CONSOL Energy Inc. – May 2011 Investor Presentation
Cautionary Language This presentation contains state ments, estimates and projections which are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934). These statements, which are described in detail in our annual report form 10-K filed with the Securities and Exchange Commission, involve risks and uncertainties that co uld cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking statements include estimates of unproved reserves, projections and estimates concerning the timing and rates of return of future projects, and our future production, revenues, income and capital spending. The forward-looking statements in this presentation speak only as of the date of this presentation; we disclaim any obligation to update these statements unless required by the securities laws, and we caution you not to rely on them unduly. This presentation does not constitute an offer to sell any securities of CONSOL Energy Inc. The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing The unproved reserve data contained in this presentation is economic and operating conditions. We use certain terms in this based on a summary review of the title to coalbed methane and presentation, such as “unproved reserves and/ or unproved resources” that other gas rights we hold, as well as a summary review of the title the SEC's guidelines strictly prohibit us from including in filings with the SEC. to the coal from which many of our rights derive. As is We also caution you that the SEC views such “unproved reserves and/ or customary in the gas industry, prior to the commencement of unproved resources” estimates as inherently unreliable and these estimates gas drilling operations on our properties, we conduct a thorough may be misleading to investors unless the investor is an expert in the gas title examination and perform curative work with respect to industry. significant defects. We are typically responsible for curing any In this presentation, the term “unproved reserves and/ or unproved title defects at our expense. This curative work may include the resources” refers to gas that we believe is economically recoverable, based acquisition of additional property rights in order to perfect our on available data. ownership for development and production of the gas estate. 2
Overview of CONSOL Energy Key Points CONSOL Energy Inc. n CONSOL Energy Inc. (NYSE: CNX) is a multi − fuel energy producer and energy services provider focused in the U.S. Coal Natural Gas ─ Current market cap of over Over 4.4 billion tons of proven and probable coal reserves Over 3.7 Tcfe of proved reserves and PV-10 of $2.8 billion $11 billion n n ─ Controls the largest amount of recoverable coal reserves east of Approximately 675,000 net acres in PA and WV prospective for the n ─ Headquartered in the Mississippi River Marcellus Shale and another approximately 200,000 net acres Pittsburgh, PA prospective for the Ohio Utica / Point Pleasant ─ Controls the second largest amount of recoverable coal reserves ─ 8,630 employees among United States coal producers Over 50 horizontal Marcellus wells drilled to date; current Marcellus n production of 54 MMcfe / day One of the nation’s largest coal producers with production of ~62 n million tons of coal in 2010 Additional gas operations in three segments: n ─ Mines more high − Btu bituminous coal than any other United ─ Coalbed Methane: produced 91.4 Bcf (71% of total gas Revenue:Segment Overview States producer production) in 2010 n 2010 Revenues: $5,236 million ─ Largest coal producer east of the Mississippi River ─ Conventional: produced 24.6 Bcf (19% of gas production) in 2010; conventional reserves obtained primarily through ─ Largest United States producer of coal from underground mines Dominion acquisition 2010 coal exports of approximately 6.8 million tons n ─ Other: CONSOL also controls significant acreage holdings prospective for the New Albany, Chattanooga and Huron Shales Gas Division $825 Other 16% CNX Land Research & Fairmont Supply River & Dock CNX Marine Coal Resources, Inc. Development Company Services Terminals, Inc. Division $4,411 General − line Manages land Largest private Transportation and Provides coal 84% assets of the research and distributor of mining, distribution segment transshipment Company and development facility drilling, and industrial with a fleet of 620 directly from rail cars provides in the industry that is supplies in the United barges, 22 towboats to ocean-going environmental devoted exclusively States and 5 harbor boats vessels with capacity conservation and to coal and energy to load 14 million protection services utilization and tons of coal per year production 3
U.S. Coal & Natural Gas Operator with History of Success CONSOL Operational Timeline April 30, 2010 - During World War II 1991 - DuPont 1999 - After years of CONSOL acquires the 1927 - The Company CONSOL provided vital Energy and RWE ownership by outside Appalachian E&P becomes the largest coal energy for A.G. acquire organizations such as business of Dominion bituminous coal producer in transportation and home Consolidation Coal Conoco, DuPont and Resources, resulting in the United States, a heating needs and change the RWE A.G., CONSOL a Marcellus shale distinction it retains today After the war, a merger Company’s name Energy begins trading position of Achieved through formed the Pittsburgh to CONSOL on the NYSE under the approximately 675,000 acquisitions and expansion Consolidation Coal Energy Inc. symbol CNX net acres in PA and WV of existing operations Company 1860 1930 1980 1990 2000 2010 Started operations Almost forced into 1984 - The Innovated coal mining 2005 - CNX Gas is June 1, 2010 - in 1864 as receivership by the Great Company opens the improvements through formed to explore, CONSOL completes Consolidation Coal Depression, CONSOL largest R&D develop, produce the acquisition of Company through reorganized and underground coal Implemented longwall and gather natural CNX Gas further the merging of restructured its coal mine complex in the mining systems in gas in the solidifying the holdings of several operations, emerging from world in Bailey, PA larger underground Appalachian Basin Company as a multi- western Maryland near bankruptcy to end mines -- the safest and fuel energy producer coal operators at the decade of the 1930s most productive method the turning point of financially solid and for underground coal the Civil War secure mining Gas Reserves – December 2010: Coal Reserves – December 2010: 4.4 Billion Tons 3.7 Trillion Cubic Feet 4%1% 2% 4% 19% 18% 13% 12% 63% 64% Northern Appalachia Central Appalachia CBM Marcellus Other Conventional Illinois Basin (Midwest) Northern Powder River Basin Emery Field (Utah) Western Canada 4
CONSOL – Coal Division: Operational Overview Reserves by Coal Type (million tons) 2010 Coal Revenue by Coal Type ($ mm) 4,401 Million Tons $3,853 Million Thermal 3,839 Thermal 87% 3001 78% High Vol 172 4% Low Vol High Vol Low Vol 146 416 680 3% 10% 18% 2010 Coal Exports by Geography (million tons) Coal Cash Generation by Coal Type ($ mm) 500 6.8 Million Tons 450 400 144 Europe 350 2.2 300 114 32% 46 92 250 18 Asia 142 200 3.0 199 27 44% S. America 150 14 259 1.6 227 100 178 24% 35 135 50 60 0 1Q10 2Q10 3Q10 4Q10 1Q11 Thermal High Vol Low Vol 5
CONSOL – Gas Division: Operational Overview Total Proved Reserves by Gas Type (Bcfe) Proved Reserves by Category (Bcfe) 3.7 Trillion Cubic Feet 3.7 Trillion Cubic Feet Marcellus 859 23% Other Shale PD PUD 100 CBM 1,931 3% 1,800 1,789 52% 48% 48% Conventional 984 26% Drill Bit Finding Costs ($ per mmcf) Proved Reserve and Production Growth (Bcfe) $1.80 4,000 160 $1.60 3,500 140 128 $1.40 3,000 120 $1.20 2,500 100 94 $1.00 2,000 80 77 3,732 $0.80 $1.59 1,500 60 $1.25 58 $0.60 56 1,000 40 $0.40 1,911 1,422 1,343 $0.52 1,265 $0.20 $0.41 $0.39 500 20 $- 0 0 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Drill Bit Finding Costs Proved Reserves Production 6
Differentiating Aspects of CONSOL 7
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