CNX Gas Reports Record Quarterly Production of 24.8 Bcf 2009
Production Guidance Raised to 92 Bcf Marcellus Shale Success
Continues PITTSBURGH, Oct. 22 /PRNewswire-FirstCall/ -- CNX Gas
Corporation (NYSE: CXG) reported net income attributable to CNX Gas
shareholders of $35.5 million, or $0.23 per diluted share, for the
quarter ended September 30, 2009. This compares to $67.4 million,
or $0.45 per diluted share, for the quarter ended September 30,
2008. Production was 24.8 billion cubic feet (Bcf), or 269 million
cubic feet (MMcf) per day, for the quarter ended September 30,
2009. This was another quarterly production record, and 26% higher
than the 19.7 Bcf, or 214 MMcf per day, for the year-ago quarter.
It was also 10% higher than the 22.5 Bcf produced in the quarter
ended June 30, 2009. "We are pleased to announce that CNX Gas set
another quarterly production record, and did it safely," said J.
Brett Harvey, chairman and chief executive officer. "With our
increasing Virginia coalbed methane production and our Marcellus
Shale success, we are again raising our 2009 production guidance.
If you recall, our original 2009 production guidance was 85 Bcf. In
July, we raised it to 89 Bcf. And now, we've raised it by another 3
Bcf, to 92 Bcf. If achieved, this would represent a 20% increase in
production from the 76.6 Bcf we produced in 2008. While our
quarterly earnings are lower because of weak spot gas prices, we've
been successful in lowering unit costs. "CNX Gas is growing
production faster than most of the competition, is reporting better
earnings than most of the competition, and is continuing to invest
in its significant growth prospects, especially in coalbed methane
and the Marcellus Shale. I believe that investors will increasingly
recognize CNX Gas as a core holding for their energy portfolios."
TABLE 1 FINANCIAL AND OPERATIONAL RESULTS - Period-To-Period Nine
Months Nine Months Quarter Ended Quarter Ended Ended Ended Sept.
30, Sept. 30, Sept. 30, Sept. 30, 2009 2008 2009 2008 -------------
------------- ---------- ---------- Total Revenue and Other Income
$165.7 $216.9 $505.6 $583.4 ------------- ------ ------ ------
------ Net Income attributable to CNX Gas shareholders $35.5 $67.4
$123.4 $181.6 ------------- ----- ----- ------ ------ Earnings per
Share -Diluted $0.23 $0.45 $0.82 $1.20 --------------- ----- -----
----- ----- Net Cash from Operating Activities $65.4 $120.1 $279.5
$306.9 ------------- ----- ------ ------ ------ EBITDA $90.4 $135.7
$284.4 $356.4 ------------- ----- ------ ------ ------ EBIT $59.5
$117.9 $205.8 $306.1 ------------- ----- ------ ------ ------ Total
Period Production (Bcf) 24.8 19.7 69.3 54.3 ------------- ---- ----
---- ---- Average Daily Production (MMcf) 269 214 254 198
------------- --- --- --- --- Capital Expenditures $59.3 $170.4
$273.0 $406.2 ------------- ----- ------ ------ ------- Financial
results are in millions of dollars except per share amounts.
Production results are net of royalties. Quarter-to-Quarter
Analysis The average price realized for the company's gas
production was $6.25 per Mcf for the quarter ended September 30,
2009, or $3.48 lower than the $9.73 per Mcf received for the
quarter ended September 30, 2008. The average realized price for
the just-ended quarter included 13.2 Bcf hedged at $8.69 per Mcf.
All-in unit costs for company production, exclusive of royalties,
were $3.44 per Mcf in the just-ended quarter, or a decrease of
$0.41 from the $3.85 per Mcf for the quarter ended September 30,
2008. Pre-tax unit margins for company production were $2.81 per
Mcf in the September 30, 2009 quarter, a decrease of $3.07 from the
$5.88 per Mcf in the quarter ended September 30, 2008. TABLE 2
PRICE AND COST DATA PER NET MCF - Period-To-Period Comparison Nine
Months Nine Months Quarter Ended Quarter Ended Ended Ended Sept.
30, Sept. 30, Sept. 30, Sept. 30, 2009 2008 2009 2008 -------------
------------- ---------- ---------- Average Sales Price $6.25 $9.73
$6.75 $9.25 ------------------- ----- ----- ----- ----- Costs -
Production ------------------ Lifting $0.52 $0.77 $0.52 $0.64
------- ----- ----- ----- ----- Production Taxes $0.05 $0.29 $0.05
$0.28 ---------------- ----- ----- ----- ----- DD&A $1.03 $0.68
$0.90 $0.67 ---- ----- ----- ----- ----- Total Production Costs
$1.60 $1.74 $1.47 $1.59 ---------------- ----- ----- ----- -----
Costs - Gathering ----------------- Operating Costs $0.75 $1.05
$0.78 $0.96 --------------- ----- ----- ----- ----- Transportation
$0.22 $0.15 $0.22 $0.13 -------------- ----- ----- ----- -----
DD&A $0.22 $0.23 $0.23 $0.26 ---- ----- ----- ----- ----- Total
Gathering Costs $1.19 $1.43 $1.23 $1.35 --------------------- -----
----- ----- ----- Costs Administration $0.65 $0.68 $0.73 $0.76
--------------- ----- ----- ----- ----- Total Costs $3.44 $3.85
$3.43 $3.70 ----------- ----- ----- ----- ----- Margin $2.81 $5.88
$3.32 $5.55 ------ ----- ----- ----- ----- Note: Costs
Administration exclude incentive compensation and other corporate
items. Unit lifting costs were lower, in part, because of fewer
workovers conducted in the just-ended quarter. Water volumes from
CBM production were down, as were water handling rates. Lower water
volumes also contributed to lower road maintenance costs. Higher
gas production volumes also helped to lower unit lifting costs.
Unit production taxes were much lower in the just-ended quarter
because they are calculated on average realized price before the
effect of hedging. Due to market conditions, these prices were
significantly lower in the just-ended quarter. Unit production
DD&A was higher in the just-ended quarter as more plant assets
in Northern Appalachia were placed into service. Unit gathering
operating costs were lower partly as the result of turn backs of
rented compressors, as the pace of drilling slowed for low-pressure
coalbed methane wells. Higher production volumes also helped to
lower unit costs. Unit firm transportation costs have increased due
to acquiring additional capacity in the Northern Appalachian region
in anticipation of greater production volumes. In the just-ended
quarter, CNX Gas had (pre-tax) dry hole expense of $4.9 million. Of
this, $2.3 million was related to a non-operated dry hole targeting
the Trenton Black River formation in Upstate New York. An
additional $2.4 million was attributable to the surrender of a CBM
lease in Virginia on the fringe of the company's core CBM position.
Also in the just-ended quarter, CNX Gas had (pre-tax) other
corporate expenses of $7.2 million, versus $0.2 million in the
year-earlier quarter. The expenses were higher because the
September 2008 quarter showed a reversal of stock-based
compensation due to a declining stock price. The performance share
program was converted into the CONSOL Energy restricted stock
program. The September 2009 quarter includes $2.7 million of
allocated expense from CONSOL Energy related to stock-based
compensation expense. Safety During the third quarter, CNX Gas
employees worked another quarter without incurring a lost time
accident. This raises the cumulative time worked by employees
without a lost time incident to over 3.9 million hours. Central
Appalachia Operations Total production in Central Appalachia, which
includes Virginia CBM and Chattanooga Shale, was 18.7 Bcf in the
quarter ended September 30, 2009. This was 2.2 Bcf higher than the
16.5 Bcf produced in the quarter ended September 30, 2008. The
Central Appalachia September run rate was 207 MMcf per day. CNX Gas
drilled 45 vertical frac wells in its Virginia CBM Operations
during the third quarter and 163 wells in the first nine months.
CNX Gas expects to drill 175 wells in Virginia in 2009. CNX Gas
continues to be encouraged by its early Chattanooga Shale results.
The company has been pursuing a delineation program across its
position, which now stands at 268,000 mostly contiguous acres. One
well, which came online on October 21, 2008, has produced over 140
MMcf, and is now producing at a daily rate of 861 Mcf, plus a few
barrels of oil. A four-stage nitrogen foam frac was employed on
this well. CNX Gas continues to acquire acreage in the Chattanooga
Shale. Northern Appalachia Operations Total production in Northern
Appalachia, which includes Mountaineer CBM, Nittany CBM, and
Marcellus Shale, was 6.0 Bcf in the quarter ended September 30,
2009. This was 2.9 Bcf more, or almost double, the 3.1 Bcf produced
in the quarter ended September 30, 2008. The Northern Appalachia
September run rate was 66 MMcf per day. Of this Northern
Appalachian production, 1.5 Bcf was from the Marcellus Shale in the
just-ended quarter, versus zero in the same quarter last year. No
coalbed methane wells were drilled in Northern Appalachia in the
just-ended quarter. In the Marcellus Shale, CNX Gas drilled,
completed, and brought three more horizontal wells online, raising
the total to eleven. The peak daily production from well CNX#2B was
3.0 MMcf and from well GH34CV was 2.5 MMcf. The latest well to come
online, GH15CV, has not yet reached its peak. The latest well
drilled, NV20CV, is located in northern Greene County, Pa. It is
the first horizontal Marcellus Shale well that CNX Gas has drilled
outside of its original Greene Hill area, in central Greene County.
It is also the first in a set of six wells to be drilled on a
single pad. NV20CV is currently awaiting hydraulic fracturing. The
cost of the horizontal wells drilled during this quarter averaged
less than $3.5 million per well. The company continues to be
excited about its success in the Marcellus Shale play and, as a
result, has increased its capital for lease and land acquisition.
The following table summarizes results since the inception of the
company's horizontal Marcellus Shale program. CNX Gas has a 100%
working interest and a 100% net revenue interest in all of these
wells. TABLE 3 HORIZONTAL MARCELLUS SHALE PROGRAM STATISTICS Peak
Oct. 09 Cumulative Daily Daily Production(MMcf) Turn-in Peak
Production Production Through Well Name date date (MMcf) (MMcf)
Oct. 09 --------- ------- ------ ---------- ----------
------------- 1. CNX#3 10/5/08 12/16/08 6.6 1.6 826 2. CNX#2
1/28/09 2/13/09 2.5 1.0 344 3. CNX#2A 2/13/09 3/4/09 2.0 1.0 326 4.
GH10CV 4/6/09 4/9/09 5.5 0.9 402 5. GH10ACV 4/18/09 4/24/09 5.2 1.0
420 6. GH11CV 5/30/09 6/3/09 3.7 1.1 223 7. GH11ACV 5/30/09 6/3/09
3.2 1.4 259 8. GH10BCV 6/27/09 7/15/09 4.1 2.5 299 9. CNX#2B
8/09/09 8/14/09 3.0 1.5 121 10. GH34CV 9/02/09 9/15/09 2.5 2.1 75
11. GH15CV 9/18/09 10/08/09 Not Reached 2.3 43 ----------- Average
Peak 3.8 ------------ --- Financial Update The company continues to
monitor and evaluate capital spending to ensure adequate liquidity
and to preserve options for possible external investment. With
regard to capital, CNX Gas intends to spend largely within its net
cash from operating activities for the fourth quarter of 2009.
Capital expenditures were $59.3 million during the third quarter.
The company ended the quarter with $73.1 million drawn on its $200
million credit facility. This is down $7.9 million from June 30,
2009. Cash on hand was $1.0 million. CNX Gas also has outstanding
letters of credit of $14.9 million. Total funds available are
$113.0 million. Return on capital employed for the quarter was
9.3%, on an after tax basis. Guidance The 2009 production guidance
is raised by 3 Bcf to 92 Bcf. This guidance assumes no fourth
quarter production curtailments due to above normal national
storage levels or other factors. If the 92 Bcf is achieved, it
means that CNX Gas will have produced 20% more than the 76.6 Bcf
produced in 2008. For 2010, CNX Gas is re-instating production
guidance of 100 Bcf. The company expects to be able to achieve this
production with one horizontal rig drilling in the Marcellus Shale,
the continued drilling of CBM frac wells in Virginia, and some
ancillary drilling. While 2010 plans are currently being
formulated, the company views this as a realistic starting point.
CNX Gas locked in the pricing on more of its production for the
2009 fourth quarter during the just-ended quarter. Total hedged
production in the 2009 fourth quarter is 15.25 Bcf, at an average
price of $7.90 per Mcf. Some hedges were also added for 2011. TABLE
4 GUIDANCE 2009 2010 2011 2012 ---- ---- ---- ---- Total Yearly
Production (Bcf) 92 100 NA NA ----------------------- -- --- -- --
Volumes Hedged (Bcf) 51.6 45.6 22.6 15.1 ------------------- ----
---- ---- ---- Average Hedge Price ($/Mcf) $8.76 $7.94 $6.84 $6.84
------------------- ----- ----- ----- ----- Outlook Summary The
United States economy may have bottomed in the third quarter. Due
to the significant fiscal spending and relaxed monetary policy, a
modest U.S. recovery appears likely in 2010. Depending on the pace
and sustainability of the recovery, we believe tremendous
opportunities exist for our natural gas business. The U.S. natural
gas market has shown signs of stability because the total rig count
appears to have bottomed at approximately 700 rigs. The
expectations of lower natural gas production, coupled with
expectations of increased demand due to an improving economy and a
return to normal weather patterns, has led to an improvement in
pricing. With its low costs and rising production volumes, CNX Gas
should benefit from improved pricing. Conference Call Information
CNX Gas and CONSOL Energy will co-host a conference call today at
10:00 a.m. Eastern Daylight Time to discuss the company's third
quarter results. The teleconference can be heard "live" at the
investor relations portion of the company web site:
http://www.cnxgas.com/. Description CNX GAS CORPORATION is the
leading gas producer in the Appalachian Basin, when measured by
revenue, net income, and safety. Contact: Dan Zajdel Vice President
- Investor Relations (724) 485-4169 http://www.cnxgas.com/
Definition: EBIT is defined as earnings (excluding cumulative
effect of accounting change) before deducting net interest expense
(interest expense less interest income) and income taxes. EBITDA is
defined as earnings (excluding cumulative effect of accounting
change) before deducting net interest expense (interest expense
less interest income), income taxes, and depreciation, depletion
and amortization. Although EBIT and EBITDA are not measures of
performance calculated in accordance with generally accepted
accounting principles, management believes that they are useful to
an investor in evaluating CNX Gas because they are widely used to
evaluate a company's operating performance before debt expense and
its cash flow. EBIT and EBITDA do not purport to represent cash
generated by operating activities and should not be considered in
isolation or as a substitute for measures of performance in
accordance with generally accepted accounting principles. In
addition, because all companies do not calculate EBIT and EBITDA
identically, the presentation here may not be comparable to
similarly titled measures of other companies. Reconciliation of
EBITDA and EBIT to the income statement is as follows: CNX Gas EBIT
& EBITDA Reconciliation (000) Omitted Nine Nine Quarter Quarter
Months Months Ended Ended Ended Ended Sept. 30, Sept. 30, Sept. 30,
Sept. 30, 2009 2008 2009 2008 -------- -------- -------- --------
Net Income attributable to CNX Gas shareholders $35,470 $67,415
$123,351 $181,591 ---------------- ------- ------- --------
-------- Add: Interest Expense 1,865 2,412 5,753 5,567
--------------- ----- ----- ----- ----- Less: Interest Income (24)
116 (60) 358 --------------- --- --- --- --- Add: Income Taxes
22,194 48,160 76,780 119,287 ------------- ------ ------ ------
------- Earnings Before Interest & Taxes (EBIT) 59,505 117,871
205,824 306,087 ------ ------- ------- ------- Add: Depreciation,
Depletion, & Amortization 30,879 17,803 78,581 50,340
--------------- ------ ------ ------ ------ EBITDA $90,384 $135,674
$284,405 $356,427 ------ ======= ======== ======== ======== CNX Gas
Capital Employed and Return on Capital Employed (000) Omitted
Capital employed is a measure of net investment. When viewed from
the perspective of how the capital is used, it includes CNX Gas'
property, plant, and equipment and other assets less liabilities.
As of As of Capital Employed Sept. 30, June 30, ----------------
2009 2009 ---- ---- Total assets $2,137,211 $2,182,563 ------------
---------- ---------- Less liabilities: ----------------- Total
current liabilities (other than current portion of indebtedness)
(125,938) (161,349) ------------ -------- -------- Total long-term
liabilities (other than indebtedness) (389,073) (381,456)
--------------------------------------- --------- --------- Total
Capital Employed $1,622,200 $1,639,758 ----------------------
========== ========== Return on average capital employed (ROCE) is
a performance measure ratio. ROCE is defined as net income plus
after-tax interest expense, divided by average capital employed.
Below is a calculation of ROCE for the September 2009 quarter. In
order to annualize the result on a compounded basis, a "1" is added
to the quarterly ROCE, before it is raised to the fourth power.
Quarter Ended Return on Capital Employed Sept. 30,
-------------------------- 2009 ---- Net Income $35,470 ----------
------- Financing costs (after-tax): (1,148)
---------------------------- ------- Earnings excluding financing
costs $36,618 ---------------------------------- ------- Average
capital employed $1,630,979 ------------------------ ----------
Return on average capital employed 2.2%
---------------------------------- --- Return on average capital
employed-annualized 9.3% ------------------------- --- Although
ROCE is not a measure of performance calculated in accordance with
generally accepted accounting principles, management believes that
ROCE is a useful measure because it indicates the return on all
capital, which includes equity and debt, employed in the business.
Management believes that ROCE is an additional measure of
efficiency when considered in conjunction with return on equity,
which measures the return on only the shareholders' equity
component of total capital employed. CAUTIONARY STATEMENT
CONCERNING FORWARD-LOOKING STATEMENTS Various statements in this
document, including those that express a belief, expectation, or
intention, as well as those that are not statements of historical
fact, are forward-looking statements (as defined in Section 21E of
the Securities Exchange Act of 1934 and the Private Securities
Litigation Reform Act of 1995). The forward-looking statements may
include projections and estimates concerning the timing and success
of specific projects, our future production, revenues, income and
capital spending. When we use the words "believe," "intend,"
"expect," "may," "should," "anticipate," "could," "would," "will,"
"estimate," "plan," "predict," "project," or their negatives, or
other similar expressions, the statements which include those words
are usually forward-looking statements. When we describe strategy
that involves risks or uncertainties, we are making forward-looking
statements. The forward-looking statements in this document speak
only as of the date of this document; we disclaim any obligation to
update these statements unless required by securities law, and we
caution you not to rely on them unduly. We have based these
forward-looking statements on our current expectations and
assumptions about future events. While our management considers
these expectations and assumptions to be reasonable, they are
inherently subject to significant business, economic, competitive,
regulatory and other risks, contingencies and uncertainties, most
of which are difficult to predict and many of which are beyond our
control. These risks, uncertainties and contingencies include, but
are not limited to: our business strategy; our financial position,
cash flow and liquidity; the deteriorating economic conditions in
the United States and globally; declines in the prices we receive
for our gas affecting our operating results and cash flow;
uncertainties in estimating our gas reserves and replacing our gas
reserves; uncertainties in exploring for and producing gas; our
inability to obtain additional financing necessary in order to fund
our operations, capital expenditures and to meet our other
obligations; disruptions to, capacity constraints in or other
limitations on the pipeline systems which deliver our gas; the cost
of disposing of water from our coalbed methane and Marcellus Shale
gas wells; the cost of removing impurities from the gas we produce;
the availability of personnel and equipment, including our
inability to retain and attract key personnel; increased costs; the
effects of government regulation, permitting and other legal
requirements; legal uncertainties regarding the ownership of the
coalbed methane estate, and costs associated with perfecting title
for gas rights in some of our properties; litigation concerning
real property rights, intellectual property rights, royalty
calculations and other matters; our relationships and arrangements
with CONSOL Energy; and other factors discussed in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2008
under "Risk Factors," as updated by any subsequent Form 10-Qs,
which are on file at the Securities and Exchange Commission. CNX
GAS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) (Dollars in thousands, except per share data) For the
Three For the Nine Months Ended Months Ended September 30,
September 30, ------------- ------------- 2009 2008 2009 2008 ----
---- ---- ---- Revenue and Other Income: Outside Sales $153,959
$188,612 $465,727 $494,624 Related Party Sales 825 2,587 2,260
8,035 Royalty Interest Gas Sales 8,443 22,902 29,741 61,921
Purchased Gas Sales 1,471 1,674 4,102 6,860 Other Income 955 1,172
3,815 11,929 --- ----- ----- ------ Total Revenue and Other Income
165,653 216,947 505,645 583,369 Costs and Expenses: Lifting Costs
14,173 20,709 39,229 50,176 Gathering and Compression Costs 23,948
23,642 69,135 59,034 Royalty Interest Gas Costs 6,279 21,055 23,350
59,057 Purchased Gas Costs 1,103 1,664 3,023 6,607 Other 6,693 872
15,049 1,679 General and Administrative 16,081 13,342 50,697 41,063
Other Corporate Expenses 7,206 185 21,519 9,638 Depreciation,
Depletion and Amortization 30,879 17,803 78,581 50,340 Interest
Expense 1,865 2,412 5,753 5,567 ----- ----- ----- ----- Total Costs
and Expenses 108,227 101,684 306,336 283,161 ------- -------
------- ------- Earnings Before Income Taxes and Noncontrolling
Interest 57,426 115,263 199,309 300,208 Noncontrolling Interest
(238) (312) (822) (670) ---- ---- ---- ---- Earnings Before Income
Taxes 57,664 115,575 200,131 300,878 Income Taxes 22,194 48,160
76,780 119,287 ------ ------ ------ ------- Net Income Attributable
to CNX Gas Shareholders $35,470 $67,415 $123,351 $181,591 =======
======= ======== ======== Earnings Per Share: Basic $0.23 $0.45
$0.82 $1.20 ===== ===== ===== ===== Dilutive $0.23 $0.45 $0.82
$1.20 ===== ===== ===== ===== Weighted Average Number of Common
Shares Outstanding: Basic 150,977,117 150,939,418 150,974,479
150,956,753 =========== =========== =========== ===========
Dilutive 151,372,672 151,292,158 151,304,768 151,366,746
=========== =========== =========== =========== CNX GAS CORPORATION
AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
---------------------- (Unaudited) September 30, December 31, 2009
2008 ---- ---- ASSETS ------ Current Assets: Cash and Cash
Equivalents $968 $1,926 Accounts and Notes Receivable: Trade 27,833
61,764 Other Receivables 852 3,080 Recoverable Income Taxes -
30,302 Derivatives 128,153 150,564 Other 1,966 2,222 ----- -----
Total Current Assets 159,772 249,858 Property, Plant and Equipment:
Property, Plant and Equipment 2,351,804 2,111,383 Less -
Accumulated Depreciation, Depletion and Amortization 404,781
322,470 ------- ------- Total Property, Plant and Equipment - Net
1,947,023 1,788,913 Other Assets: Investment in Affiliates 24,604
25,204 Derivatives - 55,945 Other 5,812 5,053 ----- ----- Total
Other Assets 30,416 86,202 ---------- ---------- TOTAL ASSETS
$2,137,211 $2,124,973 ========== ========== CNX GAS CORPORATION AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
---------------------- (Unaudited) September 30, December 31, 2009
2008 ---- ---- LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------ Current Liabilities: Accounts
Payable $48,528 $100,565 Accrued Royalties 13,585 20,301 Accrued
Severance Taxes 659 3,672 Related Parties 3,290 2,234 Short-Term
Notes Payable 73,050 72,700 Deferred Income Taxes 46,207 55,000
Accrued Income Taxes 2,609 - Current Portion of Long-Term Debt
8,540 8,462 Other Current Liabilities 11,060 18,116 ------ ------
Total Current Liabilities 207,528 281,050 Long-Term Debt: Long-Term
Debt 11,240 15,386 Capital Lease Obligations 56,566 59,296 ------
------ Total Long-Term Debt 67,806 74,682 Deferred Credits and
Other Liabilities: Derivatives 1,123 - Deferred Income Taxes
347,311 331,338 Gas Well Plugging 8,141 7,401 Postretirement
Benefits Other Than Pensions 3,000 2,728 Other 29,498 42,900 ------
------ Total Deferred Credits and Other Liabilities 389,073 384,367
Total Liabilities 664,407 740,099 Stockholders' Equity: Common
Stock, $.01 par value; 200,000,000 Shares Authorized, 150,981,596
Issued and Outstanding at September 30, 2009 and 150,971,636 Issued
and Outstanding at December 31, 2008 1,510 1,510 Capital in Excess
of Par Value 805,736 789,625 Preferred Stock, 5,000,000 Shares
Authorized; None Issued and Outstanding - - Retained Earnings
592,306 468,955 Other Comprehensive Income 77,406 124,784 ------
------- Total CNX Gas Shareholders' Equity 1,476,958 1,384,874
Noncontrolling Interest (4,154) - ------ - Total Equity 1,472,804
1,384,874 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $2,137,211 $2,124,973 ========== ========== CNX GAS
CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (Dollars in thousands) For the Three For the Nine
Months Ended Months Ended September 30, September 30, -------------
------------- 2009 2008 2009 2008 ---- ---- ---- ---- Operating
Activities: Net Income Attributable to CNX Gas Shareholders $35,470
$67,415 $123,351 $181,591 Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities: Depreciation, Depletion
and Amortization 30,879 17,803 78,581 50,340 Stock-based
Compensation 796 881 5,638 2,535 (Gain) Loss on the Sale of Assets
12 - 85 - Change in Noncontrolling Interest (238) (1,312) (822)
(1,670) Deferred Income Taxes 14,345 5,920 38,785 59,908 Equity in
Earnings of Affiliates (93) (236) (650) (352) Changes in Operating
Assets: Accounts Receivable 6,164 13,230 36,159 (27,925) Related
Party Receivable (1,602) 2,013 1,056 192 Other Current Assets (574)
(453) 256 537 Changes in Other Assets (1,572) (263) (950) 4,243
Changes in Operating Liabilities: Accounts Payable (18,777) 14,774
(30,141) 12,823 Income Taxes (6,331) 2,443 32,482 6,006 Other
Current Liabilities (242) 1,875 (16,785) 16,877 Changes in Other
Liabilities 1,075 (4,490) (2,096) 1,580 Other 6,073 540 14,511 234
----- --- ------ --- Net Cash Provided by Operating Activities
65,385 120,140 279,460 306,919 Investing Activities: Capital
Expenditures (59,256) (170,374) (273,019) (370,180) Acquisition of
Knox Energy - - - (36,000) Investment in Equity Affiliates - -
1,250 1,081 Proceeds From Sale of Assets 30 - 275 450 -- -- --- ---
Net Cash Used in Investing Activities (59,226) (170,374) (271,494)
(404,649) Financing Activities: Capital Lease Payments (914) (698)
(2,814) (2,058) Variable Interest Entity Debt (1,721) (469) (4,104)
11,984 Proceeds from Short-Term Borrowings (7,950) 31,200 350
58,200 Exercise of Stock Options 101 210 115 488 Noncontrolling
Interest Distribution (2,300) - (2,500) - Tax Benefit from Stock-
Based Compensation 23 6 29 184 -- - -- --- Net Cash (Used in)
Provided by Financing Activities (12,761) 30,249 (8,924) 68,798
------- ------ ------ ------ Net Decrease in Cash and Cash
Equivalents (6,602) (19,985) (958) (28,932) Cash and Cash
Equivalents at Beginning of Period 7,570 23,101 1,926 32,048 -----
------ ----- ------ Cash and Cash Equivalents at End of Period $968
$3,116 $968 $3,116 ==== ====== ==== ====== CNX GAS CORPORATION AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited) (Dollars in Thousands - except per share data)
Accumulated Other Capital in Comprehensive Common Excess of
Retained Income Stock Par Value Earnings (Loss) ----- ---------
-------- ------ Balance - December 31, 2008 $1,510 $789,625
$468,955 $124,784 ------ -------- -------- -------- (Unaudited) Net
Income Attributable to CNX Gas Shareholders - - 123,351 - Gas Cash
Flow Hedge (net of $31,186 tax) - - - (47,363) FAS 158 OPEB
Adjustment (Net of $10 tax) (15) ------ ------- ------- -------
Comprehensive Income (Loss) 123,351 (47,378) Stock Options
Exercised - 115 - - Tax Benefit from Stock-Based Compensation - 11
- - Amortization of Restricted Stock Unit Grants - 14,533 - -
Amortization of Stock Option Grants - 1,452 - - Noncontrolling
Interest - - - - Balance - ------ -------- -------- -------
September 30, 2009 $1,510 $805,736 $592,306 $77,406 ====== ========
======== ======= Total CNX Gas Stock- Non- holders' controlling
Total Equity Interest Equity ------ -------- ------ Balance -
December 31, 2008 $1,384,874 $- $1,384,874 ---------- -- ----------
(Unaudited) Net Income Attributable to CNX Gas Shareholders 123,351
- 123,351 Gas Cash Flow Hedge (net of $31,186 tax) (47,363) -
(47,363) FAS 158 OPEB Adjustment (Net of $10 tax) (15) - (15)
--------- ------- -------- Comprehensive Income (Loss) 75,973
75,973 Stock Options Exercised 115 - 115 Tax Benefit from
Stock-Based Compensation 11 - 11 Amortization of Restricted Stock
Unit Grants 14,533 - 14,533 Amortization of Stock Option Grants
1,452 - 1,452 Noncontrolling Interest - (4,154) (4,154) Balance -
---------- ------- ---------- September 30, 2009 $1,476,958
$(4,154) $1,472,804 ========== ======= ========== DATASOURCE: CNX
Gas Corporation CONTACT: Dan Zajdel, Vice President, Investor
Relations of CNX Gas Corporation, +1-724-485-4169, Web Site:
http://www.cnxgas.com/
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