UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
  FORM 8-K

 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported): October 31, 2017
 

  CONSOL Energy Inc.

(Exact name of registrant as specified in its charter)
 
 
Delaware
 
001-14901
 
51-0337383
(State or other jurisdiction
of incorporation)
 
(Commission File Number)
 
(IRS Employer
Identification No.)
 
CNX Center
1000 CONSOL Energy Drive
Canonsburg, Pennsylvania 15317  

(Address of principal executive offices)
(Zip code)
 
Registrant's telephone number, including area code:
(724) 485-4000
 
Not applicable
(Former name or former address, if changed since last report)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

  Indicate by check mark whether the registrant is an emerging growth company in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company   o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   o





Item 1.01      Entry into a Material Definitive Agreement.

CONSOL Energy Inc. (“CONSOL Energy” or the “Company”) as borrower and certain of its subsidiaries as guarantor loan parties entered into Amendment No. 3 and Borrowing Base Redetermination, dated as of October 25, 2017 (the “Amendment”), with certain lenders and PNC Bank, National Association as administrative agent. The Amendment amends the Amended and Restated Credit Agreement, dated as of June 18, 2014 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”). A copy of the Amendment is filed as Exhibit 10.1 hereto, and is incorporated herein by reference. The description of the Amendment in this Form 8-K is a summary and is qualified in its entirety by the terms of the Amendment.

Amendment

The Amendment amends the Credit Agreement to extend the amount of time available to the Company for delivery of required title reports and information and associated mortgages with respect to the proved reserves and proved developed producing reserves that are required in connection with delivery of the reserve report dated as of June 30, 2017, and waives any default with respect to the failure to deliver such required title reports and information and associated mortgages by the deadlines specified in the Credit Agreement.

By the Amendment, the lenders also approve the Company’s $2.0 billion borrowing base in connection with the reserve report dated as of June 30, 2017.

General

The description set forth above is not complete and is subject to and qualified in its entirety by reference to the complete text of the Amendment, a copy of which is filed herewith as an exhibit and the terms of which are incorporated by reference.
The Amendment is being filed herewith solely to provide investors and security holders with information regarding its terms. It is not intended to be a source of financial, business or operational information about CONSOL Energy or any of its subsidiaries or affiliates. The representations, warranties and covenants contained in the Amendment are made solely for purposes of that agreement and are made as of specific dates; are solely for the benefit of the parties thereto; may be made for the purpose of allocating contractual risk between the parties instead of establishing matters as facts; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors or security holders. Investors and security holders should not rely on the representations, warranties and covenants or any description thereof as characterizations of the actual state of facts or condition of CONSOL Energy or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Amendment, which subsequent information may or may not be fully reflected in public disclosures.

  Item 2.02 Results of Operations and Financial Condition.
 
CONSOL Energy Inc. (the "Company") issued a press release on October 31, 2017 announcing its 2017 third fiscal quarter results. A copy of the earnings release is attached to this Form 8-K as Exhibit 99.1.

Please refer to our website at www.consolenergy.com for additional information regarding the Company. For example, periodically during the quarter, we make investor presentations, which will appear on our website under Investor Relations. Further, you can subscribe to our RSS feeds, and register to receive Investor Alerts which provide updates related to our filings, events and investor presentations.

The information in this Current Report and the exhibit hereto are being furnished and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in this Current Report and exhibit hereto shall not be incorporated by reference into any registration statement or document filed pursuant to the Securities Act of 1933, as amended, unless expressly provided in any such registration statement or other document.

Item 2.03      Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The response to Item 1.01 is incorporated herein by reference to this Item 2.03.





Item 5.02      Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On October 30, 2017, James A. Brock, current Executive Vice President and Chief Operating Officer - Coal of the Company, submitted his resignation, effective as of immediately prior to the effective time of, and contingent upon, the occurrence of the Separation and Distribution (as defined below). Mr. Brock serves as Chief Executive Officer of CONSOL Mining Corporation, a wholly owned subsidiary of the Company (“CoalCo”).
In addition, on October 30, 2017, each of Messrs. Alvin R. Carpenter, John T. Mills, Joseph P. Platt, William P. Powell and Edwin S. Roberson submitted their respective resignations from the Company’s Board of Directors (the “Board”), with each such resignation to become effective as of immediately prior to the effective time of, and in each case contingent upon, the occurrence of the Separation and Distribution and their respective appointments to serve on the Board of Directors of CoalCo, as discussed further below.
Item 7.01 Regulation FD

The response to Item 2.02 is incorporated herein by reference to this Item 7.01.

Item 8.01      Other Events.
On October 30, 2017, the Company’s Board of Directors approved the separation of the Company’s coal business through the distribution of 100% of the outstanding common stock of CoalCo to the Company’s stockholders (the “Separation and Distribution”). To consummate the Separation and Distribution, the Board declared a pro rata dividend of CoalCo common stock, which is expected to be paid on November 28, 2017, to the Company’s stockholders of record as of the close of business on November 15, 2017 (the “Record Date”). Each of the Company’s stockholders as of the Record Date will receive one share of CoalCo common stock for every eight (8) shares of the Company’s common stock held at the close of business on the Record Date. Stockholders will receive cash in lieu of fractional shares of CoalCo common stock. The Separation and Distribution is subject to the satisfaction or waiver of certain conditions.
Following the Separation and Distribution, CoalCo will be an independent, publicly traded company, and the Company will not retain any equity interest in CoalCo. In connection with the Separation and Distribution, CONSOL Energy Inc. will change its name to CNX Resources Corporation, and will retain its ticker symbol “CNX” on the New York Stock Exchange. CoalCo will assume the name CONSOL Energy Inc., and will trade as an independent company on the New York Stock Exchange under the ticker symbol “CEIX”. CONSOL stockholders will retain their shares of Company common stock, but due to the name change, these shares will be shares of CNX Resources Corporation at the time of the Separation and Distribution.
On September 5, 2017, the Board approved a one-year share repurchase program of up to $200 million, under which approximately $81 million of the Company's common stock had been repurchased as of October 30, 2017, at an average price of approximately $16.00 per share, through a Rule 10b5-1 plan that will terminate on November 1, 2017. On October 30, 2017, the Board approved an increase in the aggregate amount of the repurchase plan to $450 million. CONSOL Energy may determine, from time-to-time, to effect repurchases through open market purchases, Rule 10b5-1 plans, accelerated stock repurchases or derivative contracts. The timing of any repurchases will be based on a number of factors, including available liquidity, the Company's stock price, the company's financial outlook, and alternative investment options. The share repurchase program does not obligate the Company to repurchase any dollar amount or number of shares and the Board may modify, suspend or discontinue its authorization of the program at any time. The Board of Directors will continue to evaluate the size of the stock repurchase program based on CONSOL's free cash flow position, leverage ratio, and capital plans. 
The press release announcing certain details of the Separation and Distribution and the share repurchase program is filed as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference.


















Item 9.01 Financial Statements and Exhibits.
 
(d) Exhibits.  
 





















































SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 

CONSOL ENERGY INC.
 
By:     /s/ Stephen W. Johnson
Stephen W. Johnson
Executive Vice President and Chief Administrative Officer
 

Dated: October 31, 2017

 




Exhibit Index


Exhibit No.      Description

Exhibit 10.1
Amendment No. 3 and Borrowing Base Redetermination, dated as of October 25, 2017, to the Amended and Restated Credit Agreement, dated as of June 18, 2014, by and among CONSOL Energy Inc., the subsidiary guarantors party thereto, certain lenders and PNC Bank, National Association as administrative agent.

Exhibit 99.1
Press release of CONSOL Energy Inc. dated October 31, 2017, regarding CONSOL Energy Inc.’s third fiscal quarter results.

Exhibit 99.2
Press release of CONSOL Energy Inc. dated October 31, 2017, regarding the Board of Directors’ approval of the Separation and Distribution.









AMENDMENT NO. 3 AND
BORROWING BASE REDETERMINATION
This AMENDMENT NO. 3, dated as of October 25, 2017 (this “ Amendment ”), amends the Amended and Restated Credit Agreement, dated as of June 18, 2014 (as amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, the “ Credit Agreement ”), by and among CONSOL Energy Inc. (the “ Borrower ”), the guarantors party thereto, the lenders and agents party thereto and PNC Bank, National Association, as administrative agent (the “ Administrative Agent ”). Capitalized terms used but not defined herein shall have the meanings given them in the Credit Agreement as amended by this Amendment.
WITNESSETH
WHEREAS , the Borrower desires to amend the Credit Agreement and to request a redetermination of the Borrowing Base, in each case on the terms set forth herein;
WHEREAS , PNC Capital Markets LLC is acting as sole lead arranger and sole bookrunner for this Amendment; and
WHEREAS , the contemplated amendments require the consent of the Required Lenders under the Credit Agreement, and the redetermination of the Borrowing Base requires the approval of the Required Borrowing Base Lenders under the Credit Agreement.
NOW, THEREFORE , the parties hereto, in consideration of the mutual covenants and agreements herein contained and intending to be legally bound hereby, covenant and agree as follows:
1. Amendments . Effective as of the Amendment No. 3 Effective Date:
(a)      Section 1.1 of the Credit Agreement is hereby amended by adding the following definitions in their proper alphabetical order:
“ Amendment No. 3 Effective Date ” shall mean the date of effectiveness of Amendment No. 3 to this Agreement, among the Loan Parties and the Administrative Agent, which date is October 25, 2017.
(b)      Section 8.1.17(a)(ii) of the Credit Agreement is hereby amended by adding the following proviso to the end of such Section:
“ provided, that with respect to the Mortgages to be delivered with respect to Proved Gas Collateral that is included in the Borrowing Base Properties evaluated by the Reserve Report as of June 30, 2017 (and not included in the Borrowing Base Properties evaluated by any prior Reserve Report), such Mortgages shall be delivered within forty-five (45) days after the Amendment No. 3 Effective Date (or such longer period as reasonably acceptable to the Administrative Agent);”.


    


(c)      Section 8.1.18(a) of the Credit Agreement is hereby amended by replacing the last two provisos thereof with the following
“; provided that the deadline for delivery of the Required Title Information with respect to the Proved Reserves and Proved Developed Producing Reserves included in the Borrowing Base Properties evaluated by the Reserve Report as of June 30, 2017 (and not included in the Borrowing Base Properties evaluated by any prior Reserve Report) shall be forty-five (45) days after the Amendment No. 3 Effective Date (or such later date as the Administrative Agent may agree in its discretion; provided that any extension of more than thirty (30) additional days shall require the consent of the Required Lenders)”.
(d)      The Lenders hereby waive (i) the Default that arose under Section 9.1.4 of the Credit Agreement solely as a result of the failure of the Borrower to deliver the Required Title Information with respect to the Borrowing Base Properties that were included in the Reserve Report as of June 30, 2017 (and not included in the Borrowing Base Properties evaluated by any prior Reserve Report) by the deadline specified in Section 8.1.18(a) of the Credit Agreement (before giving effect to this Amendment) and (ii) the Default that arose under Section 8.3.5 solely as a result of the Borrower’s failure to give notice of the Default described in the foregoing clause (i).
2.      Borrowing Base Redetermination . The Required Borrowing Base Lenders hereby approve the Borrowing Base of $2,000,000,000 with respect to the Reserve Report as of June 30, 2017 in accordance with Section 2.9(b) of the Credit Agreement.
3.      Conditions Precedent . This Amendment shall be effective upon satisfaction of each of the following conditions (the date of such effectiveness, the “ Amendment No. 3 Effective Date ”):
(a)      Execution and Delivery of Amendment . The Borrower, the Guarantors and the Administrative Agent shall have executed and delivered this Amendment, and the Administrative Agent shall have received consents, in the form attached hereto as Exhibit A (each, a “ Consent ”), executed and delivered by (i) in the case of the effectiveness of Section 1 hereof, the Required Lenders and (ii) in the case of the effectiveness of Section 2 hereof, the Required Borrowing Base Lenders.
(b)      Officer’s Certificate . The representations and warranties of each of the Loan Parties contained in the Loan Documents shall be true and correct in all material respects on and as of the Amendment No. 3 Effective Date with the same effect as though such representations and warranties had been made on and as of such date (except (i) that any representation and warranty that is already qualified as to materiality shall be true and correct in all respects as so qualified and (ii) representations and warranties which relate solely to an earlier date or time, which representations and warranties shall be true and correct on and as of the specific dates or times referred to therein); no Event of Default or Potential Default shall have occurred and be continuing; and there shall be delivered to the Administrative Agent for the benefit of each Lender a certificate of each of the Loan Parties, dated the Amendment No. 3 Effective Date and signed by a

-2-



Responsible Officer or Authorized Officer of each of the Loan Parties, to each such effect.
(c)      Fees and Expenses . All fees and expenses payable on or before the Amendment No. 3 Effective Date by the Borrower to the Administrative Agent (or its Affiliates) in connection with this Amendment shall have been paid, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent.
4.      Full Force and Effect; Reaffirmation . All of the terms, conditions, representations, warranties and covenants contained in the Loan Documents shall continue in full force and effect except, in each case, as expressly modified by this Amendment. This Amendment shall constitute a Loan Document for purposes of the Credit Agreement as of the Amendment No. 3 Effective Date and all references to the Credit Agreement in any Loan Document and all references in the Credit Agreement to “this Agreement,” “hereunder,” “hereof” or words of like import referring to the Credit Agreement, shall, unless expressly provided otherwise, shall mean and be a reference to the Credit Agreement, as amended by this Amendment. Each Loan Party, by its signature below, hereby affirms and confirms (i) its obligations under each of the Loan Documents to which it is a party and (ii) its guarantee of the Obligations and the pledge of and/or grant of a security interest in its assets as Collateral to secure the Obligations, and acknowledges and agrees that such guarantee, pledge and/or grant continue in full force and effect in respect of, and to secure, the Obligations.
5.      Counterparts . This Amendment may be executed by different parties hereto in any number of separate counterparts, each of which, when so executed and delivered shall be an original and all such counterparts shall together constitute one and the same instrument. Delivery of an executed counterpart of this Amendment by telecopy or e-mail shall be effective as delivery of a manually executed counterpart of this Amendment.
6.      Severability . If any term of this Amendment or any application thereof shall be held to be invalid, illegal or unenforceable, the validity of other terms of this Amendment or any other application of such term shall in no way be affected thereby.
7.      Entire Agreement . This Amendment sets forth the entire agreement and understanding of the parties with respect to the amendments to the Loan Documents contemplated hereby and supersedes all prior understandings and agreements, whether written or oral, between the parties hereto relating to such amendments. No representation, promise, inducement or statement of intention has been made by any party that is not embodied in this Amendment, and no party shall be bound by or liable for any alleged representation, promise, inducement or statement of intention not set forth herein.
8.      Governing Law . This Amendment shall be governed by and construed in accordance with the laws of the State of New York without regard to its conflict of laws principles. The provisions of Section 11.11.2 through 11.11.5 of the Credit Agreement shall apply to this Amendment mutatis mutandis .
[SIGNATURES APPEAR ON FOLLOWING PAGES]

-3-



IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Amendment as of the day and year first above written.

CONSOL ENERGY INC.
By: /s/ Stephen W. Johnson
Name:    Stephen W. Johnson
Title:    Executive Vice President and
Chief Administrative Officer


GUARANTORS:

Amvest Gas Resources, LLC
Amvest LLC
AMVEST West Virginia Coal, L.L.C.
Braxton-Clay Land & Mineral, LLC
Cardinal States Gathering Company
CNX Gas Company LLC
CNX Gas Corporation
CNX Land LLC
CNX Marine Terminals LLC
CNX RCPC LLC
CNX Water Assets LLC
Conrhein Coal Company
CONSOL Amonate Facility LLC
CONSOL Amonate Mining Company LLC
CONSOL Energy Sales Company LLC
CONSOL Financial Inc.
CONSOL Mining Company LLC
CONSOL Mining Holding Company LLC
CONSOL of Canada LLC
CONSOL of Kentucky LLC


[Signature Page to Amendment No. 3 to CONSOL Amended and Restated Credit Agreement]


Consol Pennsylvania Coal Company LLC
Fola Coal Company, L.L.C.
Helvetia Coal Company LLC
Island Creek Coal Company LLC
Laurel Run Mining Company LLC
Leatherwood, LLC
Little Eagle Coal Company, L.L.C.
MOB Corporation
MTB LLC
Nicholas-Clay Land & Mineral, LLC
R&PCC LLC
TECPART LLC
Terra Firma Company
Terry Eagle Coal Company, L.L.C.
Terry Eagle Limited Partnership
Vaughan Railroad Company, LLC
Windsor Coal Company LLC
Wolfpen Knob Development Company LLC

By: /s/ Stephen W. Johnson
Name:    Stephen W. Johnson
Title:    Authorized Signatory for each of the     Guarantors



[Signature Page to Amendment No. 3 to CONSOL Amended and Restated Credit Agreement]



PNC BANK, NATIONAL ASSOCIATION ,
as Administrative Agent and Issuing Lender



By: /s/ John Engel
Name: John Engel
Title: Vice President



[Signature Page to Amendment No. 3 to CONSOL Amended and Restated Credit Agreement]
EXHIBIT A

CONSENT TO AMENDMENT NO. 3 AND
BORROWING BASE REDETERMINATION
CONSENT (this “ Consent ”) to Amendment No. 3 (the “ Amendment ”) to the certain Credit Agreement, dated as of June 18, 2014 (as amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, the “ Credit Agreement ”) by and among CONSOL Energy Inc. (the “Borrower”), the guarantors party thereto, the lenders and agents party thereto and PNC Bank, National Association, as administrative agent (the “ Administrative Agent ”), including the Borrowing Base determination set forth therein.

The undersigned Lender hereby consents to the Amendment.


________________________________________,
(Name of Institution)
By:         
Name:
Title:
If a second signature is necessary:
By:         
Name:
Title


[Signature Page to Amendment No. 3 to CONSOL Amended and Restated Credit Agreement]
Exhibit 99.1

CEIFINALLOGOA01A01A02A08.JPG
CONSOL Energy Reports Third Quarter Results;
Utica Shale Production Increased by 45% Quarter-Over-Quarter;
E&P Division Operating Costs Were Lowered to $2.26 Per Mcfe;
Closed on Asset Sales Totaling $427 Million Year-To-Date


PITTSBURGH (October 31, 2017 ) - CONSOL Energy Inc. (NYSE: CNX) reported net cash provided by operating activities in the just-ended quarter of $ 178 million, compared to $ 163 million in the year-earlier quarter, which included $ 5 million of net cash used in discontinued operating activities. The company reported a net loss attributable to CONSOL Energy shareholders of $ 26 million, or a loss of $ 0.11 per diluted share, compared to net income attributable to CONSOL Energy shareholders of $ 25 million, or earnings of $ 0.11 per diluted share, in the third quarter of 2016.

Earnings before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization (EBITDA) from continuing operations 1 were $190 million for the 2017 third quarter, compared to $314 million in the year-earlier quarter.

On a GAAP basis, the third quarter earnings included the following pre-tax items attributable to continuing operations:

•
Recorded $30 million in gains on assets sales; and
•
Recorded a $2 million unrealized gain on commodity derivative instruments, related to changes in the fair market value of existing hedges on a mark-to-market basis

After adjusting for certain items, which are described in the footnote to the EBITDA reconciliation table, the company had an adjusted net loss attributable to CONSOL Energy Shareholders 1 in the 2017 third quarter of $36 million, or a loss of $0.15 per diluted share. Adjusted EBITDA from continuing operations 1 was $ 168 million for the 2017 third quarter, compared to $ 158 million in the year-earlier quarter.

"The company has been hard at work during the quarter finalizing the process to separate the gas and coal businesses and recently filed an amended Form 10," commented Nicholas J. DeIuliis, president and CEO. "Our strategic goal of creating two successful, separately-traded, pure play entities is expected to be complete in the coming weeks, and as indicated by the press release this morning, the record and distribution dates have been set for November 15, 2017 and November 28, 2017, respectively. Both of the teams are executing at peak performance; respective company financials and balance sheets are strong; and the future looks bright for both the gas business, which will be renamed CNX Resources Corporation after the separation, and the coal business, which will be renamed CONSOL Energy Inc. after the separation. This is truly a historic time for our company, and once the separation is completed, we are looking forward to focusing 100% of our time and energy on our core operations: as an industry leading pure play Appalachian E&P company. Going into year-end, not only will our businesses be separated, but our E&P operations will be growing substantially, and we will continue to opportunistically buy back shares.”    

“During the quarter, we had strong operational execution, and we finished slightly above our previously stated production guidance for the third quarter," continued Mr. DeIuliis. "This implies that we expect fourth quarter volumes to be a little over 120 Bcfe based on the midpoint of our full year 2017 production guidance range of 405-415 Bcfe. Our program is heavily weighted in the fourth quarter, and our turn-in-line (TIL) schedule peaks in November. This will help drive an estimated exit rate for the year of around 1.4 Bcfe per day, which will set us up to achieve our 2018 production guidance of 520-550 Bcfe. Also, this production ramp is expected to correspondingly ramp EBITDA higher over the coming quarters, which will naturally de-lever the balance sheet further and help us quickly reach our targeted pro forma net debt to EBITDA leverage ratio of around 2.5x.”







Exhibit 99.1

During the third quarter, CONSOL Energy received approximately $82 million in proceeds from asset sales, which included the sale of non-core Marcellus Shale acres in Allegheny, Westmoreland, Washington, and Greene counties, Pennsylvania, for approximately $55 million and surface acres and other miscellaneous non-core assets for approximately $27 million. Including these recent transactions, CONSOL Energy has closed on asset sales totaling $427 million year-to-date. The company continues to pursue the sale of various non-core assets, including its Virginia coalbed methane project area and scattered Marcellus and Utica acres. Despite already being within the full year 2017 asset sale guidance range of $400-$600 million, the company believes that it could enter into agreements for some of these additional asset sale transactions in the fourth quarter.

During the quarter, CONSOL Energy generated approximately $ 94 million in free cash flow 1 , which included proceeds from sales of assets. In addition to the $286 million of cash on the balance sheet as of the end of the quarter, as part of the spin-off transaction, CONSOL expects to receive a cash distribution from CoalCo of approximately $425 million, net of fees, which the company will use to achieve its targeted leverage ratio. Following the end of the quarter and through October 30, 2017, the company utilized a portion of the $286 million of cash on the balance sheet to repurchase $81 million of its common stock through a Rule 10b5-1 plan under the one-year share repurchase program of up to $450 million, which was recently increased from the original $200 million program.

1 The terms "adjusted net (loss) income attributable to CONSOL Energy Shareholders," "EBITDA from continuing operations," and "adjusted EBITDA from continuing operations" are non-GAAP financial measures, which are defined and reconciled to the GAAP net income below, under the caption “Non-GAAP Financial Measures." The terms "free cash flow," and "organic free cash flow from continuing operations" are non-GAAP financial measures, which are defined and reconciled to the GAAP Net Cash Provided by Operating Activities, also under the caption “Non-GAAP Financial Measures."

E&P Division:

During the third quarter of 2017, CONSOL's E&P Division sold 101.0 Bcfe, or an increase of 5% from the 96.4 Bcfe sold in the year-earlier quarter, driven primarily from Marcellus Shale volumes. Total quarterly production costs decreased to $2.26 per Mcfe, compared to the year-earlier quarter of $2.36 per Mcfe, driven primarily by reductions in operating expense, non-income based taxes and depreciation, depletion and amortization (DD&A). E&P Division capital expenditures increased in the third quarter to $148 million, compared to $49 million spent in year-earlier quarter.

Marcellus Shale production volumes, including liquids, in the 2017 third quarter were 60.4 Bcfe, approximately 17% higher than the 51.8 Bcfe produced in the 2016 third quarter. The increased production is due to 16 new Marcellus Shale wells coming on line during the quarter. Marcellus total production costs were $2.20 per Mcfe in the just-ended quarter, which is a $0.13 per Mcfe improvement from the third quarter of 2016 of $2.33 per Mcfe, driven by reductions to depreciation, depletion and amortization (DD&A) and production, ad valorem and other fees. The decrease in DD&A is primarily driven by increased reserves.

CONSOL Energy's Utica Shale production volumes, including liquids, in the 2017 third quarter were 20.1 Bcfe, down approximately 11% from 22.5 Bcfe in the year-earlier quarter, which is due to natural production declines in the Ohio wet Utica Shale area. Utica Shale total production costs were $1.91 per Mcfe in the just-ended quarter, which is a $0.10 per Mcfe increase from the third quarter of 2016 total production costs of $1.81 per Mcfe. The cost increase was driven by lower Utica Shale volumes resulting in increased lease operating expense (LOE). Also, Utica Shale DD&A rates increased, in part, due to higher capital costs associated with the initial dry Utica delineation wells in Pennsylvania. These cost increases were partially offset by a decrease in taxes due to an adjustment related to a non-operated area. Despite the year-over-year production decline, quarterly Utica Shale volumes grew 45% from the second quarter of 2017. This quarter-over-quarter growth was driven by Monroe County, Ohio, dry Utica Shale volumes, which grew 476% in the third quarter to 9.8 Bcf, compared to 1.7 Bcf from the second quarter of 2017. For the fourth quarter of 2017, the company expects further growth in Utica Shale volumes to approximately 33.4 Bcfe, or an increase of approximately 66%, compared to the third quarter of 2017. The fourth quarter growth will also be driven by Monroe County, Ohio, dry Utica Shale volumes, which the company expects to increase approximately 125% to approximately 22.0 Bcfe, compared to the third quarter of 2017. With the continued ramp in Monroe County, Ohio, volumes through the remainder of the year, the company expects Utica Shale total production costs to improve to approximately $1.70 per Mcfe in the fourth quarter of 2017.


2


E&P Division Third Quarter Operations Summary:
In the quarter, CONSOL operated two horizontal rigs and drilled six Greene County, Pennsylvania, Marcellus Shale wells and four Monroe County, Ohio, dry Utica Shale wells. The Marcellus and Utica Shale laterals averaged 9,576 feet and 9,007 feet, respectively. The company averaged 17 days to drill the Marcellus Shale wells, which included two wells that the company drilled in less than 14 days. For the Utica Shale wells, the company averaged 17.4 drilling days, which is a 2% improvement when compared to the second quarter of 2017 and a 10% improvement, compared to the first quarter of 2017.

The company utilized three frac crews and completed 21 wells in the third quarter: five Marcellus Shale wells located in Tyler County, West Virginia; seven Marcellus Shale wells located in Ritchie County, West Virginia; and nine dry Utica Shale wells located in Monroe County, Ohio.

During the quarter, CONSOL turned-in-line 29 wells: seven Marcellus Shale wells located in Ritchie County, West Virginia; four Marcellus Shale wells located in Tyler County, West Virginia; five Marcellus Shale wells and one Burkett Shale well located in Washington County, Pennsylvania; and 12 dry Utica Shale wells in Monroe County, Ohio. The company is on schedule to TIL 15 wells in the fourth quarter of 2017, including its Aikens 5J and 5M dry Utica Shale wells in Westmoreland County, Pennsylvania.

In the quarter, CONSOL Energy continued to improve production and capital efficiency performance in two core areas: the Morris Marcellus Shale field in Greene County, PA, and the Switz Utica Shale field in Monroe County, Ohio. Compared to legacy results, CONSOL Energy increased the estimated ultimate recovery (EUR) and capital efficiency in the Morris Marcellus Shale field by 77% and 311%, respectively. Similarly, the company achieved performance results in the Switz Utica Shale field by increasing EURs and capital efficiency by 38% and 258%, respectively. The company delivered these results through drilling and completion (D&C) advancements and reservoir optimization initiatives. Reservoir modeling advancements have driven increased sand loading in each area by 40%-150%, compared to previous designs. Extended laterals combined with increased proppant loading, azimuth optimization, diversion technology, and perforation efficiency have been the key drivers in yielding superior results.

E&P DIVISION RESULTS — Quarter-to-Quarter Comparison
 
 
Quarter
 
Quarter
 
Quarter
 
 
 
Ended
 
Ended
 
Ended
 
 
 
September 30, 2017
 
September 30, 2016
 
June 30, 2017
 
Sales - Gas
 
$
196.3

 
$
170.7

 
$
233.7

 
Sales - Oil
 
0.6

 
0.6

 
1.1

 
Sales - NGLs
 
33.2

 
27.1

 
21.6

 
Sales - Condensate
 
4.3

 
7.5

 
3.9

 
Total Sales Revenue ($ MM)
 
$
234.4

 
$
205.9

 
$
260.3

 
Gain (Loss) on Commodity Derivative Instruments - Cash Settlement
 
17.7

 
38.6

 
(32.3
)
 
Total Revenue
 
$
252.1

 
$
244.5

 
$
228.0

 
 
 
 
 
 
 
 
 
Earnings Before Income Tax ($ MM)
 
$
20.2

 
$
161.1

 
$
227.4

 
Adjusted Earnings (Loss) Before Income Tax ($MM)
 
$
12.3

1  
$
6.4

2  
$
5.7

3  
Capital Expenditures ($ MM)
 
$
147.5

 
$
48.7

 
$
142.3

 
1 Adjusted earnings before income tax for the E&P Division of $12.3 million for the three months ended September 30, 2017 is calculated as GAAP earnings before income tax of $20.2 million less total pre-tax adjustments of $7.9 million. The $7.9 million of adjustments are $1.5 million of pre-tax gain related to the unrealized gain on commodity derivative instruments, $11.6 million of pre-tax gains on asset sales, a pre-tax charge of $4.8 million related to stock-based compensation and a pre-tax charge of $0.4 million related to severance expense.
2 Adjusted earnings before income tax for the E&P Division of $6.4 million for the three months ended September 30, 2016 is calculated as GAAP earnings before income tax of $161.1 million less total pre-tax adjustments of $154.7 million. The $154.7 million adjustment includes a $159.6

3


million pre-tax gain related to the unrealized gain on commodity derivative instruments, a pre-tax charge of $4.8 million related to stock-based compensation and a pre-tax loss of $0.1 million related to severance expense.
3 Adjusted earnings before income tax for the E&P Division of $5.7 million for the three months ended June 30, 2017 is calculated as GAAP earnings before income tax of $227.4 million less total pre-tax adjustments of $221.7 million. The $221.7 million of adjustments are $116.0 million of pre-tax gain related to the unrealized gain on commodity derivative instruments, $126.7 million of pre-tax gains on asset sales, a pre-tax loss related to $16.9 million in lease expirations and a pre-tax charge of $4.1 million related to stock-based compensation.

CONSOL's E&P Division production in the quarter came from the following categories:
 
 
Quarter
 
Quarter
 
 
 
Quarter
 
 
 
 
Ended
 
Ended
 
 
 
Ended
 
 
 
 
September 30, 2017
 
September 30, 2016
 
% Increase/(Decrease)
 
June 30, 2017
 
% Increase/(Decrease)
GAS
 
 
 
 
 
 
 
 
 
 
Marcellus Sales Volumes (Bcf) 1
 
52.1

 
43.0

 
21.2
 %
 
51.1

 
2.0
 %
Utica Sales Volumes (Bcf)
 
17.5

 
17.7

 
(1.1
)%
 
10.7

 
63.6
 %
CBM Sales Volumes (Bcf)
 
16.2

 
17.0

 
(4.7
)%
 
16.5

 
(1.8
)%
Other Sales Volumes (Bcf) 2
 
4.2

 
5.1

 
(17.6
)%
 
4.9

 
(14.3
)%
 
 
 
 
 
 
 
 
 
 
 
LIQUIDS 3
 
 
 
 
 
 
 
 
 
 
NGLs Sales Volumes (Bcfe)
 
10.3

 
12.3

 
(16.3
)%
 
8.1

 
27.2
 %
Oil Sales Volumes (Bcfe)
 
0.1

 
0.1

 
—
 %
 
0.2

 
(50.0
)%
Condensate Sales Volumes (Bcfe)
 
0.6

 
1.2

 
(50.0
)%
 
0.7

 
(14.3
)%
 
 
 
 
 
 
 
 
 
 
 
TOTAL
 
101.0

 
96.4

 
4.8
 %
 
92.2

 
9.5
 %
 
 
 
 
 
 
 
 
 
 
 
Average Daily Production (MMcfe)
 
1,098.1

 
1,047.7

 
 
 
1,013.4

 
 
1 In the quarter ended June 30 2017, the company sold approximately 3.0 Bcfe of production related to the net developed acres located in Doddridge and Wetzel counties, West Virginia, and the production was retroactive from January 1, 2017 through May 31, 2017.
2 Other Sales Volumes: primarily related to shallow oil and gas production.
3 NGLs, Oil and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices.


4


E&P PRICE AND COST DATA PER MCFE — Quarter-to-Quarter Comparison:
 
 
Quarter
 
Quarter
 
Quarter
 
 
Ended
 
Ended
 
Ended
(Per Mcfe)
 
September 30, 2017
 
September 30, 2016
 
June 30, 2017
Average Sales Price - Gas
 
$
2.18

 
$
2.06

 
$
2.81

Average Gain (Loss) on Commodity Derivative Instruments - Cash Settlement- Gas
 
$
0.20

 
$
0.47

 
$
(0.39
)
Average Sales Price - Oil*
 
$
6.99

 
$
7.01

 
$
8.03

Average Sales Price - NGLs*
 
$
3.22

 
$
2.19

 
$
2.66

Average Sales Price - Condensate*
 
$
6.89

 
$
6.21

 
$
5.69

 
 
 
 
 
 
 
Average Sales Price - Total Company
 
$
2.50

 
$
2.54

 
$
2.47

 
 
 
 
 
 
 
Lease Operating Expense
 
$
0.22

 
$
0.23

 
$
0.23

Production, Ad Valorem, and Other Fees
 
0.06

 
0.10

 
0.05

Transportation, Gathering and Compression
 
0.98

 
0.98

 
0.94

Depreciation, Depletion and Amortization (DD&A)
 
1.00

 
1.05

 
0.98

Total Production Costs
 
$
2.26

 
$
2.36

 
$
2.20

Margin
 
$
0.24

 
$
0.18

 
$
0.27

 
 
 
 
 
 
 
Addback: DD&A
 
$
1.00

 
$
1.05

 
$
0.98

Margin, before DD&A
 
$
1.24

 
$
1.23

 
$
1.25

* Oil, NGLs, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices.
Note: "Total Production Costs" excludes Selling, General, and Administration and Other Corporate Expenses.

The average sales price of $2.50 per Mcfe, when combined with unit costs of $2.26 per Mcfe, resulted in a margin of $0.24 per Mcfe. This was an increase when compared to the year-earlier quarter, due to improvements in total production costs, partially offset by a reduction in average sales price.

Marketing Update:
For the third quarter of 2017, CONSOL's average sales price for natural gas, natural gas liquids (NGLs), oil, and condensate was $2.50 per Mcfe. CONSOL's average price for natural gas was $2.18 per Mcf for the quarter and, including cash settlements from hedging, was $2.38 per Mcf. The average realized price for all liquids for the third quarter of 2017 was $20.77 per barrel.

CONSOL's weighted average differential from NYMEX in the third quarter of 2017 was negative $0.94 per MMBtu. CONSOL's average sales price for natural gas before hedging was $0.63 per Mcf lower than the $2.81 per Mcf reported for the second quarter of 2017. This decrease results primarily from a lower Henry Hub price coupled with a wider differential. Including the impact of cash settlements from hedging, the average sales price for natural gas was $0.04 per Mcf lower than the second quarter.

CONSOL continued to recover and sell discretionary ethane during the quarter. Directly-marketed ethane volumes were 637,000 barrels in the third quarter of 2017 and yielded a weighted average sales price that was $1.52 per MMBtu higher than CONSOL's residue natural gas alternative.





5


E&P Division Guidance:
CONSOL Energy maintains its E&P Division production guidance for 2017 of approximately 405-415 Bcfe and total E&P capital expenditures in 2017 of approximately $620-$645 million. For full year 2018, the company maintains production guidance of 520-550 Bcfe.

CONSOL Energy continued its programmatic hedge program to further build out NYMEX and basis hedges through 2021. Total hedged natural gas production in the 2017 fourth quarter is 83.1 Bcf. The annual gas hedge position is shown in the table below:

 
 
2017
 
2018
Volumes Hedged (Bcf), as of 10/17/17
 
316.6*
 
333.3

* Includes actual settlements of 258.2 Bcf.

CONSOL Energy's hedged gas volumes include a combination of NYMEX financial hedges and index (NYMEX and basis) hedges and contracts. In addition, to protect the NYMEX hedge volumes from basis exposure, CONSOL enters into basis-only financial hedges and physical sales with fixed basis at certain sales points. CONSOL Energy's gas hedge position is shown in the table below:

 
 
Q4 2017
 
2017
 
2018
 
2019
 
2020
NYMEX Only Hedges
 
 
 
 
 
 
 
 
 
 
Volumes (Bcf)
 
73.5

 
282.4

 
316.1

 
226.3

 
161.6

Average Prices ($/Mcf)
 
$
3.16

 
$
3.14

 
$
3.14

 
$
2.99

 
$
2.89

Index Hedges and Contracts
 
 
 
 
 
 
 
 
 
 
Volumes (Bcf)
 
9.6

 
34.2

 
17.2

 
13.1

 
11.9

Average Prices ($/Mcf)
 
$
3.01

 
$
3.11

 
$
2.62

 
$
2.44

 
$
2.27

Total Volumes Hedged (Bcf) 1
 
83.1

 
316.6

 
333.3

 
239.4

 
173.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NYMEX + Basis (fully-covered volumes) 2
 
 
 
 
 
 
 
 
 
 
Volumes (Bcf)
 
81.7

 
311.3

 
333.3

 
239.1

 
166.2

Average Prices ($/Mcf)
 
$
2.62

 
$
2.59

 
$
2.78

 
$
2.69

 
$
2.59

NYMEX Only Hedges Exposed to Basis
 
 
 
 
 
 
 
 
 
 
Volumes (Bcf)
 
1.4

 
5.3

 
—

 
0.3

 
7.3

Average Prices ($/Mcf)
 
$
3.16

 
$
3.14

 
$
—

 
$
2.99

 
$
2.89

Total Volumes Hedged (Bcf) 1
 
83.1

 
316.6

 
333.3

 
239.4

 
173.5

1 2018 excludes 9.1 Bcf of physical basis sales not matched with NYMEX hedges.
2 Includes physical sales with fixed basis in Q4 2017, 2017, 2018, 2019, and 2020 of 19.1 Bcf, 64.0 Bcf, 97.5 Bcf, 103.9 Bcf, and 65.0 Bcf, respectively.
 
During the third quarter of 2017, CONSOL Energy added additional NYMEX natural gas hedges of 4.3 Bcf, 7.0 Bcf, 21.9 Bcf, and 94.1 Bcf for 2018, 2019, 2020, and 2021, respectively. To help mitigate basis exposure on NYMEX hedges, in the third quarter CONSOL added 1.4 Bcf, 34.4 Bcf, 37.7 Bcf, 41.4 Bcf, and 54.2 Bcf of basis hedges for 2017, 2018, 2019, 2020, and 2021, respectively.

Pennsylvania (PA) Mining Operations Division:

CONSOL Energy's PA Mining Operations sold 6.3 million tons in the 2017 third quarter, compared to 6.0 million tons during the year-earlier quarter. During the quarter, the average cost of coal sold increased slightly to $37.32 per ton, compared to $35.79 per ton in the year-earlier quarter.


6


Third Quarter Summary:
CNX Coal Resources LP ("CNXC") reported the following in its third quarter 2017 earnings press release, dated October 30, 2017: "The marketing team did an excellent job of communicating with our customers to make sure that shipments were managed to meet their requirements during the quarter when we were volume-constrained due to Enlow Fork geological conditions in July, and one idled Bailey longwall in September. The operations team added incremental shifts at other longwalls to make up for some of the lost production and we expect to do this in the fourth quarter as well. I am very pleased to announce that all of our longwalls resumed production in the first week of October, and we expect to meet our contractual obligations and previously-provided sales guidance for the full year."

During the quarter, on a total consolidated basis, PA Mining Operations Division generated $83 million of cash flow before capital expenditures.

PA MINING OPERATIONS RESULTS - Quarter-To-Quarter Comparison

 
 
PA Mining Ops
 
PA Mining Ops
 
PA Mining Ops
 
 
Quarter
 
Quarter
 
Quarter
 
 
Ended
 
Ended
 
Ended
 
 
September 30,
 
September 30,
 
June 30,
 
 
2017
 
2016
 
2017
 
 
 
 
 
 
 
Beginning Inventory (millions of tons)
 
0.3

 
0.1

 
0.3

Coal Production (millions of tons)
 
6.1

 
6.2

 
6.8

Ending Inventory (millions of tons)
 
0.2

 
0.2

 
0.3

Sales - Company Produced (millions of tons)
 
6.3

 
6.0

 
6.8

 
 
 
 
 
 
 
Sales Per Ton
 
$
44.16

 
$
44.30

 
$
44.75

 
 
 
 
 
 
 
Average Cost of Coal Sold Per Ton
 
$
37.32

 
$
35.79

 
$
34.79

 
 
 
 
 
 
 
Average Margin Per Ton Sold
 
$
6.84

 
$
8.51

 
$
9.96

Addback: DD&A Per Ton
 
$
6.38

 
$
6.50

 
$
5.71

Average Margin Per Ton, before DD&A
 
$
13.22

 
$
15.01

 
$
15.67

Cash Flow before Cap. Ex ($ MM)
 
$
83

 
$
90

 
$
107

Note: The PA Mining Operations include Bailey, Enlow Fork, and Harvey mines. Total Production Costs per Ton include: operating and other costs, royalty and production taxes and depreciation, depletion and amortization. Sales tons times Average Margin Per Ton, before DD&A is meant to approximate the amount of cash generated by PA Mining Operations. This cash generation will be offset by maintenance of production (MOP) capital expenditures. Table may not sum due to rounding.

CONSOL Energy expects total consolidated PA Mining Operations annual sales to be approximately 26.0-27.0 million tons for 2017. Also, CONSOL Energy reduces total consolidated capital expenditures for PA Mining Operations to $92-$108 million for 2017.






7


2017 EBITDA Guidance by Segment:
(in millions)
 
E&P Division 1
 
PA Mining Operations Division
 
Other
 
Total

Earnings Before Interest, Taxes and DD&A (EBITDA)
 
$
615

 
$
365

 
$
(20
)
 
$
960

     Adjustments:
 
 
 
 
 
 
 
 
       Unrealized Gain on Commodity Derivative Instruments
 
(140
)
 
-

 
-

 
(140
)
       Stock-Based Compensation
 
20

 
15

 
-

 
35

Adjusted EBITDA
 
$
495

 
$
380

 
$
(20
)
 
855

       Noncontrolling Interest
 
-

 
$
(40
)
 
-

 
(40
)
Adjusted EBITDA Attributable to CNX
 
$
495

 
$
340

 
$
(20
)
 
$
815

Note: CONSOL Energy is unable to provide a reconciliation of projected Adjusted EBITDA to projected operating income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing and potential significance of certain income statement items. EBITDA guidance based on the midpoint of production guidance and assumes NYMEX as of 9/29/2017 of $3.14 + weighted average differential of ($0.61) per MMBtu.
1 Includes forecasted Earnings of Equity Affiliates of $40 million in 2017 associated with CONSOL Energy's proportionate share of ownership in CONE Midstream Partners LP and CONE Gathering LLC. This income is reflected within Miscellaneous Other Income in the CNX income statement.

Liquidity:
As of September 30, 2017, CONSOL Energy had $1,967.9 million in total liquidity, which is comprised of $282.1 million of cash, excluding the CNXC cash balance, and $1,685.8 million available to be borrowed under its $2.0 billion bank facility. In addition, CONSOL holds 16.6 million CNXC limited partnership units with an aggregated current market value of approximately $247 million and 21.7 million CONE Midstream Partners LP ("CNNX") limited partnership units with a current market value of approximately $357 million, in each case as of October 16, 2017.

CONSOL Energy's net leverage ratio at the end of the quarter was 2.8x, which is an improvement of 0.2x and 1.1x compared to 3.0x at June 30, 2017 and 3.9x at December 31, 2016, respectively. Financial performance from operations along with asset sales and debt reduction drove the decrease in leverage. Lastly, following the end of the third quarter, the company’s $2.0 billion bank facility borrowing base was reaffirmed.

  
About CONSOL
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2016, CONSOL Energy had 6.3 trillion cubic feet equivalent of proved natural gas reserves.  CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index.  Additional information may be found at www.consolenergy.com.

Important Information about Company Names and Stock Trading Symbols
Effective November 28, 2017, the company known as CONSOL Energy Inc. (NYSE: CNX) expects to separate its gas business (GasCo or RemainCo) and its coal business (CoalCo or SpinCo) into two independent, publicly traded companies by means of a separation of CoalCo from RemainCo. 
•
The gas business will be named CNX Resources Corporation (RemainCo, GasCo or CNX) and will continue to be listed on the New York Stock Exchange (NYSE), retaining the ticker symbol “CNX”. After the spin-off occurs, information regarding CNX and its natural gas business will be available at www.cnx.com .
•
The coal business will be named CONSOL Energy Inc. (SpinCo, CoalCo or CONSOL) and will be listed on the NYSE under a new ticker symbol: “CEIX”. CoalCo will own, operate and develop all of the company’s coal assets,

8


including its interest in the Pennsylvania Mining Complex, the Baltimore Marine Terminal, and approximately 1.6 billion tons of greenfield coal reserves. After the spin-off occurs, information regarding the new CONSOL Energy and its coal business will be available at www.consolenergy.com . 
•
The master limited partnership that is currently named CNX Coal Resources LP (NYSE:  CNXC) will change its name to CONSOL Coal Resources LP and will trade on the NYSE under a new ticker symbol: “CCR”. CoalCo will own 100% of the general partner of CONSOL Coal Resources LP (representing a 1.7% general partner interest), as well as all of the incentive distribution rights and the common and subordinated interests in CNX Coal Resources LP that are currently owned by CONSOL Energy Inc. After the spin-off occurs, information regarding CONSOL Coal Resources LP will be available at www.ccrlp.com  

Non-GAAP Financial Measures
Definition: EBIT is defined as earnings before deducting net interest expense (interest expense less interest income) and income taxes. EBITDA is defined as earnings before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization. Adjusted EBITDA is defined as EBITDA after adjusting for the discrete items listed below. Although EBIT, EBITDA, and Adjusted 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 CONSOL Energy because they are widely used to evaluate a company's operating performance. We exclude stock-based compensation from Adjusted EBITDA because we do not believe it accurately reflects the actual operating expense incurred during the relevant period and may vary widely from period to period irrespective of operating results. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT, EBITDA, or Adjusted EBITDA identically, the presentation here may not be comparable to similarly titled measures of other companies.
 
Reconciliation of EBIT, EBITDA and Adjusted EBITDA to financial net income attributable to CONSOL Energy Shareholders is as follows (dollars in 000):


9


 
 
Three Months Ended
 
 
September 30,
 
 
2017
 
2017
 
2017
 
2017
 
2016
Dollars in thousands
 
E&P Division
 
PA Mining Operations Division
 
Other 1
 
Total Company
 
Total Company
Net Income (Loss)
 
$
20,226

 
$
21,011

 
$
(66,888
)
 
$
(25,651
)
 
$
27,593

 
 
 
 
 
 
 
 
 
 
 
Less: Loss from Discontinued Operations
 
—

 
—

 
—

 
—

 
34,975

Add: Interest Expense
 
575

 
2,164

 
38,763

 
41,502

 
47,317

Less: Interest Income
 
(3
)
 
—

 
(1,303
)
 
(1,306
)
 
(214
)
Add: Income Taxes
 
—

 
—

 
26,758

 
26,758

 
52,858

Earnings Before Interest & Taxes (EBIT)
 
20,798

 
23,175

 
(2,670
)
 
41,303

 
162,529

 
 
 
 
 
 
 
 
 
 
 
Add: Depreciation, Depletion & Amortization
 
101,585

 
41,638

 
5,545

 
148,768

 
151,712

 
 
 
 
 
 
 
 
 
 
 
Earnings Before Interest, Taxes and DD&A (EBITDA) from Continuing Operations
 
$
122,383

 
$
64,813

 
$
2,875

 
$
190,071

 
$
314,241

 
 
 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
 
 
 
Unrealized Gain on Commodity Derivative Instruments
 
(1,512
)
 
—

 
—

 
(1,512
)
 
(159,555
)
Gain on Asset Sales
 
(11,557
)
 
—

 
(18,758
)
 
(30,315
)
 
—

Severance Expense
 
348

 
4,563

 
509

 
5,420

 
229

Other Transaction Fees
 
—

 
—

 
6,387

 
6,387

 
—

Loss on Debt Extinguishment
 
—

 
—

 
2,019

 
2,019

 
—

Stock-Based Compensation
 
4,788

 
5,882

 
798

 
11,468

 
7,771

Pension Settlement
 
—

 
—

 
—

 
—

 
3,651

Lease Expirations
 
—

 
—

 
—

 
—

 
—

Coal Contract Buyout
 
—

 
(8,410
)
 
—

 
(8,410
)
 
—

Total Pre-tax Adjustments
 
(7,933
)
 
2,035

 
(9,045
)
 
(14,943
)
 
(147,904
)
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA from Continuing Operations
 
$
114,450

 
$
66,848

 
$
(6,170
)
 
$
175,128

 
$
166,337

 
 
 
 
 
 
 
 
 
 
 
Less: Adjusted EBITDA Attributable to Noncontrolling Interest 2
 
—

 
7,065

 
—

 
7,065

 
8,812

 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Attributable to Continuing Operations
 
$
114,450

 
$
59,783

 
$
(6,170
)
 
$
168,063

 
$
157,525

Note: Income tax effect of Total Pre-tax Adjustments was $5,530 and $48,784 for the three months ended September 30, 2017 and September 30, 2016, respectively. Adjusted net income attributable to CONSOL Energy Shareholders for the three months ended September 30, 2017 is calculated as GAAP net loss attributable to CONSOL Energy Shareholders of $26,441 less total pre-tax adjustments from the above table of $14,943, plus the associated tax expense of $5,530 equals the adjusted net loss attributable to CONSOL Energy Shareholders of $35,854.
1 CONSOL Energy's Other Division includes expenses from various other corporate and diversified business unit activities including legacy liabilities costs and income tax expense that are not allocated to E&P or PA Mining Operations Divisions.
2 Adjusted EBITDA Attributable to Noncontrolling Interest for the three months ended September 30,2017 is Net Income Attributable to Noncontrolling interest of $790 plus Depreciation, Depletion and Amortization of $4,640, plus Interest Expense of $1,077, plus Stock-based compensation of $558.

10


Adjusted EBITDA Attributable to Noncontrolling Interest for the three months ended September 30,2016 is Net Income Attributable to Noncontrolling interest of $2,248 plus Depreciation, Depletion and Amortization of $5,233, plus Interest Expense of $1,098 plus Stock-based compensation of $233.

Free cash flow and organic free cash flow from continuing operations are non-GAAP financial measures. Management believes that these measures are meaningful to investors because management reviews cash flows generated from operations and non-core asset sales after taking into consideration capital expenditures due to the fact that these expenditures are considered necessary to maintain and expand CONSOL’s asset base and are expected to generate future cash flows from operations. It is important to note that free cash flow and organic free cash flow from continuing operations do not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure.

 Organic Free Cash Flow from Continuing Operations
Three Months Ended September 30, 2017
Net Cash Provided by Continuing Operations
$
178,667

 
 
Capital Expenditures
(177,294
)
Net Distributions from Equity Affiliates
10,920

Organic Free Cash Flow from Continuing Operations
$
12,293


 Free Cash Flow
Three Months Ended September 30, 2017
Net Cash Provided by Operating Activities
$
178,328

 
 
Capital Expenditures
(177,294
)
Net Distributions from Equity Affiliates
10,920

Proceeds From Sales of Assets
81,727

Free Cash Flow
$
93,681


Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements under federal securities laws including Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward looking statements as a prediction of actual results. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending. When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "estimate," "plan," "predict," "project," “will,” 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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. 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, contingencies and uncertainties relate to, among other matters, the following: uncertainties as to the timing of the separation and whether it will be completed; the possibility that various closing conditions for the separation (as set forth in the information statement attached as an exhibit to the Form 10 filed with the SEC by CONSOL Mining Corporation, as amended) may not be satisfied; the impact of the separation on our business; the expected tax treatment of the separation; the risk that the coal and natural gas exploration and production businesses will not be separated successfully or such separation may be more difficult, time-consuming or costly than expected, which could result in additional demands on our resources, systems, procedures and controls, disruption of our ongoing business and diversion of management's attention from other business concerns; competitive responses to the separation; deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas, natural gas and other liquids and coal are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas, natural gas liquids and coal affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our coal and natural gas liquids abroad; our customers extending existing contracts or entering into new long-term contracts for coal on favorable terms; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption

11


of rail, barge, gathering, processing and transportation facilities and other systems that deliver our natural gas, natural gas liquids and coal to market; a loss of our competitive position because of the competitive nature of the natural gas and coal industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and coal and for our securities; the risks inherent in natural gas and coal operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our mining and transportation operations; obtaining and renewing governmental permits and approvals for our natural gas and coal operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas and coal operations; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of water used or removed from strata in connection with our natural gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current natural gas and coal operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable natural gas, oil and coal reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for natural gas and coal rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934; exposure to employee-related long-term liabilities; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; our participation in joint ventures may restrict our operational and corporate flexibility, and actions taken by a joint venture partner may impact our financial position and operational results; risks associated with our debt; replacing our natural gas and oil reserves, which if not replaced, will cause our natural gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from near-term price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by Murray Energy to satisfy liabilities it acquired from us, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; certain provisions in our multi-year coal sales contracts may provide limited protection during adverse economic conditions, and may result in economic penalties or permit the customer to terminate the contract; a majority of our common units in CNX Coal Resources LP and CONE Midstream Partners LP are subordinated, and we may not receive distributions from CNX Coal Resources LP or CONE Midstream Partners LP; with respect to the sale of the Buchanan and Amonate mines and other coal assets to Coronado IV LLC - disruption to our business, including customer, employee and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating results; with respect to the termination of the joint venture with Noble - disruption to our business, including customer and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results and liquidity; other factors discussed in the 2016 Form 10-K under “Risk Factors,” as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission. We disclaim any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law

The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible oil and gas reserves that a company anticipates as of a given date to be economically and legally producible and deliverable by application of development projects to known accumulations. We may use certain terms in this press release, such as EUR (estimated ultimate recovery), unproved reserves and total resource potential, that the SEC's rules strictly prohibit us from including in filings with the SEC. These measures are by their nature more speculative than estimates of reserves prepared in accordance with SEC definitions and guidelines and accordingly are less certain. We also note that the SEC strictly prohibits us from aggregating proved, probable and possible reserves in filings with the SEC due to the different levels of certainty associated with each reserve category.

This announcement does not constitute an offer to sell, or the solicitation of an offer to buy, any securities of CNX Coal Resources LP.

Contacts:
Investor:     Tyler Lewis, at (724) 485-3157
    
Media:     Brian Aiello, at (724) 485-3078


12


CONSOL ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
Three Months Ended
 
Nine Months Ended
(Unaudited)
September 30,
 
September 30,
Revenues and Other Income:
2017
 
2016
 
2017
 
2016
Natural Gas, NGLs and Oil Sales
$
234,443

 
$
205,913

 
$
812,511

 
$
555,101

Gain on Commodity Derivative Instruments
19,183

 
198,192

 
80,508

 
53,872

Coal Sales
279,245

 
267,685

 
899,400

 
744,411

Other Outside Sales
16,959

 
4,714

 
45,986

 
20,687

Purchased Gas Sales
13,384

 
12,086

 
32,678

 
28,633

Freight-Outside Coal
21,803

 
9,392

 
51,847

 
33,949

Miscellaneous Other Income
41,036

 
32,393

 
115,669

 
114,159

Gain on Sale of Assets
45,230

 
15,203

 
197,343

 
13,541

Total Revenue and Other Income
671,283

 
745,578

 
2,235,942

 
1,564,353

Costs and Expenses:
 
 
 
 
 
 
 
Exploration and Production Costs
 
 
 
 
 
 
 
Lease Operating Expense
21,754

 
22,602

 
64,459

 
73,996

Transportation, Gathering and Compression
98,768

 
94,796

 
279,699

 
279,753

Production, Ad Valorem, and Other Fees
5,919

 
9,027

 
19,854

 
23,732

Depreciation, Depletion and Amortization
101,585

 
101,257

 
288,220

 
312,122

Exploration and Production Related Other Costs
4,479

 
384

 
33,980

 
5,036

Purchased Gas Costs
13,142

 
11,940

 
32,231

 
28,692

Other Corporate Expenses
26,844

 
21,760

 
68,172

 
65,980

Impairment of Exploration and Production Properties
—

 
—

 
137,865

 
—

Selling, General, and Administrative Costs
20,328

 
26,198

 
62,490

 
74,067

Total Exploration and Production Costs
292,819

 
287,964

 
986,970

 
863,378

PA Mining Operations Costs
 
 
 
 
 
 
 
Operating and Other Costs
207,772

 
182,717

 
608,678

 
521,277

Depreciation, Depletion and Amortization
41,638

 
42,370

 
125,341

 
125,334

Freight Expense
21,803

 
9,392

 
51,847

 
33,949

Selling, General, and Administrative Costs
18,664

 
7,653

 
50,637

 
20,207

Total PA Mining Operations Costs
289,877

 
242,132

 
836,503

 
700,767

Other Costs
 
 
 
 
 
 
 
Miscellaneous Operating Expense
35,518

 
39,658

 
117,007

 
126,580

Selling, General, and Administrative Costs
2,896

 
4,996

 
9,182

 
11,124

Depreciation, Depletion and Amortization
5,545

 
8,085

 
1,047

 
4,463

Loss on Debt Extinguishment
2,019

 
—

 
1,233

 
—

Interest Expense
41,502

 
47,317

 
129,367

 
144,609

Total Other Costs
87,480

 
100,056

 
257,836

 
286,776

Total Costs And Expenses
670,176

 
630,152

 
2,081,309

 
1,850,921

Earnings (Loss) From Continuing Operations Before Income Tax
1,107

 
115,426

 
154,633

 
(286,568
)
Income Tax Expense (Benefit)
26,758

 
52,858

 
39,962

 
(71,798
)
(Loss) Income From Continuing Operations
(25,651
)
 
62,568

 
114,671

 
(214,770
)
Loss From Discontinued Operations, net
—

 
(34,975
)
 
—

 
(322,747
)
Net (Loss) Income
(25,651
)
 
27,593

 
114,671

 
(537,517
)
Less: Net Income Attributable to Noncontrolling Interest
790

 
2,248

 
10,567

 
4,541

Net (Loss) Income Attributable to CONSOL Energy Shareholders
$
(26,441
)
 
$
25,345

 
$
104,104

 
$
(542,058
)

13




CONSOL ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)
(Dollars in thousands, except per share data)
Three Months Ended
 
Nine Months Ended
(Unaudited)
September 30,
 
September 30,
(Loss) Earnings Per Share
2017
 
2016
 
2017
 
2016
Basic
 
 
 
 
 
 
 
(Loss) Income from Continuing Operations
$
(0.11
)
 
$
0.26

 
$
0.45

 
$
(0.96
)
Loss from Discontinued Operations
—

 
(0.15
)
 
—

 
(1.40
)
Total Basic (Loss) Earnings Per Share
$
(0.11
)
 
$
0.11

 
$
0.45

 
$
(2.36
)
Dilutive
 
 
 
 
 
 
 
(Loss) Income from Continuing Operations
$
(0.11
)
 
$
0.26

 
$
0.45

 
$
(0.96
)
Loss from Discontinued Operations
—

 
(0.15
)
 
—

 
(1.40
)
Total Dilutive (Loss) Earnings Per Share
$
(0.11
)
 
$
0.11

 
$
0.45

 
$
(2.36
)

 
 
 
 
 
 
 
Dividends Declared Per Share
$
—

 
$
—

 
$
—

 
$
0.0100


CONSOL ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 
Three Months Ended
 
Nine Months Ended
(Dollars in thousands)
September 30,
 
September 30,
(Unaudited)
2017
 
2016
 
2017
 
2016
Net (Loss) Income
$
(25,651
)
 
$
27,593

 
$
114,671

 
$
(537,517
)
Other Comprehensive Income (Loss) :
 
 
 
 
 
 
 
  Actuarially Determined Long-Term Liability Adjustments (Net of tax: ($2,034), ($1,043), ($6,121), ($5,369))
3,464

 
1,305

 
10,430

 
6,866

  Reclassification of Cash Flow Hedges from OCI to Earnings (Net of tax: $7,139, $19,284)
—

 
(12,458
)
 
—

 
(33,475
)

 
 
 
 
 
 
 
Other Comprehensive Income (Loss)
3,464

 
(11,153
)
 
10,430

 
(26,609
)

 
 
 
 
 
 
 
Comprehensive (Loss) Income
(22,187
)
 
16,440

 
125,101

 
(564,126
)
 
 
 
 
 
 
 
 
Less: Comprehensive Income Attributable to Noncontrolling Interest
779

 
2,248

 
10,533

 
4,541

 
 
 
 
 
 
 
 
Comprehensive (Loss) Income Attributable to CONSOL Energy Inc. Shareholders
$
(22,966
)
 
$
14,192

 
$
114,568

 
$
(568,667
)





14





CONSOL ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
 
(Unaudited)
 
 
(Dollars in thousands)
September 30,
2017
 
December 31,
2016
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and Cash Equivalents
$
285,708

 
$
60,475

Accounts and Notes Receivable:
 
 

Trade
193,778

 
220,222

Other Receivables
77,746

 
69,901

Inventories
63,182

 
65,461

Recoverable Income Taxes
105,432

 
116,851

Prepaid Expenses
79,437

 
93,146

Current Assets of Discontinued Operations
—

 
83

Total Current Assets
805,283

 
626,139

Property, Plant and Equipment:
 
 
 
Property, Plant and Equipment
13,738,388

 
13,771,388

Less—Accumulated Depreciation, Depletion and Amortization
5,939,426

 
5,630,949

Total Property, Plant and Equipment—Net
7,798,962

 
8,140,439

Other Assets:
 
 
 
Deferred Income Taxes
—

 
4,290

Investment in Affiliates
190,154

 
190,964

Other
185,169

 
222,149

Total Other Assets
375,323

 
417,403

TOTAL ASSETS
$
8,979,568

 
$
9,183,981






















15





CONSOL ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

 
(Unaudited)
 
 
(Dollars in thousands, except per share data)
September 30,
2017
 
December 31,
2016
LIABILITIES AND EQUITY
 
 
 
Current Liabilities:
 
 
 
Accounts Payable
$
303,196

 
$
241,616

Current Portion of Long-Term Debt
10,971

 
12,000

Other Accrued Liabilities
540,672

 
680,348

Current Liabilities of Discontinued Operations
5,353

 
6,050

Total Current Liabilities
860,192

 
940,014

Long-Term Debt:
 
 
 
Long-Term Debt
2,500,782

 
2,722,995

Capital Lease Obligations
31,530

 
39,074

Total Long-Term Debt
2,532,312

 
2,762,069

Deferred Credits and Other Liabilities:
 
 
 
Deferred Income Taxes
44,720

 
—

Postretirement Benefits Other Than Pensions
649,565

 
659,474

Pneumoconiosis Benefits
106,837

 
108,073

Mine Closing
198,764

 
218,631

Gas Well Closing
223,446

 
223,352

Workers’ Compensation
66,165

 
67,277

Salary Retirement
100,510

 
112,543

Other
125,822

 
151,660

Total Deferred Credits and Other Liabilities
1,515,829

 
1,541,010

TOTAL LIABILITIES
4,908,333

 
5,243,093

Stockholders’ Equity:
 
 
 
Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 230,090,909 Issued and Outstanding at September 30, 2017; 229,443,008 Issued and Outstanding at December 31, 2016
2,305

 
2,298

Capital in Excess of Par Value
2,486,071

 
2,460,864

Preferred Stock, 15,000,000 shares authorized, None issued and outstanding
—

 
—

Retained Earnings
1,825,547

 
1,727,789

Accumulated Other Comprehensive Loss
(382,092
)
 
(392,556
)
Total CONSOL Energy Inc. Stockholders’ Equity
3,931,831

 
3,798,395

Noncontrolling Interest
139,404

 
142,493

TOTAL EQUITY
4,071,235

 
3,940,888

TOTAL LIABILITIES AND EQUITY
$
8,979,568

 
$
9,183,981





16




CONSOL ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
 
(Dollars in thousands)
Common
Stock
 
Capital in
Excess
of Par
Value
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Total CONSOL Energy Inc.
Stockholders’
Equity
 
Non-
Controlling
Interest
 
Total
Equity
Balance at December 31, 2016
$
2,298

 
$
2,460,864

 
$
1,727,789

 
$
(392,556
)
 
$
3,798,395

 
$
142,493

 
$
3,940,888

(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income
—

 
—

 
104,104

 
—

 
104,104

 
10,567

 
114,671

Other Comprehensive Income (Loss) (Net of ($6,121) Tax)
—

 
—

 
—

 
10,464

 
10,464

 
(34
)
 
10,430

Comprehensive Income
—

 
—

 
104,104

 
10,464

 
114,568

 
10,533

 
125,101

Issuance of Common Stock
7

 
852

 
—

 
—

 
859

 
—

 
859

Treasury Stock Activity
—

 
—

 
(6,346
)
 
—

 
(6,346
)
 
(1,009
)
 
(7,355
)
Amortization of Stock-Based Compensation Awards
—

 
24,355

 
—

 
—

 
24,355

 
3,790

 
28,145

Distributions to Noncontrolling Interest
—

 
—

 
—

 
—

 
—

 
(16,403
)
 
(16,403
)
Balance at September 30, 2017
$
2,305

 
$
2,486,071

 
$
1,825,547

 
$
(382,092
)
 
$
3,931,831

 
$
139,404

 
$
4,071,235




































17


CONSOL ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three Months Ended
 
Nine Months Ended
(Unaudited)
September 30,
 
September 30,
Cash Flows from Operating Activities:
2017
 
2016
 
2017
 
2016
Net (Loss) Income
$
(25,651
)
 
$
27,593

 
$
114,671

 
$
(537,517
)
Adjustments to Reconcile Net (Loss) Income to Net Cash Provided By Operating Activities:
 
 
 
 
 
 
 
Net Loss from Discontinued Operations
—

 
34,975

 
—

 
322,747

Depreciation, Depletion and Amortization
148,768

 
151,712

 
414,608

 
441,919

Impairment of Exploration and Production Properties
—

 
—

 
137,865

 
—

Stock-Based Compensation
11,468

 
7,771

 
28,145

 
23,825

Gain on Sale of Assets
(45,230
)
 
(15,203
)
 
(197,343
)
 
(13,541
)
Loss on Debt Extinguishment
2,019

 
—

 
1,233

 
—

Gain on Commodity Derivative Instruments
(19,183
)
 
(198,192
)
 
(80,508
)
 
(53,872
)
Net Cash Received (Paid) in Settlement of Commodity Derivative Instruments
17,671

 
38,637

 
(61,717
)
 
203,303

Deferred Income Taxes
25,600

 
51,650

 
42,888

 
(72,866
)
Equity in Earnings of Affiliates
(12,425
)
 
(15,355
)
 
(34,810
)
 
(41,239
)
Return on Equity Investment
—

 
13,076

 
—

 
22,268

Changes in Operating Assets:
 
 
 
 
 
 
 
Accounts and Notes Receivable
22,334

 
(13,546
)
 
18,231

 
4,555

Inventories
11,772

 
12,116

 
1,974

 
4,169

Prepaid Expenses
(9,646
)
 
24,287

 
1,869

 
71,423

Changes in Other Assets
11,705

 
1,057

 
37,357

 
(14,241
)
Changes in Operating Liabilities:
 
 
 
 
 
 
 
Accounts Payable
21,176

 
33,139

 
23,700

 
(10,985
)
Accrued Interest
32,537

 
36,792

 
31,093

 
35,985

Other Operating Liabilities
(5,394
)
 
(7,301
)
 
(13,423
)
 
(21,370
)
Changes in Other Liabilities
(9,890
)
 
(17,963
)
 
(31,221
)
 
(2,620
)
Other
1,036

 
2,290

 
38,226

 
11,937

Net Cash Provided by Continuing Operating Activities
178,667

 
167,535

 
472,838

 
373,880

Net Cash (Used in) Provided by Discontinued Operating Activities
(339
)
 
(4,626
)
 
(614
)
 
14,427

Net Cash Provided by Operating Activities
178,328

 
162,909

 
472,224

 
388,307

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
Capital Expenditures
(177,294
)
 
(64,132
)
 
(450,620
)
 
(179,389
)
Proceeds from Sales of Assets
81,727

 
20,693

 
426,878

 
38,977

Net Distributions from (Investments in) Equity Affiliates
10,920

 
1,023

 
35,620

 
(4,555
)
Net Cash (Used in) Provided by Continuing Investing Activities
(84,647
)
 
(42,416
)
 
11,878

 
(144,967
)
Net Cash (Used in) Provided by Discontinued Investing Activities
—

 
(28,260
)
 
—

 
366,251

Net Cash (Used in) Provided by Investing Activities
(84,647
)
 
(70,676
)
 
11,878

 
221,284

Cash Flows from Financing Activities:
 
 
 
 
 
 
 
Payments on Short-Term Borrowings
—

 
(112,000
)
 
—

 
(598,000
)
Payments on Miscellaneous Borrowings
(2,971
)
 
(1,763
)
 
(8,944
)
 
(6,222
)
Payments on Long-Term Notes
(96,543
)
 
—

 
(213,728
)
 
—

Net (Payments on) Proceeds from Revolver - CNX Coal Resources LP
(2,000
)
 
10,000

 
(13,000
)
 
23,000

Distributions to Noncontrolling Interest
(5,468
)
 
(5,416
)
 
(16,403
)
 
(16,241
)
Dividends Paid
—

 
—

 
—

 
(2,294
)
Issuance of Common Stock
136

 
—

 
859

 
4

Treasury Stock Activity
(262
)
 
(12
)
 
(7,355
)
 
(1,669
)
Debt Repurchase and Financing Fees
—

 
(482
)
 
(298
)
 
(482
)
Net Cash Used in Continuing Financing Activities
(107,108
)
 
(109,673
)
 
(258,869
)
 
(601,904
)
Net Cash Provided by (Used in) Discontinued Financing Activities
—

 
61

 
—

 
(14
)
Net Cash Used in Financing Activities
(107,108
)
 
(109,612
)
 
(258,869
)
 
(601,918
)
Net (Decrease) Increase in Cash and Cash Equivalents
(13,427
)
 
(17,379
)
 
225,233

 
7,673

Cash and Cash Equivalents at Beginning of Period
299,135

 
97,626

 
60,475

 
72,574

Cash and Cash Equivalents at End of Period
$
285,708

 
$
80,247

 
$
285,708

 
$
80,247


18


CONSOL Energy Board of Directors Gives Final Approval to Separation of the Coal and E&P Businesses; Board Authorizes Increase to Share Repurchase Program

Separation will occur by means of a distribution to CONSOL stockholders of 100% of the outstanding shares of Coal Company
PITTSBURGH, October 31, 2017 /PRNewswire/ --   CONSOL Energy Inc. (NYSE: CNX) (CONSOL or the Company) announced today that its board of directors has given final approval of the Company’s previously announced separation into two publicly-traded companies--a coal company and a natural gas exploration and production (E&P) company--and has declared a pro rata distribution of all of the outstanding shares of CONSOL Mining Corporation (CoalCo) common stock to the Company’s stockholders.
Distribution Ratio
On November 28, 2017, the expected distribution date, CONSOL stockholders will receive one share of common stock of CoalCo for every eight shares of CONSOL common stock held as of the close of business on the record date of November 15, 2017. No fractional shares of CoalCo will be issued, and stockholders will receive cash in lieu of fractional shares. The distribution of CoalCo common stock will complete the separation of the coal business from the Company. After the distribution, CoalCo will be an independent, publicly-traded company and the Company will retain no ownership interest.
Names and Stock Trading Symbols of the Post-Separation Companies
In connection with the distribution, the current parent CONSOL Energy will change its name to CNX Resources Corporation, and will retain its ticker symbol “CNX” on the New York Stock Exchange. At the same time, CoalCo will change its name to CONSOL Energy Inc., and its common stock will trade on the New York Stock Exchange under the ticker symbol “CEIX”. CONSOL stockholders will retain their shares of Company common stock, but as a result of the name change, these shares will represent shares of CNX Resources Corporation after the time of separation.
In addition, CNX Coal Resources LP will change its name to CONSOL Coal Resources LP. In connection with the name change, CNX Coal Resources will also change its NYSE ticker symbol to “CCR” from “CNXC”, and its common units will continue to be listed on the NYSE.
Trading of Common Stock
Beginning on or about November 14, 2017, and continuing up to and through the distribution date, two markets are expected for CONSOL common stock: the “regular-way” market and the “ex-distribution” market. Shares that trade in the “regular-way” market will be entitled to shares of CoalCo common stock distributed pursuant to the distribution; shares that trade in the “ex-distribution” market will trade under the symbol CNX WI and without an entitlement to shares of CoalCo common stock distributed pursuant to the distribution. CoalCo anticipates “when-issued” trading of its common stock will begin on or about November 14, 2017, under the symbol CEIX WI, and will continue up to and through the distribution date. “Regular-way” trading in CoalCo’s common stock is expected to begin on November 29, 2017. CONSOL




Stockholders who sell their shares of CONSOL common stock in the “regular-way” market prior to November 29, 2017 will also be selling their entitlement to receive shares of CoalCo common stock in the distribution. Investors are encouraged to consult with their financial advisors regarding the specific implications of buying or selling Company or CoalCo common stock on or before the distribution date.
Distribution of the CoalCo Stock
Distribution of the stock dividend of shares of CoalCo common stock remains subject to the satisfaction or waiver of certain conditions described in CoalCo’s Registration Statement on Form 10, as amended, including among others, the Securities and Exchange Commission (SEC) declaring the Form 10 effective. A copy of the final Form 10, as amended, will be available on the SEC website at www.sec.gov .
No action is required by CONSOL stockholders to receive shares of CoalCo common stock in the distribution. CONSOL expects to mail a notice of Internet availability of the information statement to all stockholders entitled to receive the distribution of shares of CoalCo common stock on or about November 3, 2017. The information statement is an exhibit to CoalCo’s Registration Statement on Form 10 that describes CoalCo, including the risks of owning CoalCo common stock, and other details regarding the separation and distribution.
Share Repurchase Program
On September 5, 2017, CONSOL’s Board of Directors approved a one-year share repurchase program of up to $200 million, under which approximately$81 million of its common stock had been repurchased as of October 30, 2017, at an average price of approximately $16.00 per share, through a Rule 10b5-1 plan that will terminate on November 1, 2017. On October 30, 2017, the Board approved an increase in the aggregate amount of the repurchase plan to $450 million. CONSOL may determine, from time-to-time, to effect repurchases through open market purchases, Rule 10b5-1 plans, accelerated stock repurchases or derivative contracts. The timing of any repurchases will be based on a number of factors, including available liquidity, the Company's stock price, the company's financial outlook, and alternative investment options. The share repurchase program does not obligate the Company to repurchase any dollar amount or number of shares and the Board's authorization of the program may be modified, suspended or discontinued at any time. The Board of Directors will continue to evaluate the size of the stock repurchase program based on CONSOL's free cash flow position, leverage ratio, and capital plans.
About CONSOL
CONSOL Energy Inc. is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The Company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2016, CONSOL had 6.3 trillion cubic feet equivalent of proved natural gas reserves. CONSOL is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com .
About CONSOL Mining




CONSOL Mining Corporation was formed in connection with the separation to hold CONSOL Energy Inc.’s coal business. Following the separation, CONSOL Mining Corporation will hold the assets and liabilities of CONSOL Energy Inc. relating to (i) its interests in the Pennsylvania Mining Complex, (ii) its interests in CNX Coal Resources LP, (iii) its wholly-owned terminal in the Port of Baltimore, and (iv) its greenfield reserves and certain related coal assets and liabilities.
Important Information about Company Names and Stock Trading Symbols
Effective November 28, 2017, the company known as CONSOL Energy Inc. (NYSE: CNX) expects to separate its gas business (GasCo or RemainCo) and its coal business (CoalCo or SpinCo) into two independent, publicly traded companies by means of a separation of CoalCo from RemainCo. 
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The gas business will be named CNX Resources Corporation (RemainCo, GasCo or CNX) and will continue to be listed on the New York Stock Exchange (NYSE), retaining the ticker symbol “CNX”.   After the spin-off occurs, information regarding CNX and its natural gas business will be available at www.cnx.com .
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The coal business will be named CONSOL Energy Inc. (SpinCo, CoalCo or CONSOL) and will be listed on the NYSE under a new ticker symbol: “CEIX”.   CoalCo will own, operate and develop all of the company’s coal assets, including its interest in the Pennsylvania Mining Complex, the Baltimore Marine Terminal, and approximately one billion tons of greenfield coal reserves.  After the spin-off occurs, information regarding the new CONSOL Energy and its coal business will be available at www.consolenergy.com . 
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The master limited partnership that is currently named CNX Coal Resources LP (NYSE:  CNXC) will change its name to CONSOL Coal Resources LP and will trade on the NYSE under a new ticker symbol: “CCR”.   CoalCo will own 100% of the general partner of CONSOL Coal Resources LP (representing a 1.7% general partner interest), as well as all of the incentive distribution rights and the common and subordinated interests in CNX Coal Resources LP that are currently owned by CONSOL Energy Inc.  After the spin-off occurs, information regarding CONSOL Coal Resources LP will be available at www.ccrlp.com  

Cautionary Statements
We are including the following cautionary statement in this press release to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of us. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending. When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "estimate," "plan," "predict," "project," "will," 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 press release speak only as of the date of this press release; we disclaim any obligation to update these statements. 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, contingencies and uncertainties may be applicable to either, or both, of the GasCo and CoalCo following the separation and distribution, and relate to, among other matters, the following: uncertainties as to the timing and manner of the separation and whether it will be completed; the possibility that various closing conditions for the separation may not be satisfied; the impact of the separation on our business; the expected tax treatment of the separation; the risk that the coal and natural gas exploration and production businesses will not be separated successfully or such separation may be more difficult, time-consuming or costly than expected, which could result in additional demands on our resources, systems, procedures and controls, disruption of our ongoing business and diversion of management's attention from other business concerns; competitive responses to the separation; deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas, natural gas liquids and coal are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas, natural gas liquids and coal affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our coal and natural gas liquids abroad; our customers extending existing contracts or entering into new long-term contracts for coal on favorable terms; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our natural gas, natural gas liquids and coal to market; a loss of our competitive position because of the competitive nature of the natural gas and coal industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and coal and for our securities; the risks inherent in natural gas and coal operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions that could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our coal mining and natural gas operations; obtaining and renewing governmental permits and approvals for our natural gas and coal operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas and coal operations; our ability to find adequate water sources for our use in natural gas drilling, or




our ability to dispose of water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current gas and coal operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable natural gas, oil and coal reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for natural gas rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; exposure to employee-related long-term liabilities; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; our participation in joint ventures may restrict our operational and corporate flexibility, and actions taken by a joint venture partner may impact our financial position and operational results; risks associated with our debt; replacing our natural gas and oil reserves, which if not replaced, will cause our natural gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from near-term price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by Murray Energy to satisfy liabilities it acquired from us, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; certain provisions in our multi-year coal sales contracts may provide limited protection during adverse economic conditions, and may result in economic penalties or permit the customer to terminate the contract; a majority of our limited partner interests in CNX Coal Resources LP and CONE Midstream Partners LP are subordinated, and we may not receive distributions from CNX Coal Resources LP or CONE Midstream Partners LP; with respect to the sale of the Buchanan and Amonate mines and other coal assets to Coronado IV LLC – any disruption to our business, including customer, employee and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating results; with respect to the termination of the joint venture with Noble - disruption to our business, including customer and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results and liquidity. Additional factors are described in detail under the captions “Forward Looking Statements” and “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2016 filed with the SEC, as supplemented by our quarterly reports on Form 10-Q, and the factors described under the captions “Cautionary Statements Regarding Forward Looking Statements” and “Risk Factors” in the Form 10 filed with the SEC by CONSOL Mining Corporation, on July 11, 2017, as amended from time to time.