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What changed in Core Natural Resources, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Core Natural Resources, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+538 added−591 removedSource: 10-K (2024-02-09) vs 10-K (2023-02-10)

Top changes in Core Natural Resources, Inc.'s 2023 10-K

538 paragraphs added · 591 removed · 418 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

200 edited+47 added−51 removed156 unchanged
Biggest changeFrom time to time, we also evaluate investments in industries and sectors that are not related to coal but may provide long-term business opportunities that develop due to the potential energy transition efforts of various local, federal and international governments.
Biggest changeFrom time to time, we also evaluate investments in industries and sectors that are not related to coal but may provide long-term business opportunities that develop due to the potential energy transition efforts of various local, federal and international governments. 8 Table of Contents Opportunistically grow our presence in the industrial and metallurgical markets, while preserving coal sales to top-performing rail-served power plants in our core market areas We plan to minimize our market risk and maximize realizations by continuing to focus on placing a growing portion of our production in the export markets, where we sell to industrial, metallurgical and power generation end-users.
Our most significant tangible assets are the PAMC and CONSOL Marine Terminal. Coal from the PAMC is valued because of its high energy content (as measured in Btu per pound), relatively low levels of sulfur and other impurities, and strong thermoplastic properties that enable it to be used in metallurgical, industrial and power generation applications.
Our most significant tangible assets are the PAMC and the CONSOL Marine Terminal. Coal from the PAMC is valued because of its high energy content (as measured in Btu per pound), relatively low levels of sulfur and other impurities, and strong thermoplastic properties that enable it to be used in metallurgical, industrial and power generation applications.
In this connection, we filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission (“SEC”) in February 2022 that allows us to issue an indeterminate amount of securities, including common stock, preferred stock, debt securities and warrants.
In connection with this, we filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission (“SEC”) in February 2022 that allows us to issue an indeterminate amount of securities, including common stock, preferred stock, debt securities and warrants.
Please see the section titled “Management's Discussion and Analysis of Financial Condition and Results of Operations - How We Evaluate Our Operations” for a reconciliation of average realized coal revenue per ton sold to total coal revenue, the most directly comparable measure calculated in accordance with GAAP.
Please see the section titled “Management's Discussion and Analysis of Financial Condition and Results of Operations - How We Evaluate Our Operations” for a reconciliation of realized coal revenue and average realized coal revenue per ton sold to total coal revenue, the most directly comparable measure calculated in accordance with GAAP.
For example, pursuant to the Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis (“Environment Executive Order”), which was issued on January 20, 2021, President Biden directed the heads of all federal agencies to review “all existing regulations, orders, guidance documents, policies, and any other similar agency actions promulgated, issued, or adopted” during the Trump Administration for consistency with the policies established in the new Biden Administration order.
For example, pursuant to the Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis (“Environment Executive Order”), which was issued in January 2021, President Biden directed the heads of all federal agencies to review “all existing regulations, orders, guidance documents, policies, and any other similar agency actions promulgated, issued, or adopted” during the Trump Administration for consistency with the policies established in the new Biden Administration order.
In addition to competitive base wages, the Company has additional programs, which include bonus opportunities, a Company-matched 401(k) plan, healthcare and insurance benefits, health savings spending accounts, paid time off, family leave, flexible work schedules, employee wellness programs and employee assistance programs.
In addition to competitive base wages, the Company has additional programs, which include bonus opportunities, a Company-matched 401(k) plan, healthcare and insurance benefits, health savings spending accounts, paid time off, family leave, flexible work schedules, employee wellness programs and employee assistance programs. Employee Development.
We mine our reserves from the Pittsburgh No. 8 Coal Seam, which is a large contiguous formation of high-Btu coal that is ideal for high productivity, low-cost longwall operations. The design of the PAMC is optimized to produce large quantities of coal on a cost-efficient basis.
We mine our reserves from the Pittsburgh No. 8 Coal Seam, which is a large contiguous formation of high-Btu coal that is ideal for high productivity, low-cost longwall mining operations. The design of the PAMC is optimized to produce large quantities of coal on a cost-efficient basis.
In the United States, findings published by the EPA in 2009 concluded that GHG emissions pose an endangerment to public health and the environment, and as a result, the EPA has the authority to adopt and implement regulations restricting GHG emissions under existing provisions of the CAA. In addition, the U.S.
In the United States, findings published by the EPA in 2009 concluded that GHG emissions pose an endangerment to public health and the environment, and as a result, the EPA has the authority to adopt and implement regulations restricting GHG emissions under existing provisions of the CAA. The U.S.
It is also the only major east coast United States coal terminal served by two railroads, Norfolk Southern and CSX. • Itmann Mining Complex: Construction of the Itmann No. 5 Mine, located in Wyoming County, West Virginia, began in the second half of 2019; development mining began in April 2020, but the pace of the project was intentionally slowed to minimal capital spending due to the uncertainties surrounding the COVID-19 pandemic.
It is also the only major east coast United States coal terminal served by two railroads, Norfolk Southern and CSX. • Itmann Mining Complex: Construction of the Itmann No. 5 Mine, located in Wyoming County, West Virginia, began in the second half of 2019; development mining began in April 2020, but the pace of the project was intentionally slowed to minimize capital spending due to the uncertainties surrounding the COVID-19 pandemic.
However, the Inflation Reduction Act of 2022 made the higher rates (of up to $1.10 per ton for deep mined coal and up to $0.55 per ton for surface-mined coal) permanent, effective October 1, 2022.
However, the Inflation Reduction Act of 2022 made the higher rates (of up to $1.10 per ton for deep mined coal and up to $0.55 per ton for surface-mined coal) permanent, effective in October 2022.
On December 2, 2021, the Government Accountability Office (“GAO”) published a report entitled “Black Lung Benefits Program: Continued Inaction on Coal Operator Self-Insurance Increases Financial Risk to Trust Fund.” This report notes that the Department of Labor (“DOL”) took certain steps to improve its oversight of self-insured coal mine operators, but these efforts were complicated by the COVID-19 pandemic.
In December 2021, the Government Accountability Office (“GAO”) published a report entitled “Black Lung Benefits Program: Continued Inaction on Coal Operator Self-Insurance Increases Financial Risk to Trust Fund.” This report notes that the Department of Labor (“DOL”) took certain steps to improve its oversight of self-insured coal mine operators, but these efforts were complicated by the COVID-19 pandemic.
CONSOL ENERGY ITMANN MINING COMPLEX Recoverable Coal Reserves as of December 31, 2022 and 2021 Moisture Free Quality (%) Recoverable Coal Reserves (As-Received) Owned (%) Leased%) Tons in Millions Mine/Reserve Reserve Class Sulfur Ash Vol Proven Probable 2022 Total 2021 Total Itmann Mining Complex Itmann No. 5 Permitted 0.97 8.4 18.5 — % 100 % 3.7 0.9 4.6 5.4 Itmann No. 5 Unpermitted 0.98 7.0 19.4 9 % 91 % 12.2 11.5 23.7 15.1 Tug Fork 1 Permitted 0.84 5.3 20.2 — % 100 % 0.4 — 0.4 — Total Recoverable Coal Reserves 16.3 12.4 28.7 20.5 1 Tug Fork is located approximately 35 miles southwest of the Itmann preparation plant and raw tons are accessible to the Itmann preparation plant via truck haul.
CONSOL ENERGY ITMANN MINING COMPLEX Recoverable Coal Reserves as of December 31, 2023 and 2022 Moisture Free Quality (%) Recoverable Coal Reserves (As-Received) Owned (%) Leased%) Tons in Millions Mine/Reserve Reserve Class Sulfur Ash Vol Proven Probable 2023 Total 2022 Total Itmann Mining Complex Itmann No. 5 Permitted 0.97 8.4 18.5 — % 100 % 3.4 0.9 4.3 4.6 Itmann No. 5 Unpermitted 0.98 7.0 19.4 9 % 91 % 12.2 11.5 23.7 23.7 Tug Fork 1 Permitted 0.84 5.3 20.2 — % 100 % 0.4 — 0.4 0.4 Total Recoverable Coal Reserves 16.0 12.4 28.4 28.7 1 Tug Fork is located approximately 35 miles southwest of the Itmann preparation plant and raw tons are accessible to the Itmann preparation plant via truck haul.
We believe that our focus on safety and compliance promotes greater reliability in our operations, which fosters long-term customer relationships and lower operating costs that support higher margins. Consistent with our core value of continuous improvement, we have improved our productivity at the PAMC from 6.27 tons per employee hour to 7.62 tons per employee hour since 2015.
We believe that our focus on safety and compliance promotes greater reliability in our operations, which fosters long-term customer relationships and lower operating costs that support higher margins. Consistent with our core value of continuous improvement, we have improved our productivity at the PAMC from 6.27 tons per employee hour to 7.40 tons per employee hour since 2015.
The properties comprise over 220 square miles within the NAPP coal-producing region of the eastern United States; as such, they are among the largest undeveloped Pittsburgh Seam properties. On December 31, 2022, the Company's estimated potentially underground minable thermal coal resources for Mason Dixon and River Mine were 273.9 million tons and 610.6 million tons, respectively.
The properties comprise over 220 square miles within the NAPP coal-producing region of the eastern United States; as such, they are among the largest undeveloped Pittsburgh Seam properties. On December 31, 2023, the Company's estimated potentially underground minable thermal coal resources for Mason Dixon and River Mine were 273.9 million tons and 610.6 million tons, respectively.
Maintain Ability to Access Capital Markets We have generated significant cash from operations since becoming a publicly-traded company, which has allowed us to opportunistically refinance and pay down our debt. The reduced indebtedness on our balance sheet and improved liquidity allows us to pursue attractive organic growth opportunities and acquisitions.
Maintain Ability to Access Capital Markets We have generated significant cash from operations since becoming a publicly-traded company, which has allowed us to opportunistically refinance and pay down our debt. The reduced indebtedness on our balance sheet and improved liquidity allow us to pursue attractive organic growth opportunities and acquisitions.
Despite a lengthy ownership history dating back to the 1920s with the acquisition of certain coal leases by the Company’s predecessor, commercial operations at the PAMC did not begin until 1984. The total book value of the PAMC and its associated plant and equipment as of December 31, 2022 is approximately $1.4 billion.
Despite a lengthy ownership history dating back to the 1920s with the acquisition of certain coal leases by the Company’s predecessor, commercial operations at the PAMC did not begin until 1984. The total book value of the PAMC and its associated plant and equipment as of December 31, 2023 is approximately $1.4 billion.
In response to the Governor's Order, the Pennsylvania Environmental Quality Board (“PAEQB”) published a proposed rulemaking on November 7, 2020 to establish the Commonwealth's participation in RGGI and to institute a CO 2 budget trading program limiting emissions from fossil fuel-fired EGUs with a minimum nameplate capacity of 25 megawatts (“MWe”).
In response to the Governor's Order, the Pennsylvania Environmental Quality Board (“PAEQB”) published a proposed rulemaking in November 2020 to establish the Commonwealth's participation in RGGI and to institute a CO 2 budget trading program limiting emissions from fossil fuel-fired EGUs with a minimum nameplate capacity of 25 megawatts (“MWe”).
Under federal black lung benefits legislation, each coal mine operator is required to make payments of black lung benefits or contributions to: 29 Table of Contents • current and former coal miners totally disabled from black lung disease; • certain survivors of miners who have died from black lung disease; and • a trust fund for the payment of benefits and medical expenses to claimants whose last mine employment was before January 1, 1970, where no responsible coal mine operator has been identified for claims (where a miner's last coal employment was after December 31, 1969), or where the responsible coal mine operator has defaulted on the payment of such benefits.
Under federal black lung benefits legislation, each coal mine operator is required to make payments of black lung benefits or contributions to: • current and former coal miners totally disabled from black lung disease; • certain survivors of miners who have died from black lung disease; and • a trust fund for the payment of benefits and medical expenses to claimants whose last mine employment was before January 1, 1970, where no responsible coal mine operator has been identified for claims (where a miner's last coal employment was after December 31, 1969), or where the responsible coal mine operator has defaulted on the payment of such benefits.
Clean Water Act The federal Clean Water Act (“CWA”) and corresponding state laws affect our coal operations by regulating discharges into certain waters. CWA permits - issued either by the EPA or an analogous state agency - typically require regular monitoring and compliance with limitations on defined pollutants and reporting requirements.
Clean Water Act The federal Clean Water Act (“CWA”) and corresponding state laws affect our coal and export terminal operations by regulating discharges into certain waters. CWA permits - issued either by the EPA or an analogous state agency - typically require regular monitoring and compliance with limitations on defined pollutants and reporting requirements.
Loadout Facility Location Mine Type Mining Equipment Transportation Tons Produced (in millions) Year Established or Acquired Mine 2022 2021 2020 PA Mining Operations Bailey Enon, PA U LW/CM R R/B 11.6 11.8 8.7 1984 Enlow Fork Enon, PA U LW/CM R R/B 6.3 6.8 5.7 1989 Harvey Enon, PA U LW/CM R R/B 6.1 5.3 4.4 2014 Total 23.9 23.9 18.8 Itmann Mining Complex Itmann No. 5 Mine (1) Itmann, WV U CM T/R 0.2 0.1 — 2020 Total Company 24.1 24.0 18.8 Table may not sum due to rounding.
Loadout Facility Location Mine Type Mining Equipment Transportation Tons Produced (in millions) Year Established or Acquired Mine 2023 2022 2021 PA Mining Operations Bailey Enon, PA U LW/CM R R/B 11.2 11.6 11.8 1984 Enlow Fork Enon, PA U LW/CM R R/B 8.7 6.3 6.8 1989 Harvey Enon, PA U LW/CM R R/B 6.2 6.1 5.3 2014 Total 26.1 23.9 23.9 Itmann Mining Complex Itmann No. 5 Mine Itmann, WV U CM T/R 0.3 0.2 0.1 2020 Total Company 26.4 24.1 24.0 Table may not sum due to rounding.
As of December 31, 2022, the Company held less than $1 million in surety bonds to cover its current obligations relating to mining and reclamation, mine subsidence, stream restoration, and water loss with respect to the Itmann No. 5 Mine, preparation plant facility and refuse area.
As of December 31, 2023, the Company held less than $1 million in surety bonds to cover its current obligations relating to mining and reclamation, mine subsidence, stream restoration, and water loss with respect to the Itmann No. 5 Mine, preparation plant facility and refuse area.
In 2020, the EPA issued the 2020 CWA Section 401 Certification Rule, intending to clarify the scope of state regulatory authority and, under certain circumstances, allowing the EPA to certify projects regardless of state objection. The rule was vacated by the U.S. District Court for the Northern District of California on October 21, 2021.
In 2020, the EPA issued the 2020 CWA Section 401 Certification Rule, intending to clarify the scope of state regulatory authority and, under certain circumstances, allowing the EPA to certify projects regardless of state objection. The rule was vacated by the U.S. District Court for the Northern District of California in October 2021.
Such goals include those announced by multiple domestic utilities, including some of our customers, pledging to substantially reduce or to achieve net zero GHG emissions, to accelerate closure of existing coal-fired power generating stations, or to increase generating capacity from natural gas or renewable sources.
Such goals include those announced by multiple domestic utilities, including some of our customers, pledging to substantially reduce or to achieve net zero GHG emissions, to accelerate closure of existing coal-fired power generating stations, or to increase generating capacity from renewable sources.
Similarly, in December 2015, the U.S. and approximately 200 nations signed the international Paris Agreement, making voluntary commitments to limit or reduce GHG emissions in order to limit global warming below 2 degrees Celsius from temperatures in the pre-industrial era by 2100.
Similarly, in December 2015, the U.S. and approximately 200 nations signed the international Paris Agreement, making voluntary commitments to limit or reduce GHG emissions in order to limit global warming below 2 degrees Celsius from temperatures in the pre-industrial era.
The following table shows the production, in millions of tons, for the Company's mines for the years ended December 31, 2022, 2021 and 2020, the location of each mine, the type of mine, the type of equipment used at each mine, method of transportation and the year each mine was established or acquired by us.
The following table shows the production, in millions of tons, for the Company's mines for the years ended December 31, 2023, 2022 and 2021, the location of each mine, the type of mine, the type of equipment used at each mine, method of transportation and the year each mine was established or acquired by us.
EO 14008: Tackling the Climate Crisis at Home and Abroad, signed on January 27, 2021, includes provisions supporting an end to international financing of fossil fuel-based energy and seeks a reduction in climate pollution from every sector of the economy.
EO 14008: Tackling the Climate Crisis at Home and Abroad, signed in January 2021, includes provisions supporting an end to international financing of fossil fuel-based energy and seeks a reduction in climate pollution from every sector of the economy.
World-Class, Well-Capitalized, Low-Cost Longwall Mining Complex Based on production per employee, the PAMC is a productive and efficient coal mining complex in NAPP, averaging 7.88 tons of coal production per employee hour for the past two years.
World-Class, Well-Capitalized, Low-Cost Longwall Mining Complex Based on production per employee, the PAMC is a productive and efficient coal mining complex in NAPP, averaging 7.50 tons of coal production per employee hour for the past two years.
The advantageous qualities of our coal enable us to compete for demand from a broader range of coal-fired power plants compared to mining operations in basins that typically 9 Table of Contents produce coal with a comparatively lower heat content (ILB and the Powder River Basin (“PRB”)), higher sulfur content (ILB and most areas in NAPP) and higher chlorine content (certain areas of ILB).
The advantageous qualities of our coal enable us to compete for demand from a broader range of coal-fired power plants compared to mining operations in basins that typically produce coal with a comparatively lower heat content (ILB and the Powder River Basin (“PRB”)), higher sulfur content (ILB and most areas in NAPP) and higher chlorine content (certain areas of ILB).
The following is a summary of the more significant existing environmental and worker health and safety laws and regulations to which we or our customers’ business operations are subject and for which compliance may have a material 21 Table of Contents adverse impact on our capital expenditures, results of operations and financial condition, and/or demand for our coal product by our customers.
The following is a summary of the more significant existing environmental and worker health and safety laws and regulations to which we or our customers’ business operations are subject and for which compliance may have a material adverse impact on our capital expenditures, results of operations and financial condition, and/or demand for our coal product by our customers.
In addition to the substantial reserve base associated with the PAMC, our Itmann Mining Complex includes 28.7 million tons of recoverable coal reserves that are sufficient to support more than 25 years of full-capacity production, and our 1.4 billion tons of Greenfield Reserves and Resources in NAPP, CAPP and ILB feature both thermal and metallurgical reserves and resources and provide additional optionality for organic growth or monetization as market conditions allow.
In addition to the substantial reserve base associated with the PAMC, our Itmann Mining Complex includes 28.4 million tons of recoverable coal reserves that are sufficient to support more than 30 years of full-capacity production, and our 1.3 billion tons of Greenfield Reserves and Resources in NAPP, CAPP and ILB feature both thermal and metallurgical reserves and resources and provide additional optionality for organic growth or monetization as market conditions allow.
We believe that the use of coal as a fuel source for electricity and use in industrial applications, including but not limited to the steel-making process, will continue for many years. Furthermore, our Itmann Mining Complex is expected to benefit from the demand related to global infrastructure needs.
We believe that the use of coal in industrial applications, including but not limited to the steel-making process, and as a fuel source for electricity will continue for many years. Furthermore, our Itmann Mining Complex is specifically suited to benefit from the demand related to global infrastructure needs.
Any emissions limitations in the final rule or similar future rulemakings could require customers to incur significant capital costs associated with installation of emissions control technologies, which could negatively affect the demand and prices for our coal, our business and results of operations. National Ambient Air Quality Standards .
Any emissions limitations in the final rule or similar future rulemakings could require our customers to incur significant capital costs associated with installation of emissions 22 Table of Contents control technologies, which could negatively affect the demand and prices for our coal, our business and results of operations. National Ambient Air Quality Standards .
All of our mines at the PAMC utilize longwall mining, which is a highly automated underground mining technique that produces large volumes of coal at lower costs compared to other underground mining methods. • CONSOL Marine Terminal: Through our subsidiary CONSOL Marine Terminals LLC, we provide coal export terminal services through the Port of Baltimore.
All our mines at the PAMC utilize longwall mining, which is a highly automated underground mining technique that produces large volumes of coal at lower costs compared to other underground mining methods. 6 Table of Contents • CONSOL Marine Terminal: Through our subsidiary CONSOL Marine Terminals LLC, we provide coal export terminal services through the Port of Baltimore.
These coal consumption patterns are influenced by many factors that are beyond our control, including demand for electricity, which is 20 Table of Contents significantly dependent upon economic activity and summer and winter temperatures, government regulation, technological developments and the location, quality, price and availability of competing fuel sources.
These coal consumption patterns are influenced by many factors that are beyond our control, including demand for electricity, which is significantly dependent upon economic activity and summer and winter temperatures, government regulation, technological developments and the location, quality, price and availability of competing fuel sources.
A lack of investment in construction, modification or reconstruction of coal-fired EGUs could negatively affect the demand and prices for our coal, thereby having a material adverse impact on our business and results of operations. Global Climate Change Our customers' consumption of the coal we produce results in the emission of greenhouse gases, particularly CO 2 .
A lack of investment in construction, modification or reconstruction of coal-fired EGUs could negatively affect the demand and prices for our coal, thereby having a material adverse impact on our business and results of operations. Global Climate Change Our customers' consumption of the coal we produce results in the emission of GHGs, particularly CO 2 .
If 24 Table of Contents the EPA were to regulate coal mine methane emissions in the future, we may be required to install additional pollution control devices, pay fees or taxes for our emissions, or incur expenses associated with the purchase of emissions credits in order to continue operation. Alternatively, we may need to curtail coal production.
If the EPA were to regulate coal mine methane emissions in the future, we may be required to install additional pollution control devices, pay fees or taxes for our emissions, or incur expenses associated with the purchase of emissions credits in order to continue operation. Alternatively, we may need to curtail coal production.
The proposed rule prescribes disclosure of climate-related risks that are reasonably likely to have a material impact on a business, results of operations or financial condition, including, but not limited to, certain climate-related financial metrics, an accounting of direct and indirect greenhouse gas emissions and details of climate change targets and goals.
The proposed rule prescribes disclosure of climate-related risks that are reasonably likely to have a material impact on a business, results of operations or financial condition, including, but not limited to, certain climate-related financial metrics, an accounting of direct and indirect GHG emissions and details of climate change targets and goals.
As of December 31, 2022, the Itmann No. 5 Mine's assigned and accessible reserve base contained an aggregate of 28.3 million tons of clean recoverable coal, enough to allow for more than 25 years of full-capacity production. These reserves contain an approximate average quality on a dry basis of 0.98% sulfur, 7.2% ash, and 19.3% volatile matter.
As of December 31, 2023, the Itmann No. 5 Mine's assigned and accessible reserve base contained an aggregate of 28.0 million tons of clean recoverable coal, enough to allow for more than 30 years of full-capacity production. These reserves contain an approximate average quality on a dry basis of 0.98% sulfur, 7.2% ash, and 19.3% volatile matter.
The changes have increased the cost to us of complying with the Federal Black Lung Benefits Act. In addition to the federal legislation, we are also liable under various state statutes for our portion of black lung claims. Other State and Local Laws Related to Our Coal Business Ownership of Coal Rights .
The changes have increased the cost to us of complying with the Federal Black Lung Benefits Act. In addition to the federal legislation, we are also liable under various state statutes for our portion of black lung claims. 30 Table of Contents Other State and Local Laws Related to Our Coal Business Ownership of Coal Rights .
Furthermore, the electric power generation industry and other users of our coal are subject to extensive regulation regarding the environmental impact of their activities, which could affect demand for our coal. We seek to conduct our operations in compliance with applicable laws and regulations.
Furthermore, the electric power generation industry and other users of our coal are subject to extensive regulation regarding the environmental impact of their activities, which could affect demand for our coal. 21 Table of Contents We seek to conduct our operations in compliance with applicable laws and regulations.
EO 14057: Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability, signed on December 8, 2021, emphasizes federal actions to support a carbon pollution free electricity sector by 2035 and seeks to achieve net zero emissions economy wide no later than 2050.
EO 14057: Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability, signed in December 2021, emphasizes federal actions to support a carbon pollution free electricity sector by 2035 and seeks to achieve net zero emissions economy wide no later than 2050.
Under federal and state laws, including SMCRA, we are required to obtain surety bonds or other acceptable security to secure payment of our long-term obligations, including mine closure and reclamation, mine water treatment, federal and 27 Table of Contents state workers’ compensation costs, coal leases, or other miscellaneous obligations.
Under federal and state laws, including SMCRA, we are required to obtain surety bonds or other acceptable security to secure payment of our long-term obligations, including mine closure and reclamation, mine water treatment, federal and state workers’ compensation costs, coal leases, or other miscellaneous obligations.
On January 19, 2023, the Office of Workers' Compensation Programs (“OWCP”) issued a Notice of Proposed Rulemaking to update its regulations authorizing coal producers to self-insure and for determining appropriate security amounts, and that it plans to solicit public comments for that proposal.
In January 2023, the Office of Workers' Compensation Programs (“OWCP”) issued a Notice of Proposed Rulemaking to update its regulations authorizing coal producers to self-insure and for determining appropriate security amounts, and that it plans to solicit public comments for that proposal.
The Company controls approximately 178,394 acres of mineral and/or surface rights as a complex collection of owned and/or leased tracts that range from less than an acre to several hundred acres in size covered by various coal deeds and coal lease agreements. Lease terms generally extend until all the coal is removed from the subject tract.
The Company controls approximately 179,181 acres of mineral and/or surface rights as a complex collection of owned and/or leased tracts that range from less than an acre to several hundred acres in size covered by various coal deeds and coal lease agreements. Lease terms generally extend until all the coal is removed from the subject tract.
Bureau of Alcohol, Tobacco, and Firearms and the Department of Homeland Security. Health and Safety Laws Mine Safety . Legislative and regulatory changes have required us to purchase additional safety equipment, construct stronger seals to isolate mined-out areas, and engage in additional training.
Bureau of Alcohol, Tobacco, and Firearms and the Department of Homeland Security. 29 Table of Contents Health and Safety Laws Mine Safety . Legislative and regulatory changes have required us to purchase additional safety equipment, construct stronger seals to isolate mined-out areas, and engage in additional training.
At the state level, on October 3, 2019, Pennsylvania Governor Tom Wolf issued an Executive Order, “Commonwealth Leadership in Addressing Climate Change through Electric Sector Emissions Reductions,” directing the state’s Department of Environmental Protection to begin a rulemaking process that will allow Pennsylvania to join the Regional Greenhouse Gas Initiative (“RGGI”).
At the state level, in October 2019, Pennsylvania Governor Tom Wolf issued an Executive Order, “Commonwealth Leadership in Addressing Climate Change through Electric Sector Emissions Reductions,” directing the state’s Department of Environmental Protection to begin a rulemaking process that would allow Pennsylvania to join the Regional Greenhouse Gas Initiative (“RGGI”).
On January 1, 2022, these rates expired and reverted back to pre-2008 levels, at $0.50 per ton for deep mined coal and $0.25 per ton for surface-mined coal, neither amount to exceed 2.0% of the gross sales price.
In January 2022, these rates expired and reverted back to pre-2008 levels, at $0.50 per ton for deep mined coal and $0.25 per ton for surface-mined coal, neither amount to exceed 2.0% of the gross sales price.
The Itmann Mining Complex started up its own preparation plant and rail loadout during the third quarter of 2022, and the remainder of 2022 production was washed at this new facility and shipped via rail from the newly built loadout.
The Itmann Mining Complex started up its own preparation plant and rail loadout 15 Table of Contents during the third quarter of 2022, and the remainder of 2022 production was washed at this new facility and shipped via rail from the newly built loadout.
Boyd Company. Portions of the following information are based on assumptions, qualifications and procedures that are not fully described herein. Reference should be made to the full text of the TRSs, incorporated herein by reference, made a part of our 2021 Annual Report on Form 10-K, and, in part, updated as a part of this Annual Report on Form 10-K.
Boyd Company. Portions of the following information are based on assumptions, qualifications and procedures that are not fully described herein. Reference should be made to the full text of the TRSs, incorporated herein by reference, made a part of our 2021 Annual Report on Form 10-K and in part, updated within our 2022 Annual Report on Form 10-K.
Sources of electrical power, water, supplies and materials are readily 16 Table of Contents available. Electrical power would be provided to the mines and facilities by regional utility companies while water would be supplied by public water services, surface impoundments, or water wells.
Sources of electrical power, water, supplies and materials are readily available. Electrical power would be provided to the mines and facilities by regional utility companies while water would be supplied by public water services, surface impoundments, or water wells.
At both the state and federal levels, environmental organizations, third parties and regulators have challenged permitting actions associated with new fossil fuel infrastructure, power plants and pipelines, citing GHG emissions, the uncertainty surrounding the economic viability of these projects under future laws limiting CO 2 emissions, or the failure to 25 Table of Contents account for their climate change impacts.
At both the state and federal levels, environmental organizations, third parties and regulators have challenged permitting actions associated with new fossil fuel infrastructure, power plants, pipelines and shipping terminals, citing GHG emissions, the uncertainty surrounding the economic viability of these projects under future laws limiting CO 2 emissions, or the failure to account for their climate change impacts.
Under CERCLA or related state laws, joint and several liability may be imposed on generators of hazardous waste, site owners, waste transporters or others regardless of fault associated with 28 Table of Contents the original disposal activity.
Under CERCLA or related state laws, joint and several liability may be imposed on generators of hazardous waste, site owners, waste transporters or others regardless of fault associated with the original disposal activity.
Our current production from the Bailey, Enlow Fork and Harvey mines can be sold domestically or abroad into the power generation, industrial or metallurgical coal markets. These low-cost mines, with up to five operating longwalls, produce a high-Btu Pittsburgh-seam coal that is lower in sulfur than many Northern Appalachian coals.
Our current production from the Bailey, Enlow Fork and Harvey mines can be sold domestically or abroad into the industrial, metallurgical or power generation coal markets. These low-cost mines, with up to five operating longwalls, produce a high-Btu Pittsburgh-seam coal that is lower in sulfur than many Northern Appalachian coals as well as several Illinois Basin coals.
On October 23, 2015, the EPA published a final rule known as the Clean Power Plan (“CPP”), which required states to create systems that reduce carbon dioxide (“CO 2 ”) emissions from existing coal-fired EGUs by 28% in 2025 and 32% in 2030, compared to 2005 levels under section 111(d) of the CAA.
In October 2015, the EPA published a final rule under section 111(d) of the CAA known as the Clean Power Plan (“CPP”), which required states to create systems that reduce carbon dioxide (“CO 2 ”) emissions from existing fossil fuel-fired EGUs by 28% in 2025 and 32% in 2030, compared to 2005 levels.
Environmental Laws Clean Air Act . The federal Clean Air Act (“CAA”) and corresponding state and local laws and regulations affect all aspects of coal mining operations, both directly and indirectly. The CAA directly impacts our coal mining operations through permitting and emission control requirements for the construction, modification or expansion of certain facilities.
Environmental Laws Clean Air Act . The federal Clean Air Act (“CAA”) and corresponding state and local laws and regulations affect multiple aspects of our business, both directly and indirectly. The CAA directly impacts our coal mining and coal export operations through permitting and emission control requirements for the construction, modification or expansion of certain facilities.
Our remaining reserves have an average as-received gross heat content of 12,972 Btu/lb, while production from the PRB, ILB, CAPP and the rest of NAPP averages approximately 8,700 Btu/lb, 11,200 Btu/lb, 12,100 Btu/lb and 12,300 Btu/lb, respectively (based on the average quality reported by the United States Energy Information Administration (the “EIA”) for U.S. power plant deliveries for the three years ended June 30, 2022).
Our remaining reserves have an average as-received gross heat content of 12,972 Btu/lb, while production from the PRB, ILB, CAPP and the rest of NAPP averages approximately 8,700 Btu/lb, 11,200 Btu/lb, 12,000 Btu/lb and 12,400 Btu/lb, respectively (based on the average quality reported by the United States Energy Information Administration (the “EIA”) for U.S. power plant deliveries for the three years ended June 30, 2023).
The over- or underestimation of reserves can have certain impacts on financial performance, such as changes in amortizations that are based on life-of-mine estimates. Pennsylvania Mining Complex Pennsylvania Mining Complex.
The over- or underestimation of reserves can have certain impacts on financial performance, such as changes in amortizations that are based on life-of-mine estimates. 13 Table of Contents Pennsylvania Mining Complex Pennsylvania Mining Complex.
For the years ended December 31, 2022, 2021 and 2020, the Itmann No. 5 Mine produced 164 thousand, 101 thousand and 25 thousand tons of coal, respectively. Through July 2022, production from the Itmann No. 5 Mine was toll washed at a third-party preparation plant.
For the years ended December 31, 2023, 2022 and 2021, the Itmann No. 5 Mine produced 316 thousand, 164 thousand and 101 thousand tons of coal, respectively. Through July 2022, production from the Itmann No. 5 Mine was toll washed at a third-party preparation plant.
On September 2, 2015, MSHA published proposed rules for underground coal mining operations concerning proximity detection systems for coal hauling machines and scoops. The rulemaking record for this proposed rule was closed on December 15, 2016, but on January 9, 2017, MSHA published a notice reopening the record and extending the comment period for this proposed rule for 30 days.
In September 2015, MSHA published proposed rules for underground coal mining operations concerning proximity detection systems for coal hauling machines and scoops. The rulemaking record for this proposed rule was closed in December 2016, but in January 2017, MSHA published a notice reopening the record and extending the comment period for this proposed rule for 30 days.
The majority (95%) of the acreage is held under coal leases with lengthy terms that are subject to industry standard royalties. The total book value of the Itmann Mining Complex and its associated plant and equipment as of December 31, 2022 is approximately $102.0 million. The first Itmann mine was opened in 1916 by the Pocahontas Fuel Company.
The majority (95%) of the acreage is held under coal leases with lengthy terms that are subject to industry standard royalties. The total book value of the Itmann Mining Complex and its associated plant and equipment as of December 31, 2023 is approximately $104.6 million. The first Itmann mine was opened in 1916 by the Pocahontas Fuel Company.
Furthermore, our PAMC MSHA significant and substantial (“S&S”) citation rate per 100 inspection hours was approximately 73% lower than the industry’s average MSHA S&S citation rate over the twelve-month period ended December 31, 2022.
Furthermore, our PAMC MSHA significant and substantial (“S&S”) citation rate per 100 inspection hours was approximately 88% lower than the industry’s average MSHA S&S citation rate over the twelve-month period ended December 31, 2023.
Other Properties The Company also holds other greenfield recoverable coal reserves and coal resources located in NAPP, CAPP and ILB, which are not deemed individually material and had an estimated 528.9 million tons of recoverable coal reserves and coal resources.
Other Properties The Company also holds other greenfield recoverable coal reserves and coal resources located in NAPP, CAPP and ILB, which are not deemed individually material and had an estimated 457.3 million tons of recoverable coal reserves and coal resources.
Development mining at the Itmann No. 5 Mine began in 2020. Coal from the Itmann No. 5 Mine is currently extracted by underground methods using 4-6 continuous miner units to achieve expected capacity of approximately 900 thousand clean tons per year.
Development mining at the Itmann No. 5 Mine began in 2020. Coal from the Itmann No. 5 Mine is currently extracted by underground methods using 6 continuous miner units in 3 super sections to achieve expected future capacity of approximately 900 thousand clean tons per year.
Approximately 90% of our sales in 2022 were to customer companies that were in our 2021 portfolio, and ten of our top domestic power plant customers in 2022 (which are included in the twelve plants to which we shipped approximately 500,000 tons or more of PAMC coal in 2022) have been in our portfolio for at least five consecutive years.
Approximately 96% of our sales in 2023 were to customer companies that were in our 2022 portfolio, and six of our top domestic power plant customers in 2023 (which are included in the ten plants to which we shipped approximately 500,000 tons or more of PAMC coal in 2023) have been in our portfolio for at least five consecutive years.
Royalty tonnage leased to third parties is not included in the amounts of produced tons that we report, nor is it included in our reported recoverable reserves and resources. Production In the year ended December 31, 2022, 99.3% of the Company's production came from underground mines equipped with longwall mining systems.
Royalty tonnage leased to third parties is not included in the amounts of produced tons that we report, nor is it included in our reported recoverable reserves and resources. Production In the year ended December 31, 2023, 98.8% of the Company's production came from underground mines equipped with longwall mining systems.
House Select Committee on the Climate Crisis released its report, known as The Climate Crisis Action Plan, in June 2020, followed by the Senate Democrats' Special Committee on the Climate Crisis's report, “The Case for Climate Action”, in August 2020. Both reports call for the U.S. to achieve net-zero emissions no later than 2050.
House Select Committee on the Climate Crisis released its report, known as The Climate Crisis Action Plan, in June 2020, followed by a report from the Senate Democrats' Special Committee on the Climate Crisis, titled “The Case for Climate Action,” in August 2020. Both reports call for the U.S. to achieve net-zero emissions no later than 2050.
A change in requirements for security posted to self-insure black lung liabilities could result in the Company being required to post additional security for its obligations. The Patient Protection and Affordable Care Act (“PPACA”) made two changes to the Federal Black Lung Benefits Act.
A change in requirements for security posted for coal operator self-insurance could result in the Company being required to post additional security for its obligations. The Patient Protection and Affordable Care Act (“PPACA”) made two changes to the Federal Black Lung Benefits Act.
The UNFCCC convened its 26th Conference of the Parties (“COP26”) in November 2021, and ultimately enacted the Glasgow Climate Pact to operationalize Article 6 of the Paris Agreement. Article 6 establishes a framework for the voluntary international cooperation of countries to reduce GHG emissions and meet nationally determined contributions (“NDCs”) to the Paris Agreement's goals.
The UNFCCC convened its 26th Conference of the Parties (“COP26”) in November 2021, and ultimately enacted the Glasgow Climate Pact to establish a framework for the voluntary international cooperation of countries to reduce GHG emissions and meet nationally determined contributions (“NDCs”) to the Paris Agreement's goals.
Where applicable, royalty rates typically range from 3% to 8% of the gross sales price of the coal. The Company maintains the right to mine and remove almost all of the Pittsburgh Seam within the PAMC boundaries. As part of the PAMC, CONSOL controls surface rights to 13 Table of Contents approximately 16,593 acres through fee simple ownership.
Where applicable, royalty rates typically range from 3% to 8% of the gross sales price of the coal. The Company maintains the right to mine and remove almost all of the Pittsburgh Seam within the PAMC boundaries. As part of the PAMC, CONSOL controls surface rights to approximately 17,665 acres through fee simple ownership.
We believe that having approximately 42% of the Company's workforce with at least 10 years of company service coupled with our average voluntary retention rate of 92% as of the end of fiscal year 2022 reflects the engagement of our employees. Total Rewards. Our employees are critical to the success of our company.
We believe that having approximately 43% of the Company's workforce with at least 10 years of company service coupled with our average voluntary retention rate of 89% as of the end of fiscal year 2023 reflects the engagement of our employees. Total Rewards. Our employees are critical to the success of our company.
The total book value of the Mason Dixon and River Mine properties as of December 31, 2022 is approximately $57.4 million. The Mason Dixon and River Mine Properties comprise over 141,000 acres of coal mineral and/or surface rights.
The total book value of the Mason Dixon and River Mine properties as of December 31, 2023 is approximately $57.4 million. 16 Table of Contents The Mason Dixon and River Mine Properties comprise over 141,000 acres of coal mineral and/or surface rights.
In addition to challenges related to compliance burden and a lack of standardized quantification methods, the proposed rule could proliferate investment bias and practices by investors and financial institutions to exclude our securities from investment portfolios or increase our cost of capital, regardless of the Company's results, strategy or financial performance.
In addition to challenges related to compliance burden and a lack of standardized quantification methods, climate disclosure rules like the SEC's proposed rule and the California laws could proliferate investment bias and practices by investors and financial institutions to exclude our securities from investment portfolios or increase our cost of capital, regardless of the Company's results, strategy or financial performance.
Fish and Wildlife Service and the National Marine Fisheries Service published, or announced plans to publish, separate rules to rescind and revise the ESA critical habitat regulations and definitions finalized under the previous administration, with final rules expected to be promulgated in 2023.
Fish and Wildlife Service and the National Marine Fisheries Service published, or announced plans to publish, separate rules to rescind and revise the ESA critical habitat regulations and definitions finalized under the previous administration. Multiple NPRMs were published in June 2023, with final rules expected to be promulgated in April 2024.
Our Greenfield Reserves and Resources associated with certain NAPP and CAPP properties provide additional potential organic growth opportunities in the metallurgical coal space, and our Greenfield Resources associated with the Mason Dixon and River Mine projects present potential organic growth opportunities in NAPP.
Our Greenfield Reserves and Resources associated with certain NAPP and CAPP properties provide additional potential organic growth opportunities in the metallurgical coal space, and our Greenfield Resources associated with the Mason Dixon and River Mine projects present potential organic growth opportunities or monetization opportunities to create value.
As of December 31, 2022, the Company held more than $370 million in surety bonds to cover its obligations relating to mining and reclamation, mine subsidence, stream restoration, water loss, and dam safety with respect to the PAMC. Bailey Mine.
As of December 31, 2023, the Company held more than $380 million in surety bonds to cover its obligations relating to mining and reclamation, mine subsidence, road repairs, stream restoration, water loss, and dam safety with respect to the PAMC. Bailey Mine.
For the years ended December 31, 2022, 2021 and 2020, the Bailey Mine produced 11.6, 11.8 and 8.7 million tons of coal, respectively. Enlow Fork Mine.
For the years ended December 31, 2023, 2022 and 2021, the Bailey Mine produced 11.2, 11.6 and 11.8 million tons of coal, respectively. Enlow Fork Mine.
The magnitude of impact on our operations, capital expenditures, financial condition or cash flows would be dependent on the structure of any proposed regulation and the degree of emission reduction prescribed. In June 2022, the EPA published a proposed rulemaking amending certain provisions of the Mandatory GHG Reporting Rule, with supplemental and final rulemakings expected to follow in 2023.
The magnitude of impact on our operations, capital expenditures, financial condition or cash flows would be dependent on the structure of any final regulation and the degree of emission reduction prescribed. In June 2022, the EPA published a NPRM amending certain provisions of the Mandatory GHG Reporting Rule, with a supplemental NPRM published in May 2023.
Separately, in April 2022, the SEC published a proposed rulemaking that would require registrants to disclose certain climate-related information in their registration statements and annual reports.
A final rulemaking is expected to follow in April 2024. Separately, in April 2022, the SEC published a proposed rulemaking that would require registrants to disclose certain climate-related information in their registration statements and annual reports.
Human Capital Management As of December 31, 2022, we had 1,860 employees, of which 36 CONSOL Marine Terminal employees were represented by a collective bargaining agreement. We believe our efforts in managing our workforce have been effective, evidenced by a strong culture and a good relationship between the Company and our employees. Health and Safety.
Human Capital Management As of December 31, 2023, we had 2,020 employees, of which 40 CONSOL Marine Terminal employees were represented by a collective bargaining agreement. We believe our efforts in managing our workforce have been effective, evidenced by a strong culture and a good relationship between the Company and our employees. Health and Safety.
In addition, our Department of Energy-sponsored REMEDY project seeks to develop an ultra-efficient, safe and cost-effective technology for mitigation of mine ventilation air methane and if successful, could have applicability in other markets.
In addition, our Department of Energy-sponsored REMEDY project seeks to develop an efficient, safe and cost-effective technology for mitigation of mine ventilation air methane that, if successful, could have broader market applicability.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWhile tariffs and other retaliatory trade measures imposed by other countries on U.S. goods have not yet had a significant impact on our business or results of operations, we cannot predict further developments, and such existing or future tariffs could have a material adverse effect on our results of operations, financial position and cash flows.
Biggest changeWhile tariffs and other retaliatory trade measures imposed by other countries on U.S. goods have not yet had a significant impact on our business or results of operations, we cannot predict further developments, and such existing or future tariffs could have a material adverse effect on our results of operations, financial position and cash flows. 43 Table of Contents We may be unsuccessful in finding suitable joint venture partners or acquisition targets or in integrating the operations of any future acquisitions, including acquisitions involving new lines of business, with our existing operations, and in realizing all or any part of the anticipated benefits of any such acquisitions.
We sell coal to foreign electricity generators, industrial end-users and to the more specialized metallurgical coal market, which are significantly affected by international demand and competition. The coal industry has experienced consolidation in recent years, including consolidation among some of our major competitors.
We sell coal to foreign industrial end-users, electricity generators and to the more specialized metallurgical coal market, which are significantly affected by international demand and competition. The coal industry has experienced consolidation in recent years, including consolidation among some of our major competitors.
Coal contains impurities, including sulfur, mercury, chlorine and other elements or compounds, many of which are released into the air along with fine particulate matter, nitrogen oxides and carbon dioxide when it is burned. Complying with regulations on these emissions can be costly for our customers, including those in the power generation, metallurgical and industrial markets.
Coal contains impurities, including sulfur, mercury, chlorine and other elements or compounds, many of which are released into the air along with fine particulate matter, nitrogen oxides and carbon dioxide when it is burned. Complying with regulations on these emissions can be costly for our customers, including those in the industrial, metallurgical and power generation markets.
Rulemakings such as the Cross State Air Pollution Rule (“CSAPR”), the National Ambient Air Quality Standards (“NAAQS”), or the New Source Performance Standards (“NSPS”) and other Clean Air Act regulations may decrease the demand for our coal in electric power generation, metallurgical or industrial markets in the future. For more information, please see “Laws and Regulations” under Item 1 above.
Rulemakings such as the Cross State Air Pollution Rule (“CSAPR”), the National Ambient Air Quality Standards (“NAAQS”), or the New Source Performance Standards (“NSPS”) and other Clean Air Act regulations may decrease the demand for our coal in industrial, metallurgical or electric power generation markets in the future. For more information, please see “Laws and Regulations” under Item 1 above.
Risks Related to Our Capital Stock and the Securities Market • uncertainty with respect to the Company's common stock, potential stock price volatility and future dilution; • the consequences of a lack of, or negative, commentary about us published by securities analysts and media; • uncertainty regarding the timing of any dividends we may declare; • uncertainty as to whether we will repurchase shares of our common stock or outstanding debt securities; • restrictions on the ability to acquire us in our certificate of incorporation, bylaws and Delaware law and the resulting effects on the trading price of our common stock; and • inability of stockholders to bring legal action against us in any forum other than the state courts of Delaware.
Risks Related to Our Common Stock and the Securities Market • uncertainty with respect to the Company's common stock, potential stock price volatility and future dilution; • the consequences of a lack of, or negative, commentary about us published by securities analysts and media; • uncertainty regarding the timing of any dividends we may declare; • uncertainty as to whether we will repurchase shares of our common stock or outstanding debt securities; • restrictions on the ability to acquire us in our certificate of incorporation, bylaws and Delaware law and the resulting effects on the trading price of our common stock; and • inability of stockholders to bring legal action against us in any forum other than the state courts of Delaware.
If the assumptions underlying our accruals are inaccurate, we could be required to expend greater amounts than anticipated. The Surface Mining Control and Reclamation Act (“SMCRA”) and various state laws establish operational, reclamation and closure standards for all our coal mining operations and require us, under certain circumstances, to plug natural gas wells.
If the assumptions underlying our accruals are inaccurate, we could be required to expend greater amounts than anticipated. The Surface Mining Control and Reclamation Act and various state laws establish operational, reclamation and closure standards for all our coal mining operations and require us, under certain circumstances, to plug natural gas wells.
In addition, demand can fluctuate widely due to a number of matters beyond our control, including: • the market price for coal; • changes in the consumption pattern of industrial consumers, electricity generators and residential end-users of electricity; • weather conditions in our markets which affect the demand for thermal coal; • competition from other coal suppliers; • the price and availability of alternative fuels and sources for electricity generation, especially natural gas and renewable energy sources; • with respect to thermal coal, the price and availability of natural gas and the price and supply of imported liquefied natural gas; • technological advances affecting energy consumption; • with respect to metallurgical coal, the overall demand for steel; • the costs, availability and capacity of transportation infrastructure; • overall domestic and global economic conditions, including the supply of and demand for domestic and foreign coal; • international developments impacting supply of thermal and metallurgical coal, including supply side reforms promulgated in China, and continued expected growth in demand for seaborne metallurgical coal in India; and • the impact of domestic and foreign governmental laws and regulations, including environmental and climate change regulations and regulations affecting the coal mining industry and coal-fired power plants, and delays in the receipt of, failure to receive, failure to maintain or revocation of necessary governmental permits.
In addition, demand can fluctuate widely due to a number of matters beyond our control, including: 32 Table of Contents • the market price for coal; • changes in the consumption pattern of industrial consumers, electricity generators and residential end-users of electricity; • weather conditions in our markets which affect the demand for thermal coal; • competition from other coal suppliers; • the price and availability of alternative fuels and sources for electricity generation, especially natural gas and renewable energy sources; • with respect to thermal coal, the price and availability of natural gas and the price and supply of imported liquefied natural gas; • technological advances affecting energy consumption; • with respect to metallurgical coal, the overall demand for steel; • the costs, availability and capacity of transportation infrastructure; • overall domestic and global economic conditions, including the supply of and demand for domestic and foreign coal; • international developments impacting supply of thermal and metallurgical coal, including supply side reforms promulgated in China, and continued expected growth in demand for seaborne metallurgical coal in India; and • the impact of domestic and foreign governmental laws and regulations, including environmental and climate change regulations and regulations affecting the coal mining industry and coal-fired power plants, and delays in the receipt of, failure to receive, failure to maintain or revocation of necessary governmental permits.
For more information, see “ Forward-Looking Statements. ” Risk Factors Summary The following is a summary of the principal risks that could adversely affect our business, operations and financial results: Risks Related to Our Business • deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; • volatility and wide fluctuation in coal prices based upon a number of factors beyond our control including future plans to eliminate coal-fired generation facilities, oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; • the effects the COVID-19 pandemic has on our business and results of operations and on the global economy; • an extended decline in the prices we receive for our coal affecting our operating results and cash flows; • our customers extending existing contracts or not entering into new long-term contracts for coal on favorable terms; • our reliance on major customers; • decreases in demand and changes in coal consumption patterns of electric power generators, industrial end users and metallurgical coal users; • the availability and reliability of transportation facilities and other systems, disruption of rail, barge, processing and transportation facilities and other systems that deliver our coal to market and fluctuations in transportation costs; • the impact of potential, as well as any adopted, regulations to address pollution and climate change, including any requirements relating to greenhouse gas emissions, on our operating costs as well as on the market for coal; • the risks inherent in coal operations, including being subject to unexpected disruptions caused by adverse geological conditions, equipment failure, delays in moving out longwall equipment, railroad derailments, security breaches or terroristic acts and other hazards, delays in the completion of significant construction or repair of equipment, fires, explosions, seismic activities, accidents and weather conditions; • the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current coal operations; • uncertainties in estimating our economically recoverable coal reserves; • failure to obtain or renew surety bonds or insurance coverage on acceptable terms; • exposure to employee-related long-term liabilities; and • the risk of our debt agreements, our debt, access to capital markets and changes in interest rates affecting our operating results and cash flows.
For more information, see “ Forward-Looking Statements. ” Risk Factors Summary The following is a summary of the principal risks that could adversely affect our business, operations and financial results: Risks Related to Our Business • deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; • volatility and wide fluctuation in coal prices based upon a number of factors beyond our control including future plans to eliminate coal-fired generation facilities, oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; • the effects pandemics may have on our business and results of operations and on the global economy; • an extended decline in the prices we receive for our coal affecting our operating results and cash flows; • our customers extending existing contracts or not entering into new long-term contracts for coal on favorable terms; • our reliance on major customers; • decreases in demand and changes in coal consumption patterns of industrial end users, metallurgical coal users and electric power generators; • the availability and reliability of transportation facilities and other systems, disruption of rail, barge, processing and transportation facilities and other systems that deliver our coal to market and fluctuations in transportation costs; • the impact of potential, as well as any adopted, regulations to address pollution and climate change, including any requirements relating to greenhouse gas emissions, on our operating costs as well as on the market for coal; 31 Table of Contents • the risks inherent in coal operations, including being subject to unexpected disruptions caused by adverse geological conditions, equipment failure, delays in moving out longwall equipment, railroad derailments, security breaches or terroristic acts and other hazards, delays in the completion of significant construction or repair of equipment, fires, explosions, seismic activities, accidents and weather conditions; • the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current coal operations; • uncertainties in estimating our economically recoverable coal reserves; • failure to obtain or renew surety bonds or insurance coverage on acceptable terms; • exposure to employee-related long-term liabilities; and • the risk of our debt agreements, our debt, access to capital markets and changes in interest rates affecting our operating results and cash flows.
Although the Company has not experienced any material adverse effect on its results of operations, financial condition or cash flows as a result of the war or the resulting volatility as of the date of this report, such volatility, including market expectations of potential changes in coal prices and inflationary pressures on steel products, may significantly affect prices for our coal or the cost of supplies and equipment, as well as the prices of competing sources of energy for our electric power plant customers, like natural gas.
Although the Company has not experienced any material adverse effect on its results of operations, financial condition or cash flows as a result of these conflicts or the resulting volatility as of the date of this report, such volatility, including market expectations of potential changes in coal prices and inflationary pressures on steel products, may significantly affect prices for our coal or the cost of supplies and equipment, as well as the prices of competing sources of energy for our electric power plant customers, like natural gas.
Acquisitions, joint ventures and business expansions involve numerous risks, including the following: 42 Table of Contents • difficulties in the integration of the assets and operations of the acquired businesses; • inefficiencies and difficulties that arise because of unfamiliarity with new assets and the businesses associated with them and new geographic areas; • the possibility that we have insufficient expertise to engage in such activities profitably or without incurring inappropriate amounts of risk; • potential lack of control over a joint venture's business decisions and operations; and • the diversion of management's attention from other operating issues.
Acquisitions, joint ventures and business expansions involve numerous risks, including the following: • difficulties in the integration of the assets and operations of the acquired businesses; • inefficiencies and difficulties that arise because of unfamiliarity with new assets and the businesses associated with them and new geographic areas; • the possibility that we have insufficient expertise to engage in such activities profitably or without incurring inappropriate amounts of risk; • potential lack of control over a joint venture's business decisions and operations; and • the diversion of management's attention from other operating issues.
These include legal requirements that govern 38 Table of Contents discharges of substances into the air and water, the management and disposal of hazardous substances and wastes, the cleanup of contaminated sites, groundwater quality and availability, threatened and endangered plant and wildlife protection, reclamation and restoration of mining properties after mining is completed, the installation of various safety equipment in our mines, remediation of impacts of surface subsidence from underground mining, and work practices related to employee health and safety.
These include legal requirements that govern discharges of substances into the air and water, the management and disposal of hazardous substances and wastes, the cleanup of contaminated sites, groundwater quality and availability, threatened and endangered plant and wildlife protection, reclamation and restoration of mining properties after mining is completed, the installation of various safety equipment in our mines, remediation of impacts of surface subsidence from underground mining, and work practices related to employee health and safety.
Additionally, the recent efforts of certain members of the investment community, including investment advisors, sovereign wealth funds, public pension funds, universities and other groups, to promote divestment of fossil fuel equities, to encourage the consideration of ESG practices of companies in a manner that negatively affects coal companies and to pressure lenders to limit funding to companies engaged in the extraction of fossil fuel reserves may also negatively impact our ability to attract and retain key management personnel.
Additionally, the recent efforts of certain members of the investment community, including investment advisors, sovereign wealth funds, public pension funds, universities and other groups, to promote divestment of fossil fuel equities, to encourage the consideration of ESG practices of companies in a manner that negatively affects coal companies and to pressure lenders to limit funding to companies engaged in the extraction of fossil fuel reserves may also negatively impact our ability to attract and retain 45 Table of Contents key management personnel.
Some of the factors and assumptions which impact economically recoverable coal reserve estimates include: • geologic and mining conditions; • historical production from the area compared with production from other producing areas; • the assumed effects of regulations and taxes by governmental agencies; • our ability to obtain, maintain and renew all required permits; • future improvements in mining technology; • assumptions governing future prices; and • future operating costs, including the cost of materials and capital expenditures.
Some of the factors and assumptions which impact economically recoverable coal reserve estimates include: 46 Table of Contents • geologic and mining conditions; • historical production from the area compared with production from other producing areas; • the assumed effects of regulations and taxes by governmental agencies; • our ability to obtain, maintain and renew all required permits; • future improvements in mining technology; • assumptions governing future prices; and • future operating costs, including the cost of materials and capital expenditures.
Except for 36 of our employees at the CONSOL Marine Terminal who unionized in 2018, none of our employees are currently represented by a labor union or covered under a collective bargaining agreement, although many employers in our industry have employees who belong to a union.
Except for 40 of our employees at the CONSOL Marine Terminal who unionized in 2018, none of our employees are currently represented by a labor union or covered under a collective bargaining agreement, although many employers in our industry have employees who belong to a union.
A rapid or significant increase in the costs of commodities or capital equipment we use in our operations, whether as a result of increased demand, shortages caused by supply chain disruptions or general inflationary pressures, could impact our mining operating costs because we may have a limited ability to negotiate lower prices, and, in some cases, may not have a ready substitute.
A rapid or significant increase in the costs of commodities or capital equipment we use in our operations, whether as a result of increased demand, shortages caused by supply chain disruptions or general inflationary pressures, could impact our mining operating costs because we may have a limited ability to negotiate lower 33 Table of Contents prices, and, in some cases, may not have a ready substitute.
Any failure to retain key management personnel or to attract additional or suitable replacement personnel could cause uncertainty among investors, employees, customers and others concerning our future direction and performance and could have a material adverse effect on our business, financial condition and results of operations. 44 Table of Contents We have asset retirement obligations and obligations for long-term employee benefits.
Any failure to retain key management personnel or to attract additional or suitable replacement personnel could cause uncertainty among investors, employees, customers and others concerning our future direction and performance and could have a material adverse effect on our business, financial condition and results of operations. We have asset retirement obligations and obligations for long-term employee benefits.
If an incident were to occur at one of our coal mines, it could be shut down for an extended period of time and our reputation with our customers could be materially damaged. 43 Table of Contents Our operations may impact the environment or cause exposure to hazardous substances, and our properties may have environmental contamination, which could result in liabilities to us.
If an incident were to occur at one of our coal mines, it could be shut down for an extended period of time and our reputation with our customers could be materially damaged. Our operations may impact the environment or cause exposure to hazardous substances, and our properties may have environmental contamination, which could result in liabilities to us.
Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions. 51 Table of Contents ITEM 1B. Unresolved Staff Comments None.
Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions. ITEM 1B. Unresolved Staff Comments None.
Also, if we fail to maintain good relations with our employees at the CONSOL Marine Terminal, we could potentially experience labor disputes, work stoppages or other disruptions in the business of the CONSOL Marine Terminal, which could negatively impact the profitability of the CONSOL Marine Terminal, and accordingly, have a material adverse effect on our business, results of operations and financial condition.
Also, if we fail to maintain good relations with our employees at the CONSOL Marine 49 Table of Contents Terminal, we could potentially experience labor disputes, work stoppages or other disruptions in the business of the CONSOL Marine Terminal, which could negatively impact the profitability of the CONSOL Marine Terminal, and accordingly, have a material adverse effect on our business, results of operations and financial condition.
Because we sell a significant portion of our production in international markets, our operations and activities inside and outside the U.S., as well as the shipment of our products across international borders, require us to comply with a number of federal, state, local and foreign laws and regulations, which are complex and increase our cost of doing business.
Because we sell a significant portion of our production in international markets, our operations and activities inside and outside the U.S., as well as the shipment of our products across international borders, require us to comply with a number of federal, state, local and foreign laws and regulations, which are complex and increase our risks of doing business internationally.
Any person or entity purchasing or otherwise holding any interest in shares of our capital stock will be deemed to have notice of, and consented to, the provisions of our certificate of incorporation described in the preceding sentence.
Any person or entity purchasing or otherwise holding any interest in shares of our common stock will be deemed to have notice of, and consented to, the provisions of our certificate of incorporation described in the preceding sentence.
Our business, results of operations and financial condition may be adversely affected by the novel coronavirus (COVID-19) pandemic. The COVID-19 pandemic had a severe adverse impact on our business and operations, resulting in an unprecedented decline in demand for our coal during a portion of 2020, driven by widespread government-imposed lockdowns.
Our business, results of operations and financial condition may be adversely affected by pandemics, such as the novel coronavirus (COVID-19) pandemic. The COVID-19 pandemic had a severe adverse impact on our business and operations, resulting in an unprecedented decline in demand for our coal during a portion of 2020, driven by widespread government-imposed lockdowns.
Structural failure of a CRDA, slurry impoundment or other dam structure classified as a high or significant hazard could result in extensive damage to the environment and natural resources, such as bodies of water that the coal slurry reaches, as well as liability for related personal injuries, property damages, injuries to wildlife or loss of life.
Structural failure of a CRDA, slurry impoundment or other dam structure classified as a high or significant hazard could result in extensive damage to the environment and natural resources, such as bodies of water, as well as liability for related personal injuries, property damages, injuries to wildlife or loss of life.
As a result of the Murray Energy bankruptcy, the Company could be required to pay for certain liabilities previously held by Murray in a 2013 transaction between Murray and our former parent.
As a result of the Murray Energy bankruptcy, the Company could be required to pay for certain liabilities previously acquired by Murray in a 2013 transaction between Murray and our former parent.
Any of these circumstances could have significant negative effects and could materially and adversely affect our results of operations and cash flows. Our mines are subject to stringent federal and state safety regulations that increase our cost of doing business at active operations and may place restrictions on our methods of operation.
Any of these circumstances could have significant negative effects and could materially and adversely affect our results of operations and cash flows. 44 Table of Contents Our mines are subject to stringent federal and state safety regulations that increase our cost of doing business at active operations and may place restrictions on our methods of operation.
The Murray sale agreement includes indemnification by Murray with respect to the Coal Act and BLBA liabilities. In addition, the Company had agreed to indemnify its former parent relative to certain pre-separation liabilities. As of September 16, 2020, the Company entered into a settlement agreement with Murray and withdrew its claims in bankruptcy.
The Murray sale agreement includes 47 Table of Contents indemnification by Murray with respect to the Coal Act and BLBA liabilities. In addition, the Company had agreed to indemnify its former parent relative to certain pre-separation liabilities. As of September 16, 2020, the Company entered into a settlement agreement with Murray and withdrew its claims in bankruptcy.
Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties and curtailment of operations in certain jurisdictions, and might adversely affect our business, financial condition, results of operations and cash flows. In addition, actual or alleged violations could damage our reputation and ability to do business.
Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties and curtailment of operations in certain jurisdictions, and might adversely affect our business, financial condition, results of operations and cash flows. In addition, actual or alleged violations could damage our 37 Table of Contents reputation and ability to do business.
At the time of sale, the liabilities included certain retiree medical liabilities under the Coal Industry Retiree Health Benefit Act of 1992 (“Coal Act”) and certain federal black lung liabilities under the Black Lung Benefits Act (“BLBA”).
At the time of sale, the liabilities of the sold companies included certain retiree medical liabilities under the Coal Industry Retiree Health Benefit Act of 1992 (“Coal Act”) and certain federal black lung liabilities under the Black Lung Benefits Act (“BLBA”).
Any reduction in the amount of coal consumed by electric power generators as a result of actual or potential regulation of greenhouse gas emissions could decrease demand for our fossil fuels, thereby reducing our revenues and materially and adversely affecting our business and results of operations.
Any reduction in the amount of coal consumed by electric power generators as a result of actual or potential regulation of GHG emissions could decrease demand for our fossil fuels, thereby reducing our revenues and materially and adversely affecting our business and results of operations.
Depending on the language of the contract, some contracts may terminate upon continuance of an event of force majeure that extends for a 48 Table of Contents period greater than three to twelve months and some contracts may obligate us to perform notwithstanding what would typically be a force majeure event.
Depending on the language of the contract, some contracts may terminate upon continuance of an event of force majeure that extends for a period greater than three to twelve months and some contracts may obligate us to perform notwithstanding what would typically be a force majeure event.
Consequently, currency fluctuations could adversely affect the competitiveness of our coal in international markets, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. Inflation could result in higher costs and decreased profitability.
Consequently, currency fluctuations could adversely affect the competitiveness of our coal in international markets, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. 36 Table of Contents Inflation could result in higher costs and decreased profitability.
Any significant legislative changes at 37 Table of Contents the international, national, state or local levels designed to reduce GHG emissions could significantly affect our ability to produce and sell our coal and develop our reserves, could increase the cost of the production and sale of coal and could materially reduce the value of our coal and coal reserves.
Any significant legislative changes at the international, national, state or local levels designed to reduce GHG emissions could significantly affect our ability to produce and sell our coal and develop our reserves, could increase the cost of the production and sale of coal and could materially reduce the value of our coal and coal reserves.
Oil and natural gas drillers and transporters may be subject to law and regulations that are enforced by regulators that do not have jurisdiction over our activities.
Oil and natural gas drillers and transporters may be subject to laws and regulations that are enforced by regulators that do not have jurisdiction over our activities.
For example: 31 Table of Contents • demand for electricity in the United States is impacted by industrial production, which, if weakened, would negatively impact the revenues, margins and profitability of our coal business; • demand for metallurgical coal depends on coke and steel demand in the United States and globally, which, if weakened, would negatively impact the revenues, margins and profitability of our metallurgical coal business including our ability to sell coal from the Itmann Mining Complex or our thermal coal as higher priced high volatile metallurgical coal; • demand for coal used in industrial applications, such as cement and brick manufacturing processes, which, if weakened, would negatively impact the revenues, margins and profitability of our coal business; • the tightening of credit or lack of credit availability to our customers could adversely affect our ability to collect our trade receivables; • our ability to access the capital markets may be restricted at a time when we would like, or need, to raise capital for our business including for exploration and/or development of our coal reserves, or for strategic acquisitions of assets; and • a decline in our creditworthiness, which may require us to post letters of credit, cash collateral, or surety bonds to secure certain obligations, all of which would have an adverse effect on our liquidity.
For example: • demand for electricity in the United States is impacted by industrial production, which, if weakened, would negatively impact the revenues, margins and profitability of our coal business; • demand for metallurgical coal depends on coke and steel demand in the United States and globally, which, if weakened, would negatively impact the revenues, margins and profitability of our metallurgical coal business including our ability to sell coal from the Itmann Mining Complex or our thermal coal as higher priced high volatile metallurgical coal; • demand for coal used in industrial applications depends on demand for products such as cement and brick used in construction and infrastructure projects, which, if weakened, would negatively impact the revenues, margins and profitability of our coal business; • the tightening of credit or lack of credit availability to our customers could adversely affect our ability to collect our trade receivables; • our ability to access the capital markets may be restricted at a time when we would like, or need, to raise capital for our business including for exploration and/or development of our coal reserves, or for strategic acquisitions of assets; and • a decline in our creditworthiness, which may require us to post letters of credit, cash collateral, or surety bonds to secure certain obligations, all of which would have an adverse effect on our liquidity.
Federal and state mandates for increased use of electricity derived from renewable energy sources could also affect demand for our coal. Such mandates, combined with other incentives to use renewable energy 34 Table of Contents sources, such as tax credits, could make alternative fuel sources more competitive with coal.
Federal and state mandates for increased use of electricity derived from renewable energy sources could also affect demand for our coal. Such mandates, combined with other incentives to use renewable energy sources, such as tax credits, could make alternative fuel sources more competitive with coal.
As a result, a substantial portion of coal 35 Table of Contents production is from companies that have significantly greater resources than we do. Current or further consolidation in the coal industry or current or future bankruptcy proceedings of coal competitors may adversely affect us.
As a result, a substantial portion of coal production is from companies that have significantly greater resources than we do. Current or further consolidation in the coal industry or current or future bankruptcy proceedings of coal competitors may adversely affect us.
In addition, our borrowing capacity under our receivables financing arrangement could be reduced if we experience prolonged and significant delays in payments by one or more material customers. Our inability to acquire or develop additional coal reserves that are economically recoverable may have a material adverse effect on our future profitability.
In addition, our borrowing capacity under our receivables financing arrangement could be reduced if we experience prolonged and significant delays in payments by one or more material customers. 34 Table of Contents Our inability to acquire or develop additional coal reserves that are economically recoverable may have a material adverse effect on our future profitability.
The extent to which COVID-19 may adversely impact our results of operations, cash flows and financial condition depends on future developments, which are highly uncertain and unpredictable. The Company will continue to take the appropriate steps to mitigate the impact on the Company's operations, liquidity and financial condition.
The extent to which pandemics may adversely impact our results of operations, cash flows and financial condition depends on future developments, which are highly uncertain and unpredictable. The Company will continue to take the appropriate steps to mitigate the impact on the Company's operations, liquidity and financial condition.
In addition, the steel industry's demand for coal is affected by a number of factors, including the variable nature of that industry's business, technological developments in the steel-making process and the availability of substitutes for steel, such as aluminum, composites or plastics.
In addition, the steel 35 Table of Contents industry's demand for coal is affected by a number of factors, including the variable nature of that industry's business, technological developments in the steel-making process and the availability of substitutes for steel, such as aluminum, composites or plastics.
For the fiscal years ended December 31, 2022, 2021 and 2020, approximately 53%, 46% and 35%, respectively, of our annual coal revenue was derived from customers who exported our coal outside of the United States. We believe that international markets will continue to account for a significant percentage of our revenue as we seek international expansion opportunities.
For the fiscal years ended December 31, 2023, 2022 and 2021, approximately 66%, 53% and 46%, respectively, of our annual coal revenue was derived from customers who exported our coal outside of the United States. We believe that international markets will continue to account for a significant percentage of our revenue as we seek international expansion opportunities.
Any indebtedness we incur in the future may also expose us to increased interest rates, whether as a result of higher fixed rates at the time such a new facility is entered into or because such new indebtedness accrues interest at a variable rate.
Any indebtedness we incur in the future may expose us to increased interest rates, whether as a result of higher fixed rates at the time such a new instrument is entered into or because such new indebtedness accrues interest at a variable rate.
In addition, we may be exposed to legal risks under the laws of the countries outside the U.S. in which we do 36 Table of Contents business, as well as the laws of the U.S. governing our business activities in those other countries, such as the U.S. Foreign Corrupt Practices Act.
In addition, we may be exposed to legal risks under the laws of the countries outside the U.S. in which we do business, as well as the laws of the U.S. governing our business activities in those other countries, such as the U.S. Foreign Corrupt Practices Act.
Your percentage of ownership in the Company may be diluted in the future. Your percentage of ownership in us may be diluted because of equity issuances for acquisitions, capital market transactions or otherwise, including, without limitation, equity awards that we may be granting to our directors, officers and employees.
Your percentage of ownership in us may be diluted because of equity issuances for acquisitions, capital market transactions or otherwise, including, without limitation, equity awards that we may be granting to our directors, officers and employees.
We have experienced rising premiums, reduced coverage and/or fewer providers willing to 39 Table of Contents underwrite policies and surety bonds. Terms have generally become more unfavorable, including increases in the amount of collateral required to secure surety bonds.
We have experienced rising premiums, reduced coverage and/or fewer providers willing to underwrite policies and surety bonds. Terms have generally become more unfavorable, including increases in the amount of collateral required to secure surety bonds.
We accrue for the costs of current mine disturbance, gas well plugging and of final mine closure, including the cost of treating mine water discharge where necessary. Estimates of our total asset retirement obligations, which are based upon permit requirements and our experience, were approximately $252 million at December 31, 2022.
We accrue for the costs of current mine disturbance, gas well plugging and of final mine closure, including the cost of treating mine water discharge where necessary. Estimates of our total asset retirement obligations, which are based upon permit requirements and our experience, were approximately $241 million at December 31, 2023.
These supply chain disruptions have 32 Table of Contents previously caused and may continue to or again cause some of our suppliers to fail to deliver the quantities of supplies we need or fail to deliver such supplies in a timely manner.
These supply chain disruptions have previously caused and may continue to or again cause some of our suppliers to fail to deliver the quantities of supplies we need or fail to deliver such supplies in a timely manner.
Additionally, coal and other mining companies are increasingly struggling to obtain adequate insurance coverage for their business and operations. Our failure to obtain adequate insurance coverages could have a material adverse effect on our business and results of operations.
Additionally, coal and other mining companies are increasingly struggling to obtain adequate insurance coverage for their business and operations. Our failure to obtain adequate insurance coverages 40 Table of Contents could have a material adverse effect on our business and results of operations.
At December 31, 2022, no borrowings were outstanding under our revolving credit facility or our $100 million accounts receivable securitization facility.
At December 31, 2023, no borrowings were outstanding under our revolving credit facility or our $100 million accounts receivable securitization facility.
In 2022, the Pennsylvania Mining Complex sold approximately 54% of its coal to U.S. electric power generators, and we have annual or multi-year contracts in place with many of these electric power generators for a significant portion of our future production.
In 2023, the Pennsylvania Mining Complex sold approximately 38% of its coal to U.S. electric power generators, and we have annual or multi-year contracts in place with many of these electric power generators for a significant portion of our future production.
If we do not make sufficient or effective capital expenditures, we will be unable to maintain and grow our business. To fund our capital expenditures, we will be required to use cash from our operations, incur debt or sell additional equity securities.
If we do not make sufficient or effective capital expenditures, we will be unable to maintain and grow our business. To fund our capital expenditures, we will be required to use cash from our 41 Table of Contents operations, incur debt or sell additional equity securities.
This could have a material adverse effect on our business, financial condition and results of operations, along with our operating costs, making it difficult to execute our planned capital expenditure program. Additionally, the geopolitical and macroeconomic consequences of the war and associated sanctions cannot be predicted, but could severely impact the world economy.
Either of these risks could have a material adverse effect on our business, financial condition and results of operations, along with our operating costs, making it difficult to execute our planned capital expenditure program. Additionally, the geopolitical and macroeconomic consequences of these conflicts and associated sanctions cannot be predicted, but could severely impact the world economy.
Compliance with import and export requirements, the Foreign Corrupt Practices Act and other applicable anti-corruption laws may increase the cost of doing business.
Compliance with import and export requirements, the Foreign Corrupt Practices Act and other applicable anti-corruption laws may increase the risks of doing business internationally.
Our senior secured credit agreement and the indenture governing our 11.00% senior secured notes impose a number of restrictions upon us, such as restrictions on us granting liens on our assets, making investments, paying dividends, stock repurchases, selling assets and engaging in acquisitions.
Our senior secured credit agreement and the indenture governing our PEDFA bonds impose a number of restrictions upon us, such as restrictions on us granting liens on our assets, making investments, paying dividends, stock repurchases, selling assets and engaging in acquisitions.
While we have an employment agreement in place with our chief executive officer and change-in-control agreements with our senior executives, there can be no assurance we will continue to retain their services and we may become subject to significant severance payments if our relationship with these executives is terminated under certain circumstances.
While we have change-in-control agreements in place with our senior executives, there can be no assurance we will continue to retain their services and we may become subject to significant severance payments if our relationship with these executives is terminated under certain circumstances.
In addition, federal and state regulators are considering making financial assurance requirements more stringent and costly with respect to self-insured CWP, mine closure and reclamation security amounts.
In addition, federal and state regulators are considering making financial assurance requirements more stringent and costly with respect to self-insured coal workers' pneumoconiosis, mine closure and reclamation security amounts.
The war, trade and monetary sanctions, as well as any escalation of the conflict and future developments, could significantly affect worldwide market prices and demand for our coal and cause turmoil in the capital markets and generally in the global financial system.
These conflicts, trade and monetary sanctions, as well as any escalation of either of these conflicts and future developments, could significantly affect worldwide market prices and demand for our coal and cause turmoil in the capital markets and generally in the global financial system.
Our senior secured credit agreement and the indenture governing our 11.00% senior secured notes limit the incurrence of additional indebtedness unless specified tests or exceptions are met. In addition, our senior secured credit agreement and the indenture governing our 11.00% senior secured notes subject us to financial and/or other restrictive covenants.
Our senior secured credit agreement and the indenture governing our PEDFA bonds limit the incurrence of additional indebtedness unless specified tests or exceptions are met. In addition, our senior secured credit agreement and the indenture governing our PEDFA bonds subject us to financial and/or other restrictive covenants.
The United States, European Union and other large economies have recently experienced inflation at a rate significantly higher than recent years. Current and future inflationary effects may be driven by, among other things, governmental stimulus and monetary policies, supply chain disruptions and geopolitical instability, including the ongoing military conflict between Ukraine and Russia.
The United States, European Union and other large economies have recently experienced inflation at a rate significantly higher than recent years. Current and future inflationary effects may be driven by, among other things, governmental stimulus and monetary policies, supply chain disruptions and geopolitical instability.
At December 31, 2022, the current and non-current portions of these obligations included: • postretirement medical and life insurance ($255 million); • coal workers’ pneumoconiosis benefits ($161 million); • pension benefits ($23 million); • workers’ compensation ($50 million); and • long-term disability ($7 million). However, if our assumptions are inaccurate, we could be required to expend greater amounts than anticipated.
At December 31, 2023, the current and non-current portions of these obligations included: • postretirement medical and life insurance ($227 million); • coal workers’ pneumoconiosis benefits ($170 million); • pension benefits ($23 million); • workers’ compensation ($48 million); and • long-term disability ($7 million). However, if our assumptions are inaccurate, we could be required to expend greater amounts than anticipated.
We derive a significant 33 Table of Contents portion of our revenues from two customers, each of which accounted for over 10% of our total sales and aggregated approximately 30% of our total sales in fiscal year 2022. There are inherent risks whenever a significant percentage of total revenues are concentrated with a limited number of customers.
We derive a significant portion of our revenues from two customers, each of which accounted for over 10% of our total sales and aggregated approximately 23% of our total sales in fiscal year 2023. There are inherent risks whenever a significant percentage of total revenues are concentrated with a limited number of customers.
According to the EIA, in 2022, the domestic electric power sector accounted for approximately 92% of total U.S. coal consumption.
According to the EIA, in 2023, the domestic electric power sector accounted for approximately 91% of total U.S. coal consumption.
During the year ended December 31, 2022, approximately 41% of the coal the Company produced was sold under multi-year sales contracts.
During the year ended December 31, 2023, approximately 42% of the coal the Company produced was sold under multi-year sales contracts.
However, the payment and amount of any future dividend will be subject to the sole discretion of our board of directors and will depend upon many factors, including our financial condition and prospects, our capital requirements and access to capital markets, covenants associated with certain of our debt obligations, legal requirements and other factors that our board of directors may deem relevant, and there can be no assurance that we will pay dividends in the future in the amounts we have recently declared, or at all.
The payment and amount of any future dividend is at the discretion of our board of directors and will depend upon many factors, including our financial condition and prospects, our capital requirements and access to capital markets, covenants associated with certain of our debt obligations, legal requirements and other factors that our board of directors may deem relevant, and there can be no assurance that we will return to declaring and paying dividends in the future in the amounts we have previously declared.
These provisions include, among others: • the inability of our stockholders to act by written consent unless such written consent is unanimous; • the inability of our stockholders to call special meetings; • rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings; • the right of our board of directors to issue preferred stock without stockholder approval; and • the ability of our directors, and not stockholders, to fill vacancies (including those resulting from an enlargement of our board of directors) on our board of directors.
These provisions include, among others: • the inability of our stockholders to act by written consent unless such written consent is unanimous; • the inability of our stockholders to call special meetings; • rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings; • the right of our board of directors to issue preferred stock without stockholder approval; and • the ability of our directors, and not stockholders, to fill vacancies (including those resulting from an enlargement of our board of directors) on our board of directors. 51 Table of Contents In addition, we are subject to Section 203 of the Delaware General Corporation Law (“DGCL”).
In addition to the existing risks, the adoption of new technologies may also increase our exposure to data breaches or our ability to detect and remediate effects of a breach. Our insurance may not protect us against such occurrences.
In addition to the existing risks, the adoption of new technologies may also increase our exposure to data breaches or our ability to detect and remediate effects of a breach.
In addition, one or more analysts providing research coverage of our Company could use estimation or valuation methods that we do not agree with, downgrade our shares or issue other negative commentary about our company or our industry. As a result of one or more of these factors, the trading price of our shares could decline.
In addition, one or more analysts providing research coverage of our Company could use estimation or valuation methods that we do not agree with, downgrade our shares or issue other negative commentary about our company or our industry.
Our operations could be affected by various risks, many of which are beyond our control. Based on current information, we believe that the following list identifies the most significant risk factors (not necessarily in order of importance or probability of occurrence) that could affect our financial condition, results of operations or cash flows.
Based on current information, we believe that the following list identifies the most significant risk factors (not necessarily in order of importance or probability of occurrence) that could affect our financial condition, results of operations or cash flows.
Our operations include coal refuse disposal areas, slurry impoundments and other water retaining or dam structures classified as “high” or “significant” hazards, depending on the extent of damage or loss of life that could occur in the event of a failure. A failure of these structures would result in liabilities that could have a material impact on our business.
Our operations include coal refuse disposal areas, slurry impoundments and other water retaining or dam structures, with multiple facilities classified as “high” or “significant” hazards, depending on the extent of damage or loss of life that could occur in the event of a failure.
If we are unable to reach an agreement with the holders of such rights, or to do so on a cost-effective basis, we may incur increased costs, and our ability to mine could be impaired, which could materially and adversely affect our business, results of operations, financial condition and cash flows. 40 Table of Contents In order to maintain, grow and diversify our business, we will be required to make substantial capital expenditures.
If we are unable to reach an agreement with the holders of such rights, or to do so on a cost-effective basis, we may incur increased costs, and our ability to mine could be impaired, which could materially and adversely affect our business, results of operations, financial condition and cash flows.
As a result of these factors, holders of our common stock or other securities may not be able to resell their shares at or above the market price at which they purchased their shares or may not be able to resell them at all.
As a result of these factors, holders of our common stock or other securities may not be able to resell their shares at or above the market price at which they purchased their shares or may not be able to resell them at all. In addition, price volatility with our common stock may be greater if trading volume is low.
We may incur additional costs and delays to mine coal because we have to acquire additional property rights to perfect our title to coal rights. If we fail to acquire additional property rights to perfect our title to coal rights, we may have to reduce our estimated reserves.
If we fail to acquire additional property rights to perfect our title to coal rights, we may have to reduce our estimated reserves.
The availability and reliability of rail transportation and transportation facilities and fluctuations in transportation costs could affect the demand for our coal, and any significant damage to the CONSOL Marine Terminal that impacts its use could impair our ability to supply coal to our customers. Transportation logistics play an important role in allowing us to supply coal to our customers.
The availability and reliability of modes of transportation and transportation facilities as well as fluctuations in transportation costs could affect the demand for our coal, and any significant damage to the CONSOL Marine Terminal that impacts its use could impair our ability to supply coal to our customers.
Our business involves many hazards and operating risks, some of which may not be fully covered by insurance. The occurrence of a significant accident or other event that is not fully insured could curtail our operations and have a material adverse effect on our results of operations, financial condition and cash flows. Our coal mining operations are underground mines.
The occurrence of a significant accident or other event that is not fully insured could curtail our operations and have a material adverse effect on our results of operations, financial condition and cash flows. Our coal mining operations are underground mines.
Furthermore, adoption of comprehensive legislation or regulation focusing on climate change or GHG emission reductions for the United States or other countries where we sell coal, or the inability of utilities to obtain financing in connection with coal-fired plants, may make it more costly to operate coal-fired electric power generation plants and make coal less attractive for electric utility power plants in the future.
However, at this time, we are unable to determine the extent to which climate change may lead to increased storm or weather hazards affecting our operations. 38 Table of Contents Furthermore, adoption of comprehensive legislation or regulation focusing on climate change or GHG emission reductions for the United States or other countries where we sell coal, or the inability of utilities to obtain financing in connection with coal-fired plants, may make it more costly to operate coal-fired electric power generation plants and make coal less attractive for electric utility power plants in the future.
As of December 31, 2022, our total long-term indebtedness was approximately $388 million, consisting of: • $103 million under our Maryland Economic Development Corporation Port Facilities Refunding Revenue Bonds (“MEDCO”) 5.75% revenue bonds due September 2025; • $99 million under our 11.00% senior secured second lien notes due November 2025; • $75 million under our Pennsylvania Economic Development Financing Authority (“PEDFA”) 9.00% Solid Waste Disposal Revenue Bonds due April 2028; • $64 million under our Term Loan B Facility; • $37 million associated with finance leases due through 2027; and • $10 million of miscellaneous debt.
As of December 31, 2023, our total long-term indebtedness was approximately $199 million, consisting of: • $103 million under our Maryland Economic Development Corporation Port Facilities Refunding Revenue Bonds (“MEDCO”) 5.75% revenue bonds due September 2025; • $75 million under our Pennsylvania Economic Development Financing Authority (“PEDFA”) 9.00% Solid Waste Disposal Revenue Bonds due April 2028; • $14 million associated with finance leases due through 2028; and • $7 million of miscellaneous debt.
ITEM 1A. Risk Factors You should carefully consider the following risks and other information in this Annual Report on Form 10-K in evaluating us and our common stock.
ITEM 1A. Risk Factors You should carefully consider the following risks and other information in this Annual Report on Form 10-K in evaluating us and our common stock. The risk factors generally have been separated into two groups: risks related to our business and risks related to our common stock and the securities market.
This could cause a sustained decrease in demand for our coal and the failure of our customers to purchase coal from us that they are obligated to purchase pursuant to existing contracts, which would have a material adverse effect on our operations and financial condition.
If a pandemic were to again become an acute, severe risk, this could lead to government shutdowns being reinstated, leading to a sustained decrease in demand for our coal and the failure of our customers to purchase coal from us that they are obligated to purchase pursuant to existing contracts, which would have a material adverse effect on our operations and financial condition.
Any additional laws, regulations and other legal requirements enacted or adopted by federal, state and local authorities, as well as foreign authorities, or new interpretations of existing legal requirements by regulatory bodies relating to the protection of the environment could further affect our costs of operations and competitive position.
Any additional laws, regulations and other legal requirements enacted or adopted by federal, state and local authorities, as well as foreign authorities, or new interpretations of existing legal requirements by regulatory bodies relating to the protection of the environment could further affect our costs of operations and competitive position. 39 Table of Contents Our business involves many hazards and operating risks, some of which may not be fully covered by insurance.
If we are unable to obtain needed capital or financing on satisfactory terms, our financial leverage could increase. In order to maintain, grow and diversify our business, we will need to make substantial capital expenditures to fund our share of capital expenditures associated with our mines, acquisitions or other business development initiatives.
In order to maintain, grow and diversify our business, we will be required to make substantial capital expenditures. If we are unable to obtain needed capital or financing on satisfactory terms, our financial leverage could increase.
In future years, the cost associated with purchasing natural gas wells which are in 45 Table of Contents the path of our coal mining may make mining through those wells uneconomical, thereby effectively causing a loss of significant portions of our coal reserves.
In future years, the cost associated with purchasing natural gas wells which are in the path of our coal mining may make mining through those wells uneconomical, thereby effectively causing a loss of significant portions of our coal reserves. Each of the factors which impacts reserve estimation may vary considerably from the assumptions used in estimating the reserves.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeHowever, we are not currently subject to any material litigation, other than those described in Note 23, “Commitments and Contingent Liabilities,” in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K, which descriptions are incorporated herein by this reference. ITEM 4.
Biggest changeHowever, we are not currently subject to any material litigation, other than those described in Note 23, “Commitments and Contingent Liabilities,” in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K, which descriptions are incorporated herein by this reference.
Removed
Mine Safety Disclosures Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this annual report. 52 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Removed
ITEM 4. Mine Safety D isclosures 52 PART II ITEM 5. Market for Registrant's Common Equity , Related Stockholder Matters and Issuer Purchases of Equity Securities 53 ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 55 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 75 ITEM 8. Financial Statements and Supplementary Data 76
Added
ITEM 4. Mine Safety Disclosures Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this annual report. 53 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDecember 31, 2017 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 CONSOL Energy Inc. 100.0 80.3 36.8 18.3 57.6 170.0 S&P 500 Stock Index 100.0 93.8 120.9 140.6 178.4 143.8 Peer Group 100.0 85.5 56.7 37.2 116.2 257.5 The above information is being furnished pursuant to Regulation S-K, Item 201 (e) (Performance Graph). 53 Table of Contents Repurchases of Equity Securities The following table sets forth repurchases of the Company's common stock during the three months ended December 31, 2022: (a) (b) (c) (d) Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs (000s omitted) (2) October 1, 2022 - October 31, 2022 — $ — — $ 380,557 (3) November 1, 2022 - November 30, 2022 — $ — — $ 380,557 (3) December 1, 2022 - December 31, 2022 124,454 $ 64.18 124,454 $ 372,569 (3) (1) In December 2017, CONSOL Energy's Board of Directors approved a program to repurchase, from time to time, the Company's outstanding shares of common stock or its 11.00% Senior Secured Second Lien Notes due 2025.
Biggest changeDecember 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 CONSOL Energy Inc. 100.0 45.8 22.7 71.6 210.9 339.0 S&P 500 Stock Index 100.0 128.9 149.9 190.2 153.3 190.4 Peer Group 100.0 62.9 41.3 122.8 264.4 412.3 The above information is being furnished pursuant to Regulation S-K, Item 201 (e) (Performance Graph). 54 Table of Contents Repurchases of Equity Securities The following table sets forth repurchases of the Company's common stock during the three months ended December 31, 2023: (a) (b) (c) (d) Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs (000s omitted) (2) October 1, 2023 - October 31, 2023 142,935 $ 104.94 142,935 $ 488,174 (3) November 1, 2023 - November 30, 2023 739,575 $ 98.95 739,575 $ 414,994 (3) December 1, 2023 - December 31, 2023 361,117 $ 104.72 361,117 $ 377,179 (3) (1) In December 2017, CONSOL Energy's Board of Directors approved a program to repurchase, from time to time, the Company's outstanding shares of common stock or its 11.00% Senior Secured Second Lien Notes due 2025.
Since the inception of the program, CONSOL Energy Inc.'s Board of Directors has amended the program on several separate occasions. As a result of such amendments, the Company may now repurchase up to $600 million of its stock and debt until December 31, 2024.
Since the inception of the program, CONSOL Energy Inc.'s Board of Directors has amended the program on several separate occasions. As a result of such amendments, the Company may now repurchase up to $1 billion of its stock and debt until December 31, 2024.
The graph above tracks the performance of an initial investment of $100 in CONSOL Energy's common stock and each member of the peer group and the Standard & Poor's 500 Stock Index, including the reinvestment of any dividends, from December 31, 2017 through December 31, 2022.
The graph above tracks the performance of an initial investment of $100 in CONSOL Energy's common stock and each member of the peer group and the Standard & Poor's 500 Stock Index, including the reinvestment of any dividends, from December 31, 2018 through December 31, 2023.
As of February 1, 2023, there were 73 holders of record of our common stock. A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers and other financial institutions.
As of February 1, 2024, there were 68 holders of record of our common stock. A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers and other financial institutions.
As of February 10, 2023, approximately $373 million remained available under the stock and debt repurchase program. The repurchases will be effected from time to time on the open market or in privately negotiated transactions or under a Rule 10b5-1 plan.
As of February 1, 2024, approximately $347 million remained available under the stock and debt repurchase program. The repurchases will be effected from time to time on the open market or in privately negotiated transactions or under a Rule 10b5-1 plan.
(2) Management cannot estimate the number of shares that will be repurchased because purchases are made based upon the Company's stock price, the Company's financial outlook and alternative investment options. (3) In December 2022, CONSOL Energy utilized approximately $7.988 million to repurchase its common stock.
(2) Management cannot estimate the number of shares that will be repurchased because purchases are made based upon the Company's stock price, the Company's financial outlook and alternative investment options. (3) In the three months ended December 31, 2023, CONSOL Energy utilized approximately $126 million to repurchase its common stock.
However, the declaration and payment of dividends by CONSOL Energy is subject to the discretion of CONSOL Energy's Board of Directors, and no assurance can be given that CONSOL Energy will continue to pay dividends in the future.
The declaration and payment of dividends by CONSOL Energy is at the discretion of CONSOL Energy's Board of Directors, and no assurance can be given that CONSOL Energy will return to declaring and paying dividends in the future.
The Company's Senior Secured Credit Facilities and the Indenture to the Second Lien Notes limit CONSOL Energy's ability to pay dividends based on certain covenants. See Part III, Item 12. “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information relating to CONSOL Energy's equity compensation plans.
Certain of the Company's financing arrangements may limit CONSOL Energy's ability to pay dividends and repurchase stock based on certain covenants. See Part III, Item 12. “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information relating to CONSOL Energy's equity compensation plans.
The Company currently intends, subject to the discretion of the Company's Board of Directors, to return a planned aggregate range of approximately 35% to 50% of the Company's quarterly free cash flow in the form of dividends and/or repurchases of shares of common stock.
The Company currently intends, subject to the discretion of the Company's Board of Directors, to return a planned aggregate of approximately 75% of the Company's quarterly free cash flow in the form of share repurchases.
Dividends In the third quarter of the fiscal year ended December 31, 2022, the Company initiated an enhanced shareholder capital return program.
Dividends In the fiscal year ended December 31, 2022, the Company initiated an enhanced shareholder capital return program through repurchases of shares of common stock and the payment of dividends.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe GAAP measure most directly comparable to adjusted EBITDA is net income (loss). 58 Table of Contents For the Year Ended December 31, 2022 Dollars in thousands PA Mining Complex CONSOL Marine Terminal Other Total Company Net Income (Loss) $ 620,208 $ 41,223 $ (194,452) $ 466,979 Add: Income Tax Expense — — 101,458 101,458 Add: Interest Expense — 6,116 46,524 52,640 Less: Interest Income (1,857) — (4,174) (6,031) Earnings (Loss) Before Interest & Taxes (EBIT) 618,351 47,339 (50,644) 615,046 Add: Depreciation, Depletion & Amortization 200,320 4,604 21,954 226,878 Earnings (Loss) Before Interest, Taxes and DD&A (EBITDA) $ 818,671 $ 51,943 $ (28,690) $ 841,924 Adjustments: Add: Stock-Based Compensation $ 6,628 $ 316 $ 946 $ 7,890 Add: Loss on Debt Extinguishment — — 5,623 5,623 Add: Equity Affiliate Adjustments — — 3,500 3,500 Less: Fair Value Adjustment of Commodity Derivative Instruments (52,204) — — (52,204) Total Pre-tax Adjustments (45,576) 316 10,069 (35,191) Adjusted EBITDA $ 773,095 $ 52,259 $ (18,621) $ 806,733 For the Year Ended December 31, 2021 Dollars in thousands PA Mining Complex CONSOL Marine Terminal Other Total Company Net Income (Loss) $ 94,161 $ 32,251 $ (92,302) $ 34,110 Add: Income Tax Expense — — 1,297 1,297 Add: Interest Expense 1,710 6,141 55,491 63,342 Less: Interest Income (90) — (3,197) (3,287) Earnings (Loss) Before Interest & Taxes (EBIT) 95,781 38,392 (38,711) 95,462 Add: Depreciation, Depletion & Amortization 206,727 4,834 13,022 224,583 Earnings (Loss) Before Interest, Taxes and DD&A (EBITDA) $ 302,508 $ 43,226 $ (25,689) $ 320,045 Adjustments: Add: Stock-Based Compensation $ 5,768 $ 265 $ 599 $ 6,632 Less: Gain on Debt Extinguishment — — (657) (657) Add: Pension Settlement — — 22 22 Add: Fair Value Adjustment of Commodity Derivative Instruments 52,204 — — 52,204 Total Pre-tax Adjustments 57,972 265 (36) 58,201 Adjusted EBITDA $ 360,480 $ 43,491 $ (25,725) $ 378,246 59 Table of Contents Results of Operations: Year Ended December 31, 2022 Compared with the Year Ended December 31, 2021 Net Income CONSOL Energy reported net income of $467 million for the year ended December 31, 2022, compared to net income of $34 million for the year ended December 31, 2021.
Biggest changeFor the Year Ended December 31, 2023 Dollars in thousands PA Mining Complex CONSOL Marine Terminal Other Total Company Net Income (Loss) $ 810,234 $ 69,253 $ (223,595) $ 655,892 Add: Income Tax Expense — — 121,980 121,980 Add: Interest Expense — 6,097 23,228 29,325 Less: Interest Income (2,344) — (11,253) (13,597) Earnings (Loss) Before Interest & Taxes (EBIT) 807,890 75,350 (89,640) 793,600 Add: Depreciation, Depletion & Amortization 202,833 4,671 33,813 241,317 Earnings (Loss) Before Interest, Taxes and DD&A (EBITDA) $ 1,010,723 $ 80,021 $ (55,827) $ 1,034,917 Adjustments: Add: Stock-Based Compensation $ 8,438 $ 301 $ 1,307 $ 10,046 Add: Loss on Debt Extinguishment — — 2,725 2,725 Total Pre-tax Adjustments 8,438 301 4,032 12,771 Adjusted EBITDA $ 1,019,161 $ 80,322 $ (51,795) $ 1,047,688 For the Year Ended December 31, 2022 Dollars in thousands PA Mining Complex CONSOL Marine Terminal Other Total Company Net Income (Loss) $ 620,208 $ 41,223 $ (194,452) $ 466,979 Add: Income Tax Expense — — 101,458 101,458 Add: Interest Expense — 6,116 46,524 52,640 Less: Interest Income (1,857) — (4,174) (6,031) Earnings (Loss) Before Interest & Taxes (EBIT) 618,351 47,339 (50,644) 615,046 Add: Depreciation, Depletion & Amortization 200,320 4,604 21,954 226,878 Earnings (Loss) Before Interest, Taxes and DD&A (EBITDA) $ 818,671 $ 51,943 $ (28,690) $ 841,924 Adjustments: Add: Stock-Based Compensation $ 6,628 $ 316 $ 946 $ 7,890 Add: Loss on Debt Extinguishment — — 5,623 5,623 Add: Equity Affiliate Adjustments — — 3,500 3,500 Less: Fair Value Adjustment of Commodity Derivative Instruments (52,204) — — (52,204) Total Pre-tax Adjustments (45,576) 316 10,069 (35,191) Adjusted EBITDA $ 773,095 $ 52,259 $ (18,621) $ 806,733 58 Table of Contents Results of Operations: Year Ended December 31, 2023 Compared with the Year Ended December 31, 2022 Revenue and Other Income For the Year Ended December 31, (in millions) 2023 2022 Variance Coal Revenue - PAMC $ 2,025 $ 1,974 $ 51 Coal Revenue - Itmann Mining Complex 82 45 37 Terminal Revenue 106 79 27 Freight Revenue 294 182 112 Total Revenues from Contracts with Customers 2,507 2,280 227 Loss on Commodity Derivatives, net — (237) 237 Miscellaneous Other Income 53 24 29 Gain on Sale of Assets 9 35 (26) Total Revenue and Other Income $ 2,569 $ 2,102 $ 467 Revenues from Contracts with Customers Revenues from contracts with customers were $2,507 million for the year ended December 31, 2023, compared to $2,280 million for the year ended December 31, 2022.
The agreements comprising the Securitization contain various customary representations and warranties, covenants and default provisions which provide for the termination and acceleration of the commitments and loans under the Securitization in certain circumstances including, but not limited to, failure to make payments when due, breach of representation, warranty or covenant, certain insolvency events or failure to maintain the security interest in the trade receivables, and defaults under other material indebtedness.
The agreements comprising the securitization facility contain various customary representations and warranties, covenants and default provisions which provide for the termination and acceleration of the commitments and loans under the securitization facility in certain circumstances including, but not limited to, failure to make payments when due, breach of representation, warranty or covenant, certain insolvency events or failure to maintain the security interest in the trade receivables, and defaults under other material indebtedness.
The metrics include: (i) coal production and sales volumes; (ii) realized coal revenue, a non-GAAP financial measure; (iii) cost of coal sold, a non-GAAP financial measure; (iv) cash cost of coal sold, a non-GAAP financial measure; (v) average realized coal revenue per ton sold, an operating ratio derived from non-GAAP financial measures; (vi) average cash cost of coal sold per ton, an operating ratio derived from non-GAAP financial measures; (vii) average margin per ton sold, an operating ratio derived from non-GAAP financial measures; (viii) average cash margin per ton sold, an operating ratio derived from non-GAAP financial measures; and (ix) adjusted EBITDA, a non-GAAP financial measure.
The metrics include: (i) adjusted EBITDA, a non-GAAP financial measure; (ii) coal production and sales volumes; (iii) realized coal revenue, a non-GAAP financial measure; (iv) cost of coal sold, a non-GAAP financial measure; (v) cash cost of coal sold, a non-GAAP financial measure; (vi) average realized coal revenue per ton sold, an operating ratio derived from non-GAAP financial measures; (vii) average cash cost of coal sold per ton, an operating ratio derived from non-GAAP financial measures; and (viii) average cash margin per ton sold, an operating ratio derived from non-GAAP financial measures.
Any repurchases of common stock or notes are to be funded from available cash on hand or short-term borrowings. The program does not obligate CONSOL Energy to acquire any particular amount of its common stock or notes, and it can be modified or suspended at any time at the Company’s discretion.
Any repurchases of common stock or notes are to be funded from available cash on hand or short-term borrowings. The program does not obligate CONSOL Energy to acquire any particular amount of its common stock or notes, and the program can be modified or suspended at any time at the Company’s discretion.
CONSOL Energy also uses a combination of surety bonds, corporate guarantees and letters of credit to secure its financial obligations for employee-related, environmental, performance and various other items which are not reflected on the Consolidated Balance Sheet at December 31, 2022. Management believes these items will expire without being funded.
CONSOL Energy also uses a combination of surety bonds, corporate guarantees and letters of credit to secure its financial obligations for employee-related, environmental, performance and various other items which are not reflected on the Consolidated Balance Sheet at December 31, 2023. Management believes these items will expire without being funded.
A similar discussion and analysis that compares year ended December 31, 2021 to the fiscal year ended December 31, 2020 may be found in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Form 10-K for the year ended December 31, 2021, which is incorporated herein by reference.
A similar discussion and analysis that compares year ended December 31, 2022 to the fiscal year ended December 31, 2021 may be found in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Form 10-K for the year ended December 31, 2022, which is incorporated herein by reference.
The Company has not derecognized any receivables due to its continued involvement in the collections efforts. 71 Table of Contents 11.00% Senior Secured Second Lien Notes due 2025 On November 13, 2017, the Company issued $300 million in aggregate principal amount of 11.00% Senior Secured Second Lien Notes due 2025 (the “Second Lien Notes”) pursuant to an indenture (the “Indenture”) dated as of November 13, 2017, by and between the Company and UMB Bank, N.A., a national banking association, as trustee and collateral trustee (the “Trustee”).
The Company has not derecognized any receivables due to its continued involvement in the collections efforts. 11.00% Senior Secured Second Lien Notes due 2025 On November 13, 2017, the Company issued $300 million in aggregate principal amount of 11.00% Senior Secured Second Lien Notes due 2025 (the “Second Lien Notes”) pursuant to an indenture (the “Indenture”) dated as of November 13, 2017, by and between the Company and UMB Bank, N.A., a national banking association, as trustee and collateral trustee (the “Trustee”).
This revenue is based on the weight of coal shipped, negotiated freight rates and method of transportation, primarily rail, used by the customers to which the Company contractually provides transportation services to move its coal from the mine to the ultimate sales point. Freight revenue is completely offset by freight expense.
This revenue is based on the weight of coal shipped, negotiated freight rates and method of transportation, primarily rail, to which the Company contractually provides transportation services to move its coal from the mine to the ultimate sales point. Freight revenue is completely offset by freight expense.
Realized coal revenue, average realized coal revenue per ton sold, cost of coal sold, cash cost of coal sold, average cash cost of coal sold per ton, average margin per ton sold and average cash margin per ton sold normalize the volatility contained within comparable GAAP measures by adjusting for certain non-operating or non-cash transactions.
We believe realized coal revenue, average realized coal revenue per ton sold, cost of coal sold, cash cost of coal sold, average cash cost of coal sold per ton, and average cash margin per ton sold normalize the volatility contained within comparable GAAP measures by adjusting for certain non-operating or non-cash transactions.
These non-GAAP financial measures should not be considered an alternative to total costs, total coal revenue, net income, or any other measure of financial performance presented in accordance with GAAP.
These non-GAAP financial measures should not be considered an alternative to operating and other costs, total coal revenue, net income, or any other measure of financial performance presented in accordance with GAAP.
The Indenture contains covenants that limit the ability of the Company and the Guarantors, to (i) incur, assume or guarantee additional indebtedness or issue preferred stock; (ii) create liens to secure indebtedness; (iii) declare or pay dividends on the Company’s common stock, redeem stock or make other distributions to the Company’s stockholders; (iv) make investments; (v) restrict dividends, loans or other asset transfers from the Company’s restricted subsidiaries; (vi) merge or consolidate, or sell, transfer, lease or dispose of substantially all of the Company’s assets; (vii) sell or otherwise dispose of certain assets, including equity interests in subsidiaries; (viii) enter into transactions with affiliates; and (ix) create unrestricted subsidiaries.
The Indenture contained covenants that limited the ability of the Company and the Guarantors, to (i) incur, assume or guarantee additional indebtedness or issue preferred stock; (ii) create liens to secure indebtedness; (iii) declare or pay dividends on the Company’s common stock, redeem stock or make other distributions to the Company’s stockholders; (iv) make investments; (v) pay or make dividends, loans or other asset transfers from the Company’s restricted subsidiaries; (vi) merge or consolidate, or sell, transfer, lease or dispose of substantially all of the Company’s assets; (vii) sell or otherwise dispose of certain assets, including equity interests in subsidiaries; (viii) enter into transactions with affiliates; and (ix) create unrestricted subsidiaries.
The GAAP measure most directly comparable to realized coal revenue, average realized coal revenue per ton sold, average margin per ton sold and average cash margin per ton sold is total coal revenue. 57 Table of Contents The following table presents a reconciliation for the PAMC segment of realized coal revenue, average realized coal revenue per ton sold, average margin per ton sold and average cash margin per ton sold to total coal revenue, the most directly comparable GAAP financial measure, on a historical basis, for each of the periods indicated (in thousands, except per ton information).
The following table presents a reconciliation for the PAMC segment of realized coal revenue, average realized coal revenue per ton sold and average cash margin per ton sold to total coal revenue, the most directly comparable GAAP financial measure, on a historical basis, for each of the periods indicated (in thousands, except per ton information).
CONSOL Energy believes it will be able to satisfy these material requirements with cash generated from operations, cash on hand, borrowings under the revolving credit facility and securitization facility, and, if necessary, cash generated from its ability to issue additional equity or debt securities.
CONSOL Energy believes it will be able to satisfy these material requirements with cash generated from operations, cash on hand, short-term investments, borrowings under the revolving credit facility and securitization facility, and, if necessary, cash generated from its ability to issue additional equity or debt securities.
Estimates of the Company's total asset retirement obligations, which are based upon permit requirements and CONSOL Energy engineering expertise related to these requirements, including the current portion, were approximately $252 million at December 31, 2022. This liability is reviewed annually, or when events and circumstances indicate an adjustment is necessary, by CONSOL Energy management and engineers.
Estimates of the Company's total asset retirement obligations, which are based upon permit requirements and CONSOL Energy engineering expertise related to these requirements, including the current portion, were approximately $241 million at December 31, 2023. This liability is reviewed annually, or when events and circumstances indicate an adjustment is necessary, by CONSOL Energy management and engineers.
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The Company's discussion and analysis includes a comparison of the year ended December 31, 2022 to the year ended December 31, 2021.
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The Company's discussion and analysis includes a comparison of the year ended December 31, 2023 to the year ended December 31, 2022.
If the carrying value 66 Table of Contents of a long-lived asset exceeds the future undiscounted cash flows expected from the asset, the amount of impairment recorded is measured as the difference between the asset's carrying value and the estimated fair value of the asset, determined using discounted future cash flows.
If the carrying value of a long-lived asset exceeds the future undiscounted cash flows expected from the asset, the amount of impairment recorded is measured as the difference between the asset's carrying value and the estimated fair value of the asset, determined using discounted future cash flows.
The obligations are secured by, subject to certain exceptions (including a limitation of pledges of equity interests in certain subsidiaries and certain thresholds with respect to real property), a first-priority lien on (i) the Company’s interest in the Pennsylvania Mining Complex, (ii) the equity interests in the Partnership held by the Company (iii) the CONSOL Marine Terminal, (iv) the Itmann Mining Complex, and (v) the 1.4 billion tons of Greenfield Reserves and Resources.
The obligations are secured by, subject to certain exceptions (including a limitation of pledges of equity interests in certain subsidiaries and certain thresholds with respect to real property), a first-priority lien on (i) the Company’s interest in the Pennsylvania Mining Complex, (ii) the equity interests in PA Mining Complex LP held by the Company, (iii) the CONSOL Marine Terminal, (iv) the Itmann Mining Complex, and (v) the 1.3 billion tons of Greenfield Reserves and Resources.
In addition, the SPV paid certain structuring fees to PNC Capital Markets LLC and will pay other customary fees to the lenders, including a fee on unused commitments equal to 0.60% per annum.
In addition, the SPV paid certain structuring fees to PNC Capital Markets LLC and pays other customary fees to the lenders, including a fee on unused commitments equal to 0.60% per annum.
The following table presents a reconciliation for the PAMC segment of cost of coal sold, cash cost of coal sold and average cash cost of coal sold per ton to total costs and expenses, the most directly comparable GAAP financial measure, on a historical basis, for each of the periods indicated (in thousands, except per ton information).
The following table presents a reconciliation for the PAMC segment of cash cost of coal sold, cost of coal sold and average cash cost of coal sold per ton to operating and other costs, the most directly comparable GAAP financial measure, on a historical basis, for each of the periods indicated (in thousands, except per ton information).
At December 31, 2022, CONSOL Energy had no borrowings outstanding and approximately $83 million of letters of credit outstanding under the $100 million Securitization Facility. 73 Table of Contents Stock and Debt Repurchases In December 2017, CONSOL Energy’s Board of Directors approved a program to repurchase, from time to time, the Company's outstanding shares of common stock or its Second Lien Notes.
At December 31, 2023, CONSOL Energy had no borrowings outstanding and approximately $72 million of letters of credit outstanding under the $100 million securitization facility. 69 Table of Contents Stock and Debt Repurchases In December 2017, CONSOL Energy’s Board of Directors approved a program to repurchase, from time to time, the Company's outstanding shares of common stock or its Second Lien Notes.
The Second Lien Notes are secured by second priority liens on substantially all of the assets of the Company and the Guarantors that are pledged on a first-priority basis as collateral securing the Company’s obligations under the Senior Secured Credit Facilities (described above), subject to certain exceptions under the Indenture.
The Second Lien Notes were secured by second priority liens on substantially all of the assets of the Company and the Guarantors that are pledged on a first-priority basis as collateral securing the Company’s obligations under the Revolving Credit Facility (described above), subject to certain exceptions under the Indenture.
Additionally, access to capital continues to tighten for the Company's industry as a result of banking, institutional and investor environmental, social and governance (ESG) requirements and limitations, which tend to discourage investment in coal or other fossil fuel companies.
Additionally, access to capital remains challenging for the Company's industry as a result of banking, institutional and investor environmental, social and governance (ESG) requirements and limitations, which tend to discourage investment in coal and other fossil fuel companies.
See the Consolidated Statements of Stockholders' Equity in Item 8 of this Form 10-K for additional details. The declaration and payment of dividends by CONSOL Energy is subject to the discretion of CONSOL Energy's Board of Directors, and no assurance can be given that CONSOL Energy will pay dividends in the future.
See the Consolidated Statements of Stockholders' Equity in Item 8 of this Form 10-K for additional details. The declaration and payment of dividends by CONSOL Energy is at the discretion of CONSOL Energy's Board of Directors, and no assurance can be given that CONSOL Energy will return to declaring and paying dividends in the future.
During the year ended December 31, 2022, the Company generated cash flows from operating activities of approximately $651 million and utilized a portion of operating cash flows to retire outstanding indebtedness.
During the year ended December 31, 2023, the Company generated cash flows from operating activities of approximately $858 million and utilized a portion of operating cash flows to retire outstanding indebtedness.
At December 31, 2022 and 2021, CONSOL Energy had liabilities for uncertain tax positions of $2 million and $4 million, respectively, recorded in Other Accrued Liabilities and Deferred Income Taxes.
At December 31, 2023 and 2022, CONSOL Energy had liabilities for uncertain tax positions of $2 million recorded in Other Accrued Liabilities and Deferred Income Taxes.
Refer to Note 13 – Long-Term Debt for additional information concerning material cash requirements in future years. CONSOL Energy expects to make payments of $32 million on its operating and finance lease obligations, including interest, in the next 12 months. Refer to Note 14 – Leases for additional information concerning material cash requirements in future years.
Material Cash Requirements CONSOL Energy expects to make payments of $14 million on its long-term debt obligations, including interest, in the next 12 months. Refer to Note 13 – Long-Term Debt for additional information concerning material cash requirements in future years.
At December 31, 2022, CONSOL Energy had deferred tax liabilities in excess of deferred tax assets of approximately $22 million. CONSOL Energy evaluates all tax positions taken on the state and federal tax filings to determine if the position is more likely than not to be sustained upon examination.
At December 31, 2023, CONSOL Energy had deferred tax liabilities in excess of deferred tax assets of approximately $36 million. 63 Table of Contents CONSOL Energy evaluates all tax positions taken on the state and federal tax filings to determine if the position is more likely than not to be sustained upon examination.
The Company believes that cash generated from these sources will be sufficient to meet its short-term working capital requirements, long-term capital expenditure requirements, and debt servicing obligations, as well as to provide required letters of credit.
The Company believes that cash generated from these sources, without needing to issue additional equity or debt securities, will be sufficient to meet its short-term working capital requirements, long-term capital expenditure requirements, and debt servicing obligations, as well as to provide required letters of credit.
The GAAP measure most directly comparable to cost of coal sold, cash cost of coal sold and average cash cost of coal sold per ton is total costs and expenses.
The GAAP measure most directly comparable to cost of coal sold, cash cost of coal sold and average cash cost of coal sold per ton is operating and other costs.
Debt At December 31, 2022, CONSOL Energy had total long-term debt and finance lease obligations of $388 million outstanding, including the current portion of long-term debt of $29 million.
Debt At December 31, 2023, CONSOL Energy had total long-term debt and finance lease obligations of $199 million outstanding, including the current portion of $11 million.
At December 31, 2022, CONSOL Energy had no borrowings outstanding and approximately $103 million of letters of credit outstanding under the $400 million senior secured Revolving Credit Facility.
At December 31, 2023, CONSOL Energy had no borrowings outstanding and approximately $111 million of letters of credit outstanding under the $355 million senior secured Revolving Credit Facility.
The Senior Secured Credit Facilities contain a number of customary affirmative covenants. In addition, the Senior Secured Credit Facilities contain a number of negative covenants, including (subject to certain exceptions) limitations on (among other things): indebtedness, liens, investments, acquisitions, dispositions, restricted payments, and prepayments of junior indebtedness.
The Revolving Credit Facility contains a number of customary affirmative covenants and a number of negative covenants, including (subject to certain exceptions) limitations on (among other things): indebtedness, liens, investments, acquisitions, dispositions, restricted payments, and prepayments of junior indebtedness.
However, the Company expects to maintain adequate liquidity through its operating cash flow and cash and cash equivalents on hand, as well as its revolving credit facility and securitization facility, to fund its working capital and capital expenditures in the short-term and long-term.
However, the Company expects to maintain adequate liquidity through its operating cash flow, cash and cash equivalents on hand, and short-term investments, as well as its revolving credit facility and securitization facility, to fund its working capital and capital expenditures in the short-term and long-term. Uncertainty in the financial markets brings additional potential risks to CONSOL Energy.
Throughput volumes at the CONSOL Marine Terminal were 13.7 million tons in the year ended December 31, 2022, compared to 13.8 million tons in the year ended December 31, 2021.
Throughput volumes at the CONSOL Marine Terminal were 19.0 million tons for the year ended December 31, 2023, compared to 13.7 million tons for the year ended December 31, 2022.
These covenants are subject to important exceptions and qualifications. If the Second Lien Notes achieve an investment grade rating from both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc. and no default under the Indenture exists, many of the foregoing covenants will terminate and cease to apply.
These covenants were subject to important exceptions and qualifications. If the Second Lien Notes achieved an investment grade rating from both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc. and no default under the Indenture existed, many of the foregoing covenants would have terminated and ceased to apply.
The 2022 amendment provides that borrowings under the Senior Secured Credit Facilities will bear interest at a floating rate that is, at the Company's option, either (i) Secured Overnight Financing Rate (“SOFR”) plus the applicable SOFR Adjustment (as defined therein) depending on the applicable interest period plus an applicable margin or (ii) an alternate base rate plus an applicable margin.
Borrowings under the Company's Revolving Credit Facility bear interest at a floating rate that is, at the Company's option, either (i) SOFR plus the applicable SOFR adjustment (as defined therein) depending on the applicable interest period plus an applicable margin or (ii) an alternate base rate plus an applicable margin.
Loans and letters of credit under the Securitization also accrue a program fee and a letter of credit participation fee, respectively, ranging from 2.00% to 2.50% per annum depending on the total net leverage ratio of CONSOL Energy.
Loans under the securitization facility accrue interest at a reserve-adjusted market index rate equal to the applicable term SOFR rate. Loans and letters of credit under the securitization facility also accrue a program fee and a letter of credit participation fee, respectively, ranging from 2.00% to 2.50% per annum depending on the total net leverage ratio of CONSOL Energy.
Cash Flows (in millions) For the Years Ended For the Years Ended December 31, 2022 2021 Change Cash Provided by Operating Activities $ 651 $ 306 $ 345 Cash Used in Investing Activities $ (142) $ (127) $ (15) Cash Used in Financing Activities $ (380) $ (31) $ (349) Cash provided by operating activities increased $345 million in the perio d-to-period comparison, primarily due to a $428 million increase in Adjusted EBITDA, a non-GAAP financial measure, offset by other working capital changes that occurred throughout both periods. 68 Table of Contents Cash used in investing activities increased $15 million in the period-to-period comparison.
Cash Flows (in millions) For the Years Ended December 31, 2023 2022 Change Cash Provided by Operating Activities $ 858 $ 651 $ 207 Cash Used in Investing Activities $ (259) $ (142) $ (117) Cash Used in Financing Activities $ (682) $ (380) $ (302) Cash provided by operating activities increased $207 million in the perio d-to-period comparison, primarily due to a $241 million increase in adjusted EBITDA, a non-GAAP financial measure, offset by other working capital changes that occurred throughout both periods.
Interest on the notes is payable May 15 and November 15 of each year. • An aggregate principal amount of $75 million of tax-exempt solid waste disposal revenue bonds, which were issued to finance the ongoing expansion of the coal refuse disposal area at the Central Preparation Plant, which bear interest at 9.00% per annum for an initial term of seven years and mature in April 2051.
Payment of the principal and interest on the notes is guaranteed by CONSOL Energy. • An aggregate principal amount of $75 million of PEDFA bonds, which were issued to finance the ongoing expansion of the coal refuse disposal area at the Central Preparation Plant, which bear interest at 9.00% per annum for an initial term of seven years and mature in April 2051.
During the year ended December 31, 2022, the Company repurchased and retired 124,454 shares of common stock at an average price of $64.18 per share. Total Equity and Dividends Total equity attributable to CONSOL Energy was $1,166 million at December 31, 2022 and $673 million at December 31, 2021.
During the year ended December 31, 2023, the Company repurchased and retired 5,224,016 shares of common stock at an average price of $75.69 per share. Total Equity and Dividends Total equity attributable to CONSOL Energy was $1,343 million at December 31, 2023 and $1,166 million at December 31, 2022.
Cost of coal sold includes items such as direct operating costs, royalty and production taxes, direct administration costs, and depreciation, depletion and amortization costs on production assets.
Cost of coal sold includes items such as direct operating costs, royalty and production taxes, direct administration costs, and depreciation, depletion and amortization costs on production assets. Cost of coal sold excludes any indirect costs and other costs not directly attributable to the production of coal.
CONSOL MARINE TERMINAL ANALYSIS : The CONSOL Marine Terminal segment provides coal export terminal services through the Port of Baltimore. The segment also includes general and administrative activities and interest expense, as well as various other activities assigned to the CONSOL Marine Terminal segment.
The CONSOL Marine Terminal segment provides coal export terminal services through the Port of Baltimore. The segment also includes general and administrative activities and interest expense, as well as various other activities assigned to the CONSOL Marine Terminal segment. The Company evaluates the performance of its segments utilizing Adjusted EBITDA and various sales and production metrics.
Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion of the deferred tax asset will not be realized. All available evidence, both positive and negative, must be considered in determining the need for a valuation allowance.
Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion of the deferred tax asset will not be realized.
The obligations of the Company under the Loan Agreement and of the PEDFA Notes Guarantors under the Guaranty are secured by second priority liens on substantially all of the assets of the Company and the PEDFA Notes Guarantors on parity with the Second Lien Notes.
The obligations of the Company under the Loan Agreement and of the PEDFA Notes Guarantors under the Guaranty are secured by second priority liens on substantially all of the assets of the Company and the PEDFA Notes Guarantors. The Loan Agreement and Guaranty incorporate by reference covenants in the Indenture under which the Second Lien Notes were issued (discussed previously).
Since its inception, the Company's Board of Directors has subsequently amended the program several times, the most recent of which amendment in August 2022 raised the aggregate limit of the Company's repurchase authority to $600 million and extended the program until December 31, 2024.
Since the program's inception, the Company's Board of Directors has subsequently amended the program several times, the most recent of which amendment in April 2023 raised the aggregate limit of the Company's repurchase authority to $1 billion. The program expires on December 31, 2024.
Consolidated Fixed Charges, as used in the covenant calculation, include cash interest payments, cash payments for income taxes, scheduled debt repayments, dividends paid, and Maintenance Capital Expenditures.
Consolidated Fixed Charges, as used in the covenant calculation, include cash interest payments, cash payments for income taxes, scheduled debt repayments, Maintenance Capital Expenditures and cash payments related to legacy employee liabilities to the extent in excess of amounts accrued in the calculation of Consolidated EBITDA.
CONSOL Energy expects to make payments of $50 million on its employee-related long-term liabilities in the next 12 months. Refer to Note 15 – Pension and Other Postretirement Benefit Plans and Note 16 – Coal Workers’ Pneumoconiosis and Workers’ Compensation for additional information concerning material cash requirements in future years.
CONSOL Energy expects to make payments of $16 million on its operating and finance lease obligations, including interest, in the next 12 months. Refer to Note 14 – Leases for additional information concerning material cash requirements in future years. CONSOL Energy expects to make payments of $49 million on its employee-related long-term liabilities in the next 12 months.
Gain on Sale of Assets Gain on sale of assets increased $26 million in the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily due to the sale of certain coal assets.
Gain on Sale of Assets Gain on sale of assets was $9 million for the year ended December 31, 2023, compared to $35 million for the year ended December 31, 2022. The $26 million decrease was due to the sale of certain coal assets during the year ended December 31, 2022.
The maximum total net leverage ratio is calculated as the ratio of Consolidated Indebtedness, minus Cash on Hand, to Consolidated EBITDA. The minimum fixed charge coverage ratio is calculated as the ratio of Consolidated EBITDA to Consolidated Fixed Charges.
The minimum fixed charge coverage ratio is calculated as the ratio of Consolidated EBITDA to Consolidated Fixed Charges.
We define average margin per ton sold as average realized coal revenue per ton sold, net of average cost of coal sold per ton. We define average cash margin per ton sold as average realized coal revenue per ton sold, net of average cash cost of coal sold per ton.
We define average cash margin per ton sold as average realized coal revenue per ton sold, net of average cash cost of coal sold per ton. The GAAP measure most directly comparable to realized coal revenue, average realized coal revenue per ton sold, and average cash margin per ton sold is total coal revenue.
Based on available information at December 31, 2022, CONSOL Energy's aggregate obligation for the UMWA Combined Benefit Fund and 1992 Benefit Plan is estimated to be approximately $39 million.
CONSOL Energy's total contributions under the Coal Industry Retiree Health Benefit Ac t of 1992 were $4 million and $4 million for the years ended December 31, 2023 and 2022, respectively. Based on available information at December 31, 2023, CONSOL Energy's aggregate obligation for the UMWA Combined Benefit Fund and 1992 Benefit Plan is estimated to be approximately $33 million.
In June 2019, the TLB Facility began amortizing in equal quarterly installments in an amount equal to 0.25% per annum of the amended principal amount thereof, with the remaining balance due at final maturity. 69 Table of Contents Obligations under the Senior Secured Credit Facilities are guaranteed by (i) all owners of the PAMC held by the Company, (ii) any other members of the Company’s group that own any portion of the collateral securing the Revolving Credit Facility, and (iii) subject to certain customary exceptions and agreed materiality thresholds, all other existing or future direct or indirect wholly-owned restricted subsidiaries of the Company.
Obligations under the Revolving Credit Facility are guaranteed by (i) all owners of the PAMC held by the Company, (ii) any other members of the Company’s group that own any portion of the collateral securing the Revolving Credit Facility, and (iii) subject to certain customary exceptions and agreed materiality thresholds, all other existing or future direct or indirect wholly-owned restricted subsidiaries of the Company.
At December 31, 2022, no valuation allowance has been recorded. At December 31, 2021, CONSOL had a valuation allowance related to net operating losses of $1 million. Impairment of Long-Lived Assets CONSOL Energy reviews the carrying value of its long-lived assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
At December 31, 2023 and 2022, no valuation allowance was recorded. Impairment of Long-Lived Assets CONSOL Energy reviews the carrying value of its long-lived assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Long-lived assets are not reviewed for impairment unless an impairment indicator is noted.
Years Ended December 31, 2022 2021 Total Coal Revenue (PAMC Segment) $ 1,973,884 $ 1,085,080 Less: Settlements of Commodity Derivatives (289,228) — Total Realized Coal Revenue 1,684,656 1,085,080 Operating and Other Costs 949,222 745,292 Less: Other Costs (Non-Production and non-PAMC) (114,817) (76,480) Total Cash Cost of Coal Sold 834,405 668,812 Add: Depreciation, Depletion and Amortization 226,878 224,583 Less: Depreciation, Depletion and Amortization (Non-Production and non-PAMC) (37,021) (29,355) Total Cost of Coal Sold $ 1,024,262 $ 864,040 Total Tons Sold (in millions) 24.1 23.7 Average Realized Coal Revenue per Ton Sold $ 69.89 $ 45.75 Average Cash Cost of Coal Sold per Ton 34.56 28.25 Depreciation, Depletion and Amortization Costs per Ton Sold 7.93 8.18 Average Cost of Coal Sold per Ton 42.49 36.43 Average Margin per Ton Sold 27.40 9.32 Add: Depreciation, Depletion and Amortization Costs per Ton Sold 7.93 8.18 Average Cash Margin per Ton Sold $ 35.33 $ 17.50 We define adjusted EBITDA as (i) net income (loss) plus income taxes, interest expense and depreciation, depletion and amortization, as adjusted for (ii) certain non-cash items, such as stock-based compensation and fair value adjustments of commodity derivative instruments.
Years Ended December 31, 2023 2022 Total Coal Revenue (PAMC Segment) $ 2,024,610 $ 1,973,884 Less: Settlements of Commodity Derivatives — (289,228) Realized Coal Revenue 2,024,610 1,684,656 Operating and Other Costs 1,120,065 949,222 Less: Other Costs (Non-Production and non-PAMC) (180,173) (114,817) Cash Cost of Coal Sold $ 939,892 $ 834,405 Total Tons Sold (in millions) 26.0 24.1 Average Realized Coal Revenue per Ton Sold $ 77.74 $ 69.89 Less: Average Cash Cost of Coal Sold per Ton 36.10 34.56 Average Cash Margin per Ton Sold $ 41.64 $ 35.33 We define adjusted EBITDA as (i) net income (loss) plus income taxes, interest expense and depreciation, depletion and amortization, as adjusted for (ii) certain non-cash items, such as stock-based compensation, loss on debt extinguishment and fair value adjustments of commodity derivative instruments.
Liquidity and Capital Resources CONSOL Energy's potential sources of liquidity include cash generated from operations, cash on hand, borrowings under the revolving credit facility and securitization facility (which are discussed below), and, if necessary, the ability to issue additional equity or debt securities.
Treasury securities, borrowings under the revolving credit facility and securitization facility (which are discussed below), and, if necessary, the ability to issue additional equity or debt securities.
Operating and Other Costs Operating and other costs were $71 million for the year ended December 31, 2022, compared to $42 million for the year ended December 31, 2021.
Operating and Other Costs On a consolidated basis, operating and other costs were $1,120 million for the year ended December 31, 2023, compared to $949 million for the year ended December 31, 2022.
Assumptions about sales, operating margins, capital expenditures and sales prices are based on the Company's forecasts, business plans, economic projections, and anticipated future cash flows. No indicators of impairment were present and, therefore, no impairment losses were recorded during the years ended December 31, 2022, 2021 and 2020.
Assumptions about sales, operating margins, capital expenditures and sales prices are based on the Company's forecasts, business plans, economic projections, and anticipated future cash flows.
The segment also includes general and administrative costs, as well as various other activities assigned to the PAMC segment, but not included in the cost components on a per unit basis.
The PAMC segment's principal activities include the mining, preparation and marketing of bituminous coal, sold primarily to industrial end-users, metallurgical end-users and power generators. The segment also includes general and administrative activities and interest expense, as well as various other activities assigned to the PAMC segment, but not included in the cost components on a per unit basis.
The $21 million increase in the period-to-period comparison was primarily related to increased expense under the long-term incentive compensation plan incurred in the year ended December 31, 2022, due to the Company achieving certain financial metrics and a substantial increase in the Company's share price compared to the year ended December 31, 2021.
The $14 million decrease in the period-to-period comparison was primarily related to decreased expense under the long-term incentive compensation plan incurred in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to fluctuations in the Company's share price and vesting periods during each of the respective periods.
The program is conducted in compliance with applicable legal requirements and within the limits imposed by any credit agreement, receivables purchase agreement, indenture or the tax matters agreement and is subject to market conditions and other factors. During the year ended December 31, 2022, the Company spent approximately $26 million to retire $25 million of its Second Lien Notes.
The program is conducted in compliance with applicable legal requirements imposed by any credit agreement, receivables purchase agreement or indenture. During the year ended December 31, 2023, the Company did not make any open market repurchases of its Second Lien Notes in accordance with this program.
More specifically, the Company made debt repayments of $176 million, $50 million, $41 million and $25 million on its Term Loan B Facility, Second Lien Notes, Term Loan A Facility and equipment-financed debt, respectively.
More specifically, the Company made debt repayments of $99 million to fully retire its Second Lien Notes (as defined below), $64 million to payoff its Term Loan B Facility, and $26 million on its equipment-financed and other debt.
The Company's first lien gross leverage ratio was 0.13 to 1.00 at December 31, 2022. The Company's total net leverage ratio was 0.14 to 1.00 at December 31, 2022. The Company's fixed charge coverage ratio was 2.43 to 1.00 at December 31, 2022.
Under the Revolving Credit Facility, the maximum first lien gross leverage ratio shall be 1.50 to 1.00, the maximum total net leverage ratio shall be 2.50 to 1.00 and the minimum fixed charge coverage ratio shall be 1.10 to 1.00. The Company's first lien gross leverage ratio was 0.01 to 1.00 at December 31, 2023.
Future results of operations for any particular quarterly or annual period could be materially affected by changes in the Company’s assumptions. 65 Table of Contents Income Taxes Deferred tax assets and liabilities are recognized using enacted tax rates for the estimated future tax effects of temporary differences between the book and tax basis of recorded assets and liabilities.
Income Taxes Deferred tax assets and liabilities are recognized using enacted tax rates for the estimated future tax effects of temporary differences between the book and tax basis of recorded assets and liabilities.
Consolidated EBITDA, as used in the covenant calculation, excludes non-cash compensation expenses, non-recurring transaction expenses, extraordinary gains and losses, gains and losses on discontinued operations, non-cash charges related to legacy employee liabilities and gains and losses on debt extinguishment, and subtracts cash payments related to legacy employee liabilities.
Consolidated EBITDA, as used in the covenant calculation, excludes non-cash compensation expenses, nonrecurring transaction expenses, extraordinary gains and losses, gains and losses on discontinued operations and gains and losses on debt extinguishment. The maximum total net leverage ratio is calculated as the ratio of Consolidated Indebtedness, minus Cash on Hand, to Consolidated EBITDA.
Events that negatively impact our overall financial condition and liquidity could result in our inability to comply with our credit facility's financial covenants. This could limit our access to our credit facilities if we are unable to obtain waivers from our lenders or amend the credit facilities.
This could limit our access to our credit facilities if we are unable to obtain waivers from our lenders or amend the credit facilities.
Over the past few years, the insurance and surety markets have been increasingly challenging, particularly for coal companies. We have experienced rising premiums, reduced coverage and/or fewer providers willing to underwrite policies and surety bonds. Terms have generally become more unfavorable, including increases in the amount of collateral required to secure surety bonds.
We have experienced rising premiums, reduced coverage and/or fewer providers willing to underwrite policies and surety bonds. Terms have generally become more unfavorable, including increases in the amount of collateral required to secure surety bonds. However, more recently, we have seen insurance rates stabilize and even decrease on certain lines of coverage, as new insurance carriers have entered the market.
Management is currently evaluating the impact of this guidance, but does not expect this update to have a material impact on the Company's financial statements.
The amendments in this update are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Management is currently evaluating the impact of this guidance, but does not expect this update to have a material impact on the Company's financial statements. 71 Table of Contents
Included in 2022 net income and adjusted EBITDA were settlements of commodity derivative instruments at a loss of $289 million (see Note 21 - Derivatives in the Notes to the Consolidated Financial Statements in Item 8 of this Form 10-K for additional information). Variances are discussed below.
All of the Company's commodity derivatives were settled as of December 31, 2022 (see Note 21 - Derivatives in the Notes to the Consolidated Financial Statements in Item 8 of this Form 10-K for additional information).
General and Administrative Costs The amount of general and administrative costs related to the PAMC segment were $86 million for the year ended December 31, 2022, compared to $65 million for the year ended December 31, 2021.
General and Administrative Costs On a consolidated basis, general and administrative costs were $103 million for the year ended December 31, 2023, compared to $117 million for the year ended December 31, 2022.
Further restrictions apply to investments in joint ventures, share repurchases and dividends that require the total net leverage ratio shall not be greater than 2.00 to 1.00. The Revolving Credit Facility also includes financial covenants, including (i) a maximum first lien gross leverage ratio, (ii) a maximum total net leverage ratio, and (iii) a minimum fixed charge coverage ratio.
The Revolving Credit Facility also includes financial covenants, including (i) a maximum first lien gross leverage ratio, (ii) a maximum total net leverage ratio, and (iii) a minimum fixed charge coverage ratio. The maximum first lien gross leverage ratio is calculated as the ratio of Consolidated First Lien Debt to Consolidated EBITDA.
Borrowings under the TLB Facility bear interest at a floating rate. • An aggregate principal amount of $37 million of finance leases with a weighted average interest rate of 6.53%. • Advanced royalty commitments of $8 million with a weighted average interest rate of 8.09% per annum. • An aggregate principal amount of $2 million of other debt arrangements.
Interest on the PEDFA Bonds is payable on February 1 and August 1 of each year. • An aggregate principal amount of $14 million of finance leases with a weighted average interest rate of 6.68%. • Advanced royalty commitments of $6 million with a weighted average interest rate of 8.80% per annum. • An aggregate principal amount of $1 million of other debt arrangements.
The Company paid the following dividends during the year ended December 31, 2022: Per Share Total Paid (000s omitted) Payment Timing Shareholder of Record Date $1.00 $34,871 August 24, 2022 August 16, 2022 $1.05 $36,615 November 23, 2022 November 14, 2022 Recent Accounting Pronouncements In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-02 - Financial Instruments—Credit Losses (Topic 326).
The Company paid the following dividends during the year ended December 31, 2023: Per Share Total Paid (000s omitted) Payment Timing Shareholder of Record Date $1.10 $38,287 February 28, 2023 February 17, 2023 $1.10 $37,187 May 23, 2023 May 15, 2023 70 Table of Contents Recent Accounting Pronouncements In December 2023, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09 Income Taxes (Topic 740).
CONSOL Energy participates in the United Mine Workers of America (the “UMWA”) Combined Benefit Fund and the UMWA 1992 Benefit Plan for which benefits are reflected in the Company's consolidated financial statements when paid. These benefit arrangements may result in additional liabilities that are not recognized on the Consolidated Balance Sheet at December 31, 2022.
Further cost burdens on our ability to maintain adequate insurance and bond coverage may adversely impact our operations, financial position and liquidity. 65 Table of Contents CONSOL Energy participates in the United Mine Workers of America (the “UMWA”) Combined Benefit Fund and the UMWA 1992 Benefit Plan for which benefits are reflected in the Company's consolidated financial statements when paid.
See “ How We Evaluate Our Operations - Reconciliation of Non-GAAP Financial Measures ” for a reconciliation of non-GAAP measures to the most directly comparable GAAP measures.
See “How We Evaluate Our Operations - Reconciliation of Non-GAAP Financial Measures” above for an explanation and reconciliation of these amounts to the nearest GAAP measures.
December 31, 2022 2021 Change Building and Infrastructure $ 97 $ 62 $ 35 Equipment Purchases and Rebuilds 43 45 (2) Solid Waste Disposal Project 15 18 (3) IS&T Infrastructure 2 2 — Other 15 6 9 Total Capital Expenditures $ 172 $ 133 $ 39 Cash flows used in financing activities increased $349 million in the period-to-period comparison, primarily driven by a $190 million increase in net payments on indebtedness due to the Company's ongoing de-leveraging efforts.
For the Years Ended December 31, 2023 2022 Change Equipment Purchases and Rebuilds $ 76 $ 43 $ 33 Building and Infrastructure 55 97 (42) Solid Waste Disposal Project 27 15 12 IS&T Infrastructure 1 2 (1) Other 9 15 (6) Total Capital Expenditures $ 168 $ 172 $ (4) Cash flows used in financing activities increased $302 million in the period-to-period comparison primarily driven by $399 million in cash outflow during the year ended December 31, 2023 related to CONSOL Energy share repurchases.
Gain on debt extinguishment of $1 million was recognized in the year ended December 31, 2021, due to the open market repurchases of the Company's Second Lien Notes. Interest Expense, net Interest expense, net of amounts capitalized, decreased in the period-to-period comparison primarily due to the Company's continued de-leveraging efforts throughout the year ended December 31, 2022.
Interest Expense On a consolidated basis, interest expense, net of amounts capitalized, was $29 million for the year ended December 31, 2023, compared to $53 million for the year ended December 31, 2022. The decrease in the period-to-period comparison was primarily due to less debt outstanding as the Company continued its de-leveraging efforts.
The applicable margin for the Revolving Credit Facility depends on the total net leverage ratio, whereas the applicable margin for the TLB Facility is fixed. The 2020 amendment increased the applicable margin by 50 basis points on both the Revolving Credit Facility and the TLA Facility.
The applicable margin for the Revolving Credit Facility depends on the total net leverage ratio.
Pursuant to the Securitization, (i) the Sub-Originator sells current and future trade receivables to CONSOL Pennsylvania and (ii) the Originators sell and/or contribute current and future trade receivables (including receivables sold to CONSOL Pennsylvania by the Sub-Originator) to the SPV and the SPV, in turn, pledges its interests in the receivables to PNC Bank, N.A., which either makes loans or issues letters of credit on behalf of the SPV.
The SPV, in turn, pledges its interests in the receivables to PNC Bank, N.A., which either makes loans or issues letters of credit on behalf of the SPV. The maximum amount of advances and letters of credit outstanding under the securitization facility may not exceed $100 million.
The Senior Secured Credit Facilities contain customary events of default, including with respect to a failure to make payments when due, cross-default and cross-judgment default and certain bankruptcy and insolvency events. 70 Table of Contents At December 31, 2022, there were no borrowings outstanding under the Revolving Credit Facility and the facility is currently only used for providing letters of credit, with $103 million of letters of credit outstanding, leaving $297 million of unused capacity.
At December 31, 2023, there were no borrowings outstanding under the Revolving Credit Facility and the facility is currently only used for providing letters of credit, with $111 million of letters of credit outstanding, leaving $244 million of unused capacity.
Management is currently evaluating the impact of this guidance, but does not expect this update to have a material impact on the Company's financial statements. 74 Table of Contents In October 2021, the FASB issued ASU 2021-08 - Business Combinations (Topic 805).
The amendments in this update are effective for annual periods beginning after December 15, 2024, and should be applied prospectively. Management is currently evaluating the impact of this guidance, but does not expect this update to have a material impact on the Company's financial statements. In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−3 removed6 unchanged
Biggest changeAt December 31, 2022, CONSOL Energy had $321 million aggregate principal amount of debt outstanding under fixed-rate instruments, including unamortized debt issuance costs of $3 million, and $63 million of debt outstanding under variable-rate instruments, including unamortized debt issuance costs of $1 million.
Biggest changeInterest Rate Risk At December 31, 2023, CONSOL Energy's aggregate principal amount of debt outstanding is predominantly under fixed-rate instruments, and only $2 million of outstanding debt is subject to interest rate sensitivity.
During 2021, the Company initiated a targeted commodity price hedging strategy to mitigate pricing volatility inherent in a portion of the Company’s 2022 physical contracts, related to variable pricing and the Company’s spot export business, and secure future cash flows for export sales. The commodity market volatility has increased as demonstrated by significant market pricing increases throughout 2022.
During 2021, the Company initiated a targeted commodity price hedging strategy to mitigate pricing volatility inherent in a portion of the Company’s 2022 physical contracts, related to variable pricing and the Company’s spot export business, and secure future cash flows for export sales. The commodity market volatility increased as demonstrated by significant market pricing increases throughout 2022.
Furthermore, if the currencies of CONSOL Energy's overseas customers were to significantly decline in value in comparison to the U.S. dollar, those customers may seek decreased prices for the coal the Company sells to them. Consequently, currency fluctuations could adversely affect the competitiveness of CONSOL Energy's coal in international markets. 75 Table of Contents
Furthermore, if the currencies of CONSOL Energy's overseas customers were to significantly decline in value in comparison to the U.S. dollar, those customers may seek decreased prices for the coal the Company sells to them. Consequently, currency fluctuations could adversely affect the competitiveness of CONSOL Energy's coal in international markets. 72 Table of Contents
A hypothetical 100 basis-point increase in the average rate for CONSOL Energy's variable-rate instruments would decrease pre-tax future earnings by less than $1 million. Foreign Exchange Rate Risk All of CONSOL Energy’s transactions are denominated in U.S. dollars, and, as a result, any fluctuations in currency exchange rates would have no impact to the Company's current financial transactions.
Foreign Exchange Rate Risk All of CONSOL Energy’s transactions are denominated in U.S. dollars, and, as a result, any fluctuations in currency exchange rates would have no impact to the Company's current financial transactions.
Loss on Commodity Derivatives, net during the year ended December 31, 2022 was $237 million. All of our hedging arrangements have been settled. Interest Rate Risk CONSOL Energy's interest expense is sensitive to changes in the general level of interest rates in the United States.
Loss on Commodity Derivatives, net during the year ended December 31, 2022 was $237 million. All of our hedging arrangements have been settled as of December 31, 2022, and no additional arrangements have been executed.
Removed
CONSOL Energy's primary exposure to market risk for changes in interest rates relates to the Company's Senior Secured Credit Facilities. From time to time, we enter into hedging arrangements in an effort to limit our exposure to interest rate volatility.
Removed
These hedging arrangements may reduce, but will not eliminate, the potential effects of changing interest rates on our cash flow from operations for the periods covered by these arrangements.
Removed
Furthermore, while intended to help reduce the effects of volatile interest rates, such transactions, depending on the hedging instrument used, may limit our potential gains if interest rates were to fall substantially under the price established by the hedge.

Other CNR 10-K year-over-year comparisons