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CNX Gas Reports Quarterly Net Income of $41.1 Million, or $0.27 per Share; Annual 2009 Net Income of $164.5 million, or $1.09 per Share; CNX Gas Reports Record Quarterly Production of 25.1 Bcf; Record Annual 2009 Production of 94.4 Bcf, up 23% from 2008
PITTSBURGH, Jan 28, 2010 /PRNewswire via COMTEX/ -- CNX Gas Corporation (NYSE: CXG), a leading Appalachian producer, reported net income attributable to CNX Gas shareholders of $41.1 million, or $0.27 per diluted share, for the quarter ended December 31, 2009. This compares to $57.5 million, or $0.38 per diluted share, for the quarter ended December 31, 2008. Annual 2009 net income attributable to CNX Gas shareholders was $164.5 million, or $1.09 per share, compared to $239.1 million, or $1.58 per share, in 2008.

Production was 25.1 billion cubic feet (Bcf), or 273 million cubic feet (MMcf) per day, for the quarter ended December 31, 2009. This was the third consecutive quarterly production record, and 13% higher than the 22.2 Bcf, or 242 MMcf per day, for the year-ago quarter. Annual 2009 production was 94.4 Bcf, an increase of 23% over the 76.6 Bcf produced in 2008.

"CNX Gas ended 2009 on a very strong footing. Once again, we set another quarterly production record, and our employees continued working safely, having passed the 4-million hour mark without incurring a lost-time incident," said J. Brett Harvey, chairman and chief executive officer. "With our increasing Virginia coalbed methane production and our continued Marcellus Shale success, we expect 2010 production of 100 Bcf. To support this goal, we have contracted for a second horizontal rig to begin drilling in the Marcellus Shale on March 1.

"CNX Gas increased production by 23% in 2009 while paying down about $15 million of debt. And as we reported earlier this week, we also increased our proved reserves in 2009 by one-half trillion cubic feet (Tcf), or 34%, to 1.9 Tcf. When viewed together with our 2009 return on capital employed of 10.6% on an after-tax basis, there is no doubt that CNX Gas is a premier company in the E&P industry."



                                          TABLE 1
                   FINANCIAL AND OPERATIONAL RESULTS - Period-To-Period



                                                Twelve Months  Twelve Months
                       Quarter       Quarter        Ended          Ended
                       -------       -------     -------------  -------------
                        Ended          Ended     Dec. 31, 2009  Dec. 31, 2008
                        -----          -----     -------------  -------------
                   Dec. 31, 2009  Dec. 31, 2008
                   -------------  -------------
    Total Revenue          $177.8        $206.1         $683.4         $789.4
     and Other
      Income               ------        ------         ------         ------
     ---------
    Net Income
     attributable           $41.1         $57.5         $164.5         $239.1
     to CNX Gas
      shareholders          -----         -----         ------         ------
     -------------
    Earnings per
     Share -
     Diluted                $0.27         $0.38          $1.09          $1.58
    ------------            -----         -----          -----          -----
    Net Cash from
     Operating
     Activities             $80.7        $140.5         $360.2         $447.4
    -------------           -----        ------         ------         ------
    EBITDA                  $93.4        $113.7         $377.9         $470.2
    ------                  -----        ------         ------         ------
    EBIT                    $64.8         $94.1         $270.6         $400.1
    ----                    -----         -----         ------         ------
    Total Period
     Production
     (Bcf)                   25.1          22.2           94.4           76.6
    ------------             ----          ----           ----           ----
    Average Daily
     Production
     (MMcf)                   273           242            259            209
    -------------             ---           ---            ---            ---
    Capital
     Expenditures           $63.4        $154.5         $336.4         $560.7
    -------------           -----        ------         ------         ------



               Financial results are in millions of dollars except per share
                     amounts. Production results are net of royalties.


Quarter-to-Quarter Analysis

The average price realized for the company's gas production was $6.47 per Mcf for the quarter ended December 31, 2009, or $1.88 lower than the $8.35 per Mcf received for the quarter ended December 31, 2008. The average realized price for the just-ended quarter included 15.3 Bcf hedged at $7.90 per Mcf.

All-in unit costs for company production, exclusive of royalties, were $3.47 per Mcf in the just-ended quarter, or a decrease of $0.13 from the $3.60 per Mcf for the quarter ended December 31, 2008.

Pre-tax unit margins for company production were $3.00 per Mcf in the just-ended quarter, a decrease of $1.75 from the $4.75 per Mcf in the quarter ended December 31, 2008.



                                       TABLE 2
            PRICE AND COST DATA PER NET MCF - Period-To-Period Comparison



                                                   Twelve Months Twelve Months
                           Quarter      Quarter        Ended         Ended
                           -------      -------    ------------- -------------
                            Ended         Ended    Dec. 31, 2009 Dec. 31, 2008
                            -----         -----    ------------- -------------
                           Dec. 31,
                             2009    Dec. 31, 2008
                          ---------  -------------


    Average Sales Price        $6.47         $8.35         $6.68         $8.99
    -------------------        -----         -----         -----         -----


    Costs - Production
    ------------------
       Lifting                 $0.54         $0.60         $0.52         $0.63
       -------                 -----         -----         -----         -----
       Production Taxes        $0.10         $0.19         $0.06         $0.26
       ----------------        -----         -----         -----         -----
       DD&A                    $0.92         $0.67         $0.91         $0.66
       ----                    -----         -----         -----         -----
    Total Production
     Costs                     $1.56         $1.46         $1.49         $1.55
    ----------------           -----         -----         -----         -----


    Costs - Gathering
    -----------------
       Operating Costs         $0.81         $0.92         $0.78         $0.94
       ---------------         -----         -----         -----         -----
       Transportation          $0.25         $0.19         $0.23         $0.15
       --------------          -----         -----         -----         -----
       DD&A                    $0.22         $0.21         $0.23         $0.25
       ----                    -----         -----         -----         -----
    Total Gathering Costs      $1.28         $1.32         $1.24         $1.34
    ---------------------      -----         -----         -----         -----


    Costs --
     Administration            $0.63         $0.82         $0.71         $0.77
    ---------------            -----         -----         -----         -----


    Total Costs                $3.47         $3.60         $3.44         $3.66
    -----------                -----         -----         -----         -----


    Margin                     $3.00         $4.75         $3.24         $5.33
    ------                     -----         -----         -----         -----



        Note: Costs -- Administration exclude incentive compensation and other
                                  corporate items.


Unit lifting costs were lower in the just-ended quarter, in part, because of fewer workovers conducted. Water volumes from CBM production were down, as were water handling rates due to reduced drilling. Lower water volumes also contributed to lower road maintenance costs. Higher gas production volumes also helped to lower unit lifting costs.

Unit production taxes were much lower in the just-ended quarter because they are calculated on average realized price before the effect of hedging. Due to market conditions, these prices were significantly lower in the just-ended quarter. Unit production taxes were also lower because of a revised estimate of a pending litigation settlement.

Unit production DD&A was higher in the just-ended quarter as more plant assets in Northern Appalachia were placed into service.

Higher production volumes helped to lower unit gathering operating costs.

Unit firm transportation costs have increased due to acquiring additional capacity in the Northern Appalachian region in anticipation of greater production volumes.

Safety

During the fourth quarter, CNX Gas employees crossed the 4-million hour mark without incurring a lost time accident. As of December 31, the cumulative time worked by employees without a lost time incident was nearly 4.1 million hours.

Central Appalachia Operations

Total production in Central Appalachia, which includes Virginia CBM and Chattanooga Shale, was 19.2 Bcf in the quarter ended December 31, 2009. This was 1.2 Bcf higher than the 18.0 Bcf produced in the quarter ended December 31, 2008. The Central Appalachia December run rate was 199 MMcf per day.

CNX Gas drilled 201 vertical frac wells in its Virginia CBM Operations during the year, exceeding the goal of 175. CNX Gas expects to drill 175 wells in Virginia in 2010 with a drilling budget of $50 million.

For 2010, CNX Gas expects to drill 25 Chattanooga Shale wells for about $28 million, and five Huron Shale wells for about $12 million.

Northern Appalachia Operations

Total production in Northern Appalachia, which includes Mountaineer CBM, Nittany CBM, and Marcellus Shale, was 5.9 Bcf in the quarter ended December 31, 2009. This was 1.7 Bcf more than the 4.2 Bcf produced in the quarter ended December 31, 2008. The Northern Appalachia December run rate was 63 MMcf per day.

Of this Northern Appalachian production, 1.5 Bcf was from the Marcellus Shale in the just-ended quarter, versus less than 0.1 Bcf in the same quarter last year.

No coalbed methane wells were drilled in Northern Appalachia in the just-ended quarter. For 2010, CNX Gas expects to drill 5 horizontal CBM wells in Mountaineer and some ancillary wells for about $17 million.

In the Marcellus Shale, CNX Gas drilled, completed, and brought online one vertical well and two horizontal wells. The first of the two horizontal wells, GH 11C CV, has shown a 30-day daily production rate of 1.6 MMcf. This well has only 1,600 lateral feet, due to acreage constraints. The second horizontal well, GH 11B CV, is currently producing from only the first two frac stages at a 30-day production rate of 0.8 MMcf. This 1,800-ft lateral well is expected to see more normal levels of production when the remaining 3 stages are fraced.

For the entire horizontal Marcellus Shale program to date, 13 horizontal wells have been drilled. The reserves associated with the first 11 wells total 35.6 Bcf, or about 3.3 Bcf per well. The laterals on these wells averaged less than 2,000 feet.

Upcoming drilling in the Marcellus Shale is expected to be predominantly horizontal and on multiple-well pads, with laterals closer to 3,000 feet. For 2010, the company expects to drill approximately two dozen horizontal wells, with a drilling budget of about $110 million.

CNX Gas successfully increased its acreage with Marcellus Shale potential by 20,000 in the quarter, to a year-end total of 250,000. Of this, approximately 170,000 acres is considered to be Tier 1. The company remains committed to expanding its footprint to 400,000 acres.

Financial Update

The company continues to monitor and evaluate capital spending to ensure adequate liquidity and to preserve options for possible external investment. With regard to capital, CNX Gas intends to spend largely within its net cash from operating activities for 2010. Capital expenditures are targeted for $400 million, with $221 for drilling, $121 million for midstream, and the remainder for land.

The company ended the quarter with $57.8 million drawn on its $200 million credit facility. The amount drawn is down $15.2 million from September 30, 2009. Cash on hand was $1.1 million.

CNX Gas also has outstanding letters of credit of $14.9 million. Total funds available are $128.4 million.

Return on capital employed for the year was 10.6%, on an after tax basis, compared to 18.5% in 2008.

Guidance

The 2010 production guidance remains at 100 Bcf. CNX Gas expects to be able to achieve this production by adding a second horizontal rig drilling in the Marcellus Shale on March 1, the continued drilling of CBM frac wells in Virginia, and some ancillary drilling. While 2010 plans could be refined later in the year, the company views this as a realistic starting point.

Total hedged production in the 2010 first quarter is 13.0 Bcf, at an average price of $8.76 per Mcf.



                                    TABLE 3
                                   GUIDANCE



                            Actual 2009   2010    2011    2012
                            -----------   ----    ----    ----
    Total Yearly Production
     (Bcf)                          94.4   100  NA      NA
    -----------------------         ----   --- ---     ---
    Volumes Hedged (Bcf)            51.6  47.5    22.6    15.1
    --------------------            ----  ----    ----    ----
    Average Hedge Price
     ($/Mcf)                       $8.76 $7.88   $6.84   $6.84
    -------------------            ----- -----   -----   -----



Economic Outlook

The U.S. economy began growing in the third quarter of 2009, at an annual rate of 2.2% and continued growing in the fourth quarter. Due to the significant fiscal spending and relaxed monetary policy in the United States, a modest recovery appears likely to continue in the U.S. through 2010. This should lead to an increase in demand for energy products from industrial customers, power generators and steel producers. Depending on the pace and sustainability of the recovery, we believe substantial opportunities exist for our gas business.

Natural Gas Outlook

At the onset of the winter heating season, natural gas in storage fields was at record high levels. Because of much colder than normal weather in much of the U.S. from mid-December through mid-January, gas in storage has been drawn down to normal levels. The economic recovery is expected to positively affect industrial and commercial demand. Gas prices have now strengthened to the point where it makes sense for CNX Gas to add a second horizontal rig to its Marcellus Shale drilling program for 2010. CNX Gas, with its low costs and rising production volumes, is expected to benefit from this improved pricing.

Conference Call Information

CNX Gas and CONSOL Energy will co-host a conference call today at 10:00 a.m. Eastern Standard Time to discuss the company's fourth quarter results. The teleconference can be heard "live" at the investor relations portion of the company web site: www.cnxgas.com.

Definition: EBIT is defined as earnings (excluding cumulative effect of accounting change) before deducting net interest expense (interest expense less interest income) and income taxes. EBITDA is defined as earnings (excluding cumulative effect of accounting change) before deducting net interest expense (interest expense less interest income), income taxes, and depreciation, depletion and amortization. Although EBIT and EBITDA are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that they are useful to an investor in evaluating CNX Gas because they are widely used to evaluate a company's operating performance before debt expense and its cash flow. EBIT and EBITDA do not purport to represent cash generated by operating activities and should not be considered in isolation or as a substitute for measures of performance in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT and EBITDA identically, the presentation here may not be comparable to similarly titled measures of other companies. Reconciliation of EBITDA and EBIT to the income statement is as follows:



                     CNX Gas
           EBIT & EBITDA Reconciliation
                  (000) Omitted



                                            Twelve     Twelve
                                            Months     Months
                      Quarter   Quarter      Ended      Ended
                                             Dec.       Dec.
                                               31,        31,
                      -------   -------       2009       2008
                       Ended     Ended       ----       ----
                       -----     -----
                       Dec.       Dec.
                        31,        31,
                        2009       2008
                      -----      -----
    Net Income
     attributable
     to               $41,111    $57,482   $164,462   $239,073
     CNX Gas
      shareholders    -------    -------   --------   --------
     -------------
    Add:
     Interest
     Expense            1,815      2,253      7,568      7,820
    ---------           -----      -----      -----      -----
    Less:
     Interest
     Income                (4)       (42)       (64)      (400)
    ---------             ---        ---        ---       ----
    Add:   Income
     Taxes             21,856     34,369     98,636    153,656
    -------------      ------     ------     ------    -------
    Earnings
     Before
     Interest          64,778     94,062    270,602    400,149
    ---------          ------     ------    -------    -------
    & Taxes (EBIT)
    --------------
    Add:
     Depreciation,
     Depletion,        28,670     19,670    107,251     70,010
     & Amortization    ------     ------    -------     ------
     --------------
    EBITDA            $93,448   $113,732   $377,853   $470,159
    ------            =======   ========   ========   ========





                                    CNX Gas
                Capital Employed and Return on Capital Employed
                                 (000) Omitted


Capital employed is a measure of net investment. When viewed from the perspective of how the capital is used, it includes CNX Gas' property, plant, and equipment and other assets less liabilities.





                                                   As of          As of
                                                   -----          -----
    Capital Employed                           December 31,   December 31,
    ----------------                           ------------   ------------
                                                        2009           2008
                                                        ----            ---


    Total assets                                  $2,171,382     $2,124,973
    ------------                                  ----------     ----------
    Less liabilities:
    -----------------
       Total current liabilities (other than
        current portion of indebtedness)
       -------------------------------------
                                                    (150,778)      (199,888)
                                                    --------       --------
       Total long-term liabilities (other than
        indebtedness)                               (381,548)      (384,367)
       ---------------------------------------      --------       --------
    Total Capital Employed                        $1,639,056     $1,540,718
    ----------------------                        ==========     ==========



Return on average capital employed (ROCE) is a performance measure ratio. ROCE is defined as net income plus after-tax interest expense, divided by average capital employed. Below is a calculation of ROCE for the year 2009.





                                               Year Ended
                                               ----------
    Return on Capital Employed               December 31,
    --------------------------               ------------
                                                      2009
                                                      ----


    Net Income                                    $164,462
    ----------                                    --------
    Financing costs (after-tax):                    (4,731)
    ----------------------------                    ------
    Earnings excluding financing costs            $169,193
    ----------------------------------            --------
    Average capital employed                    $1,589,887
    ------------------------                    ----------
    Return on average capital employed                10.6%
    ----------------------------------                ----



Although ROCE is not a measure of performance calculated in accordance with generally accepted accounting principles, management believes that ROCE is a useful measure because it indicates the return on all capital, which includes equity and debt, employed in the business. Management believes that ROCE is an additional measure of efficiency when considered in conjunction with return on equity, which measures the return on only the shareholders' equity component of total capital employed.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

Various statements in this document, including those that express a belief, expectation, or intention, as well as those that are not statements of historical fact, are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995). The forward-looking statements may include projections and estimates concerning the timing and success of specific projects, our future production, revenues, income and capital spending. When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "would," "will," "estimate," "plan," "predict," "project," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this document speak only as of the date of this document; we disclaim any obligation to update these statements unless required by securities law, and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, uncertainties and contingencies include, but are not limited to: our business strategy; our financial position, cash flow and liquidity; the deteriorating economic conditions in the United States and globally; declines in the prices we receive for our gas affecting our operating results and cash flow; uncertainties in estimating our gas reserves and replacing our gas reserves; uncertainties in exploring for and producing gas; our inability to obtain additional financing necessary in order to fund our operations, capital expenditures and to meet our other obligations; disruptions to, capacity constraints in or other limitations on the pipeline systems which deliver our gas; the cost of disposing of water from our coalbed methane and Marcellus Shale gas wells; the cost of removing impurities from the gas we produce; the availability of personnel and equipment, including our inability to retain and attract key personnel; increased costs; the effects of government regulation, permitting and other legal requirements; legal uncertainties regarding the ownership of the coalbed methane estate, and costs associated with perfecting title for gas rights in some of our properties; litigation concerning real property rights, intellectual property rights, royalty calculations and other matters; our relationships and arrangements with CONSOL Energy; and other factors discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008 under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.



    Investor Contact:  Dan Zajdel at (724) 485-4169
    Media Contact: Joe Cerenzia at (724) 485-4062


                                      CNX GAS CORPORATION AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF INCOME
                                                  (Unaudited)
                                 (Dollars in thousands, except per share data)

                                                 For the Three
                                                 Months Ended
                                                 December 31,
                                                 ------------
                                                2009            2008
                                                ----            ----
     Revenue and Other Income:
        Outside Sales                       $161,692        $184,169
        Related Party Sales                      919           1,497
        Royalty Interest Gas Sales            11,210          17,381
        Purchased Gas Sales                    2,938           1,604
        Other Income                           1,040           1,401
                                               -----           -----
          Total Revenue and Other Income     177,799         206,052
     Costs and Expenses:
        Lifting Costs                         16,056          17,477
        Gathering and Compression Costs       26,552          24,718
        Royalty Interest Gas Costs             9,073          14,984
        Purchased Gas Costs                    3,419           1,568
        Exploration and Other Costs            2,152           3,986
        General and Administrative            15,958          18,181
        Other Corporate Expenses              11,352          11,364
        Depreciation, Depletion and
          Amortization                        28,670          19,670
        Interest Expense                       1,815           2,253
                                               -----           -----
          Total Costs and Expenses           115,047         114,201
                                             -------         -------
     Earnings Before Income Taxes and
        Noncontrolling Interest               62,752          91,851
     Noncontrolling Interest                    (215)
                                                ----
     Earnings Before Income Taxes             62,967          91,851
     Income Taxes                             21,856          34,369
                                              ------          ------
     Net Income Attributable to CNX Gas
      Shareholders                           $41,111         $57,482
                                             =======         =======
     Earnings Per Share:
        Basic                                  $0.27           $0.38
                                               =====           =====
        Dilutive                               $0.27           $0.38
                                               =====           =====

     Weighted Average Number of
       Common Shares Outstanding:
        Basic                            150,985,412     150,971,636
                                         ===========     ===========
        Dilutive                         151,397,310     151,240,785
                                         ===========     ===========





                                                 For the Twelve
                                                  Months Ended
                                                  December 31,
                                                  ------------
                                                2009            2008
                                                ----            ----
     Revenue and Other Income:
        Outside Sales                       $627,419        $678,793
        Related Party Sales                    3,179           9,532
        Royalty Interest Gas Sales            40,951          79,302
        Purchased Gas Sales                    7,040           8,464
        Other Income                           4,855          13,330
                                               -----          ------
          Total Revenue and Other Income     683,444         789,421
     Costs and Expenses:
        Lifting Costs                         55,285          67,653
        Gathering and Compression Costs       95,687          83,752
        Royalty Interest Gas Costs            32,423          74,041
        Purchased Gas Costs                    6,442           8,175
        Exploration and Other Costs           17,201           4,995
        General and Administrative            66,655          59,244
        Other Corporate Expenses              32,871          21,002
        Depreciation, Depletion and
          Amortization                       107,251          70,010
        Interest Expense                       7,568           7,820
                                               -----           -----
          Total Costs and Expenses           421,383         396,692
                                             -------         -------
     Earnings Before Income Taxes and
        Noncontrolling Interest              262,061         392,729
     Noncontrolling Interest                  (1,037)
                                              ------
     Earnings Before Income Taxes            263,098         392,729
     Income Taxes                             98,636         153,656
                                              ------         -------
     Net Income Attributable to CNX Gas
      Shareholders                          $164,462        $239,073
                                            ========        ========
     Earnings Per Share:
        Basic                                  $1.09           $1.58
                                               =====           =====
        Dilutive                               $1.09           $1.58
                                               =====           =====

     Weighted Average Number of
       Common Shares Outstanding:
        Basic                            150,977,235     150,947,516
                                         ===========     ===========
        Dilutive                         151,325,146     151,331,953
                                         ===========     ===========




                   CNX GAS CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                                (Unaudited)
                          (Dollars in thousands)


                                                            December
                                              December 31,     31,
                                                      2009       2008
                                                      ----       ----
    ASSETS
    ------
    Current Assets:
      Cash and Cash Equivalents                     $1,124     $1,926
      Accounts and Notes Receivable:
        Trade                                       43,421     61,764
        Other Receivables                              975      3,080
      Recoverable Income Taxes                           -     30,302
      Derivatives                                   99,265    150,564
      Other                                          3,829      2,222
                                                     -----      -----
          Total Current Assets                     148,614    249,858

    Property, Plant and Equipment:
      Property, Plant and Equipment              2,409,751  2,113,570
        Less -Accumulated Depreciation,
         Depletion
         and Amortization                          433,201    322,470
                                                   -------    -------
          Total Property, Plant and Equipment
           -Net                                  1,976,550  1,791,100

    Other Assets:
      Investment in Affiliates                      24,591     25,204
      Derivatives                                   18,218     55,945
      Other                                          3,409      2,866
                                                     -----      -----

         Total Other Assets                         46,218     84,015


          TOTAL ASSETS                          $2,171,382 $2,124,973
                                                ========== ==========




                         CNX GAS CORPORATION AND SUBSIDIARIES
                              CONSOLIDATED BALANCE SHEETS
                                      (Unaudited)
                                (Dollars in thousands)


                                                      December    December
                                                         31,         31,
                                                           2009        2008
                                                           ----        ----
    LIABILITIES AND STOCKHOLDERS' EQUITY
    ------------------------------------
    Current Liabilities:
      Accounts Payable                                  $53,516    $100,565
      Accrued Royalties                                  14,898      20,301
      Accrued Severance Taxes                             1,037       3,672
      Related Parties                                     5,171       2,234
      Short-Term Notes Payable                           57,850      72,700
      Deferred Income Taxes                              34,871      55,000
      Accrued Income Taxes                               31,765           -
      Current Portion of Long-Term Debt                   8,616       8,462
      Other Current Liabilities                           9,520      18,116
                                                          -----      ------
          Total Current Liabilities                     217,244     281,050

    Long-Term Debt:
      Long-Term Debt                                     10,062      15,386
      Capital Lease Obligations                          55,628      59,296
                                                         ------      ------
          Total Long-Term Debt                           65,690      74,682

    Deferred Credits and Other Liabilities:
      Deferred Income Taxes                             334,493     331,338
      Gas Well Plugging                                   8,312       7,401
      Postretirement Benefits Other Than
       Pensions                                           3,642       2,728
      Other                                              35,101      42,900
                                                         ------      ------
          Total Deferred Credits and Other
           Liabilities                                  381,548     384,367

          Total Liabilities                             664,482     740,099
    Stockholders' Equity:
      Common Stock, $.01 par value;
        200,000,000 Shares Authorized, 150,986,918
         Issued and
        Outstanding at December 31, 2009 and
         150,971,636 Issued and
        Outstanding at December 31, 2008                  1,510       1,510
      Capital in Excess of Par Value                    806,527     789,625
      Preferred Stock, 5,000,000 Shares
       Authorized; None Issued and Outstanding                -           -
      Retained Earnings                                 633,417     468,955
      Other Comprehensive Income                         69,816     124,784
                                                         ------     -------
          Total CNX Gas Shareholders' Equity          1,511,270   1,384,874
      Noncontrolling Interest                            (4,370)          -
                                                         ------         ---
          Total Equity                                1,506,900   1,384,874


          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,171,382  $2,124,973
                                                     ==========  ==========



                                    CNX GAS CORPORATION AND SUBSIDIARIES
                                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                 (Unaudited)
                                           (Dollars in thousands)

                                                 For the Three Months
                                                        Ended
                                                    December 31,
                                                    ------------
                                                  2009             2008
                                                  ----             ----
    Operating Activities:
      Net Income Attributable to CNX Gas
       Shareholders                            $41,111          $57,482
      Adjustments to Reconcile Net Income
       to Net Cash
           Provided by Operating Activities:
       Depreciation, Depletion and
        Amortization                            28,670           19,670
       Stock-based Compensation                    673              843
      (Gain) Loss on the Sale of Assets            (13)               -
       Change in Noncontrolling Interest          (215)               -
       Deferred Income Taxes                    (6,889)          57,962
       Equity in Earnings of Affiliates             13             (199)
       Changes in Operating Assets:
         Accounts Receivable                   (15,711)           6,136
         Related Party Receivable                1,881            3,064
         Other Current Assets                   (1,863)            (346)
       Changes in Other Assets                     445             (382)
       Changes in Operating Liabilities:
         Accounts Payable                        8,296           20,708
         Income Taxes                           20,090          (34,521)
         Other Current Liabilities               1,171             (209)
       Changes in Other Liabilities                727            9,031
       Other                                     2,317            1,217
                                                 -----            -----
           Net Cash Provided by Operating
            Activities                          80,703          140,456
    Investing Activities:
      Capital Expenditures                     (63,428)        (154,483)
      Acquisition of Knox Energy                     -                -
      Investment in Equity Affiliates                -                -
      Proceeds From Sale of Assets                  13                -
                                                   ---              ---
           Net Cash Used in Investing
            Activities                         (63,415)        (154,483)
    Financing Activities:
      Capital Lease Payments                      (936)            (711)
      Variable Interest Entity Debt             (1,114)            (952)
      (Payment on) Proceeds from Short-
       Term Borrowings                         (15,200)          14,500
      Exercise of Stock Options                     85             (196)
      Noncontrolling Interest Distribution           -                -
      Tax Benefit from Stock-Based
       Compensation                                 33              196
                                                   ---              ---
           Net Cash (Used in) Provided by
            Financing Activities               (17,132)          12,837
                                               -------           ------
    Net Decrease in Cash and Cash
     Equivalents                                   156           (1,190)
    Cash and Cash Equivalents at
     Beginning of Period                           968            3,116
                                                   ---            -----
           Cash and Cash Equivalents at End of
            Period                              $1,124           $1,926
                                                ======           ======




                                                 For the Twelve Months
                                                         Ended
                                                     December 31,
                                                     ------------
                                                   2009             2008
                                                   ----             ----
    Operating Activities:
      Net Income Attributable to CNX Gas
       Shareholders                            $164,462         $239,073
      Adjustments to Reconcile Net Income
       to Net Cash
           Provided by Operating Activities:
       Depreciation, Depletion and
        Amortization                            107,251           70,010
       Stock-based Compensation                   6,311            3,378
      (Gain) Loss on the Sale of Assets              72                -
       Change in Noncontrolling Interest         (1,037)               -
       Deferred Income Taxes                     31,896          117,870
       Equity in Earnings of Affiliates            (637)            (551)
       Changes in Operating Assets:
         Accounts Receivable                     20,448          (21,789)
         Related Party Receivable                 2,937            3,256
         Other Current Assets                    (1,607)             191
       Changes in Other Assets                     (505)           3,861
       Changes in Operating Liabilities:
         Accounts Payable                       (21,845)          33,531
         Income Taxes                            52,572          (28,515)
         Other Current Liabilities              (15,614)          16,668
       Changes in Other Liabilities              (1,369)          10,611
       Other                                     16,828             (219)
                                                 ------             ----
           Net Cash Provided by Operating
            Activities                          360,163          447,375
    Investing Activities:
      Capital Expenditures                     (336,447)        (524,663)
      Acquisition of Knox Energy                      -          (36,000)
      Investment in Equity Affiliates             1,250            1,081
      Proceeds From Sale of Assets                  288              450
                                                    ---              ---
           Net Cash Used in Investing
            Activities                         (334,909)        (559,132)
    Financing Activities:
      Capital Lease Payments                     (3,750)          (2,769)
      Variable Interest Entity Debt              (5,218)          11,032
      (Payment on) Proceeds from Short-
       Term Borrowings                          (14,850)          72,700
      Exercise of Stock Options                     200              292
      Noncontrolling Interest
       Distribution                              (2,500)               -
      Tax Benefit from Stock-Based
       Compensation                                  62              380
                                                    ---              ---
           Net Cash (Used in) Provided by
            Financing Activities                (26,056)          81,635
                                                -------           ------
    Net Decrease in Cash and Cash
     Equivalents                                   (802)         (30,122)
    Cash and Cash Equivalents at
     Beginning of Period                          1,926           32,048
                                                  -----           ------
           Cash and Cash Equivalents at End of
            Period                               $1,124           $1,926
                                                 ======           ======



          CNX GAS CORPORATION AND SUBSIDIARIES
     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       (Unaudited)
     (Dollars in Thousands - except per share data)

                                                                 Accumulated
                                                                    Other
                                                                   Compre-
                                               Capital
                                                  in               hensive
                                                Excess
                                       Common     of    Retained   Income
                                                  Par
                                        Stock   Value   Earnings   (Loss)
                                        -----  ------   --------   ------
    Balance -
       December 31, 2008                $1,510 $789,625 $468,955    $124,784
                                        ------ -------- --------    --------

    (Unaudited)

    Net Income Attributable to CNX Gas
     Shareholders                            -        -  164,462           -
    Gas Cash Flow Hedge
        (net of $34,932 tax)                 -        -        -     (53,132)
    Actuarially Determined Liabilities
     Adjustment
         (Net of $1,185 tax)                 -        -        -      (1,836)
                                           ---      ---      ---      ------
    Comprehensive Income
       (Loss)                                -        -  164,462     (54,968)
    Stock Options Exercised                  -      200        -           -
    Tax Benefit from Stock-Based
    Compensation                             -       44        -           -
    Amortization of Restricted
        Stock Unit Grants                    -   15,119        -           -
    Amortization of Stock
       Option Grants                         -    1,539        -           -
    Noncontrolling Interest                  -        -        -           -
    Balance -

       December 31, 2009                $1,510 $806,527 $633,417     $69,816
                                        ====== ======== ========     =======






                                          Total
                                           CNX
                                           Gas
                                          Stock-        Non-
                                        holders'     controlling    Total
                                         Equity       Interest     Equity
                                         ------       --------     ------
    Balance -
       December 31, 2008               $1,384,874  $           -  $1,384,874
                                       ----------            ---  ----------

    (Unaudited)

    Net Income Attributable to CNX Gas
     Shareholders                         164,462              -     164,462
    Gas Cash Flow Hedge
        (net of $34,932 tax)              (53,132)             -     (53,132)
    Actuarially Determined Liabilities
     Adjustment
         (Net of $1,185 tax)               (1,836)             -      (1,836)
                                           ------            ---      ------
    Comprehensive Income
       (Loss)                             109,494                    109,494
    Stock Options Exercised                   200              -         200
    Tax Benefit from Stock-Based
    Compensation                               44              -          44
    Amortization of Restricted
        Stock Unit Grants                  15,119              -      15,119
    Amortization of Stock
       Option Grants                        1,539              -       1,539
    Noncontrolling Interest                     -         (4,370)     (4,370)
    Balance -

       December 31, 2009               $1,511,270        $(4,370) $1,506,900
                                       ==========        =======  ==========




SOURCE CNX Gas Corporation



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