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CNX Resources Corp (CNX)·Q2 2025 Earnings Summary

Executive Summary

  • CNX delivered a strong Q2 2025, with adjusted EPS of ~$0.58 versus ~$0.45 consensus and revenue of ~$541.9M versus ~$478.9M consensus; GAAP results were boosted by a $456M unrealized derivative gain, driving diluted EPS to $2.53. Consensus: EPS beat ~$0.13 and revenue beat ~$63M. Bold beat catalyst: production outperformance and hedging tailwinds . EPS/Revenue estimates and actuals from S&P Global: $0.44806 vs $0.5823*, $478.9M vs $541.9M*.
  • Production rose 13% q/q to 167.6 Bcfe, with shale volumes up 16% q/q; management cited strong Apex Marcellus wells, deeper Utica performance slightly above expectations, and base uptime/efficiency as drivers .
  • Guidance tweaks: 2025 production raised at the low end (615–620 Bcfe vs 605–620), NYMEX price assumption reduced ($3.59 vs $3.76), differential widened (−$0.67 vs −$0.59), environmental attribute FCF impact cut to ~$65M (from ~$75M), and FCF/share increased to ~$4.07 (from ~$3.97) due to lower share count; total FCF unchanged at ~$575M .
  • Near-term setup: Q3 and Q4 volumes to sequentially decline ahead of next batch of TILs in late Q4; Capex lighter in Q3 then re-accelerates in Q4. Narrative catalysts: AI/data center demand in Appalachia and monetization pathways for remediated mine gas (RMG) under PA Tier 1 RECs and 45Z, with potential incremental value from voluntary markets .

What Went Well and What Went Wrong

What Went Well

  • Production outperformance: 167.6 Bcfe in Q2 (+13% q/q), driven by Apex Marcellus and deep Utica wells slightly above expectations, base production efficiency gains, and higher uptime .
  • Adjusted EBITDAX stability: $332M in Q2 vs $325M in Q1, with operating margin holding in the mid-30% range despite price volatility; cash from operations increased to $282M .
  • Strategic positioning for AI demand and RMG monetization: “Offering the RMG product… to get… data centers down to a zero carbon profile,” with ongoing discussions and third-party marketing; management views RMG as a premium pathway recognized across manufacturing, power (PA PUC), hydrogen (45E), and transportation fuels (45Z) .

What Went Wrong

  • Environmental attributes FCF impact revised down: 2025 impact lowered to ~$65M (from ~$75M), reflecting mid-20s $/MWh pricing in PA Tier 1 strips and market conditions .
  • Differential widened in guidance: 2025 natural gas differential assumption moved to −$0.67 (from −$0.59), offsetting some NYMEX changes and affecting realized pricing .
  • Derivatives’ volatility: While Q2 booked a $456M unrealized gain, the hedge book remains exposed to basis movements; management projects realized losses on hedges year-to-date and forward periods under current strip, underscoring earnings variability tied to hedge marks .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Total Revenue and Other Operating Income ($USD Millions)$321.4 $136.6 $82.4 $962.4
Natural Gas, NGL & Oil Sales incl Cash Settlements (Non-GAAP, $USD Millions)$346 $386 $441 $450
Diluted EPS ($USD)$(0.12) $(0.97) $(1.34) $2.53
Adjusted EBITDAX ($USD Millions)$242 $280 $325 $332
Operating Margin (%) (Company-defined)29% 33% 37% 34%
Cash from Operations ($USD Millions)$191.8 $268.8 $215.7 $282.5
Free Cash Flow ($USD Millions)$47 $199 $100 $188
KPIQ2 2024Q4 2024Q1 2025Q2 2025
Total Production (Bcfe)134.0 141.9 147.8 167.6
Shale Sales Volumes (Bcf)111.7 115.6 126.0 146.9
CBM Sales Volumes (Bcf)9.7 9.9 9.3 9.4
NGL Sales Volumes (Bcfe)12.4 16.2 12.2 11.1
Average Daily Production (MMcfe)1,472.5 1,543.1 1,642.3 1,841.8
Avg Sales Price – Natural Gas ($/Mcf)$1.60 $2.41 $3.66 $2.84
TGC Cost ($/Mcfe)$0.68 $0.69 $0.64 $0.58
Production Cash Costs ($/Mcfe, before DD&A)$0.86 $0.87 $0.85 $0.79
Estimates vs ActualsQ2 2025 EstimateQ2 2025 ActualBeat/Miss
Primary EPS0.44806*0.5823*Beat
Revenue ($USD)478,933,900*541,907,000*Beat

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Production Volumes (Bcfe)2025E605–620 615–620 Raised low end
% Liquids2025E~7%–~8% ~7%–~8% Maintained
% of Natural Gas Hedged2025E85% 85% Maintained
Natural Gas NYMEX ($/MMBtu)2025E$3.76 $3.59 Lowered
Natural Gas Differential ($/MMBtu)2025E$(0.59) $(0.67) Widened
NGL Realized Price ($/Bbl)2025E~$20.00 ~$21.00 Raised
Adjusted EBITDAX ($M)2025E$1,225–$1,275 $1,225–$1,275 Maintained
Total Capex ($M)2025E$450–$500 $450–$500 Maintained
EA Sales FCF Impact ($M)2025E~$75 ~$65 Lowered
Free Cash Flow ($M)2025E~$575 ~$575 Maintained
FCF per Share2025E~$3.97 ~$4.07 Raised (lower share count)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
AI/Data center demand in AppalachiaAnticipated announcements; bullish backwind but awaiting construction; hedge/cap allocation unchanged Continues to be bullish; wait-and-see until first data center signs electricity offtake; potential for tighter market before long-term deals Positive/bullish, cautious execution
RMG monetization pathways (PA Tier 1, 45Z)Recognized in power and hydrogen; seeking rule clarity; EA FCF run-rate ~$75M; Q4 FCF timing skew Stackable potential with 45Z and PA Tier 1 under initial guidance; credit pricing mid-$20s/MWh supports ~$65M EA FCF; exploring voluntary markets for higher value Broadening pathways; near-term EA FCF lower
Activity/TIL cadenceHeavy 1H25; optionality to add 2H25; overall flat base volumes Sequential production declines expected in Q3/Q4; next TILs late Q4; Capex lighter in Q3, picks up in Q4 Managed moderation until late Q4
Utica developmentCompetitive returns, spacing tests (1,300’/1,500’); cost per lateral foot improving Q2 TILs slightly above expectations; costs already below target; more reps to improve efficiency; competitive IRRs vs Marcellus Strengthening performance
Marketing/differentialsMarket optimization with FT portfolio; no structural changes Guidance differential widened to −$0.67; hedging/basis exposure remains Mixed (wider diffs)

Management Commentary

  • “Our mantra around here is Appalachia first… offering the RMG product… as a true sustainable… solution to get folks… down to a zero carbon… profile on these new data centers.” – Alan Shepard .
  • “We’re excited to see [RMG] develop… not just on existing volumes, but enough incentive from the voluntary markets to go out and gather some additional volumes.” – Alan Shepard .
  • “At this point in the cost structure [deep Utica] wells are in the mix in terms of IRR competitiveness… we can be super focused on just the best projects at the right time.” – Alan Shepard .
  • “All our Utica wells… are within our expectations and our latest TILs… are slightly above our expectation.” – Navneet Behl .
  • “Anything that creates in-basin demand… is going to help everyone… [but] our hedging strategy… remains exactly the same.” – Alan Shepard; Nicholas DeIuliis .

Q&A Highlights

  • Activity cadence: Expect sequential production declines in Q3/Q4, next TILs late Q4; one-rig program continues; Capex lighter in Q3, higher in Q4 .
  • EA credits pricing and guidance: PA Tier 1 strip in mid-$20s/MWh underpin revised ~$65M EA FCF; potential stackability with 45Z subject to final rules .
  • Utica performance and costs: Q2 TILs above expectations; costs already below target; strong IRR competitiveness with Marcellus; continued ops focus to drive further efficiencies .
  • AI/data center monetization: RMG positioned to deliver “zero-carbon” profile for gas-powered data centers; value recognition expected via voluntary markets and existing regulatory pathways; waiting for first concrete offtake .
  • Hedging and basis exposure: Guidance differential widened; hedging gain/loss projections reflect potential realized losses under current strip despite Q2 unrealized gains .

Estimates Context

  • Q2 2025 EPS and revenue exceeded consensus: EPS $0.5823 vs $0.44806 and revenue $541.9M vs $478.9M; estimate counts: 8 for EPS, 2 for revenue. Bold beat signals, likely driven by production outperformance and realized pricing, with GAAP uplift from unrealized derivative gains . Values retrieved from S&P Global.*
  • Given raised production guidance and Utica performance, Street models should reflect higher near-term production trajectory and potential EA FCF run-rate reset (~$65M) with optional upside from voluntary markets and 45Z stackability once rules finalize .

Key Takeaways for Investors

  • Production strength and execution: Shale and deep Utica wells drove a meaningful q/q production increase, supporting an EPS and revenue beat; expect managed moderation until late Q4 TILs .
  • Quality of earnings: GAAP diluted EPS benefited from a $456M unrealized derivative gain; use non-GAAP metrics (Adjusted EBITDAX, sales incl. cash settlements) to assess recurring performance .
  • Guidance mix: Low-end production raised; pricing assumptions adjusted (lower NYMEX, wider differential); EA FCF impact trimmed to ~$65M; FCF/share boosted via lower shares outstanding; total 2025 FCF steady at ~$575M .
  • Capital discipline: One-rig program and mid-80s capital efficiency remain central; Capex flexes with market conditions, but focus stays on optimizing FCF/share .
  • RMG optionality: Multiple monetization pathways (PA Tier 1, 45E/45Z, voluntary markets) create upside leverage to AI/data center demand in Appalachia; timing/scale remain the gating variables .
  • Cost structure trending favorable: TGC at $0.58/Mcfe and production cash costs at $0.79/Mcfe in Q2, positioning CNX competitively into late-year activity .
  • Hedging/basis vigilance: Differential widened in guidance; while Q2 saw unrealized hedge gains, forward realized losses are possible under current strip—watch basis dynamics and in-basin demand evolution .

References

  • Q2 2025 8-K and Exhibit 99.1: Financials, production, guidance, non-GAAP reconciliations .
  • Q2 2025 earnings call transcript Q&A and duplicate transcript .
  • Q1 2025 8-K and Exhibit 99.1 (trend) .
  • Q4 2024 8-K and Exhibit 99.1 (trend) .
  • Q2 2025 press releases: results posting and call logistics .

Values retrieved from S&P Global.*