Q4 2021 CONSOL Energy Inc Earnings Call

Good day, and welcome to the Consol Energy's fourth quarter and full fiscal year 2021 earnings conference call.

Speaker 1: Good day and welcome to the console energies 4th quarter and full fiscal year 2021 earnings conference call. All participants will be in a listen only mode. Should you need assistance? Please signal a conference specialist by pressing the star key followed by 0.

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Please note. This event is being recorded I would now.

Speaker 1: I would now like to turn the conference over to Nathan Tucker, Director of Finance and Investor Relations. Please go ahead. Thank you, and good morning, everyone. Welcome to Consol Energy's fourth quarter and full fiscal year 2021 earnings conference call. Any forward-looking statements or comments we make about future expectations are subject to some risk.

Now like to turn the conference over to Nathan Tucker Director of Finance and Investor Relations. Please go ahead. Thank you and good morning, everyone. Welcome to Consol Energy's fourth quarter and full fiscal year 2021 earnings conference call any forward looking statements or comments, we make about future expectations are subject to some risks certain of which we have outlined in our press.

Speaker 1: certain of which we have outlined in our press release and in our SEC filings, and are considered forward-looking statements within the meaning of Section 21e of the Securities Exchange Act of 1934. We do not undertake any obligations of updating any forward-looking statements for future events or otherwise.

The release and in our SEC filings and are considered forward looking statements within the meaning of section 20 <unk> of the Securities Exchange Act of 1934, we do not undertake any obligations of updating any forward looking statements for future events or otherwise we will also be discussing certain non-GAAP financial measures, which are defined and reconciled to comparable GAAP.

Speaker 1: We will also be discussing certain non-GAAP financial measures which are defined and reconciled to comparable GAAP financial measures in our press release and furnished to the SEC on Form 8K, which is also posted on our website.

Financial measures in our press release and furnished to the SEC on form 8-K, which is also posted on our website. Additionally, we expect to file our 10-K for the year ended December 31, 2021 with the SEC. This Friday February 11th which will include updates required under applicable SEC rules, including technical report summary for our material.

Speaker 1: Additionally, we expect to file our 10K for the year-ended December 31, 2021 with the SEC this Friday, February 11, which will include updates required under applicable SEC rules, including technical report summaries for our material reserves and resources pursuant to regulation SK1300. You can find additional information regarding the company on our website, www.consolenergy.com, which includes a supplemental slide deck that was posted this morning.

Our reserves and resources pursuant to regulation SK <unk> hundred <unk>.

You can find additional information regarding the company on our website Www Dot Consol energy Dot Com, which includes a supplemental slide deck that was posted this morning.

Speaker 1: On the call with me today are Jimmy Brock, our Chief Executive Officer, Matej Dakhar, our Chief Financial Officer, Dan Connell, our Senior Vice President of Strategy, and Bob Braithwaite, our Vice President of Marketing and Sales. In his prepared remarks, Jimmy will provide a recap of our key achievements during the fourth quarter and full year 2021, and specific insights on operations and sales.

On the call with me today are Jimmy Brock, our Chief Executive Officer, <unk>, Chief Financial Officer, Dan <unk>, Our senior Vice President of strategy and Bob Braithwaite, Our vice President of marketing and sales and his prepared remarks, Jimmy will provide a recap of our key achievements during the fourth quarter and full year 2021, and specific insights on operations and sales.

Speaker 1: We will then provide an update on our liability management initiatives and financial performance and will introduce our 2022 guidance. In his closing comments, Jimmy will lay out our key priorities for 2022. After the prepared remarks, there will be a Q&A session in which Dan and Bob will also participate. With that, let me turn it over to our speakers.

<unk> will then provide an update on our liability management initiatives and financial performance and will introduce our 2022 guidance and his closing comments Jimmy will lay out our key priorities for 2022. After the prepared remarks, there will be a Q&A session in which Dan and Bob will also participate with that let me turn it over to our CEO Jimmy Brock.

Thank you Nate and good morning, everyone.

Speaker 2: Thank you, Nate, and good morning everyone. Consolo Energy achieved a strong financial performance for the fourth quarter and full year of 2021, despite some operational issues in the late third and early fourth quarters. We've also advanced some of our key strategic growth initiatives during the year.

<unk> energy achieved a strong financial performance for the fourth quarter and full year of 2021, despite some operational issues in the late third and early fourth quarters. We've also advanced some of our key strategic growth initiatives during the year.

Speaker 2: First and foremost, we made significant progress on our Ipman's Lobo Medellar School Project, and it remained on schedule and on budget.

First and foremost we made significant progress on our <unk> low vol metallurgical project and it remains on schedule and on budget.

Speaker 2: Second, our Pennsylvania mining complex ended the year on a high note during Q4 of 2021, where we achieved the highest quarterly sales price for our coal since the first quarter of 2018.

Second our Pennsylvania mining complex ended the year on a high note during Q4 of 'twenty, one where we achieved the highest quarterly sales price for our coal since the first quarter of 2018.

Speaker 2: We also moved past the geological issues that impacted our performance in Q3 of 21, which extended into October , before returning to a more normalized run rate with our four operating long-hauls starting in November .

We also moved past the geological issues that impacted our performance in Q3 of 'twenty, one which extended into October before returning to a more normalized run rate with our four operating longwall starting in November .

Speaker 2: Third, we finished full year 2021 with a cash cost of coal sold at just above $28 per ton, which was impressive considering the inflationary pressures we encountered throughout the year.

Third we finished full year 2021, with a cash cost of coal sold at just above $28 per ton, which was impressive considering the inflationary pressures wind countered throughout the year.

Speaker 2: Finally, we generated $186 million of free cash flow during full year 2021.

Finally, we generated $186 million of free cash flow again full year 2021.

Speaker 2: added almost $100 million of unrestricted cash to our balance sheet, and made payments of $101 million toward our outstanding legacy debt, while additionally raising $75 million in tax-exempt bonds to fund future expenditures on our refuse disposal areas at the PAMC. We believe these strong results will create additional financial flexibility for us as we move forward.

Added almost $100 million of unrestricted cash to our balance sheet and made payments of 101 million towards our outstanding legacy debt, while additionally, raising $75 million in tax exempt bonds to fund future expenditures on our refuse disposal areas at AMC.

We believe these strong results will create additional financial flexibility for us as we move forward.

Speaker 2: I am very excited about 2022, where we expect to see the completion of the EPMEN project.

I am very excited about 2022, where we expect to see the completion of the <unk> project.

Speaker 2: There's a tremendous opportunity in front of us to expand our revenue through Inquiry's pricing in 2022 and follow that up with even more revenue growth in 2023 as the Ipman mine is expected to have its first four-year production coupled with the potential for incremental volumes out of the PAMC.

There is a tremendous opportunity in front of us to expand our revenue to increase pricing in 2022, and followed that up with even more revenue growth and 2023 at the <unk> mine is expected to have its first full year of production coupled with the potential for incremental volumes out of the AMC.

Let me now discuss our Q4 'twenty one operational performance in more detail.

Speaker 2: Let me now discuss our Q421 operational performance in more detail.

Speaker 2: Whole production at the Pennsylvania Monin Complex came in at 5.6 million times in Q4 of 21.

Coal production at the Pennsylvania mining complex came in at $5 6 million tonnes in Q4 of 'twenty one.

Speaker 2: October production was effective due to the lingering geological issue.

October production was affected due to the lingering geological issues than when we started producing at full run rate pace. The railroads were not able to consistently move to increased volumes due to COVID-19 related on availability of crews.

Speaker 2: Then when we started producing at full run rate pace, the railroads were not able to consistently move the increased volumes due to COVID-related unavailability of crews.

Speaker 2: These delays limited our shipments in the fourth quarter, which weighed on our production output, and ultimately prevented us from hitting our 24 million ton midpoint guidance target for the four year of 2021.

These delays limited our shipments in the fourth quarter, which weighed on our production output and ultimately prevented us from hitting our 24 million ton midpoint guidance target for the full year of 2021.

Speaker 2: Productivity at the PMC in 2021 measured as tons per employee hour improved by 13% compared to 2020 and the complex ended the year with production of 23.9 million tons.

Productivity at the PMC in 2021 measured as tons per employee hour improved by 13% compared to 2020 and the complex ended the year with production of $23 9 million tonnes.

Speaker 2: Given the aforementioned transportation delays, we also ended up with 309,000 tons of coal and inventory or in transit.

Given the aforementioned transportation delays. We also ended up with 309000 tons of coal in inventory or in transit.

Speaker 2: On the cost fraud, our PAMC average cash cost of Colso Patan was elevated in Q4 of 21, finishing at $30.81 compared to $27.49 per ton and Q4 of 20.

On the cost front, our PMC average cash cost of coal sold per ton was elevated in Q4 of 'twenty, one finishing at $30 81.

Compared to $27 49 per ton in Q4 of 'twenty the.

Speaker 2: The increase in our per-tun cash cost was the result of limited production as well as increased maintenance, supply, contractor and project expenses associated with the geological issues that we encountered early in the fourth quarter. The ongoing development of the fifth long wall, which is progressing as expected and will enhance our production option now that it once completed, also added to our Q4-21 cost.

The increase in our per ton cash cost was the result of limited production as well as increased maintenance supply contract and project expenses associated with the geological issues that we encountered early in the fourth quarter.

The ongoing development of the fifth longwall, which is progressing as expected and will enhance our production optionality. Once complete also added to our Q4 'twenty one cost.

Speaker 2: Despite the higher Q4 costs, the PAMC ended the year with a cash cost of coal-soaked per ton of $28.25 compared to $29.12 in 2020, largely driven by the significant improvement in our production and increased productivity year over year.

Despite the higher Q4 cost that.

<unk> ended the year with a cash cost of coal so per ton of $28 25, compared to $29 12, and 2020, largely driven by the significant improvement in our production and increased productivity year over year.

Speaker 2: The Consolverine Tarmel had a throughput volume of 3.1 million times during Q4 of 21.

The Consol Marine terminal had a throughput volume of $3 1 million tonnes during Q4 of 'twenty one.

Speaker 2: Terminal revenues for the quarter came in at 15.5 million with CMT operating cash calls of 5.4 million.

Terminal revenues for the quarter came in at $15 5 million with CMT operating cash costs of $5 4 million.

Speaker 2: For 2021, the Termo had a very strong operational performance. Finishing the year with 13.8 million throughput tons, which was its second highest throughput tonnage on record.

For 2021, the terminal had a very strong operational performance, finishing the year with $13 8 million throughput tonnes, which was its second highest throughput tonnage on electric.

Speaker 2: Terminal revenue for 2021 came in at 65.2 million with CMT operating cash cost of 21.8.

<unk> revenue for 2021 came in at $65 $2 million with CMT operating cash cost of $21 8 million. This resulted in CMT adjusted EBITDA of $43 5 million in 2021 and marks the fourth consecutive year of CMT EBITDA above four.

Speaker 2: This resulted in CMT adjusted EBITDA of 43.5 million in 2021, and marks the fourth consecutive year of CMT EBITDA above 40 million.

<unk> million dollars.

Speaker 2: on the marketing front. The demand for our product remains strong in the fourth quarter of 21, due to the continued improvement in electric power and industrial demand domestically and across the globe.

On the marketing front the.

The demand for our products remained strong in the fourth quarter of 'twenty, one due to the continued improvement in electric power and industrial demand domestically and across the globe.

Speaker 2: During the quarter, we sold 5.6 million tons of coal at an average revenue per ton of $51.27, compared to 5.9 million tons at an average revenue per ton of $39.5 in the year ago period.

During the quarter, we sold five 6 million tons of coal at an average revenue per ton of $51 in 2007.

Compared to $5 9 million tons at an average revenue per ton of $39 five in the year ago period.

Speaker 2: This brought our total PAMC time sold in 2021 to 23.7 million with an average revenue of $45.75 per ton compared to 18.7 million ton sold with an average revenue of $41.31 per ton in 2020.

This brought our total AMC tons sold in 2021 to $23 7 million with an average revenue of $45 75 per ton compared to $18 7 million tons sold with an average revenue of $41 31 per ton in 2020.

This significant pricing improvement was due to the continued rise in demand for our product and the ongoing coal supply tightness compared to the prior year period.

Speaker 2: This significant pricing improvement was due to the continued rising demand for our product and the ongoing co-support tightness compared to the prior year period.

Speaker 2: Looking at the broader coal market picture, we expect coal demand to remain robust domestically as well as internationally due to strong forward pricing and tight supply.

Looking at the broader coal market picture.

We expect coal demand to remain robust domestically as well as internationally due to strong forward pricing and tight supply.

Speaker 2: Our sales team was successful in securing additional sales contracts in 22 and 23. In addition, we are very excited to announce that we recently entered into long-term coal supply contracts in the export market, with multiple buyers for approximately 7 million tons of coal to be delivered through 2024.

Our sales team was successful in securing additional sales contracts and 22 and 23. In addition, we are very excited to announce that we recently entered into long term coal supply contracts and the export market with multiple buyers for approximately 7 million tons of coal to be delivered through.

2024.

Speaker 2: Approximately 73% of this was directly contracted with a large industrial cost.

Approximately 73% of this was directly contracted with a large industrial customer.

Longer duration contracts are not typical in the export market and this contract highlights the success, we've been able to achieve in establishing a high quality product as it desirable and consistent component and export industrial applications.

Speaker 2: Longer-duration contracts are not typical on the export market. In this contract highlights the success we've been able to achieve in establishing our high-quality product as a desirable and consistent component in export industrial applications.

Speaker 2: After accounting for these recent deals, our contracted position has grown and we are now near fully contracted for 2022 and have 11.4 million times contracted in 2023.

After accounting for these recent deals our contracted position is strong and we are now near fully contracted for 2022 and have 11.

4 million tons contracted in 2023.

Speaker 2: Our Ipman project continued to progress as expected in Q421, and the relocation of the preparation plant remains on track. This assembly of the purchase plant is mostly complete. Earthwork at the Ipman plant site is also near completion, and construction of foundations and structural steel are underway.

Our <unk> project continues to progress as expected in Q4, 'twenty, one and the relocation of the preparation plant remains on track. This assembly at the purchase plant is mostly complete earthwork at the <unk> plant site is also nearing completion and construction of foundations and structural steel.

Are underway.

Speaker 2: We're still targeting a full production ramp up in the second half of 22.

We're still targeting a full production ramp up in the second half of 'twenty two. Additionally.

Speaker 2: Additionally, we have succeeded and continue to build out our workforce in preparation for this ramp up plan despite ongoing challenges in the labor.

Additionally, we have succeeded in continuing to build out our workforce in preparation for this ramp up plan despite ongoing challenges in the labor market.

Speaker 2: We've also initiated marketing efforts for Ipman-Lovab Metal Arts School product to both domestic and international customers, which has been well received.

We've also initiated marketing efforts for our <unk> low vol metallurgical product to both domestic and international customers, which has been well received.

Speaker 2: We believe there's a lot of excitement in the marketplace for this product. With high quality, low-volmet reserves become increasingly scarce in the US.

We believe there is a lot of excitement in the marketplace for this product with high quality low vol met reserves become an increasingly scarce in the U S.

Speaker 2: Our Edmund Project produced and sold approximately 100,000 tons of low-vaw metallurgical coal on a clean coal equivalent basis during 2021 and generated positive operating cash flow, 80-bottle continued strength in the Met coal mine.

Alright, and then project produced and sold approximately 100000 tons of low vol. Metallurgical coal on a clean coal equivalent basis during 2021 and generated positive operating cash flow aided by the continued strength in the met coal market.

Speaker 2: This is even more impressive when you consider that this product was being sold raw, which highlights the free cash flow potential of the IpnMine. Once our prep plant is fully operational and we're able to reap the full value of our finished product and achieve a unit cost structure consistent with a full run rate operation. With that, I will now turn the call over to Mattess.

This is even more impressive when you consider that this product was being sold raw, which highlights the free cash flow potential of the <unk> mine once our prep plant is fully operational and we are able to reap the full value of our finished products and achieve a unit cost structure consistent with a full run rate operation.

With that I will now turn the call over to potash.

Speaker 3: Thank you Jimmy and good morning everyone. Before I interview the fourth quarter results, let me provide a high level comparison of what we discussed at the end of 4Q20 regarding our 2021 outlook and where we ended up.

Thank you Jimmy and good morning, everyone.

Before I review the fourth quarter results, let me provide a high level comparison of what we discussed at the end of <unk> 'twenty regarding our 2021 outlook and where we ended up.

Speaker 3: Plus, we begin the year with the target to sell 22 to 24 million tons of coal in 2021.

We begin to yield with the target to sell 22 to 24 million tons of coal in 2021.

Speaker 3: Throughout the year, we took advantage of improving coal markets and battled various operational and logistical challenges, some within and some outside our control to deliver coal sales of 23.7 million tons, which was at the top end of our original guidance range.

Throughout the year, we took advantage of improving coal markets and battled various operational and logistical challenges some within and outside our control to deliver coal sales of $23 7 million tons, which was at the top end of our original guidance range.

Speaker 3: Second, we not only captured the volume improvement, but we were also able to capture a meaningful pricing improvement.

We not only captured the volume improvement, but we were also able to capture a meaningful pricing improvement.

Speaker 3: There are approximately 18.2 million tons sold with an expected revenue pattern of $41.56 and when we report at 420 Resorts.

Good approximately $18 2 million tons sold with unexpected revenue per ton of $41 56, when we reported <unk> results.

Speaker 3: But we ended 2021 with a sales price of $45.75 a ton, which allowed us to significantly increase the margins and free cash flow generation.

But we ended 2021 with a sales price of $45 75, a ton, which allowed us to significantly increase.

Margins and free cash flow generation.

Speaker 3: Third, we originally got it to a cash cost of co-sold of $27-$29 a ton and ended at $28.25 Under 15 million dollars later live for LA June 2011.

We originally guided to a cash cost of coal sold of 27 to $29 a ton and ended at $28 25, a ton for 2021.

Speaker 3: Our operations team did a phenomenal job of delivering costs within the guidance range, despite unprecedented inflationary pressures, difficult geology, logistics bottlenecks, and multiple COVID variants that resulted in higher absenteeism for our workforce.

Our operations team did a phenomenal job of delivering cost within the guidance range despite unprecedented inflationary pressures.

Our geology logistics bottlenecks and multiple COVID-19 weighed against that resulted in higher absenteeism bought our workforce.

Speaker 3: Fourth, on the legacy liabilities front, we now have a fully funded status on our defined benefit pension plan. We also took advantage of the funded status and strong equity markets of 2021 to de-risk our pension plan further and move to a 2575 equity to fixed income split compared to 4060 split at the end of 2020.

On the legacy liabilities front, we now have a fully funded status on our defined benefit pension plan. We also took advantage of the funded status and strong equity markets of 2021 to Derisk, our pension plan, Florida.

And move to a $25 75 equity to fixed income split compared to 40 60 split at the end of 2020.

Speaker 3: Fifth, all of this helped us generate $186 million of free cash flow, which is significant for a company with current market cap of just over $800 million.

All of this helped us generate $186 million of free cash flow, which is significant for a company with current market cap of just over $800 million.

Speaker 3: This free cash flow allowed us to make significant progress on the financial priorities we laid out at the beginning of the year. Key among these were reducing our leverage to just under 1.5 times at the end of 2021 compared to 2.54 times at the end of 2020. Reducing our outstanding debt by an aggregate amount of 101 million dollars, which was partially offset by our 75 million dollar bet for bond issue.

This free cash flow allowed us to make significant progress on the financial priorities, we laid out at the beginning of the year.

Key among these were reducing our leverage to just under one five times at the end of 2021 compared to $2 five four times at the end of 2020, reducing our outstanding debt by an aggregate amount of $101 million, which was partially offset by our $75 million, but far bond issuance improved.

Speaker 3: Improving our available liquidity at the end of 2021 to 381 million compared to 326 million at the end of 2020. And finally, we were also able to move forward with internally funding some of our strategic growth initiatives, such as our Edmund Project, which will allow us to diversify our revenue stream and further accelerate value creation for our shareholders.

Improving our available liquidity at the end of 2021% to $381 million come back to $326 million.

The end of 2020 and finally, we are also able to move forward with internally funding some of our strategic growth initiatives, such as our <unk> project, which will allow us to diversify our revenue stream and further accelerate value creation for our shareholders.

Speaker 3: Before moving to our financial results, let me provide an update on the volatility we have seen in the API 2 market as it relates to our financial hedges for 2022. As a reminder, we hatched 2 million metric tons in the API 2 market for calendar year 2022 at a weighted average price of $79.34 per ton.

Before moving to our financial results, let me provide an update on the volatility we have seen in the API two market as it relates to our financial hedges for 2022.

As a reminder, we hedged 2 million metric tons in the API two market for calendar year 2022 at a weighted average price of $79 34.

None.

Speaker 3: Through the third quarter, we recorded nearly $168 million in unrealized pre-tax losses on commodity derivative instruments as Cal22 API 2 forwards, where at $157 per metric turn at the end of September 2021.

Through the third quarter, we recorded nearly $168 million in unrealized pre tax losses on commodity derivative instruments as Cal 'twenty two API two forward.

At $157 per metric ton at the end of September 2021.

Speaker 3: However, Cal22 API 2 price is retreated significantly in 4Q21 and as such we reverse approximately 116 million of

However, Cal 'twenty two API two prices recruited significantly in full year, 'twenty, one and as such we devoted approximately $116 million.

Speaker 3: These unrealized pre-tax losses in the fourth quarter ending the year and an unrealized loss position of $52 million.

These unrealized pre tax losses in the fourth quarter ending the year at an unrealized loss position of $52 million.

Speaker 3: We expect that as we go through calendar year 2022, the volatility of these hedges will decline as settlements occur both on the physical and financial side. As a reminder, we do not have any financial hedges for 2023 volume.

We expect that as we go through calendar year 2022.

Volatility of these hedges will decline as settlements occur both on the physical and financial side. As a reminder, we do not have any financial hedges for 2023 volumes.

Speaker 3: With that, let me now recap our fourth quarter and full year 2021 results before moving on to our 2022 rider.

With that let me now recap our fourth quarter and full year 2021 results before moving on to our 2022 guidance.

This morning, we reported a solid fourth quarter 2021 financial performance with a net income of $117 3 million or $3.30 per diluted share.

Speaker 3: This morning we reported a solid fourth quarter 2021 financial performance with a net income of $117.3 million or $3.30 per diluted shares which included previously mentioned $115.5 million on realised pre-tax market gain related to commodity deliver.

Which included the previously mentioned $115 $5 million unrealized pretax mark to market gain related to commodity derivatives net income. Excluding these unrealized gains and associated income tax effect was $30 7 million and adjusted EBITDA came in at $126 million.

Speaker 3: Net income, excluding these unrealized gains and associated income tax effect was 30.7 million and adjusted a bit.Keyman at 120.6 million.

Speaker 3: In 4Q21, we generated $52.4 million of cash flow from operations, which included $38.2 million of negative working capital changes, largely driven by an increase in our trade and no choice to see where we're going to.

And <unk> 21, we generated $52 4 million of cash flow from operations, which included $38 2 million of negative working capital changes largely driven by an increase in our trade in order to see Weibo's balance.

Speaker 3: Additionally, we spent 29.4 million in capital expenditures in 4Q21. This resulted in free cash regeneration of $24.5 million in the fourth quarter.

Additionally, we spent $29 4 million in capital expenditures and $40 91. This resulted in free cash flow generation of $24 5 million in the fourth quarter.

Speaker 3: For the full year 2021, we reported a net income of 34.1 million or 73.3 million when excluding the unrealized market market losses related to commodity data vetters and the associated income tax effects.

For the full year 2021, we reported a net income of $34 1 million or <unk> $73 3 million when excluding the unrealized mark to market losses related to commodity derivatives and associated income tax effect.

Speaker 3: Adjusted a bit of 378.2 million and incurred cap ex of 132.8 million.

Just had a bit of $378 2 million and incurred capex of $132 8 million.

Speaker 3: CEIX finished the year with free cash flow of 1806.4 million, marking the fourth consecutive year of positive free cash flow generation since becoming an independent public company in November 2017 and a net-leveled ratio of just under 1.5 times. Now let me-

<unk> finished the year with free cash flow of $186 4 million, marking the fourth consecutive year of positive free cash flow generation since becoming an independent public company in November 2017, and a net leverage ratio of just under one five times.

Now, let me provide you with our outlook for 2022.

Speaker 3: For the pencil-winy or mining complex, we are expecting our 2022 sales volumes to be slightly improved at the midpoint compared to our 2021 level.

For the Pennsylvania mining complex, we are expecting our 2022 sales volumes to be slightly improve at the midpoint compared to our 2021 levels.

Speaker 3: As such, we are providing a 2022 PMC Coltsel's volume range of 23 to 25 million tons.

As such we are providing a 2022.

<unk> coal sales volume range of 23 to 25 million tonnes.

Speaker 3: The upper boundary reflects our belief in our operations teams' ability to efficiently meet increased spot market demand with our four long walls, as well as our optimism that the transportation delays that plague the latter part of 2021 will be mitigated by the end of 1 Q2 022 as our logistics partners address their crew availability issues.

The upper boundary reflects our belief in our operations teams' ability to efficiently meet increased spot market demand with our four longwall as well as our optimism that the transportation delays that plagued the latter part of 2021 will be mitigated by the end of <unk> 2022, as our logistics partners address that crew availability issues.

Yeah.

Speaker 3: The lower boundary considers the possibility of transportation issues lingering past 1Q22 and the potential for other unforeseen supply chain or operational chain.

The lower boundary consider the possibility of transportation issues lingering past $1 22, and the potential for other unforeseen supply chain our operational challenges.

Speaker 3: The good news is that all our minds are currently running well and we are near fully contracted at the midpoint of our guidance range.

The good news is that all our mines are currently running well and.

And we are near fully contracted at the midpoint of our guidance range.

On the pricing front.

Speaker 3: To reflect a robust contracted position and the potential for continued strength in our power price and API Q-Linked volumes along with upside sales opportunities.

To reflect a robust contracted position and the potential for continued strength in our power price in API two linked volumes along with upside sales opportunities.

Speaker 3: We currently expect our average January per tonne to be in the 55 to 57 dollars per tonne range.

We currently expect our average revenue per ton to be in the 55% to $57 per ton range. Our guidance is also based on Cal 'twenty two power price expectation of $41 33 per megawatt hour at the midpoint and the sensitivity for every dollar per megawatt hour change in PJM west power prices as approximately 17 cents per ton.

Speaker 3: Our guidance is also based on Cal22 power price expectation of $41.33 per megawatt hour at the midpoint and the sensitivity for every dollar per megawatt hour chain in PJM less power prices is approximately 17 cents per ton on our entire portfolio at the midpoint.

On our entire portfolio at the midpoint.

We expect our 'twenty two PMC cash cost of coal sold to be 29 to $31 per ton.

Speaker 3: We expect our 2022 PMC cash cost of coal sold to be $29.31 per ton.

Speaker 3: We are expecting our cash cost to be elevated compared to 2021 to reflect the ongoing development of our first long wall through much of 2022 as well as continue to inflationary pressures on certain goods and service.

We are expecting our cash cost will be elevated compared to 2021 to reflect the ongoing development of our first longwall through much of 2022 as well as continued inflationary pressures on certain goods and services.

Speaker 3: While our team has done a good job of managing inflationary pressures in the past, it is becoming more difficult. And just like in many other industries, cost pressures remain elevated for us as well. In our case, the biggest drivers of cost inflation are the material, supplies, and power consumption categories. As always, we constantly focus on ways to reduce our costs.

While our team has done a good job of managing inflationary pressures in the past it is becoming more difficult and just like in many other industries cost pressures remain elevated for us as well.

In our case, the biggest travelers of cost inflation or the material supplies and power consumption categories as always.

We constantly focus on ways to reduce our costs and improve efficiencies. Additionally.

Speaker 3: Additionally, we are providing a CEIX Capital Expandedial Guidance range of 162 to 195 million.

Additionally, we are providing a <unk> capital expenditure guidance range of $162 million to $195 million.

At the midpoint, 65% of this is associated with BMC maintenance Capex, 25% related to the remaining development of the <unk> project and the remaining piece is associated with various operational and corporate initiatives, which we had highlighted in the earnings release in more detail.

Speaker 3: At the midpoint, 65% of this is associated with PMC maintenance gap X. 25% were led to the remaining development of the ITMAN project, and the remaining piece is associated with various operational and corporate initiatives which were highlighted in the earnings release in more detail.

As discussed earlier.

Speaker 3: As discussed earlier, our Itman Preparation Plan project is progressing as expected and on budget and we are reaffirming our guidance of second half 2022's data as well as all operating assumptions. We also expect to produce between 300 and 500,000 tons of coal on a clean coal equivalent basis from the Itman mind this year, of which the majority will come in the back half of 2022.

It's been preparation plant project is progressing as expected and on budget and we are reaffirming our guidance of second half 2022 startup.

As well as all operating assumptions, we also expect to produce between 300 and 500000 tons of coal on a clean coal equivalent basis from the Edmund mined this year.

Fixed the majority will come in the back half of 2022.

Speaker 3: To put this all into perspective, the trajectory of our business has improved drastically since 2020, and we believe current indicators support its continuance.

We put this all into perspective, the trajectory of our business has improved drastically since 2020.

And we believe current indicators support X continuance.

Speaker 3: We had significant volume growth and pricing improvement at the PMC in 2021 compared to 2020 level.

We had significant volume growth and pricing improvement at the PMC in 2021 compared to 2020 levels.

Speaker 3: Based on our 2022 guidance, we expect a substantial increase in PMC pricing of more than $10 per ton in 2022 at the guidance midpoint versus 2021 actual.

Based on our 2022 guidance, we expect a substantial increase in PMC pricing of more than $10 per ton in 2022 at the guidance midpoint was 2021 actuals.

As Jimmy previously mentioned, we also expect our admin project to be fully operational in the back half of the year and become a cash flow generator.

Speaker 3: As Jimmy previously mentioned, you also expect our Edmund project to be fully operational in the back half of the year and become a cash flow generator. Additionally, with our remaining open position, continued strengthen core markets, potential for additional PMC volumes, and fully out of production at Edmund, we could see further EBITDA growth in 2023. With that, let me turn it back to Jimmy to touch on our key priorities for 2022.

Additionally, with our remaining open position continued strength in core markets potential for additional PMC volumes and full year of production at Beckman.

See further EBITDA growth in 2023 with that let me turn it back to Jimmy to touch on our key priorities for 2022.

Thank you <unk>.

Speaker 2: First, as we always do, we prioritize safety and compliance across all of our operations.

First as we always do we prioritize safety and compliance across all of our operations.

Speaker 2: We will remain good stewards of the environment to the communities where we operate and most importantly to our people.

We will remain good stewards of the environment to the communities, where we operate and most importantly to our people.

Speaker 2: Second, we will continue to focus on strengthening our balance sheet and liquid it.

Second we will continue to focus on strengthening our balance sheet and liquidity.

Speaker 2: Due to our consistent free cash flow generation and expectations for 2022, we are optimistic moving forward that we will continue to deliver the balance sheet and reduce our absolute debt.

Due to our consistent free cash flow generation and expectations for 2022, we are optimistic moving forward that we will continue to delever, the balance sheet and reduce our absolute debt levels.

Speaker 2: Third, due to our strong contractive position in 22, we have turned our focus towards selling in 2023 and beyond. Aiming to improve the duration of revenue visibility and further seize the ongoing strength in the marketplace.

Third due to our strong contracted position in 'twenty two we have turned our focus towards selling in 2023 and beyond aiming to improve the duration of revenue visibility and further sees the ongoing strength in the marketplace.

Speaker 2: We are prepared to run to the market and will focus on the highest arbitrage opportunities while, simultaneously, carrying out our longer-term strategic shift into the export market.

We're prepared to run to the market and we will focus on the highest arbitrage opportunities while simultaneously carrying out our longer term strategic shift into the export markets.

Speaker 2: We will continue to build relationships globally to balance our domestic exposure and allow us to capitalize on growing international demand for our products.

We will continue to build relationships globally to balance our domestic exposure and allow us to capitalize on growing international demand for our product.

Speaker 2: Fourth, we are fully committed to getting our Ippman project up and running as quickly as possible. This will be a major focus of our team in early 2022, as this project is the next phase of our growth and diversification strategy.

Fourth we are fully committed to getting our Hickman project up and running as quickly as possible. This will be a major focus of our team in early 2022. As this project is the next phase of our growth and diversification strategy.

Speaker 2: There's a lot of excitement for our Itman product. And we are anxious to start placing this high-quality low-ball Met Coal into the mark.

There is a lot of excitement for our <unk> product and we are anxious to start placing this high quality low vol met coal into the market.

Speaker 2: We are also continuing the development work for an additional long wall at the end-low fort mine to provide access with the optionality to flex up production to capture future market upside potential and also to offset any unforeseen operational issues across the rest of the mining company.

Fifth we are also continuing the development work for an additional longwall at the Enlow Fork mine to provide ourselves with the optionality to flex up production to capture future market upside potential and also to offset any unforeseen operational issues across the rest of the mining complex.

Speaker 2: This should allow us to maintain four long walls worth of output more consistent.

This should allow us to maintain four longwall is worth of output more consistently which will support our strategy of run into the market, but also provide upside potential.

Speaker 2: which will support our strategy of running to the market but also provide upside potential.

Speaker 2: Finally, we want to be in a strong position to return capital to our shareholders in the most attractive manner. However, we feel strongly that in the short term we have more work to do on our debt reduction goals and de-leverage and targets, as well as finishing our capital investment and developing the Edmund project.

Finally, we want to be in a strong position to return capital to our shareholders in the most attractive manner. However, we feel strongly that in the short term we have more work to do on our debt reduction goals and deleveraging targets as well as finishing our capital investment in developing the <unk> project.

Speaker 2: But with continued co-market strength and free cash flow generation, we expect to achieve those targets in the coming quarter.

But what's continued co market strength and free cash flow generation, we expect to achieve those targets in the coming quarters.

Speaker 2: In summary, I'm very pleased with the accomplishments of our team in 2021. Our employees did a commendable job working through multiple operational and logistical challenges during the year, mitigating risk and seizing on upside opportunities. All while working safely and compilinally, during the year that was mild in multiple COVID variants and the associated challenges to community health.

In summary, I am.

Very pleased with the accomplishments of our team in 2021.

Our employees did a commendable job working through multiple operational and logistical challenges during the year mitigating risks and seizing on upside opportunities all while working safely and compliant Lee Joanna.

During the year that was mired in multiple culvert variance and the associated challenges to community health.

Speaker 2: We believe we've positioned ourselves well and are prime to execute our strategy in 2022.

We believe we have positioned ourselves well and are prime to execute our strategy in 2022.

Speaker 2: Moving forward, we're excited by the outlook of our business and the potential to continue to generate significant free cash flow.

Moving forward.

We're excited by the outlook of our business and the potential to continue to generate significant free cash flow.

Speaker 2: This cash flow generation will not only allow us to meet our debt reduction goals, but will also allow us to grow the intrinsic value of our X.

This cash flow generation will not only allow us to meet our debt reduction goals, but will also allow us to grow the intrinsic value of our equity I expect this equity value could go even further when the project starts generating positive free cash flow later this year with that I will hand, the call back over to Nate.

Speaker 2: I expect this equity value could grow even further when the Ipman Project starts generating positive free cash flow later this year. With that, I will hand the call back over to next.

Speaker 1: Thank you Jimmy. We will now move to the Q&A session of our call. At this time I'd like to ask our operator to please provide the instructions to our call.

Jimmy we will now move to the Q&A session of our call at this time I would like to ask our operator to please provide the instructions to our callers.

Speaker 3: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone.

Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.

Speaker 4: If you're using a speaker phone, please pick up your handset before pressing the key.

If you are using a speakerphone please pick up your handset before pressing the keys.

Speaker 4: If at any time your question has been addressed and you would like to withdraw your question, please press star them too. At this time we will pause momentarily to assemble our last.

If at any time. Your question has been addressed and you would like to withdraw. Your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.

Our first question will come from Nathan Martin with the Benchmark Company. Please go ahead.

Speaker 4: Our first question will come from Nathan Martin with the benchmark company. Please go ahead. Hey, good morning guys. Thanks for taking...

Hey, good morning, guys. Thanks for taking my questions.

Good morning Nate.

Speaker 5: So maybe I'll start real quick. You mentioned transportation delays during the quarter, and I know you guys aren't the only ones that have experienced those. But how many times would you estimate slipped, maybe here into the first quarter, and would you expect the bill to make up all of those service issues to kind of get better, maybe towards the end of the first quarter as you alluded to, hopefully?

So maybe I'll start real quick you mentioned transportation delays during the quarter and I know you guys aren't the only ones that have experienced those but how many times would you estimate slipped maybe here to the first quarter and would you expect to be able to make up all of those service issues.

Get better maybe towards the end of the first quarter as you alluded to hopefully.

Speaker 2: Well, first, you know, we have been working with our transportation partners and talk with them. You know, it's clearly a cruise availability issue, but it's hard to put a number on. I mean, we ended the year with 310,000 tons in inventory there, but also we met some opportunities to produce, to whereas we could not get the rail service here to move those away. And Bobby, I don't know if you have a-

Well first.

We have been working with our transportation partners and talk with them.

It's clearly a cruise availability issue, but it's hard to put a number on it I mean, we ended the year with 310000 tons in inventory there, but also we missed some opportunities to produce whereas we could not get the rail service here to move those away and Bobby I don't know if you have a.

Speaker 2: Number of tons. Yeah, I mean, a lot of those tons that I will say were in the silos and in transit, we have moved quite a bit of those here in the first quarter, or I should say in January . I will tell you, it seems as though the rowroads are improving. I'll be a little bit slower than what we would have hoped. But again, as Jimmy mentioned, we're hopeful by the end of the first quarter that these delays that we have experienced, will subside significantly.

Number of tons, yes.

All of those tons that I will say, we're in the silos and in transit we have moved quite a bit of those here in the first quarter or I should say in January .

I'll tell you it seems as though the railroads are improving, albeit a little bit slower than what we would've hoped.

But again.

Mentioned, we're hopeful by the end of the first quarter that these delays that we have experienced.

It will subside significantly.

Speaker 5: God, thanks for that color, guys. You know, maybe looking ahead.

Got it thanks for that color guys.

And maybe looking ahead.

Speaker 5: essentially fully contracted for 2022. Maybe you could comment on the split domestic versus exports and then you nearly doubled your contract position for 23 to 11.4 million tons. Maybe could you give us an idea on the split of those times as well as maybe some commentary I'm pricing there, that'd be great. Sure.

And so we fully contracted for 2022, maybe you could comment on the split of domestic versus exports and then.

Nearly doubled your contracted position for 2003 to $11 4 million tons, maybe could you give us an idea of the split of those tons as well as well as maybe some commentary on pricing there that'd be great.

Sure Nate so.

Speaker 2: Last year we are, I should say, 2021, we exported just over 11 million tons, which was a record for us. This year will probably be closer to about 9 million tons of total exports, and that's basically on the back of stronger demand here in the US.

Last year, we are I should say 2021, we export it just over 11 million tons, which was a record for us. This year will probably be closer to about 9 million tons of total exports and that's basically on the back of stronger demand here in the U S and the longer term contracts, we were able to secure because of it.

Speaker 2: in the longer term contracts we were able to secure because of it. I will say that we do have some customers, domestic customers, whose lanes are a bit challenged from a logistical perspective.

I will say that we do have some customers domestic customers, whose lanes are a bit challenged from a logistical perspective.

Speaker 1: and should that continue, we could see additional exports this year is trains that move in and out of our terminal seem to be turning quite well.

And should that continue we could see additional exports. This year as trains that move in and out of our terminal seem to be turning quite well.

Speaker 2: Looking ahead, you know, as we know the growth is in the export market, particularly into Asia. So I would expect to see more of our coal continue to flow that direction in the future, but you know, by no means am I suggesting that we're going to abandon our domestic customer base. You know, if the demand is there, we'll work with our operations and our logistic partners to ensure we maximize, you know, our productions themselves.

Looking ahead.

As we know the growth is any export market particular into particularly into Asia.

I would expect to see more of our coal continued to flow that direction in the future but.

By no means am I, suggesting that we're going to abandon our domestic customer base. If the demand is there we will work with our operations and our logistic partners to ensure we maximize our production and sales.

Speaker 2: As far as 2023 is concerned, as you mentioned, we've nearly doubled our contract to position to 11.4 million tons.

As far as 2023 is concerned as.

As you mentioned, we nearly doubled our contracted position to $11 4 million tonnes.

Speaker 1: Although we're not providing pricing guidance and mainly due to the fact that you know these markets are extremely volatile and we still have call it 50 plus percent of our volume Left to sell next year What I can tell you is that of the 11.4 million tons Approximately a million and a half are linked to power prices

Although we're not providing pricing guidance and mainly.

Mainly due to the fact that these markets are extremely volatile and we still have call. It 50% of our volume left to sell next year.

I can tell you is that of the $11 4 million tons, approximately 1 million and a half are linked to power prices.

Speaker 6: Approximately four million are contracted into the export market.

Approximately $4 million or contracted into the export market.

Speaker 6: and the balance of approximately 6 million are domestic and fixed price.

And the balance of approximately $6 million or domestic and fixed priced so with that being said.

Speaker 6: So that being said, you know, the API two markets are slightly backwardated.

The API two markets are slightly backward dated so I would say, it's safe to assume that based on the current futures that are pricing on those 11 4 million tonnes or are slightly lower than our 2022 midpoint. However.

Speaker 6: So I would say it's safe to assume that based on the current futures that our pricing on those 11.4 million tons are slightly lower than our 2022 midpoint. However, you know, as I just mentioned, we do have over 50% of our coal left to sell. And I will tell you that we are in discussions today with with additional business with domestic international customers. So, you know, by our next call, hopefully we'll be layering in additional volumes and be able to provide you a little bit more, more Keller.

As I just mentioned, we do have over 50% of our coal left to sell and I will tell you that we are in discussions today with the additional business with domestic international customers. So by our next call hopefully will be layering in additional volumes and be able to provide you a little bit more more color around that.

Speaker 5: Bob, I appreciate the additional info there. And I guess as well, you guys talked about the long-term, long-term export contract with about 7 million times through 24. I'm curious, I'm guessing your chunk of that was there, million, 23, but also curious about how pricing works on that. Is that something you guys have to head as well? Maybe just to talk there.

Bob that's great I appreciate the additional info, there and I guess.

You guys talked about the long term long term export contract with about 7 million ton through 'twenty four.

I'm curious I'm guessing here.

Chunk of that was there were three.

But also curious about how pricing works on that is that something you guys have the heads as well maybe just your thoughts there.

Speaker 6: So I'll give you some background on that made that Jim mentioned we're very excited to put these opportunities to bed. So there are for approximately seven million tons. They begin in the second quarter of this year and run through 2024. Of that seven million, approximately one million tons are at a fixed price.

So I'll give you I'll give you some some background on that nave as Jim mentioned, we're very excited to put these opportunities to bed.

So therefore, approximately 7 million tons. They begin in the second quarter of this year and run through 2024.

Of that $7 million, approximately 1 million tons or at a fixed price.

Speaker 6: and the balancer call it six million tons or index link to the API too.

And the balance are call. It 6 million tons are linked index linked to the API too.

Speaker 6: I will also tell you that these deals have floor and ceiling prices incorporated into the contract.

I will also tell you that these deals have floor and ceiling prices incorporate into the contracts.

Speaker 6: and the floor prices are above our full year 2021 average realize price.

And the floor prices are above our full year 2021 average realized price in.

Speaker 6: and the ceiling prices are such that, you know, we still have the ability to capture significant upside. Should the markets remain strong or even rally compared to the current forward?

In the ceiling prices are such that we still have the ability to capture significant upside should the markets remained strong or even rally compared to the current forwards. So again I'd like to say that these are monumental deals for consol, which which have downside protection with plenty of upside opportunity in <unk>.

Speaker 6: So again, I like to say that these are monumental deals for console which have downside protection with plenty of upside opportunities.

Speaker 2: And so we don't have any hedges, as Mattash mentioned in history, Mark in 2023, but these, this contractor was having a floor process, as well as the ceiling kind of takes share of the head situation for us.

So we don't we don't have any hedges as <unk> mentioned in his remark in 2023, but these this contract here with having a floor process as well as the selling kind of take share of the hedge situation for us.

Speaker 5: Great, thank you. Just real quick, as well guys, on the fifth long wall, you mentioned everything's going to plan start up in the fourth quarter. Given that, you may expect 23 production, maybe to be up versus 22 production.

Great. Thank you just real quick guys on the fifth Longwall mentioned everything is going as planned startup in the fourth quarter.

Given that should we expect 23 production, maybe it would be up versus 22 production.

Speaker 2: I think it's fair to state that if we do bring the fifth long, long, and the market space where it currently is today, you know, we do have some upside potential there. It's just a matter of how quick we can get the fourth long wall starting. You're the operations teams knows that. They're working.

I think it's fair to state that if we if we do bring the fifth longwall in the market stays where it currently is today, we do have some upside potential. There is just a matter of how quick we can get the fourth longwall started the operations teams knows that they are working very hard to advance those rates, but it's still going to be at.

Speaker 2: very hard to advance those rates, but it's still going to be at the very earliest it'll be, you know, I would think somewhere late November early December before we can start that wall to our timing currently shows today.

Very earliest it'll be.

Would think somewhere late November early December before we can start that wallet to our timing currently shows today, but if things continue to improve we can bring that down a little bit earlier, and obviously, if we have that fifth longwall up and running and there is opportunities in the market. There. We certainly would we would have the upside potential.

Speaker 2: But if things continue to improve, we could bring that on a little bit earlier and obviously if we have that fifth long wall up and running and there's opportunities in the market there, we certainly would have the ups up.

Speaker 3: Nate, I would also say that availability of rails continues to be one of the things that we watch too. So, you know, having the fifth long war ready along with improved rail rail delivery system would be helpful.

I'll also say that of the level of deal flow continues to be.

One of the things that we watch too so having the first longwall Verde along with improved rail.

As delivery system would be helpful.

Speaker 5: Got it. Thank you guys. And maybe finally, and Jimmy, I know you touched on this a little bit in your prepared remarks, but maybe just some additional thoughts on uses of cash. Obviously, you guys have done a fantastic job paying down debt, using leverage in 2021. Is debt still priority number one? And Pest, you think you mentioned the past, is trying to get to sub one time. And once you get there, when do you think if you get there, and how would you rank, priorities for free cash flow? You know what that is?

Got it. Thank you Jonathan maybe finally, and Jimmy I know you've touched on this a little bit in your prepared remarks, but maybe just some additional thoughts on uses of cash. Obviously you guys have done a fantastic job paying down debt reducing leverage in 'twenty. One is that still priority number one.

In the past you think you've mentioned in the past that and trying to get to sub one time. Once you get there when do you think if you get there how would you rank priorities for free cash flow at that time.

Yes.

Speaker 2: Well, paying down debt still is number one for us and protecting the balance sheet. We want to make sure we're in good position to weather a bad storm if another one comes. And then obviously once we get in Matesh's mentioned it before, we get down to one kind of leverage. I think it's time for us to start looking at some shareholder Ossman now, as we mentioned earlier today. But you want anything to add? I'll also add that.

Well paying down debt still is number one for us and protecting the balance sheet, we want to make sure were in good position to weather a bad storm. If another one comes and then obviously once we get in <unk> mentioned it before we get down to one time leverage I think it's time for us to start looking at some shareholder Osman.

We mentioned earlier today, but you want to add anything to that and I'll also add that.

Speaker 3: Remember, we are also spending on the HIPMEN project right now and that CAP-X is front-end loaded. So I think from a timing perspective, I think you have the lever ratio targets, but also the spending on HIPMEN that we are trying to balance.

Remember that we are also spending on <unk> projects right now and that Capex is front end loaded so I think from a timing perspective I think.

You have the leverage ratio targets, but also the spending on equipment that we are trying to balance here.

Speaker 2: But if we continue to be in the markets that we're in today and Bobby and the South team continues their work, we'd like to get in a place where we actually can do both.

But if we continue to be in the markets that we're in today and Bobby and the sales team continues to work, we'd like to get in a place where we actually can do both.

Yeah.

Speaker 5: Make sense guys. I appreciate all your thoughts. I'll leave it there. Thanks for the time and best of luck in 22. Thanks, Nick. Thanks, Nick.

Makes sense guys I appreciate all your thoughts I'll leave it there. Thanks for the time and best of luck in 'twenty two.

Thanks, Nick.

Again, if you have a question. Please press Star then one our next question will come from Lucas pipes with B Riley Securities. Please go ahead.

Speaker 4: Again, if you have a question, please press star then one. Our next question will come from Lucas Pipes with Be Rylee Securities. Please go ahead.

Speaker 5: Hey, good morning everyone and good job on the quarter and appreciate the outlook. I wanted to ask a quick follow up question on the 7 million tons. So is it?

Hey, good morning, everyone and good job on the quarter.

I appreciate the outlook I wanted to ask.

A quick follow up question on the 7 million tons. So.

Is it is it right to conclude that you wouldnt hedge those volumes further from here that kind of with <unk>.

Speaker 7: edge those volumes further from here that kind of with the structure you have in place, the collar,

Structure you have in place.

Caller.

Youre comfortable asset stands.

Speaker 3: Yeah, I think Lucas is a fair assumption and the way that the contract is designed, it removes the need for us hedging. I think, you know, the coal markets continue to stay strong. I think that could be significant outside here. And remember, we also have some fixed price contracts in the domestic market and this one also has a flow that is about our 2021 real-life price. So I think we have pretty protected.

Yeah, I think Lucas, it's a fair assumption and the way that contract is designed to remove the need for.

As hedging.

<unk>.

Core markets continue to stay strong I think there could be significant upside here.

In November we also have some fixed fixed price contracts.

And in the domestic market and this one also the floor that is above our 2021 realized price. So I think we are pretty protected.

Speaker 3: 20 PE trav.en that construct but we don't need to have.

In 2023.

But that construct but we don't need to add area.

Very helpful.

Speaker 7: Who would be the main counterparties on the seven?

Who would be.

Main counterparties under 7 million tons is it mostly directly to end customers or their portion of this thats going through trader or something similar.

Speaker 7: that mostly directly to end customers or their portion of this that's going through a trader.

Lucas, it's mainly direct to an end user a large industrial customer in Asia.

Speaker 6: Look, if it's mainly direct to an end user, a large industrial customer in Asia.

What percentage of that.

Speaker 6: Roughly 70, I must say 76% or 74% some 73% sorry about that

Roughly 70, almost 76% or 74% 70, 373% sorry about that.

Very helpful and then.

Speaker 7: So really terrific deal. Put this BA.

So.

Really terrific terrific deal.

Could this be.

Yes.

Speaker 7: blue print for X-Men, asked me to

Our blueprint for Eastman.

<unk>.

Speaker 7: about to complete a project there, and that co-markets are red hot. Is there something of the structure that you could borrow and apply to G-Rex?

Youre about to complete the projects their micro markets are red Hot is there something of this structure that you could borrow and applied to de risking the returns on it.

Speaker 2: Well, we certainly would look at something like that as the opportunity presents itself. But for our Ipman project, it's such a high quality. We think that we're going to be domestically and internationally marking that goal and probably more on a fixed process.

Well, we're certainly we certainly would look at something like that as the opportunity presents itself, but.

For our <unk> project at such a high quality, we think that we're going to be domestically and internationally, marking that coal and probably more on a fixed price.

Basis.

Got it Okay. That's helpful. Thank you and then.

Speaker 7: About it. Ok that's, that's helpful. Thank you, and then turning to the cost side, a good job.

Hi.

To the cost side.

Drop.

Speaker 7: I wanted to get a little bit better sense for

Here in Q4, and then the outlook.

I wanted to get a little bit better sense for two.

2022 versus 2021.

Speaker 7: one. Admittedly, I thought there might be further upside risk given the inflationary pressures we all hear about all the time. It is...

Admittedly.

Hi.

I thought it might be.

Upside risks given the inflationary pressures, we all hear about all the time.

As part of the more muted inflation.

Speaker 7: part of the more muted inflation, the fact that you have these geologic issues in Q3, or how would you kind of...

Fact that you had these geologic issues in Q3 or how would you kind of.

Bridge 2021 versus 2022 cost alright, Thank you for your color on that.

Speaker 2: Yeah, Lucas, I think it's a combination of both when I look at 2021 cost. You know, we had some inflationary pressures there as Mattest mentioned in his remarks, particularly from some of the consumers and some of the products that we used to actually produce the coal.

Yes, Lucas I think it's a combination of both when I look at 2021 cost we had some inflationary.

Pressures there as <unk> mentioned in his remarks, particularly from some of the consumers in some of the products that we use to actually produce the coal, but we work closely with our suppliers and try to keep a handle on that.

Speaker 2: But we work closely with our suppliers and try to keep a handle on that as best we can and then obviously the geological issues.

Best we can and then obviously the geological issues that we had.

Speaker 2: that we had at our Bailey Mon, certainly adds that, I mean, you had additional roof support, you had additional labor, and you have things to come back. We actually had...

Bailey mine certainly adds that you added additional real support yet additional labor and things to come there and we actually had close to four months of that on and off that we had increased cost there, but looking forward into 2022, we did raise our guidance from $29 to 31 and prep.

Speaker 2: You know, close to four months of that, all enough that we had increased cost there.

Speaker 2: But looking forward into 2022, we did raise our guidance from $29 to 31 in preparation for some of these inflationary pressures that we see. But one thing I'll tell you, and you've heard me say this before, the Pennsylvania mine complex and all of that, every employee in Consol Energy is incentivized in some way or another on unit cost. And if you want to judge and how-

Operations for some of these inflationary pressures that we see but one thing I will tell you and you've heard me say this before the Pennsylvania mining complex and all of that every employee and Consol energy is incentivized in some way or another on unit cost and if you want to judge how well we've done on that.

Speaker 2: This year, 21 mocked the third consecutive year that we've had a lower cash cost than the previous.

This year 21 marked the third consecutive year that we've had a lower cash cost than the previous year. So it's something that we work very hard on things that we can control, but now when you get out to like steel all of our our ground control support team, we work closely with them and that was a big inflationary.

Speaker 2: So it's something that we work very hard on, on things that we can control.

Speaker 2: But now when you get out to like steel, you know, all of our ground control support team, we work closely with them. And that was a big inflationary part of our cost this year, just because of our steel process. When, you know, we use those not only for roof support, we're using for channels, we're using for a lot of other things as well.

Every part of our costs. This year, just because of where steel prices. We use those not only for roof support will use them for channels, we use them for a lot of other things as well so those type things or what will concentrate heavily on this year as well as the rubber and other products to try to stay well within the guidance of 29 to 31.

Speaker 2: So those top things are what we'll concentrate, you know, heavily on this year, as well as rubber and other products to try to stay well within the Guides of 29 to $31 ton on cash.

Total cash cost.

Terrific.

Speaker 7: Well I very much appreciate all your color and best of luck. Thank you.

Very much appreciate it.

All your color and best of luck. Thank you.

Thank you Lucas.

Speaker 4: Our next question will come from Matt Warder with Seat Wolf Research. Please go ahead.

Our next question will come from Matt <unk> with Wolfe Research. Please go ahead.

Hey, guys congratulations on a great quarter.

Speaker 8: Thank you guys, congratulations on a great quarter. I had a couple of questions. So the production guidance kind of implies that

A couple of questions.

Yes, so the production guidance kind of implies that there.

Speaker 8: There's not going to be a huge contribution from that fifth long wallet and low fork. Could you guys update us a little bit on the timeline there? And then my other question regarding that was, as that fifth long wall ramps up, does that potentially allow for some flexibility for some of the other properties to potentially, sell into the met market as that ramps up? Does that give you some, basically some flexibility with in terms of sales there? Thanks a lot.

There is not going to be a huge contribution from that fifth longwall at Enlow Fork.

Could you guys update us a little bit on the timeline there and then my other question regarding that was as debt.

Longwall ramps up does that potentially allow for some flexibility for some of the some of the other properties to potentially sell into the met market as that ramps up does that give you some some.

Basically some flexibility with the.

In terms of sales there thanks a lot.

Sure Matt So all the timing as I said earlier, it's going to be in the fourth quarter and it's just a matter of development for that first longwall. So we think the earliest it could be as sometime in mid November and it could be as late as December in Q4, just dependent on how the development goes for that section the operations team is aware.

Speaker 2: Sure, Matt. So all the timing, as I said, is going to be in the fourth quarter, and it's just a matter of development for that fifth long wall. So we think the earliest it could be is, sometime in mid-November, and it could be as late as December , in June 4, just depending on how the development goes for that section. The operations team is aware of it. They're working very hard at it, and things are going well, and I'll tell you that we are on pace now.

They are working very hard at it and things are going well and I would tell you that we are on pace now, but as far as increased production from the fifth longwall as potash mentioned earlier it depend upon.

Speaker 2: but as far as increased production for the fifth long wall as Mattash mentioned earlier it would depend upon you know if all the rail and transportation issues

The rail and transportation issues are clear and we can now move the call away because we do not have ground stores at the Pennsylvania mining complex. So we store all of our clean coal and all of our all coal and silos. So the rails have to perform to take it away, but there is upside potential there for that fifth longwall as law.

Speaker 2: and we can now move the cold away because we do not have ground stores at the Pennsylvania mine complex. So we store all of our clean cold and all of our raw cold and silo.

Speaker 2: so the rails have to perform to take it away. But there is upside potential there for that fifth long wall as long as we can move the coil away. And then...

Long as we can move the coal away and then.

Speaker 2: Another added feature as well is that if we do have issues such as we had in the third and fourth quarter and we have that fifth long-awaited set now we certainly can pick up lost ground by running that wall.

Another added feature as well is that if we do have issues such as we had in the third and fourth quarter and we add that fifth longwall set now we certainly can pick up lost ground by running that wall.

Speaker 2: So we think the way we're currently running today with four long walls running and with the rails performing, we can certainly move the collar away and we can produce and let those operations run at full pace without having to idle any. When you put the fifth long wall in there, it's a little more challenging because the rails have to perform optimally and as well as we have to schedule how we run, particularly on non-scheduled shields.

So we think the way we're currently running today with four longwall is run and with the rail performance. We can certainly move the coal away and we can produce and let those operations run at full pace without having to idle any when you put the fifth longwall in there.

It's a little more challenging because the rails have to perform optimally and as well as we have to schedule, how we run particularly on <unk>.

Non scheduled shifts.

Speaker 8: I got you. So in this, there's more to coordinate than just the production there. You have to also coordinate the logistics there as well. I get it. One other sort of follow up on that. I guess if provided that rail would be able to accommodate the additional time.

I gotcha.

Yes.

To coordinate the adjusted production there you have to also coordinate the logistics centers, while I get it.

One other follow up on that.

Yes.

Provided that rail would be able to accommodate the additional tons.

Speaker 8: Just to follow up on any possibility of, I think most views are that, met prices are gonna hold up a little bit better than thermal over the longer term. And if there's a possibility to capture any additional pricing upside on there. And then the last question I had was for the very forward contracts like 2023, and out to 2024, I assume most of those were done here in the last quarter.

Just just to follow up on any possibility of.

I think most of us are that met prices youre going to hold up a little bit better than thermal over the longer term.

If there is a possibility to capture any additional pricing upside.

On there and then the last question I had was.

For the for the very forward contracts like 2023 and out to 2020 for I assume most of those were done here in the last over the last quarter.

Speaker 6: Yeah Matt, this is Bob, I'll take that. As far as that fifth long wall, the great part about that long one when it returns, it will be in some lower sulfur premium quality coal. So to answer your question, yes, I think there's an opportunity for us to grow our crossover met business out of the Pennsylvania mining complex with that production and we'll always seek to optimize and sell that coal, we realize the best price back to the mine.

Yes, Matt this is Bob I'll take that.

As far as the fifth longwall.

The great part about that that longwall when it returns it will be in some lower sulfur premium quality coal. So to answer your question, Yes, I think theres an opportunity for us to grow our crossover met business out of the Pennsylvania mining complex with that with that production and we will always seek to.

To optimize and sell that coal, we realize the best price back to the mine.

Speaker 6: And the second party of your question, yes, the majority of that was sold under this long term export arrangement for 23 and 24. However, we did layer in some additional domestic business as well.

And the second part of your question, Yes. The majority of that was sold under this long term export arrangement for 'twenty three 'twenty. Four however, we did layer in some additional domestic business as well.

Speaker 6: going through 24. So it was kind of a split, but the majority of it was under this export contract that was complete in January .

Going through 'twenty four so it was kind of a split but the majority of it was under this export contract that was completed in January .

Speaker 8: Gotcha. And the comment I heard before was that, you know, some of that is index to API 2 going forward with a foreign ceiling price. Is that how we should think about most of those contracts going forward?

Got you and.

Comment I heard before was that some of that is index to API to going forward with a floor and ceiling price is that how we should think about most of those contracts going forward.

Speaker 6: This was somewhat of a unique one. However, I will say that it works for us. And in most cases, I think it works for the customer. We are in discussions on similar type contracts. I'll be at their little different in structure from how we price.

This was somewhat of a unique one however.

However, I will say that it works for us in most cases I think it works for the customer.

So we are in discussions on similar type contracts, albeit there are little little different in structure from.

How we price it.

Okay.

Speaker 8: I think that gets me where I need to be, but guys, guys, great quarter, and thanks again for taking my questions. Really appreciate it.

I think that.

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Where I need to be but guys great quarter and thanks again for taking my questions really appreciate it. Thank.

Thank you. Thank you.

Speaker 4: This concludes our question and answer session. I would like to turn the conference back over to Mason Tucker for any closing remarks.

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

Speaker 1: Thank you, Matt. We appreciate everyone's time this morning, and thank you for your interest in the support of CIX. We hope we addressed your questions today, and we look forward to our next quarterly call. Thank you.

Thank you Matt we appreciate everyone's time this morning, and thank you for your interest and support of <unk>. We hope we address your questions today, and we look forward to our next quarterly call. Thank you.

Speaker 4: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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