CNX Resources Corp - Quarter Report: 2021 June (Form 10-Q)

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, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-14901

__________________________________________________

CNX Resources Corporation

(Exact name of registrant as specified in its charter)


Delaware						51-0337383
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

CNX Center

1000 CONSOL Energy Drive Suite 400

Canonsburg, PA 15317-6506

(724) 485-4000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Common Stock ($.01 par value)

CNX

New York Stock Exchange

Preferred Share Purchase Rights

New York Stock Exchange

__________________________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller Reporting Company ☐

Emerging Growth Company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class						Shares outstanding as of July 15, 2021
Common stock, $0.01 par value						217,921,030

TABLE OF CONTENTS


		Page
PART I FINANCIAL INFORMATION

ITEM 1.	Unaudited Condensed Consolidated Financial Statements
	Consolidated Statements of Income for the three and six months ended June 30, 2021 and 2020	5
	Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2021 and 2020	6
	Consolidated Balance Sheets at June 30, 2021 and December 31, 2020	7
	Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2021 and 2020	8
	Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020	11
	Notes to Unaudited Consolidated Financial Statements	12

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	58

ITEM 4.	Controls and Procedures	59

PART II OTHER INFORMATION

ITEM 1.	Legal Proceedings	60

ITEM 1A.	Risk Factors	60

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60

ITEM 6.	Exhibits	61

GLOSSARY OF CERTAIN OIL AND GAS TERMS

The following are certain terms and abbreviations commonly used in the oil and gas industry and included within this Form 10-Q:

Bbl - One stock tank barrel, or 42 U.S. gallons liquid volume, used in reference to oil or other liquid hydrocarbons.

Bcf - One billion cubic feet of natural gas.

Bcfe - One billion cubic feet of natural gas equivalents, with one barrel of oil being equivalent to 6,000 cubic feet of gas.

Btu - One British Thermal Unit.

BBtu - One billion British Thermal Units.

Mbbls - One thousand barrels of oil or other liquid hydrocarbons.

Mcf - One thousand cubic feet of natural gas.

Mcfe - One thousand cubic feet of natural gas equivalents, with one barrel of oil being equivalent to 6,000 cubic feet of gas.

MMBtu - One million British Thermal Units.

MMcfe - One million cubic feet of natural gas equivalents, with one barrel of oil being equivalent to 6,000 cubic feet of gas.

Tcfe - One trillion cubic feet of natural gas equivalents, with one barrel of oil being equivalent to 6,000 cubic feet of gas.

NGL - natural gas liquids - those hydrocarbons in natural gas that are separated from the gas as liquids through the process of absorption, condensation or other methods in gas processing plants.

net - “net” natural gas or “net” acres are determined by adding the fractional ownership working interests the Company has in gross wells or acres.

TIL - turn-in-line; a well turned to sales.

NYMEX - New York Mercantile Exchange.

basis – when referring to commodity pricing, the difference between the price for a commodity at a primary trading hub and the corresponding sales price at various regional sales points. The differential commonly is related to factors such as product quality, location, transportation capacity availability and contract pricing.

blending - process of mixing dry and damp gas in order to meet downstream pipeline specifications.

condensate - a mixture of hydrocarbons that exists in the gaseous phase at original reservoir temperature and pressure, but that, when produced, is in the liquid phase at surface pressure and temperature.

conventional play - a term used in the oil and natural gas industry to refer to an area believed to be capable of producing crude oil and natural gas occurring in discrete accumulations in structural and stratigraphic traps utilizing conventional recovery methods.

developed reserves - developed reserves are reserves that can be expected to be recovered: (i) through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and (ii) through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.

development well - a well drilled within the proved area of an oil or natural gas reservoir to the depth of a stratigraphic horizon known to be productive.

exploratory well - a well drilled to find a new field or to find a new reservoir in a field previously found to be productive of oil or natural gas in another reservoir. Generally, an exploratory well is any well that is not a development well, an extension well, a service well or a stratigraphic test well.

exploration costs - costs incurred in identifying areas that may warrant examination and in examining specific areas that are considered to have prospects of containing oil and natural gas reserves, including costs of drilling exploratory wells and exploratory-type stratigraphic test wells. Exploration costs may be incurred both before acquiring the related property (sometimes referred to in part as prospecting costs) and after acquiring the property. Principal types of exploration costs, which include depreciation and applicable operating costs of support equipment and facilities and other costs of exploration activities, are: (i) costs of topographical, geographical and geophysical studies and the rights to access the properties in order to conduct those studies, (ii) costs of carrying and retaining undeveloped properties, such as delay rentals and the maintenance of land and lease records, (iii) dry hole contributions (iv) costs of drilling and equipping exploratory wells, and (v) costs of drilling exploratory-type stratigraphic test wells.

gob well - a well drilled or vent hole converted to a well which produces or is capable of producing coalbed methane or other natural gas from a distressed zone created above and below a mined-out coal seam by any prior full seam extraction of the coal.

gross acres - the total acres in which a working interest is owned.

gross wells - the total wells in which a working interest is owned.

lease operating expense - costs of operating wells and equipment on a producing lease, many of which are recurring. Includes items such as water disposals, repairs and maintenance, equipment rental and operating supplies, among others.

net acres - the number of acres an owner has out of a particular number of gross acres.

net wells - the percentage ownership interest in a well that an owner has based on the working interest.

play - a proven geological formation that contains commercial amounts of hydrocarbons.

production costs - costs incurred to operate and maintain wells and related equipment and facilities, including depreciation and applicable operating costs of support equipment and facilities, which become part of the cost of oil and natural gas produced.

proved reserves - quantities of oil, natural gas, and NGLs which, by analysis of geological and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation.

proved developed reserves (PDPs) - proved reserves which can be expected to be recovered through existing wells with existing equipment and operating methods.

proved undeveloped reserves (PUDs) - proved reserves that can be estimated with reasonable certainty to be recovered from new wells on undrilled proved acreage or from existing wells where a relatively major expenditure is required for completion.

reservoir - a porous and permeable underground formation containing a natural accumulation of producible natural gas and/or oil that is confined by impermeable rock or water barriers and is separate from other reservoirs.

royalty interest - an interest in an oil and natural gas lease that gives the owner of the interest the right to receive a portion of the production from the leased acreage (or of the proceeds of the sale thereof), but generally does not require the owner to pay any portion of the costs of drilling or operating the wells on the leased acreage. Royalties may be either landowners' royalties, which are reserved by the owner of the leased acreage at the time the lease is granted, or overriding royalties, which are usually reserved by an owner of the leasehold in connection with a transfer to a subsequent owner.

throughput - the volume of natural gas transported or passing through a pipeline, plant, terminal, or other facility during a particular period.

transportation, gathering and compression - cost incurred related to transporting natural gas to the ultimate point of sale. These costs also include costs related to physically preparing natural gas, natural gas liquids and condensate for ultimate sale which include costs related to processing, compressing, dehydrating and fractionating, among others.

service well - a well drilled or completed for the purpose of supporting production in an existing field. Specific purposes of service wells include, among other things, gas injection, water injection and salt-water disposal.

unconventional formations - a term used in the oil and gas industry to refer to a play in which the targeted reservoirs generally fall into one of three categories: (1) tight sands, (2) coal beds or (3) shales. The reservoirs tend to cover large areas and lack the readily apparent traps, seals and discrete hydrocarbon-water boundaries that typically define conventional reservoirs. These reservoirs generally require fracture stimulation treatments or other special recovery processes in order to achieve economic flow rates.

undeveloped reserves - undeveloped reserves are reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required. Reserves on undrilled acreage are limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence exists that establishes reasonable certainty of economic producibility at greater distances. Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances justify a longer time. Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, or by other evidence using reliable technology establishing reasonable certainty.

unproved properties - properties with no proved reserves.

working interest - an interest that gives the owner the right to drill, produce and conduct operating activities on a property and receive a share of any production.

wet gas - natural gas that contains significant heavy hydrocarbons, such as propane, butane and other liquid hydrocarbons.

PART I : FINANCIAL INFORMATION

ITEM 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CNX RESOURCES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME


(Dollars in thousands, except per share data)	Three Months Ended				Six Months Ended
(Unaudited)	June 30,				June 30,
Revenue and Other Operating (Loss) Income:	2021		2020		2021		2020
Natural Gas, NGL and Oil Revenue	$	369,449	$	175,776	$	750,674	$	427,270
(Loss) Gain on Commodity Derivative Instruments	(538,859)		(63,303)		(505,445)		51,839
Purchased Gas Revenue	16,706		20,424		50,190		46,783

Other Revenue and Operating Income	25,494		15,944		50,445		39,308
Total Revenue and Other Operating (Loss) Income	(127,210)		148,841		345,864		565,200
Costs and Expenses:
Operating Expense
Lease Operating Expense	10,248		10,244		19,516		20,277
Production, Ad Valorem, and Other Fees	7,445		5,384		13,413		11,546
Transportation, Gathering and Compression	84,114		60,025		161,273		143,267
Depreciation, Depletion and Amortization	122,607		113,545		251,551		242,709
Exploration and Production Related Other Costs	2,929		3,310		5,006		7,197
Purchased Gas Costs	14,551		19,989		46,961		44,987
Impairment of Exploration and Production Properties	—		—		—		61,849
Impairment of Goodwill	—		—		—		473,045
Selling, General, and Administrative Costs	23,677		23,419		51,998		53,657
Other Operating Expense	15,140		26,596		30,798		47,277
Total Operating Expense	280,711		262,512		580,516		1,105,811
Other Expense
Other Expense	5,865		4,799		10,231		9,985
Gain on Asset Sales and Abandonments, net	(7,186)		(5,938)		(10,060)		(17,992)

Loss (Gain) on Debt Extinguishment	—		344		—		(10,919)
Interest Expense	39,576		46,256		75,948		95,252
Total Other Expense	38,255		45,461		76,119		76,326
Total Costs and Expenses	318,966		307,973		656,635		1,182,137
Loss Before Income Tax	(446,176)		(159,132)		(310,771)		(616,937)
Income Tax Benefit	(92,117)		(28,646)		(54,737)		(181,228)


Net Loss	(354,059)		(130,486)		(256,034)		(435,709)
Less: Net Income Attributable to Noncontrolling Interest	—		15,263		—		39,126
Net Loss Attributable to CNX Resources Shareholders	$	(354,059)	$	(145,749)	$	(256,034)	$	(474,835)

Loss per Share
Basic	$	(1.61)	$	(0.78)	$	(1.16)	$	(2.54)
Diluted	$	(1.61)	$	(0.78)	$	(1.16)	$	(2.54)

Dividends Declared	$	—	$	—	$	—	$	—

The accompanying notes are an integral part of these financial statements.

CNX RESOURCES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Three Months Ended				Six Months Ended
(Dollars in thousands)	June 30,				June 30,
(Unaudited)	2021		2020		2021		2020
Net Loss	$	(354,059)	$	(130,486)	$	(256,034)	$	(435,709)
Other Comprehensive Income:
Actuarially Determined Long-Term Liability Adjustments (Net of tax: $(48), $(39), $(96), $(79))	136		111		271		223



Comprehensive Loss	(353,923)		(130,375)		(255,763)		(435,486)

Less: Comprehensive Income Attributable to Noncontrolling Interest	—		15,263		—		39,126

Comprehensive Loss Attributable to CNX Resources Shareholders	$	(353,923)	$	(145,638)	$	(255,763)	$	(474,612)

The accompanying notes are an integral part of these financial statements.

CNX RESOURCES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	(Unaudited)
(Dollars in thousands)	June 30, 2021		December 31, 2020
ASSETS
Current Assets:
Cash and Cash Equivalents	$	39,365	$	15,617
Restricted Cash	768		735
Accounts and Notes Receivable:
Trade, net	157,667		145,929
Other Receivables, net	10,727		4,238
Supplies Inventories	5,698		9,657

Recoverable Income Taxes	—		88
Derivative Instruments	107,625		84,657
Prepaid Expenses	12,126		12,411


Total Current Assets	333,976		273,332
Property, Plant and Equipment:
Property, Plant and Equipment	11,128,496		10,963,996
Less—Accumulated Depreciation, Depletion and Amortization	4,119,856		3,938,451


Total Property, Plant and Equipment—Net	7,008,640		7,025,545
Other Non-Current Assets:

Operating Lease Right-of-Use Assets	83,618		108,683

Derivative Instruments	204,459		188,237
Goodwill	323,314		323,314
Other Intangible Assets	86,819		90,095
Restricted Cash	4,751		5,247
Other	26,533		27,311

Total Other Non-Current Assets	729,494		742,887
TOTAL ASSETS	$	8,072,110	$	8,041,764

The accompanying notes are an integral part of these financial statements.

CNX RESOURCES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	(Unaudited)
(Dollars in thousands, except per share data)	June 30, 2021		December 31, 2020
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable	$	118,574	$	118,185
Derivative Instruments	415,774		42,329
Current Portion of Finance Lease Obligations	406		6,876
Current Portion of Long-Term Debt	23,098		22,574

Current Portion of Operating Lease Obligations	47,198		52,575
Other Accrued Liabilities	204,145		198,773


Total Current Liabilities	809,195		441,312
Non-Current Liabilities:
Long-Term Debt	2,265,970		2,401,427
Finance Lease Obligations	854		1,057
Operating Lease Obligations	36,569		53,235
Derivative Instruments	285,865		127,290
Deferred Income Taxes	411,380		466,253
Asset Retirement Obligations	81,903		84,712


Other	43,443		44,041

Total Non-Current Liabilities	3,125,984		3,178,015
TOTAL LIABILITIES	3,935,179		3,619,327
Stockholders’ Equity:
Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 218,664,158 Issued and Outstanding at June 30, 2021; 220,440,993 Issued and Outstanding at December 31, 2020	2,191		2,208
Capital in Excess of Par Value	2,950,083		2,959,357
Preferred Stock, 15,000,000 shares authorized, None issued and outstanding	—		—
Retained Earnings	1,199,570		1,476,056
Accumulated Other Comprehensive Loss	(14,913)		(15,184)



TOTAL STOCKHOLDERS' EQUITY	4,136,931		4,422,437
TOTAL LIABILITIES AND EQUITY	$	8,072,110	$	8,041,764

The accompanying notes are an integral part of these financial statements.

CNX RESOURCES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY


(Dollars in thousands) (Unaudited)	Common Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Total CNX Resources Stockholders’ Equity		Non- Controlling Interest		Total Equity
March 31, 2021	$	2,207	$	2,959,934	$	1,563,318	$	(15,049)	$	4,510,410	$	—	$	4,510,410
Net Loss	—		—		(354,059)		—		(354,059)		—		(354,059)
Issuance of Common Stock	—		2		—		—		2		—		2
Purchase and Retirement of Common Stock	(17)		(13,030)		(9,644)		—		(22,691)		—		(22,691)
Shares Withheld for Taxes	—		—		(45)		—		(45)		—		(45)
Amortization of Stock-Based Compensation Awards	1		3,177		—		—		3,178		—		3,178


Other Comprehensive Income	—		—		—		136		136		—		136


June 30, 2021	$	2,191	$	2,950,083	$	1,199,570	$	(14,913)	$	4,136,931	$	—	$	4,136,931
(Dollars in thousands) (Unaudited)
March 31, 2020	$	1,874	$	2,205,941	$	1,641,009	$	(12,493)	$	3,836,331	$	808,379	$	4,644,710
Net (Loss) Income	—		—		(145,749)		—		(145,749)		15,263		(130,486)
Issuance of Common Stock	4		1,646		—		—		1,650		—		1,650

Shares Withheld for Taxes	—		—		(63)		—		(63)		—		(63)
Amortization of Stock-Based Compensation Awards	—		2,186		—		—		2,186		380		2,566
Equity Component of Convertible Senior Notes, net of Issuance Costs	—		78,307		—		—		78,307		—		78,307
Purchase of Capped Call	—		(26,351)		—		—		(26,351)		—		(26,351)
Other Comprehensive Income	—		—		—		111		111		—		111
Distributions to CNXM Noncontrolling Interest Holders	—		—		—		—		—		(3,490)		(3,490)
June 30, 2020	$	1,878	$	2,261,729	$	1,495,197	$	(12,382)	$	3,746,422	$	820,532	$	4,566,954

The accompanying notes are an integral part of these financial statements.

CNX RESOURCES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY


(Dollars in thousands)	Common Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Total CNX Resources Stockholders’ Equity		Non- Controlling Interest		Total Equity
December 31, 2020	$	2,208	$	2,959,357	$	1,476,056	$	(15,184)	$	4,422,437	$	—	$	4,422,437
(Unaudited)
Net Loss	—		—		(256,034)		—		(256,034)		—		(256,034)
Issuance of Common Stock	7		4,794		—		—		4,801		—		4,801
Purchase and Retirement of Common Stock	(31)		(24,731)		(15,916)		—		(40,678)		—		(40,678)
Shares Withheld for Taxes	—		—		(4,536)		—		(4,536)		—		(4,536)
Amortization of Stock-Based Compensation Awards	7		10,696		—		—		10,703		—		10,703
Equity Component of Convertible Senior Notes, net of Issuance Costs	—		(33)		—		—		(33)		—		(33)

Other Comprehensive Income	—		—		—		271		271		—		271


June 30, 2021	$	2,191	$	2,950,083	$	1,199,570	$	(14,913)	$	4,136,931	$	—	$	4,136,931
(Dollars in thousands)
December 31, 2019	$	1,870	$	2,199,605	$	1,971,676	$	(12,605)	$	4,160,546	$	801,763	$	4,962,309
(Unaudited)
Net (Loss) Income	—		—		(474,835)		—		(474,835)		39,126		(435,709)
Issuance of Common Stock	8		1,646		—		—		1,654		—		1,654

Shares Withheld for Taxes	—		—		(1,644)		—		(1,644)		(309)		(1,953)
Amortization of Stock-Based Compensation Awards	—		8,522		—		—		8,522		884		9,406
Equity Component of Convertible Senior Notes, net of Issuance Costs	—		78,307		—		—		78,307		—		78,307
Purchase of Capped Call	—		(26,351)		—		—		(26,351)		—		(26,351)
Other Comprehensive Income	—		—		—		223		223		—		223
Distributions to CNXM Noncontrolling Interest Holders	—		—		—		—		—		(20,932)		(20,932)
June 30, 2020	$	1,878	$	2,261,729	$	1,495,197	$	(12,382)	$	3,746,422	$	820,532	$	4,566,954

The accompanying notes are an integral part of these financial statements.

CNX RESOURCES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)	Six Months Ended
Dollars in Thousands	June 30,
Cash Flows from Operating Activities:	2021		2020
Net Loss	$	(256,034)	$	(435,709)
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:

Depreciation, Depletion and Amortization	251,551		242,709
Amortization of Deferred Financing Costs	12,156		8,795
Impairment of Exploration and Production Properties	—		61,849
Impairment of Goodwill	—		473,045
Stock-Based Compensation	10,703		9,406
Gain on Asset Sales and Abandonments, net	(10,060)		(17,992)

Gain on Debt Extinguishment	—		(10,919)
Loss (Gain) on Commodity Derivative Instruments	505,445		(51,839)
(Gain) Loss on Other Derivative Instruments	(4,659)		14,237
Net Cash (Paid) Received in Settlement of Commodity Derivative Instruments	(7,954)		293,417
Deferred Income Taxes	(54,970)		(125,429)
Other	(704)		1,552

Changes in Operating Assets:
Accounts and Notes Receivable	(18,191)		68,270
Recoverable Income Taxes	88		(52,015)
Supplies Inventories	1,936		(3,333)
Prepaid Expenses	586		6,542
Changes in Other Assets	(1,084)		396
Changes in Operating Liabilities:
Accounts Payable	14,701		(15,488)
Accrued Interest	14,762		(5,558)
Other Operating Liabilities	720		(49,620)
Changes in Other Liabilities	(117)		(1,131)



Net Cash Provided by Operating Activities	458,875		411,185
Cash Flows from Investing Activities:
Capital Expenditures	(252,387)		(286,901)

Proceeds from Asset Sales	11,969		26,126



Net Cash Used in Investing Activities	(240,418)		(260,775)
Cash Flows from Financing Activities:

Payments on Miscellaneous Borrowings	(2,526)		(3,569)
Payments on Long-Term Notes	—		(468,865)
Net (Payments on) Proceeds from CNXM Revolving Credit Facility	(131,000)		7,250
Net Payments on CNX Revolving Credit Facility	(800)		(111,000)


Net (Payments on) Proceeds from CSG Non-Revolving Credit Facilities	(13,113)		169,583
Proceeds from Issuance of Convertible Senior Notes	—		334,650
Purchase of Capped Call Related to Convertible Senior Notes	—		(35,673)
Distributions to CNXM Noncontrolling Interest Holders	—		(20,932)
Proceeds from Issuance of Common Stock	4,801		1,654
Shares Withheld for Taxes	(4,536)		(1,953)
Purchases of Common Stock	(46,678)		—
Debt Issuance and Financing Fees	(1,320)		(11,917)


Net Cash Used in Financing Activities	(195,172)		(140,772)
Net Increase in Cash, Cash Equivalents and Restricted Cash	23,285		9,638
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	21,599		16,283
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	44,884	$	25,921

The accompanying notes are an integral part of these financial statements.

CNX RESOURCES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 1—BASIS OF PRESENTATION:

The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for future periods.

The Consolidated Balance Sheet at December 31, 2020 has been derived from the Audited Consolidated Financial Statements at that date but does not include all the notes required by generally accepted accounting principles for complete financial statements. For further information, refer to the Consolidated Financial Statements and related notes for the year ended December 31, 2020 included in CNX Resources Corporation's ("CNX," "CNX Resources," the "Company," "we," "us," or "our") Annual Report on Form 10-K as filed with the Securities and Exchange Commission (SEC) on February 9, 2021.

On September 28, 2020, the Merger (as defined in Note 13 – Acquisitions and Dispositions) of CNX Midstream Partners LP (CNXM) was completed. Prior to the Merger, public unitholders held a 46.9% equity interest in CNXM and CNX owned the remaining 53.1% equity interest. The earnings of CNXM that were attributed to its common units held by the public prior to the Merger are reflected in net income attributable to noncontrolling interest in the Consolidated Statements of Income. There were no changes in our ownership interest in CNXM during the three and six months ended June 30, 2021 and 2020.

Certain amounts in prior periods have been reclassified to conform to the current period presentation.

Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash to amounts shown in the statement of cash flows:


	June 30,
	2021		2020
Cash and Cash Equivalents	$	39,365	$	19,607
Restricted Cash, Current Portion	768		738
Restricted Cash, Less Current Portion	4,751		5,576
Total Cash, Cash Equivalents, and Restricted Cash	$	44,884	$	25,921

Restricted Cash

Restricted cash consists of cash that the Company is contractually obligated to maintain in accordance with the terms of the Cardinal States Gathering LLC and CSG Holdings II LLC Credit Agreement, each dated March 13, 2020 (See Note 9 - Long-Term Debt for more information).

Receivables

As of June 30, 2021 and December 31, 2020, Accounts Receivable - Trade were $157,667 and $145,929, respectively, and Other Receivables were $10,727 and $4,238, respectively.

The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Management records an allowance for credit losses related to the collectability of third-party customers' receivables using the historical aging of the customer receivable balance. The collectability is determined based on past events, including historical experience, customer credit rating, as well as current market conditions. CNX monitors customer ratings and collectability on an on-going basis. Account balances will be charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

The following represents the roll forward of the allowance for credit losses for the six months ended:


	June 30,
	2021		2020
Allowance for Credit Losses - Trade, Beginning of Year	$	84	$	—
Provision for Expected Credit Losses	—		78
Allowance for Credit Losses - Trade, End of Period	$	84	$	78

Allowance for Credit Losses - Other Receivables, Beginning of Year	$	3,248	$	2,463
Provision for Expected Credit Losses	(55)		2,736
Write-off of Uncollectible Accounts	(15)		(69)
Allowance for Credit Losses - Other Receivables, End of Period	$	3,178	$	5,130

NOTE 2—EARNINGS PER SHARE:

Basic earnings per share is computed by dividing net income attributable to CNX shareholders by the weighted average shares outstanding during the reporting period. Diluted earnings per share is computed similarly to basic earnings per share, except that the weighted average shares outstanding are increased to include, if dilutive, additional shares from stock options, restricted stock units, performance share units and shares issuable upon conversion of CNX's outstanding Convertible Notes (See Note 9 - Long-Term Debt). The number of additional shares is calculated by assuming that outstanding stock options were exercised, that outstanding restricted stock units and performance share units were released, that the shares that are issuable from the Convertible Notes are converted (subject to the considerations discussed further in the paragraph below), and that the proceeds from such activities were used to acquire shares of common stock at the average market price during the reporting period. In periods when CNX recognizes a net loss, the impact of outstanding stock awards and the potential share settlement impact related to CNX's Convertible Notes are excluded from the diluted loss per share calculation as their inclusion would have an antidilutive effect.

Pursuant to the Merger (See Note 13 - Acquisitions and Dispositions for more information), all outstanding phantom units previously granted under the CNXM long-term incentive plan were converted into the right to receive 0.88 shares of common stock of CNX. As such, all outstanding phantom units were converted, effective as of the closing of the Merger, into CNX restricted stock units. Each CNX restricted stock unit is subject to the same vesting, forfeiture and other terms and conditions applicable to the converted CNXM phantom units. Under Accounting Standards Codification Topic 718, Compensation - Stock Compensation, it was determined that there was no additional compensation cost to record as the conversion of awards did not result in incremental fair value. CNXM's dilutive units did not have a material impact on the Company's earnings per share calculations for the three or six months ended June 30, 2020.

The table below sets forth the share-based awards that have been excluded from the computation of diluted earnings per share because their effect would be antidilutive:


	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2021	2020	2021	2020
Anti-Dilutive Options	3,029,168	4,256,409	3,029,168	4,256,409
Anti-Dilutive Restricted Stock Units	2,484,443	2,009,678	2,484,443	2,009,678
Anti-Dilutive Performance Share Units	1,011,443	651,131	1,011,443	651,131

	6,525,054	6,917,218	6,525,054	6,917,218

The Company expects to settle the principal amount of the Convertible Notes in cash. As a result, only the amount by which the conversion value exceeds the aggregated principal amount of the Convertible Notes is included in the diluted earnings per share computation under the treasury stock method. The conversion spread has a dilutive impact on diluted earnings per share when the average market price of the Company's common stock for a given period exceeds the initial conversion price of $12.84 per share for the Convertible Notes. In connection with the Convertible Notes' issuance, the Company entered into privately negotiated capped call transactions with certain counterparties (the "Capped Calls" and "Capped Call Transactions"), which were not included in calculating the number of diluted shares outstanding, as their effect would have been anti-dilutive.

The table below sets forth the share-based awards that have been exercised or released:


	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2021	2020	2021	2020
Options	205	239,839	656,573	239,839
Restricted Stock Units	34,056	163,157	735,813	504,040
Performance Share Units	—	—	291,653	274,716
	34,261	402,996	1,684,039	1,018,595

The computations for basic and diluted loss per share are as follows:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
Net Loss	$	(354,059)	$	(130,486)	$	(256,034)	$	(435,709)
Less: Net Income Attributable to Noncontrolling Interest	—		15,263		—		39,126


Net Loss Attributable to CNX Resources Shareholders	$	(354,059)	$	(145,749)	$	(256,034)	$	(474,835)

Weighted-Average Shares of Common Stock Outstanding	219,897,242		187,316,463		219,910,365		187,117,412
Effect of Diluted Shares*	—		—		—		—
Weighted-Average Diluted Shares of Common Stock Outstanding	219,897,242		187,316,463		219,910,365		187,117,412

Loss per Share:


Basic	$	(1.61)	$	(0.78)	$	(1.16)	$	(2.54)



Diluted	$	(1.61)	$	(0.78)	$	(1.16)	$	(2.54)

*During periods in which the Company incurs a net loss, diluted weighted average shares outstanding are equal to basic weighted average shares outstanding because the effect of all equity awards is antidilutive.

NOTE 3—REVENUE FROM CONTRACTS WITH CUSTOMERS:

Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company has elected to exclude all taxes from the measurement of transaction price.

For natural gas, NGL and oil, and purchased gas revenue, the Company generally considers the delivery of each unit (MMBtu or Bbl) to be a separate performance obligation that is satisfied upon delivery. Payment terms for these contracts typically require payment within 25 days of the end of the calendar month in which the hydrocarbons are delivered. A significant number of these contracts contain variable consideration because the payment terms refer to market prices at future delivery dates. In these situations, the Company has not identified a standalone selling price because the terms of the variable payments relate specifically to the Company’s efforts to satisfy the performance obligations. A portion of the contracts contain fixed consideration (i.e. fixed price contracts or contracts with a fixed differential to NYMEX or index prices). The fixed consideration is allocated to each performance obligation on a relative standalone selling price basis, which requires judgment from management. For these contracts, the Company generally concludes that the fixed price or fixed differentials in the contracts are representative of the standalone selling price. Revenue associated with natural gas, NGL and oil as presented on the accompanying Consolidated Statements of Income represent the Company’s share of revenues net of royalties and excluding revenue interests owned by others. When selling natural gas, NGL and oil on behalf of royalty owners or working interest owners, the Company is acting as an agent and thus reports the revenue on a net basis.

Included in Other Revenue and Operating Income in the Consolidated Statements of Income and in the below table are revenues generated from natural gas gathering services provided to third-parties. The gas gathering services are interruptible in nature and include charges for the volume of gas actually gathered and do not guarantee access to the system. Volumetric based fees are based on actual volumes gathered. The Company generally considers the interruptible gathering of each unit (MMBtu) of natural gas as a separate performance obligation. Payment terms for these contracts typically require payment within 25 days of the end of the calendar month in which the hydrocarbons are gathered.

Disaggregation of Revenue

The following table is a disaggregation of revenue by major source:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
Revenue from Contracts with Customers:
Natural Gas Revenue	$	320,982	$	168,510	$	668,358	$	398,108
NGL Revenue	41,521		6,226		73,384		25,638
Oil/Condensate Revenue	6,946		1,040		8,932		3,524
Total Natural Gas, NGL and Oil Revenue	369,449		175,776		750,674		427,270

Purchased Gas Revenue	16,706		20,424		50,190		46,783


Other Sources of Revenue and Other Operating (Loss) Income:
(Loss) Gain on Commodity Derivative Instruments	(538,859)		(63,303)		(505,445)		51,839
Other Revenue and Operating Income	25,494		15,944		50,445		39,308
Total Revenue and Other Operating (Loss) Income	$	(127,210)	$	148,841	$	345,864	$	565,200

The disaggregated revenue information corresponds with the Company’s segment reporting found in Note 14 - Segment Information.

Contract Balances

CNX invoices its customers once a performance obligation has been satisfied, at which point payment is unconditional. Accordingly, CNX's contracts with customers do not give rise to contract assets or liabilities under ASC 606. The Company has no contract assets recognized from the costs to obtain or fulfill a contract with a customer. The opening balance as of January 1, 2021 and the closing balance as of June 30, 2021 of the Company’s receivables related to contracts with customers were $145,929 and $157,667, respectively.

Transaction Price Allocated to Remaining Performance Obligations

ASC 606 requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied. However, the guidance provides certain practical expedients that limit this requirement, including when variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a series.

A significant portion of CNX's natural gas, NGL and oil and purchased gas revenue is short-term in nature with a contract term of one year or less. For those contracts, CNX has utilized the practical expedient in ASC 606-10-50-14 exempting the Company from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

For revenue associated with contract terms greater than one year, a significant portion of the consideration in those contracts is variable in nature and the Company allocates the variable consideration in its contract entirely to each specific performance obligation to which it relates. Therefore, any remaining variable consideration in the transaction price is allocated entirely to wholly unsatisfied performance obligations. As such, the Company has not disclosed the value of unsatisfied performance obligations pursuant to the practical expedient.

For revenue associated with contract terms greater than one year with a fixed price component, the aggregate amount of the transaction price allocated to remaining performance obligations was $75,892 as of June 30, 2021. The Company expects to recognize net revenue of $20,918 in the next 12 months and $17,438 over the following 12 months, with the remainder recognized thereafter.

For revenue associated with CNX's midstream contracts, which also have terms greater than one year, the interruptible gathering of each unit of natural gas represents a separate performance obligation; therefore, future volumes are wholly unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required.

Prior-Period Performance Obligations

CNX records revenue in the month production is delivered to the purchaser. However, settlement statements for certain natural gas, NGL and oil revenue may not be received for 30 to 90 days after the date production is delivered, and as a result, the Company is required to estimate the amount of production delivered to the purchaser and the price that will be received for the sale of the product. CNX records the differences between the estimate and the actual amounts received in the month that payment is received from the purchaser. The Company has existing internal controls for its revenue estimation process and the related accruals, and any identified differences between its revenue estimates and the actual revenue received historically have not been significant. For the three and six months ended June 30, 2021 and 2020, revenue recognized in the current reporting period related to performance obligations satisfied in a prior reporting period was not material.

NOTE 4—INCOME TAXES:

The effective tax rates for the three and six months ended June 30, 2021 were 20.6% and 17.6%, respectively. The effective tax rates for the three and six months ended June 30, 2020 were 18.0% and 29.4%, respectively. The effective tax rate for the three and six months ended June 30, 2021 differs from the U.S. federal statutory rate of 21.0% primarily due to the impact of equity compensation and state taxes. The effective tax rate for the three and six months ended June 30, 2020 differs from the U.S. federal statutory rate of 21.0% primarily due to the impact of noncontrolling interest (See Note 13 - Acquisitions and Dispositions for more information), equity compensation, and state taxes.

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act (the “Act”) which, among other things, removed the 80% taxable income limitation for utilization of net operating losses generated in tax years 2018 through 2020, allowing for 5-year net operating loss carrybacks, increased the adjusted taxable income limitation for the disallowance of interest expense from 30% to 50%, and provided for refunds of any remaining alternative minimum tax (AMT) credits. As a result of the Act, the Company recorded in the first quarter of 2020 AMT refunds of $102,482 in Recoverable Income Taxes in the Consolidated Balance Sheets for the AMT refund received in 2020. The impact of other tax implications of the Act on the financial statements and related disclosures are immaterial.

The total amount of uncertain tax positions at June 30, 2021 and December 31, 2020 was $31,891. If these uncertain tax positions were recognized, approximately $31,891 would affect CNX's effective tax rate at June 30, 2021 and December 31, 2020. There was no change to the unrecognized tax benefits during the three and six months ended June 30, 2021.

CNX recognizes accrued interest and penalties related to uncertain tax positions in interest expense and income tax expense, respectively. As of June 30, 2021 and December 31, 2020, CNX had no accrued liabilities for interest and penalties related to uncertain tax positions.

CNX and its subsidiaries file federal income tax returns with the United States and tax returns within various states. With few exceptions, the Company is no longer subject to United States federal, state, local, or non-U.S. income tax examinations by tax authorities for the years before 2016. The Internal Revenue Service and the Joint Committee on Taxation concluded its review of tax years 2016 through 2017 during the third quarter of 2020.

West Virginia enacted legislation in April 2021 that, among other things, instituted a single sales factor apportionment formula effective July 1, 2022. The Company revised the deferred tax state apportionment rates for several states to reflect the recent legislative change resulting in a net increase of $11,455 in deferred tax expense in the Consolidated Statements of Income. The net increase in deferred tax expense is comprised of an increase of $16,507 in deferred taxes relating to state apportionment rate changes and a $5,052 decrease in the valuation allowance against various state net operating losses.

NOTE 5—PROPERTY, PLANT AND EQUIPMENT:


	June 30, 2021		December 31, 2020
Intangible Drilling Cost	$	5,127,989	$	4,965,252
Gas Gathering Equipment	2,459,197		2,510,917
Proved Gas Properties	1,271,774		1,253,094
Gas Wells and Related Equipment	1,164,025		1,120,061
Unproved Gas Properties	718,042		725,705
Surface Land and Other Equipment	197,956		199,322
Other	189,513		189,645
Total Property, Plant and Equipment	11,128,496		10,963,996
Less: Accumulated Depreciation, Depletion and Amortization	4,119,856		3,938,451

Total Property, Plant and Equipment - Net	$	7,008,640	$	7,025,545

Impairment of Proved Property

CNX performs a quantitative impairment test whenever events or changes in circumstances indicate that an asset group's carrying amount may not be recoverable, over proved properties using forward commodity prices, timing, methods and other assumptions consistent with historical periods. When indicators of impairment are present, tests require that the Company first compare expected future undiscounted cash flows by asset group to their respective carrying values. If the carrying amount exceeds the estimated undiscounted future cash flows, a reduction of the carrying amount of the natural gas properties to their estimated fair values is required, which is generally determined based on an estimation of discounted cash flows using significant assumptions including projected revenues, future commodity prices, and a market-specific weighted average cost of capital which are affected by expectations about future market and economic conditions.

During the six months ended June 30, 2020, CNX recognized certain indicators of impairment specific to our Southwest Pennsylvania Coalbed Methane asset group and determined that the carrying value of that asset group was not recoverable. The fair value of the asset group was estimated by using level 3 inputs which consisted of discounting the estimated future cash flows using discount rates and other assumptions that market participants would use in their estimates of fair value. As a result, an impairment of $61,849 was recognized and is included in Impairment of Exploration and Production Properties in the Consolidated Statements of Income. The impairment was related to an economic decision to temporarily idle certain wells and the related processing facility during the first quarter of 2020.

NOTE 6—GOODWILL AND OTHER INTANGIBLE ASSETS:

In December 2017, CNX Gas entered into a purchase agreement with Noble Energy, pursuant to which CNX Gas acquired Noble’s 50% membership interest in CNX Gathering (then named CONE Gathering LLC), for a cash purchase price of $305,000 (the "Midstream Acquisition").

Prior to the Midstream Acquisition, the Company accounted for its 50% interest in CNX Gathering as an equity method investment as the Company had the ability to exercise significant influence, but not control, over the operating and financial policies of the midstream operations. In conjunction with the Midstream Acquisition, the Company obtained a controlling interest in CNX Gathering and control over the Partnership. Accordingly, the Midstream Acquisition was accounted for as a business combination using the acquisition method of accounting pursuant to ASC Topic 805, Business Combinations, or ASC 805. ASC 805 requires that, in circumstances where a business combination is achieved in stages (or step acquisition), previously held equity interests are remeasured at fair value. The fair value assigned to the previously held equity interest in CNX Gathering and CNXM was $799,033 and was determined using the income approach, based on a discounted cash flow methodology.

As part of the allocation of purchase price and in connection with the fair value of consideration transferred at closing on January 3, 2018, CNX recorded $796,359 of goodwill and $128,781 of other intangible assets which are comprised of customer relationships.

Impairment of Goodwill

All goodwill is attributed to the Midstream reporting unit within the Shale segment. Goodwill is evaluated for impairment at least annually and whenever events or changes in circumstance indicate that the fair value of a reporting unit is less than its carrying amount. In connection with the evaluation of goodwill for impairment, CNX may first consider qualitative factors to assess whether there are indicators that it is more likely than not that the fair value of a reporting unit may not exceed its carrying amount. If after assessing such factors or circumstances, CNX determines it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then a quantitative assessment is not required. If CNX chooses to bypass the qualitative assessment, or if it chooses to perform a qualitative assessment but is unable to qualitatively conclude that no impairment has occurred, then CNX will perform a quantitative assessment. If the estimated fair value of a reporting unit is less than its carrying value, an impairment charge is recognized for the excess of the reporting unit's carrying value over its fair value. The Company uses a combination of the income approach (generally a discounted cash flow method) and market approach (which may include the guideline public company method and/or the guideline transaction method) to estimate the fair value of a reporting unit.

During the first quarter of 2020, the Company identified indicators of impairment in the form of deteriorating macroeconomic conditions, and the decline in the observable market value of CNXM securities both in relation to the COVID-19 pandemic and the overall decline in the master limited partnership (MLP) market space. Management concluded that these factors presented indications that the fair value of the Midstream reporting unit was more likely than not below the reporting unit’s carrying value. CNX bypassed the qualitative assessment and performed a quantitative test that utilized a combination of the income and market approaches as described above to estimate the fair value of the Midstream reporting unit. As a result of this assessment, CNX concluded that the carrying value exceeded its estimated fair value, and a corresponding impairment of $473,045 was included in Impairment of Goodwill in the accompanying Consolidated Statements of Income. Any additional adverse changes in the future could reduce the underlying cash flows used to estimate fair values and could result in a decline in fair value that could trigger future impairment charges.

In estimating the fair value of the Midstream reporting unit, the Company used the income approach’s discounted cash flow method, which applies significant inputs not observable in the public market (Level 3), including estimates and assumptions related to the use of an appropriate discount rate, future throughput volumes, operating costs and capital spending, discounted to present value using an industry rate adjusted for company-specific risk, which management feels reflects the overall level of inherent risk of the reporting unit. These assumptions are affected by expectations about future market, industry and economic conditions. Cash flow projections were derived from board approved budgeted amounts, a seven-year operating forecast and an estimate of future cash flows. Subsequent cash flows were developed using growth or contraction rates that management believes are reasonably likely to occur. The Company used the market approach’s comparable company method. The comparable company method evaluates the value of a company using metrics of other businesses of similar size and industry.

The estimates of future cash flows utilized in the impairment analysis described above were subjective in nature and are subject to impacts from business risks as described in “Item 1A. Risk Factors” in CNX's 2020 Annual Report on Form 10-K as filed with the SEC on February 9, 2021 ("2020 Form 10-K"). The fair value estimation process requires considerable judgment and determining the fair value is sensitive to changes in assumptions impacting management’s estimates of future financial results. Although CNX believes the estimates and assumptions used in estimating the fair value are reasonable and appropriate, different assumptions and estimates could materially impact the estimated fair value. Future results could differ from our current estimates and assumptions.

Changes in the carrying amount of goodwill consist of the following activity:


	For the Six Months Ended June 30,
	2021		2020
Carrying Amount, Beginning of Period	$	323,314	$	796,359
Impairment	—		473,045
Carrying Amount, End of Period	$	323,314	$	323,314

Other Intangible Assets

The carrying amount and accumulated amortization of other intangible assets consist of the following:


	June 30, 2021		December 31, 2020
Other Intangible Assets:
Gross Amortizable Asset - Customer Relationships	$	109,752	$	109,752
Less: Accumulated Amortization - Customer Relationships	22,933		19,657
Total Other Intangible Assets, net	$	86,819	$	90,095

The customer relationship intangible asset is being amortized on a straight-line basis over approximately 17 years. Amortization expense related to other intangible assets was $1,638 for the three months ended June 30, 2021 and 2020, and $3,276 for the six months ended June 30, 2021 and 2020. The estimated annual amortization expense is expected to approximate $6,552 per year for each of the next five years.

NOTE 7—REVOLVING CREDIT FACILITIES:

CNX

CNX's senior secured revolving credit facility (the "CNX Credit Facility") matures in April 2024. Borrowings under the CNX Credit Facility are subject to borrowing base limitations based on the collateral value of CNX’s assets and are subject to regular semi-annual redeterminations. In November 2020, as part of the issuance of the $500,000 6.00% Senior Notes due January 2029 (See Note 9 - Long-Term Debt), both the lenders' commitments and borrowing base under the Credit Facility decreased to $1,775,000 from $1,900,000. In April 2021, as part of the semi-annual borrowing base redetermination, the lenders reaffirmed CNX's $1,775,000 borrowing base.

Under the terms of the CNX Credit Facility, borrowings will bear interest at CNX's option at either:

•the base rate, which is the highest of (i) the federal funds open rate plus 0.50%, (ii) PNC Bank, N.A.’s prime rate, or (iii) the one-month LIBOR rate plus 1.0%, in each case, plus a margin ranging from 0.75% to 1.75%; or

•the LIBOR rate, which is the LIBOR rate plus a margin ranging from 1.75% to 2.75%.

The CNX Credit Facility contains a number of affirmative and negative covenants including those that, except in certain circumstances, limit the Company and the subsidiary guarantors' ability to create, incur, assume or suffer to exist indebtedness, create or permit to exist liens on properties, dispose of assets, make investments, purchase or redeem CNX common stock, pay dividends, merge with another corporation or amend the senior unsecured notes. The Company must also mortgage 85% of the value of its proved reserves and 85% of the value of its proved developed producing reserves, in each case, which are included in the borrowing base, maintain applicable deposit, securities and commodities accounts with the lenders or affiliates thereof, and enter into control agreements with respect to such applicable accounts.

The CNX Credit Facility contains customary events of default, including, but not limited to, a cross-default to certain other debt, breaches of representations and warranties, change of control events and breaches of covenants.

The CNX Credit Facility also requires that CNX maintain a maximum net leverage ratio of no greater than 4.00 to 1.00, which is calculated as the ratio of debt less cash on hand to consolidated EBITDA, measured quarterly. CNX must also maintain a minimum current ratio of no less than 1.00 to 1.00, which is calculated as the ratio of current assets, plus revolver availability under the CNX Credit Facility, to current liabilities, excluding borrowings under the CNX Credit Facility, measured quarterly. The calculation of all of the ratios exclude CNXM. CNX was in compliance with all financial covenants as of June 30, 2021.

At June 30, 2021, the CNX Credit Facility had $160,000 of borrowings outstanding and $188,567 of letters of credit outstanding, leaving $1,426,433 of unused capacity. At December 31, 2020, the CNX Credit Facility had $160,800 of borrowings outstanding and $185,272 of letters of credit outstanding, leaving $1,428,928 of unused capacity.

CNX Midstream Partners LP (CNXM)

CNXM's senior secured revolving credit facility (the "CNXM Credit Facility") matures in April 2024. The lenders’ commitments under the CNXM Credit Facility are $600,000, with an accordion feature that allows CNXM to increase the

available borrowings by up to an additional $250,000 under certain terms and conditions. The CNXM Credit Facility includes the ability to issue letters of credit up to $100,000 in the aggregate.

Under the terms of the CNXM Credit Facility, borrowings will bear interest at CNXM's option at either:

•the LIBOR rate, plus a margin ranging from 1.50% to 2.50%.

Fees and interest rate spreads under the CNXM Credit Facility are based on the total leverage ratio, measured quarterly.

The CNXM Credit Facility requires CNXM to comply with a number of affirmative and negative covenants. In addition, CNXM is obligated to maintain at the end of each fiscal quarter (w) for so long as at least $150,000 of the CNXM 6.50% Senior Notes due March 2026 (CNXM Senior Notes) are outstanding, a maximum total leverage ratio of no greater than 5.25 to 1.00 (which increases to no greater than 5.50 to 1.00 during qualifying acquisition periods); (x) if less than $150,000 of the CNXM Senior Notes are outstanding, a maximum total leverage ratio of no greater than 4.75 to 1.00 (which increases to no greater than 5.25 to 1.00 during qualifying acquisition periods); (y) a maximum secured leverage ratio of no greater than 3.50 to 1.00 and (z) a minimum interest coverage ratio of no less than 2.50 to 1.00. CNXM was in compliance with all financial covenants as of June 30, 2021.

The CNXM Credit Facility also contains customary events of default, including, but not limited to, a cross-default to certain other debt, breaches of representations and warranties, change of control events and breaches of covenants. The obligations under the CNXM Credit Facility are secured by substantially all of the assets of CNXM and its wholly-owned subsidiaries. CNX is not a guarantor under the CNXM Credit Facility.

At June 30, 2021, the CNXM Credit Facility had $160,000 of borrowings outstanding and $30 of letters of credit outstanding, leaving $439,970 of unused capacity. At December 31, 2020, the CNXM Credit Facility had $291,000 of borrowings outstanding and $30 of letters of credit outstanding, leaving $308,970 of unused capacity.

NOTE 8—OTHER ACCRUED LIABILITIES:


	June 30, 2021		December 31, 2020
Royalties	$	85,968	$	72,401
Accrued Interest	41,310		26,549
Transportation Charges	17,648		15,969
Accrued Other Taxes	13,430		10,580
Deferred Revenue	10,980		10,986
Accrued Payroll & Benefits	7,070		5,009
Short-Term Incentive Compensation	5,323		20,340
Litigation Contingency	2,410		2,025
Purchased Gas Payable	428		1,528
Other	9,306		23,144
Current Portion of Long-Term Liabilities:
Asset Retirement Obligations	8,455		8,455
Salary Retirement	1,817		1,787
Total Other Accrued Liabilities	$	204,145	$	198,773

NOTE 9—LONG-TERM DEBT:


	June 30, 2021		December 31, 2020
Senior Notes due March 2027 at 7.25% (Principal of $700,000 plus Unamortized Premium of $6,147 and $6,686, respectively)	$	706,147	$	706,686
Senior Notes due January 2029 at 6.00%, Issued at Par Value	500,000		500,000
CNX Midstream Partners LP Senior Notes due March 2026 at 6.50% (Principal of $400,000 less Unamortized Discount of $3,500 and $3,875, respectively)*	396,500		396,125
Convertible Senior Notes due May 2026 at 2.25% (Principal of $345,000 less Unamortized Discount and Issuance Costs of $99,695 and $107,735, respectively)	245,305		237,265
CNX Midstream Partners LP Revolving Credit Facility*	160,000		291,000
CNX Revolving Credit Facility	160,000		160,800
Cardinal States Gathering Company Credit Facility maturing in March 2028 (Principal of $107,705 and $114,985, respectively, less Unamortized Discount of $1,048 and $1,126, respectively)	106,657		113,859
CSG Holdings II LLC Credit Facility maturing in March 2027 (Principal of $39,726 and $45,559, respectively, less Unamortized Discount of $408 and $441, respectively)	39,318		45,118
Less: Unamortized Debt Issuance Costs	24,859		26,852
	2,289,068		2,424,001
Less: Amounts Due in One Year	23,098		22,574
Long-Term Debt	$	2,265,970	$	2,401,427

*CNX is not a guarantor of CNXM's 6.50% Senior Notes due March 2026 or CNXM's Credit Facility.

In April 2020, CNX issued $345,000 in aggregate principal amount of 2.25% convertible senior notes due May 2026 (the "Convertible Notes") in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, including $45,000 aggregate principal amount of Convertible Notes issued pursuant to the exercise in full of the initial purchasers’ option to purchase additional Convertible Notes. The Convertible Notes are senior, unsecured obligations of the Company. The Convertible Notes bear interest at a fixed rate of 2.25% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, commencing on November 1, 2020. Proceeds from the issuance of the Convertible Notes totaled $334,650, net of initial purchaser discounts and issuance costs. The notes are guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner) or CSG Holdings III LLC.

The initial conversion rate is 77.8816 shares of CNX's common stock per $1,000 principal amount of Convertible Notes, which represents an initial conversion price of approximately $12.84 per share, subject to adjustment upon the occurrence of specified events. Based on the closing stock price of CNX common stock of $13.66 on June 30, 2021, the if-converted value of the Convertible Notes exceeded the principal amount by $95,439.

The Convertible Notes will mature on May 1, 2026, unless earlier repurchased, redeemed or converted. Before February 1, 2026, note holders will have the right to convert their Convertible Notes only upon the occurrence of the following events:

•during any calendar quarter (and only during such calendar quarter) commencing after June 30, 2020, if the Last Reported Sale Price per share of Common Stock exceeds one hundred and thirty percent (130%) of the Conversion Price for each of at least twenty (20) Trading Days (whether or not consecutive) during the thirty (30) consecutive Trading Days ending on, and including, the last Trading Day of the immediately preceding calendar quarter.

•during the five (5) consecutive Business Days immediately after any ten (10) consecutive trading day period (such ten (10) consecutive Trading Day period, the “Measurement Period”) if the trading Price per $1,000 principal amount of Notes, as determined following a request by a Holder in accordance with the procedures set forth below, for each trading day of the Measurement Period was less than ninety eight percent (98%) of the product of the last reported sale price per share of common stock on such trading day and the conversion rate on such trading day.

•if CNX calls any or all of the Convertible Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or

•upon the occurrence of certain specified corporate events as set forth in the indenture governing the Convertible Notes.

From and after February 1, 2026, note holders may convert their Convertible Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.

Upon conversion, the Company may satisfy its conversion obligation by paying and/or delivering, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the

Company’s election, in the manner and subject to the terms and conditions provided in the indenture governing the Convertible Notes. The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the indenture governing the Convertible Notes. In addition, following certain corporate events, as described in the indenture governing the Convertible Notes, that occur prior to the maturity date, the Company will increase the conversion rate, in certain circumstances, for a holder who elects to convert its Convertible Notes in connection with such a corporate event.

The Company will settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election. The Company’s current intent is to settle the principal amount of the Convertible Notes in cash upon conversion.

If certain corporate events that constitute a “Fundamental Change” (as defined in the indenture governing the Convertible Notes) occur, then noteholders may require the Company to repurchase their Converitble Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s common stock. During the three and six months ended June 30, 2021, the conditions allowing holders of the Convertible Notes to exercise their conversion right were not met and as of June 30, 2021, the Convertible Notes were not convertible. The Convertible Notes are therefore classified as long-term debt at June 30, 2021.

In accounting for the transaction, the Convertible Notes were separated into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated conversion feature. The fair value was based on market data available for publicly traded, senior, unsecured corporate bonds with similar maturity, which represent Level 2 observable inputs. The carrying amount of the equity component, representing the conversion option, was determined by deducting the fair value of the liability component from the principal value of the Convertible Notes and was recorded in Capital in Excess of Par Value in the Consolidated Statement of Stockholders Equity and is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the Convertible Notes over the liability component and the debt issuance costs are amortized to interest expense over the contractual term of the Convertible Notes using the effective interest method.

In accounting for the debt issuance costs of $10,350 related to the Convertible Notes, the Company allocated the total amount incurred to the liability and equity components using the same proportions as the proceeds of the Convertible Notes. Issuance costs attributable to the liability component were $7,024 and will be amortized to interest expense using the effective interest method over the contractual term of the Convertible Notes. Issuance costs attributable to the equity component were $3,326 and were netted with the equity component in Capital in Excess of Par Value in the Consolidated Statement of Stockholders Equity and are not subject to amortization.

The net carrying amount of the liability and equity components of the Convertible Notes was as follows:


	June 30, 2021		December 31, 2020
Liability Component:
Principal	$	345,000	$	345,000
Unamortized Discount	(93,836)		(101,367)
Unamortized Issuance Costs	(5,859)		(6,368)
Net Carrying Amount	$	245,305	$	237,265

Equity Component, net of Purchase Discounts and Issuance Costs	$	78,284	$	78,317

Interest expense related to the Convertible Notes is as follows:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
Contractual Interest Expense	$	1,941	$	1,294	$	3,881	$	1,294
Amortization of Debt Discount	3,809		2,325		7,531		2,325
Amortization of Issuance Costs	256		161		509		161
Total Interest Expense	$	6,006	$	3,780	$	11,921	$	3,780

In connection with the offering of the Convertible Notes, the Company entered into privately negotiated capped call transactions with certain counterparties, (the “Capped Calls”). The Capped Calls each have an initial strike price of $12.84 per share, subject to certain adjustments, which correspond to the initial conversion price of the Convertible Notes. The Capped Calls have an initial cap price of $18.19 per share, subject to certain adjustments. The Capped Calls cover, subject to anti-dilution adjustments, the aggregate number of shares of the Company’s common stock that initially underlie the Convertible Notes, and are expected generally to reduce potential dilution to the Company’s common stock upon any conversion of Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap, based on the cap price of the Capped Call Transactions. The conditions that cause adjustments to the initial strike price of the Capped Calls mirror the conditions that result in corresponding adjustments for the Convertible Notes. For accounting purposes, the Capped Calls are separate transactions, and not part of the terms of the Convertible Notes. As these transactions meet certain accounting criteria, the Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of $35,673 incurred in connection with the Capped Calls was recorded as a reduction to Capital in Excess of Par Value.

During the three and six months ended June 30, 2020, CNX purchased and retired $409,625 and $480,959, respectively, of its outstanding 5.875% Senior Notes due April 2022. As part of these transactions, a loss of $344 and a gain of $10,919 were included in Loss (Gain) on Debt Extinguishment in the Consolidated Statements of Income during the three and six months ended June 30, 2020, respectively.

During the six months ended June 30, 2020, CNX's wholly-owned subsidiary Cardinal States Gathering Company LLC (Cardinal States) entered into a $125,000 non-revolving credit facility agreement (the "Cardinal States Facility"). The Cardinal States Facility matures in 2028, has an interest rate of 3-month LIBOR + 450 basis points and includes an excess cash flow sweep in an amount required to achieve a quarterly targeted debt balance. The facility is secured by substantially all of the Cardinal States assets, requires a minimum level of hedging of the variable interest rate exposure and is non-recourse to CNX.

Additionally, during the six months ended June 30, 2020, CNX's wholly-owned subsidiary CSG Holdings II LLC (CSG Holdings) entered into a $50,000 non-revolving credit facility agreement (the "CSG Holdings Facility"). The CSG Holdings Facility matures in 2027, has interest rate of 3-month LIBOR + 675 basis points and includes a full excess cash sweep. The facility is secured by substantially all of the CSG Holding assets, requires a minimum level of hedging of the variable interest rate exposure and is non-recourse to CNX.

NOTE 10—COMMITMENTS AND CONTINGENT LIABILITIES:

CNX and its subsidiaries are subject to various lawsuits and claims with respect to such matters as personal injury, royalty accounting, damage to property, climate change, governmental regulations including environmental violations and remediation, employment and contract disputes and other claims and actions arising out of the normal course of business. CNX accrues the estimated loss for these lawsuits and claims when the loss is probable and can be estimated. The Company's current estimated accruals related to these pending claims, individually and in the aggregate, are immaterial to the financial position, results of operations or cash flows of CNX. It is possible that the aggregate loss in the future with respect to these lawsuits and claims could ultimately be material to the financial position, results of operations or cash flows of CNX; however, such amounts cannot be reasonably estimated.

The 1992 Coal Industry Retiree Health Benefit Act (“Coal Act”), in Section 9711, requires coal companies that were providing health benefits to United Mine Workers of America (“UMWA”) retirees as of February 1993 to continue providing health benefits to such individuals, in substantially the same coverages, for as long as the last signatory operator remains in business. Section 9711 also requires any “related person” to be joint and severally liable for the provision of these health benefits. On May 1, 2020, the court in the Murray Energy Corporation (“Murray”) bankruptcy proceedings approved a settlement agreement between Murray and the UMWA that transferred to the UMWA 1992 Benefit Plan the Coal Act liabilities for retirees in Murray’s Section 9711 plan. The retirees transferred by Murray to the 1992 Benefit Plan include approximately 2,159 retirees allegedly traced to the December 2013 sale by CONSOL Energy Inc. to Murray Energy of the following possible last signatory operators: Consolidation Coal Company, McElroy Coal Company, Southern Ohio Coal Company, Central Ohio Coal Company, Keystone Coal Mining Corp., and Eight-Four Coal Mining Company (the “Sold Subsidiaries”). On May 2, 2020, the Trustees of the UMWA 1992 Benefit Plan sued CNX and CONSOL Energy Inc. (“CONSOL”) in federal court contending that the Sold Subsidiaries were last signatory operators and that CNX and CONSOL are related persons to the Sold Subsidiaries and, as such, CNX and CONSOL are jointly and severally liable for the Coal Act health benefits allegedly owed to the eligible retirees traced to the Sold Subsidiaries. The 1992 Plan seeks, among other relief, a declaration that CNX and CONSOL are obligated to enroll the eligible retirees attributed to the Sold Subsidiaries in a Section 9711 Plan; that CNX and CONSOL are liable to post the security required by Section 9712; and, that CNX and CONSOL are liable to pay per beneficiary premiums until the eligible retirees are enrolled in a Section 9711 plan, and other fees, costs and disbursements under the Coal Act. We disagree with the suit filed by the UMWA 1992 Plan, have filed a Motion to Dismiss and intend to defend this action.

Further, under the Separation and Distribution Agreement that was entered into at the time we spun-out our coal business in 2017, CONSOL agreed to indemnify CNX for all coal-related liabilities, including this lawsuit. With respect to this matter, although a loss is possible, it is not probable, and accordingly no accrual has been recognized.

On July 22, 2021, CNX received a letter from the UMWA 1974 Pension Plan requesting information related to the facts and circumstances surrounding the 2013 sale of certain of its coal subsidiaries to Murray Energy. The letter indicates that litigation related to potential withdrawal liabilities from the plan created by the 2019 bankruptcy of Murray Energy is reasonably foreseeable. At this time, no liability has been assessed. Under the Separation and Distribution Agreement that was entered into at the time we spun-out our coal business in 2017, CONSOL agreed to indemnify CNX for all coal-related liabilities including any potential withdrawal liabilities.

At June 30, 2021, CNX has provided the following financial guarantees, unconditional purchase obligations, and letters of credit to certain third-parties as described by major category in the following tables. These amounts represent the maximum potential of total future payments that the Company could be required to make under these instruments. These amounts have not been reduced for potential recoveries under recourse or collateralization provisions. Generally, recoveries under reclamation bonds would be limited to the extent of the work performed at the time of the default. No amounts related to these unconditional purchase obligations and letters of credit are recorded as liabilities in the financial statements. CNX management believes that the commitments in the following table will expire without being funded, and therefore will not have a material adverse effect on CNX's financial condition.


	Amount of Commitment Expiration Per Period
	Total Amounts Committed		Less Than 1 Year		1-3 Years		3-5 Years		Beyond 5 Years
Letters of Credit:
Firm Transportation	$	181,576	$	181,576	$	—	$	—	$	—

Other	7,021		7,021		—		—		—
Total Letters of Credit	188,597		188,597		—		—		—
Surety Bonds:
Employee-Related	2,600		2,600		—		—		—
Environmental	12,017		11,959		58		—		—
Financial Guarantees	81,670		81,670		—		—		—
Other	9,183		7,686		1,497		—		—
Total Surety Bonds	105,470		103,915		1,555		—		—
Total Commitments	$	294,067	$	292,512	$	1,555	$	—	$	—

Excluded from the above table are commitments and guarantees entered into in conjunction with the spin-off of the Company's coal business in November 2017. Although CONSOL has agreed to indemnify CNX to the extent that CNX would be called upon to pay any of these liabilities, there is no assurance that CONSOL will satisfy its obligations to indemnify CNX in the event that CNX is so called upon (See “Item 1A. Risk Factors” in CNX's 2020 Form 10-K) and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 for additional information).

CNX enters into long-term unconditional purchase obligations to procure major equipment purchases, natural gas firm transportation, gas drilling services and other operating goods and services. These purchase obligations are not recorded in the Consolidated Balance Sheets. As of June 30, 2021, the purchase obligations for each of the next five years and beyond are as follows:


Obligations Due	Amount
Less than 1 year	$	266,355
1 - 3 years	439,639
3 - 5 years	403,228
More than 5 years	1,037,719
Total Purchase Obligations	$	2,146,941

NOTE 11—DERIVATIVE INSTRUMENTS:

CNX enters into interest rate swap agreements to manage its exposure to interest rate volatility. These swaps change the variable-rate cash flow exposure on the debt obligations to fixed cash flows. The change in fair value of the interest rate swap agreements is accounted for on a mark-to-market basis with the changes in fair value recorded in current period earnings.

In March 2020, CNX entered into interest rate swaps related to $175,000 of borrowings under the Cardinal States Facility and CSG Holdings Facility (See Note 9 - Long-Term Debt). In order to manage exposure to interest rate volatility, each respective entity entered into an interest rate swap for the full outstanding principal amounts inclusive of a put option at 25 basis points. The underlying notional for each swap and put option reduces over time based upon an expected amortization profile for each respective credit facility. In addition, CSG Holdings entered into a call option commencing March 31, 2023.

In June 2019, CNX entered into an interest rate swap agreement related to $160,000 of borrowings under CNX’s Credit Facility (See Note 7 - Revolving Credit Facilities) which has the economic effect of modifying the variable-interest obligation into a fixed-interest obligation over a three-year period. In March 2020, this swap was terminated and replaced via a new interest rate swap, effective April 3, 2020, into a new four-year interest rate swap inclusive of a put option at zero basis points. Also executed in March 2020 was a new four-year $250,000 interest rate swap inclusive of a put option at zero basis points, effective April 3, 2020. Consistent with the previous interest rate swap agreement, the $250,000 interest rate swap was entered into to manage CNX's exposure to interest rate volatility.

CNX enters into financial derivative instruments (over-the-counter swaps) to manage its exposure to natural gas price fluctuations. Typically, CNX “sells” swaps under which it receives a fixed price from counterparties and pays a floating market price. In order to enhance production flexibility, during the first quarter of 2021, CNX purchased, rather than sold, financial swaps for the period April through October 2021 under which CNX will pay a fixed price to and receive a floating price from its hedge counterparties. Swaps purchased have the effect of reducing total hedged volumes for the period of the swap. Natural gas commodity hedges are accounted for on a mark-to-market basis with changes in fair value recorded in current period earnings.

CNX is exposed to credit risk in the event of non-performance by counterparties. The creditworthiness of counterparties is subject to continuing review. The Company has not experienced any issues of non-performance by derivative counterparties.

None of the Company's counterparty master agreements currently require CNX to post collateral for any of its positions. However, as stated in the counterparty master agreements, if CNX's obligations with one of its counterparties cease to be secured on the same basis as similar obligations with the other lenders under the credit facility, CNX would have to post collateral for instruments in a liability position in excess of defined thresholds. All of the Company's derivative instruments are subject to master netting arrangements with our counterparties. CNX recognizes all financial derivative instruments as either assets or liabilities at fair value in the Consolidated Balance Sheets on a gross basis.

Each of the Company's counterparty master agreements allows, in the event of default, the ability to elect early termination of outstanding contracts. If early termination is elected, CNX and the applicable counterparty would net settle all open hedge positions.

The total notional amounts of CNX's derivative instruments were as follows:


	June 30,			December 31,		Forecasted to
	2021			2020		Settle Through
Natural Gas Commodity Swaps (Bcf)	1,623.0			1,256.9		2027
Natural Gas Basis Swaps (Bcf)	1,288.7		*	1,294.1		2027
Interest Rate Swaps	$	558,899		$	569,972	2028

*Net of purchased natural gas basis swaps of 13.5 Bcf.

The gross fair value of CNX's derivative instruments was as follows:


	June 30,		December 31,
	2021		2020
Current Assets:
Commodity Derivative Instruments:
Commodity Swaps	$	576	$	53,668
Basis Only Swaps	106,921		30,848
Interest Rate Swaps	128		141
Total Current Assets	$	107,625	$	84,657

Other Non-Current Assets:
Commodity Derivative Instruments:
Commodity Swaps	$	30,055	$	134,661
Basis Only Swaps	173,957		52,903
Interest Rate Swaps	447		673
Total Other Non-Current Assets	$	204,459	$	188,237

Current Liabilities:
Commodity Derivative Instruments:
Commodity Swaps	$	393,982	$	23,506
Basis Only Swaps	18,103		14,491
Interest Rate Swaps	3,689		4,332
Total Current Liabilities	$	415,774	$	42,329

Non-Current Liabilities:
Commodity Derivative Instruments:
Commodity Swaps	$	258,360	$	59,388
Basis Only Swaps	21,007		57,150
Interest Rate Swaps	6,498		10,752
Total Non-Current Liabilities	$	285,865	$	127,290

The effect of commodity derivative instruments on the Company's Consolidated Statements of Income was as follows:


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Cash (Paid) Received in Settlement of Commodity Derivative Instruments:
Natural Gas:
Commodity Swaps	$	(16,492)	$	153,149	$	(9,942)	$	310,728

Basis Swaps	6,133		(10,893)		1,988		(17,311)
Total Cash (Paid) Received in Settlement of Commodity Derivative Instruments	(10,359)		142,256		(7,954)		293,417

Unrealized (Loss) Gain on Commodity Derivative Instruments:
Natural Gas:
Commodity Swaps	(629,688)		(182,119)		(727,147)		(181,573)

Basis Swaps	101,188		(23,440)		229,656		(60,005)
Total Unrealized Loss on Commodity Derivative Instruments	(528,500)		(205,559)		(497,491)		(241,578)

(Loss) Gain on Commodity Derivative Instruments:
Natural Gas:
Commodity Swaps	(646,180)		(28,970)		(737,089)		129,155

Basis Swaps	107,321		(34,333)		231,644		(77,316)
Total (Loss) Gain on Commodity Derivative Instruments	$	(538,859)	$	(63,303)	$	(505,445)	$	51,839

The effect of interest rate swaps on Interest Expense in the Company's Consolidated Statements of Income was as follows:


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Cash Paid in Settlement of Interest Rate Swaps	$	(1,240)	$	(536)	$	(2,467)	$	(592)
Unrealized Gain (Loss) on Interest Rate Swaps	465		(3,598)		4,659		(14,237)
(Loss) Gain on Interest Rate Swaps	$	(775)	$	(4,134)	$	2,192	$	(14,829)

Cash Received in Settlement of Commodity Derivative Instruments for the three and six months ended June 30, 2020 included $29,015 related to the monetization and termination of approximately 39 million MMBtus of NYMEX natural gas hedges and a similar quantity of financial basis hedges that were to settle at various times from May through November of 2020. Net proceeds received from the monetization are classified as operating cash flows in the Consolidated Statements of Cash Flows.

Cash Received in Settlement of Commodity Derivative Instruments for the six months ended June 30, 2020, in addition to the amount discussed above, also included $54,982 related to the monetization of certain NYMEX commodity swaps. The monetization resulted from reducing the contract swap prices of certain 2022, 2023 and 2024 NYMEX natural gas swap contracts. The notional quantities of the contracts were not changed by this monetization. Net proceeds received from the monetizations are classified as operating cash flows in the Consolidated Statements of Cash Flows.

The Company also enters into fixed price natural gas sales agreements that are satisfied by physical delivery. These physical commodity contracts qualify for the normal purchases and normal sales exception and are not subject to derivative instrument accounting.

NOTE 12—FAIR VALUE OF FINANCIAL INSTRUMENTS:

CNX determines the fair value of assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The fair values are based on assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and the risks inherent in valuation techniques and the inputs to valuations. The fair value hierarchy is based on whether the inputs to valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources (including NYMEX forward curves, LIBOR-based discount rates and basis forward curves), while unobservable inputs reflect the Company's own assumptions of what market participants would use.

The fair value hierarchy includes three levels of inputs that may be used to measure fair value as described below:

Level 1 - Quoted prices for identical instruments in active markets.

Level 2 - The fair value of the assets and liabilities included in Level 2 are based on standard industry income approach models that use significant observable inputs, including NYMEX forward curves, LIBOR-based discount rates and basis forward curves.

Level 3 - Unobservable inputs significant to the fair value measurement supported by little or no market activity.

In those cases when the inputs used to measure fair value meet the definition of more than one level of the fair value hierarchy, the lowest level input that is significant to the fair value measurement in its totality determines the applicable level in the fair value hierarchy.

The financial instrument measured at fair value on a recurring basis is summarized below:


	Fair Value Measurements at June 30, 2021						Fair Value Measurements at December 31, 2020
Description	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Gas Derivatives	$	—	$	(379,943)	$	—	$	—	$	117,545	$	—
Interest Rate Swaps	$	—	$	(9,612)	$	—	$	—	$	(14,270)	$	—

The carrying amounts and fair values of financial instruments for which the fair value option was not elected are as follows:


	June 30, 2021				December 31, 2020
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and Cash Equivalents	$	39,365	$	39,365	$	15,617	$	15,617


Long-Term Debt (Excluding Debt Issuance Costs)	$	2,313,927	$	2,594,481	$	2,450,853	$	2,638,251

Cash and cash equivalents represent highly-liquid instruments and constitute Level 1 fair value measurements. Certain of the Company’s debt is actively traded on a public market and, as a result, constitute Level 1 fair value measurements. The portion of the Company’s debt obligations that is not actively traded is valued through reference to the applicable underlying benchmark rate and, as a result, constitute Level 2 fair value measurements.

NOTE 13—ACQUISITIONS AND DISPOSITIONS:

On July 26, 2020, CNX entered into an Agreement and Plan of Merger (the “Merger Agreement”) with CNXM, CNX Midstream GP LLC (the “General Partner”) and CNX Resources Holding LLC., a wholly owned subsidiary of CNX (“Merger Sub”), pursuant to which Merger Sub merged with and into CNXM with CNXM surviving as an indirect wholly owned subsidiary of CNX (the “Merger”). As a result of the Merger, CNXM’s common units are no longer publicly traded.

Except for the Class B units of CNXM, which were automatically canceled immediately prior to the effective time of the Merger for no consideration in accordance with CNXM’s partnership agreement, the interests in CNXM owned by CNX and its subsidiaries remain outstanding as limited partner interests in the surviving entity. The General Partner will continue to own the non-economic general partner interest in the surviving entity.

Because CNX controlled CNXM prior to the Merger and continues to control CNXM after the Merger, CNX accounted for the change in its ownership interest in CNXM as an equity transaction which was reflected as a reduction of noncontrolling interest with corresponding increases to common stock and capital in excess of par value. No gain or loss was recognized in its condensed consolidated statements of operations as a result of the Merger.

The tax effects of the Merger were reported as adjustments to deferred income taxes and capital in excess of par value.

Prior to the effective time of the Merger on September 28, 2020, public unitholders held a 46.9% equity interest in CNXM and CNX owned the remaining 53.1% equity interest. The earnings of CNXM that were attributed to its common units held by the public prior to the Merger are reflected in Net Income Attributable to Noncontrolling Interest in the Consolidated Statements of Income. There were no changes in CNX's ownership interest in CNXM during the three or six months ended June 30, 2021 or 2020.

CNXM’s revolving credit facility (See Note 7 - Revolving Credit Facilities) and the CNXM Senior Notes (See Note 9 - Long-Term Debt) were not impacted by the Merger.

NOTE 14—SEGMENT INFORMATION:

The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments.

The Company evaluates the performance of its reportable segments based on total revenue and other operating income, and operating expenses directly attributable to that segment. Certain expenses are managed outside the reportable segments and therefore are not allocated. These expenses include, but are not limited to, interest expense, impairment of exploration and production properties, impairment of goodwill and other corporate expenses such as selling, general and administrative costs.

CNX's principal activity is to produce pipeline quality natural gas for sale primarily to gas wholesalers and the Company has two reportable segments that conducts those operations: Shale and Coalbed Methane. The Other Segment includes nominal shallow oil and gas production which is not significant to the Company. It also includes the Company's purchased gas activities, unrealized gain or loss on commodity derivative instruments, realized gain on commodity derivative instruments that were monetized prior to their settlement dates, exploration and production related other costs, impairments of exploration and production properties, as well as various other expenses that are managed outside the reportable segments as discussed above. Operating profit for each segment is based on sales less identifiable operating and non-operating expenses.

Prior to the Merger of CNXM that occurred in September 2020 (See Note 13 - Acquisitions and Dispositions), CNX consisted of two principal business divisions: Exploration and Production (E&P) and Midstream. The E&P Division included four reportable segments, Marcellus Shale, Utica Shale, Coalbed Methane and Other Gas. Certain reclassifications of 2020 segment information have been made to conform to the new presentation.

Industry segment results for the three months ended June 30, 2021 are:


	Shale		Coalbed Methane		Other		Consolidated
Natural Gas, NGL and Oil Revenue	$	332,659	$	36,505	$	285	$	369,449	(A)
Purchased Gas Revenue	—		—		16,706		16,706
Loss on Commodity Derivative Instruments	(9,394)		(962)		(528,503)		(538,859)
Other Revenue and Operating Income	18,679		—		6,815		25,494		(B)
Total Revenue and Other Operating Income (Loss)	$	341,944	$	35,543	$	(504,697)	$	(127,210)
Total Operating Expense	$	191,996	$	28,204	$	60,511	$	280,711
Earnings (Loss) Before Income Tax	$	149,948	$	7,339	$	(603,463)	$	(446,176)
Segment Assets	$	6,095,486	$	1,069,470	$	907,154	$	8,072,110	(C)
Depreciation, Depletion and Amortization	$	104,380	$	14,264	$	3,963	$	122,607
Capital Expenditures	$	127,230	$	1,502	$	226	$	128,958

(A) Included in Total Natural Gas, NGL and Oil Revenue are sales of $60,162 to Citadel Energy Marketing LLC, which comprises over 10% of revenue from contracts with external customers for the period.

(B) Includes midstream revenue of $18,679 and equity in earnings of unconsolidated affiliates of $1,553 for Shale and Other, respectively.

Industry segment results for the three months ended June 30, 2020 are:


	Shale		Coalbed Methane		Other		Consolidated
Natural Gas, NGL and Oil Revenue	$	152,627	$	22,929	$	220	$	175,776	(D)

Purchased Gas Revenue	—		—		20,424		20,424


Gain (Loss) on Commodity Derivative Instruments	100,262		13,005		(176,570)		(63,303)		(E)
Other Revenue and Operating Income	12,191		—		3,753		15,944		(F)
Total Revenue and Other Operating Income (Loss)	$	265,080	$	35,934	$	(152,173)	$	148,841
Total Operating Expense	$	154,306	$	29,324	$	78,882	$	262,512
Earnings (Loss) Before Income Tax	$	110,774	$	6,610	$	(276,516)	$	(159,132)
Segment Assets	$	6,096,101	$	1,132,217	$	1,091,366	$	8,319,684	(G)
Depreciation, Depletion and Amortization	$	93,984	$	15,701	$	3,860	$	113,545
Capital Expenditures	$	131,974	$	2,034	$	844	$	134,852

(D) Included in Total Natural Gas, NGL and Oil Revenue are sales of $33,711 to Direct Energy Business Marketing LLC, which comprises over 10% of revenue from contracts with external customers for the period.

(E) Included in Other is a realized gain on commodity derivative instruments of $29,015 related to the monetization of hedges (see Note 11 - Derivative Instruments for more information).

(F) Includes midstream revenue of $12,191 and equity in losses of unconsolidated affiliates of $1,259 for Shale and Other, respectively.

(G) Includes investments in unconsolidated equity affiliates of $15,159.

Industry segment results for the six months ended June 30, 2021 are:


	Shale		Coalbed Methane		Other		Consolidated
Natural Gas, NGL and Oil Revenue	$	674,828	$	75,409	$	437	$	750,674	(A)

Purchased Gas Revenue	—		—		50,190		50,190

Loss on Commodity Derivative Instruments	(7,212)		(740)		(497,493)		(505,445)
Other Revenue and Operating Income	37,745		—		12,700		50,445		(B)
Total Revenue and Other Operating Income (Loss)	$	705,361	$	74,669	$	(434,166)	$	345,864
Total Operating Expense	$	380,707	$	56,759	$	143,050	$	580,516
Earnings (Loss) Before Income Tax	$	324,654	$	17,910	$	(653,335)	$	(310,771)
Segment Assets	$	6,095,486	$	1,069,470	$	907,154	$	8,072,110	(C)
Depreciation, Depletion and Amortization	$	213,886	$	29,747	$	7,918	$	251,551
Capital Expenditures	$	248,348	$	3,644	$	395	$	252,387

(A) Included in Total Natural Gas, NGL and Oil Revenue are sales of $100,465 to Citadel Energy Marketing LLC and $80,189 to Direct Energy Business Marketing LLC, each of which comprises over 10% of revenue from contracts with external customers for the period.

(B) Includes midstream revenue of $37,745 and equity in earnings of unconsolidated affiliates of $2,504 for Shale and Other, respectively.

Industry segment results for the six months ended June 30, 2020 are:


	Shale		Coalbed Methane		Other		Consolidated
Natural Gas, NGL and Oil Revenue	$	373,121	$	53,652	$	497	$	427,270	(D)

Purchased Gas Revenue	—		—		46,783		46,783


Gain (Loss) on Commodity Derivative Instruments	186,714		22,692		(157,567)		51,839		(E)
Other Revenue and Operating Income	30,597		—		8,711		39,308		(F)
Total Revenue and Other Operating Income (Loss)	$	590,432	$	76,344	$	(101,576)	$	565,200
Total Operating Expense	$	346,254	$	63,484	$	696,073	$	1,105,811
Earnings (Loss) Before Income Tax	$	244,178	$	12,860	$	(873,975)	$	(616,937)
Segment Assets	$	6,096,101	$	1,132,217	$	1,091,366	$	8,319,684	(G)
Depreciation, Depletion and Amortization	$	201,030	$	34,139	$	7,540	$	242,709
Capital Expenditures	$	279,814	$	4,486	$	2,601	$	286,901

(D) Included in Total Natural Gas, NGL and Oil Revenue are sales of $79,367 to Direct Energy Business Marketing LLC, which comprises over 10% of revenue from contracts with external customers for the period.

(E) Included in Other is a realized gain on commodity derivative instruments of $83,997 related to the monetization of hedges (see Note 11 - Derivative Instruments for more information).

(F) Includes midstream revenue of $30,597 and equity in losses of unconsolidated affiliates of $1,421 for Shale and Other, respectively.

(G) Includes investments in unconsolidated equity affiliates of $15,159.

Reconciliation of Segment Information to Consolidated Amounts:

Revenue and Other Operating (Loss) Income


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
Total Segment Revenue from Contracts with External Customers	$	404,834	$	208,391	$	838,609	$	504,650
(Loss) Gain on Commodity Derivative Instruments	(538,859)		(63,303)		(505,445)		51,839
Other Operating Income	6,815		3,753		12,700		8,711
Total Consolidated Revenue and Other Operating (Loss) Income	$	(127,210)	$	148,841	$	345,864	$	565,200

NOTE 15—STOCK REPURCHASE:

On January 26, 2021, the Company’s Board of Directors approved an increase in the aggregate amount of the previous $750,000 stock repurchase program plan to $900,000. As of June 30, 2021, the amount available under the stock repurchase program is $214,686, and is not subject to an expiration date. The repurchases may be affected from time-to-time through open market purchases, privately negotiated transactions, Rule 10b5-1 plans, accelerated stock repurchases, block trades, derivative contracts or otherwise in compliance with Rule 10b-18. The timing of any repurchases will be based on a number of factors, including available liquidity, the Company's stock price, the Company's financial outlook, and alternative investment options. The stock repurchase program does not obligate the Company to repurchase any dollar amount or number of shares and the Board may modify, suspend, or discontinue its authorization of the program at any time. The Board of Directors will continue to evaluate the size of the stock repurchase program based on CNX's free cash flow position, leverage ratio, and capital plans. During the six months ended June 30, 2021, 3,095,241 shares were repurchased and retired at an average price of $13.12 per share for a total cost of $40,678. There were no shares repurchased and retired during the six months ended June 30, 2020.

NOTE 16—RECENT ACCOUNTING PRONOUNCEMENTS:

In May 2021, the FASB issued Accounting Standards Update (ASU) 2021-04 - Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This ASU provides guidance on how an issuer would measure and recognize the effect of these transactions. Specifically, it provides a principles-based framework to determine whether an issuer should recognize the modification or exchange as an adjustment to equity or an expense. The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted. The Company is still evaluating the effect of adopting this guidance.

In August 2020, the FASB issued ASU 2020-06 - Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. This ASU simplifies an entity's accounting for convertible instruments by eliminating two of the three models in ASC 470-20 that require separate accounting for embedded conversion features, simplifies the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification, requires entities to use the if-converted method for all convertible instruments in the diluted EPS calculation and include the effect of potential share settlement (if the effect is more dilutive) for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards, requires new disclosures about events that occur during the reporting period and cause conversion contingencies to be met and about the fair value of an entity's convertible debt at the instrument level, among other things. The amendments in this ASU are effective for public entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, and can be adopted through either a modified retrospective method of transition or a fully retrospective method of transition. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is still evaluating the effect of adopting this guidance.

In March 2020, the FASB issued ASU 2020-04 - Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848). This ASU provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates (IBORs) and, particularly, the risk of cessation of the London Interbank Offered Rate (LIBOR), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. In January 2021, the FASB issued ASU 2021-01, which clarifies that certain provisions in Topic 848, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. The amendments in these ASUs are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is still evaluating the effect of adopting this guidance.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements and related notes included elsewhere in this Form 10-Q. The information provided below supplements, but does not form part of, CNX's financial statements. This discussion contains forward-looking statements that are based on the views and beliefs of management, as well as assumptions and estimates made by management. Actual results could differ materially from any such forward-looking statements as a result of various risk factors, including those that may not be in the control of management. For further information on items that could impact future operating performance or financial condition, please see “Part II. Item 1A. Risk Factors” and the section entitled “Forward-Looking Statements” and the “Risk Factors” contained in our Annual Report on Form 10-K for the year ended December 31, 2020, which we filed with the SEC on February 9, 2021 (the “Form 2020 10-K”). CNX does not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.

General

COVID-19 Update:

CNX continues to monitor the current and potential impacts of the coronavirus COVID-19 ("COVID-19") pandemic on all aspects of our business and geographies, including how it has impacted, and may in the future, impact our operations, financial results, liquidity, contractors, customers, employees and vendors. The Company also continues to monitor a number of factors that may cause actual results of operations to differ from our historical results or current expectations. These and other factors could affect the Company’s operations, earnings and cash flows for any period and could cause such results to not be comparable to those of the same period in previous years. The results presented in this Form 10-Q are not necessarily indicative of future operating results.

While CNX did not incur significant disruptions to operations during the three or six months ended June 30, 2021 or 2020 as a direct result of the COVID-19 pandemic, CNX is unable to predict the full extent of the future impact that the COVID-19 pandemic could have on the Company, including our financial position, operating results, liquidity and ability to obtain financing in future reporting periods, due to numerous uncertainties outside the Company’s control.

Hedging Update:

Total hedged natural gas production in the 2021 third quarter is 118.3(1) Bcf. The annual gas hedge position is shown in the table below:


	2021	2022
Volumes Hedged (Bcf), as of 7/7/21	490.8(1)(2)	471.5

1Net of purchased swaps.

2Includes actual settlements of 267.0 Bcf.

CNX's hedged gas volumes include a combination of NYMEX financial hedges, index (NYMEX and basis) financial hedges, and physical fixed price sales. In addition, to protect the NYMEX hedge volumes from basis exposure, CNX enters into basis-only financial hedges and physical sales with fixed basis at certain sales points. For further information see Item 3 Quantitative and Qualitative Disclosures About Market Risk.

Results of Operations - Three Months Ended June 30, 2021 Compared with Three Months Ended June 30, 2020

Net Loss Attributable to CNX Resources Shareholders

CNX reported a net loss attributable to CNX Resources shareholders of $354 million, or a loss per diluted share of $1.61, for the three months ended June 30, 2021, compared to a net loss attributable to CNX Resources shareholders of $146 million, or a loss per diluted share of $0.78, for the three months ended June 30, 2020.


	For the Three Months Ended June 30,
(Dollars in thousands)	2021		2020		Variance
Net Loss	$	(354,059)	$	(130,486)	$	(223,573)
Less: Net Income Attributable to Noncontrolling Interest	—		15,263		(15,263)
Net Loss Attributable to CNX Resources Shareholders	$	(354,059)	$	(145,749)	$	(208,310)

Included in the loss for the three months ended June 30, 2021 was an unrealized loss on commodity derivative instruments of $529 million. Included in the loss for the three months ended June 30, 2020 was an unrealized loss on commodity derivative instruments of $205 million.

Non-GAAP Financial Measures

CNX's management uses certain non-GAAP financial measures for planning, forecasting and evaluating business and financial performance, and believes that they are useful for investors in analyzing the company. Although these are not measures of performance calculated in accordance with generally accepted accounting principles (GAAP), management believes that these financial measures are useful to an investor in evaluating CNX because these metrics are widely used to evaluate a natural gas company’s operating performance. Sales of Natural Gas, NGL and Oil, including cash settlements excludes the impacts of changes in the fair value of commodity derivative instruments prior to settlement, which are often volatile, and only includes the impact of settled commodity derivative instruments. Sales of Natural Gas, NGL and Oil, including cash settlements also excludes purchased gas revenue and other revenue and operating income, which are not directly related to CNX’s natural gas producing activities. Natural Gas, NGL and Oil Production Costs excludes certain expenses that are not directly related to CNX’s natural gas producing activities and are managed outside our production operations (See Note 14 - Segment Information in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information). These expenses include, but are not limited to, interest expense, other operating expense and other corporate expenses such as selling, general and administrative costs. We believe that Sales of Natural Gas, NGL and Oil, including cash settlements, Natural Gas, NGL and Oil Production Costs and Natural Gas, NGL and Oil Production Margin (which is derived by subtracting Natural Gas, NGL and Oil Production Costs from Sales of Natural Gas, NGL and Oil, including cash settlements) provide useful information to investors for evaluating period-to-period comparisons of earnings trends. These metrics should not be viewed as a substitute for measures of performance that are calculated in accordance with GAAP. In addition, because all companies do not calculate these measures identically, these measures may not be comparable to similarly titled measures of other companies.

Non-GAAP Financial Measures Reconciliation


	For the Three Months Ended June 30,
(Dollars in millions)	2021		2020
Total Revenue and Other Operating (Loss) Income	$	(127)	$	149
Add (Deduct):
Purchased Gas Revenue	(17)		(20)
Loss on Commodity Derivative Instruments and Monetization	529		176
Other Revenue and Operating Income	(26)		(16)
Sales of Natural Gas, NGL and Oil, including Cash Settlements, a Non-GAAP Financial Measure	$	359	$	289

Total Operating Expense	$	281	$	263
Add (Deduct):
Depreciation, Depletion and Amortization (DD&A) - Corporate	(3)		(3)
Exploration and Production Related Other Costs	(3)		(3)
Purchased Gas Costs	(15)		(20)


Selling, General and Administrative Costs	(24)		(23)
Other Operating Expense	(15)		(28)
Natural Gas, NGL and Oil Production Costs, a Non-GAAP Financial Measure1	$	221	$	186

1 Natural Gas, NGL and Oil production costs consists primarily of lease operating expense, production ad valorem and other fees, transportation, gathering and compression and production related depreciation, depletion and amortization.

Selected Natural Gas, NGL and Oil Production Financial Data

The following table presents a summary of our total sales volumes, sales of natural gas, NGL and oil including cash settlements, natural gas, NGL and oil production costs and natural gas, NGL and oil production margin related to our production operations on a total company basis (See Non-GAAP Financial Measures Reconciliation for the reconciliation to the most directly comparable financial measures calculated and presented in accordance with GAAP):


	For the Three Months Ended June 30,
	2021				2020				Variance
	in Millions		Per Mcfe		in Millions		Per Mcfe		in Millions		Per Mcfe
Total Sales Volumes (Bcfe)*			137.9				114.5				23.4

Natural Gas, NGL and Oil Revenue	$	369	$	2.68	$	176	$	1.49	$	193	$	1.19
(Loss) Gain on Commodity Derivative Instruments - Cash Settlement - Gas**	(10)		(0.08)		113		1.03		(123)		(1.11)
Sales of Natural Gas, NGL and Oil, including Cash Settlements	359		2.60		289		2.52		70		0.08
Lease Operating Expense	10		0.07		10		0.09		—		(0.02)
Production, Ad Valorem, and Other Fees	7		0.05		5		0.05		2		—
Transportation, Gathering and Compression	84		0.61		60		0.52		24		0.09
Depreciation, Depletion and Amortization (DD&A)	120		0.87		111		0.97		9		(0.10)
Natural Gas, NGL and Oil Production Costs	221		1.60		186		1.63		35		(0.03)
Natural Gas, NGL and Oil Production Margin	$	138	$	1.00	$	103	$	0.89	$	35	$	0.11

*NGLs and Oil/Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of NGL, condensate, and natural gas prices.

**Excluding hedge monetizations.

The 23.4 Bcfe increase in total sales volumes in the period-to period comparison was primarily due to the turn-in-line of new wells throughout 2020 and the first half of 2021. The increase was also due to the temporary shut-in of a portion of CNX's liquids-rich Shirley-Pennsboro production in May and June of 2020 in response to low NGL prices. These increases were offset in part by normal production declines.

Changes in the average costs per Mcfe were primarily related to the following items:

•Transportation, gathering, and compression expense increased on a per unit basis primarily due to higher processing costs due to a wetter production mix.

•Depreciation, depletion and amortization expense decreased on a per unit basis as a result of low cost reserve additions from development during the 2020 period in Southwest Pennsylvania (SWPA), the addition of proved undeveloped Shale wells in Central Pennsylvania (CPA), and an impairment recognized in CBM in the 2020 period.

Average Realized Price Reconciliation

The following table presents a breakout of liquids and natural gas sales information and settled derivative information to assist in the understanding of the Company’s natural gas production and sales portfolio and information regarding settled commodity derivatives:


	For the Three Months Ended June 30,
in thousands (unless noted)	2021	2020	Variance	Percent Change
LIQUIDS
NGL:
Sales Volume (MMcfe)	9,469	4,741	4,728	99.7	%
Sales Volume (Mbbls)	1,578	790	788	99.7	%
Gross Price ($/Bbl)	26.28	7.86	18.42	234.4	%
Gross NGL Revenue	41,521	6,226	35,295	566.9	%

Oil/Condensate:
Sales Volume (MMcfe)	785	236	549	232.6	%
Sales Volume (Mbbls)	131	39	92	235.9	%
Gross Price ($/Bbl)	53.11	26.41	26.70	101.1	%
Gross Oil/Condensate Revenue	6,946	1,040	5,906	567.9	%

NATURAL GAS
Sales Volume (MMcf)	127,666	109,527	18,139	16.6	%
Sales Price ($/Mcf)	2.51	1.54	0.97	63.0	%
Gross Natural Gas Revenue	320,982	168,510	152,472	90.5	%

Hedging Impact ($/Mcf)	(0.08)	1.03	(1.11)	(107.8)	%
(Loss) Gain on Commodity Derivative Instruments - Cash Settlement*	(10,359)	113,241	(123,600)	(109.1)	%

* Excluding gains from hedge monetization.

The increase in gross revenue was primarily the result of the $0.97 per Mcf increase in general natural gas prices, when excluding the impact of hedging, the 23.4 Bcfe increase in sales volumes, and the $18.42 per Bbl increase in NGL prices. These increases were offset, in-part, by the impact of the change in the realized (loss) gain on commodity derivative instruments related to the Company's hedging program.

SEGMENT ANALYSIS for the three months ended June 30, 2021 compared to the three months ended June 30, 2020:


	For the Three Months Ended								Difference to Three Months Ended
	June 30, 2021								June 30, 2020
(in millions)	Shale		CBM		Other		Total		Shale		CBM		Other		Total
Natural Gas, NGLs and Oil Revenue	$	332	$	36	$	1	$	369	$	179	$	13	$	1	$	193
Loss on Commodity Derivative Instruments	(9)		(1)		(529)		(539)		(109)		(14)		(353)		(476)
Purchased Gas Revenue	—		—		17		17		—		—		(3)		(3)
Other Revenue and Operating Income	19		—		7		26		7		—		3		10
Total Revenue and Other Operating Income	342		35		(504)		(127)		77		(1)		(352)		(276)
Lease Operating Expense	7		3		—		10		1		(1)		—		—
Production, Ad Valorem, and Other Fees	7		1		(1)		7		3		—		(1)		2
Transportation, Gathering and Compression	74		10		—		84		24		2		(2)		24
Depreciation, Depletion and Amortization	104		14		5		123		10		(2)		1		9

Exploration and Production Related Other Costs	—		—		3		3		—		—		—		—
Purchased Gas Costs	—		—		15		15		—		—		(5)		(5)
Other Operating Expense	—		—		15		15		—		—		(13)		(13)
Selling, General and Administrative Costs	—		—		24		24		—		—		1		1
Total Operating Expense	192		28		61		281		38		(1)		(19)		18
Other Expense	—		—		6		6		—		—		1		1
Gain on Asset Sales and Abandonments, net	—		—		(7)		(7)		—		—		(1)		(1)

Interest Expense	—		—		39		39		—		—		(7)		(7)
Total Other Expense	—		—		38		38		—		—		(7)		(7)
Total Costs and Expenses	192		28		99		319		38		(1)		(26)		11
Earnings (Loss) Before Income Tax	$	150	$	7	$	(603)	$	(446)	$	39	$	—	$	(326)	$	(287)

SHALE SEGMENT

The Shale segment had earnings before income tax of $150 million for the three months ended June 30, 2021 compared to earnings before income tax of $111 million for the three months ended June 30, 2020.


	For the Three Months Ended June 30,
	2021		2020		Variance		Percent Change
Shale Gas Sales Volumes (Bcf)	115.0		96.5		18.5		19.2	%
NGLs Sales Volumes (Bcfe)*	9.5		4.7		4.8		102.1	%
Oil/Condensate Sales Volumes (Bcfe)*	0.7		0.2		0.5		250.0	%
Total Shale Sales Volumes (Bcfe)*	125.2		101.4		23.8		23.5	%

Average Sales Price - Natural Gas (per Mcf)	$	2.47	$	1.51	$	0.96	63.6	%
(Loss) Gain on Commodity Derivative Instruments - Cash Settlement- Gas (per Mcf)	$	(0.08)	$	1.04	$	(1.12)	(107.7)	%
Average Sales Price - NGLs (per Mcfe)*	$	4.38	$	1.31	$	3.07	234.4	%
Average Sales Price - Oil/Condensate (per Mcfe)*	$	8.84	$	4.40	$	4.44	100.9	%

Total Average Shale Sales Price (per Mcfe)	$	2.58	$	2.49	$	0.09	3.6	%
Average Shale Lease Operating Expenses (per Mcfe)	0.06		0.06		—		—	%
Average Shale Production, Ad Valorem and Other Fees (per Mcfe)	0.05		0.04		0.01		25.0	%
Average Shale Transportation, Gathering and Compression Costs (per Mcfe)	0.59		0.49		0.10		20.4	%
Average Shale Depreciation, Depletion and Amortization Costs (per Mcfe)	0.83		0.93		(0.10)		(10.8)	%
Total Average Shale Production Costs (per Mcfe)	$	1.53	$	1.52	$	0.01	0.7	%
Total Average Shale Production Margin (per Mcfe)	$	1.05	$	0.97	$	0.08	8.2	%

* NGLs and Oil/Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGL, condensate, and natural gas prices.

The Shale segment had natural gas, NGLs and oil/condensate revenue of $332 million for the three months ended June 30, 2021 compared to $153 million for the three months ended June 30, 2020. The $179 million increase was due primarily to a 63.6% increase in the average sales price for natural gas, a 23.5% increase in total Shale sales volumes, and a 234.4% increase in the average sales price of NGLs. The increase in total Shale volumes was primarily due to the turn-in-line of new wells throughout 2020 and the first half of 2021. The increase was also due to the temporary shut-in of a portion of CNX's liquids-rich Shirley-Pennsboro production in May and June of 2020 in response to low NGL prices. These increases were offset in part by normal production declines.

The increase in total average Shale sales price was primarily due to a $0.96 per Mcf increase in average gas sales price and a $3.07 per Mcfe increase in the average NGL sales price. These increases were offset in part by a $1.12 per Mcf change in the realized (loss) gain on commodity derivative instruments. The notional amounts associated with these financial hedges represented approximately 99.1 Bcf of the Company's produced Shale gas sales volumes for the three months ended June 30, 2021 at an average loss of $0.09 per Mcf hedged. For the three months ended June 30, 2020, these financial hedges represented approximately 103.0 Bcf at an average gain of $0.97 per Mcf hedged.

Total operating costs and expenses for the Shale segment were $192 million for the three months ended June 30, 2021 compared to $154 million for the three months ended June 30, 2020. The increase in total dollars and increase in unit costs for the Shale segment were due to the following items:

•Shale production, ad valorem and other fees were $7 million for the three months ended June 30, 2021 compared to $4 million for the three months ended June 30, 2020. The increases in total dollars and unit costs were primarily due to the increase in production volumes, as well as the total average sales price.

•Shale transportation, gathering and compression costs were $74 million for the three months ended June 30, 2021 compared to $50 million for the three months ended June 30, 2020. The increases in total dollars and unit costs were primarily due to the increase in production volumes, as well as a wetter production mix, which resulted in increased processing cost.

•Depreciation, depletion and amortization costs attributable to the Shale segment were $104 million for the three months ended June 30, 2021 compared to $94 million for the three months ended June 30, 2020. These amounts included depletion on a unit of production basis of $0.72 per Mcfe and $0.80 per Mcfe, respectively. The decrease in the units of production depreciation, depletion and amortization rate in the current period is primarily the result of low-cost reserve additions from development in 2020 in SWPA as well as the addition of proved undeveloped Shale reserves in CPA. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.

Total Shale other revenue and operating income relates to natural gas gathering services provided to third-parties. The Shale segment had other revenue and operating income of $19 million for the three months ended June 30, 2021 compared to $12 million for the three months ended June 30, 2020. The increase in the period-to-period comparison was primarily due to temporary production curtailments by third party customers that occurred in 2020 period. Those curtailments were restored to full production in the latter half of 2020. This decrease was offset in part by well turn-in-line activity.

COALBED METHANE (CBM) SEGMENT

The CBM segment had earnings before income tax of $7 million for both the three months ended June 30, 2021 and 2020.


	For the Three Months Ended June 30,
	2021		2020		Variance		Percent Change
CBM Gas Sales Volumes (Bcf)	12.6		13.1		(0.5)		(3.8)	%

Average Sales Price - Gas (per Mcf)	$	2.91	$	1.75	$	1.16	66.3	%
(Loss) Gain on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf)	$	(0.08)	$	0.99	$	(1.07)	(108.1)	%

Total Average CBM Sales Price (per Mcf)	$	2.83	$	2.74	$	0.09	3.3	%
Average CBM Lease Operating Expenses (per Mcf)	0.26		0.31		(0.05)		(16.1)	%
Average CBM Production, Ad Valorem and Other Fees (per Mcf)	0.05		0.09		(0.04)		(44.4)	%
Average CBM Transportation, Gathering and Compression Costs (per Mcf)	0.79		0.64		0.15		23.4	%
Average CBM Depreciation, Depletion and Amortization Costs (per Mcf)	1.15		1.20		(0.05)		(4.2)	%
Total Average CBM Production Costs (per Mcf)	$	2.25	$	2.24	$	0.01	0.4	%
Total Average CBM Production Margin (per Mcf)	$	0.58	$	0.50	$	0.08	16.0	%

The CBM segment had natural gas revenue of $36 million for the three months ended June 30, 2021 compared to $23 million for the three months ended June 30, 2020. The $13 million increase was due to a 66.3% increase in the average sales price for natural gas in the current period, offset in part by the 3.8% decrease in total CBM sales volumes. The decrease in CBM sales volumes was primarily due to normal production declines.

The total average CBM sales price increased $0.09 per Mcf due to a $1.16 per Mcf increase in average gas sales price, offset in part by a $1.07 per Mcf change in the realized (loss) gain on commodity derivative instruments resulting from the Company's hedging program. The notional amounts associated with these financial hedges represented approximately 10.2 Bcf of the Company's produced CBM sales volumes for the three months ended June 30, 2021 at an average loss of $0.07 per Mcf hedged. For the three months ended June 30, 2020, these financial hedges represented approximately 13.5 Bcf at an average gain of $0.96 per Mcf hedged.

Total operating costs and expenses for the CBM segment were $28 million for the three months ended June 30, 2021 compared to $29 million for the three months ended June 30, 2020. The decrease in total dollars and increase in unit costs for the CBM segment were due to the following items:

•CBM lease operating expense was $3 million for the three months ended June 30, 2021 compared to $4 million for the three months ended June 30, 2020. The decrease in total dollars and unit costs was primarily due to decreases in repairs and maintenance, well operations, environmental and safety expense and water disposal costs.

•CBM transportation, gathering and compression costs were $10 million for the three months ended June 30, 2021 compared to $8 million for the three months ended June 30, 2020. The increase in total dollars and unit costs was primarily due to an increase in firm transportation expense.

•Depreciation, depletion and amortization costs attributable to the CBM segment were $14 million for the three months ended June 30, 2021 compared to $16 million for the three months ended June 30, 2020. These amounts included depletion on a unit of production basis of $0.66 per Mcfe for both periods. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.

OTHER SEGMENT

The Other Segment includes nominal shallow oil and gas production which is not significant to the Company. It also includes the Company's purchased gas activities, unrealized gain or loss on commodity derivative instruments, realized gain on commodity derivative instruments that were monetized prior to their contractual settlement dates, exploration and production related other costs, as well as various other expenses that are managed outside the Shale and CBM segments such as SG&A, interest expense and income taxes.

The Other Segment had a loss before income tax of $603 million for the three months ended June 30, 2021 compared to a loss before income tax of $277 million for the three months ended June 30, 2020. The decrease in total dollars is discussed below.


	For the Three Months Ended June 30,
	2021	2020	Variance	Percent Change
Other Gas Sales Volumes (Bcf)	0.1	—	0.1	100.0	%

Gain or Loss on Commodity Derivative Instruments and Monetization

For the three months ended June 30, 2021, the Other Segment recognized an unrealized loss on commodity derivative instruments of $529 million. For the three months ended June 30, 2020, the Other Segment recognized an unrealized loss on commodity derivative instruments of $205 million as well as cash settlements received of $29 million related to natural gas hedges that were monetized prior to their settlement dates. The unrealized gain or loss on commodity derivative instruments represents changes in the fair value of all the Company's existing commodity hedges on a mark-to-market basis. See Note 11 - Derivative Instruments in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information related to the cash settlements.

Purchased Gas

Purchased gas volumes represent volumes of natural gas purchased at market prices from third-parties and then resold in order to fulfill contracts with certain customers and to balance supply. Purchased gas revenues were $17 million for the three months ended June 30, 2021 compared to $20 million for the three months ended June 30, 2020. Purchased gas costs were $15 million for the three months ended June 30, 2021 compared to $20 million for the three months ended June 30, 2020. The period-to-period decrease in purchased gas revenue was due to a decrease in purchased gas sales volumes, offset in part by an increase in averages sales price.


	For the Three Months Ended June 30,
	2021		2020		Variance		Percent Change
Purchased Gas Sales Volumes (in Bcf)	5.9		13.1		(7.2)		(55.0)	%
Average Sales Price (per Mcf)	$	2.82	$	1.56	$	1.26	80.8	%
Purchased Gas Average Cost (per Mcf)	$	2.45	$	1.52	$	0.93	61.2	%

Other Operating Income


	For the Three Months Ended June 30,
(in millions)	2021		2020		Variance		Percent Change
Equity Income (Loss) from Affiliates	$	2	$	(1)	$	3	300.0	%
Excess Firm Transportation Income	3		3		—		—	%
Water Income	2		2		—		—	%

Total Other Operating Income	$	7	$	4	$	3	75.0	%

•Equity income (loss) from affiliates primarily represents CNX's share of earnings from a 50% interest in a power plant located within CNX’s CBM field. Power generated from the facility is sold into wholesale electricity markets during times of peak energy consumption. Due to the plant consuming coal mine methane gas, the plant qualifies for Pennsylvania Tier I Renewable Energy Credits.

•Excess firm transportation income represents revenue from the sale of excess firm transportation capacity to third-parties. The Company obtains firm pipeline transportation capacity to enable gas production to flow uninterrupted as sales volumes increase. In order to minimize this unutilized firm transportation expense, CNX is able to release (sell) unutilized firm transportation capacity to other parties when possible and when beneficial. The revenue from released capacity helps offset the unutilized firm transportation and processing fees in total other operating expense.

Exploration and Production Related Other Costs


	For the Three Months Ended June 30,
(in millions)	2021		2020		Variance		Percent Change
Lease Expiration Costs	$	2	$	2	$	—	—	%
Land Rentals	1		1		—		—	%


Total Exploration and Production Related Other Costs	$	3	$	3	$	—	—	%

•Lease expiration costs relate to leases where the primary term expired or will expire within the next 12 months.

Selling, General and Administrative ("SG&A")

SG&A costs include costs such as overhead, including employee labor and benefit costs, short-term incentive compensation, costs of maintaining our headquarters, audit and other professional fees, and legal compliance expenses. SG&A costs also include non-cash long-term equity-based compensation expense.


	For the Three Months Ended June 30,
(in millions)	2021		2020		Variance		Percent Change
Short-Term Inventive Compensation	$	3	$	3	$	—	—	%
Long-Term Equity-Based Compensation (Non-Cash)	3		3		—		—	%
Salaries, Wages and Employee Benefits	6		8		(2)		(25.0)	%
Other	12		9		3		33.3	%
Total SG&A	$	24	$	23	$	1	4.3	%

•Salaries, wages and employee benefits decreased in the period-to-period comparison primarily due to lower employee related expenses.

•Other increased in the period-to-period comparison primarily due to an increase in professional service expense.

Other Operating Expense


	For the Three Months Ended June 30,
(in millions)	2021		2020		Variance		Percent Change
Unutilized Firm Transportation and Processing Fees	$	14	$	21	$	(7)	(33.3)	%
Idle Equipment and Service Charges	—		3		(3)		(100.0)	%
Insurance Expense	1		1		—		—	%
Other	—		3		(3)		(100.0)	%
Total Other Operating Expense	$	15	$	28	$	(13)	(46.4)	%

•Unutilized firm transportation and processing fees represent pipeline transportation capacity obtained to enable gas production to flow uninterrupted as sales volumes increase, as well as additional processing capacity for NGLs. In some instances, the Company may have the opportunity to realize more favorable net pricing by strategically choosing to sell natural gas into a market or to a customer that does not require the use of the Company’s own firm transportation capacity. Such sales would result in an increase in unutilized firm transportation expense. The Company attempts to minimize this expense by releasing (selling) unutilized firm transportation capacity to other parties when possible and when beneficial. The revenue received when this capacity is released (sold) is included in Excess Firm

Transportation Income above. The decrease in the period-to-period comparison was primarily due to an increase in utilization of firm transportation capacity in the current year due to production increases in 2021 compared to 2020.

•Idle equipment and service charges relates to the temporary idling of certain of the Company's natural gas drilling rigs as well as related equipment and other services that may be needed in the natural gas drilling and completions process. The decrease in the period-to-period comparison was the result of two of CNX's drilling rigs being idled in the prior period.

Other Expense


	For the Three Months Ended June 30,
(in millions)	2021		2020		Variance		Percent Change
Other Income

Right-of-Way Sales	$	1	$	1	$	—	—	%


Total Other Income	$	1	$	1	$	—	—	%

Other Expense
Professional Services	$	3	$	2	$	1	50.0	%

Bank Fees	3		3		—		—	%

Other Corporate Expense	1		1		—		—	%
Total Other Expense	$	7	$	6	$	1	16.7	%

Total Other Expense	$	6	$	5	$	1	20.0	%

Gain on Asset Sales and Abandonments, net

A gain on asset sales of $7 million related to the sale of various non-core assets was recognized in the three months ended June 30, 2021 compared to a gain of $6 million in the three months ended June 30, 2020.

Interest Expense


	For the Three Months Ended June 30,
(in millions)	2021		2020		Variance		Percent Change
Total Interest Expense	$	39	$	46	$	(7)	(15.2)	%

•The $7 million decrease was primarily due to the purchase of the remaining $894 million of the 5.875% senior notes due in April 2022 during the year ended December 31, 2020, lower borrowings on the CNX senior secured revolving credit facility ("Credit Facility") and higher unrealized gains on interest rate swap agreements. These decreases were offset in part by interest related to the addition of $500 million of senior notes due 2029, and $200 million of senior notes due 2027. See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

Income Taxes


	For the Three Months Ended June 30,
(in millions)	2021			2020			Variance			Percent Change
Total Company Loss Before Income Tax	$	(446)		$	(159)		$	(287)		(180.5)	%
Income Tax Benefit	$	(92)		$	(29)		$	(63)		(217.2)	%
Effective Income Tax Rate	20.6		%	18.0		%	2.6		%

The effective income tax rate was 20.6% for the three months ended June 30, 2021 compared to 18.0% for the three months ended June 30, 2020. The effective rate for the three months ended June 30, 2021 differs from the U.S. federal statutory rate of 21% primarily due to the impact of equity compensation and state income taxes. The effective rate for the three months ended June 30, 2020 differs from the U.S. federal statutory rate of 21% primarily due to the impact of equity compensation and state income taxes (See Note 4 - Income Taxes in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information).

Results of Operations - Six Months Ended June 30, 2021 Compared with Six Months Ended June 30, 2020

Net Loss Attributable to CNX Resources Shareholders

CNX reported a net loss attributable to CNX Resources shareholders of $256 million, or a loss per diluted share of $1.16, for the six months ended June 30, 2021, compared to a net loss attributable to CNX Resources shareholders of $475 million, or a loss per diluted share of $2.54, for the six months ended June 30, 2020.


	For the Six Months Ended June 30,
(Dollars in thousands)	2021		2020		Variance
Net Loss	$	(256,034)	$	(435,709)	$	179,675
Less: Net Income Attributable to Noncontrolling Interest	—		39,126		(39,126)
Net Loss Attributable to CNX Resources Shareholders	$	(256,034)	$	(474,835)	$	218,801

Included in the loss for the six months ended June 30, 2021 was an unrealized loss on commodity derivative instruments of $497 million. Included in the loss for the six months ended June 30, 2020 was an unrealized loss on commodity derivative instruments of $241 million, a $62 million non-cash impairment charge related to exploration and production properties specific to our Southwestern Pennsylvania (SWPA) CBM asset group (See Note 5 - Property, Plant and Equipment in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information), and a $473 million non-cash impairment charge related to goodwill (See Note 6 - Goodwill and Other Intangible Assets in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information).

Non-GAAP Financial Measures

CNX's management uses certain non-GAAP financial measures for planning, forecasting and evaluating business and financial performance, and believes that they are useful for investors in analyzing the company. Although these are not measures of performance calculated in accordance with generally accepted accounting principles (GAAP), management believes that these financial measures are useful to an investor in evaluating CNX because these metrics are widely used to evaluate a natural gas company’s operating performance. Sales of Natural Gas, NGL and Oil, including cash settlements excludes the impacts of changes in the fair value of commodity derivative instruments prior to settlement, which are often volatile, and only includes the impact of settled commodity derivative instruments. Sales of Natural Gas, NGL and Oil, including cash settlements also excludes purchased gas revenue and other revenue and operating income, which are not directly related to CNX’s natural gas producing activities. Natural Gas, NGL and Oil Production Costs excludes certain expenses that are not directly related to CNX’s natural gas producing activities and are managed outside our production operations (See Note 14 - Segment Information in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information). These expenses include, but are not limited to, interest expense, impairment of exploration and production properties, impairment of goodwill, other operating expense and other corporate expenses such as selling, general and administrative costs. We believe that Sales of Natural Gas, NGL and Oil, including cash settlements, Natural Gas, NGL and Oil Production Costs and Natural Gas, NGL and Oil Production Margin (which is derived by subtracting Natural Gas, NGL and Oil Production Costs from Sales of Natural Gas, NGL and Oil, including cash settlements) provide useful information to investors for evaluating period-to-period comparisons of earnings trends. These metrics should not be viewed as a substitute for measures of performance that are calculated in accordance with GAAP. In addition, because all companies do not calculate these measures identically, these measures may not be comparable to similarly titled measures of other companies.

Non-GAAP Financial Measures Reconciliation


	For the Six Months Ended June 30,
(Dollars in millions)	2021		2020
Total Revenue and Other Operating Income	$	346	$	565
Add (Deduct):
Purchased Gas Revenue	(50)		(47)
Loss on Commodity Derivative Instruments and Monetization	497		157
Other Revenue and Operating Income	(50)		(39)
Sales of Natural Gas, NGL and Oil, including Cash Settlements, a Non-GAAP Financial Measure	$	743	$	636

Total Operating Expense	$	581	$	1,106
Add (Deduct):
Depreciation, Depletion and Amortization (DD&A) - Corporate	(6)		(5)
Exploration and Production Related Other Costs	(5)		(7)
Purchased Gas Costs	(47)		(45)
Impairment of Exploration and Production Properties	—		(62)
Impairment of Goodwill	—		(473)
Selling, General and Administrative Costs	(52)		(54)
Other Operating Expense	(31)		(47)
Natural Gas, NGL and Oil Production Costs, a Non-GAAP Financial Measure1	$	440	$	413

Selected Natural Gas, NGL and Oil Production Financial Data


	For the Six Months Ended June 30,
	2021				2020				Variance
	in Millions		Per Mcfe		in Millions		Per Mcfe		in Millions		Per Mcfe
Total Sales Volumes (Bcfe)*			278.5				248.9				29.6

Natural Gas, NGL and Oil Revenue	$	751	$	2.70	$	427	$	1.67	$	324	$	1.03
(Loss) Gain on Commodity Derivative Instruments - Cash Settlement - Gas**	(8)		(0.03)		209		0.89		(217)		(0.92)
Sales of Natural Gas, NGL and Oil, including Cash Settlements	743		2.67		636		2.56		107		0.11
Lease Operating Expense	20		0.07		20		0.08		—		(0.01)
Production, Ad Valorem, and Other Fees	13		0.05		12		0.04		1		0.01
Transportation, Gathering and Compression	161		0.58		143		0.58		18		—
Depreciation, Depletion and Amortization (DD&A)	246		0.88		238		0.96		8		(0.08)
Natural Gas, NGL and Oil Production Costs	440		1.58		413		1.66		27		(0.08)
Natural Gas, NGL and Oil Production Margin	$	303	$	1.09	$	223	$	0.90	$	80	$	0.19

**Excluding hedge monetizations.

The 29.6 Bcfe increase in volumes in the period-to period comparison was primarily due to the turn-in-line of new wells throughout 2020 and the first half of 2021. The increase was offset in part by normal production declines.

Changes in the average costs per Mcfe were primarily related to the following items:

•Depreciation, depletion and amortization expense decreased on a per unit basis as a result of low cost reserve additions from development during the 2020 period in Southwest Pennsylvania (SWPA), the addition of proved undeveloped Shale wells in the Central Pennsylvania (CPA), and an impairment recognized in CBM in the 2020 period.

Average Realized Price Reconciliation


	For the Six Months Ended June 30,
in thousands (unless noted)	2021		2020		Variance		Percent Change
LIQUIDS
NGL:
Sales Volume (MMcfe)	15,937		13,042		2,895		22.2	%
Sales Volume (Mbbls)	2,656		2,174		482		22.2	%
Gross Price ($/Bbl)	$	27.60	$	11.82	$	15.78	133.5	%
Gross NGL Revenue	$	73,384	$	25,638	$	47,746	186.2	%

Oil/Condensate:
Sales Volume (MMcfe)	1,091		613		478		78.0	%
Sales Volume (Mbbls)	182		102		80		78.4	%
Gross Price ($/Bbl)	$	49.11	$	34.49	$	14.62	42.4	%
Gross Oil/Condensate Revenue	$	8,932	$	3,524	$	5,408	153.5	%

NATURAL GAS
Sales Volume (MMcf)	261,515		235,212		26,303		11.2	%
Sales Price ($/Mcf)	$	2.56	$	1.69	$	0.87	51.5	%
Gross Natural Gas Revenue	$	668,358	$	398,108	$	270,250	67.9	%

Hedging Impact ($/Mcf)	$	(0.03)	$	0.89	$	(0.92)	(103.4)	%
(Loss) Gain on Commodity Derivative Instruments - Cash Settlement*	$	(7,954)	$	209,419	$	(217,373)	(103.8)	%

* Excluding gains from hedge monetization.

The increase in gross revenue was primarily the result of the $0.87 per Mcf increase in general natural gas prices, when excluding the impact of hedging, the 29.6 Bcfe increase in sales volumes, and the $15.78 per Bbl increase in NGL prices. These increases were offset, in-part, by the impact of the change in the realized (loss) gain on commodity derivative instruments related to the Company's hedging program.

SEGMENT ANALYSIS for the six months ended June 30, 2021 compared to the six months ended June 30, 2020:


	For the Six Months Ended								Difference to Six Months Ended
	June 30, 2021								June 30, 2020
(in millions)	Shale		CBM		Other		Total		Shale		CBM		Other		Total



Natural Gas, NGLs and Oil Revenue	$	675	$	75	$	1	$	751	$	302	$	21	$	1	$	324
Loss on Commodity Derivative Instruments	(7)		(1)		(497)		(505)		(194)		(24)		(339)		(557)
Purchased Gas Revenue	—		—		50		50		—		—		3		3
Other Revenue and Operating Income	38		—		12		50		8		—		3		11

Total Revenue and Other Operating Income	706		74		(434)		346		116		(3)		(332)		(219)
Lease Operating Expense	13		6		1		20		—		(2)		2		—
Production, Ad Valorem, and Other Fees	11		2		—		13		2		(1)		—		1
Transportation, Gathering and Compression	143		18		—		161		19		(1)		—		18
Depreciation, Depletion and Amortization	214		30		8		252		14		(4)		(1)		9
Impairment of Exploration and Production Properties	—		—		—		—		—		—		(62)		(62)
Impairment of Goodwill	—		—		—		—		—		—		(473)		(473)
Exploration and Production Related Other Costs	—		—		5		5		—		—		(2)		(2)
Purchased Gas Costs	—		—		47		47		—		—		2		2
Other Operating Expense	—		—		31		31		—		—		(16)		(16)
Selling, General and Administrative Costs	—		—		52		52		—		—		(2)		(2)
Total Operating Expense	381		56		144		581		35		(8)		(552)		(525)
Other Expense	—		—		10		10		—		—		—		—
Gain on Asset Sales and Abandonments, net	—		—		(10)		(10)		—		—		8		8
Gain on Debt Extinguishment	—		—		—		—		—		—		11		11
Interest Expense	—		—		76		76		—		—		(19)		(19)
Total Other Expense	—		—		76		76		—		—		—		—
Total Costs and Expenses	381		56		220		657		35		(8)		(552)		(525)
Earnings (Loss) Before Income Tax	$	325	$	18	$	(654)	$	(311)	$	81	$	5	$	220	$	306

SHALE SEGMENT

The Shale segment had earnings before income tax of $325 million for the six months ended June 30, 2021 compared to earnings before income tax of $244 million for the six months ended June 30, 2020.


	For the Six Months Ended June 30,
	2021		2020		Variance		Percent Change
Shale Gas Sales Volumes (Bcf)	236.1		208.9		27.2		13.0	%
NGLs Sales Volumes (Bcfe)*	15.9		13.1		2.8		21.4	%
Oil/Condensate Sales Volumes (Bcfe)*	1.1		0.6		0.5		83.3	%
Total Shale Sales Volumes (Bcfe)*	253.1		222.6		30.5		13.7	%

Average Sales Price - Natural Gas (per Mcf)	$	2.51	$	1.65	$	0.86	52.1	%
(Loss) Gain on Commodity Derivative Instruments - Cash Settlement- Gas (per Mcf)	$	(0.03)	$	0.89	$	(0.92)	(103.4)	%
Average Sales Price - NGLs (per Mcfe)*	$	4.60	$	1.97	$	2.63	133.5	%
Average Sales Price - Oil/Condensate (per Mcfe)*	$	8.18	$	5.72	$	2.46	43.0	%

Total Average Shale Sales Price (per Mcfe)	$	2.64	$	2.52	$	0.12	4.8	%
Average Shale Lease Operating Expenses (per Mcfe)	0.05		0.06		(0.01)		(16.7)	%
Average Shale Production, Ad Valorem and Other Fees (per Mcfe)	0.05		0.04		0.01		25.0	%
Average Shale Transportation, Gathering and Compression Costs (per Mcfe)	0.56		0.56		—		—	%
Average Shale Depreciation, Depletion and Amortization Costs (per Mcfe)	0.85		0.90		(0.05)		(5.6)	%
Total Average Shale Production Costs (per Mcfe)	$	1.51	$	1.56	$	(0.05)	(3.2)	%
Total Average Shale Production Margin (per Mcfe)	$	1.13	$	0.96	$	0.17	17.7	%

* NGLs and Oil/Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGL, condensate, and natural gas prices.

The Shale segment had natural gas, NGLs and oil/condensate revenue of $675 million for the six months ended June 30, 2021 compared to $373 million for the six months ended June 30, 2020. The $302 million increase was due primarily to a 52.1% increase in the average sales price for natural gas, a 13.7% increase in total Shale sales volumes, and a 133.5% increase in the average sales price of NGLs. The increase in total Shale volumes was primarily due to the turn-in-line of new wells throughout 2020 and the first half of 2021. These increases were offset in part by normal production declines.

The increase in total average Shale sales price was primarily due to a $0.86 per Mcf increase in average gas sales price and a $2.63 per Mcfe increase in the average NGL sales price. These increases were offset in part by a $0.92 per Mcf change in the realized (loss) gain on commodity derivative instruments. The notional amounts associated with these financial hedges represented approximately 209.4 Bcf of the Company's produced Shale gas sales volumes for the six months ended June 30, 2021 at an average loss of $0.03 per Mcf hedged. For the six months ended June 30, 2020, these financial hedges represented approximately 207.2 Bcf at an average gain of $0.90 per Mcf hedged.

Total operating costs and expenses for the Shale segment were $381 million for the six months ended June 30, 2021 compared to $346 million for the six months ended June 30, 2020. The increase in total dollars and decrease in unit costs for the Shale segment were due to the following items:

•Shale transportation, gathering and compression costs were $143 million for the six months ended June 30, 2021 compared to $124 million for the six months ended June 30, 2020. The increase in total dollars was primarily related to the increase in production volumes, increased processing costs due to a wetter production mix, and increased firm transportation costs.

•Depreciation, depletion and amortization costs attributable to the Shale segment were $214 million for the six months ended June 30, 2021 compared to $200 million for the six months ended June 30, 2020. These amounts included depletion on a unit of production basis of $0.74 per Mcfe and $0.80 per Mcfe, respectively. The decrease in the units of production

depreciation, depletion and amortization rate in the current period is primarily the result of low-cost reserve additions from development in 2020 in SWPA as well as the addition of proved undeveloped Shale reserves in CPA. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.

Total Shale other revenue and operating income relates to natural gas gathering services provided to third-parties. The Shale segment had other revenue and operating income of $38 million for the six months ended June 30, 2021 compared to $30 million for the six months ended June 30, 2020. The increase in the period-to-period comparison was primarily due to temporary production curtailments by third party customers that occurred in the 2020 period. Those curtailments were restored to full production in the latter half of 2020. This decrease was offset in part by well turn-in-line activity.

COALBED METHANE (CBM) SEGMENT

The CBM segment had earnings before income tax of $18 million for the six months ended June 30, 2021 compared to earnings before income tax of $13 million for the six months ended June 30, 2020.


	For the Six Months Ended June 30,
	2021		2020		Variance		Percent Change
CBM Gas Sales Volumes (Bcf)	25.3		26.3		(1.0)		(3.8)	%

Average Sales Price - Gas (per Mcf)	$	2.98	$	2.04	$	0.94	46.1	%
(Loss) Gain on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf)	$	(0.03)	$	0.86	$	(0.89)	(103.5)	%

Total Average CBM Sales Price (per Mcf)	$	2.95	$	2.90	$	0.05	1.7	%
Average CBM Lease Operating Expenses (per Mcf)	0.24		0.29		(0.05)		(17.2)	%
Average CBM Production, Ad Valorem and Other Fees (per Mcf)	0.10		0.10		—		—	%
Average CBM Transportation, Gathering and Compression Costs (per Mcf)	0.72		0.73		(0.01)		(1.4)	%
Average CBM Depreciation, Depletion and Amortization Costs (per Mcf)	1.18		1.29		(0.11)		(8.5)	%
Total Average CBM Production Costs (per Mcf)	$	2.24	$	2.41	$	(0.17)	(7.1)	%
Total Average CBM Production Margin (per Mcf)	$	0.71	$	0.49	$	0.22	44.9	%

The CBM segment had natural gas revenue of $75 million for the six months ended June 30, 2021 compared to $54 million for the six months ended June 30, 2020. The $21 million increase was primarily due to a 46.1% increase in the average sales price for natural gas in the current period. The natural gas price increases were partially offset by the 3.8% decrease in CBM sales volumes due to normal production declines.

The total average CBM sales price increased $0.05 per Mcf due to a $0.94 per Mcf increase in average gas sales price, offset in part by a $0.89 per Mcf change in the realized (loss) gain on commodity derivative instruments resulting from the Company's hedging program. The notional amounts associated with these financial hedges represented approximately 21.5 Bcf of the Company's produced CBM sales volumes for the six months ended June 30, 2021 at an average loss of $0.03 per Mcf hedged. For the six months ended June 30, 2020, these financial hedges represented approximately 25.2 Bcf at an average gain of $0.90 per Mcf hedged.

Total operating costs and expenses for the CBM segment were $56 million for the six months ended June 30, 2021 compared to $64 million for the six months ended June 30, 2020. The decreases in total dollars and unit costs for the CBM segment were due to the following items:

•CBM lease operating expense was $6 million for the six months ended June 30, 2021 compared to $8 million for the six months ended June 30, 2020. The decrease in total dollars and unit costs was primarily due to decreases in repairs and maintenance, well operations, environmental and safety expense and water disposal costs.

•CBM transportation, gathering and compression costs were $18 million for the six months ended June 30, 2021 compared to $19 million for the six months ended June 30, 2020. The decrease in total dollars was primarily related to lower electrical power and repair and maintenance costs.

•Depreciation, depletion and amortization costs attributable to the CBM segment were $30 million for the six months ended June 30, 2021 compared to $34 million for the six months ended June 30, 2020. These amounts included depletion on a unit of production basis of $0.66 per Mcfe and $0.69 per Mcfe, respectively. The decrease in the units of production depreciation, depletion and amortization rate was primarily due to an impairment in the 2020 period that reduced the carrying value of the underlying CBM asset base. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.

OTHER SEGMENT

The Other Segment includes nominal shallow oil and gas production which is not significant to the Company. It also includes the Company's purchased gas activities, unrealized gain or loss on commodity derivative instruments, realized gain on commodity derivative instruments that were monetized prior to their contractual settlement dates, exploration and production related other costs, impairments, as well as various other expenses that are managed outside the Shale and CBM segments such as SG&A, interest expense and income taxes.

The Other Segment had a loss before income tax of $654 million for the six months ended June 30, 2021 compared to a loss before income tax of $874 million for the six months ended June 30, 2020. The increase in total dollars is discussed below.


	For the Six Months Ended June 30,
	2021	2020	Variance	Percent Change
Other Gas Sales Volumes (Bcf)	0.1	—	0.1	100.0	%

Gain or Loss on Commodity Derivative Instruments and Monetization

For the six months ended June 30, 2021, the Other Segment recognized an unrealized loss on commodity derivative instruments of $497 million. For the six months ended June 30, 2020, the Other Segment recognized an unrealized loss on commodity derivative instruments of $241 million as well as cash settlements received of $83 million, $84 million of which related to natural gas hedges that were partially monetized prior to their settlement dates. The unrealized gain or loss on commodity derivative instruments represents changes in the fair value of all the Company's existing commodity hedges on a mark-to-market basis. See Note 11 - Derivative Instruments in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information related to the cash settlements.

Purchased Gas

Purchased gas volumes represent volumes of natural gas purchased at market prices from third-parties and then resold in order to fulfill contracts with certain customers and to balance supply. Purchased gas revenues were $50 million for the six months ended June 30, 2021 compared to $47 million for the six months ended June 30, 2020. Purchased gas costs were $47 million for the six months ended June 30, 2021 compared to $45 million for the six months ended June 30, 2020. The period-to-period increase in purchased gas revenue was due to an increase in averages sales price, offset in part by a decrease in purchased gas sales volumes.


	For the Six Months Ended June 30,
	2021		2020		Variance		Percent Change
Purchased Gas Sales Volumes (in Bcf)	16.7		27.5		(10.8)		(39.3)	%
Average Sales Price (per Mcf)	$	3.01	$	1.70	$	1.31	77.1	%
Purchased Gas Average Cost (per Mcf)	$	2.81	$	1.64	$	1.17	71.3	%

Other Operating Income


	For the Six Months Ended June 30,
(in millions)	2021		2020		Variance		Percent Change
Equity Income (Loss) from Affiliates	$	2	$	(1)	$	3	300.0	%
Excess Firm Transportation Income	6		6		—		—	%
Water Income	4		4		—		—	%

Total Other Operating Income	$	12	$	9	$	3	33.3	%

times of peak energy consumption. Due to the plant consuming coal mine methane gas, the plant qualifies for Pennsylvania Tier I Renewable Energy Credits.

Impairment of Exploration and Production Properties

During the six months ended June 30, 2020, CNX recognized certain indicators of impairments specific to our SWPA CBM asset group and determined that the carrying value of that asset group was not recoverable. The fair value of the asset group was estimated by discounting the estimated future cash flows using discount rates and other assumptions that market participants would use in their estimates of fair value. As a result, an impairment of $62 million was recognized and is included in Impairment of Exploration and Production Properties in the Consolidated Statements of Income for the six months ended June 30, 2020. The impairment was related to an economic decision to temporarily idle certain wells and the related processing facility during the first quarter. See Note 5 - Property, Plant and Equipment in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information. No such impairment occurred in the current period.

Impairment of Goodwill

In connection with the Midstream Acquisition that occurred in January 2018, CNX recorded $796 million of goodwill.

Goodwill is tested for impairment annually during the fourth quarter, or more frequently if recent events or prevailing conditions indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying amount using the qualitative assessment, a quantitative impairment test is performed. From time to time, CNX may also bypass the qualitative assessment and proceed directly to the quantitative impairment test.

In connection with CNX's assessment of goodwill in the first quarter of 2020 in relation to the deteriorating macroeconomic conditions, and the decline in the observable market value of CNXM securities both in relation to the COVID-19 pandemic and the overall decline in the MLP market space, CNX bypassed the qualitative assessment and performed a quantitative test that utilized a combination of the income and market approaches to estimate the fair value of the Midstream reporting unit. As a result of this assessment, CNX concluded that the carrying value exceed its estimated fair value, and as a result, an impairment of $473 million was included in Impairment of Goodwill in the Consolidated Statements of Income for the six months ended June 30, 2020. See Note 6 - Goodwill and Other Intangible Assets in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information. No such impairment occurred in the current period.

Exploration and Production Related Other Costs


	For the Six Months Ended June 30,
(in millions)	2021		2020		Variance		Percent Change

Lease Expiration Costs	$	3	$	4	$	(1)	(25.0)	%
Permitting Expense	1		2		(1)		(50.0)	%
Land Rentals	1		1		—		—	%

Total Exploration and Production Related Other Costs	$	5	$	7	$	(2)	(28.6)	%

•Lease expiration costs relate to leases where the primary term expired or will expire within the next 12 months.

Selling, General and Administrative ("SG&A")


	For the Six Months Ended June 30,
(in millions)	2021		2020		Variance		Percent Change
Salaries, Wages and Employee Benefits	$	13	$	15	$	(2)	(13.3)	%
Short-Term Incentive Compensation	5		5		—		—	%
Long-Term Equity-Based Compensation (Non-Cash)	11		9		2		22.2	%
Other	23		25		(2)		(8.0)	%
Total SG&A	$	52	$	54	$	(2)	(3.7)	%

•Salaries, wages and employee benefits decreased in the period-to-period comparison primarily due to lower employee related expenses.

•Long-term equity-based compensation (non-cash) increased in the period-to-period to comparison due to an increase in equity awards.

•Other decreased in the period-to-period comparison primarily due to a decrease in professional services expense.

Other Operating Expense


	For the Six Months Ended June 30,
(in millions)	2021		2020		Variance		Percent Change
Idle Equipment and Service Charges	$	—	$	6	$	(6)	(100.0)	%

Unutilized Firm Transportation and Processing Fees	28		34		(6)		(17.6)	%
Insurance Expense	1		1		—		—	%


Other	2		6		(4)		(66.7)	%
Total Other Operating Expense	$	31	$	47	$	(16)	(34.0)	%

Other Expense


	For the Six Months Ended June 30,
(in millions)	2021		2020		Variance		Percent Change
Other Income

Right-of-Way Sales	$	1	$	1	$	—	—	%

Other	1		2		(1)		(50.0)	%
Total Other Income	$	2	$	3	$	(1)	(33.3)	%

Other Expense
Professional Services	$	3	$	5	$	(2)	(40.0)	%

Bank Fees	6		6		—		—	%

Other Corporate Expense	3		2		1		50.0	%
Total Other Expense	$	12	$	13	$	(1)	(7.7)	%

Total Other Expense	$	10	$	10	$	—	—	%

Gain on Asset Sales and Abandonments, net

A gain on asset sales of $10 million related to the sale of various non-core assets was recognized in the six months ended June 30, 2021 compared to a gain of $18 million in the six months ended June 30, 2020.

Gain on Debt Extinguishment

A gain on debt extinguishment of $11 million was recognized in the six months ended June 30, 2020. During the six months ended June 30, 2020, CNX purchased $481 million of its 5.875% senior notes due in April 2022 at an average price equal to 97.5% of the principal amount. No such purchases were made in the current period. See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

Interest Expense


	For the Six Months Ended June 30,
(in millions)	2021		2020		Variance		Percent Change
Total Interest Expense	$	76	$	95	$	(19)	(20.0)	%

•The $19 million decrease was primarily due to the purchase of the remaining $894 million of the 5.875% senior notes due in April 2022 during the year ended December 31, 2020, as well as lower borrowings on the CNX Credit Facility and higher unrealized gains on interest rate swap agreements. These decreases were offset in part by interest related to the addition of $345 million of Convertible Notes due 2026, $500 million of senior notes due 2029, and $200 million of senior notes due 2027. The amortization of debt discount in connection with the Convertible Notes also contributed to an increase. See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

Income Taxes


	For the Six Months Ended June 30,
(in millions)	2021			2020			Variance			Percent Change
Total Company Loss Before Income Tax	$	(311)		$	(617)		$	306		49.6	%
Income Tax Benefit	$	(55)		$	(181)		$	126		69.6	%
Effective Income Tax Rate	17.6		%	29.4		%	(11.8)		%

The effective income tax rate was 17.6% for the six months ended June 30, 2021 compared to 29.4% for the six months ended June 30, 2020. The effective rate for the six months ended June 30, 2021 differs from the U.S. federal statutory rate of 21% primarily due to the impact of equity compensation and state income taxes. The effective rate for the six months ended June 30, 2020 differs from the U.S. federal statutory rate of 21% primarily due to the impact of noncontrolling interest, equity

compensation, and state income taxes (See Note 4 - Income Taxes in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information).

Liquidity and Capital Resources

CNX generally has satisfied its working capital requirements and funded its capital expenditures and debt service obligations with cash generated from operations and proceeds from borrowings. CNX currently believes that cash generated from operations, asset sales and the Company's borrowing capacity will be sufficient to meet the Company's working capital requirements, anticipated capital expenditures (other than major acquisitions), scheduled debt payments, anticipated dividend payments, if any, and to provide required letters of credit for the current fiscal year. Nevertheless, the ability of CNX to satisfy its working capital requirements, to service its debt obligations, to fund planned capital expenditures, or to pay dividends will depend upon future operating performance, which will be affected by prevailing economic conditions in the natural gas industry and other financial and business factors, including the current COVID 19 pandemic, some of which are beyond CNX’s control.

From time to time, CNX is required to post financial assurances to satisfy contractual and other requirements generated in the normal course of business. Some of these assurances are posted to comply with federal, state or other government agencies' statutes and regulations. CNX sometimes uses letters of credit to satisfy these requirements and these letters of credit reduce the Company's borrowing facility capacity.

CNX continuously reviews its liquidity and capital resources. If market conditions were to change, for instance due to a significant decline in commodity prices and our revenue was reduced significantly or operating costs were to increase significantly, our cash flows and liquidity could be reduced.

As of June 30, 2021, CNX was in compliance with all of its debt covenants. After considering the potential effect of a significant decline in commodity prices, CNX currently expects to remain in compliance with its debt covenants.

In order to manage the market risk exposure of volatile natural gas prices in the future, CNX enters into various physical natural gas supply transactions with both gas marketers and end users for terms varying in length. CNX also enters into various financial natural gas swap transactions to manage the market risk exposure to in-basin and out-of-basin pricing. The fair value of these contracts was a net liability of $380 million at June 30, 2021 and a net asset of $118 million at December 31, 2020. The Company has not experienced any issues of non-performance by derivative counterparties.

CNX frequently evaluates potential acquisitions. CNX has historically funded acquisitions with cash generated from operations and a variety of other sources, depending on the size of the transaction, including debt and equity financing. There can be no assurance that additional capital resources, including debt and equity financing, will be available to CNX on terms which CNX finds acceptable, or at all.

Cash Flows (in millions)


	For the Six Months Ended June 30,
	2021		2020		Change
Cash Provided by Operating Activities	$	459	$	411	$	48
Cash Used in Investing Activities	$	(240)	$	(261)	$	21
Cash Used in Financing Activities	$	(195)	$	(141)	$	(54)

Cash flows from operating activities changed in the period-to-period comparison primarily due to the following items:

•Net income increased $180 million in the period-to-period comparison.

•Adjustments to reconcile net income to cash provided by operating activities primarily consisted of a $473 million impairment of goodwill and a $62 million impairment of exploration and production properties in the prior year, a $70 million change in deferred income taxes, a $256 million net change in commodity derivative instruments, and an $11 million decrease in the gain on debt extinguishment.

Cash flows from investing activities changed in the period-to-period comparison primarily due to the following items:

•Capital expenditures decreased $35 million in the period-to-period comparison primarily due to decreased expenditures in the Shale segment resulting from decreased drilling and completions activity as well as decreased midstream activity.

•Proceeds from asset sales decreased $14 million mainly due to decreased surface sales and oil and gas assignment sales in the six months ended June 30, 2021.

Cash flows from financing activities changed in the period-to-period comparison primarily due to the following items:

•During the six months ended June 30, 2020, CNX paid $469 million to purchase $481 million of senior notes due in 2022 at 97.5% of the principal amount. See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

•In the six months ended June 30, 2021, there were $131 million of net payments on the CNXM Credit Facility compared to $7 million of net proceeds during the six months ended June 30, 2020.

•In the six months ended June 30, 2021, there were $1 million of net payments on the CNX Credit Facility compared to $111 million of net payments during the six months ended June 30, 2020.

•In the six months ended June 30, 2021, there were $13 million of net payments on the Cardinal States Facility and CSG Holdings Facility compared to $170 million of net proceeds in the six months ended June 30, 2020. See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

•During the six months ended June 30, 2020, CNX received proceeds of $335 million from the issuance of Convertible Notes due in 2026. See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

•During the six months ended June 30, 2020, CNX paid $36 million for capped call transactions related to the issuance of the Convertible Notes as mentioned above. See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

•During the six months ended June 30, 2020, there were $21 million of payments to CNXM noncontrolling interest holders compared to no payments during the six months ended June 30, 2021 due to the Merger with CNXM (See Note 13 - Acquisitions and Dispositions in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information).

•During the six months ended June 30, 2021, CNX repurchased $47 million of its common stock on the open market compared to no purchases in the six months ended June 30, 2020.

•Debt issuance and financing fees decreased $11 million primarily due to the fees associated with the borrowings on the Cardinal States Facility and CSG Holdings Facility as well as the issuance of the Convertible Notes during the six months ended June 30, 2020.

The following is a summary of the Company's significant contractual obligations at June 30, 2021 (in thousands):


	Payments due by Year
	Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years		Total


Purchase Order Firm Commitments	$	665	$	1,077	$	—	$	—	$	1,742
Gas Firm Transportation and Processing	265,690		438,562		403,228		1,037,719		2,145,199
Long-Term Debt	23,098		368,028		688,250		1,234,551		2,313,927
Interest on Long-Term Debt	133,224		252,734		237,015		142,450		765,423
Finance Lease Obligations	406		743		91		20		1,260
Interest on Finance Lease Obligations	21		37		3		—		61
Operating Lease Obligations	47,198		8,855		6,993		20,721		83,767
Interest on Operating Lease Obligations	2,740		3,434		2,629		2,912		11,715
Long-Term Liabilities—Employee Related (a)	2,026		4,232		4,563		34,340		45,161
Other Long-Term Liabilities (b)	565,736		10,000		10,000		61,903		647,639
Total Contractual Obligations (c)	$	1,040,804	$	1,087,702	$	1,352,772	$	2,534,616	$	6,015,894

_________________________

(a)Employee related long-term liabilities include salaried retirement contributions and work-related injuries and illnesses.

(b)Other long-term liabilities include royalties, commodity derivative instruments and other long-term liability costs.

(c)The table above does not include obligations to taxing authorities due to the uncertainty surrounding the ultimate settlement of amounts and timing of these obligations.

Debt

At June 30, 2021, CNX had total long-term debt of $2,314 million, including the current portion of long-term debt of $23 million and excluding unamortized debt issuance costs. This long-term debt consisted of:

•An aggregate principal amount of $700 million of 7.25% Senior Notes due March 2027 plus $6 million of unamortized bond premium. Interest on the notes is payable March 14 and September 14 of each year. Payment of the principal and interest on the notes is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner) or CSG Holdings III LLC.

•An aggregate principal amount of $500 million of 6.00% Senior Notes due January 2029. Interest on the notes is payable January 15 and July 15 of each year. Payment of the principal and interest on the notes is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner) or CSG Holdings III LLC.

•An aggregate principal amount of $400 million of 6.50% Senior Notes due March 2026 issued by CNXM, less $4 million of unamortized bond discount. Interest on the notes is payable March 15 and September 15 of each year. Payment of the principal and interest on the notes is guaranteed by certain of CNXM's subsidiaries. CNX is not a guarantor of these notes.

•An aggregate principal amount of $345 million of 2.25% Convertible Notes due May 2026, unless earlier redeemed, repurchased, or converted, less $100 million of unamortized bond discount and issuance costs. Interest on the notes is payable May 1 and November 1 of each year. Payment of the principal and interest on the notes is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner) or CSG Holdings III LLC.

•An aggregate principal amount of $160 million in outstanding borrowings under the CNXM Credit Facility. CNX is not a guarantor of CNXM's Credit Facility.

•An aggregate principal amount of $160 million in outstanding borrowings under the CNX Credit Facility. CNXM (or its subsidiaries or general partner) is not a guarantor of CNX's Credit Facility.

•An aggregate principal amount of $108 million in outstanding borrowings under the Cardinal States Facility, less $1 million of unamortized discount. Interest and a portion of the obligation are paid quarterly.

•An aggregate principal amount of $40 million in outstanding borrowings under the CSG Holdings Facility, less a nominal unamortized discount. Interest and a portion of the obligation are paid quarterly.

Total Equity and Dividends

CNX had total equity of $4,137 million at June 30, 2021 compared to $4,422 million at December 31, 2020. See the Consolidated Statements of Stockholders' Equity in Item 1 of this Form 10-Q for additional details.

On September 28, 2020, the Merger of CNXM was completed (See Note 13 - Acquisitions and Dispositions in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information). CNX accounted for the change in our ownership interest in CNXM as an equity transaction which was reflected as a reduction of noncontrolling interest with corresponding increases to common stock and capital in excess of par value.

The declaration and payment of dividends by CNX is subject to the discretion of CNX's Board of Directors, and no assurance can be given that CNX will pay dividends in the future. CNX suspended its quarterly dividend in March 2016 to further reflect the Company's increased emphasis on growth at that time. The determination to pay dividends in the future will depend upon, among other things, general business conditions, CNX's financial results, contractual and legal restrictions regarding the payment of dividends by CNX, planned investments by CNX, and such other factors as the Board of Directors deems relevant. CNX's Credit Facility limits its ability to pay dividends in excess of an annual rate of $0.10 per share when the Company's net leverage ratio exceeds 3.00 to 1.00 and is subject to availability under the Credit Facility of at least 15% of the aggregate commitments. The net leverage ratio was 2.50 to 1.00 at June 30, 2021. The Credit Facility does not permit dividend payments in the event of default. The indentures to the 7.25% Senior Notes due March 2027 and the 6.00% Senior Notes due January 2029 limit dividends to $0.50 per share annually unless several conditions are met. These conditions include no defaults, ability to incur additional debt and other payment limitations under the indentures. There were no defaults in the six months ended June 30, 2021.

Off-Balance Sheet Transactions

CNX does not maintain off-balance sheet transactions, arrangements, obligations or other relationships with unconsolidated entities or others that are reasonably likely to have a material current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources which are not disclosed in the Notes to the Unaudited Consolidated Financial Statements. CNX uses a combination of surety bonds, corporate guarantees and letters of credit to secure the Company's financial obligations for employee-related, environmental, performance and various other items which are not reflected in the Consolidated Balance Sheet at June 30,

2021. Management believes these items will expire without being funded. See Note 10 - Commitments and Contingent Liabilities in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional details of the various financial guarantees that have been issued by CNX.

Forward-Looking Statements

We are including the following cautionary statement in this Quarterly Report on Form 10-Q to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of us. With the exception of historical matters, the matters discussed in this Quarterly Report on Form 10-Q are forward-looking statements (as defined in Section 21E of the Exchange Act) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending. When we use the words “believe,” “intend,” “expect,” “may,” “should,” “anticipate,” “could,” “estimate,” “plan,” “predict,” “project,” "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this Quarterly Report on Form 10-Q speak only as of the date of this Quarterly Report on Form 10-Q; we disclaim any obligation to update these statements unless required by securities law, and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following:

•prices for natural gas and natural gas liquids are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand for our products, weather and the price and availability of alternative fuels;

•unsuccessful drilling efforts or continued natural gas price decreases requiring write downs of our proved natural gas properties, or changes in assumptions impacting management’s estimates of future financial results as well as other assumptions such as movement in our stock price, weighted-average cost of capital, terminal growth rates and industry multiples, could cause goodwill and other intangible assets we hold to become impaired and result in material non-cash charges to earnings;

•a loss of our competitive position because of the competitive nature of the natural gas industry, consolidation within the industry or overcapacity in the industry adversely affecting our ability to sell our products and midstream services;

•deterioration in the economic conditions in any of the industries in which our customers operate, a domestic or worldwide financial downturn, or negative credit market conditions;

•hedging activities may prevent us from benefiting from price increases and may expose us to other risks;

•negative public perception regarding our Company or industry could have an adverse effect on our operations, financial results or stock price;

•events beyond our control, including a global or domestic health crisis;

•dependence on gathering, processing and transportation facilities and other midstream facilities owned by others, and disruption of, capacity constraints in, or proximity to pipeline, and any decrease in availability of pipelines or other midstream facilities;

•uncertainties in estimating our economically recoverable natural gas reserves and inaccuracies in our estimates;

•the high-risk nature of drilling, developing and operating natural gas wells;

•our identified drilling locations are scheduled out over multiple years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their development or drilling;

•the substantial capital expenditures required for our development and exploration projects, as well as midstream system development;

•decreases in the availability of, or increases in the price of, required personnel, services, equipment, parts and raw materials in sufficient quantities or at reasonable costs to support our operations;

•our ability to find adequate water sources for our use in shale gas drilling and production operations, or our ability to dispose of, transport or recycle water used or removed in connection with our gas operations at a reasonable cost and within applicable environmental rules;

•failure to successfully estimate the rate of decline of existing reserves or to find or acquire economically recoverable natural gas reserves to replace our current natural gas reserves;

•losses incurred as a result of title defects in the properties in which we invest or the loss of certain leasehold or other rights related to our midstream activities;

•the impact of climate change legislation, litigation and potential, as well as any adopted, environmental regulations, including those relating to greenhouse gas emissions;

•environmental regulations can increase costs and introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities;

•existing and future government laws, regulations and other legal requirements and judicial decisions that govern our business may increase our costs of doing business and may restrict our operations;

•significant costs and liabilities may be incurred as a result of pipeline operations and related increase in the regulation of natural gas gathering pipelines;

•changes in federal or state income tax laws or rates;

•the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act;

•risks associated with our current long-term debt obligations;

•a decrease in our borrowing base, which could decrease for a variety of reasons including lower natural gas prices, declines in natural gas proved reserves, asset sales and lending requirements or regulations;

•Risks associated with our Convertible Notes due May 2026, including the potential impact that the Convertible Notes may have on our reported financial results, potential dilution, our ability to raise funds to repurchase the Convertible Notes, and that provisions of the Convertible Notes could delay or prevent a beneficial takeover of the Company;

•the potential impact of the capped call transaction undertaken in tandem with the Convertible Notes issuance, including counterparty risk;

•challenges associated with strategic determinations, including the allocation of capital and other resources to strategic opportunities;

•acquisitions and divestitures, we anticipate may not occur or produce anticipated benefits;

•there is no guarantee that we will continue to repurchase shares of our common stock under our current or any future share repurchase program at levels undertaken previously or at all;

•we may operate a portion of our business with one or more joint venture partners or in circumstances where we are not the operator, which may restrict our operational and corporate flexibility and we may not realize the benefits we expect to realize from a joint venture;

•CONSOL Energy may not be able to satisfy its indemnification obligations in the future and such indemnities may not be sufficient to hold us harmless from the full amount of liabilities for which CONSOL Energy may be allocated responsibility;

•cyber-incidents could have a material adverse effect on our business, financial condition or results of operations;

•our success depends on key members of our management and our ability to attract and retain experienced technical and other professional personnel;

•terrorist activities could materially adversely affect our business and results of operations; and

•certain other factors addressed in this report and in our 2020 Form 10-K under “Risk Factors”.

Although forward-looking statements reflect our good faith beliefs at the time they are made, they involve known and unknown risks, uncertainties and other factors. For more information concerning factors that could cause actual results to differ materially from those conveyed in the forward-looking statements, including, among others, that our business plans may change as circumstances warrant, please refer to the “Risk Factors” and “Forward-Looking Statements” sections of our Annual Report 2020 Form 10-K and subsequent Quarterly Reports on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In addition to the risks inherent in operations, CNX is exposed to financial, market, political and economic risks. The following discussion provides additional detail regarding CNX's exposure to the risks of changing commodity prices, interest rates and foreign exchange rates.

CNX is exposed to market price risk in the normal course of selling natural gas and liquids. CNX uses fixed-price contracts, options and derivative commodity instruments (over-the-counter swaps) to minimize exposure to market price volatility in the sale of natural gas. Under our risk management policy, it is not our intent to engage in derivative activities for speculative purposes. Typically, CNX “sells” swaps under which it receives a fixed price from counterparties and pays a floating market price. In order to enhance production flexibility, during the first quarter of 2021, CNX purchased, rather than sold, financial swaps for the period April through October of 2021 under which CNX will pay a fixed price to and receive a floating price from its hedge counterparties.

CNX has established risk management policies and procedures to strengthen the internal control environment of the marketing of commodities produced from its asset base. All of the derivative instruments without other risk assessment procedures are held for purposes other than trading. They are used primarily to mitigate uncertainty and volatility and cover underlying exposures. The Company's market risk strategy incorporates fundamental risk management tools to assess market price risk and establish a framework in which management can maintain a portfolio of transactions within predefined risk parameters.

CNX believes that the use of derivative instruments, along with our risk assessment procedures and internal controls, mitigates our exposure to material risks. The use of derivative instruments without other risk assessment procedures could materially affect the Company's results of operations depending on market prices; however, we believe that use of these instruments will not have a material adverse effect on our financial position or liquidity due to our risk assessment procedures and internal controls.

For a summary of accounting policies related to derivative instruments, see Note 1—Significant Accounting Policies in the Notes to the Audited Consolidated Financial Statements in Item 8 of CNX's 2020 Form 10-K.

At June 30, 2021 our open gas derivative instruments were in a net liability position with a fair value of $380 million, and at December 31, 2020 our open gas derivative instruments were in a net asset position with a fair value of $118 million. A sensitivity analysis has been performed to determine the incremental effect on future earnings related to open derivative instruments at June 30, 2021 and December 31, 2020. A hypothetical 10 percent increase in future natural gas prices would have decreased the fair value by $551 million and $362 million at June 30, 2021 and December 31, 2020, respectively. A hypothetical 10 percent decrease in future natural gas prices would have increased the fair value by $559 million and $366 million at June 30, 2021 and December 31, 2020, respectively.

CNX's interest expense is sensitive to changes in the general level of interest rates in the United States. The Company uses derivative instruments to manage risk related to interest rates. These instruments change the variable-rate cash flow exposure on the debt obligations to fixed cash flows. At June 30, 2021 and December 31, 2020, CNX had $1,970 million and $1,980 million, respectively, aggregate principal amount of debt outstanding under fixed-rate instruments, including unamortized debt issuance costs of $25 million and $27 million, respectively. At June 30, 2021 and December 31, 2020, CNX had $320 million and $452 million, respectively, of debt outstanding under variable-rate instruments. CNX’s primary exposure to market risk for changes in interest rates relates to our Credit Facility, under which there were $160 million of borrowings at June 30, 2021 and $161 million at December 31, 2020, and CNXM's revolving credit facility, under which there were $160 million of borrowings at June 30, 2021 and $291 million at December 31, 2020. A hypothetical 100 basis-point increase in the average rate for CNX's variable-rate instruments would decrease pre-tax future earnings as of June 30, 2021 and December 31, 2020 by $3 million and $5 million, respectively, on an annualized basis.

All of the Company’s transactions are denominated in U.S. dollars and, as a result, it does not have material exposure to currency exchange-rate risks.

Natural Gas Hedging Volumes

As of July 7, 2021, the Company's hedged volumes for the periods indicated are as follows:


	For the Three Months Ended
	March 31,		June 30,		September 30,		December 31,		Total Year
2021 Fixed Price Volumes*
Hedged Bcf	N/A		N/A		128.4		132.2		260.6
Weighted Average Hedge Price per Mcf	N/A		N/A		$	2.44	$	2.50	$	2.47
2022 Fixed Price Volumes
Hedged Bcf	119.9		116.4		117.6		117.6		471.5
Weighted Average Hedge Price per Mcf	$	2.61	$	2.38	$	2.38	$	2.39	$	2.44
2023 Fixed Price Volumes
Hedged Bcf	79.1		85.8		86.8		86.8		320.1**
Weighted Average Hedge Price per Mcf	$	2.22	$	2.21	$	2.21	$	2.22	$	2.18
2024 Fixed Price Volumes
Hedged Bcf	78.3		75.4		76.2		76.2		306.1
Weighted Average Hedge Price per Mcf	$	2.26	$	2.22	$	2.22	$	2.22	$	2.23
2025 Fixed Price Volumes
Hedged Bcf	45.3		45.8		46.3		46.3		183.7
Weighted Average Hedge Price per Mcf	$	2.12	$	2.12	$	2.12	$	2.12	$	2.12
2026 Fixed Price Volumes
Hedged Bcf	33.2		33.5		33.8		33.8		134.3
Weighted Average Hedge Price per Mcf	$	2.49	$	2.49	$	2.49	$	2.49	$	2.49
2027 Fixed Price Volumes
Hedged Bcf	4.3		4.3		4.3		4.3		17.2
Weighted Average Hedge Price per Mcf	$	2.46	$	2.46	$	2.45	$	2.45	$	2.45

*Excludes purchased swaps. The Company's purchased swaps are as follows:


	For the Three Months Ended
	September 30,		December 31,
Purchased Basis Swaps	2021		2021		Total Year
Hedged Bcf	$	10.1	$	3.4	$	13.5
Weighted Average Fixed Price per Mcf	$	(0.78)	$	(0.78)	$	(0.78)

**Quarterly volumes do not add to annual volumes inasmuch as a discrete condition in individual quarters, where basis hedge volumes exceed NYMEX hedge volumes, does not exist for the year taken as a whole.

ITEM 4.CONTROLS AND PROCEDURES

Disclosure controls and procedures. CNX, under the supervision and with the participation of its management, including CNX’s principal executive officer and principal financial officer, evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, CNX’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures are effective as of June 30, 2021 to ensure that information required to be disclosed by CNX in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and includes controls and procedures designed to ensure that information required to be disclosed by CNX in such reports is accumulated and communicated to CNX’s management, including CNX’s principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in internal controls over financial reporting. There were no changes in the Company's internal controls over financial reporting that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II: OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

The first and second paragraph of Note 10—Commitments and Contingent Liabilities in the Notes to the Unaudited Consolidated Financial Statements included in Item 1 of this Form 10-Q is incorporated herein by reference.

From time to time, CNX and federal, state, and local regulatory agencies that oversee CNX’s activities enter into agreements regarding notices of noncompliance. CNX is currently not aware of any significant legal or governmental proceedings contemplated to be brought against us, under the various environmental protection statutes to which the Company is subject to, that would have a material effect on future financial results.

ITEM 1A. RISK FACTORS

The financial conditions and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in “Item 1A. Risk Factors” in CNX's 2020 Form 10-K. The risks described could materially and adversely affect CNX's business, financial condition, cash flows, and results of operations. CNX may experience additional risks and uncertainties not currently known; or, as a result of developments occurring in the future, conditions that are currently deemed to be immaterial may also materially and adversely affect CNX's business, financial condition, cash flows, and results of operations. There have been no material changes to the Company’s risk factors since the 2020 Form 10-K was filed.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth repurchases of our common stock during the three months ended June 30, 2021:


ISSUER PURCHASES OF EQUITY SECURITIES
Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (000's omitted)
April 1, 2021- April 30, 2021	2,922	$	15.30	—	$	237,343
May 1, 2021- May 31, 2021	589,218	$	13.70	589,218	$	229,268
June 1, 2021- June 30, 2021	1,041,569	$	14.00	1,041,569	$	214,686
Total	1,633,709			1,630,787

(1) Includes shares withheld from employees to satisfy minimum tax withholding obligations associated with the vesting of restricted stock during the period.

(2) Shares repurchased as part of the Company's current $900 million share repurchase program authorized by the Board of Directors, which is not subject to an expiration date. See Note 15 - Stock Repurchase in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for more information.

See Part III. Item 12. "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" included in CNX Resources Corporation's 2020 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on February 9, 2021 for information relating to CNX's equity compensation plans.

ITEM 6.EXHIBITS


10.1*						Amendment No. 5, dated as of April 27, 2021, to the Second Amended and Restated Credit Agreement, dated as of March 8, 2018, by and among the Company, the guarantors party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., as syndication agent, and PNC Bank, National Association, as administrative agent and collateral agent.
31.1*						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH*						XBRL Taxonomy Extension Schema Document.
101.CAL*						XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*						XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*						XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE*						XBRL Taxonomy Extension Presentation Linkbase Document.

* Filed herewith

In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: July 29, 2021


CNX RESOURCES CORPORATION

	By:	/S/ NICHOLAS J. DEIULIIS
		Nicholas J. DeIuliis
		Director, Chief Executive Officer and President (Duly Authorized Officer and Principal Executive Officer)

	By:	/S/ DONALD W. RUSH
		Donald W. Rush
		Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)

	By:	/S/ ALAN K. SHEPARD
		Alan K. Shepard
		Chief Accounting Officer and Vice President (Duly Authorized Officer and Principal Accounting Officer)

	By:	/S/ JASON L. MUMFORD
		Jason L. Mumford
		Vice President and Controller