CNX Resources (CNX) Q1 2024 earnings summary

Executive summary

• Generated $25 million of Q1 free cash flow, the 17th consecutive positive quarter; cumulative free cash flow since Q1 2020 reached ~$1.9 billion.

• Q1 net income was $6.9 million and diluted EPS was $0.04, versus $710.4 million and $3.61 a year earlier; prior-year results included a large unrealized commodity-derivative gain.

• Production rose to 140.4 Bcfe from 135.9 Bcfe, while lower realized gas and NGL prices reduced production revenue and margin.

• Continued a seven-year plan focused on free cash flow, per-share value and capital discipline through the commodity cycle.

Financial highlights

• Revenue and other operating income totaled $384.6 million, down from $1.276 billion; commodity-derivative gains were $7.5 million versus $762.2 million in Q1 2023.

• Natural gas, NGL and oil revenue was $326.0 million versus $455.6 million; cash-settled hedge gains were $54.7 million versus losses of $61.0 million.

• Operating expenses were $318.9 million versus $320.6 million; other expense rose to $59.4 million from $27.4 million, including a $7.0 million debt-extinguishment loss.

• Operating cash flow was $185 million, capital expenditures were $168 million, and cash used in financing was $24 million.

• Q1 cash operating margin was 58%; fully burdened cash costs before DD&A were $1.20 per Mcfe.

Outlook and guidance

• 2024 production guidance was reduced to 540–560 Bcfe from 570–590 Bcfe; adjusted EBITDAX guidance fell to $925 million–$1.075 billion from $1.0–$1.15 billion.

• 2024 capital expenditure guidance declined to $525–$575 million from $575–$625 million; free cash flow guidance was reaffirmed at ~$300 million.

• Guidance reflects lower gas prices and volumes, partly offset by stronger NGL prices; expected 2024 free cash flow includes ~$30 million of asset sales and ~$75 million from New Technologies.

• Deferred completion activity on 11 wells due to weak near-term gas prices; returning to ~580 Bcfe production in 2025 requires $50 million of deferred well capital early in the year, with expected capex of ~$550 million.

• Free cash flow is expected to be weighted to H2 as capex declines and pricing improves; quarterly production is expected to decline next quarter, then rise toward year-end.