CNX Resources Corp (CNX)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 delivered solid operating performance with adjusted operating margin up to 42% and adjusted EBITDA of $296M, despite lower NYMEX pricing and sequentially lower volumes; GAAP diluted EPS was $1.21 and total revenue and other operating income was $583.8M .
• Guidance improved: CNX raised 2025 free cash flow to ~$640M and FCF/share to ~$4.75, increased production guidance to 620–625 Bcfe, and lifted expected asset sales to ~$115M; adjusted EBITDAX guidance was trimmed to $1,200–$1,225M while total CapEx moved up to $475–$500M .
• Strong capital returns: CNX repurchased ~$182.4M of stock in Q3, citing attractive valuation and robust free cash flow generation as drivers .
• Strategic updates and catalysts: Deep Utica costs fell ~20% YoY to ~$1,750/ft with management targeting further efficiencies; management reiterated “maintenance mode” into 2026 and highlighted growing in‑basin AI demand and the need for pipeline infrastructure .
• Leadership transition: Alan Shepard to become CEO on January 1, 2026; stability of strategy and capital allocation emphasized .

What Went Well and What Went Wrong

What Went Well

• Raised 2025 free cash flow and per‑share guidance (to ~$640M and ~$4.75) while increasing production guidance to 620–625 Bcfe, signaling stronger cash generation and volume trajectory for the year .
• Deep Utica cost reductions: “We are down almost 20% to $1,750 per foot,” with ongoing drilling efficiency improvements and repeatability across pads .
• Capital returns and discipline: “Primary driver [of buybacks] was…significant free cash flow…we continue to view the business valuation very attractive relative to its intrinsic value,” supporting ~$182M in Q3 repurchases .

What Went Wrong

• Adjusted EBITDAX guidance lowered to $1,200–$1,225M, reflecting softer NYMEX pricing and higher CapEx in the back half; adjusted EBITDA declined sequentially to $296M from $330M in Q2 .
• Sequential production declines through Q3 ahead of Q4 TILs; average daily production fell to 1,753 MMcfe from 1,842 MMcfe in Q2, consistent with front‑half weighted completions .
• Elevated reliance on asset sales to achieve raised FCF (from ~$50M to ~$115M), and total CapEx increased (to $475–$500M), modestly tightening the cash conversion balance .

Financial Results

Segment/product mix and volumes

KPIs and cost metrics

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We are down almost 20% to $1,750 per foot,” on deep Utica well costs, with continued efficiency gains targeted .
• “We’re still long term extremely bullish on the prospect for AI‑generated new demand… [but] increasingly obvious need for additional pipeline infrastructure” .
• “The primary driver [of buybacks] was… significant free cash flow… we continue to view the business valuation very attractive relative to its intrinsic value” .
• “We’re still confident we’ll be at… $575 million free asset sale number,” and free cash flow guidance incorporates working capital dynamics .
• “Expect maintenance mode… we’ll give full detail on guidance in January” .

Q&A Highlights

• Capital returns: Management emphasized valuation‑driven buybacks and robust free cash generation underpinning larger repurchases in Q3 .
• Deep Utica: Significant cost reductions to ~$1,750/ft; drilling efficiencies improving; focus on repeatability and pad development (3–4 wells, optimized spacing) .
• Activity/production cadence: Frac crews restarted in October; TILs targeted for December; activity concentrated in Q4/Q1 while keeping optionality for 2026 .
• AI demand and infrastructure: Strong long‑term demand expectations; pipeline constraints need resolution; value capture will depend on how economics distribute across the chain .
• 45Z credits: Await final rulemaking; $30M/year run rate expected; stackability context with PA Tier 1 RECs depends on pathway specifics .

Estimates Context

Values retrieved from S&P Global.
Note: S&P’s revenue/EBITDA series may differ from GAAP totals and CNX’s non‑GAAP definitions; GAAP totals and adjusted metrics are provided in the Financial Results tables above .

Key Takeaways for Investors

• Raised full‑year FCF and production guidance while maintaining disciplined “maintenance mode” into 2026; this combination of higher cash generation and stable activity supports continued repurchases .
• Non‑GAAP operating margin reached 42% and cash operating margin 62%, reflecting effective cost control and hedge discipline despite lower NYMEX and sequential volume declines .
• Deep Utica cost curve inflecting lower (~$1,750/ft) with further efficiency opportunities—enhances full‑cycle returns and optionality alongside core SWPA Marcellus .
• Guidance raised partly via higher asset sales (~$115M); monitor execution of asset monetization and back‑half CapEx (now $475–$500M) for cash conversion sensitivity .
• Estimates beat across EPS, revenue, and EBITDA in Q3; expect consensus revisions on 2025 FCF, production, and per‑share metrics following guidance update (S&P data) *.
• Strategic catalysts: December TILs, 45Z final rulemaking, AI/in‑basin demand developments, and pipeline infrastructure initiatives could drive narrative and sentiment .
• Leadership transition to Alan Shepard effective 1/1/26 preserves strategic continuity around per‑share value creation and disciplined capital allocation .

References:

• Q3 2025 8‑K & Exhibit 99.1: financials, guidance, hedging, volumes, non‑GAAP reconciliations .
• Q3 2025 call transcript: capital returns, Utica costs, AI demand/infrastructure, activity cadence, 45Z .
• Prior quarter calls/press releases: production/TIL cadence, hedging, Utica progress, AI demand .
• Leadership PR (Q3 2025): CEO transition .