FBR Capital Markets & Co.: Boston Roadshow December 12-13, 2013 - PowerPoint PPT Presentation

FBR Capital Markets & Co.: Boston Roadshow December 12-13, 2013

Cautionary Language This presentation contains statements, estimates and projections which are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended). Such statements include estimates of reserves and resources, projections and estimates concerning the timing and rates of return of future projects, and our future production, revenues, income and capital spending. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those statements, estimates and projections. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of future actual results. Factors that could cause future actual results to differ from the forward-looking statements include risks, contingencies and uncertainties that related to, among other matters, the following with respect to the proposed transaction: The ability to obtain regulatory approvals for the transaction on the proposed terms and schedule; disruption to our business, including customer, employee and supplier relationships resulting from this transaction; risks that conditions to closing may not be satisfied; and the impact of the transaction on our future operating results, our capital investment program, and our dividend. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in CONSOL Energy Inc. ’s annual report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission (SEC), as updated by any subsequent quarterly reports on Form 10-Qs. The forward-looking statements in this presentation speak only as of the date of this presentation; we disclaim any obligation to update the statements, and we caution you not to rely on them unduly. The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible oil and gas reserves that a company anticipates as of a given date to be economically and legally producible and deliverable by application of development projects to known accumulations. We may use certain terms in this press release, such as EUR (estimated ultimate recovery), unproved reserves and total resource potential, that the SEC's rules strictly prohibit us from including in filings with the SEC. These measures are by their nature more speculative than estimates of reserves prepared in accordance with SEC definitions and guidelines and accordingly are less certain. We also note that the SEC strictly prohibits us from aggregating proved, probable and possible reserves in filings with the SEC due to the different levels of certainty associated with each reserve category. Except for proved reserve data, the information included in this presentation is based on a summary review of the title to the gas rights we hold, as well as a summary review of the title to the coal from which many of our coalbed methane rights derive. As is customary in the gas industry, prior to the commencement of gas drilling operations on our properties, we conduct a thorough title examination and perform curative work with respect to significant defects. We are typically responsible for curing any title defects at our expense. This curative work may include the acquisition of additional property rights in order to perfect our ownership for development and production of the gas estate. This presentation does not constitute an offer to sell or a solicitation of offers to buy securities of CONSOL Energy Inc. 2

CONSOL Energy Overview Core Values  Safety In 2012, CONSOL’s Coal Division saw safety exceptions drop 10%, from 150 to 134 ─ In 2012, CONSOL’s Gas Division worked the entire year without having recorded a lost -time ─ incident ─ CONSOL has invested approximately $1.2 billion since 2006 on coal-related safety projects Commitment to “Absolute Zero” ─  Compliance ─ Coal and Gas Divisions saw an improvement in compliance of 11% and 53%, respectively, in 2012 when compared to 2011 ─ 2012 Corporate Responsibility Report: http://www.consolenergy.com/CorporateResponsibilityReport/2012New/index.html  Continuous Improvement ─ Rebalancing portfolio: $350 million in asset sales for 2012 ─ Average drilling lateral length increase and average cost per stage decrease 3

Strategy: Evolution Continues 4

CONSOL Energy’s Evolution The Past 15 Years CONSOL Energy Equity CNX Gas (Adjusted Closing Price - NYSE) listed on $3.5B $4.0B NYSE $120 Acquisition of Marcellus & CONSOL Energy January 2006 Dominion Utica acreage IPO Resources joint ventures April 1999 CONSOL April 2010 September 2011 implements Absolute ZERO $100 $0.4B $1.0B March 2007 Monetize non- CNX Gas CNX Gas core coal $0.3B minority interest private reserves AMVEST buyback placement acquisition 2012 $80 June 2010 August 2005 August 2007 $0.2B $3.5B Antero royalty CONSOL sale Energy announces $60 September 2011 sale of five mines DuPont/Conoco sell October 2013 RWE fully divests CONSOL to RWE CNX investment 1995-1998 2004 $40 $20 CNX authorized $0.5B share repurchase September 2009 - 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 CNX has actively managed to high-grade the asset base 5

Strategy: Evolution Continues  Grow natural gas production ─ 30% annual production increase through 2016 ─ Develop our liquids profile within our footprint ─ High-grade our acreage position  Aggressively manage coal margins and maintenance capital with retained mines ─ BMX mine comes online at the end of 1Q14  No transformational acquisitions ─ CONSOL is focusing on our organic growth  Constantly close the value gap ─ Continue to examine opportunities to high-grade our portfolio of assets ─ Includes non-core and infrastructure assets 6

Transaction Overview 7

Transaction Summary  Divesting: 5 West Virginia longwall thermal coal mines, select reserves, and river division ─ Total coal reserves of 1.1 billion tons, and production of approximately 30 million tons ─ Mines have multi-year contracts, long-lived reserves, and low capital requirements  CONSOL receives $3.5 billion in value ─ Cash of $850 million ─ Future payments with an NPV of $184 million ─ Retention of royalty on select reserves, certain water treatment payments, and tolling fees at CONSOL’s Baltimore Terminal  Buyer acquires $2.4 billion in balance sheet liabilities ─ Includes $2.1 billion in other postretirement benefit plans (OPEB)  CONSOL currently contributes $5.50 per hour, or about $33 million per year ─ If this payment stream were to be capitalized, it would have a present value of approximately $941 million, assuming a discount rate of 4.02% 8

Retained Assets  Oil and Gas operations intact  Total coal reserves of 3.1 billion tons ─ Our lower sulfur and lower cost assets  Infrastructure Assets: Baltimore Terminal, midstream, and prep plants 12/31/2012 Approximate Reserves 2014 Production 2012 Sales Revenues Mine (in million tons) Mine Type (in million tons) ($ in millions) Logistics % Sulfur Northern Appalachian Bailey 395 2 Longwall 10.0 $650 Rail 2.0 - 2.5% Enlow Fork 260 2 Longwall 10.0 $640 Rail 2.0 - 2.5% BMX 180 1 Longwall 4.0 N/A Rail 2.0 - 2.5% WAE 180 CM 0.1 $17 Rail 1.0% Central Appalachian Buchanan 98 1 Longwall 5.0 $503 Rail 0.6 - 0.8% Amonate 21 HWM, CM - $3 Rail 0.8% Fola 73 Surface, HWM, CM, Drag - $113 Rail, Truck 1.2% Miller Creek 22 Surface, HWM, CM, Drag 2.0 $205 Rail, Truck 0.9 - 1.0% Other 1,871 Total 3,100 31.1 9

Strategy Going Forward Financial Focus to Fund Gas Production Growth  Transaction generates $850 million in cash ─ Cash is expected to fund natural gas production growth ─ Expected to generate a cash tax benefit  Transaction reduces coal MOP capex to $100 - $110 million per year, going forward ─ Retained coal mines, as a group, are the most profitable  Realignment of dividend will also provide an additional $58 million per year in funding ─ Regular quarterly dividend reduced by 50%, to $0.0625 per share  In a separate action following the sale, CONSOL will be reducing its administrative expenses by approximately $65 million per year After the BMX Mine is completed in April 2014, nearly all of CONSOL Energy’s production growth will occur in natural gas 10

Gas Division Overview 11

Gas Division Production Results and Forecast Gas and Liquids Production (Bcfe)  CONSOL is rapidly growing its natural gas production Total 2013 natural gas production guidance: 170 – 172 Bcfe ─ Total 2014 natural gas production guidance: 210 – 225 Bcfe (23 – 32% growth) ─ ─ Total 2015 and 2016 natural gas production guidance: 30% per year 400 Natural Gas Production +30% 300 +30% 210.0 - 225.0 Bcfe 200 170.0 - 172.0 156.3 153.5 127.9 94.4 100 76.6 58.2 56.1 48.4 48.6 44.5 - 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E Source: Company filings. Note: Acquired ~23 Bcfe of Conventional gas production from Dominion E&P in 2010. Divested ~11 Bcfe through the Marcellus JV with Noble Energy and the Antero 12 Royalty Interest transactions in 2011.