Item 7A. Quantitative and Qualitative Disclosures About Market Risk
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In addition to the risks inherent in operations, CNX is exposed to certain financial, market, political and economic risks. The following discussion provides additional detail regarding CNX's exposure to the risks of changing commodity prices, interest rates and foreign exchange rates.
CNX is exposed to market price risk in the normal course of selling natural gas and NGLs. CNX uses fixed-price contracts, options and derivative commodity instruments (over-the-counter swaps) to minimize exposure to market price volatility in the sale of natural gas and NGLs. Under our risk management policy, it is not our intent to engage in derivative activities for speculative purposes. Typically, CNX "sells" swaps under which it receives a fixed price from counterparties and pays a floating market price, but occasionally CNX may find it advantageous to purchase, rather than "sell", financial swaps.
CNX has established risk management policies and procedures to strengthen the internal control environment of the marketing of commodities produced from its asset base. All of the derivative instruments without other risk assessment procedures are held for purposes other than trading. They are used primarily to mitigate uncertainty and volatility and cover underlying exposures. The Company's market risk strategy incorporates fundamental risk management tools to assess market price risk and establish a framework in which management can maintain a portfolio of transactions within predefined risk parameters.
CNX believes that the use of derivative instruments, along with our risk assessment procedures and internal controls, mitigates our exposure to material pricing risks. The use of derivative instruments without other risk assessment procedures could materially affect the Company's results of operations depending on market prices; however, we believe that use of these instruments will not have a material adverse effect on our financial position or liquidity due to our risk assessment procedures and internal controls.
For a summary of accounting policies related to derivative instruments, see Note 1 – Significant Accounting Policies in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K.
CNX’s open derivative instruments can cause earnings volatility relative to changes in market prices until the derivative contracts are either settled or are monetized prior to settlement. At December 31, 2025 and 2024, our open commodity derivative instruments were in a net liability position with fair values of $296 million and $536 million, respectively. A sensitivity analysis has been performed to determine the incremental effect on future earnings related to open derivative instruments at December 31, 2025 and 2024. A hypothetical 10 percent increase in future natural gas prices would have decreased the fair value by $423 million and $518 million at December 31, 2025 and 2024, respectively. A hypothetical 10 percent decrease in future natural gas prices would have increased the fair value by $423 million and $518 million at December 31, 2025 and 2024, respectively.
CNX's interest expense is sensitive to changes in the general level of interest rates in the United States. The Company has used derivative instruments in the past in order to manage risk related to interest rates, although there are currently no active agreements (see Note 19 – Derivative Instruments in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for additional information). At December 31, 2025 and 2024, CNX had $2,219 million and $2,132 million, respectively, aggregate principal amount of debt outstanding under fixed-rate instruments, including unamortized debt issuance costs of $8 million and $9 million, respectively. At December 31, 2025 and 2024, CNX had $233 million and $59 million, respectively, of debt outstanding under variable-rate instruments. CNX’s primary exposure to market risk for changes in interest rates relates to CNX’s Credit Facility, under which there was $200 million of borrowings at December 31, 2025 and $43 million of borrowings at December 31, 2024, and CNXM's Credit Facility, under which there was $33 million of borrowings at December 31, 2025 and $16 million at December 31, 2024. A hypothetical 100 basis-point increase in the average rate for CNX's variable-rate instruments would decrease pre-tax future earnings as of December 31, 2025 and 2024 by approximately $2 million and $1 million, respectively, on an annualized basis.
All of CNX's transactions are denominated in U.S. dollars, and, as a result, it does not have material exposure to currency exchange-rate risks.
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Natural Gas Hedging Volumes
As of January 8, 2026, the Company's hedged volumes for the periods indicated are as follows:
For the Three Months Ended
March 31, June 30, September 30, December 31, Total Year
2026 Fixed Price Volumes
Hedged Bcf 111.3 111.9 113.0 113.0 448.8*
Weighted Average Hedge Price per Mcf $ 2.84 $ 2.72 $ 2.72 $ 2.70 $ 2.74
2027 Fixed Price Volumes
Hedged Bcf 96.0 95.2 96.3 94.3 379.3*
Weighted Average Hedge Price per Mcf $ 3.28 $ 3.27 $ 3.27 $ 3.31 $ 3.28
2028 Fixed Price Volumes
Hedged Bcf 45.0 47.3 47.9 46.3 186.5
Weighted Average Hedge Price per Mcf $ 3.23 $ 3.27 $ 3.27 $ 3.24 $ 3.25
*Quarterly volumes do not add to annual volumes inasmuch as a discrete condition in individual quarters, where basis hedge volumes exceed NYMEX hedge volumes, does not exist for the year taken as a whole.
Note: Table excludes basis only hedges of 21.0 Bcf for 2029.
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