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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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47-1054194
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of each class
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Name of exchange on which registered
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Common Units Representing Limited Partner Interests
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New York Stock Exchange
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Page
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PART I
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PART II
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PART III
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PART IV
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•
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our reliance on our customers, including our Sponsor, CNX Resources Corporation;
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•
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the effects of changes in market prices of natural gas, NGLs and crude oil on our customers’ drilling and development plans on our dedicated acreage and the volumes of natural gas and condensate that are produced on our dedicated acreage;
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•
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changes in our customers’ drilling and development plans in the Marcellus Shale and Utica Shale;
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•
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our customers’ ability to meet their drilling and development plans in the Marcellus Shale and Utica Shale;
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our ability to maintain or increase volumes of natural gas and condensate on our midstream systems;
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•
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the demand for natural gas and condensate gathering services;
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•
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changes in general economic conditions;
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•
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competitive conditions in our industry;
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•
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actions taken by third-party operators, gatherers, processors and transporters;
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•
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our ability to successfully implement our business plan;
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•
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our ability to complete internal growth projects on time and on budget;
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•
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our ability to generate adequate returns on capital;
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•
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the price and availability of debt and equity financing;
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the availability and price of oil and natural gas to the consumer compared to the price of alternative and competing fuels;
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competition from the same and alternative energy sources;
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energy efficiency and technology trends;
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•
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operating hazards and other risks incidental to our midstream services;
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•
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natural disasters, weather-related delays, casualty losses and other matters beyond our control;
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•
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interest rates;
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•
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labor relations;
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•
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defaults by our customers under our gathering agreements;
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•
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changes in availability and cost of capital;
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•
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changes in our tax status;
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the effect of existing and future laws and government regulations;
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•
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the effects of future litigation; and
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•
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certain factors discussed elsewhere in this report.
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ITEM 1.
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BUSINESS
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•
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Dedication to the Partnership of approximately 16,100 additional Utica acres in our Anchor Systems (as defined below);
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•
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Commitment to develop 40 additional wells in the Anchor Systems by 2023, subject to the terms of the GGA;
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•
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Contribution to the Anchor Systems of a 20” high pressure pipeline in addition to a one-time payment to us of approximately $2.0 million in cash; and
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•
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Distribution of our 5% interest in the Growth Systems (as defined below) and related assets, as well as our 5% interest in the Moundsville midstream assets that were a part of the Additional Systems (as defined below), to CNX Gathering, which subsequently transferred these assets to HG Energy.
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•
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Release from dedication of approximately 18,000 acres, net to the Partnership, which was comprised of approximately 275,000 acres (or approximately 14,000 acres, net to the Partnership) within the Growth and Additional Systems and approximately 4,200 scattered acres located in the Anchor Systems;
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•
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Removal of our obligation to provide gathering services or make capital investments in the Growth Systems or in the Moundsville area of the Additional Systems; and
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•
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Commitment by HG Energy to develop 12 additional wells in the Anchor Systems by 2021, subject to the terms of the HG Energy GGA.
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•
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Our Anchor Systems, in which the Partnership owns a 100% controlling interest, include our most developed midstream systems that generate the largest portion of our current cash flows, including our four primary midstream systems (the McQuay, Majorsville, Mamont and Shirley-Penns Systems), a 20” high-pressure pipeline contributed to us in the CNX Transaction and related assets.
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•
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Our Additional Systems, in which the Partnership owns a 5% controlling interest, include several gathering systems primarily located in the wet gas regions of our dedicated acreage. Revenues from our Additional Systems are currently derived primarily from the Pittsburgh Airport area. Currently, the substantial majority of capital investment in the Additional Systems would be funded by CNX Resources in proportion to CNX Gathering’s 95% retained ownership interest.
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System
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Pipelines (in miles)
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Average Daily Throughput (BBtu/d)
(1)
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Maximum Interconnect Capacity
(2)(3)
(BBtu/d)
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Compression (horsepower)
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Compression Capacity (BBtu/d)
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Anchor Systems
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206
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1,336
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2,246
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100,100
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1,621
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Additional Systems
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25
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122
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250
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—
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—
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Total
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231
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1,458
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2,496
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100,100
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1,621
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◦
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McQuay area Utica - a fee of
$0.2310
per MMBtu; and
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◦
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Wadestown Marcellus and Utica - a fee of
$0.3588
per MMBtu.
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•
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Compression:
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◦
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For areas not benefitting from system expansion pursuant to the Second Amended and Restated gas gathering agreement, compression services are included in the base fees; and
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◦
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In the McQuay and Wadestown areas, we will receive additional fees of $
0.0666
per MMBtu for Tier 1 pressure services (maximum receipt point of pressure of 600 psi) and $
0.1333
per MMBtu for Tier 2 pressure services (maximum receipt point of pressure of 300 psi).
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•
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January 1, 2018 to December 31, 2018 - 30 wells (deficiency payment of $3.5 million per well)
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January 1, 2019 to April 30, 2020 - 40 wells (deficiency payment of $3.5 million per well)
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•
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May 1, 2020 to April 30, 2021 - 40 wells (deficiency payment of $2.0 million per well)
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May 1, 2021 to April 30, 2022 - 30 wells (deficiency payment of $2.0 million per well)
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•
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July 1, 2018 to December 31, 2020 - an additional 15 wells (deficiency payment of $2.8 million per well)
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January 1, 2021 - December 31, 2023 - an additional 25 wells (deficiency payment of $2.8 million per well)
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With respect to natural gas from the Marcellus Shale formation that does not require downstream processing, or dry gas, we receive a fee of $
0.442
per MMBtu.
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•
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With respect to natural gas that requires downstream processing, or wet gas, we receive a fee of $
0.304
per MMBtu in the Pittsburgh International Airport area and a fee of $
0.607
per MMBtu for all other areas in the dedication area.
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•
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Our fees for condensate services are $5.52 per Bbl in the Majorsville area and the Shirley-Penns area.
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•
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perform ongoing assessments of pipeline integrity;
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•
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identify and characterize applicable threats to pipeline segments that could impact a HCA;
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•
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improve data collection, integration and analysis;
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repair and remediate pipelines as necessary; and
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implement preventive and mitigating actions.
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requiring the installation of pollution-control equipment, imposing emission or discharge limits or otherwise restricting the way we operate;
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limiting or prohibiting construction activities in areas, such as air quality non-attainment areas, wetlands, endangered species habitat and other protected areas;
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delaying system modification or upgrades during review of permit applications and revisions;
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requiring investigatory and remedial actions to mitigate discharges, releases or pollution conditions associated with our operations or attributable to former operations; and
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enjoining operations deemed to be in non-compliance with permits issued pursuant to or regulatory requirements imposed by such environmental laws and regulations.
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ITEM 1A.
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RISK FACTORS
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•
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a reduction in or slowing of our customers’ drilling and development plans on our dedicated acreage;
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a reduction in, or curtailment of, production from existing wells on our dedicated acreage;
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the extreme volatility of natural gas, NGL and crude oil prices, which could have a negative effect on our customers’ drilling and development plans or their ability to finance its operations and drilling and exploration costs on our dedicated acreage;
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•
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the availability of capital on an economic basis to fund exploration and development activities of our customers;
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drilling and operating risks associated with our customers’ operations on our dedicated acreage;
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downstream processing and transportation capacity constraints and interruptions, including the failure of our customers to have sufficient contracted processing or transportation capacity; and
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adverse effects of increased or changed governmental and environmental regulation.
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•
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the volume of natural gas we gather, compress and dehydrate, the volume of condensate we gather and treat and the fees we are paid for performing such services;
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•
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the effects of changes in market prices of natural gas, NGLs and crude oil on our customers’ drilling and development plans on our dedicated acreage and the volumes of natural gas and condensate that are produced on our dedicated acreage;
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•
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our customers’ ability to fund their drilling and development plans on our dedicated acreage;
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capital expenditures necessary for us to maintain and build out our midstream systems to gather natural gas and condensate from our customers’ new well completions on our dedicated acreage;
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the levels of our operating expenses, maintenance expenses and general and administrative expenses;
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regulatory action affecting: (i) the supply of, or demand for, natural gas, NGLs and condensate, (ii) the rates we can charge for our midstream services, (iii) the terms upon which we are able to contract to provide our midstream services, (iv) our existing gathering and other commercial agreements or (v) our operating costs or our operating flexibility;
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•
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our ability to generate adequate returns on capital;
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the rates we charge third parties, if any, for our midstream services;
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prevailing economic conditions; and
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favorable or adverse weather conditions.
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perform ongoing assessments of pipeline and related facility integrity;
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identify and characterize applicable threats to pipeline segments that could impact a high consequence area;
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•
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improve data collection, integration and analysis;
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repair and remediate the pipeline as necessary; and
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•
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implement preventive and mitigating actions.
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•
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a cyber-incident impacting one of our vendors or service providers could result in supply chain disruptions, loss or corruption of our information or other negative consequences, any of which could delay or halt development of additional infrastructure, effectively delaying the start of cash flows from the project;
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•
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a cyber-incident related to our facilities may result in equipment damage or failure;
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•
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a cyber-incident impacting downstream pipelines could prevent us from delivering product at the tailgate of our facilities, resulting in a loss of revenues;
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•
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a cyber-incident impacting a communications network or power grid could cause operational disruption resulting in loss of revenues;
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a deliberate corruption of our financial or operational data could result in events of non-compliance which could lead to regulatory fines or penalties; and
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business interruptions could result in expensive remediation efforts, distraction of management, damage to our reputation, or a negative impact on the price of our units.
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•
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neither our partnership agreement nor any other agreement requires CNX Resources to pursue business strategies that favor us or utilize our assets, which could involve decisions by CNX Resources to increase or decrease natural gas production on our dedicated acreage, release portions of their dedicated acreage, as permitted by the terms the gas gathering agreements, pursue and grow particular markets or undertake acquisition opportunities for itself. CNX Resources’ directors and officers have a fiduciary duty to make these decisions in the best interests of the stockholders of CNX Resources;
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•
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CNX Resources may be constrained by the terms of its debt instruments from taking actions, or refraining from taking actions, that may be in our best interests;
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our partnership agreement replaces the fiduciary duties that would otherwise be owed by our general partner with contractual standards governing its duties and limits our general partner’s liabilities and the remedies available to our unitholders for actions that, without the limitations, might constitute breaches of fiduciary duty under applicable Delaware law;
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•
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except in limited circumstances, our general partner has the power and authority to conduct our business without unitholder approval;
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our general partner determines the amount and timing of, among other things, cash expenditures, borrowings and repayments of indebtedness, the issuance of additional partnership interests, the creation, increase or reduction in cash reserves in any quarter and asset purchases and sales, each of which can affect the amount of cash that is available for distribution to unitholders;
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•
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our general partner determines the amount and timing of any capital expenditures and whether a capital expenditure is classified as a maintenance capital expenditure, which reduces operating surplus, or an expansion capital expenditure, which does not reduce operating surplus. This determination can affect the amount of cash that is distributed to our unitholders and to our general partner, the amount of adjusted operating surplus generated in any given period;
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our general partner determines which costs incurred by it are reimbursable by us;
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our general partner may cause us to borrow funds in order to permit the payment of cash distributions or to make incentive distributions;
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our partnership agreement permits us to classify up to $50.0 million as operating surplus, even if it is generated from asset sales, non-working capital borrowings or other sources that would otherwise constitute capital surplus. This cash may be used to fund distributions to our general partner in respect of the general partner interest or the incentive distribution rights;
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•
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our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered to us or entering into additional contractual arrangements with any of these entities on our behalf;
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our general partner intends to limit its liability regarding our contractual and other obligations;
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•
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our general partner may exercise its right to call and purchase all of the common units not owned by it and its affiliates if it and its affiliates own more than 80% of the common units;
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our general partner controls the enforcement of obligations owed to us by our general partner and its affiliates, including our gathering agreements with CNX Resources;
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our general partner decides whether to retain separate counsel, accountants or others to perform services for us; and
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our general partner, or any transferee holding incentive distribution rights, may elect to cause us to issue common units and general partner interests to it in connection with a resetting of the target distribution levels related to its incentive distribution rights, without the approval of the conflicts committee of the board of directors of our general partner, which we refer to as our conflicts committee, or our common unitholders. This election could result in lower distributions to our common unitholders in certain situations.
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•
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how to allocate corporate opportunities among us and other affiliates;
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•
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whether to exercise its limited call right;
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•
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whether to seek approval of the resolution of a conflict of interest by the conflicts committee of the board of directors of our general partner;
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how to exercise its voting rights with respect to the units it owns;
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•
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whether to elect to reset target distribution levels;
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•
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whether to transfer the incentive distribution rights or any units it owns to a third party or to transfer the incentive distribution rights to us in exchange for cash and/or additional common units; and
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•
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whether or not to consent to any merger, consolidation or conversion of the partnership or amendment to our partnership agreement.
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•
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provides that whenever our general partner makes a determination or takes, or declines to take, any other action in its capacity as our general partner, our general partner is required to make such determination, or take or decline to take such other action, in good faith, meaning that it subjectively believed that the determination or the decision to take or decline to take such action was in the best interests of our partnership, and will not be subject to any other or different standard imposed by our partnership agreement, Delaware law, or any other law, rule or regulation, or at equity;
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•
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provides that our general partner will not have any liability to us or our unitholders for decisions made in its capacity as a general partner so long as it acted in good faith;
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•
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provides that our general partner and its officers and directors will not be liable for monetary damages to us or our limited partners resulting from any act or omission unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our general partner or its officers and directors, as the case may be, acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the conduct was criminal; and
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•
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provides that our general partner will not be in breach of its obligations under our partnership agreement or its fiduciary duties to us or our limited partners if a transaction with an affiliate or the resolution of a conflict of interest is approved in accordance with, or otherwise meets the standards set forth in, our partnership agreement.
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•
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our unitholders’ proportionate ownership interest in us will decrease;
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•
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the amount of cash we have available to distribute on each unit may decrease;
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•
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the ratio of taxable income to distributions may increase;
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•
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the relative voting strength of each previously outstanding unit may be diminished; and
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•
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the market price of our common units may decline.
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•
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management of our business may no longer reside solely with our current general partner; and
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•
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affiliates of the newly admitted general partner may compete with us, and neither that general partner nor such affiliates will have any obligation to present business opportunities to us except with respect to rights of first offer contained in our omnibus agreement.
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•
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remove or replace our general partner for cause;
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•
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approve some amendments to our partnership agreement; or
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•
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take other action under our partnership agreement;
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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ITEM 2.
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PROPERTIES
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ITEM 3.
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LEGAL PROCEEDINGS
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ITEM 4.
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MINE SAFETY AND DISCLOSURES
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ITEM 5.
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MARKET FOR REGISTRANT
’
S COMMON UNITS, RELATED UNITHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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High
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Low
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Distributions
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Year ended December 31, 2018:
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|||||||
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Quarter ended December 31, 2018
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$
|
20.05
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$
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15.25
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$
|
0.3479
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Quarter ended September 30, 2018
|
|
$
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20.96
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$
|
19.00
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|
|
$
|
0.3361
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Quarter ended June 30, 2018
|
|
$
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21.00
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|
$
|
17.16
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|
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$
|
0.3245
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Quarter ended March 31, 2018
|
|
$
|
21.05
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|
|
$
|
16.82
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|
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$
|
0.3133
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|
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Year ended December 31, 2017:
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|||||||
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Quarter ended December 31, 2017
|
|
$
|
17.76
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|
|
$
|
15.25
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|
|
$
|
0.3025
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Quarter ended September 30, 2017
|
|
$
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21.00
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|
|
$
|
15.82
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|
|
$
|
0.2922
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Quarter ended June 30, 2017
|
|
$
|
23.78
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|
|
$
|
17.13
|
|
|
$
|
0.2821
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Quarter ended March 31, 2017
|
|
$
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25.56
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$
|
20.30
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|
|
$
|
0.2724
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•
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less
, the amount of cash reserves established by our general partner to:
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◦
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provide for the proper conduct of our business (including reserves for our future capital expenditures, future acquisitions and anticipated future debt service requirements);
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◦
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comply with applicable law or any loan agreement, security agreement, mortgage, debt instrument or other agreement or obligation to which we or any of our subsidiaries is a party or by which we or such subsidiary is bound or we or such subsidiary’s assets are subject; or
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◦
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provide funds for distributions to our unitholders and to our general partner for any one or more of the next four quarters (provided that our general partner may not establish cash reserves for distributions pursuant to this bullet point if the effect of such reserves will prevent us from distributing the minimum quarterly distribution on all common units and any cumulative arrearages on such common units for the current quarter);
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•
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plus
, if our general partner so determines, all or any portion of the cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made subsequent to the end of such quarter.
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ITEM 6.
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SELECTED FINANCIAL DATA
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|
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As of December 31,
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||||||||||||||||||
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2018
|
|
2017
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|
2016
|
|
2015
|
|
2014
|
||||||||||
CONSOLIDATED BALANCE SHEETS:
|
|
(in thousands)
|
||||||||||||||||||
Property and equipment, net
|
|
$
|
891,775
|
|
|
$
|
899,278
|
|
|
$
|
878,560
|
|
|
$
|
866,309
|
|
|
$
|
622,746
|
|
Total assets
|
|
$
|
925,428
|
|
|
$
|
926,589
|
|
|
$
|
918,557
|
|
|
$
|
924,425
|
|
|
$
|
686,804
|
|
Total debt, including current portion and revolving credit facility
|
|
$
|
477,215
|
|
|
$
|
149,500
|
|
|
$
|
167,000
|
|
|
$
|
73,500
|
|
|
$
|
31,300
|
|
Total partners’ capital and noncontrolling interest
|
|
$
|
399,314
|
|
|
$
|
751,111
|
|
|
$
|
725,261
|
|
|
$
|
803,142
|
|
|
$
|
582,763
|
|
|
|
For the Years Ended December 31,
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
CASH FLOW STATEMENT DATA:
|
|
(in thousands)
|
||||||||||||||||||
Net cash flows provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating activities
|
|
$
|
180,115
|
|
|
$
|
155,550
|
|
|
$
|
160,089
|
|
|
$
|
116,017
|
|
|
$
|
84,694
|
|
Investing activities
|
|
$
|
(138,869
|
)
|
|
$
|
(26,835
|
)
|
|
$
|
(45,328
|
)
|
|
$
|
(291,211
|
)
|
|
$
|
(269,601
|
)
|
Financing activities
|
|
$
|
(40,474
|
)
|
|
$
|
(131,942
|
)
|
|
$
|
(108,557
|
)
|
|
$
|
172,159
|
|
|
$
|
182,183
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OTHER DATA:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
|
$
|
145,331
|
|
|
$
|
48,366
|
|
|
$
|
50,660
|
|
|
$
|
291,211
|
|
|
$
|
269,686
|
|
EBITDA
(2)(4)
|
|
$
|
184,548
|
|
|
$
|
161,314
|
|
|
$
|
153,122
|
|
|
$
|
131,419
|
|
|
$
|
72,181
|
|
Adjusted EBITDA
(2)(4)
|
|
$
|
189,460
|
|
|
$
|
166,404
|
|
|
$
|
163,980
|
|
|
$
|
131,821
|
|
|
$
|
72,181
|
|
Adjusted EBITDA attributable to general and limited partner ownership interest in CNX Midstream Partners LP
(3)(4)
|
|
$
|
174,675
|
|
|
$
|
136,076
|
|
|
$
|
110,547
|
|
|
$
|
80,310
|
|
|
$
|
63,460
|
|
Distributable Cash Flow
(3)(4)
|
|
$
|
138,562
|
|
|
$
|
117,031
|
|
|
$
|
96,166
|
|
|
$
|
70,919
|
|
|
$
|
57,452
|
|
•
|
our operating performance as compared to those of other companies in the midstream energy industry, without regard to financing methods, historical cost basis or capital structure;
|
•
|
the ability of our assets to generate sufficient cash flow to make distributions to our partners;
|
•
|
our ability to incur and service debt and fund capital expenditures; and
|
•
|
the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
|
•
|
the ability of our assets to generate cash sufficient to support our indebtedness and make future cash distributions to our unitholders; and
|
•
|
the attractiveness of capital projects and acquisitions and the overall rates of return on alternative investment opportunities.
|
|
|
For the Year Ended December 31,
|
||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Net Income
|
|
$
|
138,995
|
|
|
$
|
134,062
|
|
|
$
|
130,122
|
|
|
$
|
115,531
|
|
|
$
|
64,827
|
|
Depreciation expense
|
|
21,939
|
|
|
22,692
|
|
|
21,201
|
|
|
15,053
|
|
|
7,330
|
|
|||||
Interest expense
|
|
23,614
|
|
|
4,560
|
|
|
1,799
|
|
|
835
|
|
|
24
|
|
|||||
EBITDA
|
|
$
|
184,548
|
|
|
$
|
161,314
|
|
|
$
|
153,122
|
|
|
$
|
131,419
|
|
|
$
|
72,181
|
|
Non-cash unit-based compensation expense
|
|
2,411
|
|
|
1,176
|
|
|
775
|
|
|
402
|
|
|
—
|
|
|||||
Loss on asset sales
|
|
2,501
|
|
|
3,914
|
|
|
10,083
|
|
|
—
|
|
|
—
|
|
|||||
Adjusted EBITDA
|
|
$
|
189,460
|
|
|
$
|
166,404
|
|
|
$
|
163,980
|
|
|
$
|
131,821
|
|
|
$
|
72,181
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income attributable to noncontrolling interest
|
|
4,953
|
|
|
19,069
|
|
|
33,636
|
|
|
44,284
|
|
|
7,858
|
|
|||||
Depreciation expense attributable to noncontrolling interest
|
|
3,128
|
|
|
7,147
|
|
|
9,597
|
|
|
6,799
|
|
|
863
|
|
|||||
Other expenses attributable to noncontrolling interest
|
|
4,329
|
|
|
394
|
|
|
621
|
|
|
428
|
|
|
—
|
|
|||||
Loss on asset sales attributable to noncontrolling interest
|
|
2,375
|
|
|
3,718
|
|
|
9,579
|
|
|
—
|
|
|
—
|
|
|||||
Adjusted EBITDA Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP
|
|
$
|
174,675
|
|
|
$
|
136,076
|
|
|
$
|
110,547
|
|
|
$
|
80,310
|
|
|
$
|
63,460
|
|
Less: cash interest expense, net to the Partnership
|
|
19,221
|
|
|
4,387
|
|
|
1,310
|
|
|
407
|
|
|
—
|
|
|||||
Less: maintenance capital expenditures, net to the Partnership
|
|
16,892
|
|
|
14,658
|
|
|
13,071
|
|
|
8,984
|
|
|
6,008
|
|
|||||
Distributable Cash Flow
|
|
$
|
138,562
|
|
|
$
|
117,031
|
|
|
$
|
96,166
|
|
|
$
|
70,919
|
|
|
$
|
57,452
|
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Net income of
$134.0 million
as compared to
$115.0 million
;
|
•
|
Adjusted EBITDA of
$174.7 million
as compared to
$136.1 million
; and
|
•
|
Distributable cash flow of
$138.6 million
as compared to
$117.0 million
.
|
•
|
Dedication to the Partnership of approximately 16,100 additional Utica acres in our Anchor Systems;
|
•
|
Commitment to develop 40 additional wells in the Anchor Systems by 2023, subject to the terms of the GGA;
|
•
|
Contribution to the Anchor Systems of a 20” high pressure pipeline in addition to a one-time payment to us of approximately $2.0 million in cash; and
|
•
|
Distribution of our 5% interest in the Growth Systems and related assets, as well as our 5% interest in the Moundsville midstream assets that were a part of the Additional Systems, to CNX Gathering, which subsequently transferred these assets to HG Energy II Appalachia, LLC (“HG Energy”).
|
•
|
Release from dedication of approximately 18,000 acres, net to the Partnership, which was comprised of approximately 275,000 acres (or approximately 14,000 acres, net to the Partnership) within the Growth and Additional Systems and approximately 4,200 scattered acres located in the Anchor Systems;
|
•
|
Removal of our obligation to provide gathering services or make capital investments in the Growth Systems or in the Moundsville area of the Additional Systems; and
|
•
|
Commitment by HG Energy to develop 12 additional wells in the Anchor Systems by 2021, subject to the terms of the HG Energy GGA.
|
•
|
January 1, 2018 to December 31, 2018 - 30 wells (deficiency payment of $3.5 million per well)
|
•
|
January 1, 2019 to April 30, 2020 - 40 wells (deficiency payment of $3.5 million per well)
|
•
|
May 1, 2020 to April 30, 2021 - 40 wells (deficiency payment of $2.0 million per well)
|
•
|
May 1, 2021 to April 30, 2022 - 30 wells (deficiency payment of $2.0 million per well)
|
•
|
July 1, 2018 to December 31, 2020 - 15 wells (deficiency payment of $2.8 million per well)
|
•
|
January 1, 2021 - December 31, 2023 - 25 wells (deficiency payment of $2.8 million per well)
|
•
|
With respect to natural gas from the Marcellus Shale formation that does not require downstream processing, or dry gas, we receive a fee of $
0.442
per MMBtu.
|
•
|
With respect to natural gas that requires downstream processing, or wet gas, we receive a fee of
$0.304
per MMBtu in the Pittsburgh International Airport area and a fee of $0.607 per MMBtu for all other areas in the dedication area.
|
•
|
Our fees for condensate services are $5.52 per Bbl in the Majorsville area and the Shirley-Penns area.
|
•
|
successful drilling activity by our customers on our dedicated acreage and our ability to fund the capital costs required to connect our gathering systems to new wells;
|
•
|
our ability to utilize the remaining uncommitted capacity on, or add additional capacity to, our gathering systems;
|
•
|
the level of work-overs and re-completions of wells on existing pad sites to which our gathering systems are connected;
|
•
|
our ability to increase throughput volumes on our gathering systems by making outlet connections to existing or new third-party pipelines or other facilities, primarily driven by the anticipated supply of and demand for natural gas;
|
•
|
the number of new pad sites on our dedicated acreage awaiting lateral connections;
|
•
|
our ability to identify and execute, at returns that are acceptable to us, organic expansion projects to capture incremental volumes from our customers;
|
•
|
our ability to compete for volumes from successful new wells in the areas in which we operate outside of our dedicated acreage;
|
•
|
our ability to gather natural gas and condensate that has been released from commitments with our competitors; and
|
•
|
release of our dedicated acreage, subject to the terms of our gas gathering agreements.
|
|
For the Years Ended December 31,
|
|||||||||||||
(in thousands)
|
2018
|
|
2017
|
|
Change ($)
|
|
Change (%)
|
|||||||
Revenue
|
|
|
|
|
|
|
|
|||||||
Gathering revenue — related party
|
$
|
167,048
|
|
|
$
|
184,693
|
|
|
$
|
(17,645
|
)
|
|
(9.6
|
)%
|
Gathering revenue — third party
|
89,620
|
|
|
49,155
|
|
|
40,465
|
|
|
82.3
|
%
|
|||
Total Revenue
|
256,668
|
|
|
233,848
|
|
|
22,820
|
|
|
9.8
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Expenses
|
|
|
|
|
|
|
|
|||||||
Operating expense — related party
|
19,814
|
|
|
25,513
|
|
|
(5,699
|
)
|
|
(22.3
|
)%
|
|||
Operating expense — third party
|
27,343
|
|
|
26,640
|
|
|
703
|
|
|
2.6
|
%
|
|||
General and administrative expense — related party
|
13,867
|
|
|
10,750
|
|
|
3,117
|
|
|
29.0
|
%
|
|||
General and administrative expense — third party
|
8,595
|
|
|
5,717
|
|
|
2,878
|
|
|
50.3
|
%
|
|||
Loss on asset sales
|
2,501
|
|
|
3,914
|
|
|
(1,413
|
)
|
|
(36.1
|
)%
|
|||
Depreciation expense
|
21,939
|
|
|
22,692
|
|
|
(753
|
)
|
|
(3.3
|
)%
|
|||
Interest expense
|
23,614
|
|
|
4,560
|
|
|
19,054
|
|
|
417.9
|
%
|
|||
Total Expense
|
117,673
|
|
|
99,786
|
|
|
17,887
|
|
|
17.9
|
%
|
|||
Net Income
|
$
|
138,995
|
|
|
$
|
134,062
|
|
|
$
|
4,933
|
|
|
3.7
|
%
|
Less: Net income attributable to noncontrolling interest
|
4,953
|
|
|
19,069
|
|
|
(14,116
|
)
|
|
(74.0
|
)%
|
|||
Net Income Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP
|
$
|
134,042
|
|
|
$
|
114,993
|
|
|
$
|
19,049
|
|
|
16.6
|
%
|
|
Anchor
|
|
Growth
|
|
Additional
|
|
TOTAL
|
||||
Dry Gas (BBtu/d)
2
|
716
|
|
|
15
|
|
|
9
|
|
|
740
|
|
Wet Gas (BBtu/d)
2
|
554
|
|
|
1
|
|
|
106
|
|
|
661
|
|
Other (BBtu/d)
3
|
66
|
|
|
—
|
|
|
7
|
|
|
73
|
|
Total Gathered Volumes
1
|
1,336
|
|
|
16
|
|
|
122
|
|
|
1,474
|
|
|
Anchor
|
|
Growth
|
|
Additional
|
|
TOTAL
|
||||
Dry Gas (BBtu/d)
2
|
595
|
|
|
47
|
|
|
15
|
|
|
657
|
|
Wet Gas (BBtu/d)
2
|
478
|
|
|
4
|
|
|
114
|
|
|
596
|
|
Other (BBtu/d)
3
|
5
|
|
|
—
|
|
|
8
|
|
|
13
|
|
Total Gathered Volumes
1
|
1,078
|
|
|
51
|
|
|
137
|
|
|
1,266
|
|
|
For the Years Ended December 31,
|
|||||||||||||
(in thousands)
|
2017
|
|
2016
|
|
Change ($)
|
|
Change (%)
|
|||||||
Revenue
|
|
|
|
|
|
|
|
|||||||
Gathering revenue — related party
|
$
|
184,693
|
|
|
$
|
239,211
|
|
|
$
|
(54,518
|
)
|
|
(22.8
|
)%
|
Gathering revenue — third party
|
49,155
|
|
|
—
|
|
|
49,155
|
|
|
100.0
|
%
|
|||
Total Revenue
|
233,848
|
|
|
239,211
|
|
|
(5,363
|
)
|
|
(2.2
|
)%
|
|||
|
|
|
|
|
|
|
|
|||||||
Expenses
|
|
|
|
|
|
|
|
|||||||
Operating expense — related party
|
25,513
|
|
|
29,771
|
|
|
(4,258
|
)
|
|
(14.3
|
)%
|
|||
Operating expense — third party
|
26,640
|
|
|
30,405
|
|
|
(3,765
|
)
|
|
(12.4
|
)%
|
|||
General and administrative expense — related party
|
10,750
|
|
|
10,446
|
|
|
304
|
|
|
2.9
|
%
|
|||
General and administrative expense — third party
|
5,717
|
|
|
5,384
|
|
|
333
|
|
|
6.2
|
%
|
|||
Loss on asset sales
|
3,914
|
|
|
10,083
|
|
|
(6,169
|
)
|
|
(61.2
|
)%
|
|||
Depreciation expense
|
22,692
|
|
|
21,201
|
|
|
1,491
|
|
|
7.0
|
%
|
|||
Interest expense
|
4,560
|
|
|
1,799
|
|
|
2,761
|
|
|
153.5
|
%
|
|||
Total Expense
|
99,786
|
|
|
109,089
|
|
|
(9,303
|
)
|
|
(8.5
|
)%
|
|||
Net Income
|
$
|
134,062
|
|
|
$
|
130,122
|
|
|
$
|
3,940
|
|
|
3.0
|
%
|
Less: Net income attributable to noncontrolling interest
|
19,069
|
|
|
33,636
|
|
|
(14,567
|
)
|
|
(43.3
|
)%
|
|||
Net Income Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP
|
$
|
114,993
|
|
|
$
|
96,486
|
|
|
$
|
18,507
|
|
|
19.2
|
%
|
|
Anchor
|
|
Growth
|
|
Additional
|
|
TOTAL
|
||||
Dry Gas (BBtu/d)
2
|
595
|
|
|
47
|
|
|
15
|
|
|
657
|
|
Wet Gas (BBtu/d)
2
|
478
|
|
|
4
|
|
|
114
|
|
|
596
|
|
Other (BBtu/d)
3
|
5
|
|
|
—
|
|
|
8
|
|
|
13
|
|
Total Gathered Volumes
1
|
1,078
|
|
|
51
|
|
|
137
|
|
|
1,266
|
|
|
Anchor
|
|
Growth
|
|
Additional
|
|
TOTAL
|
||||
Dry Gas (BBtu/d)
2
|
714
|
|
|
63
|
|
|
20
|
|
|
797
|
|
Wet Gas (BBtu/d)
2
|
468
|
|
|
6
|
|
|
73
|
|
|
547
|
|
Other (BBtu/d)
3
|
5
|
|
|
—
|
|
|
5
|
|
|
10
|
|
Total Gathered Volumes
1
|
1,187
|
|
|
69
|
|
|
98
|
|
|
1,354
|
|
•
|
our operating performance as compared to those of other companies in the midstream energy industry, without regard to financing methods, historical cost basis or capital structure;
|
•
|
the ability of our assets to generate sufficient cash flow to make distributions to our partners;
|
•
|
our ability to incur and service debt and fund capital expenditures; and
|
•
|
the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
|
•
|
the ability of our assets to generate cash sufficient to support our indebtedness and make future cash distributions to our unitholders; and
|
•
|
the attractiveness of capital projects and acquisitions and the overall rates of return on alternative investment opportunities.
|
|
|
For the Years Ended December 31,
|
||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net Income
|
|
$
|
138,995
|
|
|
$
|
134,062
|
|
|
$
|
130,122
|
|
Depreciation expense
|
|
21,939
|
|
|
22,692
|
|
|
21,201
|
|
|||
Interest expense
|
|
23,614
|
|
|
4,560
|
|
|
1,799
|
|
|||
EBITDA
|
|
184,548
|
|
|
161,314
|
|
|
153,122
|
|
|||
Non-cash unit-based compensation expense
|
|
2,411
|
|
|
1,176
|
|
|
775
|
|
|||
Loss on asset sales
|
|
2,501
|
|
|
3,914
|
|
|
10,083
|
|
|||
Adjusted EBITDA
|
|
189,460
|
|
|
166,404
|
|
|
163,980
|
|
|||
Less:
|
|
|
|
|
|
|
||||||
Net income attributable to noncontrolling interest
|
|
4,953
|
|
|
19,069
|
|
|
33,636
|
|
|||
Depreciation expense attributable to noncontrolling interest
|
|
3,128
|
|
|
7,147
|
|
|
9,597
|
|
|||
Other expenses attributable to noncontrolling interest
|
|
4,329
|
|
|
394
|
|
|
621
|
|
|||
Loss on asset sales attributable to noncontrolling interest
|
|
2,375
|
|
|
3,718
|
|
|
9,579
|
|
|||
Adjusted EBITDA Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP
|
|
$
|
174,675
|
|
|
$
|
136,076
|
|
|
$
|
110,547
|
|
Less: cash interest expense, net to the Partnership
|
|
19,221
|
|
|
4,387
|
|
|
1,310
|
|
|||
Less: maintenance capital expenditures, net to the Partnership
|
|
16,892
|
|
|
14,658
|
|
|
13,071
|
|
|||
Distributable Cash Flow
|
|
$
|
138,562
|
|
|
$
|
117,031
|
|
|
$
|
96,166
|
|
|
|
|
|
|
|
|
||||||
Net Cash Provided by Operating Activities
|
|
$
|
180,115
|
|
|
$
|
155,550
|
|
|
$
|
160,089
|
|
Interest expense
|
|
23,614
|
|
|
4,560
|
|
|
1,799
|
|
|||
Loss on asset sales
|
|
2,501
|
|
|
3,914
|
|
|
10,083
|
|
|||
Other, including changes in working capital
|
|
(16,770
|
)
|
|
2,380
|
|
|
(7,991
|
)
|
|||
Adjusted EBITDA
|
|
189,460
|
|
|
166,404
|
|
|
163,980
|
|
|||
Less:
|
|
|
|
|
|
|
||||||
Net income attributable to noncontrolling interest
|
|
4,953
|
|
|
19,069
|
|
|
33,636
|
|
|||
Depreciation expense attributable to noncontrolling interest
|
|
3,128
|
|
|
7,147
|
|
|
9,597
|
|
|||
Other expenses attributable to noncontrolling interest
|
|
4,329
|
|
|
394
|
|
|
621
|
|
|||
Loss on asset sales attributable to noncontrolling interest
|
|
2,375
|
|
|
3,718
|
|
|
9,579
|
|
|||
Adjusted EBITDA Attributable to General and Limited Partner ownership interest in CNX Midstream Partners LP
|
|
$
|
174,675
|
|
|
$
|
136,076
|
|
|
$
|
110,547
|
|
Less: cash interest expense, net to the Partnership
|
|
19,221
|
|
|
4,387
|
|
|
1,310
|
|
|||
Less: maintenance capital expenditures, net to the Partnership
|
|
16,892
|
|
|
14,658
|
|
|
13,071
|
|
|||
Distributable Cash Flow
|
|
$
|
138,562
|
|
|
$
|
117,031
|
|
|
$
|
96,166
|
|
|
|
For the Years Ended December 31,
|
||||||||||
(in millions)
|
|
2018
|
|
2017
|
|
Change
|
||||||
Net cash provided by operating activities
|
|
$
|
180.1
|
|
|
$
|
155.6
|
|
|
$
|
24.5
|
|
Net cash used in investing activities
|
|
$
|
(138.9
|
)
|
|
$
|
(26.8
|
)
|
|
$
|
(112.1
|
)
|
Net cash used in financing activities
|
|
$
|
(40.5
|
)
|
|
$
|
(131.9
|
)
|
|
$
|
91.4
|
|
•
|
the base rate, which is the highest of (i) the federal funds open rate plus 0.50%; (ii) PNC Bank, N.A.’s prime rate; or (iii) the one-month LIBOR rate plus 1.00%, in each case, plus a margin ranging from 0.75% to 1.75%; or
|
•
|
the LIBOR rate, which is the LIBOR rate plus a margin ranging from 1.75% to 2.75%.
|
•
|
a maximum total leverage ratio of no greater than 4.75 to 1.00 (when less than
$150.0 million
aggregate unsecured notes are outstanding) to no greater than 5.50 to 1.00 in certain circumstances. The Partnership’s total leverage ratio was 2.60 to 1.0 for the year ended December 31, 2018;
|
•
|
a maximum secured leverage ratio of no greater than 3.50 to 1.00. The Partnership’s secured leverage ratio was 0.46 to 1.0 for the year ended December 31, 2018; and
|
•
|
a minimum interest coverage ratio of no less than 2.50 to 1.00. The Partnership’s interest coverage ratio was 8.95 to 1.0 for the year ended December 31, 2018.
|
•
|
Maintenance capital expenditures
, which are cash expenditures (including expenditures for the construction or development of new capital assets or the replacement, improvement or expansion of existing capital assets) made to maintain, over the long term, our operating capacity, operating income or revenue. Examples of maintenance capital expenditures are expenditures to repair, refurbish and replace pipelines, to maintain equipment reliability, integrity and safety and to comply with environmental laws and regulations. In addition, we designate a portion of our capital expenditures to connect new wells to maintain gathering throughput as maintenance capital to the extent such capital expenditures are necessary to maintain, over the long term, our operating capacity, operating income or revenue; or
|
•
|
Expansion capital expenditures
, which are cash expenditures to construct new midstream infrastructure and those expenditures incurred in order to extend the useful lives of our assets, reduce costs, increase revenues or increase system throughput or capacity from current levels, including well connections that increase existing system throughput. Examples of expansion capital expenditures include the construction, development or acquisition of additional gathering pipelines and compressor stations, in each case to the extent such capital expenditures are expected to expand our operating capacity, operating income or revenue. In the future, if we make acquisitions that increase system throughput or capacity, the associated capital expenditures may also be considered expansion capital expenditures.
|
|
Anchor
|
|
Other
|
|
Total
|
||||||
Capital Investment
|
|
|
|
|
|
||||||
Maintenance capital
|
$
|
17,167
|
|
|
$
|
1,803
|
|
|
$
|
18,970
|
|
Expansion capital
|
119,448
|
|
|
6,913
|
|
|
126,361
|
|
|||
Total Capital Investment
|
$
|
136,615
|
|
|
$
|
8,716
|
|
|
$
|
145,331
|
|
|
|
|
|
|
|
||||||
Capital Investment Net to the Partnership
|
|
|
|
|
|
||||||
Maintenance capital
|
$
|
17,167
|
|
|
$
|
90
|
|
|
$
|
17,257
|
|
Expansion capital
|
119,448
|
|
|
346
|
|
|
119,794
|
|
|||
Total Capital Investment Net to the Partnership
|
$
|
136,615
|
|
|
$
|
436
|
|
|
$
|
137,051
|
|
|
Payments Due by Years Ending December 31,
|
||||||||||||||||||
(thousands)
|
2019
|
|
2020-21
|
|
2022-23
|
|
Thereafter
|
|
Total
|
||||||||||
Operating lease obligations
(1)
|
$
|
6,637
|
|
|
$
|
4,755
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,392
|
|
Revolving credit facility
(2)
|
—
|
|
|
—
|
|
|
84,000
|
|
|
—
|
|
|
84,000
|
|
|||||
Long-term debt
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
400,000
|
|
|
400,000
|
|
|||||
Interest on long-term debt
(3)
|
26,000
|
|
|
52,000
|
|
|
52,000
|
|
|
57,417
|
|
|
187,417
|
|
|||||
Total Contractual Obligations
|
$
|
32,637
|
|
|
$
|
56,755
|
|
|
$
|
136,000
|
|
|
$
|
457,417
|
|
|
$
|
682,809
|
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
||
|
|
Page
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Revenue
|
|
|
|
|
|
||||||
Gathering revenue — related party
|
$
|
167,048
|
|
|
$
|
184,693
|
|
|
$
|
239,211
|
|
Gathering revenue — third party
|
89,620
|
|
|
49,155
|
|
|
—
|
|
|||
Total Revenue
|
256,668
|
|
|
233,848
|
|
|
239,211
|
|
|||
|
|
|
|
|
|
||||||
Expenses
|
|
|
|
|
|
||||||
Operating expense — related party
|
19,814
|
|
|
25,513
|
|
|
29,771
|
|
|||
Operating expense — third party
|
27,343
|
|
|
26,640
|
|
|
30,405
|
|
|||
General and administrative expense — related party
|
13,867
|
|
|
10,750
|
|
|
10,446
|
|
|||
General and administrative expense — third party
|
8,595
|
|
|
5,717
|
|
|
5,384
|
|
|||
Loss on asset sales
|
2,501
|
|
|
3,914
|
|
|
10,083
|
|
|||
Depreciation expense
|
21,939
|
|
|
22,692
|
|
|
21,201
|
|
|||
Interest expense
|
23,614
|
|
|
4,560
|
|
|
1,799
|
|
|||
Total Expense
|
117,673
|
|
|
99,786
|
|
|
109,089
|
|
|||
Net Income
|
138,995
|
|
|
134,062
|
|
|
130,122
|
|
|||
Less: Net income attributable to noncontrolling interest
|
4,953
|
|
|
19,069
|
|
|
33,636
|
|
|||
Net Income Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP
|
$
|
134,042
|
|
|
$
|
114,993
|
|
|
$
|
96,486
|
|
|
|
|
|
|
|
||||||
Calculation of Limited Partner Interest in Net Income:
|
|
|
|
|
|
||||||
Net Income Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP
|
$
|
134,042
|
|
|
$
|
114,993
|
|
|
$
|
96,486
|
|
Less: General partner interest in net income, including incentive distribution rights
|
13,387
|
|
|
5,614
|
|
|
2,526
|
|
|||
Limited partner interest in net income
|
$
|
120,655
|
|
|
$
|
109,379
|
|
|
$
|
93,960
|
|
|
|
|
|
|
|
||||||
Net income per limited partner unit - basic
|
$
|
1.90
|
|
|
$
|
1.72
|
|
|
$
|
1.59
|
|
Net income per limited partner unit - diluted
|
$
|
1.89
|
|
|
$
|
1.72
|
|
|
$
|
1.58
|
|
|
|
|
|
|
|
||||||
Weighted average limited partner units outstanding - basic
|
63,635
|
|
|
63,582
|
|
|
59,207
|
|
|||
Weighted average limited partner units outstanding - diluted
|
63,694
|
|
|
63,634
|
|
|
59,289
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash
|
$
|
3,966
|
|
|
$
|
3,194
|
|
Receivables — related party
|
17,073
|
|
|
13,104
|
|
||
Receivables — third party
|
7,028
|
|
|
8,251
|
|
||
Other current assets
|
2,383
|
|
|
2,169
|
|
||
Total Current Assets
|
30,450
|
|
|
26,718
|
|
||
Property and Equipment
(Note 6)
:
|
|
|
|
||||
Property and equipment
|
974,394
|
|
|
972,841
|
|
||
Less — accumulated depreciation
|
82,619
|
|
|
73,563
|
|
||
Property and Equipment — Net
|
891,775
|
|
|
899,278
|
|
||
Other assets
|
3,203
|
|
|
593
|
|
||
TOTAL ASSETS
|
$
|
925,428
|
|
|
$
|
926,589
|
|
|
|
|
|
||||
LIABILITIES AND EQUITY
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Trade accounts payable
|
$
|
9,401
|
|
|
$
|
6,925
|
|
Accrued interest payable
|
7,761
|
|
|
87
|
|
||
Accrued liabilities
|
26,757
|
|
|
16,590
|
|
||
Due to related party
(Note 5)
|
4,980
|
|
|
2,376
|
|
||
Total Current Liabilities
|
48,899
|
|
|
25,978
|
|
||
Other Liabilities:
|
|
|
|
||||
Revolving credit facility
(Note 7)
|
84,000
|
|
|
149,500
|
|
||
Long-term debt
(Note 8)
|
393,215
|
|
|
—
|
|
||
Total Other Liabilities
|
477,215
|
|
|
149,500
|
|
||
|
|
|
|
||||
Total Liabilities
|
526,114
|
|
|
175,478
|
|
||
|
|
|
|
||||
Partners’ Capital and Noncontrolling Interest:
|
|
|
|
||||
Common units (63,639,676 units issued and outstanding at December 31, 2018 and 63,588,152 units issued and outstanding at December 31, 2017)
|
320,543
|
|
|
389,427
|
|
||
General partner interest
|
10,900
|
|
|
4,328
|
|
||
Partners’ capital attributable to CNX Midstream Partners LP
|
331,443
|
|
|
393,755
|
|
||
Noncontrolling interest
|
67,871
|
|
|
357,356
|
|
||
Total Partners’ Capital and Noncontrolling Interest
|
399,314
|
|
|
751,111
|
|
||
TOTAL LIABILITIES AND PARTNERS’ CAPITAL
|
$
|
925,428
|
|
|
$
|
926,589
|
|
|
|
Partners’ Capital
|
|
|
|
|
|
|
||||||||||||||||
|
|
Limited Partners
|
|
|
|
Capital
|
|
|
|
|
||||||||||||||
|
|
|
|
|
General
|
|
Attributable
|
|
Noncontrolling
|
|
|
|||||||||||||
|
|
Common
|
|
Subordinated
|
|
Partner
|
|
to Partners
|
|
Interest
|
|
Total
|
||||||||||||
Balance at December 31, 2015
|
|
$
|
399,399
|
|
|
$
|
(82,900
|
)
|
|
$
|
(3,389
|
)
|
|
$
|
313,110
|
|
|
$
|
490,032
|
|
|
$
|
803,142
|
|
Net income
|
|
47,935
|
|
|
46,025
|
|
|
2,526
|
|
|
96,486
|
|
|
33,636
|
|
|
130,122
|
|
||||||
General Partner and noncontrolling interest holder activity
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|
(9,068
|
)
|
|
(9,065
|
)
|
||||||
Quarterly distributions to unitholders
|
|
(29,128
|
)
|
|
(29,111
|
)
|
|
(1,451
|
)
|
|
(59,690
|
)
|
|
—
|
|
|
(59,690
|
)
|
||||||
Acquisition of remaining 25% interest in Anchor System
|
|
(606
|
)
|
|
—
|
|
|
—
|
|
|
(606
|
)
|
|
(139,394
|
)
|
|
(140,000
|
)
|
||||||
Unit-based compensation
|
|
775
|
|
|
—
|
|
|
—
|
|
|
775
|
|
|
—
|
|
|
775
|
|
||||||
Vested units withheld for unitholder taxes
|
|
(23
|
)
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
|
—
|
|
|
(23
|
)
|
||||||
Balance at December 31, 2016
|
|
$
|
418,352
|
|
|
$
|
(65,986
|
)
|
|
$
|
(2,311
|
)
|
|
$
|
350,055
|
|
|
$
|
375,206
|
|
|
$
|
725,261
|
|
Net income
|
|
72,215
|
|
|
37,164
|
|
|
5,614
|
|
|
114,993
|
|
|
19,069
|
|
|
134,062
|
|
||||||
Distributions to general partner and noncontrolling interest holders, net
|
|
—
|
|
|
—
|
|
|
30
|
|
|
30
|
|
|
(36,919
|
)
|
|
(36,889
|
)
|
||||||
Quarterly distributions to unitholders
|
|
(39,544
|
)
|
|
(33,514
|
)
|
|
(4,059
|
)
|
|
(77,117
|
)
|
|
—
|
|
|
(77,117
|
)
|
||||||
Conversion of subordinated units to common units
(1)
|
|
(62,336
|
)
|
|
62,336
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Noncash contribution of assets held by general partner
|
|
—
|
|
|
—
|
|
|
5,054
|
|
|
5,054
|
|
|
—
|
|
|
5,054
|
|
||||||
Unit-based compensation
|
|
1,176
|
|
|
—
|
|
|
—
|
|
|
1,176
|
|
|
—
|
|
|
1,176
|
|
||||||
Vested units withheld for unitholder taxes
|
|
(436
|
)
|
|
—
|
|
|
—
|
|
|
(436
|
)
|
|
—
|
|
|
(436
|
)
|
||||||
Balance at December 31, 2017
|
|
$
|
389,427
|
|
|
$
|
—
|
|
|
$
|
4,328
|
|
|
$
|
393,755
|
|
|
$
|
357,356
|
|
|
$
|
751,111
|
|
Net income
|
|
120,655
|
|
|
—
|
|
|
13,387
|
|
|
134,042
|
|
|
4,953
|
|
|
138,995
|
|
||||||
(Distributions to) contributions from general partner and noncontrolling interest holders, net
|
|
—
|
|
|
—
|
|
|
20
|
|
|
20
|
|
|
(3,525
|
)
|
|
(3,505
|
)
|
||||||
Quarterly distributions to unitholders
|
|
(84,104
|
)
|
|
—
|
|
|
(9,940
|
)
|
|
(94,044
|
)
|
|
—
|
|
|
(94,044
|
)
|
||||||
Acquisition of Shirley-Penns System
|
|
(153,587
|
)
|
|
—
|
|
|
—
|
|
|
(153,587
|
)
|
|
(111,413
|
)
|
|
(265,000
|
)
|
||||||
HG Energy Transaction
|
|
46,089
|
|
|
—
|
|
|
—
|
|
|
46,089
|
|
|
(179,500
|
)
|
|
(133,411
|
)
|
||||||
Noncash contribution of assets held by general partner
|
|
—
|
|
|
—
|
|
|
3,105
|
|
|
3,105
|
|
|
—
|
|
|
3,105
|
|
||||||
Unit-based compensation
|
|
2,411
|
|
|
—
|
|
|
—
|
|
|
2,411
|
|
|
—
|
|
|
2,411
|
|
||||||
Vested units withheld for unitholder taxes
|
|
(348
|
)
|
|
—
|
|
|
—
|
|
|
(348
|
)
|
|
—
|
|
|
(348
|
)
|
||||||
Balance at December 31, 2018
|
|
$
|
320,543
|
|
|
$
|
—
|
|
|
$
|
10,900
|
|
|
$
|
331,443
|
|
|
$
|
67,871
|
|
|
$
|
399,314
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
138,995
|
|
|
$
|
134,062
|
|
|
$
|
130,122
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation expense and amortization of debt issuance costs
|
23,540
|
|
|
22,860
|
|
|
21,364
|
|
|||
Unit-based compensation
|
2,411
|
|
|
1,176
|
|
|
775
|
|
|||
Loss on long-term asset sales
|
2,501
|
|
|
3,914
|
|
|
10,083
|
|
|||
Other
|
388
|
|
|
771
|
|
|
695
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Due to/from affiliate
|
(1,580
|
)
|
|
3,376
|
|
|
13,885
|
|
|||
Receivables — third party
|
1,223
|
|
|
(8,251
|
)
|
|
—
|
|
|||
Other current and non-current assets
|
475
|
|
|
162
|
|
|
(144
|
)
|
|||
Accounts payable and other accrued liabilities
|
12,162
|
|
|
(2,520
|
)
|
|
(16,691
|
)
|
|||
Net Cash Provided by Operating Activities
|
180,115
|
|
|
155,550
|
|
|
160,089
|
|
|||
|
|
|
|
|
|
||||||
Cash Flows from Investing Activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(145,331
|
)
|
|
(48,366
|
)
|
|
(50,660
|
)
|
|||
Proceeds from sale of assets
|
6,462
|
|
|
21,531
|
|
|
5,332
|
|
|||
Net Cash Used in Investing Activities
|
(138,869
|
)
|
|
(26,835
|
)
|
|
(45,328
|
)
|
|||
|
|
|
|
|
|
||||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
||||||
Distributions to general partner and noncontrolling interest holders, net
|
(3,505
|
)
|
|
(36,889
|
)
|
|
(2,344
|
)
|
|||
Quarterly distributions to unitholders
|
(94,044
|
)
|
|
(77,117
|
)
|
|
(59,690
|
)
|
|||
Net payments on unsecured $250.0 million credit facility
|
(149,500
|
)
|
|
(17,500
|
)
|
|
93,500
|
|
|||
Net borrowings on secured $600.0 million credit facility
|
84,000
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of long-term debt, net of discount
|
394,000
|
|
|
—
|
|
|
—
|
|
|||
Debt issuance costs
|
(6,077
|
)
|
|
—
|
|
|
—
|
|
|||
Vested units withheld for unitholder taxes
|
(348
|
)
|
|
(436
|
)
|
|
(23
|
)
|
|||
Acquisition of Shirley-Penns System
|
(265,000
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisition of remaining 25.0% noncontrolling interest in the Anchor Systems
|
—
|
|
|
—
|
|
|
(140,000
|
)
|
|||
Net Cash Used in Financing Activities
|
(40,474
|
)
|
|
(131,942
|
)
|
|
(108,557
|
)
|
|||
|
|
|
|
|
|
||||||
Net Increase (Decrease) in Cash
|
772
|
|
|
(3,227
|
)
|
|
6,204
|
|
|||
Cash at Beginning of Period
|
3,194
|
|
|
6,421
|
|
|
217
|
|
|||
Cash at End of Period
|
$
|
3,966
|
|
|
$
|
3,194
|
|
|
$
|
6,421
|
|
|
|
|
|
|
|
||||||
Cash Paid During the Period For:
|
|
|
|
|
|
||||||
Interest
|
$
|
15,283
|
|
|
$
|
4,437
|
|
|
$
|
1,921
|
|
Noncash Investing Activities:
|
|
|
|
|
|
||||||
Accrued capital expenditures
|
$
|
19,118
|
|
|
$
|
9,942
|
|
|
$
|
3,471
|
|
•
|
Our Anchor Systems, in which the Partnership owns a
100%
controlling interest, include our most developed midstream systems that generate the largest portion of our current cash flows, including our
four
primary midstream systems (the McQuay, Majorsville, Mamont and Shirley-Penns Systems), a 20” high-pressure pipeline contributed to us in the CNX Transaction and related assets.
|
•
|
Our Additional Systems, in which the Partnership owns a
5%
controlling interest, include several gathering systems primarily located in the wet gas regions of our dedicated acreage. Revenues from our Additional Systems are currently derived primarily from the Pittsburgh Airport area. Currently, the substantial majority of capital investment in these systems would be funded by CNX Resources in proportion to CNX Gathering’s
95%
retained ownership interest.
|
•
|
Dedication to the Partnership of approximately
16,100
additional Utica acres in our Anchor Systems;
|
•
|
Commitment to develop
40
additional wells in the Anchor Systems by 2023, subject to the terms of the GGA;
|
•
|
Contribution to the Anchor Systems of a 20” high pressure pipeline in addition to a one-time payment to us of approximately
$2.0 million
in cash; and
|
•
|
Distribution of our
5%
interest in the Growth Systems and related assets, as well as our
5%
interest in the Moundsville midstream assets that were a part of the Additional Systems, to CNX Gathering, which subsequently transferred these assets to HG Energy II Appalachia, LLC (“HG Energy”).
|
•
|
Release from dedication of approximately
18,000
acres, net to the Partnership, which was comprised of approximately
275,000
acres (or approximately
14,000
acres, net to the Partnership) within the Growth and Additional Systems and approximately
4,200
scattered acres located in the Anchor Systems;
|
•
|
Removal of our obligation to provide gathering services or make capital investments in the Growth Systems or in the Moundsville area of the Additional Systems; and
|
•
|
Commitment by HG Energy to develop
12
additional wells in the Anchor Systems by 2021, subject to the terms of the HG Energy GGA.
|
|
|
|
|
Marginal Percentage Interest in
Distributions
|
||||
Distribution Targets
|
|
Total Quarterly Distribution Per Unit Target Amount
|
|
Unitholders
|
|
General Partner (including IDRs)
|
||
Minimum Quarterly Distribution
|
|
|
|
$0.2125
|
|
98%
|
|
2%
|
First Target Distribution
|
|
Above $0.2125
|
|
up to $0.24438
|
|
98%
|
|
2%
|
Second Target Distribution
|
|
Above $0.24438
|
|
up to $0.26563
|
|
85%
|
|
15%
|
Third Target Distribution
|
|
Above $0.26563
|
|
up to $0.31875
|
|
75%
|
|
25%
|
Thereafter
|
|
Above $0.31875
|
|
|
|
50%
|
|
50%
|
|
December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net Income Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP
|
$
|
134,042
|
|
|
$
|
114,993
|
|
|
$
|
96,486
|
|
Less: General partner interest in net income, including incentive distribution rights
|
13,387
|
|
|
5,614
|
|
|
2,526
|
|
|||
Limited partner interest in net income
|
$
|
120,655
|
|
|
$
|
109,379
|
|
|
$
|
93,960
|
|
|
|
|
|
|
|
||||||
Net income allocable to common units - Basic and Diluted
|
$
|
120,655
|
|
|
$
|
70,837
|
|
|
$
|
47,935
|
|
Net income allocable to subordinated units - Basic and Diluted
|
—
|
|
|
38,542
|
|
|
46,025
|
|
|||
Limited partner interest in net income - Basic and Diluted
|
$
|
120,655
|
|
|
$
|
109,379
|
|
|
$
|
93,960
|
|
|
|
|
|
|
|
||||||
Weighted average limited partner units outstanding — Basic
|
|
|
|
|
|
||||||
Common units
|
63,635
|
|
|
41,710
|
|
|
30,044
|
|
|||
Subordinated units
|
—
|
|
|
21,872
|
|
|
29,163
|
|
|||
Total
|
63,635
|
|
|
63,582
|
|
|
59,207
|
|
|||
|
|
|
|
|
|
||||||
Weighted average limited partner units outstanding — Diluted
|
|
|
|
|
|
||||||
Common units
|
63,694
|
|
|
41,762
|
|
|
30,126
|
|
|||
Subordinated units
|
—
|
|
|
21,872
|
|
|
29,163
|
|
|||
Total
|
63,694
|
|
|
63,634
|
|
|
59,289
|
|
|||
|
|
|
|
|
|
||||||
Net income per limited partner unit — Basic
|
|
|
|
|
|
||||||
Common units
|
$
|
1.90
|
|
|
$
|
1.70
|
|
|
$
|
1.60
|
|
Subordinated units
|
—
|
|
|
1.76
|
|
|
1.58
|
|
|||
Total
|
$
|
1.90
|
|
|
$
|
1.72
|
|
|
$
|
1.59
|
|
|
|
|
|
|
|
||||||
Net income per limited partner unit — Diluted
|
|
|
|
|
|
||||||
Common units
|
$
|
1.89
|
|
|
$
|
1.70
|
|
|
$
|
1.59
|
|
Subordinated units
|
—
|
|
|
1.76
|
|
|
1.58
|
|
|||
Total
|
$
|
1.89
|
|
|
$
|
1.72
|
|
|
$
|
1.58
|
|
|
For the Years Ended December 31,
|
||||||||||
(in thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Operational services–CNX Resources
|
$
|
12,739
|
|
|
$
|
13,166
|
|
|
$
|
12,875
|
|
Electrical compression
|
7,075
|
|
|
12,347
|
|
|
16,896
|
|
|||
Total Operating Expense — Related Party
|
$
|
19,814
|
|
|
$
|
25,513
|
|
|
$
|
29,771
|
|
|
|
|
|
|
|
||||||
CNX Resources
|
$
|
13,867
|
|
|
$
|
10,167
|
|
|
$
|
9,796
|
|
Noble Energy
|
—
|
|
|
583
|
|
|
650
|
|
|||
Total General and Administrative Expense — Related Party
|
$
|
13,867
|
|
|
$
|
10,750
|
|
|
$
|
10,446
|
|
•
|
our payment of an annually-determined administrative support fee (approximately
$1.9 million
for the year ended December 31, 2018) for the provision of certain services by CNX Resources and its affiliates, including executive costs;
|
•
|
our obligation to reimburse CNX Resources and Noble Energy for all other direct or allocated costs and expenses incurred by CNX Resources and Noble Energy (through the date of the Noble Energy Asset Sale) in providing general
|
•
|
our right of first offer to acquire (i) CNX Gathering’s retained interests in each of our Anchor Systems, Growth Systems and Additional Systems, (ii) CNX Gathering’s other ancillary midstream assets and (iii) any additional midstream assets that CNX Gathering develops; and
|
•
|
an indemnity from CNX Gathering for liabilities associated with the use, ownership or operation of our assets, including environmental liabilities, to the extent relating to the period of time prior to the closing of the IPO; and our obligation to indemnify CNX Gathering for events and conditions associated with the use, ownership or operation of our assets that occur after the closing of the IPO, including environmental liabilities.
|
◦
|
McQuay area Utica Shale - a fee of
$0.225
per MMBtu; and
|
◦
|
Wadestown Marcellus Shale and Utica Shale - a fee of
$0.35
per MMBtu.
|
•
|
Compression:
|
◦
|
For areas not benefitting from system expansion pursuant to the Second Amended and Restated GGA, compression services are included in the base fees; and
|
◦
|
In the McQuay and Wadestown areas, for wells turned in line beginning January 1, 2018 and beyond, we will receive additional fees of
$0.065
per MMBtu for Tier 1 pressure services (maximum receipt point of pressure of 600 psi) and
$0.130
per MMBtu for Tier 2 pressure services (maximum receipt point of pressure of 300 psi).
|
•
|
January 1, 2018 to December 31, 2018 -
30
wells (deficiency payment of
$3.5 million
per well)
|
•
|
January 1, 2019 to April 30, 2020 -
40
wells (deficiency payment of
$3.5 million
per well)
|
•
|
May 1, 2020 to April 30, 2021 -
40
wells (deficiency payment of
$2.0 million
per well)
|
•
|
May 1, 2021 to April 30, 2022 -
30
wells (deficiency payment of
$2.0 million
per well)
|
(in millions)
|
Minimum Revenue
|
||
Year ending December 31, 2019
|
$
|
21.4
|
|
Year ending December 31, 2020
|
34.7
|
|
|
Year ending December 31, 2021
|
40.8
|
|
|
Year ending December 31, 2022
|
47.8
|
|
|
Year ending December 31, 2023
|
42.9
|
|
|
Remainder of term
|
213.7
|
|
|
Total revenue to be recognized under Shirley-Penns contract through December 31, 2031
|
$
|
401.3
|
|
•
|
July 1, 2018 to December 31, 2020 -
15
wells (deficiency payment of
$2.8 million
per well)
|
•
|
January 1, 2021 - December 31, 2023 -
25
wells (deficiency payment of
$2.8 million
per well)
|
•
|
With respect to natural gas from the Marcellus Shale formation that did not require downstream processing, or dry gas, we received a fee of
$0.431
per MMBtu.
|
•
|
With respect to the natural gas that required downstream processing, or wet gas, we received:
|
◦
|
a fee of
$0.296
per MMBtu in the Pittsburgh International Airport area; and
|
◦
|
a fee of
$0.593
per MMBtu for all other areas in the dedication area.
|
•
|
With respect to natural gas from the Utica Shale formation, we received a weighted average rate of
$0.15
per MMBtu.
|
•
|
Our fees for condensate services were
$5.38
per Bbl in the Majorsville area and in the Shirley-Penns area.
|
(in thousands)
|
2018
|
|
2017
|
|
Estimated Useful
Lives in Years
|
||||
Land
|
$
|
67,624
|
|
|
$
|
76,130
|
|
|
N/A
|
Gathering equipment
|
605,722
|
|
|
662,595
|
|
|
25 — 40
|
||
Compression equipment
|
199,728
|
|
|
180,038
|
|
|
30 — 40
|
||
Processing equipment
|
30,979
|
|
|
30,979
|
|
|
40
|
||
Assets under construction
|
70,341
|
|
|
23,099
|
|
|
N/A
|
||
Total Property and Equipment
|
$
|
974,394
|
|
|
$
|
972,841
|
|
|
|
|
|
|
|
|
|
||||
Less: Accumulated Depreciation
|
|
|
|
|
|
||||
Gathering equipment
|
$
|
58,561
|
|
|
$
|
53,544
|
|
|
|
Compression equipment
|
18,099
|
|
|
14,886
|
|
|
|
||
Processing equipment
|
5,959
|
|
|
5,133
|
|
|
|
||
Total Accumulated Depreciation
|
$
|
82,619
|
|
|
$
|
73,563
|
|
|
|
|
|
|
|
|
|
||||
Property and Equipment, Net
|
$
|
891,775
|
|
|
$
|
899,278
|
|
|
|
•
|
the base rate, which is the highest of (i) the federal funds open rate plus
0.50%
; (ii) PNC Bank, N.A.’s prime rate; or (iii) the one-month LIBOR rate plus
1.00%
, in each case, plus a margin ranging from
0.75%
to
1.75%
; or
|
•
|
the LIBOR rate, which is the LIBOR rate plus a margin ranging from
1.75%
to
2.75%
.
|
•
|
a maximum total leverage ratio of no greater than
4.75
to 1.00 when less than
$150.0 million
aggregate unsecured notes are outstanding ranging to no greater than
5.50
to 1.00 in certain circumstances;
|
•
|
a maximum secured leverage ratio of no greater than
3.50
to 1.00; and
|
•
|
a minimum interest coverage ratio of no less than
2.50
to 1.00.
|
(in thousands)
|
Balance
|
||
Senior Notes due March 2026 at 6.5%
|
$
|
400,000
|
|
Less: Unamortized debt issuance costs
|
1,410
|
|
|
Less: Unamortized bond discount
|
5,375
|
|
|
Total Long-Term Debt
|
$
|
393,215
|
|
(in thousands)
|
Minimum Lease Payments
|
||
For the year ending December 31, 2019
|
$
|
6,637
|
|
For the year ending December 31, 2020
|
4,755
|
|
|
|
$
|
11,392
|
|
|
For the Years Ended December 31,
|
||||||||||
(in thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Gathering Revenue:
|
|
|
|
|
|
||||||
Anchor Systems
|
$
|
240,445
|
|
|
$
|
209,470
|
|
|
$
|
215,492
|
|
Growth Systems
|
2,572
|
|
|
8,152
|
|
|
10,359
|
|
|||
Additional Systems
|
13,651
|
|
|
16,226
|
|
|
13,360
|
|
|||
Total Gathering Revenue
|
$
|
256,668
|
|
|
$
|
233,848
|
|
|
$
|
239,211
|
|
|
|
|
|
|
|
||||||
Net Income (Loss):
|
|
|
|
|
|
||||||
Anchor Systems
|
$
|
139,386
|
|
|
$
|
129,486
|
|
|
$
|
132,221
|
|
Growth Systems
|
379
|
|
|
607
|
|
|
(6,624
|
)
|
|||
Additional Systems
|
(770
|
)
|
|
3,969
|
|
|
4,525
|
|
|||
Total Net Income
|
$
|
138,995
|
|
|
$
|
134,062
|
|
|
$
|
130,122
|
|
|
|
|
|
|
|
||||||
Depreciation Expense:
|
|
|
|
|
|
||||||
Anchor Systems
|
$
|
19,009
|
|
|
$
|
17,008
|
|
|
$
|
16,132
|
|
Growth Systems
|
748
|
|
|
2,193
|
|
|
2,157
|
|
|||
Additional Systems
|
2,182
|
|
|
3,491
|
|
|
2,912
|
|
|||
Total Depreciation Expense
|
$
|
21,939
|
|
|
$
|
22,692
|
|
|
$
|
21,201
|
|
|
|
|
|
|
|
||||||
Capital Expenditures for Segment Assets:
|
|
|
|
|
|
||||||
Anchor Systems
|
$
|
136,615
|
|
|
$
|
46,393
|
|
|
$
|
41,451
|
|
Growth Systems
|
120
|
|
|
702
|
|
|
1,089
|
|
|||
Additional Systems
|
8,596
|
|
|
1,271
|
|
|
8,120
|
|
|||
Total Capital Expenditures
|
$
|
145,331
|
|
|
$
|
48,366
|
|
|
$
|
50,660
|
|
|
December 31,
|
||||||
(in thousands)
|
2018
|
|
2017
|
||||
Segment Assets:
|
|
|
|
||||
Anchor Systems
|
$
|
832,885
|
|
|
$
|
694,942
|
|
Growth Systems
|
—
|
|
|
92,659
|
|
||
Additional Systems
|
92,543
|
|
|
138,988
|
|
||
Total Segment Assets
|
$
|
925,428
|
|
|
$
|
926,589
|
|
|
Number of Units
|
|
Weighted Average Grant Date Fair Value
|
||
Total awarded and unvested at December 31, 2017
|
134,153
|
|
$
|
16.40
|
|
Granted
|
139,234
|
|
19.14
|
|
|
Vested
|
(72,469)
|
|
16.64
|
|
|
Forfeited
|
(22,289)
|
|
16.59
|
|
|
Total awarded and unvested at December 31, 2018
|
178,629
|
|
$
|
18.35
|
|
|
For the Quarters Ended
|
||||||||||||||
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
63,869
|
|
|
$
|
61,014
|
|
|
$
|
60,968
|
|
|
$
|
70,817
|
|
Net income
|
$
|
33,705
|
|
|
$
|
30,282
|
|
|
$
|
33,575
|
|
|
$
|
41,433
|
|
Net income attributable to general and limited partner ownership interests in CNX Midstream Partners LP
|
$
|
27,847
|
|
|
$
|
30,005
|
|
|
$
|
33,639
|
|
|
$
|
42,551
|
|
Net income per limited partner unit:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.40
|
|
|
$
|
0.43
|
|
|
$
|
0.47
|
|
|
$
|
0.60
|
|
Diluted
|
$
|
0.40
|
|
|
$
|
0.43
|
|
|
$
|
0.47
|
|
|
$
|
0.59
|
|
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
58,958
|
|
|
$
|
56,534
|
|
|
$
|
56,658
|
|
|
$
|
61,698
|
|
Net income
|
$
|
33,240
|
|
|
$
|
29,752
|
|
|
$
|
33,468
|
|
|
$
|
37,602
|
|
Net income attributable to general and limited partner ownership interests in CNX Midstream Partners LP
|
$
|
30,067
|
|
|
$
|
28,991
|
|
|
$
|
28,914
|
|
|
$
|
27,021
|
|
Net income per limited partner unit:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.46
|
|
|
$
|
0.44
|
|
|
$
|
0.43
|
|
|
$
|
0.40
|
|
Diluted
|
$
|
0.45
|
|
|
$
|
0.44
|
|
|
$
|
0.43
|
|
|
$
|
0.40
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
•
|
consist of a majority of independent directors;
|
•
|
have a nominating/corporate governance committee that is composed entirely of independent directors; and
|
•
|
have a compensation committee that is composed entirely of independent directors.
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
•
|
Nicholas J. DeIuliis, our Chief Executive Officer;
|
•
|
Donald W. Rush, our Chief Financial Officer;
|
•
|
Timothy C. Dugan, Chief Operating Officer; and
|
•
|
Chad A. Griffith, President.
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED UNITHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
|
•
|
2% general partner interest; and
|
•
|
98% limited partner interest.
|
•
|
9,038,121 common units;
|
•
|
29,163,121 subordinated units;
|
•
|
a 2% general partner interest in us;
|
•
|
the incentive distribution rights; and
|
•
|
a distribution of approximately $408.0 million from the net proceeds of the IPO.
|
•
|
We will generally make cash distributions of 98% to the unitholders pro rata, including CNX, and 2% to our general partner, assuming it has made any capital contributions necessary to maintain its 2% general partner interest in us. In addition, if distributions exceed the minimum quarterly distribution and target distribution levels, the incentive distribution rights held by our general partner will entitle our general partner to increasing percentages of the distributions, up to 48% of the distributions above the highest target distribution level.
|
•
|
Under our partnership agreement, we are required to reimburse our general partner and its affiliates for all costs and expenses that they incur on our behalf for managing and controlling our business and operations. Except to the extent specified under our omnibus agreement and operational services agreement, our general partner determines the amount of these expenses and such determinations must be made in good faith under the terms of our partnership agreement. Under our omnibus agreement, we will reimburse our Sponsor for expenses incurred by our Sponsor and its affiliates in providing certain general and administrative services to us, including the provision of executive management services by certain officers of our general partner. The expenses of other employees will be allocated to us based on the amount of time actually spent by those employees on our business. These reimbursable expenses also include an allocable portion of the compensation and benefits of employees and executive officers of other affiliates of our general partner who provide services to us. We will also reimburse our Sponsor for any additional out-of-pocket costs and expenses incurred by our Sponsor and its affiliates in providing general and administrative services to us. The costs and expenses for which we are required to reimburse our general partner and its affiliates are not subject to any caps or other limits.
|
•
|
Under our operational services agreement, we will pay our Sponsor for any direct costs actually incurred by our Sponsor and its affiliates in providing our gathering pipelines and dehydration, treating and compressor stations and facilities with certain maintenance, operational, administrative and construction services.
|
•
|
If our general partner withdraws or is removed, its general partner interest and its incentive distribution rights will either be sold to the new general partner for cash or converted into common units, in each case for an amount equal to the fair market value of those interests.
|
•
|
Upon our liquidation, the partners, including our general partner, will be entitled to receive liquidating distributions according to their respective capital account balances.
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
|
Year Ended December 31,
|
||||||
(in thousands)
|
2018
|
|
2017
|
||||
Audit fees
|
$
|
563
|
|
|
$
|
389
|
|
Audit-related fees
|
198
|
|
|
15
|
|
||
Tax fees
|
—
|
|
|
—
|
|
||
All other fees
|
—
|
|
|
—
|
|
||
Total fees
|
$
|
761
|
|
|
$
|
404
|
|
•
|
Bookkeeping or other services related to the accounting records or financial statements
|
•
|
Financial information systems design and implementation
|
•
|
Appraisal or valuation services, fairness opinions or contribution-in-kind reports
|
•
|
Actuarial services
|
•
|
Internal audit outsourcing services
|
•
|
Management functions
|
•
|
Human resources functions
|
•
|
Broker-dealer, investment adviser or investment banking services
|
•
|
Legal services
|
•
|
Expert services unrelated to the audit
|
•
|
Prohibited tax services
|
|
|
|
|
Incorporated by Reference
|
|||||||
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
SEC File
Number |
|
Exhibit
|
|
Filing Date
|
|
3.1*
|
|
|
S-1
|
|
333-198352
|
|
3.1
|
|
|
8/25/2014
|
|
3.2*
|
|
|
8-K
|
|
001-36635
|
|
3.1
|
|
|
1/3/2018
|
|
3.3*
|
|
|
8-K
|
|
001-36635
|
|
3.2
|
|
|
1/3/2018
|
|
4.1*
|
|
|
8-K
|
|
001-36635
|
|
4.1
|
|
|
3/16/2018
|
|
10.1*
|
|
|
8-K
|
|
001-36635
|
|
10.1
|
|
|
10/3/2014
|
|
10.2*
|
|
|
8-K
|
|
001-36635
|
|
10.2
|
|
|
10/3/2014
|
|
10.3*
|
|
|
8-K
|
|
001-36635
|
|
10.1
|
|
|
12/7/2016
|
|
10.4*
|
|
|
10-K
|
|
001-36635
|
|
10.15
|
|
|
2/7/2018
|
10.5*
|
|
|
8-K
|
|
001-36635
|
|
10.2
|
|
|
1/3/2018
|
|
10.6*
|
|
|
10-Q
|
|
001-36635
|
|
10.1
|
|
|
8/2/2018
|
|
10.7*
|
|
|
10-Q
|
|
001-36635
|
|
10.2
|
|
|
8/2/2018
|
|
10.8*
|
|
|
10-Q
|
|
001-36635
|
|
10.3
|
|
|
8/2/2018
|
|
10.9*
|
|
|
8-K
|
|
001-36635
|
|
10.1
|
|
|
3/12/2018
|
|
10.10*
|
|
|
8-K
|
|
001-36635
|
|
10.1
|
|
|
3/16/2018
|
|
10.11*
|
|
|
10-K
|
|
001-36635
|
|
10.10
|
|
|
2/7/2018
|
|
10.12*
|
|
|
8-K
|
|
001-36635
|
|
2.1
|
|
|
11/16/2016
|
|
10.13*
|
|
|
8-K
|
|
001-36635
|
|
10.1
|
|
|
1/3/2018
|
|
10.14*#
|
|
|
8-K
|
|
001-36635
|
|
10.1
|
|
|
1/22/2015
|
|
10.15*#
|
|
|
10-K
|
|
001-36635
|
|
10.12
|
|
|
2/7/2018
|
|
10.16
†
#
|
|
|
|
|
|
|
|
|
|
||
10.17
†
#
|
|
|
|
|
|
|
|
|
|
||
21.1†
|
|
|
|
|
|
|
|
|
|
||
23.1†
|
|
|
|
|
|
|
|
|
|
||
24.1†
|
|
|
|
|
|
|
|
|
|
||
31.1†
|
|
|
|
|
|
|
|
|
|
|
|
31.2†
|
|
|
|
|
|
|
|
|
|
|
|
32.1†
|
|
|
|
|
|
|
|
|
|
|
|
32.2†
|
|
|
|
|
|
|
|
|
|
|
|
101.INS†
|
|
XBRL Instance Document.
|
|
|
|
|
|
|
|
|
|
101.SCH†
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
|
|
|
|
|
101.CAL†
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
|
|
|
|
|
101.DEF†
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
|
|
|
|
|
101.LAB†
|
|
XBRL Taxonomy Extension Labels Linkbase Document.
|
|
|
|
|
|
|
|
|
|
101.PRE†
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
|
|
|
|
|
|
CNX MIDSTREAM PARTNERS LP
|
||
|
By: CNX MIDSTREAM GP LLC, its general partner
|
||
|
|
|
|
|
By:
|
|
/S/
NICHOLAS J. DEIULIIS
|
|
|
|
Nicholas J. DeIuliis
|
|
|
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
|
By:
|
|
/S/
NICHOLAS J. DEIULIIS
|
|
|
|
Nicholas J. DeIuliis
|
|
|
|
Chief Executive Officer and Chairman of the Board
(Principal Executive Officer)
|
|
|
|
|
|
By:
|
|
/
S
/ DONALD W. RUSH
|
|
|
|
Donald W. Rush
|
|
|
|
Chief Financial Officer and Director
(Principal Financial Officer)
|
|
|
|
|
|
By:
|
|
/S/
TIMOTHY C. DUGAN
|
|
|
|
Timothy C. Dugan
|
|
|
|
Chief Operating Officer and Director
|
|
|
|
|
|
By:
|
|
/S/
STEPHEN W. JOHNSON
|
|
|
|
Stephen W. Johnson
|
|
|
|
Director and Senior Vice President
|
|
|
|
|
|
By:
|
|
/S/
BRIAN R. RICH
|
|
|
|
Brian R. Rich
|
|
|
|
Chief Accounting Officer
(Principal Accounting Officer)
|
|
|
|
|
|
By:
|
|
/S/
ANGELA A. MINAS
|
|
|
|
Angela A. Minas
|
|
|
|
Director
|
|
|
|
|
|
By:
|
|
/S/
RAYMOND T. BETLER
|
|
|
|
Raymond T. Betler
|
|
|
|
Director
|
|
|
|
|
|
By:
|
|
/S/
JOHN E. JACKSON
|
|
|
|
John E. Jackson
|
|
|
|
Director
|
|
|
|
Participant:
|
|
[ ]
|
|
|
|
Grant Date
:
|
|
[ ], 20[ ]
|
|
|
|
Number of Phantom Units
:
|
|
[ ] Phantom Units
|
|
|
|
Vesting of Phantom Units
:
|
|
The Phantom Units shall vest in three equal annual installments on each of the first three anniversaries of the Grant Date; provided that the Phantom Units shall be subject to accelerated vesting in certain circumstances as set forth in
Section 4
. In the event of a termination of the Participant’s Service for any reason, all Phantom Units that have not vested prior to or in connection with such termination of Service shall thereupon automatically be forfeited by the Participant without further action and for no consideration.
|
|
|
|
Issuance Schedule
:
|
|
Vested Phantom Units shall be paid to the Participant in the form of Units as set forth in and subject to
Section 5
below.
|
|
|
|
DERs
:
|
|
Each Phantom Unit granted under this Agreement shall be issued in tandem with a corresponding DER each of which shall entitle the Participant to receive additional Phantom Units having a value equal to Partnership distributions with respect to a Unit in accordance with
Section 3
.
|
|
|
|
SIGNATURE:
|
|
|
PRINTED NAME:
|
|
|
DATED:
|
|
|
|
||
CNX Midstream Partners LP
|
||
By: CNX Midstream GP LLC (its General Partner)
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
Participant:
|
|
[ ]
|
|
|
|
Grant Date
:
|
|
[ ], 20[ ]
|
|
|
|
Number of Phantom Units
:
|
|
[ ] Phantom Units
|
|
|
|
Vesting of Phantom Units
:
|
|
The Phantom Units shall vest on the first anniversary of the Grant Date; provided that the Phantom Units shall be subject to accelerated vesting in certain circumstances as set forth in
Section 4
. In the event of a termination of the Participant
’
s Service for any reason, all Phantom Units that have not vested prior to or in connection with such termination of Service shall thereupon automatically be forfeited by the Participant without further action and for no consideration.
|
|
|
|
Issuance Schedule
:
|
|
Vested Phantom Units shall be paid to the Participant in the form of Units as set forth in and subject to
Section 5
below.
|
|
|
|
DERs
:
|
|
Each Phantom Unit granted under this Agreement shall be issued in tandem with a corresponding DER each of which shall entitle the Participant to receive additional Phantom Units having a value equal to Partnership distributions with respect to a Unit in accordance with
Section 3
.
|
|
|
|
SIGNATURE:
|
|
|
PRINTED NAME:
|
|
|
DATED:
|
|
|
|
||
CNX Midstream Partners LP
|
||
By: CNX Midstream GP LLC (its General Partner)
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
Subsidiary
|
Percent Ownership
|
Jurisdiction of Formation
|
CNX Midstream Operating Company LLC
|
100%
|
Delaware
|
CNX Midstream DevCo I GP LLC
|
100%
|
Delaware
|
CNX Midstream DevCo I LP
|
100%
|
Delaware
|
CNX Midstream DevCo III GP LLC
|
100%
|
Delaware
|
CNX Midstream DevCo III LP
|
5%
|
Delaware
|
CNX Midstream Finance Corp
|
100%
|
Delaware
|
CNX Midstream SP Holdings LLC
|
100%
|
Delaware
|
|
/s/ Nicholas J. DeIuliis
|
Nicholas J. DeIuliis,
|
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
|
|
/s/ Donald W. Rush
|
Donald W. Rush,
|
Chief Financial Officer and Director
(Principal Financial Officer)
|
|
/s/ Timothy C. Dugan
|
Timothy C. Dugan,
|
Chief Operating Officer and Director
|
|
/s/ Chad A. Griffith
|
Chad A. Griffith,
|
President
|
|
/s/ Stephen W. Johnson
|
Stephen W. Johnson,
|
Director and Senior Vice President
|
|
/s/ Brian R. Rich
|
Brian R. Rich,
|
Chief Accounting Officer
(Principal Accounting Officer)
|
|
/s/ Angela Minas
|
Angela Minas,
|
Director
|
|
/s/ Raymond T. Betler
|
Raymond T. Betler,
|
Director
|
|
/s/ John Jackson
|
John Jackson,
|
Director
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of CNX Midstream Partners LP;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Dated: February 7, 2019
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/s/ Nicholas J. DeIuliis
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Nicholas J. DeIuliis
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Chief Executive Officer
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CNX Midstream GP LLC (the general partner of CNX Midstream Partners LP)
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(Principal Executive Officer)
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1.
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I have reviewed this Annual Report on Form 10-K of CNX Midstream Partners LP;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Dated: February 7, 2019
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/s/ Donald W. Rush
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Donald W. Rush
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Chief Financial Officer
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CNX Midstream GP LLC (the general partner of CNX Midstream Partners LP)
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(Principal Financial Officer)
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(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership as of the dates and for the periods expressed in the Report.
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Dated: February 7, 2019
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/s/ Nicholas J. DeIuliis
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|
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Nicholas J. DeIuliis
|
|
|
Chief Executive Officer
|
|
|
CNX Midstream GP LLC (the general partner of the Partnership)
|
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and
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(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership as of the dates and for the periods expressed in the Report.
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Dated: February 7, 2019
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/s/ Donald W. Rush
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Donald W. Rush
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Chief Financial Officer
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CNX Midstream GP LLC (the general partner of the Partnership)
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