CONSOL Energy Inc. (NYSE:CEIX) Q2 2022 Earnings Conference Call August 4, 2022 11:00 AM ET Company Participants Nathan Tucker - Director of Finance and Investor Relations Jimmy Brock - Chief Executive Officer Mitesh Thakkar - Chief Financial Officer Daniel Connell - Senior Vice President, Strategy Bob Braithwaite - Senior Vice President of Marketing and Sales Conference Call Participants Lucas Pipes - B. Riley Securities Michael Dudas - Vertical Research Nathan Martin - the Benchmark Company Operator Good d ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________________________________ __________________________________________________ FORM 10-Q __________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Co ...

Financial Data and Key Metrics Changes - CONSOL Energy achieved Q1 2022 adjusted EBITDA of $169 million and generated nearly $120 million in free cash flow, reflecting strong operational performance [9][30] - The company recorded a net loss of $4.5 million in Q1 2022, primarily due to $102 million in unrealized mark-to-market losses on commodity derivatives [28][30] - Total unrestricted cash and cash equivalents increased to $223 million, with total cash balance at $269 million at the end of March 2022 [24][26] Business Line Data and Key Metrics Changes - The Pennsylvania Mining Complex (PAMC) shipped 6.5 million tons in Q1 2022, achieving the highest quarterly average coal revenue per ton sold since becoming independent [7][16] - The CONSOL Marine Terminal shipped 3.6 million tons, generating its highest ever quarterly terminal revenue of $21.4 million, up from $18.2 million in Q1 2021 [12][13] - The Itmann project is on track for startup in the second half of 2022, with 44,000 tons of low-vol metallurgical coal produced in Q1 2022 [9][15] Market Data and Key Metrics Changes - Domestic coal demand remains robust due to supply tightness, with Henry Hub natural gas spot prices averaging $4.67 per million Btu in Q1 2022 [17] - Internationally, API2 prices averaged $234 per ton during Q1 2022, influenced by the conflict between Russia and Ukraine [18] - The company is nearly fully contracted for 2022 and has 16.3 million tons contracted for 2023, with expectations for strong pricing [19][46] Company Strategy and Development Direction - The company aims to maximize free cash flow generation while managing costs and mitigating inflationary pressures [37] - Growth initiatives include completing the Itmann project and restarting the fifth longwall at PAMC, both expected to enhance revenue and diversification [39] - The company is committed to reducing total debt and enhancing liquidity, with a goal of approximately $300 million to $350 million in total debt [26][35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong market backdrop and the potential for sustained demand for coal products [9][19] - The company anticipates continued volatility in commodity prices but expects to benefit from reduced hedge exposure as the year progresses [28][30] - Management is focused on maintaining operational efficiency and safety while navigating the current inflationary environment [37][39] Other Important Information - The company is committed to ESG goals, including a 50% reduction in Scope 1 and 2 greenhouse gas emissions by 2026 [41] - The 2021 corporate sustainability report will be released soon, highlighting the company's progress in ESG initiatives [41] Q&A Session Summary Question: Can you share the mix between export and domestic tons sold for 2023? - The company has about 10.8 million tons of the 16.3 million tons contracted for 2023, with a mix of 10.8 million tons domestic and 5.5 million tons export, with average pricing in the mid-60s [45][46] Question: What is the outlook for gas to coal switching given current gas prices? - Utilities are experiencing low inventories, and many are underbuying, which may limit coal burn despite high gas prices [49][50] Question: When will the company provide more concrete details on shareholder returns? - The company is nearing a point to provide concrete answers on shareholder returns, aiming for a formulaic approach based on free cash flow [51][54]

Financial Performance & Liquidity - CONSOL Energy reported a first quarter 2022 free cash flow of $118 million, representing 63% of the full year 2021 figure[5] - The company's first quarter 2022 adjusted EBITDA reached $169 million[5] - CONSOL Energy reduced its consolidated net indebtedness by $107 million since year-end 2021[6] - The net leverage ratio decreased to 099x, a notable improvement from 149x at the end of 2021[6] - Total CEIX Liquidity stood at $459 million as of March 31, 2022[6] Operational Highlights & Guidance - Pennsylvania Mining Complex (PAMC) shipments increased to 65 million tons, with volumes near-fully contracted for 2022 and 163 million tons contracted for 2023[5] - The company is raising its average realized revenue per ton sold range to $5800-$6100 per ton for 2022[5] - The Itmann growth project remains on track, with start-up expected in the second half of 2022; the project has an estimated capacity of 900,000+ tons per year[5, 14] Debt Management - CONSOL Energy made debt repayments, excluding premiums, of nearly $39 million in the first quarter of 2022, including $25 million of second lien notes[6] - An additional discretionary payment of $25 million was made toward the Term Loan B in April[6]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________________________________ __________________________________________________ FORM 10-Q __________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to C ...

PART I [ITEM 1. Business](index=6&type=section&id=ITEM%201.%20Business) CONSOL Energy is a leading low-cost Appalachian coal producer, managing core assets and pursuing strategic financial goals - CONSOL Energy Inc. was incorporated in Delaware on June 21, 2017, becoming an independent, publicly-traded company on November 28, 2017, after separating its coal business[18](index=18&type=chunk) - The company's core businesses include the Pennsylvania Mining Complex (PAMC), CONSOL Marine Terminal, the developing Itmann Mine, and Greenfield Reserves and Resources[24](index=24&type=chunk)[26](index=26&type=chunk) - The strategic vision focuses on maximizing cash flow, reducing debt, returning capital, and pursuing growth/diversification opportunities, including innovative coal uses[23](index=23&type=chunk)[28](index=28&type=chunk)[33](index=33&type=chunk) Key Operational and Financial Highlights (2021) | Metric | Value | |:-------------------------------------|:------------------------------------| | PAMC Recoverable Coal Reserves | **612.1 million tons** (20+ years production) | | Greenfield Reserves and Resources | **1.4 billion tons** | | Itmann Mine Recoverable Coal Reserves| **20.5 million tons** (20+ years production) | | PAMC Coal Production (2021) | **23.9 million tons** | | Itmann Mine Coal Production (2021) | **101 thousand tons** | | 2021 Export Sales | **11.0 million tons** (record for PAMC) | | 2021 Non-Power Generation Sales | **37%** of total PAMC sales | | 2022 Capital Expenditure Budget | **$162 - $195 million** | | CONSOL Marine Terminal Throughput (2021)| **13.8 million tons** | | CONSOL Marine Terminal Capacity | **15 million tons annually** | | Total Employees (as of Dec 31, 2021) | **1,575 employees** | - The company's coal features **high energy content** (average **12,938 Btu/lb** for remaining reserves) and relatively low sulfur, suitable for metallurgical, industrial, and power generation[21](index=21&type=chunk)[41](index=41&type=chunk) - In 2021, **46% of coal sales** were to export markets, and **37% of total PAMC sales** were for non-power generation, a significant increase from 2017[35](index=35&type=chunk)[108](index=108&type=chunk)[112](index=112&type=chunk) - Operations are subject to stringent federal and state environmental regulations (e.g., Clean Air Act, Clean Water Act, SMCRA) and climate change initiatives, increasing operating costs and affecting coal demand[129](index=129&type=chunk)[133](index=133&type=chunk)[143](index=143&type=chunk)[156](index=156&type=chunk)[162](index=162&type=chunk) [ITEM 1A. Risk Factors](index=26&type=section&id=ITEM%201A.%20Risk%20Factors) CONSOL Energy faces significant risks from market volatility, operational disruptions, stringent regulations, and capital market access challenges - Economic conditions, coal price volatility, and the COVID-19 pandemic are significant risks affecting demand, operational results, and cash flows[185](index=185&type=chunk)[187](index=187&type=chunk)[190](index=190&type=chunk)[192](index=192&type=chunk) - Operational risks include significant downtime of mining equipment, inability to obtain parts, reliance on a single preparation plant, and adverse geological conditions[196](index=196&type=chunk)[197](index=197&type=chunk)[199](index=199&type=chunk)[242](index=242&type=chunk) - Customer concentration is a risk, with **three customers** accounting for approximately **40% of total coal sales revenue** in fiscal year 2021[206](index=206&type=chunk) - Extensive environmental regulations (e.g., Clean Air Act, Clean Water Act, SMCRA) and climate change initiatives are expected to increase operating costs, reduce coal demand, and potentially decrease coal asset value[231](index=231&type=chunk)[232](index=232&type=chunk)[234](index=234&type=chunk)[237](index=237&type=chunk)[238](index=238&type=chunk) - The company faces litigation risks, including lawsuits related to climate change effects and potential liabilities from the Murray Energy bankruptcy regarding retiree medical benefits[235](index=235&type=chunk)[236](index=236&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk)[295](index=295&type=chunk) - Access to capital markets may be restricted due to increased consideration of ESG practices, potentially excluding the company's securities from certain investment funds and increasing financing costs[256](index=256&type=chunk)[257](index=257&type=chunk) - The company's debt agreements impose financial and restrictive covenants, and non-compliance could materially adversely affect its business, financial condition, and cash flows[297](index=297&type=chunk)[298](index=298&type=chunk) [ITEM 1B. Unresolved Staff Comments](index=43&type=section&id=ITEM%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report [ITEM 2. Properties](index=43&type=section&id=ITEM%202.%20Properties) Information regarding the company's mining properties, including the CONSOL Marine Terminal and principal executive offices, is incorporated by reference from Item 1 - Details on mining properties, including the CONSOL Marine Terminal, are provided in Item 1 of this report[337](index=337&type=chunk) [ITEM 3. Legal Proceedings](index=43&type=section&id=ITEM%203.%20Legal%20Proceedings) The company is not currently subject to any material litigation other than those described in Note 23, 'Commitments and Contingent Liabilities,' in the Notes to the Audited Consolidated Financial Statements - The company is not currently subject to any material litigation, apart from those detailed in Note 23 of the financial statements[338](index=338&type=chunk) [ITEM 4. Mine Safety and Health Administration Safety Data](index=43&type=section&id=ITEM%204.%20Mine%20Safety%20and%20Health%20Administration%20Safety%20Data) Information concerning mine safety violations and other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 of this annual report - Mine safety data, including violations and regulatory matters, is provided in Exhibit 95 of this annual report[339](index=339&type=chunk) PART II [ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities](index=44&type=section&id=ITEM%205.%20Market%20for%20Registrant's%20Common%20Equity%20and%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) CONSOL Energy's common stock trades on the New York Stock Exchange under 'CEIX', with an ongoing repurchase program and discretionary dividend payments subject to financial conditions and debt covenants - CONSOL Energy's common stock is listed on the New York Stock Exchange under the symbol **'CEIX'**[341](index=341&type=chunk) CONSOL Energy Inc. Stock Performance vs. Benchmarks (November 3, 2017 - December 31, 2021) | Date | CONSOL Energy Inc. | S&P 500 Stock Index | Peer Group | |:--------------------|:-------------------|:--------------------|:-----------| | November 3, 2017 | 100.0 | 100.0 | 100.0 | | November 30, 2017 | 200.0 | 102.3 | 104.9 | | December 31, 2017 | 359.2 | 103.3 | 118.2 | | December 31, 2018 | 288.4 | 96.9 | 101.1 | | December 31, 2019 | 132.1 | 124.9 | 67.0 | | December 31, 2020 | 65.7 | 145.3 | 44.0 | | December 31, 2021 | 206.8 | 184.4 | 137.3 | - As of February 11, 2022, approximately **$127 million** remained available under the company's stock and debt repurchase program, which can be modified or suspended at any time[347](index=347&type=chunk) - Dividend payments are at the discretion of the Board of Directors and are subject to various factors, including financial results and contractual debt restrictions, with a total net leverage ratio of **1.49 to 1.00** as of December 31, 2021[348](index=348&type=chunk)[349](index=349&type=chunk) [ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=ITEM%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section reviews CONSOL Energy's financial performance, highlighting 2021 results, 2022 outlook, and critical accounting policies, including impacts from the COVID-19 pandemic - The COVID-19 pandemic caused an unprecedented decline in coal demand in early 2020, but demand improved throughout 2021, leading to higher pricing and increased sales volumes[353](index=353&type=chunk)[354](index=354&type=chunk)[379](index=379&type=chunk) 2021 Highlights and 2022 Outlook | Metric | 2021 Highlight | 2022 Outlook (Expected) | |:----------------------------------------|:--------------------|:-------------------------------------------------------------| | Coal Shipments | **23.7 million tons** | **23-25 million tons** (PAMC) | | Export Market Shipments | **11.0 million tons** | N/A | | Non-Power Generation Sales | **37%** of total | N/A | | Total Consolidated Indebtedness Payments| **$101.2 million** | N/A | | PAMC Average Revenue per Ton Sold | N/A | **$55.00-$57.00 per ton** | | PAMC Average Cash Cost of Coal Sold per Ton | N/A | **$29.00-$31.00 per ton** | | Capital Expenditures | N/A | **$110-$125 million** (PAMC maintenance), **$42-$47 million** (Itmann Mine), **$10-$23 million** (Other) | Net Income (Loss) Attributable to CONSOL Energy Inc. Stockholders (in millions) | Year | Net Income (Loss) | |:-----|:------------------| | 2021 | **$34.11 million** | | 2020 | **($9.76 million)** | | 2019 | **$76.00 million** | PAMC Division Performance (in millions, except per ton) | Metric | 2021 | 2020 | Variance (2021 vs 2020) | |:----------------------------------------|:--------------------|:--------------------|:------------------------| | Earnings Before Income Tax | **$94 million** | **$17 million** | **$77 million** | | Coal Revenue | **$1,085 million** | **$771 million** | **$314 million** | | Total Tons Sold | **23.7 million tons** | **18.7 million tons** | **5.0 million tons** | | Average Revenue per Ton Sold | **$45.75 per ton** | **$41.31 per ton** | **$4.44 per ton** | | Average Cash Cost of Coal Sold per Ton | **$28.25 per ton** | **$29.12 per ton** | **($0.87) per ton** | | Average Cash Margin per Ton Sold | **$17.50 per ton** | **$12.19 per ton** | **$5.31 per ton** | CONSOL Marine Terminal Division Performance (in millions) | Metric | 2021 | 2020 | Variance (2021 vs 2020) | |:----------------------------|:------------------|:------------------|:------------------------| | Earnings Before Income Tax | **$32 million** | **$33 million** | **($1 million)** | | Throughput Tons | **13.8 million tons** | **10.1 million tons** | **3.7 million tons** | - Total liquidity as of December 31, 2021, was **$381 million**, comprising **$150 million** in cash and cash equivalents and **$231 million** in unused capacity on the revolving credit facility[457](index=457&type=chunk) Cash Flows (in millions) | Activity | 2021 | 2020 | Change | |:------------------------------|:------------------|:------------------|:------------------| | Operating Activities | **$306 million** | **$129 million** | **$177 million** | | Investing Activities | **($127 million)**| **($76 million)** | **($51 million)** | | Financing Activities | **($31 million)** | **($82 million)** | **$51 million** | - The company was in compliance with all financial covenants under its Senior Secured Credit Facilities as of December 31, 2021, with a maximum first lien gross leverage ratio of **0.97 to 1.00** and a maximum total net leverage ratio of **1.49 to 1.00**[475](index=475&type=chunk)[661](index=661&type=chunk) Long-Term Debt and Finance Lease Obligations (in millions) as of December 31, 2021 | Debt Type | Amount | |:----------------------------------------|:------------------| | Term Loan B (due Sep 2024) | **$239 million** | | 11.00% Senior Secured Second Lien Notes (due Nov 2025) | **$149 million** | | MEDCO Revenue Bonds (due Sep 2025) | **$103 million** | | 9.00% PEDFA Solid Waste Disposal Revenue Bonds (due Apr 2028) | **$75 million** | | Term Loan A (due Mar 2023) | **$41 million** | | Finance Leases | **$48 million** | | Other Asset-Backed Financing | **$2 million** | | Advance Royalty Commitments | **$5 million** | | **Total Long-Term Debt and Finance Lease Obligations** | **$661 million** | [ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk](index=67&type=section&id=ITEM%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) CONSOL Energy is exposed to market risks from commodity prices, interest rates, and foreign exchange rates, managed through hedging strategies and USD-denominated transactions - The company manages commodity price risk through targeted hedging strategies, utilizing swap arrangements to mitigate volatility in spot export business and index-priced physical contracts[514](index=514&type=chunk)[516](index=516&type=chunk) - Unrealized mark-to-market losses on commodity derivative instruments totaled **$52 million** for the year ended December 31, 2021, driven by significant API2 coal price fluctuations[516](index=516&type=chunk) - Interest rate risk is primarily associated with variable-rate debt (**$225 million** outstanding as of December 31, 2021), where a **100 basis-point increase** would increase annual pre-tax interest expense by **$2 million**[517](index=517&type=chunk) - All transactions are denominated in U.S. dollars, limiting direct foreign exchange rate risk, though currency fluctuations can affect the competitiveness of CONSOL Energy's coal in international markets[518](index=518&type=chunk) [ITEM 8. Financial Statements and Supplementary Data](index=68&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents CONSOL Energy's audited consolidated financial statements, including the independent auditor's unqualified opinion and a critical audit matter regarding asset retirement obligations - Ernst & Young LLP issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2021[524](index=524&type=chunk)[525](index=525&type=chunk) - A critical audit matter identified was the auditing of closed-mine asset retirement obligations due to the complexity of assumptions used in measurement, such as future expenditures, mine life, inflation rates, and credit-adjusted risk-free interest rates[530](index=530&type=chunk) Consolidated Statements of Income (in millions) | Metric | 2021 | 2020 | 2019 | |:----------------------------------------|:--------------------|:--------------------|:--------------------| | Total Revenue and Other Income | **$1,258.95 million** | **$1,021.64 million** | **$1,430.90 million** | | Total Costs and Expenses | **$1,223.54 million** | **$1,030.89 million** | **$1,332.81 million** | | Earnings (Loss) Before Income Tax | **$35.41 million** | **($9.24 million)** | **$98.10 million** | | Income Tax Expense | **$1.30 million** | **$3.97 million** | **$4.54 million** | | Net Income (Loss) | **$34.11 million** | **($13.21 million)**| **$93.56 million** | | Net Income (Loss) Attributable to CONSOL Energy Inc. Stockholders | **$34.11 million** | **($9.76 million)** | **$76.00 million** | | Basic Earnings (Loss) per Share | **$0.99** | **($0.37)** | **$2.82** | | Dilutive Earnings (Loss) per Share | **$0.96** | **($0.37)** | **$2.81** | Consolidated Balance Sheets (in millions) as of December 31 | Asset/Liability | 2021 | 2020 | |:--------------------------------------|:--------------------|:--------------------| | Total Current Assets | **$386.34 million** | **$292.94 million** | | Total Property, Plant and Equipment—Net | **$1,978.55 million** | **$2,049.06 million** | | Total Other Assets | **$208.63 million** | **$181.36 million** | | **TOTAL ASSETS** | **$2,573.52 million** | **$2,523.37 million** | | Total Current Liabilities | **$445.23 million** | **$368.47 million** | | Total Long-Term Debt | **$594.65 million** | **$603.06 million** | | Total Deferred Credits and Other Liabilities | **$860.82 million** | **$998.32 million** | | **TOTAL LIABILITIES** | **$1,900.70 million** | **$1,969.85 million** | | Total CONSOL Energy Inc. Stockholders' Equity | **$672.81 million** | **$553.52 million** | Consolidated Statements of Cash Flows (in millions) | Activity | 2021 | 2020 | 2019 | |:------------------------------|:--------------------|:--------------------|:--------------------| | Net Cash Provided by Operating Activities | **$305.57 million** | **$129.33 million** | **$244.57 million** | | Net Cash Used in Investing Activities | **($127.36 million)** | **($76.33 million)**| **($172.54 million)** | | Net Cash Used in Financing Activities | **($30.85 million)** | **($82.44 million)**| **($256.67 million)** | | Net Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash | **$147.36 million** | **($29.44 million)**| **($184.64 million)** | - Key accounting policies include the use of estimates for postretirement benefits, CWP, workers' compensation, asset retirement obligations, and deferred income taxes, with no material impact from FASB ASUs adopted in 2021[559](index=559&type=chunk)[578](index=578&type=chunk)[579](index=579&type=chunk)[580](index=580&type=chunk)[595](index=595&type=chunk)[596](index=596&type=chunk)[597](index=597&type=chunk)[598](index=598&type=chunk)[599](index=599&type=chunk)[600](index=600&type=chunk) - The CCR Merger on December 30, 2020, resulted in CONSOL Energy acquiring the remaining common units of PA Mining Complex LP, making it a wholly-owned subsidiary, accounted for as an equity transaction[606](index=606&type=chunk)[608](index=608&type=chunk) [ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures](index=111&type=section&id=ITEM%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures) There have been no changes in or disagreements with accountants on accounting and financial disclosures [ITEM 9A. Controls and Procedures](index=111&type=section&id=ITEM%209A.%20Controls%20and%20Procedures) CONSOL Energy's management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2021, with an unqualified attestation report from Ernst & Young LLP - The company's disclosure controls and procedures were deemed effective as of December 31, 2021[775](index=775&type=chunk) - Management concluded that CONSOL Energy maintained effective internal control over financial reporting as of December 31, 2021, based on the COSO (2013 framework) criteria[779](index=779&type=chunk) - Ernst & Young LLP issued an unqualified attestation report on the company's internal control over financial reporting[780](index=780&type=chunk)[784](index=784&type=chunk) - There were no material changes in the company's internal controls over financial reporting during the period[781](index=781&type=chunk) [ITEM 9B. Other Information](index=113&type=section&id=ITEM%209B.%20Other%20Information) This section details an amendment to the CEO's employment agreement for a retention payment and equity vesting, and reports a resolved mine safety incident at the Bailey Mine - The CEO's employment agreement was amended to include an additional **$1 million** retention payment and full vesting of equity awards, contingent on continued employment through December 31, 2023[792](index=792&type=chunk)[795](index=795&type=chunk)[796](index=796&type=chunk) - A mine safety incident occurred at the Bailey Mine on February 9, 2022, where an imminent danger order was issued due to methane, which was subsequently resolved without injury or damage[798](index=798&type=chunk) [ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=113&type=section&id=ITEM%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to CONSOL Energy Inc PART III [ITEM 10. Directors and Executive Officers of the Registrant](index=113&type=section&id=ITEM%2010.%20Directors%20and%20Executive%20Officers%20of%20the%20Registrant) Information regarding the company's directors, executive officers, and corporate governance, including the Code of Business Conduct and Ethics, is incorporated by reference from the Proxy Statement for the 2022 Annual Meeting of Stockholders - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2022 Proxy Statement[801](index=801&type=chunk) - The company maintains a written Code of Business Conduct and Ethics applicable to its principal executive, financial, and accounting officers, available on its website[802](index=802&type=chunk) [ITEM 11. Executive Compensation](index=113&type=section&id=ITEM%2011.%20Executive%20Compensation) Information concerning executive compensation is incorporated by reference from the Proxy Statement for the 2022 Annual Meeting of Stockholders - Executive compensation details are incorporated by reference from the Proxy Statement[804](index=804&type=chunk) [ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=113&type=section&id=ITEM%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership of certain beneficial owners and management, as well as related stockholder matters, is incorporated by reference from the Proxy Statement for the 2022 Annual Meeting of Stockholders - Security ownership information for beneficial owners and management is incorporated by reference from the Proxy Statement[805](index=805&type=chunk) [ITEM 13. Certain Relationships and Related Transactions and Director Independence Principal Accounting Fees and Services](index=114&type=section&id=ITEM%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence%20Principal%20Accounting%20Fees%20and%20Services) Information on certain relationships and related transactions, director independence, and principal accounting fees and services is incorporated by reference from the Proxy Statement for the 2022 Annual Meeting of Stockholders - Details on related party transactions, director independence, and accounting fees are incorporated by reference from the Proxy Statement[807](index=807&type=chunk)[808](index=808&type=chunk) PART IV [ITEM 15. Exhibits and Financial Statement Schedules](index=114&type=section&id=ITEM%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the 10-K report, including the independent auditor's report, consolidated financial statements, and various corporate and debt agreements - The section lists all financial statements, schedules, and exhibits, including the Report of Independent Registered Public Accounting Firm and consolidated financial statements[810](index=810&type=chunk) - Exhibits include key agreements such as the Separation and Distribution Agreement, Tax Matters Agreement, Employee Matters Agreement, and various credit and financing agreements[810](index=810&type=chunk)[811](index=811&type=chunk)[813](index=813&type=chunk)[815](index=815&type=chunk)[816](index=816&type=chunk)[817](index=817&type=chunk)[819](index=819&type=chunk)[820](index=820&type=chunk) - Management contracts and compensatory plans, such as the Omnibus Performance Incentive Plan and CEO Employment Agreement, are also listed as exhibits[816](index=816&type=chunk)[817](index=817&type=chunk)[818](index=818&type=chunk)[819](index=819&type=chunk)[820](index=820&type=chunk) [SIGNATURES](index=117&type=section&id=SIGNATURES) This section contains the duly authorized signatures of CONSOL Energy Inc.'s principal executive officer, principal financial officer, principal accounting officer, and directors, certifying the report as of February 11, 2022 - The report is signed by James A. Brock (Director, CEO, and President), Miteshkumar B. Thakkar (CFO), John M. Rothka (Chief Accounting Officer), and other directors, as of February 11, 2022[826](index=826&type=chunk)[827](index=827&type=chunk)

Financial Data and Key Metrics Changes - CONSOL Energy reported a net income of $117.3 million for Q4 2021, translating to $3.30 per diluted share, which included a $115.5 million unrealized pre-tax mark-to-market gain related to commodity derivatives [32] - The company generated $186 million of free cash flow for the full year 2021, marking the fourth consecutive year of positive free cash flow generation since becoming an independent public company [35] - The cash cost of coal sold for the full year 2021 was $28.25 per ton, a decrease from $29.12 per ton in 2020 [14] Business Line Data and Key Metrics Changes - Coal production at the Pennsylvania mining complex was 5.6 million tons in Q4 2021, with total production for the year reaching 23.9 million tons [11][12] - The average revenue per ton for coal sold in Q4 2021 was $51.27, compared to $39.05 in the same period of the previous year [17] - The CONSOL Marine Terminal had throughput volume of 3.1 million tons in Q4 2021, with terminal revenues of $15.5 million [15] Market Data and Key Metrics Changes - The company expects robust coal demand both domestically and internationally due to strong forward pricing and tight supply [18] - CONSOL secured long-term coal supply contracts for approximately 7 million tons to be delivered through 2024, with 73% contracted directly with a large industrial customer [19] Company Strategy and Development Direction - The company is focused on completing the Itmann low-vol metallurgical project, which is expected to ramp up production in the second half of 2022 [20][42] - CONSOL aims to strengthen its balance sheet and liquidity while reducing leverage and outstanding debt [45] - The company is also committed to expanding its presence in the export market while maintaining its domestic customer base [45] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2022, expecting to see increased pricing and revenue growth, particularly with the Itmann project coming online [10][43] - The company acknowledged ongoing inflationary pressures affecting costs but emphasized efforts to manage these challenges [40][75] Other Important Information - The company reported a cash cost of coal sold per ton of $30.81 in Q4 2021, up from $27.49 in Q4 2020, primarily due to geological issues and increased maintenance costs [13] - The company has a fully funded status on its defined benefit pension plan and has de-risked it further by adjusting the equity to fixed income split [27] Q&A Session Summary Question: How many tons were affected by transportation delays? - Management indicated that it is difficult to quantify the exact number of tons affected but noted that they ended the year with 310,000 tons in inventory and missed production opportunities due to rail service issues [53][54] Question: What is the split between domestic and export contracts for 2022? - Management stated that they exported just over 11 million tons in 2021 and expect to export around 9 million tons in 2022, with a focus on domestic demand [56][57] Question: What is the timeline for the fifth longwall? - The fifth longwall is expected to be operational by late November to early December 2022, depending on development progress [63][79] Question: What are the priorities for free cash flow management? - Management emphasized that paying down debt remains the top priority, with plans to balance this with capital expenditures for the Itmann project [66][68]

CONSOL ENERGY. | --- | --- | --- | --- | --- | |-------|-------|--------|---------------------|------------------| | | | | | | | | | | | | | | | rd 3 | Quarter 2021 | | | | | | Earnings Supplement | | | | | | | November 2, 2021 | Disclaimer This presentation contains statements, estimates and projections which are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended). Statements that are not historical are forward-looking, and include, without limitation, ...

Financial Data and Key Metrics Changes - CONSOL Energy reported a net loss of $113.8 million or $3.30 per diluted share for Q3 2021, compared to a loss of $7.2 million or $0.28 per diluted share in Q3 2020 [36] - Adjusted EBITDA for Q3 2021 was $66.6 million, slightly down from $68.3 million in the same quarter last year [36] - Free cash flow generation was nearly $35 million in Q3 2021, bringing the year-to-date total to $162 million [29][38] - The cash balance increased by approximately $12 million during Q3 2021, totaling $162 million in unrestricted cash and cash equivalents [31] Business Line Data and Key Metrics Changes - Coal production at the Pennsylvania mining complex increased to 5.3 million tons in Q3 2021 from 4.5 million tons in Q3 2020, driven by recovering demand [14] - Average cash cost of coal sold per ton rose to $30.64 in Q3 2021 from $28.64 in Q3 2020 due to operational challenges and increased maintenance costs [15] - The CONSOL Marine terminal throughput volume increased to 2.8 million tons in Q3 2021 from 2 million tons in the prior year [16] Market Data and Key Metrics Changes - Henry Hub natural gas spot prices averaged $4.35 per million BTU in Q3 2021, a 118% increase compared to Q3 2020 [20] - API2 spot prices for seaborne thermal coal ended Q3 2021 at $151 per ton, a 193% improvement versus Q3 2020 [21] - U.S. coal demand in 2021 is expected to increase by 110 million tons, while production is projected to improve by only 59 million tons, leading to tight supply [25] Company Strategy and Development Direction - The company aims to reduce Scope 1 and 2 greenhouse gas emissions by 50% by 2026 and achieve net zero emissions by 2040, emphasizing its commitment to ESG [6][7] - Development of the 5th longwall at the Enlow Fork mine is set to recommence due to improved market conditions and demand [9] - The Itmann mine and preparation plant are progressing as planned, with commissioning targeted for the second half of 2022 [12][40] Management's Comments on Operating Environment and Future Outlook - Management highlighted a significant supply-demand imbalance in the coal market, expecting robust market conditions to continue [24] - The company is optimistic about its ability to generate free cash flow and reduce debt levels, especially with improved coal markets [43] - Management noted ongoing operational challenges but expressed confidence in overcoming geological issues and ramping up production [71] Other Important Information - The company has secured contracts for 20.2 million tons in 2022 and 5.8 million tons in 2023, reflecting strong demand and market positioning [23] - The company is focused on balancing domestic and export markets, with approximately 50% of total sales volume shipped to the export market year-to-date [46] Q&A Session Summary Question: Can you elaborate on the capital costs for the 5th longwall project? - Management indicated that the upfront investment would be in the single-digits of millions, primarily for rebuilding existing equipment [54][56] Question: What pricing for 2022-2023 have you locked in under fixed-price contracts? - The average price for the 20.2 million tons contracted for 2022 is expected to be in the low $50s, with approximately 6 million tons sold for export [60][63] Question: Can you elaborate on the logistics issues faced during the quarter? - Management acknowledged rail issues but noted improvements are expected, with hiring efforts underway to meet increased demand [66] Question: How do you see costs trending in 2022? - Management anticipates small inflationary pressures and aims to keep inflation below 5% while addressing labor market challenges [71] Question: What is the expected production from the Itmann mine in 2022? - The Itmann project is expected to ramp up to an annual run rate of approximately 900,000 tons in the latter part of 2022 [76] Question: How will you utilize free cash flow moving forward? - The company aims to reduce outstanding debt and considers various initiatives for capital allocation, including the Itmann project [101]

Part I. Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents CONSOL Energy Inc.'s unaudited consolidated financial statements for the three and nine months ended September 30, 2021 and 2020, including statements of income, comprehensive income, balance sheets, stockholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, significant transactions, revenue recognition, and other financial details [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Net Loss Attributable to CONSOL Energy Inc. Stockholders | Period | 2021 (Thousands) | 2020 (Thousands) | | :----- | :--------------- | :--------------- | | 3 Months Ended Sep 30 | $(113,789) | $(7,224) | | 9 Months Ended Sep 30 | $(83,213) | $(22,840) | Total Revenue and Other Income | Period | 2021 (Thousands) | 2020 (Thousands) | | :----- | :--------------- | :--------------- | | 3 Months Ended Sep 30 | $149,012 | $243,219 | | 9 Months Ended Sep 30 | $778,322 | $697,036 | Unrealized Loss on Commodity Derivative Instruments | Period | 2021 (Thousands) | 2020 (Thousands) | | :----- | :--------------- | :--------------- | | 3 Months Ended Sep 30 | $(147,306) | $— | | 9 Months Ended Sep 30 | $(167,743) | $— | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive Loss Attributable to CONSOL Energy Inc. Stockholders | Period | 2021 (Thousands) | 2020 (Thousands) | | :----- | :--------------- | :--------------- | | 3 Months Ended Sep 30 | $(110,040) | $(3,238) | | 9 Months Ended Sep 30 | $(71,174) | $(14,421) | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) Key Balance Sheet Items | Item | Sep 30, 2021 (Thousands) | Dec 31, 2020 (Thousands) | | :-------------------------- | :----------------------- | :----------------------- | | Total Assets | $2,589,747 | $2,523,366 | | Total Liabilities | $2,105,167 | $1,969,847 | | Total Equity | $484,580 | $553,519 | | Cash and Cash Equivalents | $161,981 | $50,850 | [Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Total Equity | Date | Amount (Thousands) | | :--- | :----------------- | | December 31, 2020 | $553,519 | | September 30, 2021 | $484,580 | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (Nine Months Ended Sep 30) | Activity | 2021 (Thousands) | 2020 (Thousands) | | :-------------------------------- | :--------------- | :--------------- | | Net Cash Provided by Operating Activities | $253,143 | $62,388 | | Net Cash Used in Investing Activities | $(91,603) | $(57,405) | | Net Cash Used in Financing Activities | $(84) | $(62,992) | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of the accounting policies, significant transactions, and financial instrument disclosures, covering areas such as the CCR Merger, revenue recognition, pension costs, income taxes, and long-term debt [NOTE 1—BASIS OF PRESENTATION](index=12&type=section&id=NOTE%201%E2%80%94BASIS%20OF%20PRESENTATION) - The financial statements are prepared in accordance with GAAP for interim financial information and Form 10-Q instructions, with all necessary adjustments included[44](index=44&type=chunk) - Management does not expect ASU 2021-04, effective after **December 15, 2021**, to have a material impact on the Company's financial statements[47](index=47&type=chunk) [NOTE 2—MAJOR TRANSACTIONS](index=14&type=section&id=NOTE%202%E2%80%94MAJOR%20TRANSACTIONS) - The CCR Merger was completed on **December 30, 2020**, resulting in CONSOL Energy issuing **7,967,690 common shares** to acquire outstanding CCR units for an implied consideration of **$51.71 million**[53](index=53&type=chunk) - The CCR Merger was accounted for as an equity transaction, reducing noncontrolling interest and increasing common stock and capital in excess of par value, with no gain or loss recognized in the income statement[55](index=55&type=chunk) - A settlement transaction with Murray Energy was finalized on **September 16, 2020**, resolving disputes and resulting in **$4.871 million** in Other Receivables, net, and **$19.156 million** in Other Assets, net, as of **September 30, 2021**[58](index=58&type=chunk) [NOTE 3—REVENUE](index=15&type=section&id=NOTE%203%E2%80%94REVENUE) Total Revenue from Contracts with Customers | Period | 2021 (Thousands) | 2020 (Thousands) | | :----- | :--------------- | :--------------- | | 3 Months Ended Sep 30 | $292,016 | $214,292 | | 9 Months Ended Sep 30 | $925,998 | $610,688 | - Coal revenue is disaggregated into domestic (typically fixed-price, longer-term contracts) and export (spot or shorter-term, market-index-based pricing) categories, reflecting different pricing and contract characteristics[61](index=61&type=chunk) - Freight revenue, which is fully offset by freight expense, is recognized when coal title passes to the customer, covering transportation costs to the sales point[68](index=68&type=chunk) [NOTE 4—MISCELLANEOUS OTHER INCOME](index=17&type=section&id=NOTE%204%E2%80%94MISCELLANEOUS%20OTHER%20INCOME) Miscellaneous Other Income | Item | 3 Months Sep 30, 2021 (Thousands) | 3 Months Sep 30, 2020 (Thousands) | 9 Months Sep 30, 2021 (Thousands) | 9 Months Sep 30, 2020 (Thousands) | | :----------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Royalty Income - Non-Operated Coal | $2,821 | $2,241 | $5,095 | $9,638 | | Interest Income | $737 | $76 | $2,406 | $442 | | Rental Income | $256 | $255 | $716 | $1,077 | | Contract Buyout | $— | $— | $— | $40,969 | | Sale of Certain Coal Lease Contracts | $— | $17,847 | $— | $17,847 | | Other | $467 | $582 | $1,287 | $1,134 | | **Total Miscellaneous Other Income** | **$4,281** | **$21,001** | **$9,504** | **$71,107** | - The decrease in miscellaneous other income for the nine months ended **September 30, 2021**, was primarily due to the non-recurrence of contract buyout income and sales of coal lease contracts that occurred in **2020**[71](index=71&type=chunk)[72](index=72&type=chunk) [NOTE 5—COMPONENTS OF PENSION AND OTHER POST-EMPLOYMENT BENEFIT (OPEB) PLANS NET PERIODIC BENEFIT COSTS](index=17&type=section&id=NOTE%205%E2%80%94COMPONENTS%20OF%20PENSION%20AND%20OTHER%20POST-EMPLOYMENT%20BENEFIT%20(OPEB)%20PLANS%20NET%20PERIODIC%20BENEFIT%20COSTS) - For the nine months ended **September 30, 2021**, lump sum payments exceeded projected service and interest costs, triggering settlement accounting and resulting in a **$22 thousand expense** and a **$1.009 million reduction** in pension liability[75](index=75&type=chunk) [NOTE 6—COMPONENTS OF COAL WORKERS' PNEUMOCONIOSIS (CWP) AND WORKERS' COMPENSATION NET PERIODIC BENEFIT COSTS](index=17&type=section&id=NOTE%206%E2%80%94COMPONENTS%20OF%20COAL%20WORKERS'%20PNEUMOCONIOSIS%20(CWP)%20AND%20WORKERS'%20COMPENSATION%20NET%20PERIODIC%20BENEFIT%20COSTS) Net Periodic Benefit Cost (Nine Months Ended Sep 30) | Benefit Type | 2021 (Thousands) | 2020 (Thousands) | | :------------- | :--------------- | :--------------- | | CWP | $13,151 | $12,310 | | Workers' Compensation | $5,245 | $7,389 | [NOTE 7—INCOME TAXES](index=19&type=section&id=NOTE%207%E2%80%94INCOME%20TAXES) Income Tax (Benefit) Expense | Period | 2021 (Thousands) | 2020 (Thousands) | | :----- | :--------------- | :--------------- | | 3 Months Ended Sep 30 | $(40,258) | $5,918 | | 9 Months Ended Sep 30 | $(43,966) | $143 | - The effective tax rate for both periods differed from the U.S. federal statutory rate of **21%** primarily due to the income tax benefit for excess percentage depletion, partially offset by tax expense related to compensation[79](index=79&type=chunk)[80](index=80&type=chunk) [NOTE 8—CREDIT LOSSES](index=19&type=section&id=NOTE%208%E2%80%94CREDIT%20LOSSES) - The Company adopted ASU 2016-013, Financial Instruments - Credit Losses (Topic 326), on **January 1, 2020**, recording a cumulative-effect adjustment to retained earnings of **$3.298 million**, net of taxes[83](index=83&type=chunk) Allowance for Credit Losses on Receivables | Item | Dec 31, 2020 (Thousands) | Sep 30, 2021 (Thousands) | | :---------------- | :----------------------- | :----------------------- | | Trade Receivables | $4,426 | $4,360 | | Other Receivables | $4,710 | $8,682 | | Other Assets | $1,661 | $2,690 | | **Total** | **$10,797** | **$15,732** | [NOTE 9—INVENTORIES](index=21&type=section&id=NOTE%209%E2%80%94INVENTORIES) Inventory Components | Item | Sep 30, 2021 (Thousands) | Dec 31, 2020 (Thousands) | | :---------- | :----------------------- | :----------------------- | | Coal | $8,521 | $7,163 | | Supplies | $47,494 | $49,037 | | **Total Inventories** | **$56,015** | **$56,200** | [NOTE 10—ACCOUNTS RECEIVABLE SECURITIZATION](index=21&type=section&id=NOTE%2010%E2%80%94ACCOUNTS%20RECEIVABLE%20SECURITIZATION) - The securitization facility, with a maximum of **$100 million**, had no outstanding borrowings and **$24.306 million** in letters of credit outstanding as of **September 30, 2021**, leaving no unused capacity[96](index=96&type=chunk) - The facility's maturity date was extended from **August 30, 2021**, to **March 27, 2023**[93](index=93&type=chunk) [NOTE 11—PROPERTY, PLANT AND EQUIPMENT](index=22&type=section&id=NOTE%2011%E2%80%94PROPERTY,%20PLANT%20AND%20EQUIPMENT) Total Property, Plant and Equipment, Net | Date | Amount (Thousands) | | :--- | :----------------- | | September 30, 2021 | $1,998,957 | | December 31, 2020 | $2,049,062 | - Amortization expense for assets under finance leases was **$6.409 million** for the three months and **$21.456 million** for the nine months ended **September 30, 2021**[99](index=99&type=chunk) [NOTE 12—OTHER ACCRUED LIABILITIES](index=22&type=section&id=NOTE%2012%E2%80%94OTHER%20ACCRUED%20LIABILITIES) Total Other Accrued Liabilities | Date | Amount (Thousands) | | :--- | :----------------- | | September 30, 2021 | $382,910 | | December 31, 2020 | $223,154 | - Commodity Derivatives liability increased significantly to **$144.094 million** at **September 30, 2021**, from **$0** at **December 31, 2020**[100](index=100&type=chunk) [NOTE 13—LONG-TERM DEBT](index=23&type=section&id=NOTE%2013%E2%80%94LONG-TERM%20DEBT) Long-Term Debt | Date | Amount (Thousands) | | :--- | :----------------- | | September 30, 2021 | $597,697 | | December 31, 2020 | $566,858 | - The Company issued **$75 million** in **9.00% PEDFA Solid Waste Disposal Revenue Bonds** in **April 2021**, maturing in **April 2051**[102](index=102&type=chunk)[113](index=113&type=chunk) - As of **September 30, 2021**, the Company was in compliance with all financial covenants under its Senior Secured Credit Facilities, with a maximum first lien gross leverage ratio of **1.12:1.00**, a maximum total net leverage ratio of **1.64:1.00**, and a minimum fixed charge coverage ratio of **1.67:1.00**[106](index=106&type=chunk) - Interest rate swaps, designated as cash flow hedges, resulted in unrealized gains of **$390 thousand** (net of tax) for the three months and **$1.195 million** (net of tax) for the nine months ended **September 30, 2021**[116](index=116&type=chunk) [NOTE 14—COMMITMENTS AND CONTINGENT LIABILITIES](index=27&type=section&id=NOTE%2014%E2%80%94COMMITMENTS%20AND%20CONTINGENT%20LIABILITIES) - The Company is involved in various legal proceedings, including the Fitzwater and Casey litigations concerning retiree health care benefits, and a dispute with the UMWA 1992 Benefit Plan regarding Coal Act liabilities[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) Financial Guarantees and Commitments (September 30, 2021) | Type | Total Amounts Committed (Thousands) | | :-------------------- | :---------------------------------- | | Total Letters of Credit | $183,990 | | Total Surety Bonds | $625,692 | | Other Guarantees | $6,889 | [NOTE 15—DERIVATIVES](index=30&type=section&id=NOTE%2015%E2%80%94DERIVATIVES) - The Company uses interest rate swaps to manage interest rate risk on long-term debt and coal-related financial contracts to manage exposure to coal prices[130](index=130&type=chunk)[131](index=131&type=chunk) Unrealized Loss on Commodity Derivative Instruments | Period | Amount (Thousands) | | :----- | :--------------- | | 3 Months Ended Sep 30, 2021 | $(147,306) | | 9 Months Ended Sep 30, 2021 | $(167,743) | - As of **September 30, 2021**, the Company held coal-related financial contracts for a notional volume of **2.0 million metric tons**, settling in **2022**[131](index=131&type=chunk) [NOTE 16—FAIR VALUE OF FINANCIAL INSTRUMENTS](index=31&type=section&id=NOTE%2016%E2%80%94FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) - The Company measures fair value using a three-level hierarchy, with Level 2 inputs (observable inputs like LIBOR-based discount rates) used for interest rate swaps and coal commodity contracts[141](index=141&type=chunk) Fair Value of Long-Term Debt | Date | Carrying Amount (Thousands) | Fair Value (Thousands) | | :--- | :-------------------------- | :--------------------- | | September 30, 2021 | $635,201 | $647,978 | | December 31, 2020 | $610,510 | $517,862 | [NOTE 17—SEGMENT INFORMATION](index=32&type=section&id=NOTE%2017%E2%80%94SEGMENT%20INFORMATION) - CONSOL Energy operates two reportable segments: the Pennsylvania Mining Complex (PAMC) and the CONSOL Marine Terminal, with an 'Other' segment for corporate and diversified activities[146](index=146&type=chunk) Adjusted EBITDA by Segment (Three Months Ended Sep 30) | Segment | 2021 (Thousands) | 2020 (Thousands) | | :-------------------- | :--------------- | :--------------- | | PAMC | $69,492 | $45,272 | | CONSOL Marine Terminal | $7,319 | $11,342 | | Other | $(10,247) | $11,684 | | **Consolidated** | **$66,564** | **$68,298** | Adjusted EBITDA by Segment (Nine Months Ended Sep 30) | Segment | 2021 (Thousands) | 2020 (Thousands) | | :-------------------- | :--------------- | :--------------- | | PAMC | $246,943 | $135,732 | | CONSOL Marine Terminal | $30,244 | $32,556 | | Other | $(19,491) | $(2,811) | | **Consolidated** | **$257,696** | **$165,477** | [NOTE 18—RELATED PARTY TRANSACTIONS](index=35&type=section&id=NOTE%2018%E2%80%94RELATED%20PARTY%20TRANSACTIONS) - Following the CCR Merger on **December 30, 2020**, CONSOL Coal Resources became an indirect wholly-owned subsidiary of CONSOL Energy[154](index=154&type=chunk) - Prior to the merger, CONSOL Energy provided services to CCR, with total charges of **$2.776 million** for the three months and **$9.142 million** for the nine months ended **September 30, 2020**[156](index=156&type=chunk) [NOTE 19—STOCK AND DEBT REPURCHASES](index=36&type=section&id=NOTE%2019%E2%80%94STOCK%20AND%20DEBT%20REPURCHASES) - The Board of Directors approved a stock and debt repurchase program with an aggregate limit of **$320 million**, extended until **December 31, 2022**[158](index=158&type=chunk) - During the nine months ended **September 30, 2021**, the Company spent **$17.092 million** to retire **$18.040 million** of its **11.00% Senior Secured Second Lien Notes**[160](index=160&type=chunk) - No shares of common stock were repurchased under this program during the nine months ended **September 30, 2021** and **2020**[160](index=160&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and operational results, highlighting the impact of the COVID-19 pandemic, business segments, key performance metrics, and a detailed comparison of financial performance for the three and nine months ended September 30, 2021, versus 2020 [COVID-19 Update](index=37&type=section&id=COVID-19%20Update) - The general business environment has improved, leading to higher demand for the Company's products as COVID-19 restrictions eased, but global supply chain imbalances and inflationary pressures persist[165](index=165&type=chunk) - The Company continues to monitor and mitigate potential risks from COVID-19, which could still impact operations, cash flows, and financial condition[165](index=165&type=chunk) [Our Business](index=37&type=section&id=Our%20Business) - CONSOL Energy is a low-cost producer of high-quality bituminous coal in the Appalachian Basin, with core assets including the Pennsylvania Mining Complex (PAMC), CONSOL Marine Terminal, and the developing Itmann Mine[167](index=167&type=chunk)[171](index=171&type=chunk) - The Itmann Mine is expected to be fully operational in the **second half of 2022**, producing approximately **900 thousand product tons** per year of high-quality, low-vol coking coal[171](index=171&type=chunk)[275](index=275&type=chunk) - The Company announced targets to achieve a **50% reduction** in direct operating greenhouse gas emissions by the end of **2026** (compared to **2019**) and aims for **net-zero Scope 1 and 2 emissions by 2040**[177](index=177&type=chunk) Key Operational Metrics (Q3 2021 vs. Q3 2020) | Metric | Q3 2021 | Q3 2020 | | :-------------------- | :------ | :------ | | Coal Shipments | 5.4M tons | 4.5M tons | | Average Revenue per Ton | $47.46 | $40.55 | | API2 Spot Prices (YoY) | +193% | N/A | - The Company is recommencing development of the fifth longwall at the PAMC, with operations expected to resume in late **Q4 2022**[177](index=177&type=chunk) - As of **November 2, 2021**, the Company is fully contracted for **2021**, with **20.2 million tons** contracted for **2022** and **5.8 million tons** for **2023**[178](index=178&type=chunk)[174](index=174&type=chunk) [How We Evaluate Our Operations](index=39&type=section&id=How%20We%20Evaluate%20Our%20Operations) - Management uses various financial and operating metrics, including non-GAAP measures like cost of coal sold, cash cost of coal sold, average cash cost of coal sold per ton, average margin per ton sold, and Adjusted EBITDA, to assess performance and allocate resources[180](index=180&type=chunk)[181](index=181&type=chunk) Average Cash Cost of Coal Sold per Ton | Period | 2021 | 2020 | | :----- | :--- | :--- | | 3 Months Ended Sep 30 | $30.64 | $28.64 | | 9 Months Ended Sep 30 | $27.45 | $29.88 | Average Cash Margin per Ton Sold | Period | 2021 | 2020 | | :----- | :--- | :--- | | 3 Months Ended Sep 30 | $16.82 | $11.91 | | 9 Months Ended Sep 30 | $16.60 | $12.47 | [Results of Operations](index=44&type=section&id=Results%20of%20Operations) The Company reported a higher net loss for both the three and nine months ended September 30, 2021, primarily due to significant unrealized losses on commodity derivative instruments, while coal production and revenue increased substantially across segments due to improved demand [Three Months Ended September 30, 2021 Compared with the Three Months Ended September 30, 2020](index=44&type=section&id=Three%20Months%20Ended%20September%2030,%202021%20Compared%20with%20the%20Three%20Months%20Ended%20September%2030,%202020) Net Loss Attributable to CONSOL Energy Inc. Stockholders | Period | 2021 (Millions) | 2020 (Millions) | | :----- | :-------------- | :-------------- | | 3 Months Ended Sep 30 | $(114) | $(7) | [PAMC Analysis](index=44&type=section&id=PAMC%20ANALYSIS%20(Three%20Months)) PAMC Coal Production (Thousands of Tons) | Mine | Q3 2021 | Q3 2020 | Variance | | :----------- | :------ | :------ | :------- | | Bailey | 2,278 | 1,808 | 470 | | Enlow Fork | 1,542 | 1,436 | 106 | | Harvey | 1,474 | 1,291 | 183 | | **Total** | **5,294** | **4,535** | **759** | - PAMC coal production increased by **759 thousand tons** due to improved demand, but was negatively impacted by acute operational and geological issues and transportation delays in **Q3 2021**[203](index=203&type=chunk) PAMC Coal Revenue and Cost per Ton (Q3) | Metric | Q3 2021 | Q3 2020 | Variance | | :------------------------------------------------ | :------ | :------ | :------- | | Total Tons Sold (millions) | 5.4 | 4.5 | 0.9 | | Average Revenue per Ton Sold | $47.46 | $40.55 | $6.91 | | Average Cost of Coal Sold per Ton | $39.71 | $38.70 | $1.01 | | Average Cash Margin per Ton Sold | $16.82 | $11.91 | $4.91 | - Coal revenue increased by **$72 million** to **$256 million**, driven by higher pricing on export contracts and power-price adjusted contracts, and increased sales volume[201](index=201&type=chunk)[206](index=206&type=chunk) - An unrealized loss of **$147 million** on commodity derivative instruments was recognized due to increased API2 coal markets[201](index=201&type=chunk)[209](index=209&type=chunk) - Selling, General, and Administrative Costs increased by **$9 million** to **$18 million**, primarily due to higher expense under incentive compensation plans and an increase in the Company's share price[201](index=201&type=chunk)[212](index=212&type=chunk) [CONSOL Marine Terminal Analysis](index=48&type=section&id=CONSOL%20MARINE%20TERMINAL%20ANALYSIS%20(Three%20Months)) CONSOL Marine Terminal Financials (Q3, Millions) | Item | Q3 2021 | Q3 2020 | Variance | | :-------------------- | :------ | :------ | :------- | | Terminal Revenue | $14 | $17 | $(3) | | Earnings Before Income Tax | $5 | $8 | $(3) | | Throughput Tons (millions) | 2.8 | 2.0 | 0.8 | - Terminal revenue decreased by **$3 million** despite increased throughput tons, due to the expiration of a take-or-pay contract that provided revenue for unused capacity in **2020**[216](index=216&type=chunk) [Other Analysis](index=48&type=section&id=Other%20Analysis%20(Three%20Months)) Other Business Activities Financials (Q3, Millions) | Item | Q3 2021 | Q3 2020 | Variance | | :-------------------------- | :------ | :------ | :------- | | Miscellaneous Other Income | $3 | $21 | $(18) | | Gain on Sale of Assets | $0 | $8 | $(8) | | Loss Before Income Tax | $(28) | $(4) | $(24) | | Employee-Related Legacy Liability Expense | $2 | $7 | $(5) | - Miscellaneous other income decreased by **$18 million**, primarily due to the non-recurrence of income from the sale of coal lease contracts in **Q3 2020**[222](index=222&type=chunk) - Employee-Related Legacy Liability Expense decreased by **$5 million** due to changes in actuarial assumptions[225](index=225&type=chunk) [Nine Months Ended September 30, 2021 Compared with the Nine Months Ended September 30, 2020](index=51&type=section&id=Nine%20Months%20Ended%20September%2030,%202021%20Compared%20with%20the%20Nine%20Months%20Ended%20September%2030,%202020) Net Loss Attributable to CONSOL Energy Inc. Stockholders | Period | 2021 (Millions) | 2020 (Millions) | | :----- | :-------------- | :-------------- | | 9 Months Ended Sep 30 | $(83) | $(23) | [PAMC Analysis](index=51&type=section&id=PAMC%20ANALYSIS%20(Nine%20Months)) PAMC Coal Production (Thousands of Tons) | Mine | 9 Months 2021 | 9 Months 2020 | Variance | | :----------- | :------------ | :------------ | :------- | | Bailey | 9,078 | 5,619 | 3,459 | | Enlow Fork | 5,133 | 4,054 | 1,079 | | Harvey | 4,015 | 3,222 | 793 | | **Total** | **18,226** | **12,895** | **5,331** | - PAMC coal production increased by **5.3 million tons** due to significantly improved demand following the lifting of COVID-19 restrictions[240](index=240&type=chunk) PAMC Coal Revenue and Cost per Ton (9 Months) | Metric | 9 Months 2021 | 9 Months 2020 | Variance | | :------------------------------------------------ | :------------ | :------------ | :------- | | Total Tons Sold (millions) | 18.1 | 12.8 | 5.3 | | Average Revenue per Ton Sold | $44.05 | $42.35 | $1.70 | | Average Cost of Coal Sold per Ton | $35.53 | $39.25 | $(3.72) | | Average Cash Margin per Ton Sold | $16.60 | $12.47 | $4.13 | - Coal revenue increased by **$257 million** to **$799 million**, driven by higher sales volume and improved market dynamics[239](index=239&type=chunk)[243](index=243&type=chunk) - Unrealized losses on commodity derivative instruments totaled **$168 million** due to increased API2 pricing[239](index=239&type=chunk)[246](index=246&type=chunk) - Other costs decreased by **$54 million**, primarily due to the non-recurrence of costs associated with temporarily idling longwalls in **2020**[239](index=239&type=chunk)[249](index=249&type=chunk) - Selling, General, and Administrative Costs increased by **$25 million** to **$56 million**, mainly due to higher incentive compensation expenses and increased share price[239](index=239&type=chunk)[250](index=250&type=chunk) [CONSOL Marine Terminal Analysis](index=54&type=section&id=CONSOL%20MARINE%20TERMINAL%20ANALYSIS%20(Nine%20Months)) CONSOL Marine Terminal Financials (9 Months, Millions) | Item | 9 Months 2021 | 9 Months 2020 | Variance | | :-------------------- | :------------ | :------------ | :------- | | Terminal Revenue | $50 | $49 | $1 | | Earnings Before Income Tax | $22 | $24 | $(2) | | Throughput Tons (millions) | 10.7 | 7.0 | 3.7 | - Terminal revenue increased by **$1 million**, driven by a **3.7 million ton** increase in throughput, but partially offset by the expiration of a take-or-pay contract from **2020**[254](index=254&type=chunk) [Other Analysis](index=54&type=section&id=Other%20Analysis%20(Nine%20Months)) Other Business Activities Financials (9 Months, Millions) | Item | 9 Months 2021 | 9 Months 2020 | Variance | | :-------------------------- | :------------ | :------------ | :------- | | Miscellaneous Other Income | $7 | $30 | $(23) | | Gain on Sale of Assets | $10 | $15 | $(5) | | Loss Before Income Tax | $(67) | $(34) | $(33) | | Employee-Related Legacy Liability Expense | $6 | $19 | $(13) | | Gain on Debt Extinguishment | $0 | $(18) | $18 | - Miscellaneous other income decreased by **$23 million**, primarily due to the non-recurrence of customer contract buyouts and sales of coal lease contracts in **2020**[260](index=260&type=chunk)[262](index=262&type=chunk) - Employee-Related Legacy Liability Expense decreased by **$13 million** due to changes in actuarial assumptions[264](index=264&type=chunk) - Interest expense, net, increased due to interest on **PEDFA tax-exempt bonds** issued in **Q2 2021**, partially offset by de-leveraging efforts[269](index=269&type=chunk) [Liquidity and Capital Resources](index=58&type=section&id=Liquidity%20and%20Capital%20Resources) - The Company's liquidity sources include operating cash flow, cash on hand, borrowings under credit facilities, and proceeds from PEDFA Bonds, expected to be sufficient for short-term and long-term needs[271](index=271&type=chunk)[274](index=274&type=chunk) Cash Flows (Nine Months Ended Sep 30, Millions) | Activity | 2021 | 2020 | Change | | :-------------------------------- | :--- | :--- | :----- | | Cash Provided by Operating Activities | $253 | $62 | $191 | | Cash Used in Investing Activities | $(92) | $(57) | $(35) | | Cash Used in Financing Activities | $0 | $(63) | $63 | - Capital expenditures increased by **$37 million** to **$103 million**, primarily due to an early buyout of longwall shields and construction of a preparation plant for the Itmann Mine[282](index=282&type=chunk)[283](index=283&type=chunk) - The Company borrowed **$75 million** from **PEDFA tax-exempt solid waste disposal revenue bonds** in **April 2021** to fund a capital construction project on the coarse refuse disposal area[272](index=272&type=chunk)[275](index=275&type=chunk) - As of **September 30, 2021**, the Revolving Credit Facility had no outstanding borrowings and **$160 million** in letters of credit, leaving **$240 million** of unused capacity[292](index=292&type=chunk) - The Company spent **$17 million** to retire **$18 million** of its **11.00% Senior Secured Second Lien Notes** during the nine months ended **September 30, 2021**[311](index=311&type=chunk) - Total equity attributable to CONSOL Energy was **$485 million** at **September 30, 2021**, down from **$554 million** at **December 31, 2020**[312](index=312&type=chunk) - Dividend payments are subject to Board discretion and credit facility covenants, which limit annual dividends to **$25 million** (or **$50 million** if total net leverage is below **1.50:1.00**), with additional conditions[313](index=313&type=chunk) [Forward-Looking Statements](index=68&type=section&id=Forward-Looking%20Statements) - This section contains forward-looking statements regarding future production, revenues, income, and capital spending, which are subject to significant business, economic, competitive, regulatory, and other risks and uncertainties[316](index=316&type=chunk) - Key risks include economic downturns, coal price volatility, COVID-19 impacts, equipment downtime, reliance on major customers, inability to acquire reserves or complete projects, changes in coal demand, transportation disruptions, and environmental regulations[316](index=316&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=70&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the Company's exposure to market risks, particularly commodity price risk, and its strategies for managing these risks through hedging activities [Commodity Price Risk](index=70&type=section&id=Commodity%20Price%20Risk) - CONSOL Energy is exposed to market price risk from coal sales, which include spot market sales and contracts with variable pricing based on quality, calorific value, or electric power prices[321](index=321&type=chunk) - The Company initiated a targeted commodity price hedging strategy in **Q2 2021** to mitigate pricing volatility and secure future cash flows for export sales[323](index=323&type=chunk) Unrealized Losses on Commodity Derivative Instruments | Period | Amount (Thousands) | | :----- | :--------------- | | 3 Months Ended Sep 30, 2021 | $147,306 | | 9 Months Ended Sep 30, 2021 | $168,743 | [Item 4. Controls and Procedures](index=72&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the Company's disclosure controls and procedures as of September 30, 2021, and states that there were no material changes in internal controls over financial reporting during the quarter [Disclosure Controls and Procedures](index=72&type=section&id=Disclosure%20Controls%20and%20Procedures) - The Company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of **September 30, 2021**[325](index=325&type=chunk) [Changes in Internal Controls over Financial Reporting](index=72&type=section&id=Changes%20in%20Internal%20Controls%20over%20Financial%20Reporting) - There were no changes in internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, the Company's internal controls during the fiscal quarter[326](index=326&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=72&type=section&id=Item%201.%20Legal%20Proceedings) This section states that the Company is not currently subject to any material litigation beyond what is disclosed in Note 14 to the Consolidated Financial Statements - The Company is not currently subject to any material litigation, except as disclosed in Note 14 - Commitments and Contingent Liabilities[328](index=328&type=chunk) [Item 1A. Risk Factors](index=72&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the comprehensive list of risk factors detailed in the Company's 2020 Form 10-K, along with any updates in subsequent 10-Q filings, emphasizing that these are not exhaustive - Readers should consider the risk factors described in the Company's **2020 Form 10-K**, as updated by subsequent Form 10-Qs, as additional risks may exist[329](index=329&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=73&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that there were no repurchases of the Company's equity securities during the three months ended September 30, 2021, and provides an update on the remaining authority under the stock and debt repurchase program - No repurchases of the Company's equity securities occurred during the three months ended **September 30, 2021**[332](index=332&type=chunk) - As of **November 2, 2021**, approximately **$127 million** remained available under the **$320 million** stock and debt repurchase program, which terminates on **December 31, 2022**[332](index=332&type=chunk) [Item 3. Defaults Upon Senior Securities](index=73&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[334](index=334&type=chunk) [Item 4. Mine Safety Disclosures](index=73&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that information regarding mine safety violations and other regulatory matters is included in Exhibit 95 of this report - Mine safety disclosures are provided in Exhibit 95 to this Quarterly Report on Form 10-Q[335](index=335&type=chunk) [Item 5. Other Information](index=73&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report - No other information is reported in this section[336](index=336&type=chunk) [Item 6. Exhibits](index=74&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including certifications, mine safety data, and interactive data files Key Exhibits | Exhibit | Description | | :------ | :---------- | | 31.1 | Certification of Chief Executive Officer | | 31.2 | Certification of Chief Financial Officer | | 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 | | 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 | | 95 | Mine Safety and Health Administration Safety Data | | 101 | Interactive Data File (Inline XBRL) | | 104 | Cover Page Interactive Data File (Inline XBRL) | [Signatures](index=75&type=section&id=Signatures) This section contains the required signatures for the Form 10-Q report, confirming its submission on behalf of CONSOL Energy Inc - The report is duly signed on **November 2, 2021**, by **James A. Brock** and **Miteshkumar B. Thakkar** on behalf of CONSOL Energy Inc[342](index=342&type=chunk)[343](index=343&type=chunk)