CNX Resources 1Q 2026 Earnings Call - Extending Maturities and Betting on Long-Dated Gas Demand
Summary
CNX Resources navigated the first quarter of 2026 with a clear focus on balance sheet fortification and strategic patience. The company successfully refinanced its 2029 notes into new 8-year debt at 5 and 7/8%, pushing its next major maturity well into 2030. This move signals a deliberate effort to avoid maturity towers and lock in favorable terms as the gas market slowly matures. Meanwhile, the company remains in "harvest mode" for its SWFPA Marcellus properties, leveraging existing infrastructure to optimize per-well economics while cautiously blending in Utica development as a longer-term growth vector.
On the demand front, CNX management expresses long-term optimism about in-basin gas consumption, particularly from data centers and power generation, though they remain skeptical about the exact timing of these projects. The company is participating in supply RFPs and notes that basis differentials are tightening, which is already improving realized prices in the 2028 timeframe. With 13 BCF added to its long-dated hedge book and a net issuance of 12 million shares following the conversion of its remaining convertible notes, CNX is positioning itself to capture future upside without sacrificing liquidity or control.
Key Takeaways
- CNX successfully refinanced its 2029 notes into new 8-year notes at 5 and 7/8%, significantly extending its maturity profile and reducing near-term refinancing risk.
- The next major maturity is not until 2030, with management emphasizing a strategy to keep maturities 2 to 3 years out to avoid liquidity pressure.
- Production from the Utica program remains consistent with reservoir expectations, but full cost and performance data will not be available until late 2026 or early 2027.
- Management is in "harvest mode" for SWFPA Marcellus properties, prioritizing existing infrastructure and per-well economics over rapid expansion.
- Utica development will be blended in gradually as a longer-term strategic position, rather than displacing Marcellus production in the near term.
- CNX added 13 BCF to its long-dated hedge book, targeting higher realized prices in the 2028 timeframe as basis differentials continue to tighten.
- The company sees long-term optimism for in-basin gas demand, particularly from data centers and power generation, but remains cautious on the exact timing of project execution.
- CNX is agnostic to where in-basin demand develops, noting that Ohio offers faster permitting and flatter terrain, while Pennsylvania has major projects like Homer City and NextEra in the Mon Valley.
- The remaining $209 million in convertible notes are maturing on May 1, 2026, resulting in a net issuance of approximately 12 million shares after accounting for the cap call.
- The new technology business, including AutoSep and CNG/LNG initiatives, remains on track with 2026 projections, pending final guidance on the 45Z tax credit.
Full Transcript
Operator: Good day, and welcome to the CNX Resources first quarter 2026 question and answer conference call. I would now like to hand the call to Tyler Lewis, Senior Vice President of Finance and Treasurer. Please go ahead.
Tyler Lewis, Senior Vice President of Finance and Treasurer, CNX Resources: Thank you. Good morning, everybody. Welcome to CNX’s first quarter Q&A conference call. Today, we will be answering questions related to our first quarter results. This morning, we posted to our investor relations website an updated slide presentation and detailed first quarter earnings release data such as quarterly E&P data, financial statements, and non-GAAP reconciliations, which can be found in a document titled "1Q 2026 earnings results and supplemental information of CNX Resources." Also, we posted to our investor relations website our prepared remarks for the quarter, which we hope everyone had a chance to read before the call, as the call today will be used exclusively for Q&A. With me today for Q&A are Alan Shepard, our President and Chief Executive Officer, Everett Good, our Chief Financial Officer, and Navneet Behl, our Chief Operating Officer.
Please note that the company’s remarks made during this call, including answers to questions, include forward-looking statements, which are subject to various risks and uncertainties. These statements are not guarantees of future performance and our actual results may differ materially as a result of many factors. A discussion of risks and uncertainties related to those factors in CNX’s business is contained in its filings with the Securities and Exchange Commission and in the release issued today. With that, thank you for joining us this morning, and operator, please open the call up for Q&A at this time.
Operator: We will now begin the question and answer session. As a reminder, to ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, you will need to pick up your handset before pressing the keys. To withdraw your question, please press star then two. Our first question will come from Leo Mariani of Roth. Please go ahead.
Leo Mariani, Analyst, Roth: Yeah, hi, good morning. I was hoping we could hear a little bit more about the Utica. I see you guys brought 3 wells on, you know, here in the first quarter. Any comments on kind of well performance or costs? I know you’ve been working hard to kind of continue to improve the play over time, so just wanted to see if there was kind of an update there.
Alan Shepard, President and Chief Executive Officer, CNX Resources: Hey, Leo. Yeah, no, good question. We are continuing to develop the Utica program there. The most recent pad, it was a recent till towards the last part of the quarter. We’re a little ways off from providing any sort of production results from that. Everything we’ve seen so far, you know, as we’ve mentioned on previous calls, very, very consistent with what our expectation of the reservoir is, and we’re continuing sort of to make progress on the cost side. Nothing new to update at this time. You know, the way to think about it is probably towards the end of this year, we’ll be in a position to provide a more full sum.
We’ll have a nice data set, to provide to the market towards the end of 2026, early 2027, once these wells have had enough duration on them.
Leo Mariani, Analyst, Roth: Okay. Would you envision that as you guys develop a more robust data set, if the play continues to progress nicely, could we see a little bit more allocation to the Utica versus the Marcellus in the next handful of years? Do you guys think that, you know, the Marcellus still is probably gonna be a little bit economically superior based on kind of the current rate?
Alan Shepard, President and Chief Executive Officer, CNX Resources: I think the Marcellus, you know, has the advantage of having the infrastructure already there, right? You know, we optimize for kind of the best economics per well, right? Right now, the SWFPA Marcellus, you don’t need to build new infrastructure for the most part because of all the legacy investment there. You will see us kind of blend in more Utica over time as that’s sort of the longer-term position for the company. Definitely the SWFPA Marcellus, we’re in harvest mode there, and you’re gonna continue to see those for the next few years.
Leo Mariani, Analyst, Roth: Okay. That’s helpful for sure. I just wanted to ask about kind of your new tech, you know, business here. Any kind of, you know, updates there on any of the other business lines other than the kind of environment and credit monetization in which you guys have been consistently doing? Specifically anything on AutoSep or anything on like CNG or LNG business you guys have mentioned in the past?
Alan Shepard, President and Chief Executive Officer, CNX Resources: No, I think everything’s consistent with where we thought it’d be at this point in 2026. We’re still waiting for sort of the final guidance on 45Z, but we don’t think that’s gonna impact any of the projections we’ve made so far. Nothing new to update there, Leo.
Leo Mariani, Analyst, Roth: Okay. Thank you.
Operator: The next question comes from Jake Roberts of TPH. Please go ahead.
Jake Roberts, Analyst, TPH: Good morning.
Alan Shepard, President and Chief Executive Officer, CNX Resources: Hey, good morning.
Jake Roberts, Analyst, TPH: On hedging, you guys are typically transacting on a longer-term basis than a lot of your peers. Given what seems to be the prevailing theory of an improving gas space in that sort of 2028 plus timeframe, can you give some context on what you’re seeing in that 2028 market? I think you added another 13 BCF to the book with this update. Just curious what you’re seeing on that longer-dated market at the moment.
Everett Good, Chief Financial Officer, CNX Resources: Yeah. Yeah, again, on our longer term hedges, we’re certainly in a position to be more opportunistic maybe than we have in the past, and patient. As we see that price move up, and we’ve seen basis differentials tighten as well, and that’s really helped us get to a better all-in realized price in kind of the Cal 28 market. We’re targeting to bring that up over time as we approach that year.
Jake Roberts, Analyst, TPH: Okay, perfect. I appreciate that. Then just kind of, you know, I know you made some changes to the balance sheet. Just curious what the next steps are from here on that front.
Everett Good, Chief Financial Officer, CNX Resources: Yeah. We did a very positive refinancing of our 2029 notes, at new 8-year notes at 5 and 7/8, in the quarter. I mean, generally, we’ve been very consistent in that we try to push out the maturities to make sure that we’re at least 2, 3 years out before our next maturity. The next one up for us is a 2030 maturity that we’ll handle well ahead of time. It’s all about keeping the maturity profile extended and making sure that we don’t have particular periods where you have large maturity towers in front of us.
Jake Roberts, Analyst, TPH: Thanks. I appreciate the time.
Alan Shepard, President and Chief Executive Officer, CNX Resources: Thank you.
Operator: Again, if you would like to ask a question, please press star then one. Our next question will come from Michael Scialla of Stephens Inc. Please go ahead.
Michael Scialla, Analyst, Stephens Inc.: Hi, good morning.
Alan Shepard, President and Chief Executive Officer, CNX Resources: Hey, good morning, Mike.
Michael Scialla, Analyst, Stephens Inc.: Morning. Wanted to ask on in basin demand, some of your competitors are becoming a lot more confident on that, talking about that growing by more than 10 BCF per day by the end of the decade. Wanted to see if you share that enthusiasm and anything you can share with us that the company may be doing to capture some of that demand.
Alan Shepard, President and Chief Executive Officer, CNX Resources: Yeah, no, I would agree that, you know, we certainly see the same sort of long-term optimism on the demand side. You know, some of the announcements that come out are sort of mind-boggling, right? When you think about a 9 gigawatt sort of power center plant, you know, there’s been multiple of those proposed. We’re like everyone else, right? We see the announcements, and we’re watching, monitoring. You know, as RFP come out for gas supply, we’re participating in those. I mean, the magnitude of gas that’s gonna be demanded in basin in Appalachia is gonna need to be sourced by multiple producers.
If you think about the folks like ourselves that have the resource depth and sort of the credit worthiness to enter into long-term arrangements with these new demand sources, we’re certainly gonna benefit from that. Yeah, we would share that optimism. The only question in my mind is timing, right? Is it 3 years? Is it 5 years? Is it 7 years?
Michael Scialla, Analyst, Stephens Inc.: Alan, do you see that developing more on the Ohio side? Looks like it’s maybe ahead of Pennsylvania, and that can you participate as much over there if that is the case?
Alan Shepard, President and Chief Executive Officer, CNX Resources: I think, you know, for an Appalachian producer, just given the interconnectedness of the pipes, we’re pretty agnostic to where it develops. You know, you can wheel gas around here between the states pretty easily. You know, just as a sort of macro observation, Ohio has shown itself to be a little easier to do business with in terms of speed. It’s a little bit flatter over there too for some of the data centers, and they have some of the intersection points with the long haul pipelines like Clairton that make it very attractive. You know, Pennsylvania is also being competitive, though. I mean, you got the Homer City plant here and the NextEra projects that they’re still working on site selection but have indicated they’re gonna be in the Mon Valley area. Those will certainly be in our footprint.
Bigger picture, like I said, we’re agnostic. We’re just excited about the, you know, the growth in demand. As Everett mentioned, you’re starting to see differentials tighten up in the out years, and we hope that trend continues.
Michael Scialla, Analyst, Stephens Inc.: Yep, got it. Wanted to ask on your convertible notes. Can you say when during the quarter you expect that remaining, I think it’s $209 million, to convert? I’m just trying to estimate the diluted share count for the second quarter.
Everett Good, Chief Financial Officer, CNX Resources: Yeah, that maturity is on May first, so this week. Those shares will be issued about approximately 12 million shares, net issuance later this week.
Alan Shepard, President and Chief Executive Officer, CNX Resources: Yeah. We say net, that’s including the effect of the cap call that we structured when we entered into the converts. The 12’s the net out the door.
Michael Scialla, Analyst, Stephens Inc.: Great. Thank you. Appreciate it.
Operator: This concludes our question and answer session. I’d like to turn the call over to Tyler Lewis for any closing remarks.
Tyler Lewis, Senior Vice President of Finance and Treasurer, CNX Resources: Great. Thank you again for joining us this morning. Please feel free to reach out if anyone has any additional questions. Otherwise, we’ll look forward to speaking with everyone again next quarter. Thank you.
Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.
