Q1 2025 CNX Resources Corp Earnings Call - Q&A

Speaker Change: Good day and welcome to the CNX Resources First Quarter 2025 Q&A Conference Call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question, you can press the star button, then one, under session phone. To withdraw your question, please press star then two.

Please note this event is being recorded.

Speaker Change: I would now like to turn the conference over to Tyler Lewis, Vice President of Investor Relations.

please go ahead.

Speaker Change: Thanks, and good morning to everybody. Welcome to CNX's first quarter Q&A conference call. Today, we will be answering questions related to our first quarter results.

Speaker Change: This morning we posted to our Investor Relations website an updated slide presentation in detailed first quarter earnings release data such as quarterly E&P data, financial statements and non-GAAP reconciliations.

Speaker Change: which can be found in a document titled 1 Q2 025, Earnings Results and Supplemental Information of CNX Resources.

Speaker Change: Also, we posted to our investor relations website our prepared remarks for the quarter, which we hope everyone had a chance to read before the call, as the call today will be used exclusively for Q&A.

Speaker Change: With me today for Q&A, or Nick DeIuliis, or President and CEO , Alan Shepard, our Chief Financial Officer, and Navneet Behl, our Chief Operating Officer.

Speaker Change: Please note that the company's remarks made during this call, including answers to questions include forward-looking statements which are subject to various risks and uncertainties.

Speaker Change: A discussion of the risks and uncertainties related to those factors, and CNX's business is contained in its filings with the Securities and Exchange Commission and in the release issue today. With that, thank you for joining us this morning and operator can you please open the call for Q&A this time.

Speaker Change: Thank you. We will now begin the question and answer session. And again, to ask a question, you may press star then one on your touch on phone. If you're using a speaker phone, please pick up your handset before pressing the key.

Speaker Change: If it any time your question has been addressed and would like to wish all your questions, please press star then to.

Speaker Change: Our first question will come from Zack Parham with JP Morgan. Please go ahead.

Hey, thanks for taking about questions.

Speaker Change: I guess first, just wanted to ask on activity levels, you'll have a significant amount of turn-in lines in 1Q with 19. Can you talk about the rest of the turn-in lines here in the year, when do those come in line and maybe come in on what the production trajectory should look like through the back half of the year and maybe in the 2026?

is a is a is a is a is a

Speaker Change: Thanks. And then just wanted to follow up on the 4Q call, you talked about having the flexibility to add some activity to the program in the second half of the year. Given the volatility we've seen in gas prices, how are you thinking about flexing that activity and maybe talk about the timeline on when you would have to make a decision on whether or not to add some activity?

Speaker Change: Yeah, right now there's no plan changes to the activity set. We'll kind of watch it through this part of the shoulder season here in where she

Thanks.

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

Speaker Change: Hey, just a couple quick questions here on some of the numbers here.

Speaker Change: A little bit surprising. Generally thought you guys want to be paying much on the...

Speaker Change: One-off, and then just on the buyback, kind of very robust number here in first quarter, you know, 125 million, you know, pretty big number. You know, it's a fairer to think that kind of around this $30 level, you guys think it's a pretty compelling investment here in the buyback.

Speaker Change: with current projections called sometime 27-28, as we've talked about previously. There are a little bit of state tax starting to hit but again that's all very determinous. In terms of your latter question, yeah, I think, you know, we're always

Speaker Change: We see value and kind of repurchases when we deal on this part of our process.

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

Speaker Change: Now we don't have anything outside of what's in the public domain in the public domain.

Our next question will come from Gabe Daoud.

with TD Cohen.

Gabe Dowd: Thanks. Hey, morning, everyone. Maybe just following up on Zach's question earlier. Could you maybe just give us a sense, Thanos?

Gabe Dowd: Just given a heavy first half, you're declining into the second half [inaudible]

Gabe Dowd: Probably into 26, so what's the production level that you guys would like to hold flat into 26? Is it 1.4 or these a day on the gas side, and if that's the case, what's the cat-backed level needed to hold that flat into 26?

Gabe Dowd: Yeah, I think you take kind of the chill comments I made earlier, you can kind of refer from that [inaudible]

Gabe Dowd: You know, we have kind of a range we've been in the last few years and I would expect going forward being that sort of range plus, you know, the volumes associated with APEX. But again, you know, we're so long for free cash lovers share as opposed to any particular production level target. Thank you.

Speaker Change: Understood. Thanks for that. And then I guess just as a follow-up, some M&A in your backyard recently, maybe just any kind of updated thoughts on the transaction that just changed hand recently and Westmoreland and generally your views on future opportunities in the area. Thank you guys.

Yeah, no.

Speaker Change: We think it kind of reinforces what we've been saying for the last decade, which is that particular area of the basin is some of the best rock that's going to be moving forward.

Gotcha. Thanks guys.

Noah Hungness: Our next question will come from Noah Hungness with Bank of America. Please go ahead.

Noah Hungness: Good morning, guys. For my first question here, I was hoping to ask you on slide six.

Noah Hungness: Seemed to have widened a bit, but your free cash flow guidance for the year is unchained. So could you kind of walk us through some of the potential improvements in the base business that's kind of driving that free cash flow resiliency? Thank you.

Speaker Change: Yes, it's a minor 85% hedge, so when you see the open volumes pricing change, you're really talking about just call it three quarters of

Speaker Change: Exposed pricing at this point on 15% volume. So there's not a huge amount of real room associated with open pricing left for the full year and then you know the free cash flow guidance we give. It is a it's a point number, but it's really sort of a range around a number.

Speaker Change: So when open get overly specific and trying to re-analyze it, we'll be in that range and reaffirming that range [inaudible]

Speaker Change: in that kind of in that Southwest Central PA area. And I was just kind of hoping to get your guys' latest view on how you see in base in demand developing and if you think we'll continue to see announcements over the next six to 12 months.

Speaker Change: Yeah, in my opinion, I think you're gonna see a lot of announcements and we'll see how many of those turns late in the actual construction overall bullish for all the operators in the basin. Very similar to any sort of utility coming in as I'm sure everyone will be able to benefit from the increased in basin demand and shrinking of differentials associated with that. Thank you very much.

Speaker Change: So we'll see which ones actually develop, but generally a great backwind to have for everyone.

Thank you guys. Thanks.

Speaker Change: And if you have a question, please press star then one. Our next question will come from Jacob Roberts with TPH. Please go ahead.

Morning.

Jacob Roberts: Fine, I was hoping to hear some thoughts about the apex turn lines that happened during the quarter, just how those are performing relative to the base business and that look there.

Jacob Roberts: The eight welds that we brought online from Apex, they are releasing better than we expected. So we are pretty optimistic about the long term production on these welds.

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

Speaker Change: That won't have any impact on our EA sales. We use multiple facilities across BJM to create those credits.

Thanks for taking the time.

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

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

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