Inside Consol Energy’s Production Guidance and Management Strategies

What Analysts Are Saying about Consol Energy's 1Q16 Earnings

(Continued from Prior Part)

Consol Energy’s production guidance: E&P division

For 2016, Consol Energy (CNX) expects its E&P (exploration and production) division’s total production to grow by ~15% YoY (year-over-year). CNX expects natural gas (USO) (UGAZ) (DGAZ) production of ~335 Bcf (billion cubic feet), natural gas liquids production of ~6,000 MBbls (thousand barrels), crude oil (USO) (UWTI) production of ~65 MBbls, and condensate production of ~1,000 MBbls in the same year. In 2015, CNX’s total E&P production was ~329 Bcf.

CNX is expecting its 2016 production growth to come mainly from the Marcellus Shale and the Utica Shale. Marcellus Shale is expected to contribute ~54% in CNX’s total E&P production for 2016. Southwestern Energy (SWN), which also operates in the Marcellus Shale, is expecting a ~15% decrease in its yearly production for 2016. EQT Corporation (EQT) operates in the Utica Shale.

CNX is expecting 2016 production growth to come from the following three areas:

• New in-line wells: focusing on completing approximately 31 wells that are already drilled and turning in-line an additional 36 wells, with an expectation of turn-in-line at approximately 67 wells in 2016

• Non-operated production: focusing on ventures outside of the joint ventures with Hess Corporation (HES) and Noble Energy (NBL)

• Additional midstream debottlenecking: focusing on back-end weighted projects

Coal division and capex

In response to ongoing coal market uncertainty, in January 2016, CNX’s Coal division reduced its 2016 expected sales forecast to 27 million–32 million tons, as compared to its previous guidance of 30.6 million–33.4 million tons.

This reduction was due to the weakness in the coal market resulting from unusually warm winter weather and low natural gas prices. CNX’s 2016 coal guidance is almost flat when compared with 2015 sales of ~29.2 million tons. CNX did not give any specific guidance for 1Q16 productions.

For 2016, CNX now expects its E&P division capital budget to be in the range of $205 million–$325 million, which is ~$185 million lower than the previous guidance of $400 million–$500 million, based on midpoints.

Now let’s look at analyst recommendations.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - What to Expect from Consol Energy’s 1Q16 Earnings

• Part 3 - What Analysts Are Saying about Consol Energy: The Word from the Street

• Part 4 - Analyzing Consol Energy’s Stock Movement ahead of Its 1Q16 Earnings