4/24/2025

speaker
Conference Operator
Call Operator/Moderator

Good day and welcome to the CNX resources first quarter 2025 Q&A conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you can press the star button, then one on your phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Tyler Lewis, Vice President of Investor Relations. Please go ahead.

speaker
Tyler Lewis
Vice President of Investor Relations

Thanks and good morning to everybody. Welcome to CNX's first quarter Q&A conference call. Today we will be answering questions related to our first quarter results. This morning we posted to our Investor Relations website an updated slide presentation and detailed first quarter earnings release data such as quarterly E&P data, financial statements and non-GAAP reconciliations which can be found in a document titled 1Q 2025 earnings results and supplemental information of CNX resources. Also we posted to our Investor Relations website our prepared remarks for the quarter which we hope everyone had a chance to read before the call as the call today will be used exclusively for Q&A. With me today for Q&A are Nick Deolius, our President and CEO, Alan Shepard, our Chief Financial Officer and Abneet Bell, our Chief Operating Officer. Please note that the company's remarks made during this call including answers to questions include forward-looking statements which are subject to various risks and uncertainties. These statements are not guarantees of future performance and our actual results may differ materially as a result of many factors. A discussion of the risks and uncertainties related to those factors in CNX's business is contained in its filings with the Securities and Exchange Commission and in the release issued today. With that, thank you for joining us this morning and Operator can you please open the call up for Q&A at this time.

speaker
Conference Operator
Call Operator/Moderator

Thank you. We will now begin the question and answer session and again to ask a question you may press star then one on your touchtone phone. If you're using a speakerphone please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question please press star then two. Our first question will come from Zach Parham with JP Morgan. Please go ahead.

speaker
Zach Parham
JP Morgan Analyst

Hey, thanks for taking my questions. I guess first just wanted to ask on activity levels you'll have a significant amount of turning lines in one queue with 19. Can you talk about the rest of the turning lines here in the year? When do those come in line and maybe comment on what the production trajectory should look like through the back half of the year and maybe into 2026? Yeah, hey,

speaker
Alan Shepard
Chief Financial Officer

this is Alan. A lot of those tills came in line for the later part of the first quarter. As we mentioned on the last call the bulk of some of our completion activity was going to be scheduled in the first half of the year. So you'll see a few more tills in Q2 and probably a lull in Q3 and then some additional tills coming in in Q4.

speaker
Zach Parham
JP Morgan Analyst

Thanks. And then just wanted to follow up on the four queue call you talked about having the flexibility to add some activity to the program in the second half of the year. Given the volatility we've seen in gas prices, how are you thinking about flexing that activity and maybe talk about the timeline on when you would have to make a decision on whether or not to add some activity?

speaker
Alan Shepard
Chief Financial Officer

Yeah, right now there's no planned changes to the activity side. We'll kind of watch it through this part of the shoulder season here and where we see the end of summer storage is targeting and go off that as our queue. Thanks.

speaker
Conference Operator
Call Operator/Moderator

Our next question will come from Leo P. Mariani with Roth Capital Partners. Please go ahead.

speaker
Leo P. Mariani
Roth Capital Partners Analyst

Hey, just a couple of quick questions here on some of the numbers here. Looks like you guys actually paid some cash taxes in the first quarter. A little bit surprising. Generally thought you guys weren't going to be paying much on the cash tax side. Just curious if that was kind of a one-off. And then just on the buyback, kind of very robust number here in first quarter, $125 million, pretty big number. Is it fair to think that kind of around this $30 level you guys think it's a pretty compelling investment here on the buyback?

speaker
Alan Shepard
Chief Financial Officer

Yeah, on the cash taxes front, we're still a de minimis cash taxpayer. You know, if you're seeing noise trying to reconcile deferred tax to things, that's basically from the hedge book. We don't become a material tax cash payer until about $3 billion in cumulative free cash flow, which is the current projections called sometime 27, 28 as we've talked about previously. There is a little bit of state tax starting to hit, but again, that's all very de minimis. In terms of your latter question, yeah, I think we're always, we see value in kind of the repurchases when we do them as part of our process.

speaker
Leo P. Mariani
Roth Capital Partners Analyst

Okay, appreciate that. And I just wanted to ask if you guys have got any kind of further intel in terms of how the Trump administration might be looking at changes in 45Q here?

speaker
Alan Shepard
Chief Financial Officer

No, we don't have anything outside of what's in the public domain.

speaker
Tyler Lewis
Vice President of Investor Relations

Okay, thank you.

speaker
Conference Operator
Call Operator/Moderator

Our next question will come from Gabe Dowd with TD Cohen.

speaker
Gabe Dowd
TD Cohen Analyst

Thanks. Hey, morning everyone. Maybe just following up on Zach's question earlier, could you maybe just give us a sense then of what volume trajectory looks like? Imagine just given a heavy first half, you're declining into the second half and probably into 26. So what's the production level that you guys would like to hold flat into 26? Is it 1.4 B's a day on the gas side? And if that's the case, what's the cap X level needed to hold that flat into 2026?

speaker
Alan Shepard
Chief Financial Officer

Yeah, I think if you take out the till comments I made earlier, you can kind of infer from that, you know, if you want to do quarterly production. Again, we don't get too tied up in looking at quarterly production and even annual production levels. You know, we have kind of a range. We've been in the last few years and I would expect going forward would be in that sort of range plus, you know, the volumes associated with Apex. But again, you know, we're selling for free cash flow per share as opposed to any particular production level target.

speaker
Gabe Dowd
TD Cohen Analyst

Understood. Thanks for that. And then I guess this is a follow up, some M&A in your backyard recently, maybe just any kind of updated thoughts on the transaction that just changed hand recently and what's going on in the area. Thank you, Morlin. And generally your views on future opportunities in the area. Thank you guys.

speaker
Alan Shepard
Chief Financial Officer

Yeah, no, we think it kind of reinforces what we've been saying for the last decade, which is that particular area of the basin is some of the best rock that's going to be moving forward. So, you know, from our perspective, we have significant anchor position up there and we're excited to have a new neighbor that's kind of validated our thesis on the area.

speaker
Gabe Dowd
TD Cohen Analyst

Gotcha. Thanks,

speaker
Conference Operator
Call Operator/Moderator

guys. Our next question will come from Noah Hogness with Bank of America. Please go ahead.

speaker
Noah Hogness
Bank of America Analyst

Morning, guys. For my first question here, I was hoping to ask you on slide six. It looks like your NYMEX and NGL pricing has kind of declined as you guys kind of worked to market with strip moving down and then also the natural gas differentials seem to have widened a bit, but your free cash flow guidance for the year is unchanged. So could you kind of walk us through some of the potential improvements in the base business that's kind of driving that free cash flow resiliency?

speaker
Alan Shepard
Chief Financial Officer

Yeah, just a reminder, we're 85% hedged. When you see the open volumes pricing change, you're really talking about just call it three quarters of exposed pricing at this point on 15% of the volume. So there's not a huge amount of little room associated with open pricing left for the full year. And then, you know, the free cash flow guidance we give, it is a point number, but it's really sort of a range around a number. So when you get overly specific and trying to reanalyze it, we'll be in that range and we're reaffirming that range.

speaker
Noah Hogness
Bank of America Analyst

And then we've seen some PowerGen and data center announcements in that kind of in that southwest central PA area. And I was just kind of hoping to get your guys' latest view on how you see in-base and demand developing and if you think we'll continue to see announcements over the next six to 12 months.

speaker
Alan Shepard
Chief Financial Officer

Yeah, in my opinion, I think you're going to see a lot of announcements and we'll see how many of those translate into actual construction. Overall, bullish for all the operators in the basin. Very similar to any sort of utility coming in. I'm sure everyone will be able to benefit from the increase in base and demand and shrinking of differentials associated with that. So we'll see which ones actually develop, but generally a great backwind to have for everyone. Sounds

speaker
Conference Operator
Call Operator/Moderator

good, guys. Thanks. And if you have a question, please press star, then one. Our next question will come from Jacob Roberts with TTH. Go ahead.

speaker
Jacob Roberts
TTH Analyst

Morning. Morning. I was hoping to hear some thoughts about the APEX turn-in lines that happened during the quarter, just how those are performing relative to the base business and the outlook there.

speaker
Nick Deolius
President and CEO

Yeah, go ahead. Hi, this is Nav. Yeah, the eight wells that we brought online from APEX, they are pretty increasing, you know, as we expected. So we are pretty optimistic about the long-term production on these wells.

speaker
Jacob Roberts
TTH Analyst

Great, thanks. And my second question, I think you guys have spoken to there not necessarily being a correlation between attribute sales and a Buchanan power facility. I'm just hoping to clarify if that facility showing up on the PJM deactivation list will have any impact on that segment or if there are any other of those types of deactivations we might need to be thinking about.

speaker
Alan Shepard
Chief Financial Officer

That won't have any impact on our EA sales. We use multiple facilities across PJM to create those credits. Thanks, appreciate the time.

speaker
Conference Operator
Call Operator/Moderator

This concludes our question and answer session. I would like to turn the conference back over to Tyler Lewis for any closing remarks.

speaker
Tyler Lewis
Vice President of Investor Relations

Great, thank you again for joining us this morning. Please feel free to reach out if anyone has any additional questions. Otherwise, we look forward to speaking with everyone again next quarter. Thank you.

speaker
Conference Operator
Call Operator/Moderator

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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