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CNX CNX Resources

Filed: 29 Oct 20, 6:51am

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3Q 2020 Earnings Results &
Supplemental Information of CNX Resources
TABLE OF CONTENTS:Page:
Production Volumes and Activity Summary........................................................................................................................2
Hedge Volumes and Pricing…...........................................................................................................................................3
Gas Hedging Gain/Loss Projections…..............................................................................................................................4
Consolidated Statements of Income..................................................................................................................................5
Consolidated Balance Sheets............................................................................................................................................6
Consolidated Statements of Cash Flows….......................................................................................................................7
Market Mix and Natural Gas Price Reconciliation…..........................................................................................................8
Price and Cost Data (Per Mcfe).......................................................................................................................................9
Guidance…........................................................................................................................................................................10
Non-GAAP Reconciliations
Definitions........................................................................................................................................................................11
Quarterly Adjusted EBITDAX and Adjusted Net Income....................................................................................................12
Operating Margin...............................................................................................................................................................13
Cash Operating Margin......................................................................................................................................................14
Net Debt and Adjusted EBITDAX TTM..............................................................................................................................15
Free Cash Flow..................................................................................................................................................................16


NOTE: Please note that CNX is unable to provide a reconciliation of projected financial results contained in this presentation, including the measures referenced above, to their respective comparable financial measure calculated in accordance with GAAP. This is due to our inability to calculate the comparable GAAP projected metrics, including operating income, net cash provided by operating activities and total production costs, given the unknown effect, timing, and potential significance of certain income statement items.





PRODUCTION VOLUMES
GASQ3-2020Q2-2020Q1-2020Q4-2019Q3-2019
Shale Sales Volumes (Bcf)95.296.5112.4119.1106.0
CBM Sales Volumes (Bcf)13.013.113.213.714.1
Other Sales Volumes (Bcf)--0.10.10.1
LIQUIDS*
NGLs Sales Volumes (Bcfe)6.94.78.310.08.0
Oil and Condensate Sales Volumes (Bcfe)0.60.20.40.50.1
TOTAL (Bcfe)115.7114.5134.4143.4128.3
Average Daily Production (MMcfe)1,257.61,258.31,476.51,558.51,394.6
* NGLs, Oil and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices.
Q3 2020 ACTIVITY SUMMARYTDFracTIL
Average Lateral Length(1)
Rigs at Period End
SWPA CentralMarcellus741212,2451
Utica-----
WV Shirley-PennsboroMarcellus-----
Utica-----
CPA SouthUtica-114,840-
Ohio DryUtica-258,992-
Total7718-1
(1) Measured in lateral feet from perforation to perforation.












2


HEDGE VOLUMES AND PRICING
NYMEX HedgesQ4 202020202021202220232024
Volumes (Bcf)123.6457.1436.8290.7160.5165.2
Average Prices ($/Mcf)$2.95$2.93$2.94$2.85$2.80$2.88
Physical Fixed Price Sales and Index Hedges
Volumes (Bcf)3.812.422.320.934.317.7
Average Prices ($/Mcf)$2.48$2.44$2.51$2.49$2.16$2.22
Total Volumes Hedged (Bcf)(1)
127.4469.5459.1311.6194.8182.9
NYMEX + Basis (fully-covered volumes)(2)
Volumes (Bcf)127.4469.5453.5311.6194.8182.9
Average Prices ($/Mcf)$2.50$2.52$2.47$2.32$2.24$2.30
NYMEX Hedges Exposed to Basis
Volumes (Bcf)--5.6---
Average Prices ($/Mcf)--$2.94---
Total Volumes Hedged (Bcf)(1)
127.4469.5459.1311.6194.8182.9
(1) Hedge positions as of 10/8/2020. Excludes basis hedges in excess of NYMEX hedges of 2.9 Bcf, 10.1
Bcf, 78.4 Bcf, 77.8 Bcf, and 66.5 Bcf for Q4 2020, 2020, 2022, 2023, and 2024, respectively. Q4 2020
and 2020 exclude purchased swaps. See below table.
(2) Includes the impact of NYMEX and basis-only hedges as well as physical sales agreements.
PURCHASED SWAPS
NYMEX Only HedgesQ4 20202020
Volumes (Bcf)3.321.5
Average Fixed Prices ($/Mcf)$2.35$2.18
Index Hedges
Volumes (Bcf)2.410.3
Average Fixed Prices ($/Mcf)$1.54$1.52
Basis Hedges
Volumes (Bcf)3.820.7
Average Fixed Prices ($/Mcf)($0.47)($0.38)
For financial hedging, CNX utilizes over-the-counter swaps to manage its exposure to natural gas price
fluctuations. Typically, CNX “sells” swaps under which it receives a fixed price from counterparties and
pays a floating market price. In order to help gain additional flexibility to move production to higher price
periods, during the second quarter of 2020, CNX purchased, rather than sold, financial swaps for the
period May through November of 2020 under which CNX will pay a fixed price to and receive a floating
price from its hedge counterparties. Swaps purchased have the effect of reducing total hedged volumes
for the period of the swap.












3


HEDGING GAIN/LOSS PROJECTIONS
Q4 2020CY2020CY2021
Wtd. Avg.Avg.ForecastedWtd. Avg.Avg.ForecastedWtd. Avg.Avg.Forecasted
Hedged Volumes(1)HedgedForwardGain/(Loss)(3)Hedged Volumes(1)HedgedForwardGain/(Loss)(3)Hedged VolumesHedgedForwardGain/(Loss)(3)
($/MMBtu)(000 MMBtu)PriceMarket(2)($ in 000s)(000 MMBtu)PriceMarket(2)($ in 000s)(000 MMBtu)PriceMarket($ in 000s)
NYMEX130,975$2.72$2.63$12,394469,785$2.76$2.07$313,783475,623$2.70$2.96($122,437)
Index(1,550)$1.48$1.72$372(10,025)$1.75$1.41($4,596)900$2.40$2.42($18)
Basis:
DOM South (DOM)15,915($0.56)($0.76)$2,19153,280($0.59)($0.59)($1,085)88,545($0.61)($0.54)($6,218)
TCO Pool (TCO)13,340($0.40)($0.54)$1,52753,940($0.40)($0.39)($979)58,400($0.49)($0.39)($6,365)
Michcon (NMC)8,208($0.17)($0.24)$58934,013($0.17)($0.17)($99)46,230($0.17)($0.19)$983
TETCO ELA (TEB)1,220($0.09)($0.12)($28)4,260($0.09)($0.10)($169)7,300($0.09)($0.11)$176
TETCO WLA (TWB)2,750($0.10)($0.09)($49)10,050($0.11)($0.07)($375)7,300($0.08)($0.05)($194)
TETCO M3 (TMT)4,905$0.47($0.26)$3,44819,060$0.31($0.18)$8,9586,868$0.96$0.14($335)
TETCO M2 (BM2)52,440($0.55)($0.91)$17,831195,150($0.54)($0.66)$20,133170,575($0.60)($0.53)($12,782)
Transco Zone 5 South (DKR)3,380$0.63$0.11$1,81212,530$0.16$0.16$1,7736,825$0.55$0.34$312
Total Financial Basis Hedges102,158$27,321382,283$28,157392,043($24,423)
Total Projected Realized Gain (Loss)$40,087$337,344($146,878)
Note: Forward market prices, hedged volumes, and hedge prices are as of 10/8/2020. Anticipated hedging activity is not included in projections.
(1) Net of purchased swaps.
(2) January through October prices are settled.
(3) Forecasted Gain/(Loss) amounts are based on sum of current monthly hedge positions vs. strip. CY 2020 excludes $84 million of hedge monetization gains.

4


CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Dollars in thousands, except per share data
Revenue and Other Operating Income:Q3-2020Q2-2020Q1-2020Q4-2019Q3-2019
Natural Gas, NGL and Oil Revenue$182,213$175,776$251,494$320,463$265,051
(Loss) Gain on Commodity Derivative Instruments(168,834)(63,303)115,142135,987213,913
Purchased Gas Revenue31,54120,42426,35929,84629,192
Other Revenue and Operating Income21,15515,94423,36422,69321,841
Total Revenue and Other Operating Income66,075148,841416,359508,989529,997
Costs and Expenses:
Operating Expense
Lease Operating Expense10,37710,24410,03312,73814,202
Transportation, Gathering and Compression68,81060,02583,24286,32380,193
Production, Ad Valorem, and Other Fees5,9945,3846,1627,3586,127
Depreciation, Depletion and Amortization114,464113,545129,164133,844120,459
Exploration and Production Related Other Costs2,1413,3103,88829,4806,075
Purchased Gas Costs31,72119,98924,99828,07727,490
Impairment of Exploration and Production Properties--61,849327,400-
Impairment of Unproved Properties and Expirations---119,429-
Impairment of Goodwill--473,045--
Selling, General, and Administrative Costs22,71423,39930,23834,53524,307
Other Operating Expense23,28426,59620,68118,05919,746
Total Operating Expense279,505262,492843,300797,243298,599
Other Expense
Other Expense2,1804,8195,1861013,439
Gain on Assets Sales and Abandonments, net(3,567)(5,938)(12,055)(34,953)(3,308)
Loss (Gain) on Debt Extinguishment108344(11,263)--
Interest Expense37,92146,25648,99537,05138,405
Total Other Expense36,64245,48130,8632,19938,536
Total Costs and Expenses316,147307,973874,163799,442337,135
(Loss) Earnings Before Income Tax(250,072)(159,132)(457,804)(290,453)192,862
Income Tax (Benefit) Expense(61,279)(28,646)(152,582)(50,398)48,902
Net (Loss) Income(188,793)(130,486)(305,222)(240,055)143,960
Less: Net Income Attributable to Noncontrolling Interest15,90515,26323,86431,35328,422
Net (Loss) Income Attributable to CNX Resources Shareholders($204,698)($145,749)($329,086)($271,408)$115,538
(Loss) Earnings per Share
Basic($1.03)($0.78)($1.76)($1.45)$0.62
Diluted($1.03)($0.78)($1.76)($1.45)$0.61







5


CONSOLIDATED BALANCE SHEETS
(Unaudited)
Dollars in thousands30-Sep-2030-Jun-2031-Mar-2031-Dec-1930-Sep-19
ASSETS
Current Assets:
Cash and Cash Equivalents$150,132$19,607$31,833$16,283$5,484
Restricted Cash733738853--
Accounts and Notes Receivable
Trade, net75,92969,17491,477133,48096,997
Other Receivables, net4,6537,66910,83913,67911,462
Supplies Inventories10,09010,31710,2666,9847,527
Recoverable Income Taxes644114,440115,26162,42511,184
Derivative Instruments77,608197,804312,749247,794198,272
Prepaid Expenses12,45010,97312,77517,45614,800
Total Current Assets332,239430,722586,053498,101345,726
Property, Plant and Equipment:
Property, Plant and Equipment:10,904,83710,814,03510,691,51610,572,00610,512,298
Less-Accumulated Depreciation, Depletion and Amortization3,841,6993,730,2323,622,4133,435,4312,981,723
Total Property, Plant and Equipment—Net7,063,1387,083,8037,069,1037,136,5757,530,575
Other Non-Current Assets:
Operating Lease Right-of-Use Assets124,329141,198159,521187,097205,647
Investment in Affiliates15,68515,15916,54916,71017,110
Derivative Instruments160,098212,657258,111314,096275,892
Goodwill323,314323,314323,314796,359796,359
Other Intangible Assets91,73393,37195,00996,64798,285
Restricted Cash5,4565,5765,340--
Other Non-Current Assets13,18213,88415,95015,22116,664
Total Other Non-Current Assets733,797805,159873,7941,426,1301,409,957
TOTAL ASSETS8,129,1748,319,6848,528,9509,060,8069,286,258
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable117,004148,345171,890202,553308,003
Derivative Instruments144,54583,52749,05841,46645,476
Current Portion of Finance Lease Obligations7,4197,29520,4517,1647,203
Current Portion of Long-Term Debt22,48822,4307,200--
Current Portion of Operating Lease Obligations52,03252,11054,62261,67065,061
Other Accrued Liabilities164,473162,817197,130216,086195,881
Total Current Liabilities507,961476,524500,351528,939621,624
Non-Current Liabilities:
Long-Term Debt2,577,9742,540,7682,640,1482,754,4432,640,234
Finance Lease Obligations2,3224,2256,0957,7069,400
Operating Lease Obligations66,18079,70192,463110,466122,514
Derivative Instruments203,709178,187163,898115,862117,217
Deferred Income Taxes398,878370,412376,401476,108476,968
Asset Retirement Obligations61,76162,54364,38763,37733,123
Other Non-Current Liabilities40,21340,37040,49741,59643,360
Total Non-Current Liabilities3,351,0373,276,2063,383,8893,569,5583,442,816
TOTAL LIABILITIES3,858,9983,752,7303,884,2404,098,4974,064,440
Stockholders' Equity
Common Stock2,2491,8781,8741,8701,870
Capital in Excess of Par Value2,989,6992,261,7292,205,9412,199,6052,197,783
Preferred Stock-----
Retained Earnings1,290,4981,495,1971,641,0091,971,6762,243,104
Accumulated Other Comprehensive Loss(12,270)(12,382)(12,493)(12,605)(7,778)
Total CNX Resources Stockholders' Equity4,270,1763,746,4223,836,3314,160,5464,434,979
Noncontrolling Interest-820,532808,379801,763786,839
TOTAL STOCKHOLDERS' EQUITY4,270,1764,566,9544,644,7104,962,3095,221,818
TOTAL LIABILITIES AND EQUITY$8,129,174$8,319,684$8,528,950$9,060,806$9,286,258



6


CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Dollars in thousands
Cash Flows from Operating Activities:Q3-2020Q2-2020Q1-2020Q4-2019Q3-2019
Net (Loss) Income($188,793)($130,486)($305,222)($240,055)$143,960
Depreciation, Depletion and Amortization114,464113,545129,164133,844120,459
Amortization of Deferred Financing Costs5,8076,3482,4471,6901,649
Impairment of Exploration and Production Properties--61,849327,400-
Impairment of Unproved Properties and Expirations---119,429-
Impairment of Goodwill--473,045--
Stock-Based Compensation2,5032,5666,8401,8691,781
Gain on Asset Sales and Abandonments(3,567)(5,938)(12,055)(34,953)(3,308)
Loss (Gain) on Debt Extinguishment108344(11,263)--
Loss (Gain) on Commodity Derivative Instruments168,83463,303(115,142)(135,987)(213,913)
Loss on Other Derivative Instruments1523,59810,639--
Net Cash Received in Settlement of Commodity Derivative Instruments90,310142,256151,16143,44957,041
Deferred Income Taxes(61,278)(25,683)(99,746)95948,902
Equity in (Earnings) Loss of Affiliates(396)1,260161(400)(673)
Return on Equity Investment(131)131-8001,200
Changes in Operating Assets
Accounts and Notes Receivable(3,427)24,63143,639(36,093)28,724
Recoverable Income Taxes113,796821(52,836)(51,356)102,518
Supplies Inventories227(51)(3,282)5433,715
Prepaid Expenses(1,842)1,8324,710(2,610)1,438
Changes in Other Assets(129)(296)692989114
Changes in Operating Liabilities
Accounts Payable(14,153)(17,810)2,322(61,685)25,934
Accrued Interest(8,409)(495)(5,063)2,170(2,691)
Other Operating Liabilities9,141(35,994)(13,626)44,9314,703
Changes in Other Liabilities(55)(84)(1,047)(466)(16,134)
Net Cash Provided by Operating Activities223,162143,798267,387114,468305,419
Cash Flows from Investing Activities:
Capital Expenditures(108,335)(134,852)(152,049)(228,097)(336,137)
Proceeds from Asset Sales5,85512,15113,97529,8848,189
Net Cash Used in Investing Activities(102,480)(122,701)(138,074)(198,213)(327,948)
Cash Flows from Financing Activities:
Payments on Miscellaneous Borrowings(1,779)(1,777)(1,792)(1,827)(1,807)
Payments on Long-Term Notes(50,000)(408,985)(59,880)--
Net Proceeds from (Payments on) CNXM Revolving Credit Facility24,000(28,000)35,25065,75038,000
Net (Payments on) Proceeds from CNX Revolving Credit Facility(140,000)113,000(224,000)47,800(16,800)
Proceeds from Issuance of CNX Senior Notes207,000----
Net (Payments on) Proceeds from CSG Non-Revolving Credit Facilities(5,202)(3,667)173,250--
Proceeds from Issuance of Convertible Senior Notes-334,650---
Purchase of Capped Call Related to Convertible Senior Notes-(35,673)---
Distributions to CNXM Noncontrolling Interest Holders(21,055)(3,489)(17,443)(16,822)(16,250)
Proceeds from Issuance of Common Stock1511,650435549
Shares Withheld for Taxes(1)(63)(1,890)(27)(62)
Purchases of Common Stock----(7,697)
Debt Issuance and Financing Fees(3,396)(848)(11,069)(685)(31)
Net Cash Provided by (Used in) Financing Activities9,718(33,202)(107,570)94,544(4,598)
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash130,400(12,105)21,74310,799(27,127)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period25,92138,02616,2835,48432,611
Cash, Cash Equivalents, and Restricted Cash at End of Period$156,321$25,921$38,026$16,283$5,484





7


MARKET MIX AND NATURAL GAS PRICE RECONCILIATION
2020E2021E
Gas Sold (%)BasisGas Sold (%)Basis
DOM South6%($0.59)4%($0.54)
ETNG Mainline4%$0.094%$0.26
TCO Pool15%($0.39)23%($0.39)
TETCO ELA & WLA3%($0.08)5%($0.08)
TETCO M36%($0.18)6%$0.14
TETCO M234%($0.66)30%($0.53)
Michcon10%($0.17)9%($0.19)
Physical basis sales22%($0.28)19%($0.33)
Weighted Average Basis100%($0.40)100%($0.33)
NYMEX$2.07$2.96
Weighted Average Basis (Not considering hedging)($0.40)($0.33)
Realized Price (per MMBtu)$1.67$2.63
Conversion Factor (MMBtu/Mcf)1.081.09
Realized Price Before Financial Hedging (per Mcf)$1.80$2.87

8


PRICE AND COST DATA (PER MCFE)
Q3-2020Q2-2020Q1-2020Q4-2019Q3-2019
Average Sales Price - Gas$1.51$1.54$1.83$2.14$2.04
Average Gain on Commodity Derivative Instruments - Cash Settlement- Gas(1)
$0.83$1.03$0.77$0.33$0.47
Average Sales Price - Oil and Condensate*$6.58$4.40$6.59$7.47$12.19
Average Sales Price - NGLs*$2.19$1.31$2.34$3.20$2.28
Average Sales Price - E&P$2.36$2.52$2.59$2.54$2.51
Lease Operating Expense (LOE)$0.09$0.09$0.07$0.09$0.11
Production, Ad Valorem, and Other Fees$0.05$0.05$0.05$0.05$0.05
Transportation, Gathering and Compression$0.59$0.52$0.62$0.60$0.63
Depreciation, Depletion and Amortization (DD&A)$0.98$0.97$0.94$0.92$0.93
Total Production Costs$1.71$1.63$1.68$1.66$1.72
Total Production Cash Costs, before DD&A$0.73$0.66$0.74$0.74$0.79
Cash Margin, before DD&A$1.63$1.86$1.85$1.80$1.72
Fully Burdened Cash Costs, before DD&A(2)
$1.17$1.29$1.20$1.19$1.26
Fully Burdened Cash Margin, before DD&A$1.19$1.23$1.39$1.35$1.25
Note: "Total Production Costs" excludes Selling, General, and Administration and Other Operating Expenses
*NGLs, Oil, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices.
(1) Excludes hedge monetizations.
(2) Fully burdened cash costs include production cash costs, selling, general and administrative (SG&A) cash costs, other operating cash expense, other cash (income) expense, other revenue and operating income, and cash interest expense. Q3 2020, Q2 2020, Q1 2020, Q4 2019 and Q3 2019 total fully burdened cash costs exclude a gain on asset sales of $0.03 per Mcfe, $0.24 per Mcfe, $0.09 per Mcfe, $0.05 per Mcfe and $0.03 per Mcfe, respectively. Q3 2020, Q2 2020, Q1 2020, Q4 2019 and Q3 2019 also exclude unrealized losses on interest rate swaps and noncash amortization of $0.05 per Mcfe, $0.08 per Mcfe, $0.11 per Mcfe, $0.01 per Mcfe and $0.02 per Mcfe respectively.
Natural Gas Price ReconciliationQ3-2020Q2-2020Q1-2020Q4-2019Q3-2019
NYMEX Natural Gas ($/MMBtu)$1.98$1.72$1.95$2.50$2.23
Average Differential(0.57)(0.29)(0.26)(0.51)(0.33)
BTU Conversion (MMBtu/Mcf)*0.100.110.140.150.14
Gain on Commodity Derivative Instruments-Cash Settlement(1)
0.831.030.770.330.47
Realized Gas Price per Mcf$2.34$2.57$2.60$2.47$2.51
*Conversion factor1.071.081.081.081.08
(1) Excludes hedge monetizations.












9



GUIDANCE
PreviousUpdatedPreviousUpdated
($ in millions)2020E2020E2021E2021E
Capital ExpendituresLowHighLowHigh
Drilling & Completions (D&C)$330-$380$365-$375--
Non-D&C$140-$170$130-$140--
Total Capital$470-$550$495-$515~$440~$440
Production Volumes (Bcfe)490-530500-510~550~550
% of Natural Gas Hedged94%89%
Prices on Open Volumes(1)
Natural Gas NYMEX ($/MMBtu)$1.94$2.07--
Natural Gas Basis Differential ($/MMBtu)($0.20)-($0.30)($0.35)-($0.45)--
NGL Realized Price ($/Bbl)$12.50-$14.50$12.50-$14.50--
($ in millions)
Adjusted EBITDAX(2)
$830-$900~$900~$920~$960
($ in millions)
Free Cash Flow (FCF)(2)
~$350~$350~$425~$425
(1) Forward market prices are as of 10/8/2020.
(2) Non-GAAP measures. See “Non-GAAP Financial Measures” for definitions.
























10



Non-GAAP Measures (Definitions, Purpose, and Reconciliations)

CNX's management uses certain non-GAAP financial measures for planning, forecasting and evaluating business and financial performance, and believes that they are useful for investors in analyzing the company. Although these are not measures of performance calculated in accordance with generally accepted accounting principles (GAAP), management believes that these financial measures are useful to an investor in evaluating CNX because (i) analysts utilize these metrics when evaluating company performance and have requested this information as of a recent practicable date, (ii) these metrics are widely used to evaluate a company’s operating performance, and (iii) we want to provide updated information to investors. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with GAAP. In addition, because all companies do not calculate these measures identically, these measures may not be comparable to similarly titled measures of other companies.

Definitions: EBIT is defined as earnings before deducting net interest expense (interest expense less interest income) and income taxes. EBITDAX is defined as earnings before deducting net interest expense (interest expense less interest income), income taxes, depreciation, depletion and amortization, and exploration. Adjusted EBITDAX is defined as EBITDAX after adjusting for the discrete items listed below. Although EBIT, EBITDAX, and adjusted EBITDAX are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that they are useful to an investor in evaluating CNX Resources because they are widely used to evaluate a company's operating performance. We exclude stock-based compensation from adjusted EBITDAX because we do not believe it accurately reflects the actual operating expense incurred during the relevant period and may vary widely from period to period irrespective of operating results. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT, EBITDAX or adjusted EBITDAX identically, the presentation here may not be comparable to similarly titled measures of other companies.

Reconciliations of EBIT, EBITDAX, adjusted EBITDAX, adjusted net income, operating margins, cash operating margins, net debt, TTM EBITDAX, free cash flow and organic free cash flow to the most directly comparable GAAP financial measures are as follows:




















11


Non-GAAP Measures
EBIT is defined as earnings before deducting net interest expense (interest expense less interest income) and income taxes. EBITDAX is defined as earnings before deducting net interest expense (interest expense less interest income), income taxes, depreciation, depletion and amortization, and exploration. Adjusted EBITDAX is defined as EBITDAX after adjusting for the discrete items listed below.
(Dollars in millions)Q3-2020Q2-2020Q1-2020Q4-2019Q3-2019
Net (Loss) Income($189)($130)($305)($240)$144
Interest Expense3846493738
Interest Income(2)---(1)
Income Tax (Benefit) Expense(61)(29)(153)(50)49
(Loss) Earnings Before Interest & Taxes (EBIT)(214)(113)(409)(253)230
Depreciation, Depletion & Amortization115114129134121
Exploration Expense234296
(Loss) Earnings Before Interest, Taxes, DD&A and Exploration (EBITDAX)($97)$4($276)($90)$357
Adjustments:
Unrealized Loss (Gain) on Commodity Derivative Instruments25920636(93)(157)
Merger Related Costs5----
Stock-Based Compensation32722
Impairment of Exploration and Production Properties--62327-
Impairment of Unproved Properties and Expirations---119-
Impairment of Goodwill--473--
Gain on Debt Extinguishment--(11)-
Severance---2
Shaw Insurance Recovery---(2)-
Total Pre-tax Adjustments267208567353(153)
Adjusted EBITDAX$ 170$ 212$ 291$ 263$ 204
Adjusted Net Income is defined as net income after adjusting for the discrete items listed below as well as the tax effectiveness.
(Dollars in millions)Q3-2020Q2-2020Q1-2020Q4-2019Q3-2019
Net (Loss) Income from EBITDAX Reconciliation($189)($130)($305)($240)$144
Adjustments:
Total Pre-tax Adjustments from EBITDAX Reconciliation267208567353(153)
Tax Effect of Adjustments(70)(54)(148)(92)40
Adjusted Net Income$8$24$114$21$31














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Non-GAAP Measures
Operating Margin: Adjusted EBIT divided by Total Revenue after adjusting for unrealized loss on commodity derivative instruments.
(Dollars in millions)Q3-2020Q2-2020Q1-2020Q4-2019Q3-2019
Total Revenue$66$148$416$509$530
Net (Loss) Income($189)($130)($305)($240)$144
Interest Expense3846493738
Interest Income(2)---(1)
Income Tax (Benefit) Expense(61)(29)(153)(50)49
(Loss) Earnings Before Interest & Taxes (EBIT)(214)(113)(409)(253)230
Depreciation, Depletion & Amortization115114129134121
(Loss) Earnings Before Interest, Taxes, DD&A (EBITDA)($99)$1($280)($119)$351
Adjustments:
Unrealized Loss (Gain) on Commodity Derivative Instruments$259$206$36($93)($157)
Merger Related Costs5----
Impairment of Exploration and Production Properties--62327-
Impairment of Unproved Properties and Expirations---119-
Impairment of Goodwill--473--
Total Adjustments$264$206$571$353($157)
Total Revenue Minus Unrealized Loss (Gain) on Commodity Derivative Instruments$325$354$452$416$373
Adjusted EBIT$50$93$162$100$73
Operating Margin15%26%36%24%20%
























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Non-GAAP Measures
Cash Operating Margin: Adjusted EBITDA divided by Total Revenue after adjusting for unrealized loss on commodity derivative instruments.
(Dollars in millions)Q3-2020Q2-2020Q1-2020Q4-2019Q3-2019
Total Revenue$66$148$416$509$530
Net (Loss) Income($189)($130)($305)($240)$144
Interest Expense3846493738
Interest Income(2)---(1)
Income Tax (Benefit) Expense(61)(29)(153)(50)49
(Loss) Earnings Before Interest & Taxes (EBIT)(214)(113)(409)(253)230
Depreciation, Depletion & Amortization115114129134121
(Loss) Earnings Before Interest, Taxes, DD&A (EBITDA)($99)$1($280)($119)$351
Adjustments:
Unrealized Loss (Gain) on Commodity Derivative Instruments$259$206$36($93)($157)
Stock-Based Compensation32722
Merger Related Costs5----
Impairment of Exploration and Production Properties--62327-
Impairment of Unproved Properties and Expirations---119-
Gain on Debt Extinguishment--(11)-
Impairment of Goodwill--473--
Total Adjustments$267$208$567$355($155)
Total Revenue Minus Unrealized Loss (Gain) on Commodity Derivative Instruments$325$354$452$416$373
Adjusted EBITDA$168$209$287$236$196
Cash Operating Margin52%59%64%57%53%
























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Non-GAAP Measures
Net Debt: Management uses net debt to determine the company's outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. Management believes that using net debt attributable to CNX Resources shareholders is useful to investors in determining the company's leverage ratio since the company could choose to use its cash and cash equivalents to retire debt.
(Dollars in millions)
Net Debt30-Sep-20
Total Long-Term Debt (GAAP)(1)
$2,600
Less: Cash and Cash Equivalents150
Net Debt$2,450
(1) Includes current portion
Three Months EndedTwelve Months Ended
(Dollars in millions)31-Dec-1931-Mar-2030-Jun-2030-Sep-2030-Sep-20
Net (Loss) Income$(240)$(305)$(130)$(189)$(864)
Interest Expense37494638170
Interest Income---(2)(2)
Income Tax (Benefit) Expense(50)(153)(29)(61)(293)
(Loss) Earnings Before Interest & Taxes (EBIT)(253)(409)(113)(214)(989)
Depreciation, Depletion & Amortization134129114115492
Exploration Expense2943238
(Loss) Earnings Before Interest, Taxes, DD&A, and Exploration (EBITDAX)(90)(276)4(97)(459)
Adjustments:
Unrealized (Gain) Loss on Commodity Derivative Instruments(93)36206259408
Merger Related Costs---55
Impairment of Exploration and Production Properties32762--389
Impairment of Unproved Properties and Expirations119---119
Impairment of Goodwill-473--473
Stock Based Compensation272314
Gain on Debt Extinguishment-(11)--(11)
Shaw Insurance Recovery(2)---(2)
Total Pre-tax Adjustments3535672082671,395
Adjusted EBITDAX TTM$263 $291 $212 $170 $936 





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Non-GAAP Measures
The Company's management believes that the following measures provide useful information to external users of the Company's consolidated financial statements, such as industry analysts, lenders and ratings agencies. Free cash flow and organic free cash flow should not be considered as alternatives to net cash provided by operating activities or any other measure of liquidity presented in accordance with GAAP.                                    
Free Cash Flow (FCF): Operating cash flow minus capex plus proceeds from asset sales.
Organic Free Cash Flow (FCF): Operating cash flow minus.
FCF Yield: Free cash flow per share divided by current market value.
Free Cash Flow
(Dollars in millions)Q3-2020Q2-2020Q1-2020Q4-2019Q3-2019
Net Cash Provided by Operating Activities$223$144$267$114$305
Capital Expenditures(108)(135)(152)(228)(336)
Proceeds from Asset Sales61214308
Free Cash Flow$121$21$129($84)($23)
Organic Free Cash Flow
(Dollars in millions)Q3-2020Q2-2020Q1-2020Q4-2019Q3-2019
Net Cash Provided by Operating Activities$223$144$267$114$305
Capital Expenditures(108)(135)(152)(228)(336)
Organic Free Cash Flow$115$9$115($114)($31)

Risk Factors

This presentation, including the oral statements made in connection herewith, contains forward-looking statements estimates and projections within the meaning of the federal securities laws. Statements that are not historical are forward-looking and may include our operational and strategic plans; estimates of gas reserves and resources; projected timing and rates of return of future investments; and projections and estimates of future production revenues, income and capital spending. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those statements estimates and projections. Investors should not place undue reliance on forward-looking statements as a prediction of future actual results. The forward-looking statements in this presentation speak only as of the date of this presentation; we disclaim any obligation to update the statements, and we caution you not to rely on them unduly.

Specific factors that could cause future actual results to differ materially from the forward-looking statements are described in detail under the captions "Forward- Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission (SEC), as supplemented by our quarterly reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020, and any subsequent reports filed with the SEC. Those risk factors discuss, among other matters, pricing volatility or pricing decline for natural gas and NGLs; the failure to realize the anticipated costs savings, synergies and other benefits of CNX’s purchase of the outstanding interests in CNXM not already owned by CNX; local, regional and national economic conditions and the impact they may have on our customers; the impact of outbreaks of communicable diseases such as COVID-19 on business activity, our operations and national and global economic conditions, generally; conditions in the oil and gas industry, including a sustained decrease in the level of supply or demand for oil or natural gas or a sustained decrease in the price of oil or natural gas; the financial condition of our customers; any non-performance by customers of their contractual obligations; changes in customer, employee or supplier relationships resulting from the proposed transaction; and changes in safety, health, environmental and other regulations.

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