CNX Resources Stock

CNX Resources Corporation (CNX) operates as an independent low carbon intensity natural gas development, production, midstream and technology company centered in the Appalachian Basin.

The majority of the company’s operations are centered on unconventional shale formations, primarily the Marcellus Shale and Utica Shale, in Pennsylvania, Ohio and West Virginia. Additionally, the company operates and develops Coalbed Methane (CBM) properties in Virginia. CNX gas operations are primarily located in the eastern United States, specifically the Appalachian Basin.

Strategy

CNX’s strategy is to use the company’s substantial asset base, leading core operational competencies, and technology development and innovation methodologies to responsibly develop the company’s resources and create long-term value for its shareholders.

The company deploys a strategy focused on responsibly developing its resources to create long-term per share value for its shareholders, as well as enhancing the communities where it operates.

Operations

The company’s operations include the following plays:

Shale

The company’s Shale properties represent its primary operating and growth area in terms of reserves, production, and capital investment. The company has rights to extract natural gas from Shale formations in Pennsylvania, West Virginia, and Ohio from approximately 527,000 net Marcellus Shale acres and approximately 607,000 net Utica Shale acres as of December 31, 2023. Approximately 341,000 Utica Shale acres coincide with Marcellus Shale acreage in Pennsylvania, West Virginia, and Ohio.

The Upper Devonian Shale formation, which includes both the Burkett Shale and Rhinestreet Shale, lies above the Marcellus Shale formation in southwestern Pennsylvania and northern West Virginia. The company holds approximately 53,000 acres of incremental Upper Devonian acres, however, these acres have historically not been disclosed separately as they generally coincide with the company’s Marcellus acreage, and the company has no drilling program targeting this formation.

Coalbed Methane (CBM)

The company had rights to extract CBM in Virginia from approximately 278,000 net CBM acres as of December 31, 2023. The company extracts CBM natural gas primarily from the Pocahontas #3 seam. CNX also has the right to capture Coal Mine Methane (CMM) from active and abandoned mines in this region. The CMM the company captures would otherwise be vented into the atmosphere as third-party mining operations progress.

CNX also has rights to extract CBM from approximately 1,755,000 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.

Producing Wells

Most of the company’s development wells and proved acreage are located in Virginia, West Virginia, Ohio, and Pennsylvania.

Other Gas

The company has 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 939,000 net acres as of December 31, 2023. The majority of the company’s shallow oil and gas leasehold position is held by third-party production and all of it is extensively overlain by existing third-party natural gas gathering and transmission infrastructure.

Midstream Gas Services

CNX designs, builds, and operates natural gas gathering systems to move natural gas from the wellhead to interstate pipelines or other local sales points. In addition, over time CNX has acquired extensive gathering assets through acquisitions. CNX owns or operates approximately 2,700 miles of natural gas gathering pipelines, as well as a number of natural gas processing facilities.

CNX owns substantially all of its Shale gathering systems in Pennsylvania and West Virginia. With respect to CNX’s Shale wells in Ohio, CNX primarily contracts with third-party gathering services. CNX also provides natural gas gathering services to third parties.

CNX has developed a diversified portfolio of firm transportation capacity options to support its production. CNX plans to selectively acquire firm capacity on an as-needed basis, while minimizing transportation costs and long-term financial obligations. Optimization of the company’s firm transportation portfolio may also include, from time to time and as appropriate, releasing firm transportation to others. CNX also benefits from the strategic location of the company’s primary production areas in southwestern Pennsylvania, northern West Virginia and eastern Ohio. These areas are served by a large concentration of major pipelines that provide CNX with access to major gas markets without the necessity of transporting the company’s natural gas out of the region. In addition to firm transportation capacity, CNX has developed a processing portfolio to support produced volumes from its wet gas production areas and has the operational and contractual flexibility to potentially convert a portion of processed wet gas volumes to be marketed as dry gas volumes, or vice-versa, as economically appropriate.

CNX also supplies turn-key solutions for water sourcing, delivery and disposal for the company’s natural gas operations and supplies solutions for water sourcing, as well as delivery and disposal for third parties. In coordination with the company’s midstream operations, CNX works to develop solutions that coincide with its midstream operations to offer natural gas gathering and water delivery solutions in one package to third parties.

Marketing

The principal markets for the company’s natural gas are in the Appalachian Basin where the company sells natural gas to gas marketers, industrial customers, local distribution companies, and power generation facilities.

Although the company owns midstream facilities, the company also gathers, processes, and transports its natural gas to market by utilizing pipelines and facilities owned by others where the company has long-term contractual capacity arrangements or use purchaser-owned capacity under both long-term and short-term sales contracts.

New Technologies

Proprietary Technology: CNX is actively pursuing the commercialization of internally developed proprietary technologies that seek to reduce emissions during various natural gas development phases.

Derivative Products: 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 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.

Non-Core Mineral Assets and Surface Properties

CNX owns significant natural gas assets that are not in the company’s short-term or medium-term development plans. The company continually explores the monetization of these non-core assets by means of sale, lease, contribution to joint ventures or a combination of the foregoing in order to bring the value of these assets forward for the benefit of the company’s shareholders. The company also controls a significant amount of surface acreage. This surface acreage is valuable to the company in the development of the gathering system for its Shale production. The company also derives value from this surface control by granting rights of way or development rights to third parties.

Laws and Regulations

The federal Clean Air Act and corresponding state laws and regulations regulate air emissions primarily through permitting and/or emissions control requirements. This affects natural gas production and processing operations. Various activities in the company’s operations are subject to air quality regulation, including pipeline compression, venting and flaring of natural gas, and hydraulic fracturing and completion processes, as well as fugitive emissions from operations. CNX obtains permits, typically from state or local authorities, to conduct these activities. Additionally, CNX is required to obtain pre-approval for construction or modification of certain facilities, to meet stringent air permit requirements, or to use specific equipment, technologies or best management practices to control emissions.

The federal Clean Water Act (CWA) and corresponding state laws affect the company’s natural gas operations by regulating storm water or other regulated substance discharges, including pollutants, erosion, sediment and spills and releases of oil, brine and other substances, into surface waters (and under some state statutory schemes groundwater) and in certain instances imposing requirements to dispose of produced wastes and other oil and natural gas wastes at approved disposal facilities.

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

Regulations and orders issued by the Federal Energy Regulatory Commission (FERC) impact the company’s natural gas business to a certain degree.

The company’s natural gas operations are subject to regulation under the federal Occupational Safety and Health Act (OSHA) and comparable state laws in some states, all of which regulate health and safety of employees at the company’s natural gas operations. Additionally, OSHA's hazardous communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and comparable state laws and regulations require that information be maintained about hazardous materials used or produced by the company’s natural gas operations and that this information be provided to employees, state and local governments and the public.

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 Securities and Exchange Commission (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.

History

The company was founded in 1860. It was incorporated in 1991. The company was formerly known as CONSOL Energy Inc. and changed its name to CNX Resources Corporation in 2017.