CONSOL Energy Inc. CONSOL Coal Resources LP Investor Presentation August 2019
Disclaimer This presentation contains statements, estimates and projections which are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended). Statements that are not historical are forward-looking, and include, without limitation, projections and estimates concerning the timing and success of specific projects and the future production, revenues, income and capital spending of CONSOL Energy, Inc. (“CEIX”) and CONSOL Coal Resources LP (“CCR,” and together with CEIX, “we,” “us,” or “our”) . When we use the words “anticipate,” “believe,” “could,” “continue,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” “will,” or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results and outcomes to differ materially from results and outcomes expressed in or implied by our forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of future actual results. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Factors that could cause future actual results to differ materially from those made or implied by the forward-looking statements include risks, contingencies and uncertainties that are described in detail under the captions “Forward -Looking Statements” and “Risk Factors” in our public filings with the Securities and Exchange Commission. 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. This presentation includes unaudited “non -GAAP financial measures” as defined in Regulation G under the Securities Exchange Act of 1934, including EBIT, EBITDA, Adjusted EBITDA, Bank EBITDA, EBITDA per Affiliated Company Credit Agreement, PAMC Adjusted EBITDA, net leverage ratio, bank net leverage ratio, CONSOL Marine Terminal EBITDA, modified net leverage ratio, consolidated net debt, Consolidated Net Debt less Non-controlling Portion of CCR Affiliate Loan, Net Debt per Affiliated Company Credit Agreement, Return of Capital, Adjusted EBITDA Attributable to CONSOL Energy Shareholders, average cash cost per ton sold, average cash margin per ton sold, Organic Free Cash Flow, distribution coverage ratio and Organic Free Cash Flow Net to CEIX Shareholders. The presentation of non-GAAP financial measures is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with GAAP. 2
Investment Thesis Proven Ability to Generate Material Free Cash Flow Leading to Significant Deleveraging with Continued Focus 1 on Further Debt Paydown and Increasing Shareholder Returns Base Assets with 1 st Quartile Cost Position Sustains Margins through the Cycle and Provides Internal Funding 2 to Execute Our Strategy 3 Opportunistically Growing Our Metallurgical Coal Footprint through Long-life Itmann Project (Low-Vol) 4 Stable, Diversified, Domestic Credit Worthy Customer Base that Minimizes Market Risk and Optimizes Margin Secure Export Exposure Due to High Quality Coal, Attractive Netbacks, Contracted Position and CONSOL 5 Marine Terminal Ownership Seaborne Thermal Coal Fundamentals Supported by Continued Global Coal-fired Capacity Build Out and Strong 6 Global Value Proposition of NAPP Coal 7 Proven Competitiveness in Domestic Markets Relative to Other Basins and Natural Gas Continue to Execute our Strategy Through Balanced Approach to De-leveraging, Growth and Capital Returns To 8 Drive Shareholder Returns 9 Committed to ESG Initiatives with Focus on Efficiency, Technology and Innovation 3
CEIX Performance Since November 2017 Spin Performance of Our Securities since the November 2017 Spin… Spin Today 5% -25% 0% 110.00 6% +1 S&P notch 7.0% 0% 50.00 $105 6.0% 105.00 -2% 5% 25.00 35% 6.0% $100 -50% B1 / B+ 40.00 100.00 30% -4% 4% 5.0% 20.00 4.5% -100% -11% 25% 95.00 30.00 B1 / B 4.0% -6% 3% 15.00 $21.50 -150% 20% 90.00 $19.13 3.0% 20.00 15% -8% 2% 10.00 -200% 85.00 2.0% 10% 10.00 -10% 1% -250% 5.00 80.00 1.0% 5% - -12% 0.0% -300% 75.00 0% - 0% Common Stock Term Loan B Credit 2nd Lien Notes Pricing Corporate Ratings Spread Moody's / S&P Global …Driven by Improvements in Our Key Financial Metrics Spin Today -22% -0.8x 900.00 500.00 25% 2.5x -5% 20% -0.1x -2% 2.1x $766 $430 450.00 800.00 56% 60% 0% -0.2x 400.00 20% 53% 2.0x $357 700.00 -7% -1% $599 50% 350.00 -0.3x 600.00 300.00 15% 1.4x -2% 1.5x -0.4x 40% 500.00 -12% 250.00 -3% -0.5x 400.00 30% 200.00 10% 1.0x -17% -4% -0.6x 300.00 150.00 20% -5% -0.7x 200.00 100.00 5% 0.5x -22% 10% 100.00 -0.8x -6% 50.00 - 0% - -27% - -0.9x 0% -7% (1) (3) (2) LTM Adjusted EBITDA Net Debt Net Debt/Adjusted EBITDA Net Debt / Enterprise Value Source: CONSOL Energy Inc. management Company filings. Note: “Today” is based on COB Aug 5, 2019 & “Spin” is based on November 28, 2017 unless otherwise noted. LTM Adjusted EBITDA for “Spin” is based on initial 2018 Adjusted EBITDA spin forecast and “Today” is based on quarter -ended June 30, 2019. (1) “Spin” is CONSOL Mining Company pro forma 6/30/2017 and “Today” is as of quarter -ended June 30, 2019. (2) “Spin” figure is calculated as pro forma 6/30/2017 net debt of $766 million / $357 LTM adjusted EBITDA (spin forecast) and “Today” is as quarter -ended June 30, 2019. (3) 4
Pennsylvania Mining Complex Overview Three highly productive, well-capitalized underground coal mines ◼ Five longwalls and 15 – 17 continuous miner sections ◼ Largest central preparation plant in the United States ◼ CONSOL PA Mining Marine Terminal Complex ~79% of reserves are owned and require no royalty payment ◼ Extensive logistics network served by two Class I railroads ◼ Access to seaborne markets through CONSOL Marine Terminal ◼ More than $2.0 billion invested in PAMC since 2009 ◼ 2018 PA Mining Complex Domestic Power Plant Non-union workforce at PAMC since 1982 ◼ Customers Continuously sealing off old mine works to reduce maintenance, improve safety ◼ of employees and maintain current operating footprint Average AR Total Average AR Est. Annual Gross Heat 2018A Mine Recoverable Sulfur Production Content Production* Capacity* (3) Reserves* Content (Btu/lb) Bailey (1) 163 12,890 2.61% 11.5 12.7 Enlow Fork (1) 334 12,935 2.07% 11.5 9.9 Harvey (1) 202 12,873 2.42% 5.5 5.0 Total 699 12,907 2.30% 28.5 27.6 Illinois Basin (2) 11,320 2.92% Other Napp (2) 12,446 3.34% *(MillionTons) Sealed Reserves Source: CONSOL management, ABB Velocity Suite, EIA Note: Data shown on a 100% basis for PAMC Current Mining (1) For the fiscal year period ending and as of 12/31/2018 (2) Represent the average of power plant deliveries for the three years ending 12/31/2018 per EIA / ABB Velocity Suite. Excludes waste coal (3) Represents illustrative general capacity for each mine; actual production on a mine by mine basis can exceed illustrative capacity in order to maximize 5 complex capacity of 28.5MM tons
1st Quartile Cost Position in NAPP and Globally 1 st quartile cost position in NAPP (2018) (1) (Cash costs $ per ton) 1 st Quartile 2 nd Quartile 3 rd Quartile 4 th Quartile $100 75 50 25 0 0 10 20 30 40 50 60 70 Cumulative Production (Million Tons) Sulfur 4.3% 2.5% 3.3% 2.7% 4.2% 3.3% 3.1% 4.1% 3.3% content River market mine Rail market mine Minemouth mine 1 st quartile position among global thermal coal production (2018) (2) (Cash costs $ per tonne) Thermal Coal Exports PAMC US Appalachia US Illinois Basin US Powder River US Western Bituminous $120 2015 2016 2017 $120 1 st Quartile 2 nd Quartile 3 rd Quartile 4 th Quartile $100 100 $80 80 US $/Tonne $60 60 $40 40 20 $20 0 $0 – 100 200 300 400 500 600 700 800 900 Cumulative Production (Million Tonnes) The PAMC’s 1 st quartile cost position drives global competitiveness despite changes in seaborne thermal supply / demand fundamentals Source: CONSOL management. Wood Mackenzie (1) Costs represent total cash costs as defined by Wood Mackenzie (2) Costs are BTU adjusted and include mining, preparation, transport, port and overhead costs. PAMC cash costs of coal sold are based on CONSOL management and peers based on Wood Mackenzie 6
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