Q4 2022 CONSOL Energy Inc Earnings Call
Good morning, and welcome to Consol Energy's fourth quarter and full fiscal year 2022 earnings conference call.
All participants will be in a listen only mode.
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I would now like to turn the conference over to Nathan Tucker Director of Finance and Investor Relations. Please go ahead Sir.
Thank you and good morning, everyone and welcome to Consol Energy's fourth quarter and full fiscal year 2022 earnings conference call any forward looking statements or comments, we make about future events are subject to risks 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 20 <unk> of the Securities Exchange Act of Nike.
34, 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 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, 2022 with the SEC. This Friday February 10, you can find additional information regarding the company on our website www Dot consulting G. Dot com, which also includes a supplemental slide deck that was posted this morning on the call with me today are Jimmy Brock, Our Chief Executive Officer, Tester car, President and Chief Financial Officer.
Dan Connell, our senior Vice President of strategy, and Bob Braithwaite, our senior Vice President of marketing and sales.
In his prepared remarks, Jimmy will provide a recap of our fourth quarter and full year 2022 achievements and a detailed discussion of our operations and sales, but tests will then provide an update on our balance sheet management financial performance in 2023 outlook in his closing comments Jimmy will lay out our key priorities for 2023. After the prepared remarks, there will be a Q&A session in which Dan and Bob.
Also participate with that let me turn it over to Jimmy.
Thank you Nate and good morning, everyone.
Let me start by congratulating my tests on being named the new President of Consol energy as part of our long term succession planning.
I have worked very closely with potash since he joined US gender formation of Consol coal resources L. P and MLP, we took public in 2015.
Since then he has been an integral part of our team and I've had the opportunity to observe them grow and take on more responsibility.
In addition to his continued role as our Chief Financial Officer. He will also oversee our marketing business development and environmental and sustainability efforts.
I have the utmost confidence in his ability to take on an expanded role in the company and he is well suited for the task.
Furthermore, the board has asked and I have accepted to extend my employment terms by an additional year to December 'twenty 'twenty four to ensure our long term succession plan.
Moving onto our financial and operating performance.
All energy finish 2022 as a record year in its history as an independent public company on multiple fronts, including one of the key metrics, we measure ourselves against free cash flow generation.
As a result, we've advanced some of our key strategic initiatives during the year.
First our strong free cash flow generation allowed us to meaningfully accelerate progress toward our debt reduction goal and we made debt payments of nearly $300 million and 2022.
Second our free cash flow in conjunction with our robust contract, but bolstered our ability to initiate and enhance shareholder return program. During 2022, even while we were still at work, reducing our outstanding debt levels.
We paid multiple dividend during 2022 and resume share repurchases at the end of the year.
Third our strong free cash flow enhanced our ability to reinvest in our business during the fourth quarter, we restarted the fifth longwall at the PMC and shipped the first train of low vol metallurgical coal from our mining complex.
Let's now discuss our operational performance on the safety front, our Bailey preparation plant and Consol Marine terminal each had zero employee recordable incidents agenda full year of 2022.
The P. A M. C finished the year with a total recordable incident rate of 1.72, which was approximately 63% below the national average for underground coal mines.
Coal production at the Pennsylvania mining complex came in at $6 1 million times in Q4, 22, an increase compared to $5 6 million tons in the prior year period.
Production improved this quarter compared to Q4 'twenty one due to the restart of our faith long while in mid December 2022, and the absence of geological challenges, which we encountered in October of 2021.
From a productivity standpoint.
As tons per employee hour. The P. A M. C ended the year on a strong note and improved by 16% in Q4 22 compared to Q3 'twenty two as we move past the geological challenges, we faced in the third quarter.
The complex ended the year with production of $23 9 million tonnes.
On the cost front, our P. A M C average cash cost of coal so per tonne for Q4, 22 was $34.99 compared to $30.91 in Q4, 'twenty one, but this was a reduction of nearly $5 per ton compared to Q3 'twenty two when we sell.
Increased costs due to operational and geological challenges the delta compared to the prior year period was due to ongoing development cost associated with the fifth longwall and continued inflationary pressures on supplies maintenance contract labor and power costs at our operations.
This brings our full year 2022 average cash cost of coal sold to $34 56 per ton.
The Consol Marine terminal had a throughput volume of $3 6 million tonnes during Q4 'twenty two.
Terminal revenues for the quarter came in at $29 million with CMT operating cash costs of $6 4 million.
For 2022, the terminal had a very strong operational performance, finishing the year with $13 7 million throughput times.
Terminal revenue for 2022 came in at $78 9 million, which was by far the highest level and Consol Marine terminal history.
CMT finished the year with adjusted EBITDA of 52.3 million Mark in its first year about $50 million and the fifth consecutive year above $40 million.
Now, let's discuss our Etna project.
After accomplishing several milestones in the second half of 2022.
The ramp up to full run rate production at it man has been delayed due to multiple factors, including supply chain bottlenecks equipment delivery delays geological inconsistency and staffing challenges.
We expect these issues to be transitory and we have recently made several changes that will help us achieve our goals.
In the immediate term the minus focusing on fully staffed and optimizing <unk> super sections before focusing on the third C. I'm Super section.
Moving further into 2023, we expect a ramp up to full run rate production to occur around midyear.
Mine preparation plant was commissioned in the third quarter of 2022 haven't been purchased disassembled relocated in reconstruction on our site and just over a year's time.
We shipped nine trains of coal from the plant in Q4, 22, and so it's slightly more than 200000 tons of <unk> and third party KOL in aggregate during 2022.
The product has been successfully marketing to both domestic and export customers.
As we ramp up production and achieve consistency from our operation.
Our focus will shift to securing new business with strategic partners.
On the marketing front the demand for our P. M C product remained robust in the fourth quarter of 2022.
We sold 6.2 million tonnes of PMC coal at an average realized coal revenue per tonne sold that was $75.92 in Q4 of 'twenty two.
Compared to $5 6 million tonnes at $51 27, and the year ago period.
These significant per ton increase was driven by the ongoing improvement in the coal markets over the past year due to persistent coal supply shortages, leading to increased commodity pricing.
Henry hub natural gas spot prices averaged $5 55 per million Btu in Q4, 'twenty, two a 17% increase compared to the prior year period.
P. J M West they had power prices finished the quarter at $68.73 per megawatt hour versus $54.39 in Q4 of 21.
Despite these quarter over quarter improvements, we have seen significant volatility in the energy markets beginning in late 2022 and continue into the start of 2022 right now.
Natural gas spot prices were north of $6 per million Btu at the start of December , but we trade more than 40% by the end of the month.
A very similar trend played out in the international API to market, which we treated almost 30% throughout December of 2022.
These markers each further declined by 20% and 29% respectively.
The month of January 2023, as warmer than normal weather has grew up much of the U S and Europe , leading to increased gas storage levels and coal inventories.
Fundamentally we believe that the supply of high Btu coals is still constrained and the demand for our product remains strong for the foreseeable future.
In fact, the international Energy Agency recently estimated that annual global coal demand eclipsed the 8 billion metric tons for the first time in 2022.
And expect demand to remain around this level through 2025.
In the shorter term the majority of our sales book for 2023 is committed.
And we have a very solid contracted position for 2024. This gives us the ability to be patient as we work to fill out our sales book and maximize value for 2024 and beyond.
Despite some of the recent volatility our sales team Opportunistically increased our forward so position by more than 8 million tons through 2025, we now have $23 9 million tons contracted for 2023, and $12 5 million tons contracted for 2024.
With that I will turn the call over to attest to provide a financial update.
Thank you Jimmy and good morning, everyone.
First let me provide an update on our balance sheet management and capital allocation progress before discussing our financial results and 2023 outlook.
We continue to make considerable progress on our stated financial priorities in the quarter.
During <unk> 'twenty, two we generated $116 million of free cash flow, 70% of which was deployed towards continuing to reduce our gross debt levels.
As such we made total debt repayments of 292 million in 2022, and our gross debt level at year end was $380 million.
In fact, since B C I X went public.
We have reduced our net debt by 86% or $647 million, which translates to more than $18 per share of equity value creation based on our current shares outstanding.
Since year end, we've reduced our gross debt by an additional $50 million by making discretionary payments in January 2023 of 25 million each towards our term loan B and second lien notes that were not included in our fourth quarter results.
Furthermore at.
At the beginning of February we submitted an additional redemption notice for $25 million of our second lien notes, which will be redeemed during one to 'twenty three.
These three paydowns with an aggregate of $75 million will bring our gross debt level to approximately 300 million.
We remain committed to the ongoing strengthening off our balance sheet and now expect to for litter Doc don't won't be and second lien notes this year.
During fourth till 'twenty, two we slightly increased our unrestricted cash balance, finishing the year with $273 million, which led to a significant liquidity position of $572 million.
On the shareholder return front, we are pleased to announce this morning that the board of directors elected to issue a dividend of <unk> 10 per share, which marks our third dividend since announcing our enhance shareholder return program and the third consecutive quarter, increasing the Bush era marked.
This payment will total roughly $39 million on approximately 34% of our <unk> 'twenty two free cash flow and will be made on February 28th to all shareholders of record as of February 17th.
During the fourth quarter, we also restarted our share repurchase program. After a hiatus of approximately three years as we work to improve our balance sheet and infused capital on organic growth projects now.
Now with most of the capital spending complete on our twin project. The first longwall back up and running at the PMC significant reduction in our outstanding debt and a strong contracted position the management team and board of directors believe that share buybacks provide another attractive avenue to create additional value for our shareholders.
So far we have opportunistically repurchased 224000 shares of our common stock in December for $8 million at a weighted average price of $64 18 per share.
We're also happy to announce this morning, an increase to our enhanced shareholder return program, which will become effective immediately and $1 23.
We now plan to return a range of approximately 35% to 50% of quarterly free cash flows in the form of share repurchase and our dividends, which are subject to the discretion of the board of directors.
As mentioned previously we also expect to continue to allocate a significant portion of our free cash flow towards additional debt reduction with the goal.
Regarding our term loan B and second lien notes this year.
Once the school is achieved we will consider further increasing the percentage of free cash flow allocated towards shareholder returns no. Let me recap our fourth quarter and full year 2022 financial results.
This morning, we report.
<unk> had a strong fourth quarter 'twenty to financial performance with net income of $193 million or $5.39 per diluted share by far our highest quarterly earnings per share level since becoming an independent public company in 2017.
Additionally, we finished for Q 'twenty, two with adjusted EBITDA of $240 million and generated $116 million of free cash flow.
For the full year 2022.
Net income of $467 million or $13.07 per diluted share adjusted EBITDA of $807 million and incurred capex of $172 million.
<unk> finished the year with free cash flow of $501 million, marking our highest annual free cash flow level in the last five years and the fifth consecutive year of positive free cash flow generation since becoming an independent public company.
We finished 2022 with a net leverage ratio near zero.
Now let me provide that also for 2023 on the guidance front for the PMC. We are expecting our 2023 sales volume to be improved by approximately 8% at the midpoint compared to 2022 level due to the availability of our first longwall as.
As such we are providing our 2023 P. M. C code sales volume range of 25 to 27 million tonnes.
I'll put a boundary reflects our Boston ability to produce at 27 plus million ton pace with five operational longwall at the complex, which includes mining at a high efficiency factor.
Factor coordination with our transportation partner.
<unk> strong spot market demand.
The lower boundary considers the potential for unforeseen supply chain or operational challenges.
The lower end also reflects our ability to run to the market if that is unexpected weakness due to weather or unforeseen events.
The good news is that all our longwall mines are currently running well and we are 90 plus percent contracted at the midpoint of our guidance range.
On the pricing front.
I expect our average realized revenue per ton to be in the 70% to $84 range.
Relative to 2022 levels. This range of flat our strong contracted position and allows the upward or downward movement in API two in PJM west power prices as well as the potential to further optimize our portfolio.
Our guidance is based on Cal 'twenty three P. J must fall price expectation of $49 58 per megawatt hour at the midpoint and the sensitivity for every dollar per megawatt chain in PJM less ball prices was approximately 10 cents per ton on our entire portfolio for.
For comparison, the average PJM as power price in 2022 was approximately $73 per megawatt hour.
Additionally, the midpoint of our guidance assumes in the API two benchmark price of $165 per metric ton.
We expect our 2023 P M C.
Average cash cost of coal sold to be 34 to $36 per ton.
Not expecting our cash cost to be similar to 2022 on a per ton basis at the midpoint, despite incremental volume given the potential for ongoing inflationary pressures on certain goods and services.
We began to see some relief and cost pressures in the fourth quarter and our supply chain and operations team constantly focused on identifying ways to minimize our cash spend.
The bottom end of our cost guidance captures the potential for deflation in key commodities, including power prices as well as fixed cost leverage at the higher end of the volume guidance.
Conversely, the top and accountable reduce tonnage on an improved commodity market, which would be a net benefit to our cash margins, but a headwind to our power and supply costs.
Edmund complex for the time being we are limiting our guidance until we get the mine fully staffed and ramped up to full run rate production.
As such we are currently providing a 2023 production guidance range of 400 to 600000 tonnes from our admin mine, which is dependent on the timing of the ramp up once the admin mine achieves these milestone.
We intend to provide more detailed it's been complex items similar to what we provide for the Pennsylvania mining complex.
Lastly on the capital expenditure front, we are providing a range of 160 $285 million for 2023.
This range reflects some 2022 capital spending moving into 2023.
Keep in mind that we started 2022 with a top end capex expectation of nearly $200 million, but only spent $172 million in New York.
As we highlighted throughout last year supply chain bottlenecks have delayed equipment deliveries.
And extended lead times, which has pushed certain planned expenditures from 2022 into 2023.
Throughout last year and during our budget planning cycle, we have been very diligent and adjusting our rebuild and lifecycle management timing to better align with these longer lead times.
We also expect to further our greenhouse gas emissions reductions efforts and have approximately $10 million in the budget for this effort in 2023.
With that let me turn it back to Jimmy to touch on our key priorities for 2023. Thank.
Thank you <unk>.
As we embark on 2023, we have a few key areas of focus that we believe will further strengthen our company first we are laser focused on ramping up the app and mine to full run rate production by midyear 2023.
<unk> complex has now moved from the project team to our operations team.
We have our key operations and management personnel dedicated to supporting the <unk> team and their staffing and ramp up efforts.
We are very thankful for the hard work and persistence from our <unk> team members.
Now that they have switched to operations mode, we expect them to diligently work through the recent challenges and delays to ultimately deliver operational consistency.
Second our sales team remains opportunistic and its approach and remains focused on layering in new business for 2023 and beyond as well as continuing to optimize our contract book.
We believe that one of <unk> strategic advantages is our ability to lock in contract duration, which allows us to generate positive free cash flow in all parts of the cycle and provides us the ability to benefit from strong markets for years to come.
Third reducing the debt on our balance sheet remains a major focus we expect to hit our initial goal of a $300 million gross debt level in Q1 of 'twenty three and then continue towards fully retire our term loan b and second lien notes, we anticipate achieving these goals around mid 2020.
Three as we simultaneously enhance shareholder returns, including dividends and share buybacks.
This continued debt reduction sets the company up for long term success and facilitate additional avenues for growth and diversification.
Finally, we are committed to increasing our free cash flow allocation to shareholder returns as our debt levels decline.
As promised we increased our shareholder return percentage due to our expectations of achieving our 300 million gross debt go this quarter.
Once our term loan B and second lien notes are retired we expect to consider a further increase to our shareholder return allocation.
We are very pleased with our results and execution in 2022.
Which was a record year for us and a lot of ways and we remain even more excited about the future.
I want to personally thank all our employees for their dedication and hard work, which drove these exceptional results safely and compliant Lee I am extremely proud of this team and Consol energy was.
With that I will hand, the call back over Tonight. 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 callers.
To ask a question you May press Star then one on your telephone keypad.
If you were using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
And our first question here will come from Lucas pipes with B Riley Securities. Please go ahead. Thank you very much operator, and good morning, everyone.
Good morning Lucas.
Jimmy I wanted to.
Turn to the AMETEK.
And potash I want to turn to the balance sheet for my first question. It sounds to me like Youre looking at $190 million of gross debt is a kind of near term target a little bit more conservative from the 300 million gross debt target previously well what caused that and is that the right interpretation 190 million or or maybe.
Did I Miss anything thank you very much.
Thank you Luca so I think.
From a gross debt perspective, the way we think about it.
We originally had a target of $300 million today, it's that we have.
Without all of our term loan B and second lien. So if you look at the announcement that we made this morning about additional debt reduction for the month of January we are sitting with about $39 million on term loan B and 74 on the secondary so combined both of those is just over 100 million.
I think.
Those two are retired.
Youre going to be just north of $200 million. So youre in the ballpark and really what makes up those just over 200 million as all $103 million of our Baltimore bonds and $75 million.
That's problems.
Both of them are tax exempt securities as you know and then.
The equipment leases.
At the end of the quarter I would forecast is going to be around $34 million.
That's that's helpful. Thank you and Uh huh.
Thought here.
Just to be a little bit more conservative given.
Kind of broader macro capital market conditions.
Yes, so the dominant second lien both happen near term maturities as you know when I say near term second lien is a little bit.
And then the terminal terminal B is maturing next year next year.
And the idea is we want to get away from.
More interest rate sensitive debt, but also.
Right now both of these securities at the end of Q1 are going to be under $50 million. So theyre not what you would call like necessarily.
Appropriately sized I mean, this will allow us to create some bandwidth if in future. If we wanted to do something and raise some debt if capital market conditions. What we can do is just want to get off so something a little bit larger if at all we want to do it but it's mostly cleanup stuff.
Okay. Thanks, Thank you for that and then turning to the commercial side.
Could you share some details as to the price of the tons that were sold incrementally during the quarter for both.
2023, and 2024, and then specifically for 2024.
You have 12 plus million tons contracted to date roughly.
Roughly what's the split between domestic and export and what would be the price on those 2024 commitments. Thank you very much.
I guess I'll take that.
We've increased our sold position as you know this morning by $2 1 million tons for 2023.
Last quarter.
If you recall, we set our pricing was in the upper seventies based on the power forwards of that date.
Back in look power was it 60 round 68 Bucks API two prices were around $200. So fast forward today, we said you know.
Our midpoint of the guidance is based on $49 58.
And $1 65 for API, two that basically would imply that our portfolio dropped about $5 quarter on quarter, just based on power and API too.
However, I can tell you that our pricing of the $23 nine has actually improved so when you take a look at that in your model that youll notice that the pricing that we sold.
Tons that we sold.
Incrementally the 2.1, certainly north of $100 per ton.
And then on your second question.
On the 2020 for volume of $12 5 million tonnes.
$2 5 million are linked to power <unk>.
Three two are currently sold into the export market and six six are domestic and fixed price.
Alright, any sense on the average price for 2024 did I Miss that.
We're not providing guidance today for 2024.
However, I would tell you that it's sitting between our 2022 and 2023 pricing right now.
Alright, I appreciate the detail, thank you and best of luck.
Thank you thanks Lucas.
Our next question will come from Nathan Martin with the Benchmark group. Please go ahead.
Hey, good morning, guys. Thanks for taking my questions.
Good morning.
Bob can I actually get a similar breakdown for 2023 tons that you just gave lukas for 24 in other words, you know how many tonnes are fixed versus how many tonnes are open to fluctuations and index pricing, whether thats, you know PJM west or they've got too.
Sure.
Again, we have $2 5 million in 2023, that's linked to power, we have $8 2 million.
Right now slotted for export or contracted I should say for export of that $8 2 million.
About $5 million that are linked to API two prices.
And then of that 5 million $3 million of those have ceiling and floor prices incorporated in the contracts and the balance of $13 2 million as domestic and fixed price.
Very helpful. Bob I appreciate that and I guess sticking with API two for a second what you know with the pullback we've seen what the net backs look like at today's prices that are still open for you guys would also be helpful to get any kind of sensitivity. There I know you said, you're assuming a 165 price in Europe .
Guidance for 'twenty three.
Sure I think we mentioned in the past that the coal that we sell into Europe . When you look at in API, two price use somewhere around 65% to 70% of that price and that gets you back to an Fob mine.
<unk> price and that again it takes in account discounts quality adjustments along with freight so when youre looking at a $140 API two price you're talking somewhere in that <unk>.
$90 range.
Back to the mine and again, that's really specific to call that where we're selling into Europe .
As far as sensitivity is concerned I will tell you it's not linear because we do have different floors and ceilings across several contracts, but a good estimate is for every dollar change in API two prices. Our overall portfolio changes is approximately 10 cents. So it has a very similar sensitivity to.
Our power price as well, but again that depends on loading months of vessels. Most of our contracts are priced based on the monthly average of of the API two price of the month of it loading, but as we do with our netback sensitivities, we will continue to refine this as well every quarter.
That's very helpful. Bob I appreciate that and then.
On the domestic side, we've also seen northern app pricing weakened as well given the mild start to the winter season.
However, utilities from our stockpile perspective at.
At this point that you guys can see is there any possibility of deferrals as they move forward with the years its still little early to think about that.
Yes, I think it's early.
There certainly has been an increase in natural gas production since the end of last year, but I really think the biggest issue here is.
Demand right I don't believe that there is that much of a supply response from the coal side right now and I personally believe that.
Coal supply remains tight and I would expect I expect that to continue as we head into summer.
Right now inventories across domestic customers are at comfortable levels hover that can change very quickly as we start seeing demand out of Europe out of the U S and in Europe for that matter.
Also tell you that many of our customers, we're sitting at less than 20 days of inventory heading into winter.
I've mentioned this.
Past months, certainly afforded many to continue to build what I would call healthy levels. However, we do have several customers that are still telling us that they likely will have some spot needs the back half of the year, So very positive there.
Yeah antibodies.
And to Bob's point most of these coal inventory deals that we've seen there are certainly not due to oversupply. They are related more to demand and we expect that second half year, we can't do anything with the weather predict it but if that changes we have a typical summer that we've had those inventory allow us to become.
Less than normal pretty quickly.
I appreciate that guys any comments or thoughts on colt.
Coal to gas switching that's occurring today, you know nat gas around $3 50 or so.
I mean, we're definitely seeing gas dispatch.
A little bit more now than it has in the past just based on this $2 50 range and where coal prices are but again I would tell you that as soon as demand picks up I think youre going to see.
More coal units come online.
Perfect and then just one final one final question if I may.
Any thoughts on cadence of shipments or even pricing as we move through the next four quarters I think one of your peers noted that it was essentially sold out for the first half expected pricing to improve in the second half you know as we see hopefully the expectation for Europe with you back in the market to shore up supplies for next winter.
Yes, I think you're asking now for questions.
Or not.
We're not too concerned about the first half of the year.
We are pretty much committed and so through that back half is where we have some open tons and Bobby can go into more detail there, but we still feel really good about our ability to move coal into international markets and demand picking up second half of the year. Yeah again, I think I think Europe , there is a potential opportunity there for the second half of the year.
Right now the gas that they havent storage today's Russian gas and once that the fleets you know theyre going to be relying fully on LNG.
And then I also I think is important message is that.
Our fifth longwall at Enlow Fork is our low sulfur longwall, we've been talking about it. It's the best quality, it's certainly opening up new markets for us and also it gives us the ability to ship more into the crossover market and based on where high vol. B prices are today, you know thats the best market out there that's yielding triple digits back to the mine. So we will continue to focus on those opportunities.
<unk> in and obviously sell our coal.
Two places that yield the best realization back to us.
Great really appreciate the information guys. Thanks for the time best of luck in 'twenty three.
Thanks, Ed.
Again, if you have a question. Please press Star then one.
Our next question here will come from Ryan Murray Henske with Blue Outlier capital. Please go ahead.
Hi, good morning, congrats on the quarter.
I'm just trying to get some more color on the shareholder returns going forward.
Really happy to see that you guys were started buybacks this quarter, but any idea of the buybacks as a percentage of shareholder returns going forward.
Sure.
Sure holder returns that are much more skewed towards dividends and I'm. Just wondering if that can be expected going forward or whether dividends and buybacks will be more balanced.
Well going forward.
As we said we had that goal of 300 million gross debt and we saw this happening in Q1 is why we started our share repurchases in Q4, we purchased a 124000 shares or about $8 million and we expect to raise the return to shareholders, 35% to 50%.
We continue to get rid of that.
But if you look at it we actually paid down $647 million in debt since 2018, and sometimes we lose sight of that but thats created equity value of $18 a share. If you look at our 35 million shares outstanding So what we'll do.
We're lucky enough to have great free cash flow generation and if things hold I think what youll see US do is steadily increase that number and we will be able to do all three or if one provides a better return back to the shareholders. We could certainly pivot to that way, but currently our plan is to stick with what <unk> mentioned in his remarks.
Yeah, we want to retire the term loan b as well as the second lien and continue to pay back.
To shareholders in forms of dividend or share backs and we really haven't so far about which way we lane on Dow would go heavier on dividends or do we do all share buybacks that'll be a board decision and we'll have a discussion with them. When the time comes the good news is we believe that we're going to generate enough free cash.
Cash flow to do all those things pretty quickly here in 2023.
Thank you I appreciate the additional color.
Okay.
And our next question will be a follow up from Lucas pipes with B Riley Securities. Please go ahead.
Thank you very much for taking my follow up question.
Just wanted to.
Trying to get a little bit more color on the domestic market.
How much buying of calls going on today are utilities active today, and where would you place the domestic market.
For 2023 and 2024, thank you very much.
Well Lucas.
Of the eight to $8 3 million tons that we contracted for through 2025.
$5 million was to a domestic customer under a term deal through 2020 through 2025.
So again that just shows the the fact that people are out there.
<unk> term, but buying under term contracts. They are concerned about supply going forward. We're also in discussions with another domestic customer of our term deal as well and then when you look at the export side I can't say much more but we are in discussions with several end users in both Europe and Asia on on term deals and I'm hopeful by.
Our next earnings call, we'll have a little bit more to report there.
The pricing is kind of in line with where markets are at the time, we conclude those deals I mean, we look at power and gas every time.
At that present time were concluding in and basically coming up with what we feel is the right net back and I think the customers are doing the same so that continues to fluctuate at $2 50 gas price obviously, the mine prices aren't as attractive as they were when they were $6, but but there are still certainly.
Profits being made.
Pretty much all cycles through the $2 $57 gas price.
I really appreciate that color Bob and.
You touched on it there obviously like domestic energy market has changed fairly dramatically since the beginning of December .
More than a 50% drop how much have attitudes changed is it too early to tell or or just having a real impact when you sit down with your utility customers.
I'd say, it's too early to tell I think youre going to see a lot lot of utilities pretty much take us take a seat on the sidelines for the next couple of months kind of see how this market evolves.
As Jimmy mentioned inventory levels are I would say comfortable but these can change very very quickly and we saw that happened last year and once we get into summer. If it is a game changer, I think youre going to see a lot of utilities come to the market to try to secure their supply for the for the for the long term. So I would say give it two or three.
For months and.
How we have our next earnings call, we probably we will have I should say more color.
And be able to give some more commentary on that.
And Memphis.
I think we are.
<unk> flexibility as you know moving into domestic and export market, depending on whether the best arbitrage that's right.
This is clearly visible in terms of the amount of exports that we have and if there was.
This year versus last year despite.
Despite having higher production numbers drive so I think yes.
We are going to be market driven.
As markets change, we will just adapt to it.
Domino that Baltimore allows us that flexibility.
Very helpful. Thank you Dan.
Along along this vein.
Target or a rough target.
For 2024 split between <unk>.
Domestic and exports.
Lucas I would suggest to you we could see exports climbed to 14 million tons or thereabouts in 2024, I mean, obviously, we will continue to watch the market and see where the.
The best arbitrage is but I think 14 million tonnes is a possibility for 2024.
Thank you and then.
Back to the domestic market.
Have you heard in the industry or have you experienced any request from utilities to push out.
Deliveries.
Nothing as of late I still think it's too early I mean, we're one month then.
I'm not getting overly excited yes January didn't come in as expected, but again look what happened last year.
Really.
The demand started hitting.
Ukraine War was at the end of February we started seeing an uptick in the export business and then domestically.
They were many.
Many utilities, you're burning gas because they didn't have coal in the summer months, so that could that could potentially repeat itself and we're keeping a close eye on it but the good news for us is where well contracted throughout the entire first half of this year most of our open position or almost all of it in the second half and if that does come to fruition, we might move more.
To the domestic market will just continue to watch and see what presents the best opportunity for us.
I really appreciate all the color, thanks, again and best of luck.
Thank you.
This concludes our question and answer session I would like to turn the conference back over to Nathan Tucker for closing remarks.
Thanks, Joe on behalf of Consol energy I'd like to thank everybody for their time and interest. This morning, and we look forward to speaking with you on our next earnings call. Thank you.
The conference has now concluded. Thank you very much for attending today's presentation. You may now disconnect your lines.