The processed purity products are ultimately sold to industrial, commercial and petrochemical markets.

CNX expects to continue to realize a liquids uplift benefit as additional Shale wells are turned-in-line.

CNX markets NGLs to major midstream companies that process our natural gas, as well as through direct "in-kind" sales under processing contracts that permit the receipt of NGLs in kind.

This strategy enables us to capitalize on the transportation efficiencies of processors while strategically accessing the market at the plant tailgates and further along the transportation infrastructure.

The processed purity products are ultimately sold to industrial, commercial and petrochemical markets.

In order to manage the market risk exposure of volatile natural gas prices in the future, CNX enters into various physical natural gas supply transactions with both gas marketers and end users for terms varying in length.

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The notional volumes associated with these gas swaps represented approximately 420.3 Bcf of our total sales volumes for the year ended December 31, 2023 at an average price of $2.51 per Mcf.

As of January 5, 2024, these physical and swap transactions 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.

As of January 15, 2025, these physical and swap transactions represent approximately 478.9 Bcf of our estimated 2025 production at an average price of $2.58 per Mcf, 432.3 Bcf of our estimated 2026 production at an average price of $2.67 per Mcf, 304.4 Bcf of our estimated 2027 production at an average price of $3.28 per Mcf, 51.6 Bcf of our estimated 2028 production at an average price of $3.64 per Mcf, and a nominal amount of our estimated 2029 production.

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

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In the near term, we anticipate the majority of our New Technologies’ earnings to result from CMM capture activities being monetized through the Pennsylvania Alternative Energy Portfolio Standard (AEPS) program, other compliance programs, and sales to various voluntary market counterparties that desire to purchase carbon offsets to be used towards their own emission reduction goals.

As mining progresses, new sources of waste methane are created every year throughout our region, in addition to the currently unabated sources that exist from historical mining activity.

Each of these potential abatement opportunities represents a stand-alone discrete investment decision.

While CNX will make new investments each year to capture some of these unabated sources, currently available incentives do not provide sufficient economic justification to significantly expand our activities.

As such, we do not anticipate any major investments in new capture projects until an alternate monetization pathway improves the economics of these projects.

We expect the annual volumes of waste methane captured for 2025 that would qualify for these various programs to be approximately 17-18 Bcfe.

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The ability to achieve commercial success with these activities is dependent on, among other considerations, successful testing and validation of our technology and future market adoption.

To date, no revenue has been generated associated with these activities.

To date, there has been no material impact to the financial statements associated with these activities.

Derivative Products.

CNX believes that using natural gas as a sustainable fuel source for high-emitting economic sectors like transportation, manufacturing, and other industrial processes could dramatically reduce emissions footprints in those sectors while creating new vertical markets for compressed natural gas (CNG) and liquefied natural gas (LNG) and help fast-track the implementation of downstream products such as hydrogen and ammonia.

As an active participant in West Virginia’s pursuit of a regional hydrogen energy hub, CNX joined the Appalachian Regional Clean Hydrogen Hub (ARCH2) coalition in 2022.

CNX is an active participant in West Virginia’s pursuit of a regional hydrogen energy hub, CNX joined the Appalachian Regional Clean Hydrogen Hub (ARCH2) coalition in 2022.

CNX brings local expertise, low-carbon technology capabilities, infrastructure, and carbon capture and storage (CCS) skill sets to the coalition, which is composed of energy producers, end-users, infrastructure developers and technological experts.

CNX expects capital expenditures associated with New Technologies and other emission reduction activities to be between $5 million to $10 million in 2024.

As mining progresses, new sources of waste methane are created every year throughout our region, in addition to the currently unabated sources that exist from historical mining activity.

Each of these potential abatement opportunities represents a stand-alone discrete investment decision.

As such, we do not anticipate any major investments in new capture projects until an alternate monetization pathway improves the economics of these projects.

Non-Core Mineral Assets and Surface Properties

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

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

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

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

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

Fundamentally, daily on-site safety meetings, job safety analyses and the universal expectation for any employee or contractor to stop work if a risk is identified combine to enforce our cultural focus on health, safety, and environmental awareness, also known as Operational Excellence.

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

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

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

Diversity and Inclusion .

CNX values diversity throughout the organization.

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

CNX prioritizes diversity within recruiting and hiring practices and believes in cultivating a culture sensitive to the importance of diversity in the workplace.

In addition, the Company’s Diversity & Inclusion Advisory Council (D&I Council) and cross-training rotational program for diverse employees augment the Company’s broader talent management and diversity goals.

The D&I Council hosts/facilitates multiple events throughout the year to create awareness and training opportunities focused on a variety of topics.

These events allow employees to be exposed to cultural experiences of individuals with identities that may be different from their own and gives them the opportunity to learn how others may experience the same workplace in very different ways.

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

CNX believes that a diverse, talented team – providing varied perspectives, and working together with trust, respect, and professionalism across the entire organization – is critical for innovation, problem solving, and promoting a positive culture, achieving our goals, and thriving in an ever-changing world.

Our initiatives reflect our deep commitment to diversity of thought, experience, and skill, and our focus on creating opportunities for the people and communities in our home region – Appalachia.

We are committed to ensuring that everyone is welcome and has the same opportunities for career advancement, including access to training, mentorship, and professional development.

We embrace employees of all backgrounds and experiences and invest in the personal and professional success of everyone.

Employee Attraction and Retention .

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

CNX recognizes the importance of attracting and retaining top talent to help drive our Sustainable Business Model.

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

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

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

Health and Safety.

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

CNX employs stop work empowerment, where every person working at CNX locations is empowered to stop work if they feel there is a safety risk to themselves or others.

Health, Safety and Environmental.

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

CNX employs stop work empowerment, where every person working at CNX locations is empowered to stop work if they feel there is a risk to themselves or others.

This empowerment approach is reactive, when necessary, but also includes proactive measures such as procedural enhancements and communication.

CNX further promotes empowerment through its CNX Hazard Training compliance, and verification of contractor training and short service employee program.

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

The evaluation of our health and safety performance is an ongoing, daily discussion, with key performance indicators being regularly monitored and analyzed for trends across operations.

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

The evaluation of our health, safety and environmental performance is an ongoing, daily discussion, with key performance indicators being regularly monitored and analyzed for trends across operations.

As trends are identified, CNX utilizes the information to amend policies, training and company-wide communication.

CNX’s hybrid approach, where the traditional safety group is merged with an operational field compliance team, forms the Operational Excellence department.

The Operational Excellence department falls under the direction of the Chief Operating Officer.

The Environmental, Safety and

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

CNX employs safety, health, compliance, and quality professionals with a variety of certifications such as an Occupational Health Nurse, Emergency Medical Technicians, Certified Safety Professionals, Certified Welding Inspectors, and Certified Piping Inspectors.

CNX’s hybrid approach, where the traditional safety and environmental teams are merged with an operational field compliance team, forms the Operational Excellence department.

The Environmental, Safety and Corporate Responsibility (ESCR) Committee of the Board of Directors is kept apprised of quality, health, safety, and environmental related matters on an as needed basis and in ESCR Committee meetings.

Emergency Preparedness and Response.

Emergency response plans are developed for all CNX locations and operations.

The plans are reviewed for effectiveness biannually and are communicated to affected employees through safety meetings and training.

The plans are reviewed for effectiveness biannually and are communicated to affected employees through safety and environmental meetings and training.

Drills and mock emergency exercises are conducted to ensure all employees understand their roles and responsibilities during an actual event.

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

Factors - Climate change risk, legislation, litigation and regulation of greenhouse gas emissions at the federal or state level may increase our operating costs and reduce the value of our natural gas assets” for additional discussion regarding certain laws and regulations related to climate change, greenhouse gas and related matters.

See “Risk Factors - Climate change risk, legislation, litigation and regulation of greenhouse gas emissions at the federal or state level may increase our operating costs and reduce the value of our natural gas assets” for additional discussion regarding certain laws and regulations related to climate change, greenhouse gas and related matters.

Real Estate and Title Regulations.

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

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

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

Financial and Derivatives Regulations.

In 2010, Congress adopted comprehensive financial reform legislation that established federal oversight and regulation of the OTC derivative market and entities, such as the Company, which participate in that market.

This legislation, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), required the CFTC, the SEC and other regulatory agencies to promulgate rules and regulations implementing this legislation.

This legislation, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), required the CFTC, the SEC and other regulatory agencies to promulgate rules and regulations implementing this legislation.

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

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• 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.

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

• Uncertainties exist in the estimation of the economic recovery of natural gas reserves.

• 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.

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• 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.

• 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.

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

• If CNX cannot find adequate sources of water for our use or 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.

• 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.

• 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.

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

Legal, Environmental and Regulatory Risks

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• 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.

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

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Other General Risks

• 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.

• Cybersecurity incidents targeting our data, systems, oil and natural gas industry systems and infrastructure, or the systems of our third-party service providers or business partners could materially adversely affect our business, financial condition or results of operations.

• Terrorist activities could materially adversely affect our business and results of operations.

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

What changed 10-K

Item 1. Business