Raymond James 35 th Annual Institutional Investors Conference - PowerPoint PPT Presentation

Raymond James 35 th Annual Institutional Investors Conference March 5, 2014

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 are described in detail under (i) the captions "Forward Looking Statements" in our earnings press release issued today and (ii) "Risk Factors" in CONSOL Energy Inc. ’s annual report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission (SEC), as updated by any subsequent 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. A registration statement relating to the securities of the MLP that would be sold in the offering has not been filed with the Securities and Exchange Commission or become effective. This presentation does not constitute an offer to sell or a solicitation of offers to buy securities of CONSOL Energy Inc. This presentation is being made pursuant to, and in accordance with, Rule 135 under the Securities Act of 1933. 2

Appalachian E&P Transformation Creating Value CONSOL acquires CONSOL announces gas 90,000 acres in W. Va. reserves increase 44% CONSOL announces sale of five mines CONSOL recruits new COO – Gas CONSOL announces CONSOL announces Upper Devonian possible structural changes success Premier E&P entity backed by best-in-class coal free cash flow generator. 3

2013 Was a Year of Accomplishment  Upgraded the C-suite with three executives having skill sets needed for the company’s transformation  Ended 2013 with a record eight rigs running in the Marcellus Shale  Improved our capital efficiencies  Reduced drilling cost per thousand lateral feet by nearly 30%  Implemented enhanced well completion techniques  Rebalanced our asset portfolio  Sold five West Virginia mines for $4.5 billion in value  Meaningfully de-levered our balance sheet  Invested nearly $1 billion in gas 4

Strong Liquidity Position of $2.1 Billion  Cash on hand of $327 million  Accounts receivable securitization and revolving credit facilities of $1.8 billion Amount/ Amount Letters Amount Capacity Drawn December 31, 2013 ($ in million) of Credit Available Cash and Cash Equivalents $327 $0 $0 $327 Accounts Receivable Securitization $115 $0 $66 $49 Revolving Credit Facilities $2,000 $0 $295 $1,705 Total $2,442 $0 $361 $2,081 For 2014, CONSOL’s liquidity could benefit from:  A cash tax refund of $100-150 million in 1H 2014  A joint venture drilling carry of up to $220 million, if NYMEX remains above $4.00 per MMBtu  The monetization of midstream assets 5

Pittsburgh Airport: ~9,000 Contiguous Acres Marcellus Shale, Upper Devonian, and Dry Utica Shale Potential Economics justified on 6 pads with up to 49 Marcellus Shale wells. Additional value from potential Upper Devonian and Utica Shale wells. First Marcellus Shale well to be drilled by February 2015. 6

Dominion Transmission: ~90,000 Contiguous Acres West Virginia Fink-Kennedy ~46,000 net Racket- acres Newberne: (wet gas) ~9,000 net acres (wet gas) Lost Creek ~33,000 net acres (dry gas) Farm-in acquired for only $2,000 per acre. Acreage allows for +350 Marcellus Shale wells, with stacked play potential. CONSOL now has 228,000 net acres in this portion of West Virginia. 7

Projected Dual Pay - The Appeal of Monroe County  ~11k highly contiguous acres  100% WI to CONSOL Energy  Acquired for dual wet Marcellus and dry Utica development  Very close to water, pipelines, and gas processing  Marcellus 5,700’ TVD Multiple cost sharing opportunities include: ─ Roads ─ Locations ─ Pipelines ─ Water Systems Utica 10,200’ TVD  Built in ethane solution  11k acres effectively becomes 22k acres! Valuable land position built by CONSOL from projecting Marcellus Shale and early Utica Shale results. 8

Recent IP rates in and around Monroe County, OH 30.3 MMcf/d Avg 24-hr rate 32.5 MMcf/d Avg 24-hr rate Recent nearby Utica Shale and Marcellus Shale IP rates have been very encouraging. 9

Recent West Virginia Results are Impressive PHL13 (*completed using RCS/SSL) 6 wells – 7,999’ average length 13.0 MMcfd – 24 hr IP on first two wells, all wells IP’d greater than 10.0 MMcfd AUD3 1 well – 8,396’ 6.95 MMcfd – 24 hour IP CENT3 1 well – 7,470’ 8.5 MMcfd – 24 hour IP Recent results by CONSOL Energy have significantly de-risked the area. 10

Improved Marcellus Drilling and Completion Results 2011 2012 2013 Drilling Summary Wells TD'd 78 64 46 Lateral Ft 300,466 328,428 366,615 Total MD 92,264' 794,098' 730,316' Average Lateral 3,853' 5,514' 7,970' Average TMD 11,824' 13,280' 15,876' Average Drill Cost $180/ft $220/ft $190/ft Average Lateral Cost $552/ft $529/ft $378/ft Completions Summary 2011 2012 2013 Wells Completed 57 51 59 Lateral Ft Completed 188,800 270,256 333,895 Total Stages 684 940 1,527 Average Stg/Well 12 18 26 Average Stage Cost $205k $184k $193k CONSOL was able to drill an 8,000-ft lateral in 2013 for the same cost as a 5,500-ft. lateral in 2012, while average stages per well have more than doubled. 11

Pre vs. Post RCS/SSL Results  SWPA are actual results - Seeing 10mmcf/d 30-day average production results in area  W.Va. results are for the PHL pad Only 2 wells of data due to curtailment resulting from too much production -  In CPA, post RCS/SSL results are theoretical since program has been focused on SWPA and W.Va. CPA W.Va. SWPA Without RCS/SSL Average 24-hr IP (mmcf/d) 6.7 7.9 8.4 EUR / 1,000 feet 1.2 1.3 1.6 With RCS / SSL Average 24-hr IP (mmcf/d) 9.5 11.0 12.0 EUR / 1,000 feet 1.4 1.7 2.0 CONSOL Energy’s proved reserves at year -end 2013 assume very little from these enhanced completion techniques. 12

Upper Devonian Exploration Well – NV39F 5 Underlying Marcellus Wells on Pad PA OH MD CONSOL WV Nineveh Core Area VA  Washington County, PA Wet Gas Dry Gas Drilled lateral length of 4,889’ ─ Frac’d 17 stages in Burkett Shale ─ ─ Tested 3.0 MMcfd, TIL 6/21/13 ─ Currently producing 2.9 MMcfd ─ Great impact on underlying Marcellus wells that tested 10.0 MMcfd and 9.0 MMcfd ─ Planning 5+ Burkett Shale and at least two Rhinestreet Shale wells in 2014 CONSOL was perhaps the first to drill a Burkett well and perform a zipper frac with neighboring Marcellus Shale wells. 13

Upper Devonian Burkett Shale Sweet Spot CONSOL is well situated within what could be the best part of the Burkett fairway, with an estimated 345,000 net acres of potential. 14

Increased Proved Reserves by 44% (in Bcfe) 105 (172 ) 6,000 172 5,731 1,633 5,000 3,993 4,000 3,000 44% increase in proved reserves  87% increase in Marcellus Shale  2,000 proved reserves 948% reserve replacement  1,000 0 YE 2012 Extensions & Performance Price Revisions Production YE 2013 Discoveries Revisions & Plan Changes CONSOL adds 1.63 Tcfe from drilling in 2013; achieves drill bit finding cost of $0.42 per mcfe. Upside potential in 2014 from enhanced completion techniques. 15 Source: CONSOL filings.