CNX Resources Corporation (NYSE: CNX) reports third quarter results. Throughout this release, CNX distinguishes between "attributable to CNX shareholders" and "consolidated" results.

Attributable to CNX shareholders: Excludes from consolidated results interests in CNXM not held by CNX, which was approximately 63.91% during the third quarter. The following results are reported on an attributable to CNX shareholders basis:

During the third quarter, the company reported net income attributable to CNX shareholders of $125 million, or earnings of $0.59 per diluted share, compared to a net loss attributable to CNX shareholders of $26 million, or a loss of $0.11 per diluted share, in the third quarter of 2017. After adjusting for certain items, which are highlighted in the EBITDAX reconciliation table, the company had adjusted net income attributable to CNX shareholders1 in the 2018 third quarter of $35 million, or $0.17 per diluted share, compared to an adjusted net loss attributable to CNX shareholders1 of $41 million, or a negative $0.18 per diluted share in the year-earlier quarter. Adjusted EBITDAX attributable to CNX shareholders1 was $210 million for the 2018 third quarter, compared to $109 million in the year-earlier quarter. When using shares outstanding as of October 16, 2018, during the third quarter, adjusted EBITDAX attributable to CNX shareholders1 per outstanding share grew 117% to $1.03, compared to $0.48 per outstanding share in the year-earlier quarter.

Consolidated: Includes 100% of the results of CNX, CNX Gathering LLC, and CNX Midstream Partners LP (NYSE: CNXM) ("CNXM") on a consolidated basis. The following results are reported on a consolidated basis:

The company reported net income of $147 million for the 2018 third quarter, compared to a net loss of $26 million in the third quarter of 2017. After adjusting for certain items, which are highlighted in the EBITDAX reconciliation table, the company had adjusted net income1 in the 2018 third quarter of $57 million, compared to an adjusted net loss1 of $41 million in the year-earlier quarter. Adjusted EBITDAX from continuing operations1 was $239 million for the 2018 third quarter, compared to $109 million in the year-earlier quarter. When using shares outstanding as of October 16, 2018, during the third quarter, adjusted EBITDAX from continuing operations1 per outstanding share grew 147% to $1.17, compared to $0.48 per outstanding share in the year-earlier quarter.

During the third quarter, capital expenditures were $297 million, compared to $150 million spent in the year-earlier quarter, driven largely by increased drilling and completion activity.

During the third quarter of 2018, CNX sold 119.0 Bcfe of natural gas, or an increase of 18% from the 101.0 Bcfe sold in the year-earlier quarter, driven primarily from a substantial increase in dry Utica Shale volumes from Monroe County, Ohio. Total quarterly production costs decreased to $1.97 per Mcfe, compared to the year-earlier quarter of $2.26 per Mcfe, through reductions in lease operating expense (LOE), transportation, gathering, and compression costs, and depreciation, depletion and amortization (DD&A). LOE improved due to reduced well tending, well service jobs, and water disposal costs. Transportation, gathering, and compression costs improved due in part to a drier production mix and higher sales volumes.

"During the third quarter, our team delivered targeted turn-in-lines (TILs) with continued strong well performance," commented Nicholas J. DeIuliis, president and CEO. "This operational execution led to expected production and lower cash costs, which when coupled with our hedge strategy, turned loose strong cash margins and cash flows, resulting in a lower leverage ratio that creates optionality for capital deployment. We used that optionality to reduce our share count at discounted prices. For the third quarter, we delivered strong EBITDAX per share growth of 147%, compared to the previous year's third quarter, and in the fourth quarter we expect even more meaningful EBITDAX per share results. Our focus remains on driving the NAV per share of the company through capital allocation optionality."

As previously announced, CNX closed on the sale of its Ohio Utica JV assets to Ascent Resources-Utica, LLC for approximately $400 million. CNX received approximately $381 million in total cash proceeds, of which the company received an initial deposit of approximately $40 million during the second quarter of 2018. The company retained all related production and EBITDAX until the closing date on August 31, 2018. The difference between the transaction value and the total cash received is a result of the adjustment to the April 1, 2018 effective date, as well as modest closing adjustments. The company deployed the cash proceeds through a combination of debt repayment and continued share repurchases in the quarter.

Since the October 2017 inception of the current repurchase program through the end of the third quarter, CNX has repurchased approximately 25.8 million shares, which includes 8.3 million shares repurchased within the third quarter, resulting in 205,147,139 shares outstanding at the end of the third quarter. As of October 16, 2018, CNX has repurchased a total of approximately 27.6 million shares for $425 million life-to-date, resulting in 203,599,810 shares outstanding, which is an approximately 12% reduction to total shares outstanding. The company has approximately $25 million remaining on its $450 million share repurchase program, which is set to expire on December 31, 2018. On October 26, 2018, the company's Board of Directors approved an additional $300 million share repurchase authorization, which is not subject to an expiration date.

1The terms "adjusted net income (loss) attributable to CNX shareholders," "adjusted EBITDAX attributable to CNX shareholders," "adjusted EBITDAX attributable to CNX Shareholders per outstanding share," "adjusted net income (loss)," "adjusted EBITDAX from continuing operations," and "adjusted EBITDAX from continuing operations per outstanding share," are non-GAAP financial measures, which are defined and reconciled to the GAAP net income below, under the caption "Non-GAAP Financial Measures."

Third Quarter Operations Summary:

In the third quarter of 2018, CNX operated four horizontal rigs and drilled 23 wells, which included 15 Marcellus Shale wells in Greene County, Pennsylvania; three dry Utica Shale wells in Westmoreland County, Pennsylvania; three dry Utica Shale wells in Monroe County, Ohio; and two Marcellus Shalewells in Tyler County, West Virginia. In Pennsylvania, CNX continues to gain drilling efficiencies in the dry Utica Shale due in part to a specially outfitted rig on the Shaw pad in Westmoreland County, Pennsylvania, and CNX will benefit from a similarly upgraded rig that the company expects in Greene County, Pennsylvania.

During the quarter, the company utilized three frac crews to complete 27 wells, which included 10 Marcellus Shale wells in Greene County, Pennsylvania; six dry Utica Shale wells in Monroe County, Ohio; five Marcellus Shale wells in Washington County, Pennsylvania; five Marcellus Shale wells in Tyler County, West Virginia; and one dry Utica Shale well in Westmoreland County, Pennsylvania. Also during the quarter, in the Shirley-Pennsboro area, CNX set a new company record by completing 2,600 feet per day, as well as completed a record 13 stages in a 24-hour period.

CNX turned-in-line 35 wells in the third quarter, which included 15 Marcellus Shale wells in Greene County, Pennsylvania; six Marcellus Shale wells in Washington County, Pennsylvania; five Marcellus Shale wells in Tyler County, West Virginia; four dry Utica Shale wells in Monroe County, Ohio; and five wet Utica Shale wells in Harrison County, Ohio, that were part of the former Ohio JV, and of which CNX had a 50% working interest. Following the closing of the JV divestiture on August 31, 2018, production from those five wells transferred to the buyer. The company expects production to peak for the year in the fourth quarter of 2018, driven by a number of the wells that the company turned-in-line in the later half of the third quarter and the approximately 16 wells expected to get turned-in-line in the fourth quarter of 2018.

Marcellus Shale volumes, including liquids, in the 2018 third quarter were 70.6 Bcfe, approximately 17% higher than the 60.4 Bcfe produced in the 2017 third quarter. Marcellus Shale total production costs were $2.05 per Mcfe in the just-ended quarter, which is a $0.15 per Mcfe decrease from the third quarter of 2017 of $2.20 per Mcfe, driven by decreases to LOE and DD&A. During the quarter, water disposal costs improved as the company reused more produced water for fracs, avoiding the need to send that water to disposal. DD&A improved due in part to increased capital efficiencies related to the Shirley-Pennsboro wells, and the production mix benefiting from lower West Virginia rates.

Utica Shale volumes, including liquids, in the 2018 third quarter were 33.6 Bcfe, approximately 67% higher than the 20.1 Bcfe in the year-earlier quarter, driven primarily from activity in Monroe County, Ohio, and Pennsylvania deep dry Utica Shale. The ramp in Pennsylvania deep dry Utica and Monroe County, Ohio, volumes also benefited Utica Shale total production costs, which were $1.39 per Mcfe in the just-ended quarter, or a $0.52 per Mcfe improvement from the third quarter of 2017 total production costs of $1.91 per Mcfe. After subtracting $0.83 per Mcfe in DD&A, total production cash costs for the Utica Shale were only $0.56 per Mcfe in the third quarter of 2018.

The average sales price of $2.92 per Mcfe, when combined with total production cash costs, before DD&A of $1.04 per Mcfe, resulted in a cash margin of $1.88 per Mcfe. When compared to the year-earlier quarter, cash margins increased due to improvements in average sales price and total production costs.

During the third quarter of 2018, total production cash costs improved to $1.04 per Mcfe, compared to $1.09 per Mcfe in the second quarter of 2018. Over the same period, CNX realized an improvement to lease operating expense, which was primarily driven by decreased water disposal as the company re-used more produced water for frac's.

Marketing Update:

For the third quarter of 2018, CNX's average sales price for natural gas, natural gas liquids (NGLs), oil, and condensate was $2.92 per Mcfe. CNX's average price for natural gas was $2.71 per Mcf for the quarter and, including cash settlements from hedging, was $2.74 per Mcf. The average realized price for all liquids for the third quarter of 2018 was $29.35 per barrel.

CNX's weighted average differential from NYMEX in the third quarter of 2018 was negative $0.36 per MMBtu. With an improved Henry Hub price coupled with an improved differential, CNX's average sales price for natural gas before hedging increased 6% to $2.71 per Mcf compared with the average sales price of $2.55 per Mcf in the second quarter of 2018. Including the impact of cash settlements from hedging, CNX's average sales price for natural gas was $0.04 per Mcf, or 1%, higher than the second quarter of 2018 and $0.36 per Mcf, or 15%, higher than last year's third quarter.

Guidance Update:

The midpoint of the 2018 production guidance remains unchanged, but the company narrows the range to 497.5-507.5 Bcfe, compared to the previous guidance of 490-515 Bcfe. CNX reaffirms net capital expenditure guidance of $900-$950 million. Due primarily to CNXM making a strategic land acquisition, system upsizing to accommodate higher throughput levels resulting from CNX's continued well improvements, and the additional acceleration of completing planned projects and construction activity from 2019 into 2018, CNXM's capital guidance for 2018 increased consolidated capital expenditures to $1,035-$1,095 million, compared to the previous guidance of $1,000-$1,060 million.

Due to consistent execution driving production, capital efficiencies driving costs lower, and a locked in hedge book, CNX expects 2018 consolidated adjusted EBITDAX to increase to $990-$1,010 million, compared to the previous guidance of $945-$970 million. Assuming the same outstanding share count as of October 16, 2018, the company expects 2018 consolidated adjusted EBITDAX per outstanding share to be $4.91, based on the midpoint of the guidance range.

Note: In regard to guidance, CNX is unable to provide a reconciliation of projected 2018 consolidated adjusted EBITDAX to projected net income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing, and potential significance of certain income statement items.

During the third quarter of 2018, CNX added additional NYMEX natural gas hedges of 28.8 Bcf, 31.3 Bcf, 9.3 Bcf, 6.8 Bcf, and 47.6 Bcf for 2019, 2020, 2021, 2022, and 2023, respectively. To help mitigate basis exposure on NYMEX hedges, in the third quarter CNX added .1 Bcf, 31.6 Bcf, 43.8 Bcf, 3.4 Bcf, and 20.8 Bcf of basis hedges for 2018, 2019, 2020, 2022, and 2023, respectively.

Finance:

At September 30, 2018, CNX's net debt attributable to CNX Shareholders to trailing-twelve-months (TTM) adjusted EBITDAX attributable to CNX Shareholders was 2.26x. On a consolidated basis, CNX's net debt to TTM adjusted EBITDAX from continuing operations was 2.36x. Driven in part by the production ramp that the company expects will peak in the fourth quarter of 2018, CNX expects its leverage ratio to decrease further, outside of additional share count reductions.

At September 30, 2018, the company's credit facility had $439 million of borrowings outstanding and $251 million of letters of credit outstanding, leaving $1,410 million of unused capacity. In addition, CNX holds 21.7 million CNXM limited partnership units with a current market value of approximately $414 million as of October 16, 2018.

During the third quarter, CNX purchased the remaining $200 million of its outstanding 8.0% senior notes due in April 2023. As part of this transaction, a loss of $15 million was included in Loss on Debt Extinguishment on the Consolidated Statements of Income. The company expects the transaction to result in approximately $7 million in annual interest savings. In total, the company expects to realize approximately $18 million in annual interest savings after repurchasing $500 million of its outstanding 8.0% senior notes, further driving the company's NAV per share.

About CNX

CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2017, CNX had 7.6 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.