The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements and related notes included elsewhere in this Form 10-Q. The information provided below supplements, but does not form part of, CNX's financial statements. This discussion contains forward-looking statements that are based on the current views and beliefs of management, as well as assumptions and estimates made by management. Actual results could differ materially from any such forward-looking statements as a result of various risk factors, including those that may not be in the control of management. For further information on items that could impact future operating performance or financial condition, please see "Part II. Item 1A. Risk Factors" and the section entitled "Forward-Looking Statements" and the "Risk Factors" contained in our Annual Report on Form 10-K for the year endedDecember 31, 2021 , which we filed with theSEC onFebruary 10, 2022 . CNX does not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law. General CNX continually monitors factors that could cause actual results of operations to differ from historical results or current expectations. Examples include the conflict betweenRussia andUkraine that has had an impact on global commodity prices. These and other factors could affect the Company's operations, earnings and cash flows for any period and could cause such results to not be comparable to those of the same period in previous years. The results presented in this Form 10-Q are not necessarily indicative of future operating results.
COVID-19 Pandemic:
Although CNX did not incur significant disruptions to operations during the three or six months endedJune 30, 2022 or 2021 as a direct result of the COVID-19 pandemic, CNX is unable to predict the full extent of the future impact that the COVID-19 pandemic could have on the Company, including our financial position, operating results, liquidity and ability to obtain financing in future reporting periods, due to numerous uncertainties outside of the Company's control.
Inflation
Heightened levels of inflation, primarily related to steel, diesel fuel and labor, continue to present risk for CNX and the broader natural gas industry. CNX experienced higher capital costs from inflation in the first half of 2022, if inflation continues to increase, and CNX is unable to successfully mitigate the impact, our costs could increase further, having a greater impact on our financial position. Rising interest rates could also increase our borrowing costs on new debt and could affect the fair value of our investments. CNX remains committed to our ongoing efforts to increase the efficiency of our operations and improve costs, which may, in part, offset cost increases from inflation. Hedging Update:
Total hedged natural gas production in the third quarter of 2022 is 118.6(1) Bcf. The annual gas hedge position is shown in the table below:
2022 2023 Volumes Hedged (Bcf), as of 7/7/22 473.9(1)(2) 417.2 1Net of purchased swaps. 2Includes actual settlements of 265.5 Bcf. CNX's hedged gas volumes include a combination of NYMEX financial hedges, index (NYMEX and basis) financial hedges, and physical fixed price sales. In addition, to protect the NYMEX hedge volumes from basis exposure, CNX enters into basis-only financial hedges and physical sales with fixed basis at certain sales points. For further information see Item 3 Quantitative and Qualitative Disclosures About Market Risk. 30
--------------------------------------------------------------------------------
Results of Operations - Three Months Ended
Net Income (Loss)
CNX reported net income of
Included in the earnings for the three months ended
Non-GAAP Financial Measures
CNX's management uses certain non-GAAP financial measures for planning, forecasting and evaluating business and financial performance, and believes that they are useful for investors in analyzing the company. Although these are not measures of performance calculated in accordance with generally accepted accounting principles (GAAP), management believes that these financial measures are useful to an investor in evaluating CNX because these metrics are widely used to evaluate a natural gas company's operating performance. Sales of Natural Gas, NGL and Oil, including cash settlements excludes the impacts of changes in the fair value of commodity derivative instruments prior to settlement, which are often volatile, and only includes the impact of settled commodity derivative instruments. Sales of Natural Gas, NGL and Oil, including cash settlements also excludes purchased gas revenue and other revenue and operating income, which are not directly related to CNX's natural gas producing activities. Natural Gas, NGL and Oil Production Costs excludes certain expenses that are not directly related to CNX's natural gas producing activities and are managed outside our production operations (See Note 13 - Segment Information in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information). These expenses include, but are not limited to, interest expense, other operating expense and other corporate expenses such as selling, general and administrative costs. We believe that Sales of Natural Gas, NGL and Oil, including cash settlements, Natural Gas, NGL andOil Production Costs and Natural Gas , NGL and Oil Production Margin (which is derived by subtracting Natural Gas, NGL and Oil Production Costs from Sales of Natural Gas, NGL and Oil, including cash settlements) provide useful information to investors for evaluating period-to-period comparisons of earnings trends. These metrics should not be viewed as a substitute for measures of performance that are calculated in accordance with GAAP. In addition, because all companies do not calculate these measures identically, these measures may not be comparable to similarly titled measures of other companies.
Non-GAAP Financial Measures Reconciliation
For the Three Months Ended June 30, (Dollars in millions) 2022 2021 Total Revenue and Other Operating Income (Loss)$ 420 $ (127) Add (Deduct): Purchased Gas Revenue (46) (17) Loss on Commodity Derivative Instruments 122 529 Other Revenue and Operating Income (23) (26)
Sales of Natural Gas, NGL and Oil, including Cash Settlements, a Non-GAAP Financial Measure
$ 473 $ 359 Total Operating Expense$ 330 $ 281 Add (Deduct): Depreciation, Depletion and Amortization (DD&A) - Corporate (2) (3) Exploration and Production Related Other Costs (5) (3) Purchased Gas Costs (46) (15) Selling, General and Administrative Costs (30) (24) Other Operating Expense (21) (15) Natural Gas, NGL and Oil Production Costs, a Non-GAAP Financial Measure1$ 226 $ 221
1 Natural Gas, NGL and Oil production costs consists primarily of lease operating expense, production ad valorem and other fees, transportation, gathering and compression and production related depreciation, depletion and amortization.
31 --------------------------------------------------------------------------------
The following table presents a summary of our total sales volumes, sales of natural gas, NGL and oil including cash settlements, natural gas, NGL and oil production costs and natural gas, NGL and oil production margin related to our production operations on a total company basis (See Non-GAAP Financial Measures Reconciliation for the reconciliation to the most directly comparable financial measures calculated and presented in accordance with GAAP): For the Three Months Ended June 30, 2022 2021 Variance in Millions Per Mcfe in Millions Per Mcfe in Millions Per Mcfe Total Sales Volumes (Bcfe)* 142.3 137.9 4.4 Natural Gas, NGL and Oil Revenue$ 1,003 $ 7.30
4.62
Loss on Commodity Derivative Instruments - Cash Settlement - Gas (530) (3.98) (10) (0.08) (520)
(3.90)
Sales of Natural Gas, NGL and Oil, including Cash Settlements, a Non-GAAP Financial Measure 473 3.32 359 2.60 114 0.72 Lease Operating Expense 14 0.10 10 0.07 4 0.03 Production, Ad Valorem, and Other Fees 10 0.07 7 0.05 3
0.02
Transportation, Gathering and Compression 88 0.62 84 0.61 4
0.01
Depreciation, Depletion and Amortization (DD&A) 114 0.79 120 0.87 (6)
(0.08)
Natural Gas, NGL and Oil Production Costs, a Non-GAAP Financial Measure 226 1.58 221 1.60 5
(0.02)
Natural Gas, NGL and Oil Production Margin, a Non-GAAP Financial Measure$ 247 $ 1.74 $ 138 $ 1.00 $ 109 $ 0.74 *NGLs and Oil/Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of NGL, condensate, and natural gas prices. The 4.4 Bcfe increase in total sales volumes in the period-to-period comparison was primarily due to the turn-in-line of new wells throughout 2021 and in the second quarter of 2022, offset in part by normal production declines.
Changes in the average costs per Mcfe were primarily related to the following items:
•Lease operating expense increased on a per unit basis primarily as a result of an increase in repairs and maintenance expense, including both routine and water impoundment maintenance, as well as an increase in water disposal costs. •Production, ad valorem and other fees increased on a per unit basis as a result of increased realized prices on natural gas and natural gas liquids. •Transportation, Gathering and Compression increased primarily due to an increase in gathering system repairs and maintenance expense and an increase in electrical compression expense. •Depreciation, depletion and amortization expense decreased on a per unit basis due to a lower annual depletion rate primarily resulting from lower cost reserve additions from development during the 2021 period. 32
--------------------------------------------------------------------------------
Average Realized Price Reconciliation
The following table presents a breakout of liquids and natural gas sales information and settled derivative information to assist in the understanding of the Company's natural gas production and sales portfolio and information regarding settled commodity derivatives:
For the Three Months Ended
in thousands (unless noted) 2022 2021 Variance Percent Change LIQUIDS NGL: Sales Volume (MMcfe) 8,845 9,469 (624) (6.6) % Sales Volume (Mbbls) 1,474 1,578 (104) (6.6) % Gross Price ($/Bbl)$ 43.26 $ 26.28 $ 16.98 64.6 % Gross NGL Revenue$ 63,774 $ 41,521 $ 22,253 53.6 % Oil/Condensate: Sales Volume (MMcfe) 343 785 (442) (56.3) % Sales Volume (Mbbls) 57 131 (74) (56.5) % Gross Price ($/Bbl)$ 96.24 $ 53.11 $ 43.13 81.2 % Gross Oil/Condensate Revenue$ 5,505 $ 6,946 $ (1,441) (20.7) % NATURAL GAS Sales Volume (MMcf) 133,143 127,666 5,477 4.3 % Sales Price ($/Mcf)$ 7.02 $ 2.51 $ 4.51 179.7 % Gross Natural Gas Revenue$ 934,127 $ 320,982 $ 613,145 191.0 % Hedging Impact ($/Mcf)$ (3.98) $ (0.08) $ (3.90) (4,875.0) % Loss on Commodity Derivative Instruments - Cash Settlement$ (530,391) $ (10,359) $ (520,032) 5,020.1 % The increase in gross revenue was primarily the result of the$4.51 per Mcf increase in natural gas prices, when excluding the impact of hedging, the$16.98 per Bbl increase in NGL prices and the 4.4 Bcfe increase in sales volumes. These increases were offset, in-part, by the impact of the change in the realized loss on commodity derivative instruments related to the Company's hedging program. 33 -------------------------------------------------------------------------------- SEGMENT ANALYSIS for the three months endedJune 30, 2022 compared to the three months endedJune 30, 2021 : For the Three Months Ended Difference to Three Months Ended June 30, 2022 June 30, 2021 (in millions) Shale CBM Other Total Shale CBM Other Total Natural Gas, NGLs and Oil Revenue$ 923 $ 79
$ 634 Loss on Commodity Derivative Instruments (489) (41) (122) (652) (480) (40) 407 (113) Purchased Gas Revenue - - 46 46 - - 29 29 Other Revenue and Operating Income 18 - 5 23 (1) - (2)
(3)
Total Revenue and Other Operating Income (Loss) 452 38 (70) 420 110 3 434 547 Lease Operating Expense 10 4 - 14 3 1 - 4 Production, Ad Valorem, and Other Fees 8 2 - 10 1 1 1
3
Transportation, Gathering and Compression 76 12 - 88 2 2 -
4
Depreciation, Depletion and Amortization 96 13 7 116 (8) (1) 2
(7)
Exploration and Production Related Other Costs - - 5 5 - - 2 2 Purchased Gas Costs - - 46 46 - - 31 31 Selling, General and Administrative Costs - - 30 30 - - 6 6 Other Operating Expense - - 21 21 - - 6 6 Total Operating Expense 190 31 109 330 (2) 3 48 49 Other Expense - - 5 5 - - (1) (1) Gain on Asset Sales and Abandonments, net - - (6) (6) - - 1 1 Loss on Debt Extinguishment - - 13 13 - - 13 13 Interest Expense - - 31 31 - - (8) (8) Total Other Expense - - 43 43 - - 5 5 Total Costs and Expenses 190 31 152 373 (2) 3 53 54 Earnings (Loss) Before Income Tax$ 262 $ 7 $ (222) $ 47 $ 112 $ -$ 381 $ 493 34
--------------------------------------------------------------------------------
SHALE SEGMENT
The Shale segment had earnings before income tax of
For the Three Months Ended June 30, Percent 2022 2021 Variance Change Shale Gas Sales Volumes (Bcf) 122.1 115.0 7.1 6.2 % NGLs Sales Volumes (Bcfe)* 8.8 9.5 (0.7) (7.4) % Oil/Condensate Sales Volumes (Bcfe)* 0.3 0.7 (0.4) (57.1) % Total Shale Sales Volumes (Bcfe)* 131.2 125.2 6.0 4.8 % Average Sales Price - Natural Gas (per Mcf)$ 7.00 $ 2.47 $ 4.53 183.4 %
Loss on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf)
$ (4.01) $ (0.08) $ (3.93) (4,912.5) % Average Sales Price - NGLs (per Mcfe)*$ 7.21 $ 4.38 $ 2.83 64.6 % Average Sales Price - Oil/Condensate (per Mcfe)*$ 16.03 $ 8.84 $ 7.19 81.3 % Total Average Shale Sales Price (per Mcfe)$ 3.31 $ 2.58 $ 0.73 28.3 % Average Shale Lease Operating Expenses (per Mcfe) 0.08 0.06 0.02 33.3 %
Average Shale Production, Ad Valorem and Other Fees (per Mcfe) 0.05
0.05 - - %
Average Shale Transportation, Gathering and Compression Costs (per Mcfe)
0.58 0.59 (0.01) (1.7) %
Average Shale Depreciation, Depletion and Amortization Costs (per Mcfe)
0.74 0.83 (0.09) (10.8) % Total Average Shale Production Costs (per Mcfe)$ 1.45 $ 1.53 $ (0.08) (5.2) % Total Average Shale Production Margin (per Mcfe)$ 1.86 $ 1.05 $ 0.81 77.1 % * NGLs and Oil/Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGL, condensate, and natural gas prices. The Shale segment had natural gas, NGLs and oil/condensate revenue of$923 million for the three months endedJune 30, 2022 compared to$332 million for the three months endedJune 30, 2021 . The$591 million increase was due primarily to a 183.4% increase in the average sales price for natural gas, a 4.8% increase in total Shale sales volumes, and a 64.6% increase in the average sales price of NGLs. The increase in total Shale volumes was primarily due to the turn-in-line of new wells throughout 2021 and the first half of 2022, offset in part by normal production declines. The increase in total average Shale sales price was primarily due to a$4.53 per Mcf increase in average gas sales price and a$2.83 per Mcfe increase in the average NGL sales price. These increases were offset in part by a$3.93 per Mcf change in the realized loss on commodity derivative instruments. The notional amounts associated with these financial hedges represented approximately 104.6 Bcf of the Company's produced Shale gas sales volumes for the three months endedJune 30, 2022 at an average loss of$4.68 per Mcf hedged. For the three months endedJune 30, 2021 , these financial hedges represented approximately 99.1 Bcf at an average loss of$0.09 per Mcf hedged. Total operating costs and expenses for the Shale segment were$190 million for the three months endedJune 30, 2022 compared to$192 million for the three months endedJune 30, 2021 . The decrease in total dollars and decrease in unit costs for the Shale segment were due to the following items: •Shale lease operating expenses were$10 million for the three months endedJune 30, 2022 compared to$7 million for the three months endedJune 30, 2021 . The increases in total dollars and unit costs were primarily related to an increase in repairs and maintenance expense, including both routine and water impoundment maintenance, as well as an increase in water disposal costs. •Shale production, ad valorem and other fees were$8 million for the three months endedJune 30, 2022 compared to$7 million for the three months endedJune 30, 2021 . The increases in total dollars was primarily due to increased realized prices on natural gas and natural gas liquids. 35 -------------------------------------------------------------------------------- •Shale transportation, gathering and compression costs were$76 million for the three months endedJune 30, 2022 compared to$74 million for the three months endedJune 30, 2021 . The increase in total dollars was primarily related to an increase in total volumes as well as an increase in gathering systems repairs and maintenance expense. •Depreciation, depletion and amortization costs attributable to the Shale segment were$96 million for the three months endedJune 30, 2022 compared to$104 million for the three months endedJune 30, 2021 . These amounts included depletion on a units of production basis of$0.62 per Mcfe and$0.72 per Mcfe, respectively. The decrease in the units of production depreciation, depletion and amortization rate in the current period is primarily the result of a lower annual depletion rate related to low-cost reserve additions from development in the 2021 period. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.Total Shale other revenue and operating income relates to natural gas gathering services provided to third-parties. The Shale segment had other revenue and operating income of$18 million for the three months endedJune 30, 2022 compared to$19 million for the three months endedJune 30, 2021 . The decrease in the period-to-period comparison was primarily due to lower third-party gathering volumes due to normal production declines.
COALBED METHANE (CBM) SEGMENT
The CBM segment had earnings before income tax of
For the Three Months Ended June 30, Percent 2022 2021 Variance Change CBM Gas Sales Volumes (Bcf) 11.0 12.6 (1.6) (12.7) % Average Sales Price - Gas (per Mcf)$ 7.23 $ 2.91 $ 4.32 148.5 %
Loss on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf)
$ (3.75) $ (0.08) $ (3.67) (4,587.5) % Total Average CBM Sales Price (per Mcf)$ 3.49 $ 2.83 $ 0.66 23.3 % Average CBM Lease Operating Expenses (per Mcf) 0.39 0.26 0.13 50.0 % Average CBM Production, Ad Valorem and Other Fees (per Mcf) 0.22 0.05 0.17 340.0 %
Average CBM Transportation, Gathering and Compression Costs (per Mcf)
1.07 0.79 0.28 35.4 %
Average CBM Depreciation, Depletion and Amortization Costs (per Mcf)
1.18 1.15 0.03 2.6 % Total Average CBM Production Costs (per Mcf)$ 2.86 $ 2.25 $ 0.61 27.1 % Total Average CBM Production Margin (per Mcf)$ 0.63 $ 0.58 $ 0.05 8.6 % The CBM segment had natural gas revenue of$79 million for the three months endedJune 30, 2022 compared to$36 million for the three months endedJune 30, 2021 . The increase was due to a 148.5% increase in the average sales price for natural gas in the current period, offset in part by the 12.7% decrease in total CBM sales volumes. The decrease in CBM sales volumes was primarily due to normal production declines. The total average CBM sales price increased$0.66 per Mcf due to a$4.32 per Mcf increase in average gas sales price, offset in part by a$3.67 per Mcf change in the realized loss on commodity derivative instruments resulting from the Company's hedging program. The notional amounts associated with these financial hedges represented approximately 8.9 Bcf of the Company's produced CBM sales volumes for the three months endedJune 30, 2022 at an average loss of$4.64 per Mcf hedged. For the three months endedJune 30, 2021 , these financial hedges represented approximately 10.2 Bcf at an average loss of$0.07 per Mcf hedged. Total operating costs and expenses for the CBM segment were$31 million for the three months endedJune 30, 2022 compared to$28 million for the three months endedJune 30, 2021 . The increase in total dollars and increase in unit costs for the CBM segment were due to the following items: •CBM lease operating expense was$4 million for the three months endedJune 30, 2022 compared to$3 million for the three months endedJune 30, 2021 . The increases in total dollars and unit costs were primarily due to increases in repairs and maintenance expense. 36 -------------------------------------------------------------------------------- •CBM production, ad valorem and other fees were$2 million for the three months endedJune 30, 2022 compared to$1 million for the three months endedJune 30, 2021 . The increases in total dollars and unit costs were primarily due to increased realized prices on natural gas. •CBM transportation, gathering and compression costs were$12 million for the three months endedJune 30, 2022 compared to$10 million for the three months endedJune 30, 2021 . The increases in total dollars and unit costs were primarily due to increases in repairs and maintenance expense and electrical compression expense. •Depreciation, depletion and amortization costs attributable to the CBM segment were$13 million for the three months endedJune 30, 2022 compared to$14 million for the three months endedJune 30, 2021 . These amounts included depletion on a units of production basis of$0.64 per Mcfe and$0.66 per Mcfe, respectively. The decrease in the units of production depreciation, depletion and amortization rate in the current period was due to a lower annual depletion rate. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.
OTHER SEGMENT
The Other Segment includes nominal shallow oil and gas production which is not significant to the Company. It also includes the Company's purchased gas activities, unrealized gain or loss on commodity derivative instruments, exploration and production related other costs, as well as various other expenses that are managed outside the Shale and CBM segments such as SG&A, interest expense and income taxes.
The Other Segment had a loss before income tax of$222 million for the three months endedJune 30, 2022 compared to a loss before income tax of$603 million for the three months endedJune 30, 2021 . The increase in total dollars is discussed below. For the Three Months Ended June 30, 2022 2021 Variance Percent Change Other Gas Sales Volumes (Bcf) 0.1 0.1 - - %
Loss on Commodity Derivative Instruments
For the three months endedJune 30, 2022 , the Other Segment recognized an unrealized loss on commodity derivative instruments of$122 million . For the three months endedJune 30, 2021 , the Other Segment recognized an unrealized loss on commodity derivative instruments of$529 million . The unrealized loss on commodity derivative instruments represents changes in the fair value of all the Company's existing commodity hedges on a mark-to-market basis.
Purchased gas volumes represent volumes of natural gas purchased at market prices from third-parties and then resold in order to fulfill contracts with certain customers and to balance supply. Purchased gas revenue was$46 million for the three months endedJune 30, 2022 compared to$17 million for the three months endedJune 30, 2021 . Purchased gas costs were$46 million for the three months endedJune 30, 2022 compared to$15 million for the three months endedJune 30, 2021 . The period-to-period increase in purchased gas revenue was due to increases in the average sales price and purchased gas sales volumes. For the
Three Months Ended
2022 2021 Variance Percent Change Purchased Gas Sales Volumes (in Bcf) 9.1 5.9 3.2 54.2 % Average Sales Price (per Mcf)$ 5.14 $ 2.82 $ 2.32 82.3 % Purchased Gas Average Cost (per Mcf)$ 5.08 $ 2.45 $ 2.63 107.3 % 37
--------------------------------------------------------------------------------
Other Operating Income
For the Three Months Ended June 30, (in millions) 2022 2021 Variance Percent Change Equity Income from Affiliates $ 1$ 2 $ (1) (50.0) % Water Income 1 2 (1) (50.0) % Excess Firm Transportation Income 3 3 - - % Total Other Operating Income $ 5$ 7 $ (2) (28.6) % •Equity income from affiliates primarily represents CNX's share of earnings from a 50% interest in a power plant located within CNX's CBM field. Power generated from the facility is sold into wholesale electricity markets during times of peak energy consumption. Due to the plant consuming lowcarbon intensity coal mine methane gas, the plant qualifies for Pennsylvania Tier I Renewable Energy Credits. •Excess firm transportation income represents revenue from the sale of excess firm transportation capacity to third-parties. The Company obtains firm pipeline transportation capacity to enable gas production to flow uninterrupted as sales volumes increase. In order to minimize this unutilized firm transportation expense, CNX is able to release (sell) unutilized firm transportation capacity to other parties when possible and when beneficial. The revenue from released capacity helps offset the unutilized firm transportation and processing fees in total other operating expense.
Exploration and Production Related Other Costs
For the Three Months Ended June 30, (in millions) 2022 2021 Variance Percent Change Seismic Activity $ 3 $ -$ 3 100.0 % Land Rentals 1 1 - - % Lease Expiration Costs 1 2 (1) (50.0) % Total Exploration and Production Related Other Costs $ 5$ 3 $ 2 66.7 % •Seismic activity expense for the current period primarily relates to the acquisition of three-dimensional seismic data. •Lease expiration costs relate to leases where the primary term expired or will expire within the next 12 months.
Selling, General and Administrative ("SG&A")
SG&A costs include costs such as overhead, including employee labor and benefit costs, short-term incentive compensation, costs of maintaining our headquarters, audit and other professional fees, charitable contributions and legal compliance expenses. SG&A costs also include non-cash long-term equity-based compensation expense. For the Three Months Ended June 30, (in millions) 2022 2021 Variance Percent Change
Salaries, Wages and Employee Benefits $ 8
33.3 % Contributions and Advertising 2 - 2 100.0 % Long-Term Equity-Based Compensation (Non-Cash) 4 3 1 33.3 % Short-Term Incentive Compensation 3 3 - - % Other 13 12 1 8.3 % Total SG&A $ 30$ 24 $ 6 25.0 % •Salaries, wages and employee benefits increased in the period-to-period comparison primarily due to an increase in employee wages and employee benefit expense. •Contributions and advertising increased in the period-to-period comparison primarily due to an increase in charitable contributions. 38
--------------------------------------------------------------------------------
Other Operating Expense
For the Three Months Ended June 30, (in millions) 2022 2021 Variance Percent Change Unutilized Firm Transportation and Processing Fees $ 18$ 14 $ 4 28.6 % Litigation Settlements 2 - 2 100.0 % Insurance Expense 1 1 - - % Total Other Operating Expense $ 21$ 15 $ 6 40.0 % •Unutilized firm transportation and processing fees represent pipeline transportation capacity obtained to enable gas production to flow uninterrupted as sales volumes increase, as well as additional processing capacity for NGLs. In some instances, the Company may have the opportunity to realize more favorable net pricing by strategically choosing to sell natural gas into a market or to a customer that does not require the use of the Company's own firm transportation capacity. Such sales would result in an increase in unutilized firm transportation expense. The Company attempts to minimize this expense by releasing (selling) unutilized firm transportation capacity to other parties when possible and when beneficial. The revenue received when this capacity is released (sold) is included in Excess Firm Transportation Income above. The increase in the period-to-period comparison was primarily due to higher unutilized processing fees and a decrease in utilization of firm transportation capacity in the current period.
Other Expense
For
the Three Months Ended
(in millions) 2022 2021 Variance Percent Change Other Income Right-of-Way Sales $ -$ 1 $ (1) (100.0) % Total Other Income $ -$ 1 $ (1) (100.0) % Other Expense Professional Services $ 1$ 3 $ (2) (66.7) % Bank Fees 3 3 - - % Other Corporate Expense 1 1 - - % Total Other Expense $ 5$ 7 $ (2) (28.6) % Total Other Expense $ 5$ 6 $ (1) (16.7) %
•Professional services decreased in the period-to-period comparison primarily due to a decrease in legal fees.
Gain on Asset Sales and Abandonments, net
A gain on asset sales of$6 million related to the sale of various non-core assets (primarily rights-of-way, surface acreage and other non-core oil and gas interests) was recognized in the three months endedJune 30, 2022 compared to a gain of$7 million in the three months endedJune 30, 2021 .
Loss on Debt Extinguishment
A loss on debt extinguishment of$13 million was recognized in the three months endedJune 30, 2022 in connection with the purchase of a portion of the Convertible Notes dueMay 2026 . See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.
Interest Expense
For the Three Months Ended June 30, (in millions) 2022 2021 Variance Percent Change Total Interest Expense $ 31$ 39 $ (8) (20.5) % 39
-------------------------------------------------------------------------------- The$8 million decrease in total interest expense was partially due to the Company adopting Accounting Standards Update (ASU) 2020-06 - Accounting for Convertible Instruments and Contracts in an Entity's Own Equity onJanuary 1, 2022 . As part of the adoption, total interest expense no longer includes a non-cash interest expense component related to the Convertible Notes dueMay 2026 . During the three months endedJune 30, 2021 , total interest expense included$4 million that was amortized as additional non-cash interest expense related to the equity component of the Convertible Notes dueMay 2026 . The decrease was also due to the purchase of the$400 million 6.500% CNXM Senior Notes dueMarch 2026 during the year endedDecember 31, 2021 offset, in part, by the$400 million of 4.750% CNXM Senior Notes due 2030 that were issued during the year endedDecember 31, 2021 . See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information. Income Taxes For the Three Months Ended June 30, (in millions) 2022 2021 Variance Percent Change Total Company Income (Loss) Before Income Tax$ 47 $ (446) $ 493 110.5 % Income Tax Expense (Benefit)$ 14 $ (92) $ 106 115.2 % Effective Income Tax Rate 28.9 % 20.6 % 8.3 % The effective income tax rate was 28.9% for the three months endedJune 30, 2022 compared to 20.6% for the three months endedJune 30, 2021 . The effective rate for the three months endedJune 30, 2022 differs from theU.S. federal statutory rate of 21% primarily due to the impact of the partial repurchase of the Convertible Notes, equity compensation and state income taxes. The effective rate for the three months endedJune 30, 2021 differs from theU.S. federal statutory rate of 21% primarily due to the impact of equity compensation and state income taxes (See Note 4 - Income Taxes in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information). 40 --------------------------------------------------------------------------------
Results of Operations - Six Months Ended
Net Loss CNX reported a net loss of$890 million , or a loss per diluted share of$4.52 , for the six months endedJune 30, 2022 , compared to a net loss of$256 million , or a loss per diluted share of$1.16 , for the six months endedJune 30, 2021 . Included in the loss for the six months endedJune 30, 2022 was an unrealized loss on commodity derivative instruments of$1,578 million . Included in the loss for the six months endedJune 30, 2021 was an unrealized loss on commodity derivative instruments of$497 million .
Non-GAAP Financial Measures
CNX's management uses certain non-GAAP financial measures for planning, forecasting and evaluating business and financial performance, and believes that they are useful for investors in analyzing the company. Although these are not measures of performance calculated in accordance with generally accepted accounting principles (GAAP), management believes that these financial measures are useful to an investor in evaluating CNX because these metrics are widely used to evaluate a natural gas company's operating performance. Sales of Natural Gas, NGL and Oil, including cash settlements excludes the impacts of changes in the fair value of commodity derivative instruments prior to settlement, which are often volatile, and only includes the impact of settled commodity derivative instruments. Sales of Natural Gas, NGL and Oil, including cash settlements also excludes purchased gas revenue and other revenue and operating income, which are not directly related to CNX's natural gas producing activities. Natural Gas, NGL and Oil Production Costs excludes certain expenses that are not directly related to CNX's natural gas producing activities and are managed outside our production operations (See Note 13 - Segment Information in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information). These expenses include, but are not limited to, interest expense, other operating expense and other corporate expenses such as selling, general and administrative costs. We believe that Sales of Natural Gas, NGL and Oil, including cash settlements, Natural Gas, NGL andOil Production Costs and Natural Gas , NGL and Oil Production Margin (which is derived by subtracting Natural Gas, NGL and Oil Production Costs from Sales of Natural Gas, NGL and Oil, including cash settlements) provide useful information to investors for evaluating period-to-period comparisons of earnings trends. These metrics should not be viewed as a substitute for measures of performance that are calculated in accordance with GAAP. In addition, because all companies do not calculate these measures identically, these measures may not be comparable to similarly titled measures of other companies.
Non-GAAP Financial Measures Reconciliation
For the Six Months Ended June 30, (Dollars in millions) 2022 2021 Total Revenue and Other Operating (Loss) Income$ (493) $ 346 Add (Deduct): Purchased Gas Revenue (92) (50) Loss on Commodity Derivative Instruments 1,578 497 Other Revenue and Operating Income (46) (50)
Sales of Natural Gas, NGL and Oil, including Cash Settlements, a Non-GAAP Financial Measure
$ 947 $ 743 Total Operating Expense$ 653 $ 581 Add (Deduct): Depreciation, Depletion and Amortization (DD&A) - Corporate (7) (6) Exploration and Production Related Other Costs (6) (5) Purchased Gas Costs (91) (47) Selling, General and Administrative Costs (62) (52) Other Operating Expense (32) (31)
Natural Gas, NGL and Oil Production Costs, a Non-GAAP Financial Measure1
$
455
1 Natural Gas, NGL and Oil production costs consists primarily of lease operating expense, production ad valorem and other fees, transportation, gathering and compression and production related depreciation, depletion and amortization.
41 --------------------------------------------------------------------------------
The following table presents a summary of our total sales volumes, sales of natural gas, NGL and oil including cash settlements, natural gas, NGL and oil production costs and natural gas, NGL and oil production margin related to our production operations on a total company basis (See Non-GAAP Financial Measures Reconciliation for the reconciliation to the most directly comparable financial measures calculated and presented in accordance with GAAP): For the Six Months Ended June 30, 2022 2021 Variance in Millions Per Mcfe in Millions Per Mcfe in Millions Per Mcfe Total Sales Volumes (Bcfe)* 293.2 278.5 14.7 Natural Gas, NGL and Oil Revenue$ 1,748 $ 6.14
3.44
Loss on Commodity Derivative Instruments - Cash Settlement - Gas (801) (2.91) (8) (0.03) (793)
(2.88)
Sales of Natural Gas, NGL and Oil, including Cash Settlements, a Non-GAAP Financial Measure 947 3.23 743 2.67 204 0.56 Lease Operating Expense 30 0.10 20 0.07 10 0.03 Production, Ad Valorem, and Other Fees 20 0.07 13 0.05 7
0.02
Transportation, Gathering and Compression 177 0.60 161 0.58 16
0.02
Depreciation, Depletion and Amortization (DD&A) 228 0.78 246 0.88 (18)
(0.10)
Natural Gas, NGL and Oil Production Costs, a Non-GAAP Financial Measure 455 1.55 440 1.58 15
(0.03)
Natural Gas, NGL and Oil Production Margin, a Non-GAAP Financial Measure$ 492 $ 1.68 $ 303 $ 1.09 $ 189 $ 0.59 *NGLs and Oil/Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of NGL, condensate, and natural gas prices.
The 14.7 Bcfe increase in volumes in the period-to-period comparison was primarily due to the turn-in-line of new wells throughout 2021 and the first half of 2022. The increases were offset in part by normal production declines.
Changes in the average costs per Mcfe were primarily related to the following items:
•Lease operating expense increased on a per unit basis as a result of an increase in repairs and maintenance expense and an increase in water disposal costs. •Production, ad valorem and other fees increased on a per unit basis as a result of increased realized prices on natural gas and natural gas liquids. •Transportation, Gathering and Compression increased primarily due to an increase in gathering system repairs and maintenance expense and an increase in electrical compression expense. •Depreciation, depletion and amortization expense decreased on a per unit basis due to a lower annual depletion rate primarily resulting from low cost reserve additions from development during the 2021 period. 42
--------------------------------------------------------------------------------
Average Realized Price Reconciliation
The following table presents a breakout of liquids and natural gas sales information and settled derivative information to assist in the understanding of the Company's natural gas production and sales portfolio and information regarding settled commodity derivatives:
For the Six Months Ended
in thousands (unless noted) 2022 2021 Variance Percent Change LIQUIDS NGL: Sales Volume (MMcfe) 17,351 15,937 1,414 8.9 % Sales Volume (Mbbls) 2,892 2,656 236 8.9 % Gross Price ($/Bbl)$ 44.46 $ 27.60 $ 16.86 61.1 % Gross NGL Revenue$ 128,570 $ 73,384 $ 55,186 75.2 % Oil/Condensate: Sales Volume (MMcfe) 698 1,091 (393) (36.0) % Sales Volume (Mbbls) 116 182 (66) (36.3) % Gross Price ($/Bbl)$ 86.46 $ 49.11 $ 37.35 76.1 % Gross Oil/Condensate Revenue$ 10,060 $ 8,932 $ 1,128 12.6 % NATURAL GAS Sales Volume (MMcf) 275,144 261,515 13,629 5.2 % Sales Price ($/Mcf)$ 5.85 $ 2.56 $ 3.29 128.5 % Gross Natural Gas Revenue$ 1,609,401 $ 668,358 $ 941,043 140.8 % Hedging Impact ($/Mcf)$ (2.91) $ (0.03) $ (2.88) (9,600.0) % Loss on Commodity Derivative Instruments - Cash Settlement$ (801,233) $ (7,954) $ (793,279) (9,973.3) %
The increase in gross revenue was primarily the result of the
43
-------------------------------------------------------------------------------- SEGMENT ANALYSIS for the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 : For the Six Months Ended Difference to Six Months Ended June 30, 2022 June 30, 2021 (in millions) Shale CBM Other Total Shale CBM Other Total
Natural Gas, NGLs and Oil Revenue
1
$ 997 Loss on Commodity Derivative Instruments (738) (63) (1,578) (2,379) (731) (62) (1,081) (1,874) Purchased Gas Revenue - - 92 92 - - 42 42 Other Revenue and Operating Income 35 - 11 46 (3) - (1) (4) Total Revenue and Other Operating Income (Loss) 901 80 (1,474) (493) 195 6 (1,040) (839) Lease Operating Expense 22 8 - 30 9 2 (1) 10 Production, Ad Valorem, and Other Fees 15 5 - 20 4 3 - 7 Transportation, Gathering and Compression 153 23 1 177 10 5 1 16 Depreciation, Depletion and Amortization 197 26 12 235 (17) (4) 4 (17) Exploration and Production Related Other Costs - - 6 6 - - 1 1 Purchased Gas Costs - - 91 91 - - 44 44 Selling, General and Administrative Costs - - 62 62 - - 10 10 Other Operating Expense - - 32 32 - - 1 1 Total Operating Expense 387 62 204 653 6 6 60 72 Other Expense - - 5 5 - - (5) (5) Gain on Asset Sales and Abandonments, net - - (20) (20) - - (10) (10) Loss on Debt Extinguishment - - 13 13 - - 13 13 Interest Expense - - 58 58 - - (18) (18) Total Other Expense - - 56 56 - - (20) (20) Total Costs and Expenses 387 62 260 709 6 6 40 52 Earnings (Loss) Before Income Tax$ 514 $ 18 $ (1,734) $ (1,202) $ 189 $ -$ (1,080) $ (891) 44
--------------------------------------------------------------------------------
SHALE SEGMENT
The Shale segment had earnings before income tax of
For the Six Months Ended June 30, Percent 2022 2021 Variance Change Shale Gas Sales Volumes (Bcf) 252.6 236.1 16.5 7.0 % NGLs Sales Volumes (Bcfe)* 17.3 15.9 1.4 8.8 % Oil/Condensate Sales Volumes (Bcfe)* 0.7 1.1 (0.4) (36.4) % Total Shale Sales Volumes (Bcfe)* 270.6 253.1 17.5 6.9 % Average Sales Price - Natural Gas (per Mcf)$ 5.80 $ 2.51 $ 3.29 131.1 %
Loss on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf)
$ (2.92) $ (0.03) $ (2.89) (9,633.3) % Average Sales Price - NGLs (per Mcfe)*$ 7.41 $ 4.60 $ 2.81 61.1 % Average Sales Price - Oil/Condensate (per Mcfe)*$ 14.40 $ 8.18 $ 6.22 76.0 % Total Average Shale Sales Price (per Mcfe)$ 3.20 $ 2.64 $ 0.56 21.2 % Average Shale Lease Operating Expenses (per Mcfe) 0.08 0.05 0.03 60.0 %
Average Shale Production, Ad Valorem and Other Fees (per Mcfe) 0.05
0.05 - - %
Average Shale Transportation, Gathering and Compression Costs (per Mcfe)
0.57 0.56 0.01 1.8 %
Average Shale Depreciation, Depletion and Amortization Costs (per Mcfe)
0.73 0.85 (0.12) (14.1) % Total Average Shale Production Costs (per Mcfe)$ 1.43 $ 1.51 $ (0.08) (5.3) % Total Average Shale Production Margin (per Mcfe)$ 1.77 $ 1.13 $ 0.64 56.6 % * NGLs and Oil/Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGL, condensate, and natural gas prices. The Shale segment had natural gas, NGLs and oil/condensate revenue of$1,604 million for the six months endedJune 30, 2022 compared to$675 million for the six months endedJune 30, 2021 . The$929 million increase was due primarily to a 131.1% increase in the average sales price for natural gas, a 6.9% increase in total Shale sales volumes, and a 61.1% increase in the average sales price of NGLs. The increase in total Shale volumes was primarily due to the turn-in-line of new wells throughout 2021 and the first half of 2022, offset in part by normal production declines. The increase in total average Shale sales price was primarily due to a$3.29 per Mcf increase in average natural gas sales price and a$2.81 per Mcfe increase in the average NGL sales price. These increases were offset in part by a$2.89 per Mcf change in the realized loss on commodity derivative instruments. The notional amounts associated with these financial hedges represented approximately 212.6 Bcf of the Company's produced Shale gas sales volumes for the six months endedJune 30, 2022 at an average loss of$3.47 per Mcf hedged. For the six months endedJune 30, 2021 , these financial hedges represented approximately 209.4 Bcf at an average loss of$0.03 per Mcf hedged. Total operating costs and expenses for the Shale segment were$387 million for the six months endedJune 30, 2022 compared to$381 million for the six months endedJune 30, 2021 . The increase in total dollars and decrease in unit costs for the Shale segment were due to the following items: •Shale lease operating expenses were$22 million for the six months endedJune 30, 2022 compared to$13 million for the six months endedJune 30, 2021 . The increases in total dollars and unit costs were primarily related to an increase in repairs and maintenance expense and an increase in water disposal costs. •Shale production, ad valorem and other fees were$15 million for the six months endedJune 30, 2022 compared to$11 million for the six months endedJune 30, 2021 . The increase in total dollars was primarily due to increased realized prices on natural gas and natural gas liquids. 45 -------------------------------------------------------------------------------- •Shale transportation, gathering and compression costs were$153 million for the six months endedJune 30, 2022 compared to$143 million for the six months endedJune 30, 2021 . The increase in total dollars was primarily related to an increase in total volumes gathered as well as an increase in gathering systems repairs and maintenance expense. •Depreciation, depletion and amortization costs attributable to the Shale segment were$197 million for the six months endedJune 30, 2022 compared to$214 million for the six months endedJune 30, 2021 . These amounts included depletion on a unit of production basis of$0.63 per Mcfe and$0.74 per Mcfe, respectively. The decrease in the units of production depreciation, depletion and amortization rate in the current period is primarily the result of a lower annual depletion rate related to low-cost reserve additions from development in the 2021 period. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.Total Shale other revenue and operating income relates to natural gas gathering services provided to third-parties. The Shale segment had other revenue and operating income of$35 million for the six months endedJune 30, 2022 compared to$38 million for the six months endedJune 30, 2021 . The decrease in the period-to-period comparison was primarily due to lower third-party gathering volumes due to normal production declines.
COALBED METHANE (CBM) SEGMENT
The CBM segment had earnings before income tax of
For the Six Months Ended June 30, Percent 2022 2021 Variance Change CBM Gas Sales Volumes (Bcf) 22.5 25.3 (2.8) (11.1) % Average Sales Price - Natural Gas (per Mcf)$ 6.37 $ 2.98 $ 3.39 113.8 %
Loss on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf)
$ (2.78) $ (0.03) $ (2.75) (9,166.7) % Total Average CBM Sales Price (per Mcf)$ 3.58 $ 2.95 $ 0.63 21.4 % Average CBM Lease Operating Expenses (per Mcf) 0.36 0.24 0.12 50.0 % Average CBM Production, Ad Valorem and Other Fees (per Mcf) 0.23 0.10 0.13 130.0 %
Average CBM Transportation, Gathering and Compression Costs (per Mcf)
1.01 0.72 0.29 40.3 %
Average CBM Depreciation, Depletion and Amortization Costs (per Mcf)
1.16 1.18 (0.02) (1.7) % Total Average CBM Production Costs (per Mcf)$ 2.76 $ 2.24 $ 0.52 23.2 % Total Average CBM Production Margin (per Mcf)$ 0.82 $ 0.71 $ 0.11 15.5 % The CBM segment had natural gas revenue of$143 million for the six months endedJune 30, 2022 compared to$75 million for the six months endedJune 30, 2021 . The$68 million increase was primarily due to a 113.8% increase in the average sales price for natural gas in the current period. The natural gas price increases were partially offset by the 11.1% decrease in CBM sales volumes due to normal production declines. The total average CBM sales price increased$0.63 per Mcf due to a$3.39 per Mcf increase in average natural gas sales price, offset in part by a$2.75 per Mcf change in the realized loss on commodity derivative instruments resulting from the Company's hedging program. The notional amounts associated with these financial hedges represented approximately 18.0 Bcf of the Company's produced CBM sales volumes for the six months endedJune 30, 2022 at an average loss of$3.46 per Mcf hedged. For the six months endedJune 30, 2021 , these financial hedges represented approximately 21.5 Bcf at an average loss of$0.03 per Mcf hedged. Total operating costs and expenses for the CBM segment were$62 million for the six months endedJune 30, 2022 compared to$56 million for the six months endedJune 30, 2021 . The increases in total dollars and unit costs for the CBM segment were due to the following items: •CBM lease operating expense was$8 million for the six months endedJune 30, 2022 compared to$6 million for the six months endedJune 30, 2021 . The increases in total dollars and unit costs were primarily due to increases in repairs and maintenance expense. 46 -------------------------------------------------------------------------------- •CBM production, ad valorem and other fees were$5 million for the six months endedJune 30, 2022 compared to$2 million for the six months endedJune 30, 2021 . The increases in total dollars and unit costs were primarily due to increased realized prices on natural gas. •CBM transportation, gathering and compression costs were$23 million for the six months endedJune 30, 2022 compared to$18 million for the six months endedJune 30, 2021 . The increases in total dollars and unit costs were primarily due to increases in repairs and maintenance expense and electrical compression expense. •Depreciation, depletion and amortization costs attributable to the CBM segment were$26 million for the six months endedJune 30, 2022 compared to$30 million for the six months endedJune 30, 2021 . These amounts included depletion on a unit of production basis of$0.64 per Mcfe and$0.66 per Mcfe, respectively. The decrease in the units of production depreciation, depletion and amortization rate was due to a lower annual depletion rate. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.
OTHER SEGMENT
The Other Segment includes nominal shallow oil and gas production which is not significant to the Company. It also includes the Company's purchased gas activities, unrealized gain or loss on commodity derivative instruments, exploration and production related other costs, as well as various other expenses that are managed outside the Shale and CBM segments such as SG&A, interest expense and income taxes.
The Other Segment had a loss before income tax of$1,734 million for the six months endedJune 30, 2022 compared to a loss before income tax of$654 million for the six months endedJune 30, 2021 . The decrease in total dollars is discussed below. For
the Six Months Ended
2022 2021 Variance Percent Change Other Gas Sales Volumes (Bcf) 0.1 0.1 - - %
Loss on Commodity Derivative Instruments
For the six months endedJune 30, 2022 , the Other Segment recognized an unrealized loss on commodity derivative instruments of$1,578 million . For the six months endedJune 30, 2021 , the Other Segment recognized an unrealized loss on commodity derivative instruments of$497 million . The unrealized loss or gain on commodity derivative instruments represents changes in the fair value of all the Company's existing commodity hedges on a mark-to-market basis.
Purchased gas volumes represent volumes of natural gas purchased at market prices from third-parties and then resold in order to fulfill contracts with certain customers and to balance supply. Purchased gas revenue was$92 million for the six months endedJune 30, 2022 compared to$50 million for the six months endedJune 30, 2021 . Purchased gas costs were$91 million for the six months endedJune 30, 2022 compared to$47 million for the six months endedJune 30, 2021 . The period-to-period increase in purchased gas revenue was due to an increase in averages sales price, offset in part by a decrease in purchased gas sales volumes. For the Six Months Ended June 30, 2022 2021 Variance Percent Change Purchased Gas Sales Volumes (in Bcf) 15.3 16.7 (1.4) (8.4) % Average Sales Price (per Mcf)$ 6.03 $ 3.01 $ 3.02 100.3 % Purchased Gas Average Cost (per Mcf)$ 5.93 $ 2.81 $ 3.12 111.0 % 47
--------------------------------------------------------------------------------
Other Operating Income For the Six Months Ended June 30, (in millions) 2022 2021 Variance Percent Change Water Income $ 3$ 4 $ (1) (25.0) % Excess Firm Transportation Income 6 6 - - % Equity Income from Affiliates 2 2 - - % Total Other Operating Income$ 11 $ 12 $ (1) (8.3) % •Excess firm transportation income represents revenue from the sale of excess firm transportation capacity to third-parties. The Company obtains firm pipeline transportation capacity to enable gas production to flow uninterrupted as sales volumes increase. In order to minimize this unutilized firm transportation expense, CNX is able to release (sell) unutilized firm transportation capacity to other parties when possible and when beneficial. The revenue from released capacity helps offset the Unutilized Firm Transportation and Processing Fees in Total Other Operating Expense. •Equity income from affiliates primarily consists of CNX's share of earnings from a 50% interest in a power plant located within CNX's CBM field. Power generated from the facility is sold into wholesale electricity markets during times of peak energy consumption. Due to the plant consuming lowcarbon intensity coal mine methane gas, the plant qualifies for Pennsylvania Tier I Renewable Energy Credits.
Exploration and Production Related Other Costs
For the Six Months Ended June 30, (in millions) 2022 2021 Variance Percent Change Seismic Activity$ 3 $ -$ 3 100.0 % Land Rentals$ 2 $ 1 $ 1 100.0 % Permitting Expense $ -$ 1 $ (1) (100.0) % Lease Expiration Costs 1 3 (2) (66.7) % Total Exploration and Production Related Other Costs$ 6 $ 5 $ 1 20.0 % •Seismic activity expense for the current period primarily relates to the acquisition of three-dimensional seismic data. •Lease expiration costs relate to leases where the primary term expired or will expire within the next 12 months.
Selling, General and Administrative ("SG&A")
SG&A costs include costs such as overhead, including employee labor and benefit costs, short-term incentive compensation, costs of maintaining our headquarters, audit and other professional fees, charitable contributions and legal compliance expenses. SG&A costs also include non-cash long-term equity-based compensation expense. For the Six Months Ended June 30, (in millions) 2022 2021 Variance Percent Change Contributions and Advertising $ 4$ 1 $ 3 300.0 % Short-Term Incentive Compensation 7 5 2 40.0 % Salaries, Wages and Employee Benefits 15 13 2 15.4 % Long-Term Equity-Based Compensation (Non-Cash) 11 11 - - % Other 25 22 3 13.6 % Total SG&A$ 62 $ 52 $ 10 19.2 % •Contributions and advertising increased in the period-to-period comparison primarily due to an increase in charitable contributions. •Short-term incentive compensation increased in the period-to-period comparison primarily due to an increase in expected payout. •Salaries, wages and employee benefits increased in the period-to-period comparison primarily due an increase in employee wages and employee benefit expense. •Other increased in the period-to-period comparison primarily due to an increase in professional services and consulting fees related to cyber security, legal matters and regulatory reporting. 48 --------------------------------------------------------------------------------
Other Operating Expense
For the Six Months Ended June 30, (in millions) 2022 2021 Variance Percent Change Litigation Settlements $ 3 $ -$ 3 100.0 % Insurance Expense 1 1 - - % Unutilized Firm Transportation and Processing Fees 27 28 (1) (3.6) % Other 1 2 (1) (50.0) % Total Other Operating Expense $ 32$ 31 $ 1 3.2 % •Unutilized firm transportation and processing fees represent pipeline transportation capacity obtained to enable gas production to flow uninterrupted as sales volumes increase, as well as additional processing capacity for NGLs. In some instances, the Company may have the opportunity to realize more favorable net pricing by strategically choosing to sell natural gas into a market or to a customer that does not require the use of the Company's own firm transportation capacity. Such sales would result in an increase in unutilized firm transportation expense. The Company attempts to minimize this expense by releasing (selling) unutilized firm transportation capacity to other parties when possible and when beneficial. The revenue received when this capacity is released (sold) is included in Excess Firm Transportation Income in Total Other Operating Income. The decrease in the period-to-period comparison was primarily due to an increase in utilization of firm transportation capacity in the current year due to production increases in 2022 compared to 2021. Other Expense For the Six Months Ended June 30, (in millions) 2022 2021 Variance Percent Change Other Income Right-of-Way Sales $ 2$ 1 $ 1 100.0 % Other 4 1 3 300.0 % Total Other Income $ 6$ 2 $ 4 200.0 % Other Expense Bank Fees $ 5$ 6 $ (1) (16.7) % Professional Services 3 3 - - % Other Corporate Expense 3 3 - - % Total Other Expense$ 11 $ 12 $ (1) (8.3) % Total Other Expense $ 5$ 10 $ (5) (50.0) %
•Total other income increased in the period-to-period comparison primarily due to increased right-of-way sales and various other one-time items.
Gain on Asset Sales and Abandonments, net
A gain on asset sales of$20 million related to the sale of various non-core assets (primarily rights-of-way, surface acreage and other non-core oil and gas interests) was recognized in the six months endedJune 30, 2022 compared to a gain of$10 million in the six months endedJune 30, 2021 .
Loss on Debt Extinguishment
A loss on debt extinguishment of$13 million was recognized in the six months endedJune 30, 2022 in connection with the purchase of a portion of the Convertible Notes dueMay 2026 . See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information. 49
--------------------------------------------------------------------------------
Interest Expense
For the Six Months Ended June 30, (in millions) 2022 2021 Variance Percent Change Total Interest Expense$ 58 $ 76 $ (18) (23.7) % The$18 million decrease in total interest expense was primarily due to the purchase of the$400 million 6.500% CNXM Senior Notes dueMarch 2026 during the year endedDecember 31, 2021 offset, in part, by the$400 million of 4.750% CNXM Senior Notes due 2030 that were issued during the year endedDecember 31, 2021 . The decrease was also due to the Company adopting Accounting Standards Update (ASU) 2020-06 - Accounting for Convertible Instruments and Contracts in an Entity's Own Equity onJanuary 1, 2022 . As part of the adoption, total interest expense no longer includes a non-cash interest expense component related to the Convertible Notes dueMay 2026 . During the six months endedJune 30, 2021 , total interest expense included$8 million that was amortized as additional non-cash interest expense related to the equity component of the Convertible Notes dueMay 2026 . See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.
Income Taxes
For the Six Months Ended June 30, (in millions) 2022 2021 Variance Percent Change Total Company Loss Before Income Tax$ (1,202) $ (311) $ (891) 286.5 % Income Tax Benefit$ (312) $ (55) $ (257) 467.3 % Effective Income Tax Rate 26.0 % 17.6 % 8.4 % The effective income tax rate was 26.0% for the six months endedJune 30, 2022 compared to 17.6% for the six months endedJune 30, 2021 . The effective rate for the six months endedJune 30, 2022 differs from theU.S. federal statutory rate of 21% primarily due to the impact of the partial repurchase of the Convertible Notes, equity compensation and state income taxes. The effective rate for the six months endedJune 30, 2021 differs from theU.S. federal statutory rate of 21% primarily due to the impact of equity compensation and state income taxes. See Note 4 - Income Taxes in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.
Liquidity and Capital Resources
Overview, Sources and Uses
CNX generally has satisfied its working capital requirements and funded its capital expenditures and debt service obligations with cash generated from operations and proceeds from borrowings. CNX currently believes that cash generated from operations, asset sales and the Company's borrowing capacity will be sufficient to meet the Company's working capital requirements, anticipated capital expenditures (other than major acquisitions), scheduled debt payments, anticipated dividend payments, if any, and to provide required letters of credit for the current fiscal year. Nevertheless, the ability of CNX to satisfy its working capital requirements, to service its debt obligations, to fund planned capital expenditures, or to pay dividends will depend upon future operating performance, which will be affected by prevailing economic conditions in the natural gas industry and other financial and business factors, including the current COVID-19 pandemic, some of which are beyond CNX's control. From time to time, CNX is required to post financial assurances to satisfy contractual and other requirements generated in the normal course of business. Some of these assurances are posted to comply with federal, state or other government agencies' statutes and regulations. CNX sometimes uses letters of credit to satisfy these requirements and these letters of credit reduce the Company's borrowing facility capacity.
CNX continuously reviews its liquidity and capital resources. If market conditions were to change, for instance due to a significant decline in commodity prices and our revenue were reduced significantly or operating costs were to increase significantly, our cash flows and liquidity could be reduced.
As ofJune 30, 2022 , CNX was in compliance with all of its debt covenants. After considering the potential effect of a significant decline in commodity prices, CNX currently expects to remain in compliance with its debt covenants. CNX frequently evaluates potential acquisitions. CNX has historically funded acquisitions with cash generated from operations and a variety of other sources, depending on the size of the transaction, including debt and equity financing. There can be no assurance that additional capital resources, including debt and equity financing, will be available to CNX on terms which CNX finds acceptable, or at all. 50 --------------------------------------------------------------------------------
Factors that may Impact our Liquidity
•The Company's cash on hand and access to additional liquidity. Cash and cash equivalents as ofJune 30, 2022 andDecember 31, 2021 were$0.2 million and$3.6 million , respectively. •Accounts and notes receivable - trade as ofJune 30, 2022 andDecember 31, 2021 were$447.5 million and$330.1 million , respectively. Our accounts and notes receivable balance may fluctuate as of any balance sheet date depending on the prices we receive for our natural gas and NGLs and the volumes sold. •Capital expenditures are expected to range between$550.0 million to$590.0 million for the year endedDecember 31, 2022 . For the six months endedJune 30, 2022 , CNX had capital expenditures of$259.0 million . Accelerated levels of inflation may lead to price increases beyond CNX's control that could lead to CNX incurring an increase in costs in the future. •Production volumes are expected to range between 575.0 Bcfe and 605.0 Bcfe for the year endedDecember 31, 2022 . For the six months endedJune 30, 2022 , CNX had production volumes of 293.2 Bcfe. •Prices for natural gas and NGLs are volatile, and an extended decline in the prices we receive for our natural gas and NGLs will adversely affect our financial condition and cash flows. •In order to manage the market risk exposure of volatile natural gas prices in the future, CNX enters into various physical natural gas supply transactions with both gas marketers and end users for terms varying in length. CNX also enters into various financial natural gas swap transactions to manage the market risk exposure to in-basin and out-of-basin pricing. The fair value of these contracts was a net liability of$2,554 million atJune 30, 2022 and a net liability of$976 million atDecember 31, 2021 . The Company has not experienced any issues of non-performance by derivative counterparties. See Item 3, "Quantitative and Qualitative Disclosures About Market Risk" of this Form 10-Q for further discussion of our commodity risk management. Cash Flows (in millions) For the Six Months Ended June 30, 2022 2021 Change Cash Provided by Operating Activities$ 528 $ 459 $ 69 Cash Used in Investing Activities$ (232) $ (240) $ 8 Cash Used in Financing Activities$ (299) $
(195)
Cash flows from operating activities changed in the period-to-period comparison primarily due to the following items:
•Net loss increased$634 million in the period-to-period comparison. •Adjustments to reconcile net loss to cash provided by operating activities primarily consisted of a$265 million change in deferred income taxes, a$1,081 million net change in commodity derivative instruments, and various other changes in working capital.
Cash flows from investing activities changed in the period-to-period comparison primarily due to the following items:
•Capital expenditures increased$7 million primarily due to an overall increase in costs related to inflation and an increase in midstream expenditures. •Proceeds from asset sales increased$15 million primarily due to increased sales of non-core surface and oil and gas interests in the six months endedJune 30, 2022 .
Cash flows from financing activities changed in the period-to-period comparison primarily due to the following items:
•In the six months endedJune 30, 2022 , CNX paid$27 million to repurchase$14 million of the 2026 Convertible Notes at an average price of 188.0% of the principal. •In the six months endedJune 30, 2022 , there were$3 million of net proceeds from the CNXM Credit Facility compared to$131 million of net payments during the six months endedJune 30, 2021 . •In the six months endedJune 30, 2022 , there were$58 million of net payments on the CNX Credit Facility compared to$1 million of net payments during the six months endedJune 30, 2021 . •In the six months endedJune 30, 2021 , there were$13 million of net payments on the Cardinal States Facility. See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information. •During the six months endedJune 30, 2022 , CNX repurchased$212 million of its common stock on the open market compared to$47 million during the six months endedJune 30, 2021 . 51
--------------------------------------------------------------------------------
The following is a summary of the Company's significant contractual obligations
at
Payments due by Year Less Than More Than 1 Year 1-3 Years 3-5 Years 5 Years Total Purchase Order Firm Commitments$ 646 $
- $ - $ -
252,952 446,421 385,865 826,383 1,911,621 Long-Term Debt 323,277 - 1,027,020 895,481 2,245,778 Interest on Long-Term Debt 117,653 235,306 218,780 117,844 689,583 Finance Lease Obligations 637 878 397 67 1,979 Interest on Finance Lease Obligations 67 108 65 16 256 Operating Lease Obligations 40,951 77,688 39,563 22,177 180,379 Interest on Operating Lease Obligations 7,457 9,720 3,434 2,379 22,990 Long-Term Liabilities-Employee Related (a) 2,941 4,355 4,711 32,797 44,804 Other Long-Term Liabilities (b) 249,630 10,000 10,000 68,463 338,093 Total Contractual Obligations (c)$ 996,211 $
784,476
_________________________
(a)Employee related long-term liabilities include salaried retirement contributions and work-related injuries and illnesses. (b)Other long-term liabilities include royalties and other long-term liability costs. (c)The table above does not include obligations to taxing authorities due to the uncertainty surrounding the ultimate settlement of amounts and timing of these obligations. Debt AtJune 30, 2022 , CNX had total long-term debt of$2,246 million , including the current portion of long-term debt of$324 million and excluding unamortized debt issuance costs. This long-term debt consisted of: •An aggregate principal amount of$700 million of 7.25% Senior Notes dueMarch 2027 plus$5 million of unamortized bond premium. Interest on the notes is payableMarch 14 andSeptember 14 of each year. Payment of the principal and interest on the notes is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner). •An aggregate principal amount of$500 million of 6.00% Senior Notes dueJanuary 2029 . Interest on the notes is payableJanuary 15 andJuly 15 of each year. Payment of the principal and interest on the notes is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner). •An aggregate principal amount of$400 million of 4.75% Senior Notes dueApril 2030 issued by CNXM, less$5 million of unamortized bond discount. Interest on the notes is payableApril 15 andOctober 15 of each year. Payment of the principal and interest on the notes is guaranteed by certain of CNXM's subsidiaries. CNX is not a guarantor of these notes. •An aggregate principal amount of$331 million of 2.25% Convertible Senior Notes dueMay 2026 , unless earlier redeemed, repurchased, or converted, less$7 million of unamortized bond discount and issuance costs. Interest on the notes is payableMay 1 andNovember 1 of each year. Payment of the principal and interest on the notes is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner). •An aggregate principal amount of$188 million in outstanding borrowings under the CNXM Credit Facility. Payment of the principal and interest on the CNXM Credit Facility is guaranteed by certain of CNXM's subsidiaries. CNX is not a guarantor of the CNXM Facility. •An aggregate principal amount of$134 million in outstanding borrowings under the CNX Credit Facility. Payment of the principal and interest on the CNX Credit Facility is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner).
Total Equity and Dividends
CNX had total equity of
The declaration and payment of dividends by CNX is subject to the discretion of CNX's Board of Directors, and no assurance can be given that CNX will pay dividends in the future. CNX has not paid dividends on its common stock since 2016. The determination to pay dividends in the future will depend upon, among other things, general business conditions, CNX's financial results, contractual and legal restrictions regarding the payment of dividends by CNX, planned investments by CNX, and such other factors as the Board of Directors deems relevant. CNX's revolving credit facility limits its ability to pay 52 -------------------------------------------------------------------------------- dividends in excess of an annual rate of$0.10 per share when the Company's net leverage ratio exceeds 3.00 to 1.00 and is subject to availability under CNX's revolving credit facility of at least 20% of the aggregate commitments and there being no borrowing base deficiency. CNX's revolving credit facility does not permit such dividend payments when an event of default has occurred and is continuing. The indentures to the 7.25% Senior Notes dueMarch 2027 and the 6.00% Senior Notes dueJanuary 2029 limit dividends to$0.50 per share annually unless several conditions are met. These conditions include no defaults, ability to incur additional debt and other payment limitations under the indentures. There were no defaults in the six months endedJune 30, 2022 . Off-Balance Sheet Transactions CNX does not maintain off-balance sheet transactions, arrangements, obligations or other relationships with unconsolidated entities or others that are reasonably likely to have a material current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources which are not disclosed in the Notes to the Unaudited Consolidated Financial Statements. CNX uses a combination of surety bonds, corporate guarantees and letters of credit to secure the Company's financial obligations for employee-related, environmental, performance and various other items which are not reflected in the Consolidated Balance Sheet atJune 30, 2022 . Management believes these items will expire without being funded. See Note 10 - Commitments and Contingent Liabilities in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional details of the various financial guarantees that have been issued by CNX.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted inthe United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. The preceding discussion and analysis of our consolidated results of operations and financial condition should be read in conjunction with our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. The 2021 financial statements, as part of our Form 10-K filed with theSEC , includes additional information about us, our operations, our financial condition, our critical accounting policies and accounting estimates, and should be read in conjunction with this Quarterly Report on Form 10-Q. Our significant accounting policies are described in Note 1-Significant Accounting Policies in the Notes to the Audited Consolidated Financial Statements in Item 8 of CNX's 2021 Form 10-K
Forward-Looking Statements
We are including the following cautionary statement in this Quarterly Report on Form 10-Q to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of us. With the exception of historical matters, the matters discussed in this Quarterly Report on Form 10-Q are forward-looking statements (as defined in Section 21E of the Exchange Act) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending. When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "estimate," "plan," "predict," "project," "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this Quarterly Report on Form 10-Q speak only as of the date of this Quarterly Report on Form 10-Q; 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, contingencies and uncertainties relate to, among other matters, the following: •prices for natural gas and NGLs are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand for our products, weather and the price and availability of alternative fuels; •unsuccessful drilling efforts or continued natural gas price decreases requiring write downs of our proved natural gas properties, or changes in assumptions impacting management's estimates of future financial results as well as other assumptions such as movement in our stock price, weighted-average cost of capital, terminal growth rates and industry 53 -------------------------------------------------------------------------------- multiples, could cause goodwill and other intangible assets we hold to become impaired and result in material non-cash charges to earnings; •a loss of our competitive position because of the competitive nature of the natural gas industry, consolidation within the industry or overcapacity in the industry adversely affecting our ability to sell our products and midstream services; •deterioration in the economic conditions in any of the industries in which our customers operate, a domestic or worldwide financial downturn, inflationary pressures, or negative credit market conditions; •hedging activities may prevent us from benefiting from price increases and may expose us to other risks; •negative public perception regarding our Company or industry; •events beyond our control, including a global or domestic health crisis, or political or economic instability or armed conflict in oil and gas producing regions; •increasing attention to environmental, social and governance matters; •dependence on gathering, processing and transportation facilities and other midstream facilities owned by others, and disruption of, capacity constraints in, or proximity to pipeline systems, and any decrease in availability of pipelines or other midstream facilities; •uncertainties in estimating our economically recoverable natural gas reserves and inaccuracies in our estimates; •the high-risk nature of drilling, developing and operating natural gas wells; •our identified drilling locations are scheduled out over multiple years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their development or drilling; •the substantial capital expenditures required for, and commensurate risks associated with, our development and exploration projects, as well as midstream system development; •decreases in the availability of, or increases in the price of, required personnel, services, equipment, parts and raw materials in sufficient quantities or at reasonable costs to support our operations; •our ability to find adequate water sources for our use in shale gas drilling and production operations, or our ability to dispose of, transport or recycle water used or removed in connection with our gas operations at a reasonable cost and within applicable environmental rules; •failure to successfully estimate the rate of decline of existing reserves or to find or acquire economically recoverable natural gas reserves to replace our current natural gas reserves; •losses incurred as a result of title defects in the properties in which we invest or the loss of certain leasehold or other rights related to our midstream activities; •the impact of climate change legislation, litigation and potential, as well as any adopted, environmental regulations, including those relating to greenhouse gas emissions; •environmental regulations can increase costs and introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities; •existing and future governmental laws, regulations and other legal requirements and judicial decisions that govern our business may increase our costs of doing business and may restrict our operations; •significant costs and liabilities may be incurred as a result of pipeline operations and related increase in the regulation of natural gas gathering pipelines; •changes in federal or state income tax laws or rates focused on natural gas exploration and development; •the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; •risks associated with our current long-term debt obligations; •a decrease in our borrowing base, which could decrease for a variety of reasons including lower natural gas prices, declines in natural gas proved reserves, asset sales and lending requirements or regulations; •Risks associated with our Convertible Notes, including the potential impact that the Convertible Notes may have on our reported financial results, potential dilution, our ability to raise funds to repurchase the Convertible Notes, and that provisions of the Convertible Notes could delay or prevent a beneficial takeover of the Company; •the potential impact of the capped call transaction undertaken in tandem with the Convertible Notes issuance, including counterparty risk; •challenges associated with strategic determinations, including the allocation of capital and other resources to strategic opportunities; •inability to complete acquisitions and divestitures, or failure to produce anticipated benefits of the transaction; •there is no guarantee that we will continue to repurchase shares of our common stock under our current or any future share repurchase program at levels undertaken previously or at all; •we may operate a portion of our business with one or more joint venture partners or in circumstances where we are not the operator, which may restrict our operational and corporate flexibility and we may not realize the benefits we expect to realize from a joint venture; •CONSOL Energy may not be able to satisfy its indemnification obligations in the future and such indemnities may not be sufficient to hold us harmless from the full amount of liabilities for which CONSOL Energy may be allocated responsibility; 54
--------------------------------------------------------------------------------
•cyber-incidents could have a material adverse effect on our business, financial condition or results of operations; •our success depends on key members of our management and our ability to attract and retain experienced technical and other professional personnel; •terrorist activities could materially adversely affect our business and results of operations; and •certain other factors addressed in this report and in our 2021 Form 10-K under "Risk Factors". Although forward-looking statements reflect our good faith beliefs at the time they are made, they involve known and unknown risks, uncertainties and other factors. For more information concerning factors that could cause actual results to differ materially from those conveyed in the forward-looking statements, including, among others, that our business plans may change as circumstances warrant, please refer to the "Risk Factors" and "Forward-Looking Statements" sections of our Annual Report 2021 Form 10-K and subsequent Quarterly Reports on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.
© Edgar Online, source