Q3 2025 CNX Resources Corp Earnings Call

Speaker #3: Good morning and welcome to the CNX Resources . Third quarter 2025 Q&A conference call . All participants will be in listen only mode .

[Analyst]: Good.

Operator: Morning and welcome to the CNX Resources 3rd Quarter 2025 Q&A conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Tyler Lewis. Please go ahead.

Speaker #3: Should you need assistance , please signal a conference by pressing the star key , followed by zero . After today's remarks , there will be an opportunity to ask questions .

Speaker #3: To ask a question , you may press star , then one on your touch tone phone . To withdraw your question , please press star .

Speaker #3: Then two . Please note this event is being recorded . I would now like to turn the conference over to Tyler Lewis . Please go ahead .

Speaker #4: Thanks and good morning to everybody . Welcome to Cnc's third quarter Q&A conference call . Today we will be answering questions related to our third quarter results .

Navneet Behl: Thanks and good morning everybody. Welcome to CNX Resources Corporation's third quarter Q&A conference call. Today we will be answering questions related to our third quarter results. This morning we posted to our investor relations website an updated slide presentation and detailed third quarter earnings release data such as quarterly E&P data, financial statements, and non-GAAP reconciliations, which can be found in a document titled 3Q 2025 Earnings Results and Supplemental Information of CNX Resources. Also, we posted to our investor relations website our prepared remarks for the quarter, which we hope everyone had a chance to read before the call, as the call today will be used exclusively for Q&A. With me today for Q&A are Nick DeIuliis, our Chief Executive Officer; Alan Shepard, our President and Chief Financial Officer; and Navneet Behl, our Chief Operating Officer.

Speaker #4: This morning we posted to our Investor Relations website an updated slide presentation and third quarter earnings release data such as quarterly E&P data , financial statements , and non-GAAP reconciliations , which can be found in a document titled three Q 2025 Earnings Results and Supplemental Information of CNX Resources .

Speaker #4: 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 As the call today will be used exclusively for Q&A .

Speaker #4: With me today for Q&A are Nick , our Chief Executive Officer ? Alan Shepard , our president and chief Financial officer . And Navneet Bell , our chief operating officer .

Speaker #4: 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 .

Navneet Behl: Please note that the company's remarks made during this call, including answers to questions, include forward-looking statements which are subject to various risks and uncertainties. These statements are not guarantees of future performance and our actual results may differ materially as a result of many factors. A discussion of risks and uncertainties related to those factors in CNX Resources Corporation's business is contained in its filings with the Securities and Exchange Commission and in the release issued today. With that, thank you for joining us this morning, and operator, can you please open the call up for Q&A at this time?

Speaker #4: These statements are not guarantees of future performance, and our actual results may differ materially as a result of many factors. A discussion of risks and uncertainties related to those calls.

Speaker #4: factors and CNX Resources is contained in its filings with the Securities and Exchange Commission and in the release issued today . With that , thank you for joining us this morning .

Speaker #4: And operator , can you please open the call up for Q&A at this time ?

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 .

Operator: 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. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press Star then two. Our first question comes from Zach Parham from JPMorgan Chase & Co. Please go ahead.

Speaker #3: If you're using a speakerphone , please pick up your handset before pressing the keys . To withdraw your question , please press star then two .

Speaker #3: Our first question comes from Zach Parham from J.P. Morgan . Please go ahead .

Speaker #5: Thanks for taking my questions . First , Nick . Congrats and good luck in your retirement . And Alan , congrats on your new role .

Navneet Behl: Thanks for taking my questions. First, Nick, congrats and good luck in your retirement. Alan, congrats on your new role. Thanks. First off, just wanted to ask on the buyback. You had a sizable buyback during Q3. It was the highest since, I think, Q4 2022. Can you talk about what drove that uptick in buybacks and how you think about the pace of the buyback going forward?

Speaker #5: Thanks . First off , first off , just wanted to ask on the buyback you had a sizable buyback during three . Q it was the highest since I think four Q 22 .

Speaker #5: Can you talk about what drove that up that uptick in buybacks , and how you think about the pace of buyback going forward ?

Speaker #6: Yeah , I think the , you know , the primary driver was this is a significant free cash flow generator in terms of what we were able to do for the quarter .

Alan Shepard: I think the primary driver was this is a significant free cash flow generator in terms of what we were able to do for the quarter. Our underlying process for evaluating whether or not we're doing buybacks versus other capital allocation opportunities hasn't changed. We continue to view the business valuation very attractive relative to its intrinsic value.

Speaker #6: Our underlying process for evaluating whether or not we're doing buybacks versus other capital allocation hasn't changed . We continue to view the business valuation very attractive relative to its intrinsic value .

Speaker #5: Thanks . It my follow up just I wanted to ask on the Utica acquisition that you made on the apex acreage . Could you give us a little more color there ?

Navneet Behl: Thanks. My follow up, just wanted to ask, on the Utica acquisition that you made on the Apex acreage, could you give us a little more color there? Do you now have Utica rights across the position? If not, are you looking to make other acquisitions where you could get more Utica rights on that acreage?

Speaker #5: Do you now have Utica rights across the position ? If not , are there are you looking to make other acquisitions where you could get more Utica rights on the on that acreage ?

Speaker #6: Yeah . If you recall , we did that acquisition . There was about 30,000 Marcellus acres , kind of the footprint for the whole asset .

Alan Shepard: Yeah, if you recall, when we did that acquisition, there was about 30,000 Marcellus acres, kind of the footprint for the whole asset, and it came with about 8,000 Utica rights. What that transaction represents is we really went out there and got the remaining unleased Utica rights that underlie that footprint for Apex, and now we're able to go back in and leverage all that infrastructure, kind of like we envisioned when we did the acquisition.

Speaker #6: And it came with about 8000 Utica rights . So what that transaction represents is we really went out there and got the remaining unleashed Utica rights that underlie that footprint for apex .

Speaker #6: And now we're able to go back in and leverage all that infrastructure , kind of like we envisioned when we did the acquisition .

Speaker #5: Thanks . Appreciate the color .

Navneet Behl: Thanks. Appreciate the color.

Speaker #3: The next question comes from Leo Mariani from Roth . Please go ahead .

Operator: The next question comes from Leo Paul Mariani from ROTH Capital Partners. Please go ahead.

Speaker #7: Hey , guys . I wanted to see if there's any , type of update on new tech here . Specifically . Was just curious if there's any update on kind of the oil field service auto business .

Navneet Behl: Hey guys, wanted to see if there's any type of update on new tech here. Specifically, was just curious if there's any update on the oil field service auto, SEP business, perhaps the compressed natural gas, liquefied natural gas business, or just status of 45Z as you guys see it.

Speaker #7: You know , perhaps the CNG kind of LNG business and , and or just status of 45 as you guys see it .

Speaker #6: Yeah . So let's start with 45 . So we're still in the period where we're waiting for the notice of final rulemaking on 45 .

Alan Shepard: Yes, let's start with 45Z. We're still in the period where we're waiting for the notice of final rulemaking on 45Z, and we expect that before the end of the year. There'll be a comment period and a finalization of that rule hopefully in the early first half of 2026. All that is subject to, you know, the government reopening and things like that. Once we have that, the expectation is that the guidance we provided last quarter on 45Z, that $30 million a year run rate, will be sort of confirmed with that guidance. In terms of oil field services, we have outsourced the operational part of that to our partner on that, and they're continuing to make progress in rolling out those different technologies, but nothing material the current quarter for 2026 as of yet.

Speaker #6: And we expect that before the end of the year . And then there'll be a comment period and a finalization of that rule .

Speaker #6: Hopefully in the early first half of 2026 . All that's subject to , you know , the government reopening and things like that .

Speaker #6: But once we have that , you know , the expectation is that the guidance we provided last quarter on 45 , that 30 million a year run rate will be will be sort of confirmed with that guidance in terms of oil field services , you know , we have outsourced sort of the operational part of that to our partner on that .

Speaker #6: And they're continuing to make progress in rolling out those different technologies , but nothing material in sort of the current quarter or for 26 as of yet .

Speaker #7: Okay . And just in terms of the plans , as we roll , into next year , just at a high level , you know , it sounds like the company still wants to stay in maintenance mode .

Navneet Behl: Okay. In terms of the plans as we roll into next year, just at a high level, it sounds like the company still wants to stay in maintenance mode. Should we expect production's not a whole lot different in 2026, and would that be similar for spending as well? How are you guys thinking about that?

Speaker #7: Should we expect productions ? Not a whole lot different in 2026 . And would that be similar for spending as well ? How are you guys thinking about that .

Speaker #6: Yeah I think I mean we'll give you the full detail on the guidance when we get to January . But generally , you know , I would expect to see maintenance mode , right .

Alan Shepard: Yeah, I mean, we'll give you the full detail on the guidance when we get to January, but generally, you know, I would expect to see maintenance mode. We, you know, we're still going into winter, full storage, and we'll see what kind of weather we get this winter. We need to see some of these longer term calls on gas develop before you'd be thinking about doing anything other than that.

Speaker #6: We you know , we're still going into winter full storage and we'll see what kind of weather we get this winter . We need to see some of these longer term calls on gas develop before you'd be thinking about doing anything other than that .

Speaker #7: Okay , that makes sense . And just on M&A , obviously you guys sold a little asset , bought another asset . Seems kind of longer term neutral on on cash .

Navneet Behl: Okay, that makes sense. Just on M&A, obviously you guys sold a little asset, bought another asset, seems kind of longer term, neutral on cash. What's the company's appetite in general for deals? Do you see other things you'd like to pick up in Appalachia and perhaps there's other Utica deals out there that you guys would like to consider?

Speaker #7: But just what's the company's appetite in general for deals . Do you see other things you'd like to pick up in Appalachia . And perhaps there's other Utica deals out there that you guys would like to consider .

Speaker #6: Yeah , we we look at we look at everything that comes to market . But you know , our threshold is acquiring ourselves , right ?

Alan Shepard: Yeah, we look at everything that comes to market, but our threshold is acquiring ourselves. Right. Unless there's an opportunity that outcompetes that opportunity, you won't see us do anything. That's sort of how we think about it. You know, we're certainly open to anything. Mr. Matt, thanks.

Speaker #6: So unless there's an opportunity that outcompetes that opportunity , you won't see us do anything . Right . So that's sort of how we think about it .

Speaker #6: But , you know , we're certainly open to to anything if the math works .

Speaker #7: Thank you .

Speaker #4: Guys .

Navneet Behl: Thank you, guys.

Speaker #3: The next question comes from Noah Hungnes from Bank of America . Please go ahead .

Operator: The next question comes from Noah B. Hungness from Bank of America. Please go ahead.

Speaker #8: Good morning guys . Just for my first question here , I was just hoping you could kind of unpack some of the moving pieces on your free cash flow guidance , even when you take out the asset , the additional asset sales , it looks like free cash Flow guide is roughly flat to where it was before .

[Analyst]: Morning guys. For my first question here, I was just hoping you could kind of unpack some of the moving pieces on your free cash flow guidance. Even when you take out the additional asset sales, it looks like free cash flow guide is roughly flat to where it was before, even though the adjusted EBITDAX guide moved down and CapEx moved up. Just hoping to unpack some of the moving parts there.

Speaker #8: Even though the adjusted EBITDA guidance moved down and CapEx moved up, I’m hoping to unpack some of the moving parts there.

Speaker #6: Yeah . So the way to think about that is our free cash flow guidance includes all working capital adjustments . Right . So if you try to take just EBITDA and CapEx , you got to account for sort of fluctuations in HR and AP .

Alan Shepard: Yeah, the way to think about that is our free cash flow guidance includes all working capital adjustments. Right. If you try to take just EBITDA and CapEx, you got to account for sort of fluctuations in AR and AP. We give you a sort of rough number to target for and we try not to move that number around a bunch. You're going to see movements like you see here where we're refining guidance throughout the year. We're still confident we'll be at kind of the range we got to $575 million pre asset sale number.

Speaker #6: I mean , we give you a sort of rough number to target for , and we try not to move that number around a bunch , but you're going to see movements like you see here where we're refining guidance throughout the year .

Speaker #6: But we're still confident we'll be at kind of the range we guided to 575 pre pre asset sale number . .

Speaker #8: Great . That makes sense . And then on the Utica acquisition here in Pennsylvania could you maybe talk about are there any requirements for drilling on that acreage next year .

[Analyst]: That makes sense. On the Utica acquisition here in Pennsylvania, could you maybe talk about are there any requirements for drilling on that acreage next year, or is there any acreage that may be expiring near term that you'll want to drill on to hold it?

Speaker #8: Or is there any acreage that that may be expiring near term that you'll want to drill on to hold it ?

Speaker #6: Yeah . So I mean , we plan to develop the field . Obviously , that's part of the the underwriting case for making the investment .

Alan Shepard: Yeah, I mean, we plan to develop the field. Obviously, that's part of the underwriting case for making the investment. The exact timing of that development is not going to get into at this point, but you'll see that folded into our development plan in the years ahead.

Speaker #6: The exact timing of that development I'm not going to get into at this point , but you'll see that folded into our development plan in the years ahead .

Speaker #8: Great . Thank you .

[Analyst]: Great, thank you.

Speaker #3: The next question comes from Michael Scala from Stephens . Please go ahead .

Operator: The next question comes from Michael Stephen Scialla from Stephens Inc. Please go ahead.

Speaker #9: Good morning. I had a couple of questions on the Utica. As you think about next year's plan, is there any thought about trying to delineate the play?

[Analyst]: Good morning. I had a couple questions on the Utica. I guess as you think about next year's plan, is there any thought about trying to delineate the play any more with wells maybe further north or further south, or do you plan to stay kind of in that area that you've been developing so far?

Speaker #9: Any more with Wells ? Maybe further north or further south , or you plan to stay kind of in that area that you've been developing so far ?

Speaker #6: Yeah , I think the plan for next year is really just focus on sort of the operational side of it right now , and team have done a great job sort of driving down costs , and we want to give them a couple more opportunities to do that .

Alan Shepard: Yeah, I think the plan for next year is really just focus on sort of the operational side of it. Right. Nav and team have done a great job driving down cost, and we want to give them a couple more opportunities to do that. We're pretty confident that we have a view on where the fairway is. I don't think there's a burning desire to do much exploration either north or south.

Speaker #6: We're pretty confident that we have a view on where the fairway is . So I don't think there's a burning desire to do much exploration on either north or south .

Speaker #9: And .

Navneet Behl: Yeah, I can add to that. Go ahead.

Speaker #10: There's sorry . Go ahead .

Speaker #9: No . Go ahead . Go ahead . Neff .

[Analyst]: No, go ahead, go ahead, Nav. Yeah.

Speaker #10: Yeah , I think we're pretty confident in our geological model . So our plan is to just step up the development of the play .

Navneet Behl: I think we're pretty confident in our geological model. Our plan is to just step up the development of the play.

Speaker #9: Makes sense . Want to see in terms of , well , costs . Where do you see the opportunities there . Does the Utica require a different rig and if so , you've been just running one rig .

[Analyst]: Makes sense. Wanted to see, in terms of well costs, where do you see the opportunities there? Does the Utica require a different rig? If so, you've been just running one rig most of the year. Are there further efficiencies that could be had by keeping a rig running continuously in that play?

Speaker #9: Most of the year . Are there further efficiencies that could be had by keeping a rig running continuously in that play ?

Speaker #6: Yeah . So if you think about I'll let NAB get into the details on rigs and things like that . But just a real high level , you know , the efficiencies are all in the drilling side .

Alan Shepard: If you think about it, I'll let Nav get into the details on rigs and things like that, but just at a real high level, the efficiencies are all on the drilling side. The completions is sort of pretty well known at this point. What they're focused on is getting drilling days down. Maybe Nav can talk about that a little bit.

Speaker #6: Right? Completions are sort of pretty well known at this point. So what they're focused on is getting drilling days down. So maybe NAB can talk about that a little bit.

Speaker #10: Yeah . Like the rigs that we have right now are fully capable of drilling the deep Utica . We don't have any issues with that .

Navneet Behl: Yeah. The rigs that we have right now are fully capable of drilling the Deep Utica. We don't have any issues with that. Over the last 12 months or so, we've made really huge strides on the drilling side. We've been able to increase the efficiency of drilling the whole well and have cut down the days on the pad pretty much. Basically, on the drilling side, our drilling operations are pretty steady, they're very repeatable, and best of all, we are improving and making up big efficiency gains to get the well down faster and reduce our cost. In terms of guidance on the.

Speaker #10: And over the over the last 12 months or so , we've made a really , you know , huge strides on on the drilling side , we've been able to , you know , increase the efficiency of , of drilling the whole well and have cut down the the days on the pad pretty much .

Speaker #10: And basically on on the drilling side , like our drilling operations are pretty steady . They're very repeatable and best of all , are we are improving and making up big efficiency gains to get the well , well down , you know , faster and reduce our cost .

Speaker #10: So . Right .

Speaker #6: Yeah . And in terms of guidance on the cost per foot , we're still at that sort of 1750 range for , for right now .

Alan Shepard: Cost per foot, we're still at that sort of $1,750 range for right now.

Speaker #10: Yeah . And then just to kind of add to that , like last year , our drilling cost on Utica were like about $2,200 a foot .

Navneet Behl: Yeah, just to kind of add to that, last year our drilling cost on Utica were about $2,200 per foot. We are down almost 20% to $1,750 per foot.

Speaker #10: So we are down almost 20% to $17 , $1,750 per foot .

Speaker #9: Sounds good . Thank you guys .

[Analyst]: Sounds good. Thank you, guys.

Speaker #3: The next question comes from Jacob Roberts from TPH . Please go ahead .

Operator: The next question comes from Jacob Phillip Roberts from Tudor, Pickering, Holt & Co. Please go ahead.

Speaker #11: Morning .

[Analyst]: Morning.

Speaker #12: Morning .

Navneet Behl: Morning.

Speaker #11: Wanted to start on the well outperformance that we've seen over the past several quarters . I'm curious if you could provide us some color on if this is a function of better than expected declines on older vintages .

[Analyst]: Wanted to start on the well outperformance that we've seen over the past several quarters. I'm curious if you could provide some color on if this is a function of better than expected declines on older vintages. Is this better new well performance, and how durable do you think these results are and how that translates to your longer term capital efficiency plans?

Speaker #11: Is this better new . Well , performance and how durable do you think these results are and how that translates to your longer term capital efficiency plans ?

Speaker #6: Yeah, I think for this year you're seeing two things, right? There's some outperformance on the apex assets that we acquired.

Alan Shepard: Yeah, I think for this year you're seeing two things, right. There's some outperformance on the Apex acreage assets we acquired. In particular, it's kind of the big pad that we brought in, right, when we acquired it. Then you're seeing outperformance on some of the new pods that got converted this year, you know, in terms of long-term performance and capital efficiency ratios and things like that. That remains to be seen. We're still in the sort of flat production mode and focused on generating as much free cash flow as possible.

Speaker #6: In particular . It's sort the big pad that we brought in right when we acquired it . And then you're seeing outperformance on some of the new pads that got converted this year .

Speaker #6: You know , in terms of long term performance and capital efficiency ratios and things like that , that's , you know , it remains to be seen .

Speaker #6: But we're , you know , our focus is not on that . Right . We're still in the sort of flat production mode .

Speaker #6: And focused on generating as much free cash flow as possible .

Speaker #11: Great . Thank you . And then maybe if I could just ask your opinion on current in-basin demand and power generation and all that , you know , topic du jour and your thoughts there .

[Analyst]: Great, thank you. Maybe if I could just ask your opinion on current in-basin demand and power generation and all that, you know, topic du jour and your thoughts there and ability to participate perhaps.

Speaker #11: And we'll ability to participate . Perhaps .

Speaker #6: Yeah . And we're still a long term extremely bullish . You know , on the prospect for AI generated new demand coming to basin .

Alan Shepard: Yeah, we're still long term, extremely bullish on the prospect for AI generated new demand coming to the basin. Obviously, we sit on an enormous resource base here that can be developed. Still in the early innings. Still a lot of talk with folks about developing some of these projects, can't say exactly when it's going to occur. It definitely, you know, all the math suggests that, you know, Appalachia and all the gas up here needs to be part of that mix moving forward.

Speaker #6: Obviously we sit on an enormous resource base here that can be developed still in the early innings . Still a lot of talk with folks about developing some of these projects .

Speaker #6: But can't say exactly when it's going to occur . But it definitely , you know , all the math suggests that , you Appalachia and all the gas up here needs to be part of that mix .

Speaker #6: Moving forward .

Speaker #13: And Jacob , just to add to what Alan said , the the other issue underneath all of this that sometimes gets lost with the the excitement of AI demand and in-basin demand is the increasingly obvious need for additional pipeline infrastructure to get these low cost BTUs and molecules from this basin , not just within the basin , but wherever else the demand centers may be .

[Analyst]: Jacob, just to add to what Alan said, the other issue underneath all of this that sometimes gets lost with the excitement of AI demand and in-basin demand is the increasingly obvious need for additional pipeline infrastructure to get these low-cost BTUs and molecules from this basin, not just within the basin, but to wherever else the demand centers may be. Until that happens, AI sort of demand gets fulfilled in basin from our perspective, and then if that infrastructure gets built, other regions across the nation can start to participate more wholesomely in this AI revolution.

Speaker #13: So until that happens , AI sort of demand gets fulfilled in basin . From our perspective . And then if that infrastructure gets built , other regions across the nation can start to participate more wholesomely in this AI revolution .

Speaker #11: All right . Thank you guys . Appreciate the time .

[Analyst]: Thank you, guys. Appreciate the time.

Speaker #3: The next question comes from David Deckelbaum from TD Cowan . Please go ahead .

Operator: The next question comes from David Adam Deckelbaum from TD Cowen. Please go ahead.

Speaker #14: I just wanted to echo the sentiments . Congratulations to Nick and Alan . Just also wanted to ask on welcome the activity for the fourth quarter .

[Analyst]: I just wanted to echo the sentiments. Congratulations to Nick and Alan. I just also wanted to ask on the activity for the fourth quarter. You have the frac crew coming back to work. Still wanted to get some color on the timing of the tills. It seemed like the guidance had been more of a December timeframe. I think last quarter when we checked in the macro perhaps seemed a little bit more precarious and perhaps now things are tightening up a little bit. How do you guys think about that in terms of turning on new volumes into the winter season here?

Speaker #14: You have a frac crew coming back to work . Still wanting to get some color on the timing of the tills . It seemed like the guidance had been more of a December time frame .

Speaker #14: I think last quarter when we checked in , you know , the macro perhaps seemed a little bit more precarious , you know , and perhaps now things are tightening up a little bit .

Speaker #14: So how do you guys think about that in terms of turning on new volumes into into the winter season here ?

Speaker #6: Yeah . So we started the frac crews . I think we mentioned the prepared remarks kind of at October time frame . So the expectation on those tills would be sometime in December .

Alan Shepard: Yes, we started the frac crews. I think we mentioned in the prepared remarks kind of that October timeframe. The expectation on those tills would be sometime in December. It will be later in the quarter. In terms of the macro for 2026, things have kind of settled into a trading range. We're still not to the part of winter yet where you can have a good read on where we're going to exit winter. We'll see. I think activity is going to look sort of like it did last year, where you have a concentration of completion activities in Q4 and Q1, and then you set up yourself to be able to be flexible in 2026 to respond to whatever sort of pricing environment develops.

Speaker #6: Right . So it'll be later in the quarter . You know , in terms of the macro for , for 26 , things have kind of settled into a trading range .

Speaker #6: But you know , we're we're still not to the part of winter yet where you can have a good kind of read on where we're going to exit winter .

Speaker #6: So we'll see . But you know , we're I think activity is going to look sort of like it did last year . Right .

Speaker #6: Where you have a concentration of completion activities in Q4 and Q1 . And then you set up yourself to be able to be flexible in 26 to respond to whatever sort of pricing environment develops .

Speaker #14: Appreciate that . And my my follow up is just obviously you guys crossed a couple of deals this quarter . Seems like the basin in general , that there's been a lot more land spend through all your peers right now , I guess .

[Analyst]: Appreciate that. My follow up is just obviously you guys crossed a couple deals this quarter. It seems like the basin in general, there's been a lot more land spend through all your peers right now, I guess. Can you just generally speak to that environment right now, or are we just seeing a lot more horse trading or folks kind of willing to transact on single zone areas? It seems like we should be underwriting perhaps a larger land spend in the 2026 time frame and perhaps beyond as maybe these opportunities are increasing.

Speaker #14: Is there can you just generally speak to to that environment right now , or are we just seeing a lot more horse trading or folks kind of willing to transact on single zone areas ?

Speaker #14: It seems like we should be underwriting perhaps a larger land spend in in the 26 time frame , and perhaps beyond , as maybe these opportunities are increasing .

Speaker #6: Yeah , so maybe I'm not going to speak to the activities of some of the peers that happen down in West Virginia and Ohio , but definitely in central PA .

Alan Shepard: Yeah, maybe I'm not going to speak to the activities of some of the peers that happened down in West Virginia and Ohio, but definitely in Central Pennsylvania, where we're focused on sort of the Deep Utica development. In the long term, you see more interest as folks start to understand the sort of potential of the reservoir. Some of the transactions we've seen up there, you kind of have a moment in time here where there's an opportunity to pick up some of the acreage that still may be open or held by folks that are looking to deal it to some of the more consolidated players in the area.

Speaker #6: You know , where we're focused on sort of the deep Utica development in the long term . You're just seeing more interest as folks start to understand the sort of potential the reservoir , some of the transactions we've seen up there .

Speaker #6: You kind of have a moment in time here where there's an opportunity to pick up some of the acreage that still may be open or , you know , held by folks that are looking to deal it to some of the more consolidated players in the area .

Speaker #14: Appreciate that . And just just to confirm real quick the the acres that you sold out of the the Marcellus rights , are those areas where you've already developed Utica or those are areas that you intend to develop ?

[Analyst]: Appreciate that. Just to confirm real quick, the acres that you sold out of the Marcellus rights, are those areas where you've already developed Utica, or are those areas that you intend to develop Utica in the future?

Speaker #14: Utica in the future ?

Speaker #6: Those would be the Ohio areas where we've already developed the Utica .

Alan Shepard: Those would be the Ohio areas where we've already developed the Utica.

Speaker #14: Appreciate it guys .

[Analyst]: Appreciate it, guys.

Speaker #3: Again , if you have a question , please press star . Then one . And our next question comes from Betty Jiang from Barclays .

Operator: Again, if you have a question, please press Star then one. Our next question comes from Wei Jiang from Barclays Bank PLC. Please go ahead.

Speaker #3: Please go ahead .

Speaker #15: Good morning . Thank you for taking my question . I want to ask about the pretty small but in the guidance , the increase in the non DNC capital , what's driving that ?

[Analyst]: Good morning. Thank you for taking my question. I want to ask about the pretty small, but in the guidance, the increase in the non-DNC capital, what's driving that? As I'm hearing, just more focus on Deep Utica development going forward. Is there a need for facility infrastructure spend going forward for you to optimize development there?

Speaker #15: And and as I'm hearing just more focus on the Utica development going forward . Is there a need for facility infrastructure spend going forward for you to optimize development there .

Speaker #6: Yes . Maybe for your your first question in terms of just the $7 million bump to the midpoint there , just timing . I mean , we we build all of our midstream and water infrastructure .

Alan Shepard: Yes, maybe for your first question, in terms of just the $7 million bump to the midpoint there, that's really just timing. I mean we build all of our midstream and water infrastructure. Sometimes you're just talking about a project sliding around, you know, three months or so, something like that. It's really just noise on that front. Longer term, the way we think about infrastructure development as we move to Central Pennsylvania because our decline rates are so low, there will need to be additional infrastructure, but it's not going to be anywhere near the scale that you saw last decade. Sort of midstream build out cycles that occurred. We're talking about adding, you know, a handful of pads a year. You're able to really just sort of meter out that spend at a different pace from what we've seen historically.

Speaker #6: So sometimes you're just talking about a project sliding around , you know , three months or so , something like that . So it's really just noise on that front longer term .

Speaker #6: You know , the way we think about infrastructure development as we move to , to central PA because our decline rates are so low .

Speaker #6: There will be need to be additional infrastructure , but that's really it's not going to be anywhere near the scale that you saw last decade .

Speaker #6: The sort of midstream build out cycles that occurred . We're talking about adding , you know , a handful of pads a year so you're able to really just sort of meter out that spend at a different pace from what we've seen historically .

Speaker #10: Yeah . And I can add to that comment , too , is , as I told earlier , that we're pretty confident on the of the model .

Navneet Behl: Yeah, I can add to that comment too. As I told earlier, we're pretty confident of the model. We will just be moving from pad which are contiguous to each other, and our infrastructure spend will just be a little bit of additional infrastructure rather than in a delineation model where you have to delete the wells and build a whole fairway model. We are getting into a more efficient infrastructure spend, which won't change from year to year. It'll be pretty steady, just like we have our drilling program. Got it.

Speaker #10: So we will just be , you know , moving from from pad , which are contiguous to each other . And so our infrastructure spend just will be like a little bit of additional infrastructure rather than , you know , when in a model where you have to like delineate the wells and build a whole fairway model .

Speaker #10: So , so we are getting into a more efficient infrastructure spend . So which won't change from year to year . It'll be like pretty steady , just like we have , you know , our drilling program .

Speaker #10: .

Speaker #15: Got it . So the DNC CapEx is percent of total probably going to be fairly steady .

[Analyst]: Non-DNC CapEx % of total probably going to be fairly steady.

Speaker #6: I mean , it'll be it won't be anything like last decade . There'll be periods where you maybe need to add a station or something like that , but it's nothing .

Alan Shepard: It'll be, it won't be anything like last decade. There'll be periods where you maybe need to add a station or something like that, but it's nothing, nothing on the scale of last year. As Navneet pointed out, the goal is to be as efficient as possible with that spend. Given that, you know, we're able to kind of do return trips and have a focused development plan that just kind of steps out as opposed to needing to go to the extreme end of a field and build infrastructure to that part of it.

Speaker #6: Nothing on the scale of last year . And as NAF pointed out , the goal is to be as efficient as possible with that spend .

Speaker #6: Given that , you know , we're able to kind of do return trips and , you know , have a focused development plan that just kind of steps out as opposed to needing to go to the extreme end of a field and build infrastructure to that part of it .

Speaker #15: Great . And my follow up is on the back to the Utica development . I know there's been many questions asked around that , but what I'm hearing is the focus is really trying to get the per foot cost down .

[Analyst]: Great. My follow up is on the back to the Deep Utica development. I know there's been many questions asked around that, but what I'm hearing is the focus is really trying to get the per foot cost down. As we have seen in the past with play development, it's just about steady state development and Parker rig there and optimize and reduce drill time. With one rig running, it just seems that's not moving between the southwest and Central Pennsylvania. That's just not the most efficient way. Is there a possibility for us to start seeing like one dedicated rig being allocated to the Utica to maximize that efficiency?

Speaker #15: And as we have seen the past with play development , it's just about steady state development . And Parker Rick , there and optimize and and reduce drill time .

Speaker #15: And with one rig running just seems that's not moving between the southwest and Central . That's just not the most efficient way . Is there a possibility for us to start seeing like one dedicated rig being allocated to the Utica to maximize that efficiency ?

Speaker #6: Yeah , I think you nailed it . Like this industry is incredible . The engineers and the industry are incredible when it comes to optimizing development .

Alan Shepard: Yeah, I think you nailed it. This industry is incredible. The engineers in the industry are incredible when it comes to optimizing development. Once you give enough reps at any particular project, we do try to align our development plan so that we go back to back sort of on those types of pads. We will have southwest Pennsylvania wells developed next year as well. It all gets taken into consideration. Your broader point is the right one, that we're at $1,750 per foot right now is what we've got into. My expectation would be that we're able to drive that down as the engineers do what they do.

Speaker #6: Once you give enough reps at any particular project , you know , we do try to align our development plans so that we go back to back sort of on those types of pads .

Speaker #6: But we will have , you know , southwest PA wells develop next year as well . So it all gets taken into consideration .

Speaker #6: But your broader point is the right one that , you know , we're at 1750 per foot right now is what we're guiding to .

Speaker #6: And you know , my expectation would be that we're able to drive that down as the engineers do what they do .

Speaker #10: And then to add to that , like , you know , most of our pad development , we have like three to to four wells that we are we are testing right now , especially with the spacing of 1315 hundred feet .

Navneet Behl: To add to that, most of our pad development, we have three to four wells that we are testing right now, especially with the spacing of 1,300 and 1,500 ft. Us being on a three and a four well pad leads to a lot more efficiency than it would otherwise appear in other places. Our team is actually making progress almost section by section. That is why you see the 20% reduction in costs, and that will continue to be there. We will focus on increasing drilling efficiency and reducing the cost, no matter what.

Speaker #10: So so us being on , on a , on a three and a four well pad leads to a lot more efficiency . You know , than , than it would otherwise appear in other place .

Speaker #10: So our team is actually making progress , almost like section by section . And that's why you see the 20% reduction in in costs .

Speaker #10: So and that will continue to be there . Right . So we will focus on , you know , increasing drilling efficiency and reducing the cost no matter what .

Speaker #10: So and that's that's the advantage that we have in K'Nex with the acreage position we have right now .

Alan Shepard: So.

Navneet Behl: That's the advantage that we have in CNX with the acreage position we have right now.

Speaker #15: Great helpful color . Thank you .

[Analyst]: Great. Helpful color. Thank you.

Speaker #3: There are no more questions in the queue . I would like to turn the conference back over to Tyler Lewis for any closing remarks .

Operator: There are no more questions in the queue. I would like to turn the conference back over to Tyler Lewis for any closing remarks.

Speaker #4: Great . Thank you . Thank you again for joining us this morning . Please feel free to reach out if anyone has any additional questions .

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

Speaker #4: Otherwise , we'll look forward to speaking with everyone again next quarter . Thank you .

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