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What changed in CNX Resources Corp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of CNX Resources Corp'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.

+401 added−383 removedSource: 10-K (2024-02-08) vs 10-K (2023-02-09)

Top changes in CNX Resources Corp's 2023 10-K

401 paragraphs added · 383 removed · 327 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

87 edited+21 added−15 removed74 unchanged
Biggest changeFinancing, Investment and Indebtedness Risks • Our current long-term debt obligations, the terms of the agreements that govern that debt, and the risks associated therewith, could adversely affect our business, financial condition, liquidity and results of operations. • Our borrowing base under our senior secured credit facility could decrease for a variety of reasons including lower natural gas prices, declines in natural gas proved reserves, asset sales and lending requirements or regulations. • The capped call transactions may affect the value of the Convertible Notes and our common stock. • CNX is subject to counterparty performance risk with respect to the capped call transactions. • Conversion of the Convertible Notes may dilute the ownership interest of existing stockholders or may otherwise depress the price of our common stock. • CNX may be unable to raise the funds necessary to repurchase the Convertible Notes for cash following a fundamental change, or to pay any cash amounts due upon conversion, and our other indebtedness may impact our ability to repurchase the Convertible Notes or pay cash upon their conversion. • The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results. • Provisions of our Convertible Notes could delay or prevent an otherwise beneficial takeover of us.
Biggest changeLegal, Environmental and Regulatory Risks • Climate change risk, legislation, litigation and regulation of greenhouse gas emissions at the federal or state level may increase our operating costs and reduce the value of our natural gas assets. • Environmental regulations can increase costs and introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities. • Existing and future governmental laws, regulations, other legal requirements and judicial decisions that govern our business may increase our costs of doing business and may restrict our operations. • CNX may incur significant costs and liabilities as a result of pipeline operations and/or increases in the regulation of natural gas pipelines and midstream facilities. • Changes in federal or state tax laws focused on natural gas exploration and development could cause our financial position and profitability to deteriorate. • Our future tax liability may be greater than expected if our net operating loss carryforwards are limited, CNX does not generate expected deductions, or tax authorities challenge certain of our tax positions. • We may be unable to qualify for existing federal and state level environmental attribute credits and new markets for environmental attributes are currently volatile, and otherwise may not develop as quickly or efficiently as we anticipate or at all. • CNX and its subsidiaries are subject to various legal proceedings and investigations, which may have an adverse effect on our business. 19 Financing, Investment and Indebtedness Risks • Our current long-term debt obligations, the terms of the agreements that govern that debt, and the risks associated therewith, could adversely affect our business, financial condition, liquidity and results of operations. • Our borrowing base under our revolving credit facility could decrease for a variety of reasons including lower natural gas prices, declines in natural gas reserves, asset sales and lending requirements or regulations. • The capped call transactions may affect the value of the Convertible Notes and our common stock, and subject CNX to counterparty performance risk. • Conversion of the Convertible Notes may dilute the ownership interest of existing stockholders or may otherwise depress the price of our common stock. • CNX may be unable to raise the funds necessary to repurchase the Convertible Notes for cash following a fundamental change, or to pay any cash amounts due upon conversion, and our other indebtedness may impact our ability to repurchase the Convertible Notes or pay cash upon their conversion. • The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results. • Provisions of our unsecured debt agreements, including the Convertible Notes, could delay or prevent an otherwise beneficial takeover of us.
In coordination with our midstream operations, CNX works to develop solutions that coincide with our midstream operations to offer gas natural gathering and water delivery solutions in one package to third parties. Marketing Substantially all of our natural gas is sold at market prices primarily under short-term sales contracts and is subject to seasonal and general market price swings.
In coordination with our midstream operations, CNX works to develop solutions that coincide with our midstream operations to offer natural gas gathering and water delivery solutions in one package to third parties. Marketing Substantially all of our natural gas is sold at market prices primarily under short-term sales contracts and is subject to seasonal and general market price swings.
See “Risk Factors -- Existing and future governmental laws, regulations and other legal requirements and judicial decisions that govern our business may increase our costs of doing business and may restrict our operations ” for additional discussion regarding additional laws and regulations affecting our business, operations and industry.
See “Risk Factors -- Existing and future governmental laws, regulations, other legal requirements and judicial decisions that govern our business may increase our costs of doing business and may restrict our operations ” for additional discussion regarding additional laws and regulations affecting our business, operations and industry.
The federal Clean Water Act (CWA) and corresponding state laws affect our natural gas operations by regulating storm water or other regulated substance discharges, including pollutants, sediment and spills and releases of oil, brine and other substances, into surface waters (and under some state statutory schemes groundwater) and in certain instances imposing requirements to dispose of produced wastes and other oil and natural gas wastes at approved disposal facilities.
The federal Clean Water Act (CWA) and corresponding state laws affect our natural gas operations by regulating storm water or other regulated substance discharges, including pollutants, erosion, sediment and spills and releases of oil, brine and other substances, into surface waters (and under some state statutory schemes groundwater) and in certain instances imposing requirements to dispose of produced wastes and other oil and natural gas wastes at approved disposal facilities.
(2) Net acres include acreage attributable to our working interests in the properties. Additional adjustments (either increases or decreases) may be required as we further develop title to and further confirm our rights with respect to our various properties in anticipation of development. We believe that our assumptions and methodology in this regard are reasonable.
(2) Net acres include acreage attributable to our working interests in the properties. Additional adjustments (either increases or decreases) may be required as we further develop title to and further confirm our rights with respect to our various 7 properties in anticipation of development. We believe that our assumptions and methodology in this regard are reasonable.
The geographic proximity and interconnected gathering system servicing these wells, allow CNX to blend this gas together and in some cases eliminate the need for the costly processing of natural gas that does not meet pipeline specification. This allows us more flexibility in bringing wells online at qualities that meet interstate pipeline specifications.
The geographic proximity and interconnected gathering system servicing these wells, however, allow CNX to blend this gas together and in some cases eliminate the need for the costly processing of natural gas that does not meet pipeline specification. This allows us more flexibility in bringing wells online at qualities that meet interstate pipeline specifications.
The plans are reviewed for effectiveness biannually and are communicated to affected employees through safety meetings and training. Drills and emergency exercises are conducted to ensure all employees understand their roles and responsibilities during an actual event. These exercises range from tabletop exercises to internal drills, up to and including events involving external resources.
The plans are reviewed for effectiveness biannually and are communicated to affected employees through safety meetings and training. Drills and mock emergency exercises are conducted to ensure all employees understand their roles and responsibilities during an actual event. These exercises range from tabletop exercises to internal drills, up to and including events involving external resources.
New or additional species that may be identified as requiring protection or consideration may lead to delays in permits and/or other restrictions on construction and development. Safety of Gas Transmission and Gathering Pipelines . Natural gas pipelines serving our operations are subject to regulation by the U.S.
New or additional species that may be identified as requiring protection or consideration may lead to delays in permits and/or other restrictions on construction and development. 16 Safety of Gas Transmission and Gathering Pipelines . Natural gas pipelines serving our operations are subject to regulation by the U.S.
The Company continuously evaluates multiple factors to determine activity throughout the year, and as such, may update guidance accordingly. 7 DETAIL OF OPERATIONS Our operations include the following plays: Shale Our Shale properties represent our primary operating and growth area in terms of reserves, production, and capital investment .
The Company continuously evaluates multiple factors to determine activity throughout the year, and as such, may update guidance accordingly. DETAIL OF OPERATIONS Our operations include the following plays: Shale Our Shale properties represent our primary operating and growth area in terms of reserves, production, and capital investment .
(4) Acreage amounts are only included under the target strata CNX expects to produce, with the exception of certain CBM acres governed by separate leases. 8 Producing Wells and Acreage Most of our development wells and proved acreage are located in Virginia, West Virginia, Ohio and Pennsylvania.
(4) Acreage amounts are only included under the target strata CNX expects to produce, with the exception of certain CBM acres governed by separate leases. Producing Wells and Acreage Most of our development wells and proved acreage are located in Virginia, West Virginia, Ohio and Pennsylvania.
QMS provides all employees, visitors, contractors and 15 subcontractors who operate on our behalf with a practical, easily accessible system that defines clear expectations, responsibilities and standards that provide the basis of accountability for quality and excellence in all aspects of our business.
QMS provides all employees, visitors, contractors and subcontractors who operate on our behalf with a practical, easily accessible system that defines clear expectations, responsibilities and standards that provide the basis of accountability for quality and excellence in all aspects of our business.
In December 2016, the EPA released its final report on the impacts of hydraulic fracturing on drinking water. While the language was changed and included the possibility of 17 negative impacts from hydraulic fracturing, it also included the guidance to industry and regulators on how the process can be performed.
In December 2016, the EPA released its final report on the impacts of hydraulic fracturing on drinking water. While the language was changed and included the possibility of negative impacts from hydraulic fracturing, it also included the guidance to industry and regulators on how the process can be performed.
The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov . CNX periodically provides other information for investors on corporate website, including press releases and other information about financial performance, information on corporate governance and presentations.
The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov . CNX periodically provides other information for investors on its corporate website, including press releases and other information about financial performance, information on corporate governance and presentations.
(2) Future development costs for 2022 include $442 million of plugging and abandonment costs and $293 million of midstream and water infrastructure capital on an undiscounted pre-tax basis. On a PV-10 pre-tax discounted basis, these amounts equate to $8 million and $242 million, respectively.
Future development costs for 2022 include $442 million of plugging and abandonment costs and $293 million of midstream and water infrastructure capital on an undiscounted pre-tax basis. On a PV-10 pre-tax discounted basis, these amounts equate to $8 million and $242 million, respectively.
Title to Properties CNX acquires ownership or leasehold rights to oil and natural gas properties prior to conducting operations on those properties. The legal requirements of such ownership or leasehold rights generally are established by state statutory or common law.
CNX acquires ownership or leasehold rights to oil and natural gas properties prior to conducting operations on those properties. The legal requirements of such ownership or leasehold rights generally are established by state statutory or common law.
These assessments take into account industry and internal best management practices and evaluate compliance with laws and regulations and include reviews of our third-party service providers, including, for instance, waste management transporters and related facilities. Hydraulic Fracturing Activities. Hydraulic fracturing is typically regulated by state oil and natural gas commissions and similar agencies; however, the U.S.
These assessments take into account industry and internal best management practices and evaluate compliance with laws and regulations, and applicable permits, and include reviews of our third-party service providers, including, for instance, waste management transporters and related facilities. Hydraulic Fracturing Activities. Hydraulic fracturing is typically regulated by state oil and natural gas commissions and similar agencies; however, the U.S.
CNX will conduct regular internal and external audits to ensure compliance, adherence to best-in-class processes and continuous improvement, as we relentlessly strive to be the most responsible and efficient operator in the industry. CNX’s management expectation is that QMS will serve as the platform through which the senior leadership manages and measures excellence in all operational aspects. Health and Safety.
CNX conducts regular internal and external audits to ensure compliance, adherence to best-in-class processes and continuous improvement, as we relentlessly strive to be the most responsible and efficient operator in the industry. CNX’s management expectation is that QMS will serve as the platform through which the senior leadership manages and measures excellence in all operational aspects. Health and Safety.
The Company anticipates that compliance with existing laws and regulations governing the Company and its current operations will not have a material adverse effect upon its capital expenditures, earnings or competitive position. Additional proposals that affect the oil and natural gas industry are regularly considered by Congress, the states, regulatory agencies and the courts.
The Company anticipates that compliance with existing laws and regulations governing the Company and its current operations will not have a material adverse effect upon its capital expenditures, earnings or competitive position. Additional proposals that affect the oil and natural gas industry are regularly considered by Congress, the states, local governments, regulatory agencies and the courts.
The Endangered Species Act and related state laws and regulation protect plant and animal species that are threatened or endangered. Some of our operations are located in areas that are or may be designated as protected habitats for endangered or threatened species, including the Northern Long-Eared and Indiana bats, which has a seasonal impact on our construction activities and operations.
The Endangered Species Act and related state laws and regulations protect plant and animal species that are threatened or endangered. Some of our operations are located in areas that are or may be designated as protected habitats for endangered or threatened species, including the Northern Long-Eared and Indiana bats, which has a seasonal impact on our construction activities and operations.
Industry Segments Financial information concerning industry segments, as defined by GAAP, for the years ended December 31, 2022, 2021 and 2020 is included in Note 21 – Segment Information in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K and is incorporated herein by reference.
Industry Segments Financial information concerning industry segments, as defined by GAAP, for the years ended December 31, 2023, 2022 and 2021 is included in Note 21 – Segment Information in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K and is incorporated herein by reference.
Our natural gas and midstream operations are also subject to numerous federal environmental laws and regulations. In addition to routine reviews and inspections by regulators to confirm compliance with applicable regulatory requirements, CNX has established protocols for ongoing assessments to identify potential environmental exposures.
Our natural gas and midstream operations are also subject to numerous federal environmental laws and regulations. 15 In addition to routine reviews and inspections by regulators to confirm compliance with applicable regulatory and permit requirements, CNX has established protocols for ongoing assessments to identify potential environmental exposures.
These areas are currently served by a large concentration of major pipelines that provide us with access to major gas markets without the necessity of transporting our natural gas out of the region.
These areas are currently served by a large concentration of major pipelines that provide CNX with access to major gas markets without the necessity of transporting our natural gas out of the region.
Risks Related to Economic Conditions and our Industry • Prices for natural gas and NGLs are volatile and can fluctuate widely based upon a number of factors beyond our control, including supply and demand for our products. • If natural gas prices decrease or operational efforts are unsuccessful, CNX may be required to record write-downs of our proved natural gas properties. • Competition and consolidation within the natural gas industry may adversely affect our ability to sell our products and midstream services or other parts of the business. • Deterioration in the economic conditions in any of the industries in which our customers operate, a domestic or worldwide financial downturn, or negative credit market conditions may have a material adverse effect on our liquidity, results of operations, business and financial condition that CNX cannot predict. • Our hedging activities may prevent us from benefiting from price increases and may expose us to other risks. • Negative public perception regarding our Company or industry could have an adverse effect on our operations, financial results or stock price. • Events beyond our control, including a global or domestic health crisis, may result in unexpected adverse operating and financial results. • Increasing attention to environmental, social and governance (ESG) matters may adversely impact our business.
Risks Related to Economic Conditions and our Industry • Prices for natural gas and NGLs are volatile and can fluctuate widely based upon a number of factors beyond our control, including supply and demand for our products. 18 • If natural gas prices decrease or operational efforts are unsuccessful, CNX may be required to record write-downs of the quantity and value of our proved natural gas properties. • Competition and consolidation within the natural gas industry may adversely affect our ability to sell our products and midstream services or other parts of the business. • Deterioration in the economic conditions in any of the industries in which our customers or their customers operate, a domestic or worldwide financial downturn, or negative credit market conditions may have a material adverse effect on our liquidity, results of operations, business and financial condition that CNX cannot predict. • Our hedging activities may prevent us from benefiting from price increases and may expose us to other risks. • Negative public perception regarding our Company or industry could have an adverse effect on our operations, financial results or stock price. • Events beyond our control, including a global or domestic health crisis or global instability and actual and threatened geopolitical conflict, may result in unexpected adverse operating and financial results. • Increasing attention to environmental, social and governance (ESG) matters may adversely impact our business.
The legislation, known as the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), required the CFTC, the SEC and other regulatory agencies to promulgate rules and regulations implementing this legislation.
This legislation, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), required the CFTC, the SEC and other regulatory agencies to promulgate rules and regulations implementing this legislation.
With the benefit of a more than 155-year legacy and a substantial asset base amassed over many generations, the Company deploys a strategy focused on responsibly developing its resources to create long-term per share value for its shareholders, employees, and the communities where it operates.
With the benefit of a more than 155-year legacy and a substantial asset base amassed over many generations, the Company deploys a strategy focused on responsibly developing its resources to create long-term per share value for its shareholders, as well as enhancing the communities where it operates.
See “Risk Factors - Climate change risk, legislation, litigation and regulation of greenhouse gas emissions at the federal or state level may increase our operating costs and reduce the value of our natural gas assets” for additional discussion regarding certain laws and regulations related to climate change, greenhouse gas and related matters.
See “Risk 17 Factors - Climate change risk, legislation, litigation and regulation of greenhouse gas emissions at the federal or state level may increase our operating costs and reduce the value of our natural gas assets” for additional discussion regarding certain laws and regulations related to climate change, greenhouse gas and related matters. Real Estate and Title Regulations.
Risks Related to our Business Operations • The disruption of capacity constraints in, or proximity to pipeline and processing systems could limit sales of our natural gas and NGLs and cash flows from operations, and any decrease in availability of pipelines or other midstream facilities could adversely affect our operations. • Uncertainties exist in the estimation of economical recovery of oil and natural gas reserves. • Developing, producing and operating natural gas wells is subject to operating risks and hazards that could increase expenses, decrease our production levels and expose us to losses or liabilities. • Our identified development locations are scheduled over multiple future years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their actual development. • Our capital projects require substantial capital expenditures and are subject to regulatory, environmental, political, legal and economic risks and if CNX fails to generate sufficient cash flow, obtain required capital or financing on satisfactory terms or respond to regulatory and political developments, our natural gas reserves may decline, and our operations and financial results may suffer. 20 • CNX may not be able to obtain required personnel, services, equipment, parts and raw materials in a timely manner, in sufficient quantities or at reasonable costs to support our operations. • If CNX cannot find adequate sources of water for our use or if CNX is unable to dispose of or recycle water produced from our operations at a reasonable cost and within applicable environmental rules, our ability to produce natural gas economically and in sufficient quantities could be impaired. • Failure to successfully replace our current natural gas, NGL and oil reserves through economic development of our existing or acquired assets or through acquisition of additional producing assets, would lead to a decline in our natural gas, NGL and oil production levels and reserves. • CNX may incur losses as a result of title defects in the properties in which CNX invests or the loss of certain leasehold or other rights related to our midstream activities.
Risks Related to our Business Operations • Our dependence on third party pipeline and processing systems could adversely affect our operations and limit sales of our natural gas and NGLs as a result of disruptions, capacity constraints, proximity issues or decreases in availability of pipelines or other midstream facilities. • Uncertainties exist in the estimation of economical recovery of natural gas reserves. • Developing, producing and operating natural gas wells is subject to operating risks and hazards that could increase expenses, decrease our production levels and expose us to losses or liabilities that may not be fully covered under our insurance policies. • Our identified development locations are scheduled over multiple future years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their actual development. • Our exploration and development projects and midstream development require substantial capital expenditures and are subject to regulatory, environmental, political, legal and economic risks and if CNX fails to generate sufficient cash flow, obtain required capital or financing on satisfactory terms or respond to regulatory and political developments, our natural gas reserves may decline, and our operations and financial results may suffer. • CNX may not be able to obtain required personnel, services, equipment, parts and raw materials in a timely manner, in sufficient quantities or at reasonable costs to support our operations. • If CNX cannot find adequate sources of water for our use or if CNX is unable to dispose of or recycle water produced from our operations at a reasonable cost and within applicable environmental rules, our ability to produce natural gas economically and in sufficient quantities could be impaired. • Failure to successfully replace our current natural gas reserves through economic development of our existing or acquired undeveloped assets or through acquisition of additional producing assets, would lead to a decline in our natural gas, NGL and oil production levels and reserves. • CNX may incur losses as a result of title defects in the properties in which CNX invests or the loss of certain leasehold or other rights related to our midstream activities.
Additionally, based on our current drill plans and lease management we do not anticipate any material impact to our consolidated financial statements from the expiration of such leases. Development Wells (Net) During the years ended December 31, 2022, 2021 and 2020, we drilled 37.0, 33.0 and 29.0 net d evelopment wells, respectively.
Additionally, based on our current drill plans and lease management we do not anticipate any material impact to our consolidated financial statements from the expiration of such leases. Development Wells (Net) During the years ended December 31, 2023, 2022 and 2021, we drilled 30.8 , 37.0 and 33.0 net d evelopment wells, respectively.
CNX has a variety of initiatives dedicated to ensuring our employee and contractor workforce are appropriately trained and aligned on expectations regarding safety and environmental performance. These programs utilize behavior-based techniques which embrace a collaboration between management, employees, and the service provider workforce to continually focus attention and actions on appropriate daily safety behaviors.
CNX employs a variety of initiatives dedicated to ensuring that our employee and contractor workforce is appropriately trained and aligned on expectations regarding safety and environmental performance. These programs utilize behavior-based techniques, which embrace a collaboration between management, employees, and the service provider workforce to continually focus attention and actions on appropriate daily safety behaviors.
Sales of NGLs, condensates and oil enhance our reported natural gas equivalent sales price. Across all volumes, when excluding the impact of hedging, sales of liquids added $0.02 per Mcfe, $0.15 per Mcfe, and $0.04 per Mcfe for 2022, 2021, and 2020, respectively, to average gas sales prices.
Sales of NGLs, condensates and oil enhance our reported natural gas equivalent sales price. Across all volumes, when excluding the impact of hedging, sales of liquids added $ 0.12 per Mcfe, $0.02 per Mcfe, and $0.15 per Mcfe for 2023, 2022, and 2021, respectively, to average gas sales prices.
This is accomplished through an evergreen approach with constant evaluation and adaptation for workforce, safety, and business objectives.
This is accomplished through an evergreen approach, with consistent evaluation and adaptation for workforce, safety, and business objectives.
Fundamentally, daily on-site safety meetings, job safety analyses (JSA) and the universal expectation for any employee or contractor to stop work if a risk is identified help foster a cultural focus on Health, Safety, and Environmental (HSE) awareness, also known as Operational Excellence.
Fundamentally, daily on-site safety meetings, job safety analyses (JSA) and the universal expectation for any employee or contractor to stop work if a risk is identified combine to enforce our cultural focus on Health, Safety, and Environmental (HSE) awareness, also known as Operational Excellence.
The Company knows that a diverse, talented team working together in an inclusive culture is key to achieving long-term goals. In addition to prioritizing diversity within recruiting and hiring practices, CNX also believes in cultivating a culture sensitive to the importance of diversity in the workplace.
The Company believes that a diverse, talented team working together in an inclusive culture is key to achieving long-term goals. CNX prioritizes diversity within recruiting and hiring practices and believes in cultivating a culture sensitive to the importance of diversity in the workplace.
CNX defines itself through its corporate values that serve as our road map and guide every aspect of our business as we strive to achieve our corporate mission: • Responsibility: Be a safe and compliant operator; be a trusted community partner and respected corporate citizen; act with pride and integrity; • Ownership: Be accountable for our actions and learn from our outcomes, both positive and negative; be calculated risk-takers and seek creative ways to solve problems; be prudent capital allocators; and • Excellence: Be a lean, efficient, nimble organization; be a disciplined, reliable, performance-driven company; be an inclusive team treating each other with fairness and respect.
CNX defines itself through its corporate values that serve as our road map and guide every aspect of our business as we strive to achieve our corporate mission: • Responsibility: Be a safe and compliant operator; be a trusted community partner and respected corporate citizen; act with pride and integrity; • Ownership: Be accountable for our actions and learn from our outcomes, both positive and negative; be calculated risk-takers and seek creative ways to solve problems; be prudent capital allocators; and • Excellence: Be a lean, efficient, nimble organization; be a disciplined, reliable, performance-driven company; be an inclusive team treating each other with fairness and respect. 5 These values are the foundation of CNX's identity and are the basis for how management defines continued success.
This surface acreage is valuable to us in the development of the gathering system for our Shale production. We also derive value from this surface control by granting rights of way or development rights to third parties when we are able to derive appropriate value for our shareholders.
This surface acreage is valuable to us in the development of the gathering system for our Shale production. We also derive value from this surface control by granting rights of way or development rights to third parties.
The Company holds approximately 51,000 acres of incremental Upper Devonian acres; however, these acres have historically not been disclosed separately as they generally coincide with our Marcellus acreage, and we have no current drilling program targeting this formation. Coalbed Methane (CBM) We have rights to extract CBM in Virginia from approximately 278,000 net CBM acres in Central Appalachia.
The Company holds approximately 53,000 acres of incremental Upper Devonian acres; however, these acres have historically not been disclosed separately as they generally coincide with our Marcellus acreage, and we have no current drilling program targeting this formation. Coalbed Methane (CBM) We have rights to extract CBM in Virginia from approximately 278,000 net CBM acres at December 31, 2023.
The Environmental, Safety and Corporate Responsibility (ESCR) Committee of the Board of Directors is kept apprised of QHSE related matters as needed and with monthly updates and quarterly meetings.
The Environmental, Safety and 14 Corporate Responsibility (ESCR) Committee of the Board of Directors is kept apprised of quality, health, safety, and environmental related matters as needed and with monthly updates and quarterly meetings.
In addition to a variety of laws and regulations governing our natural gas operations, CNX is also subject to laws and regulations with respect to our employees, including 16 health and safety regulations, and various financial and regulatory laws and regulations relating to our status as a public company, and our participation in derivative markets.
In addition to various laws and regulations governing our natural gas operations, CNX is also subject to laws and regulations with respect to our employees, including health and safety regulations, those relating to our status as a public company, and those governing our participation in derivative markets.
In April 2019, the EPA issued a report pursuant to the consent order concluding that revisions to the federal regulations for the management of exploration and production wastes under RCRA were 18 not necessary at the time the report was issued.
In April 2019, the EPA issued a report pursuant to the consent order concluding that revisions to the federal regulations for the management of exploration and production wastes under RCRA were not necessary at the time the report was issued. Many state governments have specific regulations and guidance for exploration and production wastes.
These laws and regulations cover virtually every aspect of our operations including, among other things: transportation and use of public roads; construction of well pads, impoundments, tanks and roads; pooling and unitizations; water withdrawal and procurement for well stimulation purposes; well drilling, casing and hydraulic fracturing; stormwater management; well production; well plugging; venting or flaring of natural gas; pipeline construction and the compression and transmission of natural gas and liquids; reclamation and restoration of properties after natural gas operations are completed; handling, storage, transportation, treatment and disposal of materials used or generated by natural gas operations; the calculation, reporting and payment of taxes on gas production; and gathering of natural gas production.
Laws and Regulations General Our operations are subject to various federal, state and local laws and regulations, with a heavy emphasis placed on compliance with environmental laws and regulations, which cover virtually every aspect of our operations including, among other things: transportation and use of public roads; construction of well pads, impoundments, tanks and roads; pooling and unitizations; water withdrawal and procurement for well stimulation purposes; well drilling, casing and hydraulic fracturing; stormwater management; well production; well plugging; venting or flaring of natural gas; pipeline construction and the compression and transmission of natural gas and liquids; reclamation and restoration of properties after natural gas operations are completed; handling, storage, transportation, treatment and disposal of materials used or generated by natural gas operations; the calculation, reporting and payment of taxes on gas production; and gathering of natural gas production.
CNX is not a party to any collective bargaining agreements. CNX recognizes that our future success depends on the expertise and services of our key employees and is firmly committed to the health and safety of not only our employees and service providers, but also the communities in which CNX operates. Training and Education .
CNX recognizes that our future success depends on the expertise and services of our employees and is firmly committed to the health and safety of not only our employees and service providers, but also the communities in which CNX operates. 13 Training and Education .
We believe that our extensive held-by-production acreage position and development inventory combined with our regional operating expertise, extensive data set from development and non-op participation wells, midstream infrastructure ownership, low-cost operations and legacy surface acreage position provide us with significant competitive advantages that position us for long-term value creation.
Additionally, we operate and develop Coalbed Methane (CBM) properties in Virginia. We believe that our extensive held-by-production acreage position and development inventory, combined with our regional operating expertise, extensive data set from development and non-operational participation wells, midstream infrastructure ownership, low-cost operations and legacy surface acreage position provide us with significant competitive advantages that position us for long-term value creation.
With respect to CNX's Shale wells in Ohio, CNX primarily contracts with third-party gathering services. CNX also provides natural gas gathering services to third parties. 13 CNX has developed a diversified portfolio of firm transportation capacity options to support its production. CNX plans to selectively acquire firm capacity on an as-needed basis, while minimizing transportation costs and long-term financial obligations.
CNX also provides natural gas gathering services to third parties. CNX has developed a diversified portfolio of firm transportation capacity options to support its production. CNX plans to selectively acquire firm capacity on an as-needed basis, while minimizing transportation costs and long-term financial obligations.
CNX has the benefit of having its operations centered in the Appalachian Basin, which CNX believes is one of the largest, most efficient, and environmentally sustainable sources of natural gas in the world. 2022 Operational Highlights and Outlook • Over the past ten years, CNX's natural gas production has grown by approximately 271% to a total of 580.2 net Bcfe in 2022. • Total average production of 1,589,505 Mcfe per day; • 93% Natural Gas, 7% Liquids; and • 92% Shale, 8% coalbed methane.
CNX has the benefit of having its operations centered in the Appalachian Basin, which the Company believes is one of the largest, most efficient, and environmentally sustainable sources of natural gas in the world. 2023 Operational Highlights and Outlook • Over the past ten years, CNX's total sales volumes have grown by approximately 225% to a total of 560.4 net Bcfe in 2023; • Total average production of 1,535,250 Mcfe per day in 2023; • 92% Natural Gas, 8% Liquids; and • 93% Shale, 7% coalbed methane.
We have rights to extract natural gas from Shale formations in Pennsylvania, West Virginia, and Ohio from approximately 531,000 net Marcellus Shale acres and approximately 609,000 net Utica Shale acres at December 31, 2022. Approximately 346,000 Utica Shale acres coincide with Marcellus Shale acreage in Pennsylvania, West Virginia, and Ohio.
We have rights to extract natural gas from Shale formations in Pennsylvania, West Virginia, and Ohio from approximately 527,000 net Marcellus Shale acres and approximately 607,000 net Utica Shale acres at December 31, 2023. Approximately 341,000 Utica Shale acres coincide with Marcellus Shale acreage in Pennsylvania, West Virginia, and Ohio.
These transactions exist parallel to the underlying physical transactions and represented approximately 460.3 Bcf of our produced gas sales volumes for the year ended December 31, 2022 at an average price of $2.43 per Mcf.
These transactions exist parallel to the underlying physical transactions and represented approximately 420.3 Bcf of our total sales volumes for the year ended December 31, 2023 at an average price of $2.51 per Mcf.
The Company includes drilled and uncompleted net development wells in proved undeveloped reserves and the Company intends to complete and turn-in-line the wells within five years of the initial disclosure. There were no net dry development wells in 2022, 2021 or 2020.
The Company includes drilled and uncompleted net development wells in proved undeveloped reserves and the Company intends to complete and turn-in-line the wells within five years of the initial disclosure. There were no net dry development wells in 2023, 2022 or 2021. As of December 31, 2023, there were no net completed developmental wells ready to be turned in-line.
Reconciliation of PV-10 to Standardized GAAP Measure As of December 31, 2022 2021 2020 (Dollars in millions) Average Henry Hub Price ($/MMBtu)(1) $ 6.357 $ 3.598 $ 1.985 Future Cash Inflows $ 54,714 $ 31,839 $ 16,578 Future Production Costs (10,225) (8,247) (6,072) Future Development Costs (including Abandonments)(2) (2,234) (1,736) (1,958) Future Net Cash Flows (pre-tax) 42,255 21,856 8,548 10% Discount Factor (27,754) (13,775) (4,945) PV-10 (Non-GAAP Measure) 14,501 8,081 3,603 Undiscounted Income Taxes (10,696) (5,839) (2,235) 10% Discount Factor 6,958 3,640 1,268 Discounted Income Taxes (3,738) (2,199) (967) Standardized GAAP Measure(3) $ 10,763 $ 5,882 $ 2,636 ___________ (1) Based on the average, first day-of-the-month price.
Reconciliation of PV-10 to Standardized GAAP Measure As of December 31, 2023 2022 2021 (Dollars in millions) Average Henry Hub Price ($/MMBtu) (1) $ 2.637 $ 6.357 $ 3.598 Future Cash Inflows $ 20,281 $ 54,714 $ 31,839 Future Production Costs (8,515) (10,225) (8,247) Future Development Costs (including Abandonments) (2) (1,903) (2,234) (1,736) Future Net Cash Flows (pre-tax) 9,863 42,255 21,856 10% Discount Factor (5,662) (27,754) (13,775) PV-10 (Non-GAAP Measure) 4,201 14,501 8,081 Undiscounted Income Taxes (2,507) (10,696) (5,839) 10% Discount Factor 1,416 6,958 3,640 Discounted Income Taxes (1,091) (3,738) (2,199) Standardized GAAP Measure (3) $ 3,110 $ 10,763 $ 5,882 ___________ (1) Based on the average, first day-of-the-month price.
CNX cannot predict whether the EPA may change its conclusion at some point, or whether any other legislation or regulations will be enacted and if so, what its provisions will be. Federal Regulation of the Sale and Transportation of Natural Gas Federal Energy Regulatory Commission .
CNX cannot predict whether the EPA may change its conclusion at some point, or whether any other legislation or regulations will be enacted at a federal or state level and if so, what its provisions will be. Other Laws and Regulations Federal Energy Regulatory Commission .
Risks Related to Strategic Transactions • Strategic determinations, including the allocation of capital and other resources to strategic opportunities, are subject to risk and uncertainties, and our failure to appropriately allocate capital and resources among our strategic opportunities may adversely affect our financial condition. • CNX does not completely control the timing of divestitures that CNX plans to engage in, and they may not provide anticipated benefits. • There is no guarantee that CNX will continue to repurchase shares of our common stock under our current or any future share repurchase program at levels undertaken previously or at all. • CNX may operate a portion of our business with one or more joint venture partners or in circumstances where CNX is not the operator, which may restrict our operational and corporate flexibility. • In connection with the separation of our coal business, CONSOL Energy has agreed to indemnify us for certain liabilities, and we have agreed to indemnify CONSOL Energy for certain liabilities. 21 Other General Risks • Cyber-incidents targeting our systems, oil and natural gas industry systems and infrastructure, or the systems of our third-party service providers could materially adversely affect our business, financial condition or results of operations. • Our success depends on key members of our management and our ability to attract and retain experienced technical and other professional personnel. • Terrorist activities could materially adversely affect our business and results of operations.
Risks Related to Strategic Transactions • Strategic determinations, including the allocation of capital and other resources to strategic opportunities, are subject to risk and uncertainties, and our failure to appropriately allocate capital and resources among our strategic opportunities may adversely affect our financial condition. • CNX does not completely control the timing of any divestitures that CNX may engage in, and they may not provide anticipated benefits. • There is no guarantee that CNX will continue to repurchase shares of our common stock under our current or any future share repurchase program at levels undertaken previously or at all. • CNX may operate a portion of our business with one or more joint venture partners or in circumstances where CNX is not the operator, which may restrict our operational and corporate flexibility. • In connection with the separation of our coal business, CONSOL Energy has agreed to indemnify us for certain liabilities, and we have agreed to indemnify CONSOL Energy for certain liabilities.
Midstream Gas Services CNX designs, builds and operates natural gas gathering systems to move gas from the wellhead to interstate pipelines or other local sales points. In addition, over time CNX has acquired extensive gathering assets through acquisitions. CNX owns or operates approximately 2,600 miles of natural gas gathering pipelines as well as a number of natural gas processing facilities.
Midstream Gas Services CNX designs, builds and operates natural gas gathering systems to move natural gas from the wellhead to interstate pipelines or other local sales points. In addition, over time CNX has acquired extensive gathering assets through acquisitions.
“Management's Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K for a breakdown by segment. 12 For the Year Ended December 31, 2022 2021 2020 Average Sales Price - Gas (per Mcf) $ 6.27 $ 3.55 $ 1.71 (Loss) Gain on Commodity Derivative Instruments - Cash Settlement- Gas (per Mcf)* $ (3.35) $ (0.98) $ 0.78 Average Sales Price - NGLs (per Mcfe)** $ 6.36 $ 5.65 $ 2.29 Average Sales Price - Oil/Condensate (per Mcfe)** $ 13.65 $ 9.39 $ 5.98 Total Average Sales Price (per Mcfe) Including Effect of Derivative Instruments* $ 3.17 $ 2.79 $ 2.49 Total Average Sales Price (per Mcfe) Excluding Effect of Derivative Instruments $ 6.29 $ 3.70 $ 1.75 Average Lifting Costs Excluding Ad Valorem and Severance Taxes (per Mcfe) $ 0.11 $ 0.08 $ 0.08 Average Sales Price - NGLs (per Bbl) $ 38.16 $ 33.90 $ 13.74 Average Sales Price - Oil/Condensate (per Bbl) $ 81.90 $ 56.34 $ 35.88 *Excludes the effect of hedge monetizations. **Oil, NGLs, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas.
For the Year Ended December 31, 2023 2022 2021 Average Sales Price - Gas (per Mcf) $ 2.20 $ 6.27 $ 3.55 Gain (Loss) on Commodity Derivative Instruments - Cash Settlement (per Mcf) $ 0.32 $ (3.35) $ (0.98) Average Sales Price - NGLs (per Mcfe)** $ 3.54 $ 6.36 $ 5.65 Average Sales Price - Oil/Condensate (per Mcfe)** $ 10.98 $ 13.65 $ 9.39 Total Average Sales Price (per Mcfe) Including Effect of Derivative Instruments $ 2.61 $ 3.17 $ 2.79 Total Average Sales Price (per Mcfe) Excluding Effect of Derivative Instruments $ 2.32 $ 6.29 $ 3.70 Average Lifting Costs Excluding Ad Valorem and Severance Taxes (per Mcfe) $ 0.11 $ 0.11 $ 0.08 Average Sales Price - NGLs (per Bbl) $ 21.24 $ 38.16 $ 33.90 Average Sales Price - Oil/Condensate (per Bbl) $ 65.88 $ 81.90 $ 56.34 **Oil, NGLs, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas.
The notional volumes associated with these gas swaps represented approximately 470.0 Bcf of our produced natural gas sales volumes for the year ended December 31, 2021 at an average price of $2.51 per Mcf.
The notional volumes associated with these gas swaps represented approximately 460.3 Bcf of our total sales volumes for the year ended December 31, 2022 at an average price of $2.43 per Mcf.
No job or activity is considered a success if CNX compromises the safety of its employees and contractors. Everyone working at CNX locations is empowered to stop work if they feel their safety or that of a coworker is at risk.
No job or activity is considered a success if CNX compromises the safety of its employees and contractors. CNX employs stop work empowerment, where every person working at CNX locations is empowered to stop work if they feel there is a safety risk to themselves or others.
Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K for a breakdown of sales volume variances. CNX expects 2023 annual production volumes to be approximately 555-575 Bcfe.
Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K for a breakdown of sales volume variances. CNX expects 2024 annual sales volumes to be approximately 570-590 Bcfe (This includes approximately 15-18 Bcfe of coal mine methane.
CNX cannot predict whether new legislation to regulate natural gas sales might be enacted in the future or what effect, if any, any such legislation might have on our operations. Health and Safety Laws Occupational Safety and Health Act .
Natural gas prices are currently unregulated, but Congress historically has been active in the area of natural gas regulation. CNX cannot predict whether new legislation to regulate natural gas sales might be enacted in the future or what effect, if any, any such legislation might have on our operations. Occupational Safety and Health Act .
Certain of CNX’s processing contracts provide for the ability to take our NGLs “in-kind” and market them directly if desired. The processed purity products are ultimately sold to industrial, commercial and petrochemical markets.
CNX directly markets certain NGLs taken “in-kind” pursuant to processing contracts that provide for the ability to take our NGLs “in-kind.” The processed purity products are ultimately sold to industrial, commercial and petrochemical markets.
Reserves The following table shows our estimated proved developed and proved undeveloped reserves. Reserve information is net of royalty interest. Proved developed and proved undeveloped reserves are reserves that could be commercially recovered under current economic conditions, operating methods and government regulations. Proved developed and proved undeveloped reserves are defined by the Securities and Exchange Commission (SEC).
As of December 31, 2023, there are no net exploratory wells in process. Reserves The following table shows our estimated proved developed and proved undeveloped reserves. Reserve information is net of royalty interest. Proved developed and proved undeveloped reserves are reserves that could be commercially recovered under current economic conditions, operating methods and government regulations.
At December 31, 2022, our proved natural gas, NGL, condensate and oil reserves (collectively, “natural gas reserves”) had the following characteristics: • 9.8 Tcfe of proved reserves; • 93.7% natural gas; • 63.4% proved developed; and • 98.2% operated. In 2023, CNX expects capital expenditures of approximately $575 million to $675 million.
At December 31, 2023, our proved natural gas, NGL, condensate and oil reserves (collectively, “natural gas reserves”) had the following characteristics: • 8.7 Tcfe of proved reserves; • 90.6% natural gas; • 69.0% proved developed; and • 99.5% operated. In 2024, CNX expects capital expenditures to be between $575 million and $625 million.
As of December 31, 2022, there were 4.0 net completed developmental wells ready to be turned in-line. 9 The following table illustrates the net wells drilled by well classification type: For the Year Ended December 31, 2022 2021 2020 Shale Segment 37.0 33.0 25.0 CBM Segment — — 4.0 Other Gas Segment — — — Total Development Wells (Net) 37.0 33.0 29.0 Exploratory Wells (Net) There were no net exploratory wells drilled during the years ended December 31, 2022 and 2021.
The following table illustrates the net wells drilled by well classification type: For the Years Ended December 31, 2023 2022 2021 Shale Segment 30.8 37.0 33.0 CBM Segment — — — Other Gas Segment — — — Total Development Wells (Net) 30.8 37.0 33.0 Exploratory Wells (Net) There were no net exploratory wells drilled during the years ended December 31, 2023, 2022 and 2021.
CNX is committed to fostering a culture of accountability and continuous improvement through the utilization of a Quality Management System (QMS), which strengthens accountability across the enterprise, and reinforces our core values of Responsibility, Ownership, and Excellence.
Goal attainment and outstanding achievements contribute to the year-end discretionary incentive pay awarded to employees that perform above expectations. Quality Management Systems. CNX is committed to fostering a culture of accountability and continuous improvement through the utilization of a Quality Management System (QMS), which strengthens accountability across the enterprise, and reinforces our core values of Responsibility, Ownership, and Excellence.
CNX is subject to the informational requirements of the Exchange Act, and we file or furnish reports, proxy statements and other information with the SEC. Such reports and other information CNX files with the SEC are available free of charge at our website www.cnx.com when such reports are available on the SEC’s website.
CNX is subject to the informational requirements of the Exchange Act, and we file or furnish reports, proxy statements and other information with the SEC.
We also have rights to extract CBM from approximately 1,752,000 net CBM acres in other states including West Virginia, Pennsylvania, Ohio, Illinois, Indiana, and New Mexico; however the Company has no current plans to drill CBM wells in these areas.
CNX also has rights to extract CBM from approximately 1,755,000 net CBM acres, and rights to capture CMM from various active and abandoned mines in other states including West Virginia, Pennsylvania, Ohio, Illinois, Indiana, and New Mexico; however, the Company has no current plans to drill CBM wells or capture CMM in these areas. 6 Other Gas We have rights to extract natural gas from other Shale and shallow oil and gas formations primarily in Illinois, Indiana, New York, Ohio, Pennsylvania, Virginia, and West Virginia from approximately 939,000 net acres at December 31, 2023.
The following table sets forth, at December 31, 2022, the number of producing wells, developed acreage and undeveloped acreage: Gross(1) Net(2) Producing Gas Wells (including gob wells) - Working Interest 4,553 4,420 Producing Oil Wells - Working Interest 2 — Producing Gas Wells - Royalty Interest 2,325 — Producing Oil Wells - Royalty Interest 157 — Net Acreage Position: Proved Developed Acreage 381,873 381,873 Proved Undeveloped Acreage 40,894 40,894 Unproved Acreage 4,791,506 3,456,575 Total Acreage 5,214,273 3,879,342 _________ (1) All of our acreage identified as proved developed and undeveloped is controlled fully by CNX through ownership of a 100% working interest.
The following table sets forth, at December 31, 2023, the number of producing wells, developed acreage and undeveloped acreage: Gross (1) Net (2) Producing Gas Wells (including gob wells) - Working Interest 4,499 4,425 Producing Oil Wells - Working Interest 2 — Producing Gas Wells - Royalty Interest 320 — Producing Oil Wells - Royalty Interest 126 — Net Acreage Position: Proved Developed Acreage 385,087 385,087 Proved Undeveloped Acreage 40,811 40,811 Unproved Acreage 4,704,922 3,392,132 Total Acreage 5,130,820 3,818,030 _________ (1) All of our acreage identified as proved developed and undeveloped is controlled fully by CNX through ownership of a 100% working interest.
Gas Production The following table sets forth net sales volumes produced for the periods indicated: For the Year Ended December 31, 2022 2021 2020 Natural Gas Sales Volume (MMcf) Shale 496,614 502,184 428,679 CBM 43,733 49,570 52,609 Other 349 234 138 Total 540,696 551,988 481,426 NGL* Sales Volume (Mbbls) Shale 6,333 5,976 4,675 Other — — 2 Total 6,333 5,976 4,677 Oil and Condensate* Sales Volume (Mbbls) Shale 240 396 250 Other 6 4 14 Total 246 400 264 Total Sales Volume (MMcfe) Shale 536,050 540,413 458,231 CBM 43,733 49,570 52,609 Other 386 265 232 Total** 580,169 590,248 511,072 *Oil, NGLs, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas. **See Part II.
(3) For additional information on our reserves, see Note 22 – Supplemental Gas Data (unaudited) to the Consolidated Financial Statements in Item 8 of this Form 10-K. 9 Sales Volumes Produced The following table sets forth net sales volumes produced for the periods indicated: For the Year Ended December 31, 2023 2022 2021 Natural Gas Sales Volume (MMcf) Shale 473,828 496,614 502,184 CBM 40,598 43,733 49,570 Other 242 349 234 Total 514,668 540,696 551,988 NGL* Sales Volume (Mbbls) Shale 7,410 6,333 5,976 Total 7,410 6,333 5,976 Oil and Condensate* Sales Volume (Mbbls) Shale 203 240 396 Other 3 6 4 Total 206 246 400 Total Sales Volume (MMcfe) Shale 519,503 536,050 540,413 CBM 40,598 43,733 49,570 Other 265 386 265 Total** 560,366 580,169 590,248 *Oil, NGLs, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas. **See Part II.
However, it is still not possible at this time to predict the full extent of the impact of the regulations on the Company's hedging program or regulatory compliance obligations. CNX endeavors to conduct our natural gas and midstream operations in compliance with all applicable federal, state and local laws and regulations.
However, it is still not possible at this time to predict the full extent of the impact of the regulations on the Company's hedging program or regulatory compliance obligations.
As of January 5, 2023, these physical and swap transactions represent approximately 429.7 Bcf of our estimated 2023 production at an average price of $2.47 per Mcf, 381.3 Bcf of our estimated 2024 production at an average price of $2.38 per Mcf, 373.2 Bcf of our estimated 2025 production at an average price of $2.37 per Mcf, approximately 321.7 Bcf of our estimated 2026 production at an average price of $2.61 per Mcf, and approximately 140.4 Bcf of our estimated 2027 production at an average price of $3.35 per Mcf.
As of January 5, 2024, these physical and swap transactions represent approximately 434.2 Bcf of our estimated 2024 production at an average price of $2.53 per Mcf, 375.1 Bcf of our estimated 2025 production at an average price of $2.41 per Mcf, 339.0 Bcf of our estimated 2026 production at an average price of $2.53 per Mcf, and 216.2 Bcf of our estimated 2027 production at an average price of $3.35 per Mcf.
Employees were exposed to potential cultural experiences of individuals with identities that may be different from their own and had the opportunity to learn how others may experience the same workplace in very disparate ways. CNX intends to continue and expand Diversity and Inclusion training in 2023.
These events allow employees to be exposed to cultural experiences of individuals with identities that may be different from their own and gives them the opportunity to learn how others may experience the same workplace in very different ways. Employee Attraction and Retention .
However, the distinction between federally unregulated gathering facilities and FERC-regulated transmission facilities is a fact-based determination, and the classification of such facilities may be the subject of dispute and, potentially, litigation.
However, the distinction between federally unregulated gathering facilities and FERC-regulated transmission facilities is a fact-based determination, and the classification of such facilities may be the subject of dispute and, potentially, litigation. CNX owns certain natural gas pipeline facilities that CNX believes meet the traditional tests used to establish a pipeline's status as a gatherer not subject to FERC jurisdiction.
See “Risk Factors - CNX may incur losses as a result of title defects in the properties in which CNX 19 invests or the loss of certain leasehold or other rights related to our midstream activities.” Available Information Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Exchange Act, are filed with the Securities and Exchange Commission (the SEC ).
See “ Risk Factors- Our hedging activities may prevent us from benefiting from price increases and may expose us to other risks.” Available Information Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Exchange Act, are filed with the Securities and Exchange Commission (the SEC ).
ITEM 1. Business General CNX Resources Corporation (“CNX,” the “Company,” or “we,” “us,” or “our”) is a premier independent natural gas and midstream company engaged in the exploration, development, production and acquisition of natural gas properties in the Appalachian Basin.
ITEM 1. Business General CNX Resources Corporation (“CNX,” the “Company,” or “we,” “us,” or “our”) is a premier independent low carbon intensity natural gas development, production, midstream and technology company centered in the Appalachian Basin. The majority of our operations are centered on unconventional shale formations, primarily the Marcellus Shale and Utica Shale, in Pennsylvania, Ohio and West Virginia.
The following table represents the terms under which we hold these acres: Gross Unproved Acres Net Unproved Acres Gross Proved Undeveloped Acres Net Proved Undeveloped Acres Held by Production/Fee 4,684,012 3,403,100 28,475 28,475 Expiration Within 2 Years 29,277 16,406 2,986 2,986 Expiration Beyond 2 Years 78,217 37,069 9,433 9,433 Total Acreage 4,791,506 3,456,575 40,894 40,894 The leases reflected above as Gross and Net Unproved Acres with expiration dates are included in our current drill plan or active land program.
The following table represents the terms under which we hold these acres: Gross Unproved Acres Net Unproved Acres Gross Proved Undeveloped Acres Net Proved Undeveloped Acres Held by Production/Fee 4,623,168 3,349,590 29,977 29,977 Expiration Within 2 Years 31,812 17,377 4,319 4,319 Expiration Beyond 2 Years 49,942 25,165 6,515 6,515 Total Acreage 4,704,922 3,392,132 40,811 40,811 The leases reflected above as Gross and Net Unproved Acres with expiration dates are included in our current drill plan or active land program.
Average Sales Price and Average Lifting Cost The following table sets forth the total average sales price and the total average lifting cost for all of our natural gas and NGL production for the periods indicated. Total lifting cost is the cost of raising gas to the gathering system and does not include depreciation, depletion or amortization. See Part II.
See New Technologies below for more information). 10 Average Sales Price and Average Lifting Cost The following table sets forth the total average sales price and the total average lifting cost for all of our natural gas and NGL production for the periods indicated.
The Company is committed to attracting, developing, engaging, retaining, and rewarding a diverse team of highly skilled individuals dedicated to accountability, fairness, and respect. The continued success of CNX is not only contingent upon seeking out the best possible candidates, but, more importantly, retaining and developing the Company’s existing talent.
CNX recognizes the importance of attracting and retaining top talent to help drive the Company’s strategy forward. The Company is committed to attracting, developing, engaging, retaining, and rewarding a diverse team of highly skilled individuals dedicated to accountability, fairness, and respect.
CNX competes with other large producers, as well as a myriad of smaller producers and marketers. CNX also competes for pipeline capacity and other services to deliver its products to customers. New Technologies CNX is currently developing unique, proprietary technology for vertical and horizontal business growth.
CNX competes with other large producers, as well as a myriad of smaller producers and marketers. CNX also competes for pipeline capacity and other services to deliver its products to customers. New Technologies CNX’s New Technologies efforts are rooted in the Company’s extensive legacy asset base and innovative tradition.
Future development costs for 2020 include $402 million of plugging and abandonment costs and $287 million of midstream and water infrastructure capital on an undiscounted pre-tax basis.
(2) Future development costs for 2023 include $535 million of plugging and abandonment costs and $210 million of midstream and water infrastructure capital on an undiscounted pre-tax basis. On a PV-10 pre-tax discounted basis, these amounts equate to $49 million and $173 million, respectively.
Net Reserves (Millions of Cubic Feet Equivalent) As of December 31, 2022 2021 2020 Proved Developed Reserves 6,221,422 5,905,611 5,199,748 Proved Undeveloped Reserves 3,585,468 3,720,119 4,350,010 Total Proved Developed and Undeveloped Reserves (1) 9,806,890 9,625,730 9,549,758 ___________ (1) For additional information on our reserves, see Note 22 – Supplemental Gas Data (unaudited) to the Consolidated Financial Statements in Item 8 of this Form 10-K. 10 Discounted Future Net Cash Flows The following table shows our estimated future net cash flows and total standardized measure of discounted future net cash flows at 10%: As of December 31, 2022 2021 2020 (Dollars in millions) Future Net Cash Flows (pre-tax) less Undiscounted Income Taxes $ 31,559 $ 16,017 $ 6,313 Total PV-10 Non-GAAP Measure of Pre-Tax Discounted Future Net Cash Flows (1) $ 14,501 $ 8,081 $ 3,603 Total Standardized GAAP Measure of After-Tax Discounted Future Net Cash Flows $ 10,763 $ 5,882 $ 2,636 ____________ (1) We calculate our present value at 10% (PV-10) in accordance with the following table.
Net Reserves (Millions of Cubic Feet Equivalent) As of December 31, 2023 2022 2021 Proved Developed Reserves 6,027,762 6,221,422 5,905,611 Proved Undeveloped Reserves 2,712,980 3,585,468 3,720,119 Total Proved Developed and Undeveloped Reserves (1) 8,740,742 9,806,890 9,625,730 8 ___________ (1) For additional information on our reserves, see Note 22 – Supplemental Gas Data (unaudited) to the Consolidated Financial Statements in Item 8 of this Form 10-K.
As trends are identified, CNX utilizes the information to amend policies, training and company-wide communication. The team takes a hybrid approach where CNX has merged traditional safety group with an operational field compliance team to form the Operational Excellence department. The Operational Excellence department falls under the direction of the Chief Operating Officer.
CNX’s hybrid approach, where the traditional safety group is merged with an operational field compliance team, forms the Operational Excellence department. The Operational Excellence department falls under the direction of the Chief Operating Officer.
Gob wells and wells drilled by operators other than our primary joint venture partners at that time are excluded from net development wells and represents less than 0.5 net wells for each year. As o f December 31, 2022, there were 13.0 net development wells and no exploratory wells drilled but uncompleted.
Gob wells and wells drilled by other operators in which we own an interest are excluded from net development wells. As o f December 31, 2023, there were 13.8 net development wells and no exploratory wells drilled but uncompleted.
CNX’s approach to employee stop work empowerment, while reactive, when necessary, includes proactive measures such as procedural enhancements and communication. CNX promotes empowerment through new employee on-boarding, CNX Hazard Training compliance, and verification of contractor training and short service employee program.
This empowerment approach is reactive, when necessary, but also includes proactive measures such as procedural enhancements and communication. CNX further promotes empowerment through its CNX Hazard Training compliance, and verification of contractor training and short service employee program. Our safety professionals provide support throughout all phases of operation with education, training, policy development, audits and emergency preparedness and response.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

122 edited+27 added−20 removed172 unchanged
Biggest changeDisputes between us and the other party may result in litigation or arbitration that would increase our expenses, delay or terminate projects and distract our officers and directors from focusing their time and effort on our business. 38 In connection with the separation of our coal business, CONSOL Energy has agreed to indemnify us for certain liabilities, and we have agreed to indemnify CONSOL Energy for certain liabilities.
Biggest changeCNX could also incur liability as a result of actions taken or not taken by a joint venture partner or third-party operator. Disputes between us and the other party may result in litigation or arbitration that would increase our expenses, delay or terminate projects and distract our officers and directors from focusing their time and effort on our business.
However, this issue has been the subject of substantial litigation, and if FERC were to consider the status of an individual facility and determine that it is not exempt from FERC regulation under the NGA, the rates for, and terms and conditions of, services provided by such facility would become subject to regulation by FERC.
However, this issue has been the subject of substantial litigation, and if the FERC were to consider the status of an individual facility and determine that it is not exempt from FERC regulation under the NGA, the rates for, and terms and conditions of, services provided by such facility would become subject to regulation by the FERC.
For example: • demand for natural gas and electricity in the United States is impacted by industrial production, which if weakened would negatively impact the revenues, margins and profitability of our natural gas business; • a decrease in international demand for natural gas or NGLs produced in the United States could adversely affect the pricing for such products, which could adversely affect our results of operations and liquidity; • the tightening of credit or lack of credit availability to our customers could adversely affect our liquidity, as our ability to receive payment for our products sold and delivered depends on the continued creditworthiness of our customers; • our ability to refinance our existing senior notes may be limited and the terms on which we are able to do so may be less favorable to us depending on the strength of the capital markets or our credit ratings; • our ability to access the capital markets may be restricted at a time when CNX would like, or need, to raise capital for our business including for exploration and/or development of our natural gas reserves; • increased capital markets scrutiny of E&P companies leading to increased costs of capital or lack of credit availability; • a decline in our creditworthiness 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; and • increased inflationary pressure in the broader macro-economic environment may impact our business by increasing costs and tightening the supply of critical goods and services needed to support our operations.
For example: • demand for natural gas and electricity in the United States is impacted by industrial production, which if weakened would negatively impact the revenues, margins and profitability of our natural gas business; • a decrease in international demand for natural gas or NGLs produced in the United States could adversely affect the pricing for such products, which could adversely affect our results of operations and liquidity; • the tightening of credit or lack of credit availability to our customers could adversely affect our liquidity, as our ability to receive payment for our products sold and delivered depends on the continued creditworthiness of our customers; • our ability to refinance our existing senior notes may be limited and the terms on which we are able to do so may be less favorable to us depending on the strength of the capital markets or our credit ratings; • our ability to access the capital markets may be restricted at a time when CNX would like, or need, to raise capital for our business including for exploration and/or development of our natural gas reserves; • increased capital markets scrutiny of E&P companies leading to increased costs of capital or lack of credit availability; 22 • a decline in our creditworthiness 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; and • increased inflationary pressure in the broader macro-economic environment may impact our business by increasing costs and tightening the supply of critical goods and services needed to support our operations.
Apart from issues with respect to the supply of products CNX produces, demand can fluctuate widely due to a number of matters beyond our control, including: • weather conditions in our markets that affect the demand for natural gas; 22 • changes in the consumption pattern of industrial consumers, electricity generators and residential users of electricity and natural gas; • with respect to natural gas, the price and availability of alternative fuel sources used by electricity generators; • technological advances affecting energy consumption and conservation measures reducing demand; • the costs, availability and capacity of transportation infrastructure; • proximity and capacity of natural gas pipelines and other transportation facilities; • changes in levels of international demand and tariffs associated with international export; and • the impact of domestic and foreign governmental laws and regulations, including environmental and climate change regulations and delays.
Apart from issues with respect to the supply of products CNX produces, demand can fluctuate widely due to a number of matters beyond our control, including: • weather conditions in our markets that affect the demand for natural gas; • changes in the consumption pattern of industrial consumers, electricity generators and residential users of electricity and natural gas; • with respect to natural gas, the price and availability of alternative fuel sources used by electricity generators; • technological advances affecting energy consumption and conservation measures reducing demand; • the costs, availability and capacity of transportation infrastructure; • proximity and capacity of natural gas pipelines and other transportation facilities; • changes in levels of international demand and tariffs associated with international export; and • the impact of domestic and foreign governmental laws and regulations, including environmental and climate change regulations and delays.
Our ability to develop these locations may be dependent on a number of factors, including natural gas, NGL and oil prices, the availability and cost of capital, drilling and production costs, obtaining required regulatory permits, the acquisition on acceptable terms of any leasehold interests we do not control but that are necessary to complete the drilling unit (including potentially through third-party swap transactions), availability of drilling services and equipment, drilling results, lease expirations for the failure to timely develop or otherwise, transportation constraints, regulatory and zoning approvals and other factors.
Our ability to develop these locations may be dependent on a number of factors, including natural gas, NGL and oil prices, the availability and cost of capital, drilling, completions and production costs, obtaining required regulatory permits, the acquisition on acceptable terms of any leasehold interests we do not control but that are necessary to complete the drilling unit (including potentially through third-party swap transactions), availability of drilling services and equipment, drilling results, lease expirations for the failure to timely develop or otherwise, transportation constraints, regulatory and zoning approvals and other factors.
In developing our business plan, we consider allocating capital and other resources to various aspects of our businesses including well development, reserve acquisitions, exploratory activity, corporate items 37 (including share and debt repurchases) and other alternatives, including investments into new proprietary technologies and strategies surrounding the generation and monetization of environmental attributes from our operations, including but not limited to carbon credit offsets.
In developing our business plan, we consider allocating capital and other resources to various aspects of our businesses including well development, reserve acquisitions, exploratory activity, corporate items (including share and debt repurchases) and other alternatives, including investments into new proprietary technologies and strategies surrounding the generation and monetization of environmental attributes from our operations, including but not limited to carbon credit offsets.
The occurrence of an event that is not fully covered by insurance, such as pollution or environmental issues, could materially adversely affect our business, financial condition, results of operations and cash flows. Our identified development locations are scheduled over multiple future years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their actual development.
The occurrence of an event that is not fully covered by insurance, such as pollution or environmental issues, could materially adversely affect our business, financial condition, results of operations and cash flows. 26 Our identified development locations are scheduled over multiple future years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their actual development.
Our investment in midstream infrastructure development and maintenance programs is intended, among other items, to connect our wells to other existing gathering and transmission pipelines and can involve significant risks, including those relating to timing, cost overruns and operational efficiency. Significant portions of our natural gas production are dependent on a small number of key compression and processing stations.
Our continuing investment in midstream infrastructure development and maintenance programs is intended, among other items, to connect our wells to other existing gathering and transmission pipelines and can involve significant risks, including those relating to timing, cost overruns and operational efficiency. Significant portions of our natural gas production are dependent on a small number of key compression and processing stations.
Producing natural gas, NGL and oil reservoirs generally are characterized by declining production rates that vary depending upon reservoir characteristics and other factors. The rate of decline can change if production from our existing wells is different than what has been estimated, operating conditions change, or other circumstances arise that affect our ability to produce the wells.
Producing natural gas and oil reservoirs generally are characterized by declining production rates that vary depending upon reservoir characteristics and other factors. The rate of decline can change if production from our existing wells is different than what has been estimated, operating conditions change, or other circumstances arise that affect our ability to produce the wells.
For further discussion of pending legal proceedings, see Note 20 – Commitments and Contingent Liabilities in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K. Environmental regulations can increase costs and introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities.
For further discussion of pending legal proceedings, see Note 20 – Commitments and Contingent Liabilities in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K. 30 Environmental regulations can increase costs and introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities.
In October 2019, PHMSA published a final rule that significantly modifies existing regulations related to reporting, impact, design, construction, maintenance, operations and integrity management of gas transmission and gathering pipelines. Compliance with the rule could materially adversely affect our operations. In May 2020, PHMSA proposed additional amendments to Federal Pipeline Safety Regulations.
In October 2019, PHMSA published a final rule that significantly modifies existing regulations related to reporting, impact, design, construction, maintenance, operations and integrity management of gas transmission and gathering pipelines. Compliance with the rule could materially adversely affect our operations. In May 2020, PHMSA proposed additional 32 amendments to Federal Pipeline Safety Regulations.
While CNX expects to be able to utilize our NOL carryforwards and generate deductions to offset our future taxable income, in the event that deductions are not generated as expected, one or more of our tax positions are successfully challenged by the IRS (in a tax audit or otherwise), or our NOL 34 carryforwards are subject to future limitations, our future tax liability may be greater than expected.
While CNX expects to be able to utilize our NOL carryforwards and generate deductions to offset our future taxable income, in the event that deductions are not generated as expected, one or more of our tax positions are successfully challenged by the IRS (in a tax audit or otherwise), or our NOL carryforwards are subject to future limitations, our future tax liability may be greater than expected.
As is common in the natural gas industry, CNX may operate one or more of our properties with a joint venture partner, or contract with a third-party to control operations. These relationships could require us to share operational and other control, such that CNX may no longer have the flexibility to control completely the development of these properties.
As is common in the natural gas industry, CNX may operate one or more of our properties with a joint venture partner, or contract with a third-party to control operations. These relationships could require us to share operational and other control, such that CNX may no longer have the flexibility to control completely the development and operation of these properties.
If divestment efforts continue, the price of our common stock or debt securities, and our ability to access capital markets or to otherwise obtain new investment or financing, may be negatively impacted and have a material adverse effect on our business, financial condition, results of operations and cash flows.
If divestment efforts continue, the price of our common 23 stock or debt securities, and our ability to access capital markets or to otherwise obtain new investment or financing, may be negatively impacted and have a material adverse effect on our business, financial condition, results of operations and cash flows.
While new interstate pipeline projects could reduce this discount, it could increase further if production in the basin continues to grow and projects to move gas out of the basin are cancelled, delayed or denied for any reason, such as permitting and regulatory issues or environmental lawsuits.
While new interstate pipeline projects could reduce this discount, it could increase further if production in the basin continues to grow and projects to move natural gas out of the basin are cancelled, delayed or denied for any reason, such as permitting and regulatory issues or environmental lawsuits.
Further, if pipeline quality standards change or we cannot meet applicable standards, we might be required to install additional processing equipment which could increase our costs. Pipelines could also curtail our flows until the natural gas delivered to their pipeline is in compliance with predetermined gas quality specifications.
Further, if pipeline quality standards change or we cannot meet applicable standards, we might be required to install additional processing equipment which could increase our costs. Pipelines could also curtail our flows until the natural gas delivered to their pipeline is in 24 compliance with predetermined gas quality specifications.
Deterioration in the economic conditions in any of the industries in which our customers operate, a domestic or worldwide financial downturn, or negative credit market conditions can have a material adverse effect on our liquidity, results of operations, business and financial condition that CNX cannot predict.
Deterioration in the economic conditions in any of the industries in which our customers and their customers operate, a domestic or worldwide financial downturn, or negative credit market conditions can have a material adverse effect on our liquidity, results of operations, business and financial condition that CNX cannot predict.
For example, previous tax law legislation decreased the regular U.S. federal income tax rate, limited the ability of corporations to take certain interest deductions, increased the limitation on deductibility of executive compensation, and have eliminated a corporation’s ability to take deductions for income attributable to domestic production activities.
For example, previous tax law legislation decreased the regular U.S. federal income tax rate, limited the ability of corporations to take certain interest deductions, increased the limitation on deductibility of executive compensation, and eliminated a corporation’s ability to take deductions for income attributable to domestic production activities.
The PV-10 measure of pre-tax discounted future net cash flows and the standardized measure of after-tax discounted future net cash flows from our proved reserves included within this Form 10-K are not necessarily the same as the current market value of our estimated natural gas and liquid reserves.
The PV-10 measure of pre-tax discounted future net cash flows and the standardized measure of after-tax discounted future net cash flows from our proved reserves included within this Form 10-K are not necessarily the same as the current market value of our estimated natural gas reserves.
Many of the companies with which CNX competes are larger and have more resources to deploy, 23 and if CNX were unable to compete, our company, our operating results, financial position or other parts of the business may be adversely affected.
Many of the companies with which CNX competes are larger and have more resources to deploy, and if CNX were unable to compete, our company, our operating results, financial position or other parts of the business may be adversely affected.
Although FERC has not made any formal determinations with respect to any of our gathering facilities, CNX believes that the natural gas pipelines in our gathering systems meet the traditional tests FERC has used to establish that a natural gas pipeline is a gathering pipeline not subject to FERC jurisdiction.
Although the FERC has not made any formal determinations with respect to any of our gathering facilities, CNX believes that the natural gas pipelines in our midstream systems meet the traditional tests the FERC has used to establish that a natural gas pipeline is a gathering pipeline not subject to the FERC jurisdiction.
Further, CNX Midstream Partners LP’s (CNXM) existing $600 million revolving credit facility and CNXM’s $400 million of 4.75% Senior Notes, neither of which are guaranteed by CNX, subjects CNXM to similar financial and/or other restrictive covenants and other restrictions.
Further, CNX Midstream Partners LP’s (CNXM) existing $600 million revolving credit facility and $400 million of 4.75% Senior Notes, neither of which are guaranteed by CNX, subjects CNXM to similar financial and/or other restrictive covenants and other restrictions.
Actual future net cash flows from our proved and unproved natural gas and natural gas liquid properties may be affected by factors such as: • geological conditions; • our acreage position, and our ability to acquire additional acreage, including purchases and third-party swaps to develop our position efficiently; • changes in governmental regulations and taxation; • the amount and timing of actual production; • future prices and our hedging position; • future operating costs; • operational risks and results; and • capital costs of drilling, completion and gathering assets.
Actual future net cash flows from our proved and unproved oil and natural gas properties may be affected by factors such as: • geological conditions; • our acreage position, and our ability to acquire additional acreage, including purchases and third-party swaps to develop our position efficiently; • changes in governmental regulations and taxation; • the amount and timing of actual production; • future prices and our hedging position; • future operating costs; • operational risks and results; and • capital costs of drilling, completion and gathering assets.
Additionally, our future tax liability may be greater than expected if our net operating loss (“NOL”) carryforwards are limited, CNX does not generate expected deductions, or tax authorities challenge certain of our tax positions.
Our future tax liability may be greater than expected if our net operating loss (“NOL”) carryforwards are limited, CNX does not generate expected deductions, or tax authorities challenge certain of our tax positions.
Moreover, governmental authorities exercise considerable discretion in the timing and scope of permit issuance and the public may engage in the permitting process, including through intervention in the administrative process in the courts.
Moreover, governmental authorities exercise considerable discretion in the timing and scope of permit issuance and the public may engage in the permitting process, including through intervention in the administrative process or in the courts.
Our future success depends to a large extent on the services of our key employees. The loss of one or more of these individuals could materially adversely affect our business. Furthermore, competition for experienced technical and other professional personnel, as well as diverse candidates which bring with them valuable perspectives and experiences, remains strong.
Our future success depends to a large extent on the services of our and our service providers’ key employees. The loss of one or more of these individuals could materially adversely affect our business. Furthermore, competition for experienced technical and other professional personnel, as well as diverse candidates which bring with them valuable perspectives and experiences, remains strong.
Cyber-attacks continue to evolve in frequency and complexity. While no industry is immune, Industrial Networks have come under increased targeted attacks recently (examples, Colonial Pipeline and JBS Foods Group). This has led to increased scrutiny by Cyber Insurance Carriers. As a result, securing a policy with sufficient protection has become more challenging.
Cyber-attacks continue to evolve in frequency and complexity. While no industry is immune, industrial networks have come under increased targeted attacks recently (such as, Colonial Pipeline and JBS Foods Group). This has led to increased scrutiny by cyber insurance carriers. As a result, securing a policy with sufficient protection has become more challenging.
Any of these outcomes could have a material adverse effect on our business, operations, financial results and liquidity. Increasing attention to environmental, social and governance (ESG) matters may adversely impact our business. Organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters.
Any of these disruptions or outcomes could have a material adverse effect on our business, operations, financial results and liquidity. Increasing attention to environmental, social and governance (ESG) matters may adversely impact our business. Organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters.
Pennsylvania, under Act 127 of 2011, authorized Public Utility Commission (PUC) oversight of Class I gathering lines, and required standards and fees for Class II and Class III pipelines. The State of Ohio also moved to regulate natural gas gathering lines in a similar manner pursuant to Ohio Senate Bill 315 (SB315).
Pennsylvania, under Act 127 of 2011, authorized Public Utility Commission (PUC) to oversee Class I gathering lines, and required standards and fees for Class II and Class III pipelines. The State of Ohio also moved to regulate natural gas gathering lines in a similar manner pursuant to Ohio Senate Bill 315 (SB315).
The proposed tax rates have varied but would represent a greater financial burden on the economics of the wells we drill in these states. Such changes in the rates of existing production taxes could adversely impact our earnings, cash flows and financial position.
The proposed tax rates have varied but would represent a greater financial burden on the economics of the wells we drill in these states. Such changes in the rates of existing production taxes could adversely impact our earnings, capital allocation, cash flows and financial position.
CNX may incur significant costs and liabilities as a result of pipeline operations and/or increases in the regulation of natural gas pipelines and gathering facilities. The Pipeline and Hazardous Materials Safety Administration (PHMSA) has adopted safety, transportation and operational regulations applicable to pipeline operators.
CNX may incur significant costs and liabilities as a result of pipeline operations and/or increases in the regulation of natural gas pipelines and midstream facilities. The Pipeline and Hazardous Materials Safety Administration (PHMSA) has adopted safety, transportation and operational regulations applicable to pipeline operators.
In addition, certain cyber 39 incidents, such as surveillance, may remain undetected for an extended period.
In addition, certain cyber incidents, such as surveillance, may remain undetected for an extended period.
Our insurance may not protect us against such occurrences. 40 ITEM 1B. Unresolved Staff Comments None.
Our insurance may not protect us against such occurrences. ITEM 1B. Unresolved Staff Comments None.
For example, a significant amount of our proved oil and natural gas reserves are identified as proved undeveloped reserves and may be more susceptible to positive and negative changes in reserve estimates than our proved developed reserves.
For example, a significant amount of our natural gas reserves are identified as proved undeveloped reserves and may be more susceptible to positive or negative changes in reserve estimates than our proved developed reserves.
Economic conditions in a number of industries in which our customers operate, such as electric power generation, have experienced substantial deterioration in the past, resulting in reduced demand for natural gas.
Economic conditions in a number of industries in which our customers and their customers operate, such as electric power generation, have experienced substantial deterioration in the past, resulting in reduced demand for natural gas.
Financing, Investment and Indebtedness Risks Our current long-term debt obligations, and the terms of the agreements that govern that debt, including debt of our subsidiaries, and the risks associated therewith, could adversely affect our business, financial condition, liquidity and results of operations.
Financing, Investment and Indebtedness Risks Our current long-term debt obligations, and the terms of the agreements that govern that debt and the risks associated therewith, could adversely affect our business, financial condition, liquidity and results of operations.
In particular, the U.S. natural gas industry faces oversupply due to the success of domestic shale development, associated natural gas produced by oil producers, and other North American shale gas plays that impact domestic pricing. This oversupply of natural gas, beginning in 2012, has resulted in depressed domestic prices for most of that period.
In particular, the U.S. natural gas industry faces oversupply due to the success of domestic Shale development, associated natural gas produced by oil producers, other North American Shale gas plays, and an outpacing of demand that impact domestic pricing. This oversupply of natural gas, beginning in 2012, has resulted in depressed domestic prices for most of that period.
The passage of future legislation or any other changes in U.S. federal or state income tax laws could eliminate or postpone certain tax deductions that are currently available with respect to natural gas exploration and development. Any such changes could negatively affect our financial condition and results of operations.
Any passage of future legislation or any other changes in U.S. federal or state income tax laws that would eliminate or postpone certain tax deductions that are currently available with respect to natural gas exploration and development could negatively affect our financial condition and results of operations.
Moreover, economic or other circumstances may change from those contemplated by our business plan, and our failure to recognize or respond to those changes may limit our ability to achieve our objectives. CNX does not completely control the timing of divestitures that CNX plans to engage in, and they may not provide anticipated benefits.
Moreover, economic or other circumstances may change from those contemplated by our 36 business plan, and our failure to recognize or respond to those changes may limit our ability to achieve our objectives. CNX does not completely control the timing of any divestitures that CNX may engage in, and they may not provide anticipated benefits.
Thereafter in September 2018, the EPA proposed revisions to the 2016 New Source Performance Standards for the oil and natural gas industry. Additional revisions were proposed in August 2019 and August 2020.
Thereafter in September 2018, the EPA proposed revisions to the 2016 New Source Performance Standards for the oil and natural gas industry. Additional revisions were proposed in August 2019, August 2020 and November 2021.
Any such regulation that may be implemented, as well as uncertainty concerning 33 such regulation and public policy pressures, could adversely impact the market for natural gas, as well as for our securities ” ( See Note 20 – Commitments and Contingent Liabilities in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for further discussion of pending legal proceedings).
Any such regulation that may be implemented, as well as uncertainty concerning such regulation and public policy pressures, could adversely impact the market for natural gas, as well as for our securities” (See Note 20 – Commitments and Contingent Liabilities in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for further discussion of pending legal proceedings).
Any significant variance from these assumptions to actual figures could greatly affect our estimates of our natural gas and natural gas liquid reserves, the economically recoverable quantities of natural gas and natural gas liquids attributable to any particular group of properties, the classifications of natural gas reserves based on risk of recovery and estimates of the future net cash flows.
Any significant variance from these assumptions to actual figures could greatly affect our estimates of our natural gas reserves, the economically recoverable quantities of oil and natural gas attributable to any particular group of properties, the classifications of natural gas reserves based on risk of recovery and estimates of the future net cash flows.
The regulatory focus has resulted in varying regulatory requirements between governmental administrations. The EPA, in 2013, and under the Climate Action Plan, elected to regulate GHGs under the Clean Air Act (“CAA”) to limit emissions of CO2 from natural gas-fired power plants.
The regulatory focus has resulted in varying regulatory requirements between governmental administrations. The EPA, in 2013, and under the Climate Action Plan, elected to regulate GHGs under the Clean Air Act (“CAA”) to limit emissions of CO 2 from natural gas-fired power plants.
For example, Pennsylvania has taken steps to bring Pennsylvania into an eleven -state consortium of Northeastern and Mid-Atlantic States - the Regional Greenhouse Gas Initiative (RGGI) -- that sets price and declining limits on CO2 emissions from power plants.
For example, Pennsylvania has taken steps to bring Pennsylvania into an eleven -state consortium of Northeastern and Mid-Atlantic States - the Regional Greenhouse Gas Initiative (RGGI) -- that sets price and declining limits on CO 2 emissions from power plants.
As of December 31, 2022, CNX has U.S. federal and state NOL carryforwards of $0.9 billion and $1.8 billion, respectively, some of which expire at various dates from 2023 to 2041 while others have no expiration date. CNX expects to be able to utilize these NOL carryforwards and generate deductions to offset our future taxable income.
As of December 31, 2023, CNX has U.S. federal and state NOL carryforwards of $0.8 billion and $1.6 billion, respectively, some of which expire at various dates from 2024 to 2041 while others have no expiration date. CNX expects to be able to utilize these NOL carryforwards and generate deductions to offset our future taxable income.
As of December 31, 2022, CNX’s total long-term indebtedness was approximately $2.2 billion, excluding unamortized debt issuance costs, of which approximately (i) $500 million was under our 7.375% Senior Notes due 2031 less $6 million of unamortized discount, (ii) $500 million of 6.00% Senior Notes due 2029, (iii) $400 million of 4.75% Senior Notes due 2030 issued by our midstream business, less $4 million of unamortized bond discount (CNX is not a guarantor of these notes), (iv) $350 million of 7.25% Senior Notes due 2027 plus $2 million of unamortized bond premium, (v) $331 million of 2.25% Convertible Senior Notes due 2026 less $7 million of unamortized discount and issuance cost, (vi) $154 million in outstanding borrowings under our midstream revolver (CNX is not a guarantor of this revolving credit facility), and (vii) no borrowings under our senior secured credit facility (the “Credit Facility”).
As of December 31, 2023, CNX’s total long-term indebtedness was approximately $2.2 billion, excluding unamortized debt issuance costs, of which approximately (i) $500 million was under our 7.375% Senior Notes due 2031 less $5 million of unamortized discount, (ii) $500 million of 6.00% Senior Notes due 2029, (iii) $400 million of 4.75% Senior Notes due 2030 issued by our midstream business, less $4 million of unamortized bond discount (CNX is not a guarantor of these notes), (iv) $350 million of 7.25% Senior Notes due 2027 plus $2 million of unamortized bond premium, (v) $331 million of 2.25% Convertible Senior Notes due 2026 less $5 million of unamortized discount and issuance cost, (vi) $105 million in outstanding borrowings under our midstream revolver (CNX is not a guarantor of this revolving credit facility), and (vii) $52 million in outstanding borrowings under our senior secured credit facility (the “Credit Facility”).
This waste can be generated from various aspects of our operations, including from drilling fluids, completions activities and normal production over the life of the well, and are associated with all types of natural gas wells. A significant portion of this water can be recycled for use in other hydraulic fracturing operations.
This produced water or wastewater can be generated from various aspects of our operations, including from drilling fluids, completions activities and normal production over the life of the well, and are associated with all types of natural gas wells. A significant portion of this water can be recycled for use in other hydraulic fracturing operations.
In addition, the continuing repercussions of the coronavirus (COVID-19) pandemic, and the governments’ response thereto, has materially and adversely impacted many businesses, industries and economies.
In addition, the repercussions of the coronavirus (COVID-19) pandemic, and the governments’ response thereto, materially and adversely impacted many businesses, industries and economies.
The issue of global climate change continues to attract considerable public and scientific attention, with underlying concern about the impacts of human activity, especially the emissions of greenhouse gases (“GHGs”) such as carbon dioxide (“CO2”) and methane into the environment and is increasingly the subject of civil litigation and regulatory focus.
The issue of global climate change continues to attract considerable public and scientific attention, with underlying concern about the impacts of human activity, especially the emissions of greenhouse gases (“GHGs”) such as carbon dioxide (“CO 2 ”) and methane into the environment and is increasingly the subject of civil litigation and regulatory focus.
CNX may not be able to consummate those sales or to obtain the proceeds which CNX could realize from them, and those proceeds may not be adequate to meet any debt service obligations then due. The capped call transactions may affect the value of the Convertible Notes and our common stock.
CNX may not be able to consummate those sales or to obtain the proceeds which CNX could realize from them, and those proceeds may not be adequate to meet any debt service obligations then due. The capped call transactions may affect the value of the Convertible Notes and our common stock, and subject CNX to counterparty performance risk.
Deliberate attacks on our assets, or security breaches in our systems or infrastructure, the systems or infrastructure of third-parties or off-premise service providers could lead to corruption or loss of our proprietary data and potentially sensitive data, delays in production or delivery, difficulty in completing and settling transactions, challenges in maintaining our books and records, environmental damage, communication interruptions, damage to our reputation, other operational disruptions and third-party liability, including the following: • a cyber-incident impacting one of our vendors or service providers could result in supply chain disruptions, loss or corruption of our information or other negative consequences, any of which could delay or halt development of additional infrastructure, effectively delaying the start of cash flows from the project; • a cyber-incident related to our facilities may result in equipment damage or failure; • a cyber-incident impacting a communications network or power grid could cause operational disruption resulting in impact to our production; • a deliberate corruption of our financial or operational data could result in events of non-compliance which could lead to regulatory fines or penalties; and • business interruptions could result in expensive remediation efforts, distraction of management, damage to our reputation, or a negative impact on the price of our stock.
Deliberate attacks on our assets, or security breaches in our systems or infrastructure, the systems or infrastructure of third-parties or off-premise service providers could lead to corruption or loss of our proprietary data and potentially sensitive data, delays in production or delivery, difficulty in completing and settling transactions, challenges in maintaining our books and records, environmental damage, communication interruptions, damage to our reputation, other operational disruptions and third-party liability, including the following: • a cyber-incident impacting one of our vendors or service providers could result in supply chain disruptions, loss or corruption of our information or other negative consequences, any of which could delay or halt development of additional infrastructure, effectively delaying the start of cash flows from the project; • a cyber-incident related to our facilities may result in equipment damage or failure; • a cyber-incident impacting a communications network or power grid could cause operational disruption resulting in impact to our production; 38 • A cyber-incident affecting an interstate pipeline company could result in an inability to deliver our natural gas to certain markets; • a deliberate corruption of our financial or operational data could result in events of non-compliance which could lead to regulatory fines or penalties; and • business interruptions could result in expensive remediation efforts, distraction of management, damage to our reputation, or a negative impact on the price of our stock.
Although the Company is able to hedge natural gas benchmarks and local basis differentials, it generally does not hedge its relatively minor quantities of NGL, condensate and oil. In addition, similar to natural gas, increased drilling activity by third parties in formations containing NGLs may led to a decline in the price CNX receives for our NGLs.
Although the Company is able to hedge natural gas benchmarks and local basis differentials, it generally does not hedge its relatively minor quantities of NGLs. In addition, similar to natural gas, increased drilling activity by third parties in formations containing NGLs may lead to a decline in the price CNX receives for our NGLs.
In addition, spurred by increasing concerns regarding climate change, the oil and gas industry face growing demand for corporate transparency and a demonstrated commitment to sustainability goals.
In addition, spurred by increasing concerns regarding climate change, the oil and natural gas industry faces growing demand for corporate transparency and a demonstrated commitment to sustainability goals.
Any disruption in those means of transportation could have a further detrimental impact on the price CNX receives for our NGLs. Our results of operations may be adversely affected by a depressed level of, or downward fluctuations in, NGLs, condensate and oil prices.
Any disruption in those means of transportation could have a further detrimental impact on the price CNX receives for our NGLs. Our results of operations may be adversely affected by a depressed level of, or downward fluctuations in the price for NGLs.
Also, we make certain assumptions regarding natural gas and liquid hydrocarbon prices, production levels and operating and development costs that may prove to be incorrect.
Also, we make certain assumptions regarding natural gas and liquid hydrocarbon prices, production levels, production and ad valorem taxes and operating and development costs that may prove to be incorrect.
An extended decline in the prices CNX receives for our natural gas and NGLs will adversely affect our business, operating results, financial condition and cash flows. Our financial results are significantly affected by the prices we receive for our natural gas and NGLs.
An extended decline in the prices CNX receives for our natural gas and NGLs will adversely affect our business, operating results, financial condition and cash flows. Our financial results are significantly affected by the prices we receive for our natural gas and NGLs (which includes oil and condensate).
If CNX chooses not to engage in or otherwise reduce our future use of hedging arrangements or are unable to engage in hedging arrangements due to lack of acceptable counterparties, CNX may be more adversely affected by changes in natural gas prices than our competitors 24 who engage in hedging arrangements to a greater extent than CNX does.
If CNX chooses not to engage in or otherwise reduce our future use of hedging arrangements or is unable to engage in hedging arrangements due to lack of acceptable counterparties, CNX may be more adversely affected by declines in natural gas prices than our competitors who engage in hedging arrangements to a greater extent than CNX does.
Accordingly, the Biden administration is taking a different direction than the Trump administration regarding these regulatory actions. For example, the Biden administration re-entered the United States in the Paris Climate Accord, and the EPA adopted a new Climate Adaptation Action Plan in October of 2021.
Circuit on the last day of the Trump administration in January 2021. Accordingly, the Biden administration is taking a different direction than the Trump administration regarding these regulatory actions. For example, the Biden administration re-entered the United States in the Paris Climate Accord, and the EPA adopted a new Climate Adaptation Action Plan in October of 2021.
Conversion of the Convertible Notes may dilute the ownership interest of existing stockholders or may otherwise depress the price of our common stock. 36 The conversion of some or all of the Convertible Notes will dilute the ownership interests of existing stockholders to the extent CNX delivers shares of our common stock upon conversion of any of the Convertible Notes and the potential dilution is not reduced or offset by the capped call transactions CNX entered into.
The conversion of some or all of the Convertible Notes will dilute the ownership interests of existing stockholders to the extent CNX delivers shares of our common stock upon conversion of any of the Convertible Notes and the potential dilution is not reduced or offset by the capped call transactions CNX entered into.
Although CNX owns midstream facilities, we also use third party facilities to gather, process and transport our natural gas to market.
Although CNX owns midstream facilities, we also depend on third party facilities to gather, process and transport our natural gas to market.
To the extent our customers are not contractually obligated to, and determine not to, develop their properties in the areas covered by these acreage dedications, or otherwise sell, exchange, farm-out or otherwise dispose of all of, or an undivided interest in, the development of the dedicated acreage, the resulting decrease in the development of reserves by our midstream customers could result in reduced volumes serviced by us and a commensurate decline in revenues and cash flows.
If our customers fail to develop their properties in the areas covered by these acreage dedications, or otherwise sell, exchange, farm-out or otherwise dispose of all of, or an undivided interest in, the development of the dedicated acreage, the resulting decrease in the development of reserves by our midstream customers could result in reduced volumes serviced by us and a commensurate decline in revenues and cash flows.
If natural gas prices decrease or operational efforts are unsuccessful, CNX may be required to record write-downs of our proved natural gas properties.
If natural gas prices decrease or operational efforts are unsuccessful, CNX may be required to record write-downs of the quantity and value of our proved natural gas properties.
The capped call transactions are expected generally to reduce the potential dilution to our common stock upon any conversion of the Convertible Notes and/or offset any potential cash payments CNX is required to make in excess of the principal amount of converted Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap.
Concurrently with the pricing of the Convertible Notes, CNX entered into capped call transactions with certain financial institutions, which are expected generally to reduce the potential dilution to our common stock upon any conversion of the Convertible Notes and/or offset any potential cash payments CNX is required to make in excess of the principal amount of converted Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap.
Our senior secured Credit Facility and the indentures governing our 7.25% Senior Notes due 2027, 6.00% Senior Notes due 2029 and 7.375% Senior Notes due 2031 limit the incurrence of additional indebtedness unless specified tests or exceptions are met, subject our operations to compliance with certain financial covenants on a quarterly basis, and impose a number of restrictions upon us, such as restrictions on granting liens on our assets, making investments, paying dividends, stock repurchases, selling assets and engaging in acquisitions.
Our senior secured revolving credit facility and the indentures governing certain of our Senior Notes limit the incurrence of additional indebtedness unless specified tests or exceptions are met, subject our operations to compliance with certain financial covenants on a quarterly basis, and impose a number of restrictions upon us, such as restrictions on granting liens on our assets, making investments, paying dividends, stock repurchases, selling assets and engaging in acquisitions.
To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks set forth in this Risk Factors section of this Form 10-K, such as those relating to our financial performance and debt obligations.
To the extent events were to adversely affect our business and financial results, it may also have the effect of heightening many of the other risks set forth in this Risk Factors section of this Form 10-K, such as those relating to our financial performance and debt obligations.
For further detail regarding the risks to our business resulting from COVID-19, see the Risk Factor titled “Events beyond our control, including a global or domestic health crisis, may result in unexpected adverse operating and financial results.” Our hedging activities may prevent us from benefiting from price increases and may expose us to other risks.
For further detail regarding the risks to our business resulting from COVID-19 or a similar or separate pandemic, see the Risk Factor titled “ Events beyond our control, including a global or domestic health crisis or global instability and actual and threatened geopolitical conflict, may result in unexpected adverse operating and financial results. ” Our hedging activities may prevent us from benefiting from price increases and may expose us to other risks.
Our producing properties are geographically concentrated in the Appalachian Basin, which exacerbates the impact of regional supply and demand factors on our business, including the pricing of our natural gas.
CNX expects continued volatility of natural gas prices in the future. Our producing properties are geographically concentrated in the Appalachian Basin, which exacerbates the impact of regional supply and demand factors on our business, including the pricing of our natural gas.
Events beyond our control, including a global or domestic health crisis, may result in unexpected adverse operating and financial results .
Events beyond our control, including a global or domestic health crisis or global instability and actual and threatened geopolitical conflict, may result in unexpected adverse operating and financial results .
These financial institutions or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions following the pricing of the Convertible Notes and prior to the maturity of the Convertible Notes (and are likely to do so during any observation period related to a conversion of Convertible Notes).
In connection with establishing their initial hedges of the capped call transactions, these financial institutions or their respective affiliates purchased shares of our common stock and/or entered into various derivative transactions with respect to our common stock, and they may modify their hedge positions by entering into or unwinding various derivatives and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Convertible Notes (and are likely to do so during any observation period related to a conversion of Convertible Notes).
Additionally, the COVID-19 outbreak has significantly impacted economic activity and markets around the world, and COVID-19 or another similar outbreak could negatively impact our business in numerous ways, including, but not limited to, the following: • our revenue may be reduced if the outbreak results in an economic downturn or recession, to the extent it leads to a prolonged decrease in the demand for natural gas and liquefied natural gas (LNG) and, to a lesser extent, NGLs and oil; and 25 • the operations of our midstream service providers, on whom CNX relies for the transmission, gathering and processing of a significant portion of our produced natural gas, NGLs, oil and condensate, may be disrupted or suspended in response to containing the outbreak, and/or the difficult economic environment may lead to the bankruptcy or closing of the facilities and infrastructure of our midstream service providers, which may result in substantial discounts in the prices CNX receives for our produced natural gas, NGLs, oil and condensate or result in the shut-in of producing wells or the delay or discontinuance of development plans for our properties.
As the pandemic and global instability has significantly impacted economic activity and markets around the world, similar pandemics and conflicts could negatively impact our business in numerous ways, including, but not limited to, the following: • our revenue may be reduced if there is a resulting economic downturn or recession, to the extent it leads to a prolonged decrease in the demand for or disruption in the global supply of natural gas and liquefied natural gas (LNG) and, to a lesser extent, NGLs and oil; and • the operations of our midstream service providers, on whom CNX relies for the transmission, gathering and processing of a significant portion of our produced natural gas, NGLs, oil and condensate, and our other service providers and suppliers may be disrupted or suspended in response to containing the outbreak, geopolitical instability and/or the difficult economic environment may lead to the bankruptcy or closing of service providers, facilities and infrastructure or delays or disruptions in our supply chain, which may result in substantial discounts in the prices CNX receives for our produced natural gas, NGLs, oil and condensate or result in the shut-in of producing wells or the delay or discontinuance of development plans for our properties.
CNX currently has a repurchase program in place authorized by our board of directors, which is not subject to an expiration date, and for which $430 million remains available for repurchases as of January 17, 2023. The repurchase program does not require us to acquire any specific number of shares.
CNX currently has a repurchase program in place authorized by our board of directors, which is not subject to an expiration date, and for which $1.1 billion remains available for repurchases as of February 6, 2024. The repurchase program does not require us to acquire any specific number of shares.
On August 20, 2018, the EPA issued the proposed “Affordable Clean Energy Rule.” On June 19, 2019, the EPA issued the final Affordable Clean Energy Rule, replacing the Clean Power Plan. The Affordable Clean Energy Rule was vacated by the United States Court of Appeals for the D.C. Circuit on the last day of the Trump administration in January 2021.
On August 20, 2018, the EPA issued the proposed “Affordable Clean Energy Rule.” On June 19, 2019, the EPA issued the final Affordable Clean Energy Rule, replacing the Clean Power Plan. The 29 Affordable Clean Energy Rule was vacated by the United States Court of Appeals for the D.C.
If natural gas prices decline by $0.10 per Mcf, then the pre-tax present value using a 10% discount rate of our proved natural gas reserves as of December 31, 2022 would decrease from $14.5 billion to $14.3 billion.
If natural gas prices decline by $0.10 per MMBtu, then the pre-tax present value using a 10% discount rate of our proved natural gas reserves as of December 31, 2023 would decrease from $4.2 billion to $4.0 billion.
This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the Convertible Notes. The potential effect, if any, of these transactions and activities on the price of our common stock or the Convertible Notes will depend in part on market conditions and cannot be ascertained at this time.
The potential effect, if any, of these transactions and activities on the price of our common stock or the Convertible Notes will depend in part on market conditions and cannot be ascertained at this time.
CNX may not be able to develop, find or acquire additional economically recoverable reserves to replace our current and future production at acceptable costs.
CNX may not be able to develop, find or acquire additional economically recoverable reserves to replace our current and future production at acceptable costs, which would negatively impact our future cash flows and income.
In December 2021, the Pennsylvania Attorney General approved a proposed regulation which would allow Pennsylvania to join RGGI; however, the Pennsylvania 31 General Assembly issued a concurrent regulatory review resolution process disapproving the proposed regulation. The regulation is currently subject to challenges pending in Pennsylvania appellate courts.
In December 2021, the Pennsylvania Attorney General approved a proposed regulation which would allow Pennsylvania to join RGGI; however, the Pennsylvania General Assembly issued a concurrent regulatory review resolution process disapproving the proposed regulation.
Natural gas, NGLs, oil and condensate prices are very volatile and can fluctuate widely based upon supply from energy producers relative to demand for these products and other factors beyond our control.
Natural gas and NGL pricing is very volatile and can fluctuate widely based upon supply from energy producers relative to demand for these products and other factors beyond our control.
The oil and natural gas industry has become increasingly dependent upon digital technologies, including information systems, infrastructure and cloud applications and services, to operate our businesses, process and record financial and operating data, communicate with our employees and business partners, analyze seismic and drilling information, estimate quantities of natural gas reserves, monitor and control our field equipment and assets and perform other activities related to our businesses.
The natural gas industry, and our business partners have become increasingly dependent upon digital technologies, including information systems, infrastructure and cloud applications and services, and third-party risk management and oversight to operate our businesses, process and record financial and operating data, market our natural gas, arrange transportation, communicate with our employees and business partners, analyze geologic and operational information, estimate quantities of natural gas reserves, monitor and control our field equipment and assets and perform other activities related to our businesses.
If CNX cannot retain our current personnel or attract additional experienced personnel, our ability to compete could be adversely affected. Also, the loss of experienced personnel could lead to a loss of technical expertise. Terrorist activities could materially adversely affect our business and results of operations.
If CNX and our service providers cannot retain our current personnel or attract additional experienced personnel, our ability to compete could be adversely affected. Also, the loss of experienced personnel could lead to a loss of technical expertise.
In addition, accelerated levels of inflation may lead to price increases beyond CNX’s control that could lead to CNX incurring increased costs for contractors and/or materials. For example, fuel pricing and labor shortages have led to increased ground transportation costs.
Weather may also play a role with respect to the relative availability of certain materials. 27 In addition, accelerated levels of inflation may lead to price increases beyond CNX’s control that could lead to CNX incurring increased costs for contractors and/or materials. For example, fuel pricing and labor shortages have led to increased ground transportation costs.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−1 removed3 unchanged
Biggest changeThe Company's Credit Facility currently limits CNX's ability to pay dividends in excess of an annual rate of $0.10 per share when the Company's net leverage ratio exceeds 3.00 to 1.00 and is subject to availability under the Credit Facility of at least 20% of the aggregate commitments and there being no borrowing base deficiency.
Biggest changeAny determination to pay dividends in the future will depend upon, among other things, general business conditions, CNX’s financial results, contractual and legal restrictions regarding the payment of dividends by CNX, planned investments by CNX, and other factors as the Board of Directors deems relevant. 41 The Company's Credit Facility currently limits CNX's ability to pay dividends in excess of an annual rate of $0.10 per share when the Company's net leverage ratio exceeds 3.00 to 1.00 and is subject to availability under the Credit Facility of at least 20% of the aggregate commitments and there being no borrowing base deficiency.
(2) Shares repurchased as part of the Company's current $1,900 million share repurchase program authorized by the Board of Directors, which is not subject to an expiration date. See Note 5 – Stock Repurchase in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for additional information. See Part III. Item 12.
(2) Shares repurchased as part of the Company's current $2,900 million share repurchase program authorized by the Board of Directors, which is not subject to an expiration date. See Note 5 – Stock Repurchase in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for additional information. See Part III. Item 12.
The Credit Facility does not permit 42 such dividend payments when an event of default has occurred and is continuing. The indentures to the 7.25% Senior Notes due March 2027, the 6.00% Senior Notes due January 2029, and the 7.375% Senior Notes due January 2031 limit dividends to $0.50 per share annually unless several conditions are met.
The Credit Facility does not permit such dividend payments when an event of default has occurred and is continuing. The indentures to the 7.25% Senior Notes due March 2027, the 6.00% Senior Notes due January 2029, and the 7.375% Senior Notes due January 2031 limit dividends to $0.50 per share annually unless several conditions are met.
The current peer group is comprised of CNX, Antero Resources Corporation, Chesapeake Energy Corporation, EQT Corporation, Gulfport Energy Corporation, Range Resources Corporation and Southwestern Energy Co. The graph assumes that the value of the investment in CNX common stock and each index was $100 at December 31, 2017.
The current peer group is comprised of CNX, Antero Resources Corporation, Chesapeake Energy Corporation, EQT Corporation, Gulfport Energy Corporation, Range Resources Corporation and Southwestern Energy Co. The graph assumes that the value of the investment in CNX common stock and each index was $100 at December 31, 2018.
These conditions include no defaults, ability to incur additional debt and other payment limitations under the indentures. There were no defaults under the Company’s Credit Facility or Notes in the year ended December 31, 2022.
These conditions include no defaults, ability to incur additional debt and other payment limitations under the indentures. There were no defaults under the Company’s Credit Facility or Notes in the year ended December 31, 2023.
ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company's common stock is listed on the New York Stock Exchange under the symbol “CNX”. As of December 31, 2022, there were 90 holders of record of our common stock.
ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company's common stock is listed on the New York Stock Exchange under the symbol “CNX”. As of December 31, 2023, there were 84 holders of record of our common stock.
The graph also assumes that all dividends were reinvested and that the investments were held through December 31, 2022. 2017 2018 2019 2020 2021 2022 CNX Resources Corporation 100.0 78.1 60.5 73.8 94.0 115.2 Peer Group 100.0 47.7 25.0 27.4 61.3 91.5 S&P 500 Stock Index 100.0 93.8 120.9 140.6 178.4 143.8 Cumulative Total Shareholder Return Among CNX Resources Corporation, Peer Group and S&P 500 Stock Index The above information is being furnished pursuant to Regulation S-K, Item 201(e) (Performance Graph).
The graph also assumes that all dividends were reinvested and that the investments were held through December 31, 2023. 2018 2019 2020 2021 2022 2023 CNX Resources Corporation 100.0 77.5 94.6 120.4 147.4 175.2 Peer Group 100.0 52.5 57.4 128.4 191.9 197.4 S&P 500 Stock Index 100.0 128.9 149.9 190.2 153.3 190.4 Cumulative Total Shareholder Return Among CNX Resources Corporation, Peer Group and S&P 500 Stock Index The above information is being furnished pursuant to Regulation S-K, Item 201(e) (Performance Graph).
Unregistered Sales of Equity Securities and Use of Proceeds The following table sets forth repurchases of our common stock during the three months ended December 31, 2022: ISSUER PURCHASES OF EQUITY SECURITIES 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 (2) Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (000's omitted) October 1, 2022- October 31, 2022 4,201,946 $ 17.37 4,200,922 $ 583,805 November 1, 2022- November 30, 2022 3,353,924 $ 17.62 3,348,642 $ 524,807 December 1, 2022- December 31, 2022 4,720,219 $ 16.54 4,715,797 $ 446,808 Total 12,276,089 12,265,361 (1) Includes shares withheld from employees to satisfy minimum tax withholding obligations associated with the vesting of restricted stock during the period.
Unregistered Sales of Equity Securities and Use of Proceeds The following table sets forth repurchases of our common stock during the three months ended December 31, 2023: ISSUER PURCHASES OF EQUITY SECURITIES 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 (2) Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (000's omitted) October 1, 2023- October 31, 2023 2,078,116 $22.33 2,077,174 $1,194,118 November 1, 2023- November 30, 2023 1,553,205 $21.25 1,553,205 $1,161,119 December 1, 2023- December 31, 2023 1,643,117 $20.08 1,643,117 $1,128,119 Total 5,274,438 5,273,496 (1) Includes shares withheld from employees to satisfy minimum tax withholding obligations associated with the vesting of restricted stock during the period.
Removed
Any determination to pay dividends in the future will depend upon, among other things, general business conditions, CNX’s financial results, contractual and legal restrictions regarding the payment of dividends by CNX, planned investments by CNX, and other factors as the Board of Directors deems relevant.

Item 7. Management's Discussion & Analysis

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

97 edited+26 added−19 removed82 unchanged
Biggest changeThese increases were offset, in part, by the impact of the change in the realized loss on commodity derivative instruments related to the Company's hedging program and the 10.0 Bcfe decrease in sales volumes. 47 SEGMENT ANALYSIS for the year ended December 31, 2022 compared to the year ended December 31, 2021: For the Year Ended Difference to Year Ended December 31, 2022 December 31, 2021 (in millions) Shale CBM Other Total Shale CBM Other Total Natural Gas, NGLs and Oil Revenue $ 3,335 $ 315 $ 2 $ 3,652 $ 1,346 $ 121 $ 1 $ 1,468 Loss on Commodity Derivative Instruments (1,673) (139) (852) (2,664) (1,181) (92) 242 (1,031) Purchased Gas Revenue — — 186 186 — — 86 86 Other Revenue and Operating Income 69 — 18 87 (12) — (7) (19) Total Revenue and Other Operating Income (Loss) 1,731 176 (646) 1,261 153 29 322 504 Lease Operating Expense 50 17 — 67 16 4 1 21 Production, Ad Valorem, and Other Fees 33 12 — 45 6 5 — 11 Transportation, Gathering and Compression 319 49 2 370 16 9 1 26 Depreciation, Depletion and Amortization 389 54 18 461 (51) (4) 1 (54) Exploration and Production Related Other Costs — — 8 8 — — (13) (13) Purchased Gas Costs — — 185 185 — — 91 91 Selling, General and Administrative Costs — — 122 122 — — 9 9 Other Operating Expense — — 63 63 — — (5) (5) Total Operating Costs and Expenses 791 132 398 1,321 (13) 14 85 86 Other Expense — — 10 10 — — (6) (6) Gain on Asset Sales and Abandonments, net — — (9) (9) — — 33 33 Loss on Debt Extinguishment — — 23 23 — — (11) (11) Interest Expense — — 128 128 — — (23) (23) Total Other Expenses — — 152 152 — — (7) (7) Total Costs and Expenses 791 132 550 1,473 (13) 14 78 79 Earnings (Loss) Before Income Tax $ 940 $ 44 $ (1,196) $ (212) $ 166 $ 15 $ 244 $ 425 48 SHALE SEGMENT The Shale segment had earnings before income tax of $940 million for the year ended December 31, 2022 compared to earnings before income tax of $774 million for the year ended December 31, 2021.
Biggest changeThese decreases were offset, in-part, by the impact of the change in the gain (loss) on commodity derivative instruments - cash settlement related to the Company's hedging program. 47 SEGMENT ANALYSIS for the year ended December 31, 2023 compared to the year ended December 31, 2022: For the Year Ended Difference to Year Ended December 31, 2023 December 31, 2022 (in millions) Shale CBM Other Total Shale CBM Other Total Natural Gas, NGLs and Oil Revenue $ 1,170 $ 131 $ 1 $ 1,302 $ (2,165) $ (184) $ (1) $ (2,350) Gain on Commodity Derivative Instruments 151 12 1,765 1,928 1,824 151 2,617 4,592 Purchased Gas Revenue — — 75 75 — — (111) (111) Other Revenue and Operating Income 67 — 63 130 (2) — 45 43 Total Revenue and Other Operating Income 1,388 143 1,904 3,435 (343) (33) 2,550 2,174 Lease Operating Expense 44 19 — 63 (6) 2 — (4) Production, Ad Valorem, and Other Fees 21 7 — 28 (12) (5) — (17) Transportation, Gathering and Compression 316 66 — 382 (3) 17 (2) 12 Depreciation, Depletion and Amortization 365 50 19 434 (24) (4) 1 (27) Exploration and Production Related Other Costs — — 10 10 — — 2 2 Purchased Gas Costs — — 70 70 — — (115) (115) Selling, General and Administrative Costs — — 125 125 — — 3 3 Other Operating Expense — — 80 80 — — 17 17 Total Operating Costs and Expenses 746 142 304 1,192 (45) 10 (94) (129) Other Expense — — 9 9 — — (1) (1) Gain on Asset Sales and Abandonments, net — — (132) (132) — — (123) (123) Loss on Debt Extinguishment — — — — — — (23) (23) Interest Expense — — 143 143 — — 15 15 Total Other Expenses — — 20 20 — — (132) (132) Total Costs and Expenses 746 142 324 1,212 (45) 10 (226) (261) Earnings Before Income Tax $ 642 $ 1 $ 1,580 $ 2,223 $ (298) $ (43) $ 2,776 $ 2,435 48 SHALE SEGMENT The Shale segment had earnings before income tax of $642 million for the year ended December 31, 2023 compared to earnings before income tax of $940 million for the year ended December 31, 2022.
Payment of the principal and interest on the notes is guaranteed by most of CNX’s subsidiaries but does not include CNXM (or its subsidiaries or general partner). • An aggregate principal amount of $500 million of 6.00% Senior Notes due January 2029. Interest on the notes is payable January 15 and July 15 of each year.
Interest on the notes is payable January 15 and July 15 each year. Payment of the principal and interest on the notes is guaranteed by most of CNX’s subsidiaries but does not include CNXM (or its subsidiaries or general partner). • An aggregate principal amount of $500 million of 6.00% Senior Notes due January 2029.
The Company groups its assets by geological and geographical characteristics. If the carrying amount exceeds the estimated undiscounted future cash flows, a reduction of the carrying amount of the natural gas properties to their estimated fair values is required, which is determined based on discounted cash flow techniques using a market-specific weighted average cost of capital.
The Company groups its assets by geological and geographical characteristics. If the carrying amount exceeds the estimated undiscounted future cash flows, a reduction of the carrying amount of the natural gas properties to their estimated fair values is required, which is 59 determined based on discounted cash flow techniques using a market-specific weighted average cost of capital.
Additionally, future estimates may differ materially from current estimates and assumptions. 61 Derivative Instruments. We enter into derivative commodity instrument contracts primarily to reduce exposure to commodity price risk associated with future sales of natural gas production. See Note 18 – Fair Value of Financial Instruments to the Consolidated Financial Statements for a description of the fair value hierarchy.
Additionally, future estimates may differ materially from current estimates and assumptions. Derivative Instruments. We enter into derivative commodity instrument contracts primarily to reduce exposure to commodity price risk associated with future sales of natural gas production. See Note 18 – Fair Value of Financial Instruments to the Consolidated Financial Statements for a description of the fair value hierarchy.
Interest on the notes is payable April 15 and October 15 of each year. Payment on the principal and interest on the notes is guaranteed by certain of CNXM's subsidiaries. CNX is not a guarantor of these notes. • An aggregate principal amount of $350 million of 7.25% Senior Notes due March 2027 plus $2 million of unamortized bond premium.
Interest on the notes is payable April 15 and October 15 of each year. Payment on the principal and interest on the notes is guaranteed by certain of CNXM's subsidiaries. CNX is not a guarantor of these notes. • An aggregate principal amount of $350 million of 7.25% Senior Notes due March 2027 plus $2 million of unamortized premium.
Payment of the principal and interest on the notes is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner). • An aggregate principal amount of $400 million of 4.75% Senior Notes due April 2030 issued by CNXM, less $4 million of unamortized bond discount.
Payment of the principal and interest on the notes is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner). • An aggregate principal amount of $400 million of 4.75% Senior Notes due April 2030 issued by CNXM, less $4 million of unamortized discount.
Actual production, 59 revenues and expenditures with respect to our reserves will likely vary from estimates, and these variances may be material. See “Risk Factors” in Item 1A of this Form 10-K for a discussion of the uncertainties in estimating our reserves.
Actual production, revenues and expenditures with respect to our reserves will likely vary from estimates, and these variances may be material. See “Risk Factors” in Item 1A of this Form 10-K for a discussion of the uncertainties in estimating our reserves.
Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on either the fair value of the reporting unit, the amount of any goodwill impairment charge, or both.
Changes in assumptions concerning future financial results or other underlying assumptions 60 could have a significant impact on either the fair value of the reporting unit, the amount of any goodwill impairment charge, or both.
CNX uses a combination of surety bonds, corporate guarantees and letters of credit to secure the Company's financial obligations for employee-related, environmental, performance and various other items which are not reflected in the Consolidated Balance Sheet at December 31, 2022. Management believes these items will expire without being funded.
CNX uses a combination of surety bonds, corporate guarantees and letters of credit to secure the Company's financial obligations for employee-related, environmental, performance and various other items which are not reflected in the Consolidated Balance Sheet at December 31, 2023. Management believes these items will expire without being funded.
Payment of the principal and interest on the notes is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner). • An aggregate principal amount of $331 million of 2.25% Convertible Senior Notes due May 2026, unless earlier redeemed, repurchased, or converted, less $7 million of unamortized discount and issuance costs.
Payment of the principal and interest on the notes is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner). • An aggregate principal amount of $331 million of 2.25% Convertible Senior Notes due May 2026, unless earlier redeemed, repurchased, or converted, less $5 million of unamortized discount and issuance costs.
A similar discussion and analysis that compares year ended December 31, 2021 to the fiscal year ended December 31, 2020 is omitted from this Form 10-K and 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 is omitted from this Form 10-K and 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.
If market conditions were to change, for instance due to a significant decline in commodity prices and our revenue was reduced significantly or operating costs were to increase significantly, our cash flows and liquidity could be reduced. As of December 31, 2022, CNX was in compliance with all of its debt covenants.
If market conditions were to change, for instance due to a significant decline in commodity prices, and our revenue was reduced significantly or operating costs were to increase significantly, our cash flows and liquidity could be reduced. As of December 31, 2023, CNX was in compliance with all of its debt covenants.
The inputs used for the income approach were significant unobservable inputs, or Level 3 60 inputs, as described in the accounting fair value hierarchy.
The inputs used for the income approach were significant unobservable inputs, or Level 3 inputs, as described in the accounting fair value hierarchy.
If the carrying amount exceeds the estimated undiscounted future cash flows, a reduction of the carrying amount of the asset to its estimated fair value is required. There were no impairments related to definite-lived intangible assets in the years ended December 31, 2022 or 2021.
If the carrying amount exceeds the estimated undiscounted future cash flows, a reduction of the carrying amount of the asset to its estimated fair value is required. There were no impairments related to definite-lived intangible assets in the years ended December 31, 2023 or 2022.
For the Company’s annual impairment assessment during the fourth quarter of 2022, the Company elected to perform a qualitative impairment test on its goodwill and concluded that it is more likely than not that the fair value exceeded the carrying value and goodwill was not impaired.
For the Company’s annual impairment assessment during the fourth quarter of 2023, the Company elected to perform a qualitative impairment test on its goodwill and concluded that it is more likely than not that the fair value exceeded the carrying value and goodwill was not impaired.
If it is determined that the properties will not yield proved reserves, the related costs are expensed in the period the determination is made. There were no impairments related to unproved properties in the years ended December 31, 2022 or 2021.
If it is determined that the properties will not yield proved reserves, the related costs are expensed in the period the determination is made. There were no impairments related to unproved properties in the years ended December 31, 2023 or 2022.
There were no impairments related to proved properties in the years ended December 31, 2022 or 2021. CNX evaluates capitalized costs of unproved gas properties for recoverability on a prospective basis.
There were no impairments related to proved properties in the years ended December 31, 2023 or 2022. CNX evaluates capitalized costs of unproved gas properties for recoverability on a prospective basis.
Recent Accounting Pronouncements See Note 1 – Significant Accounting Policies in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for a summary of recent accounting pronouncements. 62
Recent Accounting Pronouncements See Note 1 – Significant Accounting Policies in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for a summary of recent accounting pronouncements. 61
These conditions include no defaults, ability to incur additional debt and other payment limitations under the indentures. There were no defaults in the year ended December 31, 2022.
These conditions include no defaults, ability to incur additional debt and other payment limitations under the indentures. There were no defaults in the year ended December 31, 2023.
These amounts included depletion on a unit of production basis of $0.62 per Mcfe and $0.71 per Mcfe, respectively. The decrease in the units of production depreciation, depletion and amortization rate in the current period is primarily the result of a lower annual depletion rate related to low-cost reserve additions from development in the 2021 period.
These amounts included depletion on a unit of production basis of $0.59 per Mcfe and $0.62 per Mcfe, respectively. The decrease in the units of production depreciation, depletion and amortization rate in the current period is primarily the result of a lower annual depletion rate related to low-cost reserve additions from development in the 2022 period.
Purchased Gas Revenue and Costs Purchased gas volumes represent volumes of natural gas purchased at market prices from third parties and then resold in order to fulfill contracts with certain customers and to balance supply. Purchased gas revenue was $186 million for the year ended December 31, 2022 compared to $100 million for the year ended December 31, 2021.
Purchased Gas Revenue and Costs Purchased gas volumes represent volumes of natural gas purchased at market prices from third parties and then resold in order to fulfill contracts with certain customers and to balance supply. Purchased gas revenue was $75 million for the year ended December 31, 2023 compared to $186 million for the year ended December 31, 2022.
The Shale segment had other revenue and operating income of $69 million for the year ended December 31, 2022 compared to $81 million for the year ended December 31, 2021. The decrease in the period-to-period comparison was primarily due to lower third-party gathering volumes due to normal production declines.
The Shale segment had other revenue and operating income of $67 million for the year ended December 31, 2023 compared to $69 million for the year ended December 31, 2022. The decrease in the period-to-period comparison was primarily due to lower third-party gathering volumes due to normal production declines.
Although these are not measures of performance calculated in accordance with GAAP, management believes that these financial measures are useful to an investor in evaluating CNX because these metrics are widely used to evaluate a natural gas company’s operating performance.
Although these are not measures of performance calculated in accordance with generally accepted accounting principles (GAAP), management believes that these financial measures are useful to an investor in evaluating CNX because these metrics are widely used to evaluate a natural gas company’s operating performance.
CNX also enters into various financial natural gas swap transactions to manage the market risk exposure to in-basin and out-of-basin pricing. The fair value of these contracts was a net liability of $1,905 million at December 31, 2022 and a net liability of $976 million at December 31, 2021.
CNX also enters into various financial natural gas and NGL swap transactions to manage the market risk exposure to in-basin and out-of-basin pricing. The fair value of these contracts was a net liability of $56 million at December 31, 2023 and a net liability of $1,905 million at December 31, 2022.
The decreases in total dollars and unit costs for the Shale segment were due to the following items: • Shale lease operating expenses were $50 million for the year ended December 31, 2022 compared to $34 million for the year ended December 31, 2021.
The decreases in total dollars and unit costs for the Shale segment were due to the following items: • Shale lease operating expenses were $44 million for the year ended December 31, 2023 compared to $50 million for the year ended December 31, 2022.
The increases in total dollars and unit costs were primarily due to increases in repairs and maintenance expense. 50 • CBM production, ad valorem and other fees were $12 million for the year ended December 31, 2022 compared to $7 million for the year ended December 31, 2021.
The increases in total dollars and unit costs were primarily due to increases in water disposal costs and repairs and maintenance expense. • CBM production, ad valorem and other fees were $7 million for the year ended December 31, 2023 compared to $12 million for the year ended December 31, 2022.
The Shale segment had natural gas, NGLs and oil/condensate revenue of $3,335 million for the year ended December 31, 2022 compared to $1,989 million for the year ended December 31, 2021.
The Shale segment had natural gas, NGLs and oil/condensate revenue of $1,170 million for the year ended December 31, 2023 compared to $3,335 million for the year ended December 31, 2022.
The increases in total dollars and unit costs for the CBM segment were due to the following items: • CBM lease operating expense was $17 million for the year ended December 31, 2022 compared to $13 million for the year ended December 31, 2021.
The increases in total dollars and unit costs for the CBM segment were due to the following items: 50 • CBM lease operating expense was $19 million for the year ended December 31, 2023 compared to $17 million for the year ended December 31, 2022.
The Other Segment had a loss before income tax of $1,196 million for the year ended December 31, 2022 compared to a loss before income tax of $1,440 million for the year ended December 31, 2021. The increase in total dollars is discussed below.
The Other Segment had earnings before income tax of $1,580 million for the year ended December 31, 2023 compared to a loss before income tax of $1,196 million for the year ended December 31, 2022. The increase in total dollars is discussed below.
COALBED METHANE (CBM) SEGMENT The CBM segment had earnings before income tax of $44 million for the year ended December 31, 2022 compared to earnings before income tax of $29 million for the year ended December 31, 2021.
COALBED METHANE (CBM) SEGMENT The CBM segment had earnings before income tax of $1 million for the year ended December 31, 2023 compared to earnings before income tax of $44 million for the year ended December 31, 2022.
Total operating costs and expenses for the Shale segment were $791 million for the year ended December 31, 2022 compared to $804 million for the year ended December 31, 2021.
Total operating costs and expenses for the Shale segment were $746 million for the year ended December 31, 2023 compared to $791 million for the year ended December 31, 2022.
Total operating costs and expenses for the CBM segment were $132 million for the year ended December 31, 2022 compared to $118 million for the year ended December 31, 2021.
Total operating costs and expenses for the CBM segment were $142 million for the year ended December 31, 2023 compared to $132 million for the year ended December 31, 2022.
See Note 12 – Long-Term Debt in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for additional information.
See Note 12 – Long-Term Debt in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for additional information. No such transactions occurred in the current period.
Our accounts and notes receivable balance may fluctuate as of any balance sheet date depending on the prices we receive for our natural gas and NGLs and the volumes sold. • Capital expenditures are expected to range between $575 million to $675 million for the year ended December 31, 2023, compared to capital expenditures of $565.8 million in fiscal year 2022.
Our accounts and notes receivable balance may fluctuate as of any balance sheet date depending on the prices we receive for our natural gas and NGLs and the volumes sold. • Capital expenditures are expected to range between $575 million to $625 million for the year ended December 31, 2024.
The increases in total dollars and unit costs were primarily due to an increase in repairs and maintenance expense and electrical compression expense. • Depreciation, depletion and amortization costs attributable to the CBM segment were $54 million for the year ended December 31, 2022 compared to $58 million for the year ended December 31, 2021 due to lower volumes in the current period.
The increases in total dollars and unit cost were primarily due to an increase in electrical compression expense and repairs and maintenance expense. • Depreciation, depletion and amortization costs attributable to the CBM segment were $50 million for the year ended December 31, 2023 compared to $54 million for the year ended December 31, 2022.
At December 31, 2022, prior to consideration of valuation allowances on deferred tax assets, CNX had deferred tax liabilities in excess of deferred tax assets of approximately $148 million. At December 31, 2022, CNX had a valuation allowance of $85 million on deferred tax assets.
At December 31, 2023, prior to consideration of valuation allowances on deferred tax assets, CNX had deferred tax liabilities in excess of deferred tax assets of approximately $690 million. At December 31, 2023, CNX had a valuation allowance of $39 million on deferred tax assets.
The increases in total dollars and unit costs were primarily due to increased realized prices on natural gas. • CBM transportation, gathering and compression costs were $49 million for the year ended December 31, 2022 compared to $40 million for the year ended December 31, 2021.
The decreases in total dollars and unit costs were primarily due to decreased realized prices on natural gas. • CBM transportation, gathering and compression costs were $66 million for the year ended December 31, 2023 compared to $49 million for the year ended December 31, 2022.
Goodwill is not amortized, but rather it is evaluated for impairment annually during the fourth quarter, or more frequently if recent events or prevailing conditions indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value.
Additionally, future estimates may differ materially from current estimates and assumptions. Impairment of Goodwill Goodwill is not amortized, but rather it is evaluated for impairment annually during the fourth quarter, or more frequently if recent events or prevailing conditions indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value.
The notional amounts associated with these financial hedges represented approximately 35.5 Bcf of the Company's produced CBM gas sales volumes for the year ended December 31, 2022 at an average loss of $3.92 per Mcf hedged. For the year ended December 31, 2021, these financial hedges represented approximately 40.4 Bcf at an average loss of $1.15 per Mcf hedged.
The notional amounts associated with these financial hedges represented approximately 31.9 Bcf of the Company's produced CBM gas sales volumes for the year ended December 31, 2023 at an average gain of $0.36 per Mcf hedged. For the year ended December 31, 2022, these financial hedges represented approximately 35.5 Bcf at an average loss of $3.92 per Mcf hedged.
In addition, because all companies do not calculate these measures identically, these measures may not be comparable to similarly titled measures of other companies. 45 Non-GAAP Financial Measures Reconciliation For the Years Ended December 31, (Dollars in millions) 2022 2021 Total Revenue and Other Operating Income $ 1,261 $ 757 Add (Deduct): Purchased Gas Revenue (186) (100) Loss on Commodity Derivative Instruments 851 1,094 Other Revenue and Operating Income (87) (106) Sales of Natural Gas, NGL and Oil, including Cash Settlements, a Non-GAAP Financial Measure $ 1,839 $ 1,645 Total Operating Expense $ 1,321 $ 1,235 Add (Deduct): Depreciation, Depletion and Amortization (DD&A) - Corporate (13) (11) Exploration and Production Related Other Costs (8) (21) Purchased Gas Costs (185) (94) Selling, General and Administrative Costs (122) (113) Other Operating Expense (63) (68) Natural Gas, NGL and Oil Production Costs, a Non-GAAP Financial Measure 1 $ 930 $ 928 1 Natural Gas, NGL and Oil production costs consists primarily of lease operating expense, production ad valorem and other fees, transportation, gathering and compression and production related depreciation, depletion and amortization.
In addition, because all companies do not calculate these measures identically, these measures may not be comparable to similarly titled measures of other companies. 45 Non-GAAP Financial Measures Reconciliation For the Years Ended December 31, (Dollars in millions) 2023 2022 Total Revenue and Other Operating Income $ 3,435 $ 1,261 (Deduct) Add: Purchased Gas Revenue (75) (186) (Gain) Loss on Commodity Derivative Instruments (1,765) 851 Other Revenue and Operating Income (130) (87) Sales of Natural Gas, NGL and Oil, including Cash Settlements, a Non-GAAP Financial Measure $ 1,465 $ 1,839 Total Operating Expense $ 1,192 $ 1,321 (Deduct): Depreciation, Depletion and Amortization (DD&A) - Corporate (14) (13) Exploration and Production Related Other Costs (10) (8) Purchased Gas Costs (70) (185) Selling, General and Administrative Costs (125) (122) Other Operating Expense (80) (63) Natural Gas, NGL and Oil Production Costs, a Non-GAAP Financial Measure 1 $ 893 $ 930 1 Natural Gas, NGL and Oil production costs consists primarily of lease operating expense, production ad valorem and other fees, transportation, gathering and compression and production related depreciation, depletion and amortization.
CNX experienced higher capital costs from inflation during the year ended December 31, 2022. If inflation continues at its current levels or increases further for any extended period of time, and CNX is unable to successfully mitigate the impact, our costs could increase further, having a greater impact on our financial position.
If inflation continues at its current levels or increases further for any extended period of time, and CNX is unable to successfully mitigate the impact, our costs could increase further, thus having a greater impact on our financial position.
The notional amounts associated with these financial hedges represented approximately 424.7 Bcf of the Company's produced Shale gas sales volumes for the year ended December 31, 2022 at an average loss of $3.94 per Mcf hedged. For the year ended December 31, 2021, these financial hedges represented approximately 429.4 Bcf at an average loss of $1.15 per Mcf hedged.
The notional amounts associated with these financial hedges represented approximately 399.2 Bcf of the Company's produced Shale gas sales volumes for the year ended December 31, 2023 at an average gain of $0.37 per Mcf hedged. For the year ended December 31, 2022, these financial hedges represented approximately 424.7 Bcf at an average loss of $3.94 per Mcf hedged.
Cash used in financing activities changed in the period-to-period comparison primarily due to the following items: • During the year ended December 31, 2022, CNX closed on $500 million aggregate principal amount of CNX 7.375% Senior Notes due January 2031 at a price of 98.8% for cash proceeds of $494 million.
Cash used in financing activities changed in the period-to-period comparison primarily due to the following items: • Proceeds from borrowings under the CNXM Credit Facility decreased $10 million and repayments under the CNXM Credit Facility increased $7 million. • Proceeds from borrowings under the CNX Credit Facility decreased $1,745 million and repayments under the CNX Credit Facility decreased $1,989 million. • During the year ended December 31, 2022, CNX closed on $500 million aggregate principal amount of CNX 7.375% Senior Notes due January 2031 at a price of 98.8% for cash proceeds of $494 million.
For the year ended December 31, 2021, the Other Segment recognized an unrealized loss on commodity derivative instruments of $1,094 million. The unrealized loss on commodity derivative instruments represents changes in the fair value of all the Company's existing commodity hedges on a mark-to-market basis.
For the year ended December 31, 2022, the Other Segment recognized an unrealized loss on commodity derivative instruments of $851 million, as well as cash settlements paid of $1 million. The unrealized gain or loss on commodity derivative instruments represents changes in the fair value of all the Company's existing commodity hedges on a mark-to-market basis.
Due to the plant consuming coal mine methane gas, the plant qualifies for Pennsylvania Tier I Renewable Energy Credits. • Water income decreased in the period-to-period comparison due to fewer third-party sales in the current period. • Excess firm transportation income represents revenue from the sale of excess firm transportation capacity to third parties.
Due to the plant consuming coal mine methane gas, the plant qualifies for Pennsylvania Tier I Renewable Energy Credits. • Water income decreased in the period-to-period comparison due to fewer third-party sales in the current period.
Interest on the notes 57 is payable May 1 and November 1 of each year. Payment of the principal and interest on the notes is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner). • An aggregate principal amount of $154 million in outstanding borrowings under the CNXM Credit Facility.
Interest on the notes 57 is payable May 1 and November 1 of each year. Payment of the principal and interest on the notes is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner).
The increases in total dollars and unit costs were primarily due to increased realized prices on natural gas and natural gas liquids. 49 • Shale transportation, gathering and compression costs were $319 million for the year ended December 31, 2022 compared to $303 million for the year ended December 31, 2021.
The decrease in total dollars was primarily due to decreased realized prices on natural gas. 49 • Shale transportation, gathering and compression costs were $316 million for the year ended December 31, 2023 compared to $319 million for the year ended December 31, 2022.
Purchased gas costs were $185 million for the year ended December 31, 2022 compared to $94 million for the year ended December 31, 2021. The period-to-period increase in purchased gas revenue was due to an increase in average sales price and an increase in purchased gas sales volumes.
Purchased gas costs were $70 million for the year ended December 31, 2023 compared to $185 million for the year ended December 31, 2022. The period-to-period decrease in purchased gas revenue was due to a decrease in average sales price, offset in part by an increase in purchased gas sales volumes.
For the Years Ended December 31, 2022 2021 Variance Percent Change Other Gas Sales Volumes (Bcf) 0.4 0.3 0.1 33.3 % Loss on Commodity Derivative Instruments For the year ended December 31, 2022, the Other Segment recognized an unrealized loss on commodity derivative instruments of $851 million, as well as cash settlements paid of $1 million.
For the Years Ended December 31, 2023 2022 Variance Percent Change Other Gas Sales Volumes (Bcf) 0.3 0.4 (0.1) (25.0) % Unrealized Gain (Loss) on Commodity Derivative Instruments For the year ended December 31, 2023, the Other Segment recognized an unrealized gain on commodity derivative instruments of $1,765 million.
For the Years Ended December 31, 2022 2021 Variance Percent Change Shale Gas Sales Volumes (Bcf) 496.7 502.2 (5.5) (1.1) % NGLs Sales Volumes (Bcfe)* 38.0 35.8 2.2 6.1 % Oil/Condensate Sales Volumes (Bcfe)* 1.4 2.4 (1.0) (41.7) % Total Shale Sales Volumes (Bcfe)* 536.1 540.4 (4.3) (0.8) % Average Sales Price - Gas (per Mcf) $ 6.19 $ 3.51 $ 2.68 76.4 % Loss on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf) $ (3.37) $ (0.98) $ (2.39) (243.9) % Average Sales Price - NGLs (per Mcfe)* $ 6.36 $ 5.65 $ 0.71 12.6 % Average Sales Price - Oil/Condensate (per Mcfe)* $ 13.63 $ 9.38 $ 4.25 45.3 % Total Average Shale Sales Price (per Mcfe) $ 3.10 $ 2.77 $ 0.33 11.9 % Average Shale Lease Operating Expenses (per Mcfe) 0.09 0.06 0.03 50.0 % Average Shale Production, Ad Valorem and Other Fees (per Mcfe) 0.07 0.05 0.02 40.0 % Average Shale Transportation, Gathering and Compression Costs (per Mcfe) 0.60 0.56 0.04 7.1 % Average Shale Depreciation, Depletion and Amortization Costs (per Mcfe) 0.72 0.82 (0.10) (12.2) % Total Average Shale Production Costs (per Mcfe) $ 1.48 $ 1.49 $ (0.01) (0.7) % Total Average Shale Production Margin (per Mcfe) $ 1.62 $ 1.28 $ 0.34 26.6 % *NGLs and Oil/Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices.
For the Years Ended December 31, 2023 2022 Variance Percent Change Shale Gas Sales Volumes (Bcf) 473.8 496.7 (22.9) (4.6) % NGLs Sales Volumes (Bcfe)* 44.5 38.0 6.5 17.1 % Oil/Condensate Sales Volumes (Bcfe)* 1.2 1.4 (0.2) (14.3) % Total Shale Sales Volumes (Bcfe)* 519.5 536.1 (16.6) (3.1) % Average Sales Price - Gas (per Mcf) $ 2.11 $ 6.19 $ (4.08) (65.9) % Gain (Loss) on Commodity Derivative Instruments - Cash Settlement (per Mcf) $ 0.32 $ (3.37) $ 3.69 109.5 % Average Sales Price - NGLs (per Mcfe)* $ 3.54 $ 6.36 $ (2.82) (44.3) % Average Sales Price - Oil/Condensate (per Mcfe)* $ 10.95 $ 13.63 $ (2.68) (19.7) % Total Average Shale Sales Price (per Mcfe) $ 2.54 $ 3.10 $ (0.56) (18.1) % Average Shale Lease Operating Expenses (per Mcfe) 0.08 0.09 (0.01) (11.1) % Average Shale Production, Ad Valorem and Other Fees (per Mcfe) 0.04 0.07 (0.03) (42.9) % Average Shale Transportation, Gathering and Compression Costs (per Mcfe) 0.61 0.60 0.01 1.7 % Average Shale Depreciation, Depletion and Amortization Costs (per Mcfe) 0.70 0.72 (0.02) (2.8) % Total Average Shale Production Costs (per Mcfe) $ 1.43 $ 1.48 $ (0.05) (3.4) % Total Average Shale Production Margin (per Mcfe) $ 1.11 $ 1.62 $ (0.51) (31.5) % *NGLs and Oil/Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices.
The declaration and payment of dividends by CNX is subject to the discretion of CNX's Board of Directors, and no assurance can be given that CNX will pay dividends in the future. CNX has not paid dividends on its common stock since 2016.
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 CNX is subject to the discretion of CNX's Board of Directors, and no assurance can be given that CNX will pay dividends in the future. CNX has not paid dividends on its common stock since 2016.
For the Years Ended December 31, (in millions) 2022 2021 Variance Percent Change Salaries, Wages and Employee Benefits $ 31 $ 27 $ 4 14.8 % Contributions and Advertising 5 3 2 66.7 % Short-Term Incentive Compensation 20 20 — — % Long-Term Equity-Based Compensation (Non-Cash) 16 17 (1) (5.9) % Other 50 46 4 8.7 % Total SG&A $ 122 $ 113 $ 9 8.0 % • Salaries, wages and employee benefits increased in the period-to-period comparison primarily due to an increase in wages and employee benefit expense. 52 • Contributions and advertising increased in the period-to-period comparison primarily due to an increase in charitable contributions. • Other increased in the period-to-period comparison primarily due to an increase in professional services and consulting fees related to cyber security, legal matters and regulatory reporting.
For the Years Ended December 31, (in millions) 2023 2022 Variance Percent Change Long-Term Equity-Based Compensation (Non-Cash) $ 20 $ 16 $ 4 25.0 % Salaries, Wages and Employee Benefits 31 31 — — % Contributions and Advertising 4 5 (1) (20.0) % Short-Term Incentive Compensation 11 20 (9) (45.0) % Other 59 50 9 18.0 % Total SG&A $ 125 $ 122 $ 3 2.5 % 52 • Long-term equity-based compensation (non-cash) increased in the period-to-period comparison due to an increase in equity awards. • Short-term incentive compensation decreased $9 million due to lower projected payouts for the current period. • Other increased in the period-to-period comparison primarily due to an increase in professional services and consulting fees related to cyber security, legal matters and regulatory reporting.
Selected Natural Gas, NGL and Oil Production Financial Data The following table presents a summary of our total sales volumes, sales of natural gas, NGL and oil including cash settlements, natural gas, NGL and oil production costs and natural gas, NGL and oil production margin related to our production operations on a total company basis (See Non-GAAP Financial Measures Reconciliation above for the reconciliation to the most directly comparable financial measures calculated and presented in accordance with GAAP): For the Years Ended December 31, 2022 2021 Variance in Millions Per Mcfe in Millions Per Mcfe in Millions Per Mcfe Total Sales Volumes (Bcfe)* 580.2 590.2 (10.0) Natural Gas, NGL and Oil Revenue $ 3,652 $ 6.52 $ 2,184 $ 3.77 $ 1,468 $ 2.75 (Loss) Gain on Commodity Derivative Instruments - Cash Settlement - Gas (1,813) (3.35) (539) (0.98) (1,274) (2.37) Sales of Natural Gas, NGL and Oil, including Cash Settlements, a Non-GAAP Financial Measure 1,839 3.17 1,645 2.79 194 0.38 Lease Operating Expense 67 0.11 46 0.08 21 0.03 Production, Ad Valorem, and Other Fees 45 0.08 34 0.06 11 0.02 Transportation, Gathering and Compression 370 0.64 344 0.58 26 0.06 Depreciation, Depletion and Amortization (DD&A) 448 0.77 504 0.85 (56) (0.08) Natural Gas, NGL and Oil Production Costs, a Non-GAAP Financial Measure 930 1.60 928 1.57 2 0.03 Natural Gas, NGL and Oil Production Margin, a Non-GAAP Financial Measure $ 909 $ 1.57 $ 717 $ 1.22 $ 192 $ 0.35 *NGLs and Oil/Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of NGL, condensate, and natural gas prices.
Selected Natural Gas, NGL and Oil Production Financial Data The following table presents a summary of our total sales volumes, sales of natural gas, NGL and oil including cash settlements, natural gas, NGL and oil production costs and natural gas, NGL and oil production margin related to our production operations on a total company basis (See Non-GAAP Financial Measures Reconciliation above for the reconciliation to the most directly comparable financial measures calculated and presented in accordance with GAAP): For the Years Ended December 31, 2023 2022 Variance in Millions Per Mcfe in Millions Per Mcfe in Millions Per Mcfe Total Sales Volumes (Bcfe)* 560.4 580.2 (19.8) Natural Gas, NGL and Oil Revenue $ 1,302 $ 2.29 $ 3,652 $ 6.52 $ (2,350) $ (4.23) Gain (Loss) on Commodity Derivative Instruments - Cash Settlement 163 0.32 (1,813) (3.35) 1,976 3.67 Sales of Natural Gas, NGL and Oil, including Cash Settlements, a Non-GAAP Financial Measure 1,465 2.61 1,839 3.17 (374) (0.56) Lease Operating Expense 63 0.11 67 0.11 (4) — Production, Ad Valorem, and Other Fees 28 0.05 45 0.08 (17) (0.03) Transportation, Gathering and Compression 382 0.68 370 0.64 12 0.04 Depreciation, Depletion and Amortization (DD&A) 420 0.75 448 0.77 (28) (0.02) Natural Gas, NGL and Oil Production Costs, a Non-GAAP Financial Measure 893 1.59 930 1.60 (37) (0.01) Natural Gas, NGL and Oil Production Margin, a Non-GAAP Financial Measure $ 572 $ 1.02 $ 909 $ 1.57 $ (337) $ (0.55) *NGLs and Oil/Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of NGL, condensate, and natural gas prices.
Actual results could differ from those estimates upon the subsequent resolution of identified matters. See Note 6 – Income Taxes in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for additional information regarding the Company’s uncertain tax liabilities.
See Note 6 – Income Taxes in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for additional information regarding the Company’s uncertain tax liabilities.
During the year ended December 31, 2022, CNX purchased a portion of the Convertible Notes due May 2026 and $350 million of the 7.25% Senior Notes due March 2027 at an average price equal to 102.5% of the principal amount.
Loss on Debt Extinguishment A loss on debt extinguishment of $23 million was recognized in the year ended December 31, 2022 following CNX’s purchase of a portion of the Convertible Notes due May 2026 and $350 million of the 7.25% Senior Notes due March 2027 at an average price equal to 102.5% of the principal amount.
The increase in total average Shale sales price was primarily due to a $2.68 per Mcf increase in average gas sales price and a $0.71 per Mcfe increase in the average NGL sales price. These increases were offset in part by a $2.39 per Mcf change in the realized loss on commodity derivative instruments.
The decrease in total average Shale sales price was primarily due to a $4.08 per Mcf decrease in average gas sales price and a $2.82 per Mcfe decrease in the average NGL sales price. These decreases were offset in part by a $3.69 per Mcf change in the realized gain (loss) on commodity derivative instruments.
The revenue received when this capacity is released (sold) is included in Excess Firm Transportation Income in Total Other Operating Income. • Virginia flood expense includes cleanup and repair costs related to fl ooding that occurred in Buchanan County, Virginia in July 2022.
The revenue received when this capacity is released (sold) is included in Excess Firm Transportation Income in Other Operating Inc ome. • Virginia flood expense includes the continuing cleanup and repair costs related to fl ooding that occurred in Buchanan County, Virginia in July 2022. • CNX and its subsidiaries are subject to various lawsuits and claims in the normal course of business.
The effective rates for each of the years ended December 31, 2022 and 2021 differ from the U.S. federal statutory rate of 21% primarily due to federal tax credits, state income taxes including tax rate changes, equity compensation, and the impact of certain state deferred tax asset valuation allowances as a result of the higher unrealized loss on commodity derivative instruments during each of the periods presented.
The effective tax rates for the years ended December 31, 2023 and 2022 differ from the U.S. federal statutory rate of 21% primarily due to federal tax credits, state income taxes including tax rate changes, equity compensation, and the impact of changes in certain state deferred tax asset valuation allowances.
The total average CBM sales price increased $1.04 per Mcf due to a $3.29 per Mcf increase in average gas sales price, offset in part by a $2.25 per Mcf change in the realized loss on commodity derivative instruments resulting from the Company's hedging program.
The total average CBM sales price decreased $0.50 per Mcf due to a $3.98 per Mcf decrease in average gas sales price, offset in part by a $3.46 per Mcf change in the realized gain (loss) on commodity derivative instruments resulting from the Company's hedging program.
See Note 20 – Commitments and Contingent Liabilities in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for additional details of the various financial guarantees that have been issued by CNX. Debt At December 31, 2022, CNX had total long-term debt of $2,220 million, excluding unamortized debt issuance costs.
See Note 20 – Commitments and Contingent Liabilities in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for additional details of the various financial guarantees that have been issued by CNX.
Cash and cash equivalents as of December 31, 2022 and December 31, 2021 were $21.3 million and $3.6 million, respectively. • Accounts and notes receivable - trade as of December 31, 2022 and 2021 were $348.5 million and $330.1 million, respectively.
Cash and cash equivalents were nominal as of December 31, 2023 and $21 million as of December 31, 2022. • Accounts and notes receivable - trade as of December 31, 2023 and 2022 were $116 million and $348 million, respectively.
The evaluation of the sustainability of a tax position and the probable amount that is more likely than not is based on judgment, historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results of these estimates, which are not readily apparent from other sources, form the basis for recognizing an uncertain tax liability.
The evaluation of the sustainability of a tax position and the probable amount that is more likely than not is based on judgment, historical experience and on various other 58 assumptions that we believe are reasonable under the circumstances.
Accelerated levels of inflation may lead to price increases beyond CNX’s control that could lead to CNX incurring an increase in costs in the future. • Production volumes are expected to range between 555.0 Bcfe and 575.0 Bcfe for the year ended December 31, 2023, compared to production volumes of 580.2 Bcfe in fiscal year 2022. • Prices for natural gas and NGLs are volatile, and an extended decline in the prices we receive for our natural gas and NGLs will adversely affect our financial condition and cash flows. • In order to manage the market risk exposure of volatile natural gas prices in the future, CNX enters into various physical natural gas supply transactions with both gas marketers and end users for terms varying in length.
For the year ended December 31, 2023, CNX had production volumes of 560.4 Bcfe. • Prices for natural gas and NGLs are volatile, and an extended decline in the prices we receive for our natural gas and NGLs will adversely affect our financial condition and cash flows. • In order to manage the market risk exposure of volatile natural gas prices in the future, CNX enters into various physical natural gas supply transactions with both gas marketers and end users for terms varying in length.
Included in the loss for the year ended December 31, 2022 was an unrealized loss on commodity derivative instruments of $851 million. Included in the loss for the year ended December 31, 2021 was an unrealized loss on commodity derivative instruments of $1,094 million.
Included in the loss for the year ended December 31, 2022 was an unrealized loss on commodity derivative instruments of $851 million and a net gain on asset sales and abandonments of $9 million.
Net Loss Attributable to CNX Resources Shareholders CNX reported a net loss attributable to CNX Resources shareholders of $142 million, or a loss per diluted share of $0.75, for the year ended December 31, 2022, compared to a net loss attributable to CNX Resources shareholders of $499 million, or a loss per diluted share of $2.31, for the year ended December 31, 2021.
Net Income (Loss) CNX reported net income of $1,721 million, or earnings per diluted share of $8.99, for the year ended December 31, 2023, compared to a net loss of $142 million, or a loss per diluted share of $0.75, for the year ended December 31, 2022.
The increases in total dollars and unit costs were primarily related to an increase in repairs and maintenance expense, including both routine and water storage system maintenance, and an increase in water disposal costs as more water had to be taken to disposal instead of being reused in well completions. • Shale production, ad valorem and other fees were $33 million for the year ended December 31, 2022 compared to $27 million for the year ended December 31, 2021.
The decrease in total dollars was primarily related to a decrease in water disposal costs as more water was able to be reused in well completions instead of being taken to disposal. • Shale production, ad valorem and other fees were $21 million for the year ended December 31, 2023 compared to $33 million for the year ended December 31, 2022.
See the Consolidated Statements of Stockholders' Equity in Item 8 of this Form 10-K for additional details. On September 28, 2020, the Merger of CNXM was completed (See Note 4 – Acquisitions and Dispositions in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for additional information).
See Note 4 – Acquisitions and Dispositions in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for additional information related to the gain on asset sales and abandonments.
For the Years Ended December 31, 2022 2021 Variance Percent Change CBM Gas Sales Volumes (Bcf) 43.7 49.5 (5.8) (11.7) % Average Sales Price - Gas (per Mcf) $ 7.20 $ 3.91 $ 3.29 84.1 % Loss on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf) $ (3.18) $ (0.93) $ (2.25) (241.9) % Total Average CBM Sales Price (per Mcf) $ 4.01 $ 2.97 $ 1.04 35.0 % Average CBM Lease Operating Expenses (per Mcf) 0.40 0.26 0.14 53.8 % Average CBM Production, Ad Valorem and Other Fees (per Mcf) 0.27 0.14 0.13 92.9 % Average CBM Transportation, Gathering and Compression Costs (per Mcf) 1.12 0.80 0.32 40.0 % Average CBM Depreciation, Depletion and Amortization Costs (per Mcf) 1.21 1.18 0.03 2.5 % Total Average CBM Production Costs (per Mcf) $ 3.00 $ 2.38 $ 0.62 26.1 % Total Average CBM Production Margin (per Mcf) $ 1.01 $ 0.59 $ 0.42 71.2 % The CBM segment had natural gas revenue of $315 million for the year ended December 31, 2022 compared to $194 million for the year ended December 31, 2021.
For the Years Ended December 31, 2023 2022 Variance Percent Change CBM Gas Sales Volumes (Bcf) 40.6 43.7 (3.1) (7.1) % Average Sales Price - Gas (per Mcf) $ 3.22 $ 7.20 $ (3.98) (55.3) % Gain (Loss) on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf) $ 0.28 $ (3.18) $ 3.46 108.8 % Total Average CBM Sales Price (per Mcf) $ 3.51 $ 4.01 $ (0.50) (12.5) % Average CBM Lease Operating Expenses (per Mcf) 0.49 0.40 0.09 22.5 % Average CBM Production, Ad Valorem and Other Fees (per Mcf) 0.16 0.27 (0.11) (40.7) % Average CBM Transportation, Gathering and Compression Costs (per Mcf) 1.61 1.12 0.49 43.8 % Average CBM Depreciation, Depletion and Amortization Costs (per Mcf) 1.23 1.21 0.02 1.7 % Total Average CBM Production Costs (per Mcf) $ 3.49 $ 3.00 $ 0.49 16.3 % Total Average CBM Production Margin (per Mcf) $ 0.02 $ 1.01 $ (0.99) (98.0) % The CBM segment had natural gas revenue of $131 million for the year ended December 31, 2023 compared to $315 million for the year ended December 31, 2022.
Other Expense For the Years Ended December 31, (in millions) 2022 2021 Variance Percent Change Other Income Right-of-Way Sales $ 4 $ 2 $ 2 100.0 % Other 5 7 (2) (28.6) % Total Other Income $ 9 $ 9 $ — — % Other Expense Professional Services $ 4 $ 7 $ (3) (42.9) % Bank Fees 11 12 (1) (8.3) % Other Land Rental Expense 3 4 (1) (25.0) % Other Corporate Expense 1 2 (1) (50.0) % Total Other Expense $ 19 $ 25 $ (6) (24.0) % Total Other Expense $ 10 $ 16 $ (6) (37.5) % • Professional services decreased in the period-to-period comparison primarily due to a decrease in legal fees. 53 Gain on Asset Sales and Abandonments, net A net gain on asset sales of $9 million was recognized in the year ended December 31, 2022 compared to a gain of $42 million in the year ended December 31, 2021.
The decrease in litigation settlements in the period-to-period comparison was the result of various items, none of which were individually material. 53 Other Expense For the Years Ended December 31, (in millions) 2023 2022 Variance Percent Change Other Income Right-of-Way Sales $ 5 $ 4 $ 1 25.0 % Other 4 5 (1) (20.0) % Total Other Income $ 9 $ 9 $ — — % Other Expense Professional Services $ 2 $ 4 $ (2) (50.0) % Bank Fees 11 11 — — % Other Land Rental Expense 3 3 — — % Other Corporate Expense 2 1 1 100.0 % Total Other Expense $ 18 $ 19 $ (1) (5.3) % Total Other Expense $ 9 $ 10 $ (1) (10.0) % • Professional services decreased in the period-to-period comparison primarily due to a decrease in legal fees.
The $121 million increase was primarily due to an 84.1% increase in the average sales price for natural gas in the current period. The natural gas price increases were partially offset by the 11.7% decrease in CBM gas sales volumes due to normal production declines.
The $184 million decrease was primarily due to a 55.3% decrease in the average sales price for natural gas in the current period and a 7.1% decrease in CBM gas sales volumes due to normal production declines.
Payment of the principal and interest on the CNXM Credit Facility is guaranteed by certain of CNXM's subsidiaries. CNX is not a guarantor of the CNXM Facility. Total Equity and Dividends CNX had total equity of $2,950 million at December 31, 2022 compared to $3,700 million at December 31, 2021.
Payment of the principal and interest on the CNX Credit Facility is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner). Total Equity and Dividends CNX had total equity of $4,361 million at December 31, 2023 compared to $2,950 million at December 31, 2022.
Future results of operations for any particular quarterly or annual period could be materially affected by changes in the Company’s assumptions. 58 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.
Changes in the average costs per Mcfe were primarily related to the following items: • Lease operating expense increased on a per unit basis as a result of an increase in repairs and maintenance expense, including both routine and water storage system maintenance, and an increase in water disposal costs driven by more produced water being taken to disposal instead of being reused in well completions. • Production, ad valorem and other fees increased on a per unit basis as a result of increased realized prices on natural gas and NGLs. • Transportation, gathering and compression expense increased on a per unit basis primarily due to increased processing costs due to a wetter production mix, increased electrical compression expense, increased repairs and maintenance expense and lower volumes. • Depreciation, depletion and amortization expense decreased on a per unit basis due to a lower annual depletion rate primarily resulting from low-cost reserve additions from development during the 2021 period.
The remaining variance is primarily due to normal production declines offset, in part, by an increase in NGL sales volume from new wells turned-in-line and an increase in ethane recoveries. 46 Changes in the average costs per Mcfe were primarily related to the following items: • Production, ad valorem and other fees decreased on a per unit basis primarily due to decreased realized prices on natural gas. • Transportation, gathering and compression expense increased on a per unit basis primarily due to increased processing fees, increased electrical compression expense, increased repairs and maintenance expense and lower volumes. • Depreciation, depletion and amortization expense decreased on a per unit basis due to a lower annual depletion rate primarily resulting from low-cost reserve additions from development during the 2022 period.
The $1,346 million increase was due primarily to a 76.4% increase in the average sales price for natural gas and a 12.6% increase in the average sales price of NGLs, offset in part by a 0.8% decrease in total Shale gas sales volumes.
The $2,165 million decrease was due primarily to a 65.9% decrease in the average sales price for natural gas, a 44.3% decrease in the average sales price of NGLs, and a 3.1% decrease in total Shale gas sales volumes.
This well was originally part of the 2023 development plan, and in order to not delay other wells, CNX plugged the wellbore and plans on accessing the reserves at a future date. During the year ended December 31, 2021, the Company sold various non-core assets, primarily rights-of-way, surface acreage and other non-core oil and gas interests.
During the year ended December 31, 2022, the Company chose to plug and abandon a Shale wellbore. This well was originally part of future development plans, and in order to not delay other wells, CNX plugged the wellbore and planned to access the reserves at a future date.
These amounts included depletion on a unit of production basis of $0.65 per Mcfe and $0.66 per Mcfe, respectively. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations. OTHER SEGMENT The Other Segment includes nominal shallow oil and gas production which is not significant to the Company.
The decrease in total dollars and increase in unit costs was primarily due to the lower volumes in the current period. These amounts included depletion on a unit of production basis of $0.64 per Mcfe and $0.65 per Mcfe, respectively. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.
As a result, CNX experienced a significant increase in revenue and cash flows during the year ended December 31, 2022. In the current economic environment, CNX expects that commodity prices for some or all of the commodities we produce will remain volatile.
Natural Gas, NGL, and Oil Pricing Prices for natural gas, NGLs and oil that CNX produces significantly impact revenue and cash flows. In the current economic environment, CNX expects that commodity prices for some or all of the commodities we produce will remain volatile.
Average Realized Price Reconciliation The following table presents a breakout of liquids and natural gas sales information and settled derivative information to assist in the understanding of the Company’s natural gas production and sales portfolio and information regarding settled commodity derivatives: For the Years Ended December 31, in thousands (unless noted) 2022 2021 Variance Percent Change LIQUIDS NGL: Sales Volume (MMcfe) 37,997 35,858 2,139 6.0 % Sales Volume (Mbbls) 6,333 5,976 357 6.0 % Gross Price ($/Bbl) $ 38.16 $ 33.90 $ 4.26 12.6 % Gross NGL Revenue $ 241,535 $ 202,670 $ 38,865 19.2 % Oil/Condensate: Sales Volume (MMcfe) 1,476 2,401 (925) (38.5) % Sales Volume (Mbbls) 246 400 (154) (38.5) % Gross Price ($/Bbl) $ 81.90 $ 56.32 $ 25.58 45.4 % Gross Oil/Condensate Revenue $ 20,155 $ 22,541 $ (2,386) (10.6) % GAS Sales Volume (MMcf) 540,696 551,989 (11,293) (2.0) % Sales Price ($/Mcf) $ 6.27 $ 3.55 $ 2.72 76.6 % Gross Gas Revenue $ 3,390,422 $ 1,958,718 $ 1,431,704 73.1 % Hedging Impact ($/Mcf) $ (3.35) $ (0.98) $ (2.37) (241.8) % Loss on Commodity Derivative Instruments - Cash Settlement $ (1,812,777) $ (539,016) $ (1,273,761) (236.3) % The increase in gross revenue was primarily the result of the $2.72 per Mcf increase in natural gas prices, when excluding the impact of hedging, and the $4.26 per Bbl increase in NGL prices.
Average Realized Price Reconciliation The following table presents a breakout of liquids and natural gas sales information and settled derivative information to assist in the understanding of the Company’s natural gas production and sales portfolio and information regarding settled commodity derivatives: For the Years Ended December 31, in thousands (unless noted) 2023 2022 Variance Percent Change LIQUIDS NGL: Sales Volume (MMcfe) 44,461 37,997 6,464 17.0 % Sales Volume (Mbbls) 7,410 6,333 1,077 17.0 % Gross Price ($/Bbl) $ 21.24 $ 38.16 $ (16.92) (44.3) % Gross NGL Revenue $ 157,573 $ 241,535 $ (83,962) (34.8) % Oil/Condensate: Sales Volume (MMcfe) 1,236 1,476 (240) (16.3) % Sales Volume (Mbbls) 206 246 (40) (16.3) % Gross Price ($/Bbl) $ 65.88 $ 81.90 $ (16.02) (19.6) % Gross Oil/Condensate Revenue $ 13,577 $ 20,155 $ (6,578) (32.6) % GAS Sales Volume (MMcf) 514,669 540,696 (26,027) (4.8) % Sales Price ($/Mcf) $ 2.20 $ 6.27 $ (4.07) (64.9) % Gross Gas Revenue $ 1,131,068 $ 3,390,422 $ (2,259,354) (66.6) % Hedging Impact ($/Mcf) $ 0.32 $ (3.35) $ 3.67 109.6 % Gain (Loss) on Commodity Derivative Instruments - Cash Settlement $ 163,026 $ (1,812,777) $ 1,975,803 109.0 % The decrease in gross revenue was primarily the result of the $4.07 per Mcf decrease in natural gas prices, when excluding the impact of hedging, the $16.92 per Bbl decrease in NGL prices, and the 19.8 Bcfe decrease in sales volume.
See Item 7A., “Quantitative and Qualitative Disclosures About Market Risk” for further discussion of our commodity risk management. 55 Cash Flows (in millions) For the Years Ended December 31, 2022 2021 Change Cash Provided by Operating Activities $ 1,235 $ 926 $ 309 Cash Used in Investing Activities $ (528) $ (421) $ (107) Cash Used in Financing Activities $ (689) $ (524) $ (165) Cash provided by operating activities changed in the period-to-period comparison primarily due to the following items: • Net loss decreased $357 million in the period-to-period comparison. • Adjustments to reconcile net loss to cash provided by operating activities primarily consisted of an $165 million net change in commodity derivative instruments, a $62 million change in deferred income taxes, a $54 million change in depreciation, depletion and amortization, a $33 million change in gain on asset sales and abandonments, net, and various other changes in working capital.
Cash Flows (in millions) For the Years Ended December 31, 2023 2022 Change Cash Provided by Operating Activities $ 815 $ 1,235 $ (420) Cash Used in Investing Activities $ (509) $ (528) $ 19 Cash Used in Financing Activities $ (326) $ (689) $ 363 Cash provided by operating activities changed in the period-to-period comparison primarily due to the following items: • Net income increased $1,863 million in the period-to-period comparison. • Adjustments to reconcile net income to cash provided by operating activities primarily consisted of a $2,778 million net change in commodity derivative instruments, a $573 million benefit from the change in deferred income taxes, a $123 million increase in gain on asset sales and abandonments, net, and a $45 million net benefit from various other changes in working capital.
See Note 6 – Income Taxes in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for additional information. 54 Liquidity and Capital Resources Overview, Sources and Uses CNX generally has satisfied its working capital requirements and funded its capital expenditures and debt service obligations with cash generated from operations and proceeds from borrowings.
Liquidity and Capital Resources Overview, Sources and Uses CNX generally has satisfied its working capital requirements and funded its capital expenditures and debt service obligations with cash generated from operations and proceeds from borrowings.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAll of CNX's transactions are denominated in U.S. dollars, and, as a result, it does not have material exposure to currency exchange-rate risks. 63 Natural Gas Hedging Volumes As of January 5, 2023, the Company's hedged volumes for the periods indicated are as follows: For the Three Months Ended March 31, June 30, September 30, December 31, Total Year 2023 Fixed Price Volumes Hedged Bcf 103.9 113.0 114.6 114.7 429.7* Weighted Average Hedge Price per Mcf $ 2.70 $ 2.42 $ 2.41 $ 2.47 $ 2.47 2024 Fixed Price Volumes Hedged Bcf 97.5 98.1 99.2 99.2 381.3* Weighted Average Hedge Price per Mcf $ 2.27 $ 2.43 $ 2.43 $ 2.43 $ 2.38 2025 Fixed Price Volumes Hedged Bcf 91.7 92.8 93.8 94.9 373.2 Weighted Average Hedge Price per Mcf $ 2.38 $ 2.37 $ 2.37 $ 2.37 $ 2.37 2026 Fixed Price Volumes Hedged Bcf 72.5 82.6 83.3 83.3 321.7 Weighted Average Hedge Price per Mcf $ 2.55 $ 2.63 $ 2.63 $ 2.62 $ 2.61 2027 Fixed Price Volumes Hedged Bcf 34.6 35.0 35.4 35.4 140.4 Weighted Average Hedge Price per Mcf $ 3.29 $ 3.32 $ 3.32 $ 3.46 $ 3.35 *Quarterly volumes do not add to annual volumes inasmuch as a discrete condition in individual quarters, where basis hedge volumes exceed NYMEX hedge volumes, does not exist for the year taken as a whole. 64
Biggest changeAll of CNX's transactions are denominated in U.S. dollars, and, as a result, it does not have material exposure to currency exchange-rate risks. 62 Natural Gas Hedging Volumes As of January 5, 2024, the Company's hedged volumes for the periods indicated are as follows: For the Three Months Ended March 31, June 30, September 30, December 31, Total Year 2024 Fixed Price Volumes Hedged Bcf 104.8 108.7 107.6 114.8 434.2* Weighted Average Hedge Price per Mcf $ 2.61 $ 2.49 $ 2.48 $ 2.55 $ 2.53 2025 Fixed Price Volumes Hedged Bcf 92.7 95.6 96.7 96.7 375.1* Weighted Average Hedge Price per Mcf $ 2.44 $ 2.43 $ 2.43 $ 2.42 $ 2.41 2026 Fixed Price Volumes Hedged Bcf 80.6 86.9 87.7 87.7 339.0* Weighted Average Hedge Price per Mcf $ 2.51 $ 2.55 $ 2.55 $ 2.54 $ 2.53 2027 Fixed Price Volumes Hedged Bcf 53.3 53.9 54.5 54.5 216.2 Weighted Average Hedge Price per Mcf $ 3.31 $ 3.33 $ 3.33 $ 3.42 $ 3.35 *Quarterly volumes do not add to annual volumes inasmuch as a discrete condition in individual quarters, where basis hedge volumes exceed NYMEX hedge volumes, does not exist for the year taken as a whole. 63
The Company's market risk strategy incorporates fundamental risk management tools to assess market price risk and establish a framework in which management can maintain a portfolio of transactions within predefined risk parameters. CNX believes that the use of derivative instruments, along with our risk assessment procedures and internal controls, mitigates our exposure to material risks.
The Company's market risk strategy incorporates fundamental risk management tools to assess market price risk and establish a framework in which management can maintain a portfolio of transactions within predefined risk parameters. CNX believes that the use of derivative instruments, along with our risk assessment procedures and internal controls, mitigates our exposure to material pricing risks.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK In addition to the risks inherent in operations, CNX is exposed to financial, market, political and economic risks. The following discussion provides additional detail regarding CNX's exposure to the risks of changing commodity prices, interest rates and foreign exchange rates.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK In addition to the risks inherent in operations, CNX is exposed to certain financial, market, political and economic risks. The following discussion provides additional detail regarding CNX's exposure to the risks of changing commodity prices, interest rates and foreign exchange rates.
A hypothetical 100 basis-point increase in the average rate for CNX's variable-rate instruments would decrease pre-tax future earnings as of December 31, 2022 and 2021 by $2 million and $4 million, respectively, on an annualized basis.
A hypothetical 100 basis-point increase in the average rate for CNX's variable-rate instruments would decrease pre-tax future earnings as of December 31, 2023 and 2022 by $2 million on an annualized basis.
CNX’s primary exposure to market risk for changes in interest rates relates to CNX’s revolving credit facility, under which there were no borrowings at December 31, 2022 and $192 million at December 31, 2021, and CNXM's revolving credit facility, under which there were $154 million of borrowings at December 31, 2022 and $185 million at December 31, 2021.
CNX’s primary exposure to market risk for changes in interest rates relates to CNX’s Credit Facility, under which there was $52 million of borrowings at December 31, 2023 and no borrowings at December 31, 2022, and CNXM's Credit Facility, under which there was $105 million of borrowings at December 31, 2023 and $154 million at December 31, 2022.
CNX is exposed to market price risk in the normal course of selling natural gas and liquids. CNX uses fixed-price contracts, options and derivative commodity instruments (over-the-counter swaps) to minimize exposure to market price volatility in the sale of natural gas. Under our risk management policy, it is not our intent to engage in derivative activities for speculative purposes.
CNX is exposed to market price risk in the normal course of selling natural gas and liquids. CNX uses fixed-price contracts, options and derivative commodity instruments (over-the-counter swaps) to minimize exposure to market price volatility in the sale of natural gas and NGLs.
All of the derivative instruments without other risk assessment procedures are held for purposes other than trading. They are used primarily to mitigate uncertainty and volatility and cover underlying exposures.
CNX has established risk management policies and procedures to strengthen the internal control environment of the marketing of commodities produced from its asset base. All of the derivative instruments without other risk assessment procedures are held for purposes other than trading. They are used primarily to mitigate uncertainty and volatility and cover underlying exposures.
For a summary of accounting policies related to derivative instruments, see Note 1 – Significant Accounting Policies in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K.
For a summary of accounting policies related to derivative instruments, see Note 1 – Significant Accounting Policies in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K. CNX’s open derivative instruments can cause earnings volatility relative to changes in market prices until the derivative contracts are either settled or are monetized prior to settlement.
These instruments change the variable-rate cash flow exposure on the debt obligations to fixed cash flows. At December 31, 2022 and 2021, CNX had $2,055 million and $1,839 million, respectively, aggregate principal amount of debt outstanding under fixed-rate instruments, including unamortized debt issuance costs of $14 million and $17 million, respectively.
At December 31, 2023 and 2022, CNX had $2,065 million and $2,055 million, respectively, aggregate principal amount of debt outstanding under fixed-rate instruments, including unamortized debt issuance costs of $12 million and $14 million, respectively. At December 31, 2023 and 2022, CNX had $157 million and $154 million, respectively, of debt outstanding under variable-rate instruments.
A sensitivity analysis has been performed to determine the incremental effect on future earnings related to open derivative instruments at December 31, 2022 and 2021. A hypothetical 10 percent increase in future natural gas prices would have decreased the fair value by $816 million and $625 million at December 31, 2022 and 2021, respectively.
A hypothetical 10 percent increase in future natural gas prices would have decreased the fair value by $557 million and $816 million at December 31, 2023 and 2022, respectively. A hypothetical 10 percent decrease in future natural gas prices would have increased the fair value by $557 million and $679 million at December 31, 2023 and 2022, respectively.
Typically, CNX “sells” swaps under which it receives a fixed price from counterparties and pays a floating market price, but occasionally CNX may find it advantageous to purchase, rather than “sell”, financial swaps. CNX has established risk management policies and procedures to strengthen the internal control environment of the marketing of commodities produced from its asset base.
Under our risk management policy, it is not our intent to engage in derivative activities for speculative purposes. Typically, CNX "sells" swaps under which it receives a fixed price from counterparties and pays a floating market price, but occasionally CNX may find it advantageous to purchase, rather than "sell", financial swaps.
CNX’s open gas derivative instruments can cause earnings volatility relative to changes in market prices until the derivative contracts are either settled or are monetized prior to settlement. At December 31, 2022 and December 31, 2021 our open derivative instruments were in a net liability position with fair values of $1,905 million and $976 million, respectively.
At December 31, 2023 and 2022 our open commodity derivative instruments were in a net liability position with fair values of $56 million and $1,905 million, respectively. A sensitivity analysis has been performed to determine the incremental effect on future earnings related to open derivative instruments at December 31, 2023 and 2022.
A hypothetical 10 percent decrease in future natural gas prices would have increased the fair value by $679 million and $607 million at December 31, 2022 and 2021, respectively. CNX's interest expense is sensitive to changes in the general level of interest rates in the United States. The Company uses derivative instruments to manage risk related to interest rates.
CNX's interest expense is sensitive to changes in the general level of interest rates in the United States. The Company uses derivative instruments to manage risk related to interest rates. These instruments change the variable-rate cash flow exposure on the debt obligations to fixed cash flows.
Removed
At December 31, 2022 and 2021, CNX had $154 million and $377 million, respectively, of debt outstanding under variable-rate instruments.

Other CNX 10-K year-over-year comparisons