CONSOL Energy Inc. - Quarter Report: 2019 September (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 September 30, 2019



☐	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: 001-38147

__________________________________________________

CONSOL Energy Inc.

(Exact name of registrant as specified in its charter)



Delaware		82-1954058
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1000 CONSOL Energy Drive, Suite 100

Canonsburg, PA 15317-6506

(724) 416-8300

(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 each exchange on which registered
Common Stock, $0.01 par value	CEIX	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 ☒

CONSOL Energy Inc. had 25,901,275 shares of common stock, $0.01 par value, outstanding at October 25, 2019.

TABLE OF CONTENTS




	Part I. Financial Information	Page

Item 1.	Financial Statements
	Consolidated Statements of Income for the three and nine months ended September 30, 2019 and 2018	4
	Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2019 and 2018	5
	Consolidated Balance Sheets at September 30, 2019 and December 31, 2018	6
	Consolidated Statement of Stockholders' Equity for the three and nine months ended September 30, 2019 and 2018	8
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018	10
	Notes to Consolidated Financial Statements	11

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	40

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	63

Item 4.	Controls and Procedures	63

	Part II. Other Information

Item 1.	Legal Proceedings	64

Item 1A.	Risk Factors	64

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64

Item 4.	Mine Safety Disclosures	64

Item 6.	Exhibits	65

	Signatures	66

IMPORTANT DEFINITIONS REFERENCED IN THIS QUARTERLY REPORT

Unless the context otherwise requires:


•	“CONSOL Energy,” “we,” “our,” “us,” “our Company” and “the Company” refer to CONSOL Energy Inc. and its subsidiaries;


•	“Btu” means one British Thermal unit;

•

“Coal Business” refers to all of our interest in the Pennsylvania Mining Complex (PAMC) and certain related coal assets, including: (i) our former parent’s ownership interest in the Partnership, which owns a 25% undivided interest in the PAMC; (ii) the CONSOL Marine Terminal; and (iii) undeveloped coal reserves (Greenfield Reserves) located in the Northern Appalachian, Central Appalachian and Illinois basins and certain related coal assets and liabilities. “Coal Business” prior to November 28, 2017 refers to our former parent's interest in the Coal Business. References in this report to historical assets, liabilities, products, businesses or activities generally refer to the historical assets, liabilities, products, businesses or activities of the Coal Business as it was conducted as part of our former parent prior to the completion of the separation and distribution;


•	“CONSOL Marine Terminal” refers to the terminal operations located at the Port of Baltimore that were transferred from the Company's former parent to the Company as part of the separation;


•	“distribution” refers to the pro rata distribution on November 28, 2017 of the Company’s issued and outstanding shares of common stock to its former parent’s stockholders as of the close of business on the record date for the distribution;


•	“former parent” or “CNX” refers to CNX Resources Corporation and its consolidated subsidiaries;


•	“General Partner” refers to CONSOL Coal Resources GP LLC, a Delaware limited liability company;


•	“Greenfield Reserves” means those undeveloped reserves owned by the Company in the Northern Appalachian, Central Appalachian and Illinois basins that are not associated with the Pennsylvania Mining Complex;


•	“mmBtu” means one million British Thermal units;

•

“Partnership” or “CCR” refers to a Delaware limited partnership that holds a 25% undivided interest in, and is the sole operator of, the Pennsylvania Mining Complex. Prior to November 28, 2017, the Partnership was named CNX Coal Resources LP and its common units traded on the New York Stock Exchange under the ticker “CNXC.” As part of the separation and distribution on November 28, 2017, the Partnership changed its name to CONSOL Coal Resources LP and changed its New York Stock Exchange ticker to “CCR”


•	“Pennsylvania Mining Complex” or “PAMC” refers to the Bailey, Enlow Fork and Harvey coal mines, coal reserves and related assets and operations, located primarily in southwestern Pennsylvania and owned 75% by the Company and 25% by the Partnership;


•	“recoverable coal reserves” refer to the Company's proven and probable coal reserves as defined by Industry Guide 7 that could be economically and legally extracted or produced at the time of the reserve determination, taking into account mining recovery and preparation plant yield; and


•	“separation” refers to the separation of the Coal Business from our former parent’s other businesses on November 28, 2017 and the creation, as a result of the distribution, of an independent, publicly-traded company (the Company) to hold the assets and liabilities associated with the Coal Business after the distribution.

PART I : FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOL ENERGY INC.

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(unaudited)



	Three Months Ended September 30,					Nine Months Ended September 30,
Revenue and Other Income:	2019		2018			2019			2018
Coal Revenue	$	301,542	$	294,797		$	984,665		$	1,016,503
Terminal Revenue	16,303		16,115			50,829			47,995
Freight Revenue	3,599		2,443			14,115			37,774
Miscellaneous Other Income	11,188		10,978			36,674			47,234
Gain (Loss) on Sale of Assets	714		(85		)	1,986			273
Total Revenue and Other Income	333,346		324,248			1,088,269			1,149,779
Costs and Expenses:
Operating and Other Costs	234,849		222,781			718,410			700,778
Depreciation, Depletion and Amortization	54,370		51,242			151,245			155,674
Freight Expense	3,599		2,443			14,115			37,774
Selling, General and Administrative Costs	14,690		18,526			52,901			47,715
Loss on Debt Extinguishment	801		—			25,444			3,149
Interest Expense, net	15,598		20,862			50,240			63,411
Total Costs and Expenses	323,907		315,854			1,012,355			1,008,501
Earnings Before Income Tax	9,439		8,394			75,914			141,278
Income Tax Expense (Benefit)	2,415		(690		)	(243		)	8,527
Net Income	7,024		9,084			76,157			132,751
Less: Net Income Attributable to Noncontrolling Interest	2,684		3,350			14,102			19,447
Net Income Attributable to CONSOL Energy Inc. Shareholders	$	4,340	$	5,734		$	62,055		$	113,304

Earnings per Share:
Total Basic Earnings per Share	$	0.16	$	0.20		$	2.27		$	4.04
Total Dilutive Earnings per Share	$	0.16	$	0.20		$	2.26		$	3.97

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

CONSOL ENERGY INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(unaudited)



	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019			2018
Net Income	$	7,024		$	9,084	$	76,157		$	132,751

Other Comprehensive Income:
Actuarially Determined Long-Term Liability Adjustments (Net of tax: ($780), ($1,232), ($2,342), ($3,697))	2,457			4,177		7,376			12,356
Unrecognized Loss on Derivatives:
Unrealized Loss on Cash Flow Hedges (Net of tax: $83, $—, $167, $—)	(261		)	—		(525		)	—
Other Comprehensive Income	2,196			4,177		6,851			12,356

Comprehensive Income	$	9,220		$	13,261	$	83,008		$	145,107

Less: Comprehensive Income Attributable to Noncontrolling Interest	2,681			3,346		14,097			19,444

Comprehensive Income Attributable to CONSOL Energy Inc. Shareholders	$	6,539		$	9,915	$	68,911		$	125,663

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

CONSOL ENERGY INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)



	(Unaudited)
	September 30, 2019		December 31, 2018
ASSETS
Current Assets:
Cash and Cash Equivalents	$	133,331	$	235,677
Restricted Cash	1,518		29,258
Accounts and Notes Receivable
Trade	109,793		87,589
Other Receivables	29,204		41,355
Inventories	48,839		48,646
Prepaid Expenses and Other Assets	34,439		31,430
Total Current Assets	357,124		473,955
Property, Plant and Equipment:
Property, Plant and Equipment	4,973,400		4,838,171
Less—Accumulated Depreciation, Depletion and Amortization	2,866,649		2,731,643
Total Property, Plant and Equipment—Net	2,106,751		2,106,528
Other Assets:
Deferred Income Taxes	91,772		77,545
Right of Use Asset - Operating Leases	77,411		—
Other	90,177		102,699
Total Other Assets	259,360		180,244
TOTAL ASSETS	$	2,723,235	$	2,760,727

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

CONSOL ENERGY INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)



	(Unaudited)
	September 30, 2019			December 31, 2018
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable	$	125,320		$	130,930
Current Portion of Long-Term Debt	45,215			134,812
Other Accrued Liabilities	240,617			226,434
Total Current Liabilities	411,152			492,176
Long-Term Debt:
Long-Term Debt	677,935			708,536
Finance Lease Obligations	11,628			25,690
Total Long-Term Debt	689,563			734,226
Deferred Credits and Other Liabilities:
Postretirement Benefits Other Than Pensions	427,442			441,246
Pneumoconiosis Benefits	164,972			165,001
Asset Retirement Obligations	242,816			235,984
Workers’ Compensation	59,092			59,742
Salary Retirement	54,622			64,172
Operating Lease Liability	66,432			—
Other	13,697			16,569
Total Deferred Credits and Other Liabilities	1,029,073			982,714
TOTAL LIABILITIES	2,129,788			2,209,116

Stockholders' Equity:
Common Stock, $0.01 Par Value; 62,500,000 Shares Authorized, 25,900,785 Issued and Outstanding at September 30, 2019; 27,437,844 Issued and Outstanding at December 31, 2018	259			274
Capital in Excess of Par Value	524,896			550,995
Retained Earnings	245,957			182,148
Accumulated Other Comprehensive Loss	(316,626		)	(323,482		)
Total CONSOL Energy Inc. Stockholders' Equity	454,486			409,935
Noncontrolling Interest	138,961			141,676
TOTAL EQUITY	593,447			551,611
TOTAL LIABILITIES AND EQUITY	$	2,723,235		$	2,760,727

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

CONSOL ENERGY INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Dollars in thousands)



	Common Stock			Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Total CONSOL Energy Inc. Stockholders' Equity			Noncontrolling Interest			Total Equity
December 31, 2018	$	274		$	550,995		$	182,148		$	(323,482	)	$	409,935		$	141,676		$	551,611
(Unaudited)
Net Income	—			—			14,435			—			14,435			5,868			20,303
Actuarially Determined Long-Term Liability Adjustments (Net of $781 Tax)	—			—			—			2,461			2,461			(1		)	2,460
Comprehensive Income	—			—			14,435			2,461			16,896			5,867			22,763
Issuance of Common Stock	2			(2		)	—			—			—			—			—
Amortization of Stock-Based Compensation Awards	—			7,053			—			—			7,053			397			7,450
Units/Shares Withheld for Taxes	—			(3,863		)	—			—			(3,863		)	(880		)	(4,743		)
Distributions to Noncontrolling Interest	—			—			—			—			—			(5,559		)	(5,559		)
March 31, 2019	$	276		$	554,183		$	196,583		$	(321,021	)	$	430,021		$	141,501		$	571,522
(Unaudited)
Net Income	—			—			43,280			—			43,280			5,550			48,830
Actuarially Determined Long-Term Liability Adjustments (Net of $781 Tax)	—			—			—			2,460			2,460			(1		)	2,459
Interest Rate Hedge (Net of ($84) Tax)	—			—			—			(264		)	(264		)	—			(264		)
Comprehensive Income	—			—			43,280			2,196			45,476			5,549			51,025
Repurchases of Common Stock (351,443 shares)	(3		)	(7,053		)	(2,494		)	—			(9,550		)	—			(9,550		)
Purchase of CCR Units (6,884 units)	—			(28		)	—			—			(28		)	(91		)	(119		)
Amortization of Stock-Based Compensation Awards	—			2,584			—			—			2,584			341			2,925
Distributions to Noncontrolling Interest	—			—			—			—			—			(5,560		)	(5,560		)
June 30, 2019	$	273		$	549,686		$	237,369		$	(318,825	)	$	468,503		$	141,740		$	610,243
(Unaudited)
Net Income	—			—			4,340			—			4,340			2,684			7,024
Actuarially Determined Long-Term Liability Adjustments (Net of $780 Tax)	—			—			—			2,460			2,460			(3		)	2,457
Interest Rate Hedge (Net of ($83) Tax)	—			—			—			(261		)	(261		)	—			(261		)
Comprehensive Income	—			—			4,340			2,199			6,539			2,681			9,220
Repurchases of Common Stock (1,366,054 shares)	(14		)	(27,417		)	4,248			—			(23,183		)	—			(23,183		)
Purchase of CCR Units (19,413 units)	—			(1		)	—			—			(1		)	(249		)	(250		)
Amortization of Stock-Based Compensation Awards	—			2,630			—			—			2,630			344			2,974
Units/Shares Withheld for Taxes	—			(2		)	—			—			(2		)	—			(2		)
Distributions to Noncontrolling Interest	—			—			—			—			—			(5,555		)	(5,555		)
September 30, 2019	$	259		$	524,896		$	245,957		$	(316,626	)	$	454,486		$	138,961		$	593,447

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

CONSOL ENERGY INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Dollars in thousands)



	Common Stock			Capital in Excess of Par Value			Retained Earnings (Deficit)			Accumulated Other Comprehensive (Loss) Income			Total CONSOL Energy Inc. Stockholders' Equity			Noncontrolling Interest			Total Equity
December 31, 2017	$	280		$	552,793		$	(43,713	)	$	(305,100	)	$	204,260		$	139,381		$	343,641
(Unaudited)
Net Income	—			—			62,408			—			62,408			8,550			70,958
Actuarially Determined Long-Term Liability Adjustments (Net of $1,281 Tax)	—			—			—			3,999			3,999			(2		)	3,997
Comprehensive Income	—			—			62,408			3,999			66,407			8,548			74,955
Reclassification of Stranded Tax Effect of Change in Tax Law	—			—			84,729			(84,729		)	—			—			—
Separation Adjustments	—			(1,595		)	—			—			(1,595		)	—			(1,595		)
Issuance of Common Stock	1			(1		)	—			—			—			—			—
Repurchases of Common Stock (44,000 shares)	(1		)	(867		)	(417		)	—			(1,285		)	—			(1,285		)
Amortization of Stock-Based Compensation Awards	—			1,488			—			—			1,488			359			1,847
Units/Shares Withheld for Taxes	—			(1,889		)	—			—			(1,889		)	(899		)	(2,788		)
Distributions to Noncontrolling Interest	—			—			—			—			—			(5,587		)	(5,587		)
March 31, 2018	$	280		$	549,929		$	103,007		$	(385,830	)	$	267,386		$	141,802		$	409,188
(Unaudited)
Net Income	—			—			45,162			—			45,162			7,547			52,709
Actuarially Determined Long-Term Liability Adjustments (Net of $1,183 Tax)	—			—			—			4,179			4,179			3			4,182
Comprehensive Income	—			—			45,162			4,179			49,341			7,550			56,891
Repurchases of Common Stock (47,000 shares)	—			(930		)	(1,066		)	—			(1,996		)	—			(1,996		)
Amortization of Stock-Based Compensation Awards	—			2,301			—			—			2,301			507			2,808
Units/Shares Withheld for Taxes	—			(83		)	—			—			(83		)	—			(83		)
Distributions to Noncontrolling Interest	—			—			—			—			—			(5,587		)	(5,587		)
June 30, 2018	$	280		$	551,217		$	147,103		$	(381,651	)	$	316,949		$	144,272		$	461,221
(Unaudited)
Net Income	—			—			5,734			—			5,734			3,350			9,084
Actuarially Determined Long-Term Liability Adjustments (Net of $1,232 Tax)	—			—			—			4,181			4,181			(4		)	4,177
Comprehensive Income	—			—			5,734			4,181			9,915			3,346			13,261
Repurchases of Common Stock (190,272 shares)	(2		)	(3,758		)	(4,218		)	—			(7,978		)	—			(7,978		)
Purchase of CCR Units (77,536 units)	—			(392		)	—			—			(392		)	(993		)	(1,385		)
Amortization of Stock-Based Compensation Awards	—			2,479			—			—			2,479			504			2,983
Units/Shares Withheld for Taxes	—			(39		)	—			—			(39		)	(13		)	(52		)
Distributions to Noncontrolling Interest	—			—			—			—			—			(5,589		)	(5,589		)
September 30, 2018	$	278		$	549,507		$	148,619		$	(377,470	)	$	320,934		$	141,527		$	462,461

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

CONSOL ENERGY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(unaudited)



	Nine Months Ended September 30,
	2019			2018
Cash Flows from Operating Activities:
Net Income	$	76,157		$	132,751
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation, Depletion and Amortization	151,245			155,674
Gain on Sale of Assets	(1,986		)	(273		)
Stock/Unit-Based Compensation	13,349			7,638
Amortization of Debt Issuance Costs	4,953			6,713
Loss on Debt Extinguishment	25,444			3,149
Deferred Income Taxes	(16,402		)	2,945
Changes in Operating Assets:
Accounts and Notes Receivable	(10,002		)	60,240
Inventories	(193		)	950
Prepaid Expenses	(3,009		)	(8,230		)
Changes in Other Assets	14,332			7,272
Changes in Operating Liabilities:
Accounts Payable	(10,233		)	5,197
Other Operating Liabilities	3,204			(18,239		)
Changes in Other Liabilities	(23,676		)	(25,154		)
Other	—			(381		)
Net Cash Provided by Operating Activities	223,183			330,252
Cash Flows from Investing Activities:
Capital Expenditures	(131,475		)	(96,855		)
Proceeds from Sales of Assets	2,015			1,368
Net Cash Used in Investing Activities	(129,460		)	(95,487		)
Cash Flows from Financing Activities:
Payments on Finance Leases	(13,784		)	(11,019		)
Proceeds from Term Loan A	26,250			—
Payments on Term Loan A	(7,500		)	(26,250		)
Payments on Term Loan B	(123,750		)	(3,000		)
Buyback of Second Lien Notes	(35,048		)	(20,524		)
Proceeds from Asset-Backed Financing	3,757			—
Purchases of CCR Units	(369		)	(1,142		)
Repurchases of Common Stock	(31,318		)	(9,724		)
Spin Distribution to CNX Resources	—			(18,234		)
Distributions to Noncontrolling Interest	(16,674		)	(16,763		)
Shares/Units Withheld for Taxes	(4,745		)	(2,923		)
Debt-Related Financing Fees	(20,628		)	(2,851		)
Net Cash Used in Financing Activities	(223,809		)	(112,430		)
Net (Decrease) Increase in Cash and Cash Equivalents and Restricted Cash	(130,086		)	122,335
Cash and Cash Equivalents and Restricted Cash at Beginning of Period	264,935			153,979
Cash and Cash Equivalents and Restricted Cash at End of Period	$	134,849		$	276,314

Non-Cash Investing and Financing Activities:
Finance Lease	$	—		$	45,979
Longwall Shield Rebuild	$	3,834		$	—

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

CONSOL ENERGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 1—BASIS OF PRESENTATION:

On November 28, 2017, CONSOL Energy was separated from its former parent to become an independent, publicly-traded coal company. As part of the separation, the following assets of the Company's former parent were transferred to CONSOL Energy (collectively, the “Coal Business”): (i) its interest in the Pennsylvania Mining Complex, and certain related coal assets, (ii) its ownership interest in CNX Coal Resources LP, which owns a 25% undivided interest in the PAMC, (iii) the CONSOL Marine Terminal and, (iv) undeveloped coal reserves (Greenfield Reserves) located in the Northern Appalachian, Central Appalachian and Illinois basins and certain related coal assets and liabilities. Following the separation, shares of the Company's common stock began “regular-way” trading on the New York Stock Exchange on November 29, 2017 under the symbol “CEIX”.

Basis of Presentation

The accompanying 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 accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for future periods.

The Consolidated Balance Sheet at December 31, 2018 has been derived from the Audited Consolidated Financial Statements at that date but does not include all disclosures required by GAAP. This Form 10-Q report should be read in conjunction with CONSOL Energy Inc.'s Annual Report on Form 10-K for the year ended December 31, 2018.

Basis of Consolidation

The Consolidated Financial Statements include the accounts of CONSOL Energy Inc. and its wholly-owned and majority-owned and/or controlled subsidiaries. The portion of these entities that is not owned by the Company is presented as non-controlling interest. All significant intercompany transactions and accounts have been eliminated in consolidation.

Recent Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15 - Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40) to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. The amendments in Update 2018-15 align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements of capitalizing implementation costs incurred to develop or obtain internal-use software. These changes will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Management does not expect this update to have a material impact on the Company's financial statements.

In August 2018, the FASB issued ASU 2018-14 - Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20) to improve the effectiveness of disclosures in the notes to the financial statements by facilitating clear communication of the information required by GAAP. The amendments modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. These changes will be effective for fiscal years ending after December 15, 2020, including interim periods within those fiscal years. Management is currently evaluating the impact this guidance may have on the Company’s financial statements.

In August 2018, the FASB issued ASU 2018-13 - Fair Value Measurement (Topic 820) to improve the effectiveness of disclosures in the notes to the financial statements by facilitating clear communication of the information required by GAAP. The amendments modify the disclosure requirements on fair value measurements including the consideration of costs and benefits. These changes will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Management does not expect this update to have a material impact on the Company's financial statements.

In June 2016, the FASB issued ASU 2016-13 - Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this, the amendments in this Update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The measurement of expected credit losses will be based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. In May 2019, the FASB updated Topic 326 by issuing ASU 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief, which provides entities that have certain instruments within the scope of Subtopic 326-20, Financial Instruments-Credit Losses - Measured at Amortized Cost, with an option to irrevocably elect the fair value option in Subtopic 825-10, Financial Instruments-Overall, applied on an instrument-by-instrument basis for eligible instruments, upon adoption of Topic 326. The amendments in these Updates will be applied using a modified-retrospective approach and, for public entities, are effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Management does not expect this update to have a material impact on the Company's financial statements.

Earnings per Share

Basic earnings per share are computed by dividing net income attributable to CONSOL Energy Inc. shareholders by the weighted average shares outstanding during the reporting period. Dilutive earnings per share are computed similarly to basic earnings per share, except that the weighted average shares outstanding are increased to include additional shares from restricted stock units and performance share units, if dilutive. The number of additional shares is calculated by assuming that outstanding restricted stock units and performance share units were released, and that the proceeds from such activities were used to acquire shares of common stock at the average market price during the reporting period.

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 anti-dilutive:



	For the Three Months Ended		For the Nine Months Ended
	September 30,		September 30,
	2019	2018	2019	2018
Anti-Dilutive Restricted Stock Units	418,924	620	166,650	620
Anti-Dilutive Performance Share Units	56,399	—	—	—
	475,323	620	166,650	620

The computations for basic and dilutive earnings per share are as follows:



	For the Three Months Ended				For the Nine Months Ended
Dollars in thousands, except per share data	September 30,				September 30,
	2019		2018		2019		2018
Numerator:
Net Income	$	7,024	$	9,084	$	76,157	$	132,751
Less: Net Income Attributable to Noncontrolling Interest	2,684		3,350		14,102		19,447
Net Income Attributable to CONSOL Energy Inc. Shareholders	$	4,340	$	5,734	$	62,055	$	113,304

Denominator:
Weighted-average shares of common stock outstanding	26,835,297		27,982,538		27,285,511		28,011,488
Effect of dilutive shares	181,693		593,322		195,332		516,527
Weighted-average diluted shares of common stock outstanding	27,016,990		28,575,860		27,480,843		28,528,015

Earnings per Share:
Basic	$	0.16	$	0.20	$	2.27	$	4.04
Dilutive	$	0.16	$	0.20	$	2.26	$	3.97

As of September 30, 2019, CONSOL Energy authorized 500,000 shares of preferred stock, none of which were issued or outstanding.

Reclassifications

Certain amounts in prior periods have been reclassified to conform with the report classifications of the current period, including the reclassification of restricted cash, previously included in Prepaid Expenses and Other Assets on the Consolidated Balance Sheets, as well as the reclassification of amortization of debt issuance costs and loss on debt extinguishment within the Operating Activities section of the Consolidated Statements of Cash Flows. These reclassifications had no effect on previously reported total assets, net income or stockholders' equity.

NOTE 2—REVENUE:

The following table disaggregates CONSOL Energy's revenue by major source to depict how the nature, amount, timing and uncertainty of the Company's revenues and cash flows are affected by economic factors:



	Three Months Ended				Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Coal Revenue	$	301,542	$	294,797	$	984,665	$	1,016,503
Terminal Revenue	16,303		16,115		50,829		47,995
Freight Revenue	3,599		2,443		14,115		37,774
Total Revenue from Contracts with Customers	$	321,444	$	313,355	$	1,049,609	$	1,102,272

CONSOL Energy's coal revenue is recognized when title passes to the customer. The Company has determined that each ton of coal represents a separate and distinct performance obligation. The Company's coal supply contracts and other sales and operating revenue contracts vary in length from short-term to long-term contracts and do not typically have significant financing components.

The estimated transaction price from each of the Company's contracts is based on the total amount of consideration to which the Company expects to be entitled under the contract. Included in the transaction price for certain coal supply contracts is the impact of variable consideration, including quality price adjustments, handling services, per ton price fluctuations based on certain coal sales price indices and anticipated payments in lieu of shipments. The estimated transaction price for each contract is allocated to the Company's performance obligations based on relative stand-alone selling prices determined at contract inception.

Coal Revenue

Revenues are recognized at a point in time, which is generally when title passes to the customers and the price is fixed and determinable. Generally, title passes when coal is loaded at the central preparation facility and, on occasion, at terminal locations or other customer destinations. The Company's coal contract revenue per ton is fixed and determinable and adjusted for nominal quality adjustments. Some coal contracts also contain positive electric power price-related adjustments in addition to a fixed base price per ton. None of the Company’s coal contracts allow for retroactive adjustments to pricing after title to the coal has passed.

Some of the Company's contracts span multiple years and have annual pricing modifications, based upon market-driven or inflationary adjustments, where no additional value is exchanged. Also, some of the Company's contracts contain favorable electric power price-related adjustments, which represent market-driven price adjustments, wherein there is no additional value exchanged. Management believes that the invoice price is the most appropriate rate at which to recognize revenue.

While CONSOL Energy does, from time to time, experience costs of obtaining coal customer contracts with amortization periods greater than one year, those costs are immaterial to the Company's net income. At September 30, 2019 and December 31, 2018, the Company did not have any capitalized costs to obtain customer contracts on its Consolidated Balance Sheets. As of and for the three and nine months ended September 30, 2019 and 2018, the Company has not recognized any amortization of previously existing capitalized costs of obtaining customer contracts. Further, the Company has not recognized any revenue in the current period that is not a result of current period performance.

Terminal Revenue

Terminal revenues are attributable to the Company's CONSOL Marine Terminal and include revenues earned from providing receipt and unloading of coal from rail cars, transporting coal from the receipt point to temporary storage or stockpile facilities located at the Terminal, stockpiling, blending, weighing, sampling, redelivery, and loading of coal onto vessels. Revenues for these services are generally earned on a rateable basis, and performance obligations are considered fulfilled as the services are performed.

CONSOL Marine Terminal does not normally experience material costs of obtaining customer contracts with amortization periods greater than one year. At September 30, 2019 and December 31, 2018, the Company did not have any capitalized costs to obtain customer contracts on its Consolidated Balance Sheets. As of and for the three and nine months ended September 30, 2019 and 2018, the Company has not recognized any amortization of previously existing capitalized costs of obtaining Terminal customer contracts. Further, the Company has not recognized any revenue in the current period that is not a result of current period performance.

Freight Revenue

Some of CONSOL Energy's coal contracts require that the Company sell its coal at locations other than its central preparation plant. The cost to transport the Company's coal to the ultimate sales point is passed through to the Company's customers and CONSOL Energy recognizes the freight revenue equal to the transportation costs when title of the coal passes to the customer.

Contract Balances

Contract assets are recorded as trade receivables and reported separately in the Company's Consolidated Balance Sheets from other contract assets as title passes to the customer and the Company's right to consideration becomes unconditional. Payments for coal shipments are typically due within two to four weeks from the invoice date. CONSOL Energy typically does not have material contract assets that are stated separately from trade receivables as the Company's performance obligations are satisfied as control of the goods or services passes to the customer, thereby granting the Company an unconditional right to receive consideration. Contract liabilities relate to consideration received in advance of the satisfaction of the Company's performance obligations. Contract liabilities are recognized as revenue at the point in time when control of the good or service passes to the customer.

NOTE 3—MISCELLANEOUS OTHER INCOME:



	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2019		2018		2019		2018
Royalty Income - Non-Operated Coal	$	4,976	$	5,160	$	16,863	$	19,108
Purchased Coal Sales	3,136		2,901		9,052		15,389
Contract Buyout	1,193		—		3,583		350
Interest Income	755		523		2,399		1,591
Rental Income	625		896		1,923		3,066
Property Easements and Option Income	100		1,069		1,529		5,479
Other	403		429		1,325		2,251
Miscellaneous Other Income	$	11,188	$	10,978	$	36,674	$	47,234

NOTE 4—COMPONENTS OF PENSION AND OTHER POST-EMPLOYMENT BENEFIT (OPEB) PLANS NET PERIODIC BENEFIT COSTS:

The components of Net Periodic Benefit (Credit) Cost are as follows:



	Pension Benefits												Other Post-Employment Benefits
	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			2019			2018			2019			2018
Service Cost	$	987		$	288		$	2,963		$	863		$	—		$	—		$	—		$	—
Interest Cost	6,275			5,876			18,825			17,628			4,580			4,677			13,740			14,030
Expected Return on Plan Assets	(10,114		)	(10,092		)	(30,343		)	(30,277		)	—			—			—			—
Amortization of Prior Service Credits	(92		)	(126		)	(275		)	(377		)	(601		)	(601		)	(1,804		)	(1,804		)
Amortization of Actuarial Loss	1,490			2,179			4,469			6,537			2,315			4,051			6,946			12,154
Net Periodic Benefit (Credit) Cost	$	(1,454	)	$	(1,875	)	$	(4,361	)	$	(5,626	)	$	6,294		$	8,127		$	18,882		$	24,380

Expenses (credits) related to pension and other post-employment benefits are reflected in Operating and Other Costs in the Consolidated Statements of Income.

NOTE 5—COMPONENTS OF COAL WORKERS’ PNEUMOCONIOSIS (CWP) AND WORKERS’ COMPENSATION NET PERIODIC BENEFIT COSTS:

The components of Net Periodic Benefit Cost are as follows:



	CWP										Workers' Compensation
	Three Months Ended September 30,					Nine Months Ended September 30,					Three Months Ended September 30,						Nine Months Ended September 30,
	2019		2018			2019		2018			2019			2018			2019			2018
Service Cost	$	948	$	1,662		$	2,844	$	4,987		$	1,421		$	1,558		$	4,264		$	4,673
Interest Cost	1,750		1,311			5,250		3,934			646			571			1,939			1,712
Amortization of Actuarial Loss (Gain)	254		(213		)	762		(640		)	(193		)	(20		)	(580		)	(59		)
State Administrative Fees and Insurance Bond Premiums	—		—			—		—			510			675			1,671			1,986
Net Periodic Benefit Cost	$	2,952	$	2,760		$	8,856	$	8,281		$	2,384		$	2,784		$	7,294		$	8,312

NOTE 6—INCOME TAXES:

The Company's effective tax rate is based on its estimated full year effective tax rate, comprised of expected statutory tax provision, offset by excess percentage depletion and other discrete tax benefits. The effective tax rate for the nine months ended September 30, 2019 was (0.3)%, composed of a tax expense of 0.2% from operations and a discrete tax benefit of (0.5)% primarily related to equity compensation. The effective tax rate for the nine months ended September 30, 2019 differs from the U.S. federal statutory rate of 21%, primarily due to the income tax benefit for excess percentage depletion. The effective tax rate for the nine months ended September 30, 2018 was 6.0%. The effective tax rate for the nine months ended September 30, 2018 differs from the U.S. federal statutory rate of 21%, primarily due to the income tax benefit for excess percentage depletion.

The Company utilizes the “more likely than not” standard in recognizing a tax benefit in its financial statements. For the nine months ended September 30, 2019 and the year ended December 31, 2018, the Company did not have any unrecognized tax benefits. If accrual for interest or penalties is required, it is the Company's policy to include these as a component of income tax expense.

The Company is subject to taxation in the United States, as well as various states, and Canada, as well as various provinces. Under the provisions of the tax matters agreement entered into between the Company and its former parent on November 28, 2017 (the “TMA”), certain subsidiaries of the Company are subject to examination for tax years for the period January 1, 2015 through the nine months ended September 30, 2019 for certain state and foreign returns. Further, the Company is subject to examination for the period November 28, 2017 through the nine months ended September 30, 2019 for federal and certain state returns.

NOTE 7—INVENTORIES:

Inventory components consist of the following:



	September 30, 2019		December 31, 2018
Coal	$	3,974	$	4,642
Supplies	44,865		44,004
Total Inventories	$	48,839	$	48,646

Inventories are stated at the lower of cost or net realizable value. The cost of coal inventories is determined by the first-in, first-out (“FIFO”) method. Coal inventory costs include labor, supplies, equipment costs, operating overhead, depreciation, depletion, amortization and other related costs. The cost of supplies inventory is determined by the average cost method and includes operating and maintenance supplies to be used in the Company's coal operations.

NOTE 8—ACCOUNTS RECEIVABLE SECURITIZATION:

CONSOL Energy and certain of its U.S. subsidiaries are parties to a trade accounts receivable securitization facility with financial institutions for the sale on a continuous basis of eligible trade accounts receivable. In August 2018, the securitization facility was amended to, among other things, extend the term of the securitization facility for three years ending August 30, 2021.

Pursuant to the securitization facility, CONSOL Thermal Holdings LLC sells current and future trade receivables to CONSOL Pennsylvania Coal Company LLC. CONSOL Marine Terminals LLC and CONSOL Pennsylvania Coal Company LLC sell and/or contribute current and future trade receivables (including receivables sold to CONSOL Pennsylvania Coal Company LLC by CONSOL Thermal Holdings LLC) to CONSOL Funding LLC (the “SPV”). The SPV, in turn, pledges its interests in the receivables to PNC Bank, which either makes loans or issues letters of credit on behalf of the SPV. The maximum amount of advances and letters of credit outstanding under the securitization facility may not exceed $100 million.

Loans under the securitization facility accrue interest at a reserve-adjusted LIBOR market index rate equal to the one-month Eurodollar rate. Loans and letters of credit under the securitization facility also accrue a program fee and a letter of credit participation fee, respectively, ranging from 2.00% to 2.50% per annum depending on the total net leverage ratio of CONSOL Energy. In addition, the SPV paid certain structuring fees to PNC Capital Markets LLC and will pay other customary fees to the lenders, including a fee on unused commitments equal to 0.60% per annum.

At September 30, 2019, the Company's eligible accounts receivable yielded $38,384 of borrowing capacity. At September 30, 2019, the facility had no outstanding borrowings and $39,902 of letters of credit outstanding, leaving no unused capacity. CONSOL Energy posted $1,518 of cash collateral to secure the difference in the outstanding letters of credit and the eligible accounts receivable. Cash collateral of $1,518 is included in Restricted Cash in the Consolidated Balance Sheets. At December 31, 2018, the Company's eligible accounts receivable yielded $37,869 of borrowing capacity. At December 31, 2018, the facility had no outstanding borrowings and $52,536 of letters of credit outstanding, leaving no unused capacity. CONSOL Energy posted $14,667 of cash collateral to secure the difference in the outstanding letters of credit and the eligible accounts receivable. Cash collateral of $14,667 is included in Restricted Cash in the Consolidated Balance Sheets. Costs associated with the receivables facility totaled $344 and $1,095 for the three and nine months ended September 30, 2019, respectively, and $658 and $2,184 for the three and nine months ended September 30, 2018, respectively. These costs have been recorded as financing fees which are included in Operating and Other Costs in the Consolidated Statements of Income. The Company has not derecognized any receivables due to its continued involvement in the collections efforts.

NOTE 9—PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment consists of the following:



	September 30, 2019		December 31, 2018
Plant and Equipment	$	3,008,945	$	2,890,970
Coal Properties and Surface Lands	863,191		858,153
Airshafts	430,592		419,100
Mine Development	342,706		342,405
Advance Mining Royalties	327,966		327,543
Total Property, Plant and Equipment	4,973,400		4,838,171
Less: Accumulated Depreciation, Depletion and Amortization	2,866,649		2,731,643
Total Property, Plant and Equipment, Net	$	2,106,751	$	2,106,528

Coal reserves are controlled either through fee ownership or by lease. The duration of the leases vary; however, the lease terms are generally extended automatically to the exhaustion of economically recoverable reserves, as long as active mining continues. Coal interests held by lease provide the same rights as fee ownership for mineral extraction and are legally considered real property interests.

As of September 30, 2019 and December 31, 2018, property, plant and equipment includes gross assets under finance leases of $49,899 and $49,775, respectively. Accumulated amortization for finance leases was $27,458 and $15,973 at September 30, 2019 and December 31, 2018, respectively. Amortization expense for assets under finance leases approximated $3,919 and $3,927 for the three months ended September 30, 2019 and 2018 and $11,753 and $9,236 for the nine months ended September 30, 2019 and 2018, respectively, and is included in Depreciation, Depletion and Amortization in the accompanying Consolidated Statements of Income.

NOTE 10—LEASES:

On January 1, 2019, the Company adopted Accounting Standards Codification (“ASC”) Topic 842 using the transition option, “Comparatives Under 840 Option,” established by ASU 2018-11, Leases (Topic 842), Targeted Improvements. As allowed under this guidance, the Company elected not to recast the comparative periods presented when transitioning to ASC 842. As most of the Company's leases do not provide an implicit rate, CONSOL Energy has taken a portfolio approach of applying its incremental borrowing rate based on the information available at the adoption date to calculate the present value of lease payments over the lease term. CONSOL Energy has elected the package of practical expedients permitted under the transition guidance within the standard, which allows the Company (1) to not reassess whether any expired or existing contracts are or contain leases, (2) to not reassess the lease classification for any expired or existing leases, and (3) to not reassess initial direct costs for any existing leases. CONSOL Energy has also elected the practical expedient to not evaluate land easements that existed or expired before the Company’s adoption of Topic 842 and the practical expedient to not separate lease and non-lease components; that is, to account for lease and non-lease components in a contract as a single lease component for all classes of underlying assets. Further, the Company made an accounting policy election to keep leases with an initial term of twelve months or less off the balance sheet. CONSOL Energy will recognize those lease payments in the Consolidated Statements of Income over the lease term. For the three and nine months ended September 30, 2019, these short-term lease expenses were not material to the Company's financial statements.

Based on the Company's lease portfolio, the standard had a material impact on the Company’s Consolidated Balance Sheet but did not have a significant impact on the Company’s consolidated net earnings and cash flows. The most significant impact was the recognition of Right of Use (“ROU”) assets and lease liabilities for operating leases, while the accounting for finance leases remained substantially unchanged. The Company's bank covenants were not affected by this update. The Company recorded operating lease ROU assets and operating lease liabilities of approximately $92 million as of January 1, 2019, primarily related to mining equipment, based on the present value of the future lease payments on the date of adoption.

The Company determines if an arrangement is an operating or finance lease at inception of the applicable lease. For leases where the Company is the lessee, ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate based on the information available on the commencement date in determining the present value of lease payments. The ROU asset also consists of any prepaid lease payments, lease incentives received, and costs which will be incurred in exiting a lease. The lease terms used to calculate the ROU asset and related lease liability include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense while the expense for finance leases is recognized as depreciation expense and interest expense using the interest method of recognition.

The Company has operating leases for mining and other equipment used in operations and office space. Many leases include one or more options to renew, some of which include options to extend, the leases, and some leases include options to terminate or buy out the leases within a set period of time. In certain of the Company’s lease agreements, the rental payments are adjusted periodically to reflect actual charges incurred for inflation and/or changes in other indexes. Many of the Company's operating lease payments for mining equipment contain a variable component which is calculated based upon production metrics such as feet of advance or raw tonnage mined. While most of the Company's leases contain clauses regarding the general condition of the equipment upon lease termination, they do not contain residual value guarantees.

For the three and nine months ended September 30, 2019, the components of operating lease expense were as follows:



	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Fixed operating lease expense	$	6,265	$	19,561
Variable operating lease expense	2,860		9,211
Total operating lease expense	$	9,125	$	28,772

Supplemental cash flow information related to the Company's operating leases for the nine months ended September 30, 2019 was as follows:



Cash paid for amounts included in the measurement of operating lease liabilities	$	9,884
ROU assets obtained in exchange for operating lease obligations	—

The following table presents the lease balances within the Consolidated Balance Sheet, weighted average lease term, and the weighted average discount rate related to the Company's operating leases at September 30, 2019:



Lease Assets and Liabilities	Classification
Assets:
Operating Lease ROU Assets	Other Assets	$	77,411

Liabilities:
Current:
Operating Lease Liabilities	Other Accrued Liabilities	$	15,769
Long-Term:
Operating Lease Liabilities	Operating Lease Liabilities	$	66,432
Total Operating Lease Liabilities		$	82,201

Weighted average remaining lease term (in years)		5.07
Weighted average discount rate		5.64		%

CONSOL Energy leases certain owned mining equipment to a third-party under operating leases. At September 30, 2019, the amount of owned equipment included in gross property, plant and equipment was $6,966 and the associated amount of accumulated depreciation was $6,966. At September 30, 2019, scheduled minimum rental payments for operating leases related to this equipment were as follows:



Remainder of 2019		2020		2021		2022		2023		Thereafter		Total
$	311	$	627	$	—	$	—	$	—	$	—	$	938

The Company also enters into finance leases for mining equipment and automobiles. Assets arising from finance leases are included in property, plant and equipment, net and the liabilities are included in current portion of long-term debt and long-term debt in the accompanying Consolidated Balance Sheet.

For the three and nine months ended September 30, 2019, the components of finance lease expense were as follows:



	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Amortization of right of use assets	$	3,919	$	11,753
Interest expense	434		1,484
Total finance lease expense	$	4,353	$	13,237

The following table presents the weighted average lease term and weighted average discount rate related to the Company's finance leases as of September 30, 2019:



Weighted average remaining lease term (in years)	1.59
Weighted average discount rate	5.37	%

At September 30, 2019, certain finance leases for mining equipment are subleased to a third-party. The following table represents the minimum payments, including interest, for those finance subleases:



Remainder of 2019		2020		2021		2022		2023		Thereafter		Total
$	925	$	3,699	$	2,157	$	—	$	—	$	—	$	6,781

The following table presents the future maturities of the Company's operating and finance lease liabilities, together with the present value of the net minimum lease payments, at September 30, 2019:



	Finance		Operating
	Leases		Leases
Remainder of 2019	$	3,406	$	8,746
2020	20,222		24,067
2021	6,565		23,134
2022	154		13,341
2023	133		6,504
Thereafter	24		22,073
Total minimum lease payments	30,504		97,865
Less amount representing interest	1,339		15,664
Present value of minimum lease payments	$	29,165	$	82,201

As of September 30, 2019, the Company had no additional significant operating or finance leases that had not yet commenced.

NOTE 11—OTHER ACCRUED LIABILITIES:



	September 30, 2019		December 31, 2018
Subsidence Liability	$	93,202	$	83,532
Accrued Payroll and Benefits	17,144		12,978
Accrued Interest	11,521		6,850
Accrued Other Taxes	3,357		5,050
Litigation	2,640		8,235
Short-Term Incentive Compensation	2,411		6,024
Other	10,167		15,588
Current Portion of Long-Term Liabilities:
Postretirement Benefits Other than Pensions	32,361		32,345
Asset Retirement Obligations	29,413		31,017
Operating Lease Liability	15,769		—
Workers' Compensation	11,846		12,628
Pneumoconiosis Benefits	10,786		12,187
Total Other Accrued Liabilities	$	240,617	$	226,434

NOTE 12—LONG-TERM DEBT:



	September 30, 2019		December 31, 2018
Debt:
Term Loan B due in September 2024 (Principal of $273,625 and $396,000 less Unamortized Discount of $1,250 and $6,253, 6.55% and 8.53% Weighted Average Interest Rate, respectively)	$	272,375	$	389,747
11.00% Senior Secured Second Lien Notes due November 2025	239,228		274,276
MEDCO Revenue Bonds in Series due September 2025 at 5.75%	102,865		102,865
Term Loan A due in March 2023 (5.80% and 6.78% Weighted Average Interest Rate, respectively)	92,500		73,750
Other Asset-Backed Financing Arrangements Maturing in December 2020 and September 2024, 6.35% Weighted Average Interest Rate and 3.61%, respectively	7,591		—
Advance Royalty Commitments (8.57% Weighted Average Interest Rate)	2,261		2,261
Less: Unamortized Debt Issuance Costs	11,207		16,409
	705,613		826,490
Less: Amounts Due in One Year*	27,678		117,954
Long-Term Debt	$	677,935	$	708,536

* Excludes current portion of Finance Lease Obligations of $17,537 and $16,858 at September 30, 2019 and December 31, 2018, respectively.

In November 2017, CONSOL Energy entered into a revolving credit facility with commitments up to $300 million (the “Revolving Credit Facility”), a Term Loan A Facility of up to $100 million (the “TLA Facility”) and a Term Loan B Facility of up to $400 million (the “TLB Facility”, and together with the Revolving Credit Facility and the TLA Facility, the “Senior Secured Credit Facilities”). On March 28, 2019, the Company amended the Senior Secured Credit Facilities (the “amendment”) to increase the borrowing commitment of the Revolving Credit Facility to $400 million and reallocate the principal amounts outstanding under the TLA Facility and TLB Facility. As a result, the principal amount outstanding under the TLA Facility was $100 million and the principal amount outstanding under the TLB Facility was $275 million. Borrowings under the Company's Senior Secured Credit Facilities bear interest at a floating rate which can be, at the Company's option, either (i) LIBOR plus an applicable margin or (ii) an alternate base rate plus an applicable margin. The applicable margin for the Revolving Credit Facility and TLA Facility depends on the total net leverage ratio, whereas the applicable margin for the TLB Facility is fixed. The amendment reduced the applicable margin by 50 basis points on both the Revolving Credit Facility and the TLA Facility, and by 150 basis points on the

TLB Facility. The amendment also extended the maturity dates of the Senior Secured Credit Facilities. The maturity date of the Revolving Credit and TLA Facilities was extended from November 28, 2021 to March 28, 2023. The TLB Facility's maturity date

was extended from November 28, 2022 to September 28, 2024. Obligations under the Senior Secured Credit Facilities are guaranteed by (i) all owners of the 75% undivided economic interest in the PAMC held by the Company, (ii) any other members of the Company’s group that own any portion of the collateral securing the Revolving Credit Facility, and (iii) subject to certain customary exceptions and agreed materiality thresholds, all other existing or future direct or indirect wholly-owned restricted subsidiaries of the Company (excluding the Partnership and its wholly-owned subsidiaries).

The Revolving Credit Facility and TLA Facility also include financial covenants, including (i) a maximum first lien gross leverage ratio, (ii) a maximum total net leverage ratio, and (iii) a minimum fixed charge coverage ratio. CONSOL Energy must maintain a maximum first lien gross leverage ratio covenant of no more than 2.00 to 1.00, measured quarterly, stepping down to 1.75 to 1.00 in March 2020. The maximum first lien gross leverage ratio is calculated as the ratio of Consolidated First Lien Debt to Consolidated EBITDA, excluding the Partnership. The maximum first lien gross leverage ratio was 1.15 to 1.00 at September 30, 2019. CONSOL Energy must maintain a maximum total net leverage ratio covenant of no more than 3.00 to 1.00, measured quarterly, stepping down to 2.75 to 1.00 in March 2020. The maximum total net leverage ratio is calculated as the ratio of Consolidated Indebtedness, minus Cash on Hand, to Consolidated EBITDA, excluding the Partnership. The maximum total net leverage ratio was 1.78 to 1.00 at September 30, 2019. Consolidated EBITDA, as used in the covenant calculation, excludes non-cash compensation expenses, non-recurring transaction expenses, extraordinary gains and losses, gains and losses on discontinued operations, non-cash charges related to legacy employee liabilities and gains and losses on debt extinguishment, and includes cash distributions received from the Partnership and subtracts cash payments related to legacy employee liabilities. The facilities also include a minimum fixed charge coverage covenant of no less than 1.10 to 1.00, measured quarterly. The minimum fixed charge coverage ratio is calculated as the ratio of Consolidated EBITDA to Consolidated Fixed Charges, excluding the Partnership. Consolidated Fixed Charges, as used in the covenant calculation, include cash interest payments, cash payments for income taxes, scheduled debt repayments, dividends paid, and Maintenance Capital Expenditures. The minimum fixed charge coverage ratio was 1.46 to 1.00 at September 30, 2019.

The TLB Facility also includes a financial covenant that requires the Company to repay a certain amount of its borrowings under the TLB Facility within ten business days after the date it files its Form 10-K with the Securities and Exchange Commission if the Company has excess cash flow (as defined in the credit agreement for the Senior Secured Credit Facilities) during the year covered by the applicable Form 10-K. During the nine months ended September 30, 2019, CONSOL Energy made the required repayment of approximately $110 million based on the amount of the Company's excess cash flow as of December 31, 2018. For fiscal year 2018, such repayment was equal to 75% of the Company’s excess cash flow less any voluntary prepayments of its borrowings under the TLB Facility made by the Company during 2018. For all subsequent fiscal years, the required repayment is equal to a certain percentage of the Company’s excess cash flow for such year, ranging from 0% to 75% depending on the Company’s total net leverage ratio, less the amount of certain voluntary prepayments made by the Company, if any, under the TLB Facility during such fiscal year. The amendment reduced the maximum amount of the mandatory annual excess cash flow sweep under the TLB Facility by 25%.

As of September 30, 2019, no amount related to the prepayment of the TLB Facility in connection with the excess cash flow requirement has been classified as Current Portion of Long-Term Debt in the Consolidated Balance Sheets. The amount of excess cash flow is a covenant feature only applicable as of the Company's year-end and calculated as of December 31, 2019. If this covenant was applicable as of September 30, 2019, management estimates the repayment under this covenant would be approximately $7 million, subject to fourth quarter performance and other discretionary uses of cash.

At September 30, 2019, the Revolving Credit Facility had no borrowings outstanding and $73,732 of letters of credit outstanding, leaving $326,268 of unused capacity. At December 31, 2018, the Revolving Credit Facility had no borrowings outstanding and $54,065 of letters of credit outstanding, leaving $245,935 of unused capacity. From time to time, CONSOL Energy 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. CONSOL Energy sometimes uses letters of credit to satisfy these requirements and these letters of credit reduce the Company's borrowing facility capacity.

In November 2017, CONSOL Energy issued $300 million in aggregate principal amount of 11.00% Senior Secured Second Lien Notes due 2025 (the “Second Lien Notes”) pursuant to an indenture (the “Indenture”) dated as of November 13, 2017, by and between the Company and UMB Bank, N.A., a national banking association, as trustee and collateral trustee (the “Trustee”). On November 28, 2017, certain subsidiaries of the Company executed a supplement to the Indenture and became party to the Indenture as a guarantor (the “Guarantors”). The Second Lien Notes are secured by second priority liens on substantially all of the assets of the Company and the Guarantors that are pledged and on a first-priority basis as collateral securing the Company’s obligations under the Senior Secured Credit Facilities (described above), subject to certain exceptions under the Indenture.

During the nine months ended September 30, 2019, the Company made a required repayment of approximately $110 million on the TLB Facility (discussed above) and amended the Senior Secured Credit Facilities.The Company also repurchased $35 million of its outstanding 11.00% Senior Secured Second Lien Notes due in 2025 during the nine months ended September 30, 2019. As part of these transactions, $801 and $25,444 was included in Loss on Debt Extinguishment on the Consolidated Statements of Income for the three and nine months ended September 30, 2019, respectively.

During the nine months ended September 30, 2018, CONSOL Energy made total payments of $26 million on its outstanding TLA Facility, including accelerated payments of $15 million. The Company also repurchased $21 million of its outstanding 11.00% Senior Secured Second Lien Notes due in 2025 during the nine months ended September 30, 2018. As part of these transactions, $3,149 was included in Loss on Debt Extinguishment on the Consolidated Statements of Income for the nine months ended September 30, 2018.

During the nine months ended September 30, 2019, the Company entered into two asset-backed financing arrangements related to certain equipment. The equipment, which has an approximate value of $7,591, fully collateralizes the loans.

NOTE 13—COMMITMENTS AND CONTINGENT LIABILITIES:

The Company and its former parent entered into a separation and distribution agreement on November 28, 2017 that implemented the legal and structural separation of the Company from its former parent. The separation and distribution agreement also identified the assets of the Coal Business that were transferred to the Company and the liabilities and contracts related to the Coal Business that were assumed by the Company as part of the separation and distribution, and provides post-closing indemnification obligations and procedures between the Company and its former parent relating to the liabilities of the Coal Business that the Company assumed.

The Company is subject to various lawsuits and claims with respect to such matters as personal injury, wrongful death, damage to property, exposure to hazardous substances, governmental regulations including environmental remediation, employment and contract disputes and other claims and actions arising out of the normal course of business. The Company accrues the estimated loss for these lawsuits and claims when the loss is probable and reasonably estimable. The Company’s 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 the Company as of September 30, 2019. It is possible that the aggregate loss in the future with respect to these lawsuits and claims could ultimately be material to the Company’s financial position, results of operations or cash flows; however, such amounts cannot be reasonably estimated. The amount claimed against the Company as of September 30, 2019 is disclosed below when an amount is expressly stated in the lawsuit or claim, which is not often the case.

Fitzwater Litigation: Three nonunion retired coal miners have sued Fola Coal Company LLC, Consolidation Coal Company (“CCC”) and CONSOL of Kentucky Inc. (“COK”) (as well as the Company's former parent) in West Virginia Federal Court alleging ERISA violations in the termination of retiree health care benefits. The Plaintiffs contend they relied to their detriment on oral statements and promises of “lifetime health benefits” allegedly made by various members of management during Plaintiffs’ employment and that they were allegedly denied access to Summary Plan Documents that clearly reserved the right to modify or terminate the Retiree Health and Welfare Plan subject to Plaintiffs’ claims. Pursuant to Plaintiffs’ amended complaint filed on April 24, 2017, Plaintiffs request that retiree health benefits be reinstated and seek to represent a class of all nonunion retirees who were associated with AMVEST and COK areas of operation. On October 15, 2019, Plantiffs’ supplemental motion for class certification was denied on all counts and a scheduling order for the remaining individual claims was set on October 16, 2019. The Company believes it has a meritorious defense and intends to vigorously defend this suit.

Casey Litigation: A class action lawsuit was filed on August 23, 2017 on behalf of two nonunion retired coal miners against CCC, COK, CONSOL Buchanan Mining Co., LLC and Kurt Salvatori in West Virginia Federal Court alleging ERISA violations in the termination of retiree health care benefits. Filed by the same lawyers who filed the Fitzwater litigation, and raising nearly identical claims, the Plaintiffs contend they relied to their detriment on oral promises of “lifetime health benefits” allegedly made by various members of management during Plaintiffs’ employment and that they were not provided with copies of Summary Plan Documents clearly reserving to the Company the right to modify or terminate the Retiree Health and Welfare Plan. Plaintiffs request that retiree health benefits be reinstated for them and their dependents and seek to represent a class of all nonunion retirees of any subsidiary of the Company's former parent that operated or employed individuals in McDowell or Mercer Counties, West Virginia, or Buchanan or Tazewell Counties, Virginia whose retiree welfare benefits were terminated. On December 1, 2017, the trial court judge in Fitzwater signed an order to consolidate Fitzwater with Casey. The Casey complaint was amended on March 1, 2018 to add new plaintiffs, add defendant CONSOL Pennsylvania Coal Company, LLC and eliminate defendant CONSOL Buchanan Mining Co., LLC in an attempt to expand the class of retirees. On October 15, 2019, Plantiffs’ supplemental motion for class certification was denied on all counts and a scheduling order for the remaining individual claims was set on October 16, 2019. The Company believes it has a meritorious defense and intends to vigorously defend this suit.

Other Matters: Various Company subsidiaries are defendants in certain other legal proceedings arising out of the conduct of the Coal Business prior to the separation and distribution, and the Company is also a defendant in other legal proceedings following the separation and distribution. In the opinion of management, based upon an investigation of these matters and discussion with legal counsel, the ultimate outcome of such other legal proceedings, individually and in the aggregate, is not expected to have a material adverse effect on the Company’s financial position, results of operations or liquidity.

As part of the separation and distribution, the Company assumed various financial obligations relating to the Coal Business and agreed to reimburse its former parent for certain financial guarantees relating to the Coal Business that its former parent retained following the separation and distribution. Employee-related financial guarantees have primarily been provided to support the United Mine Workers’ of America’s 1992 Benefit Plan and federal black lung and various state workers’ compensation self-insurance programs. Environmental financial guarantees have primarily been provided to support various performance bonds related to reclamation and other environmental issues. Coal and other financial guarantees have primarily been provided to support various sales contracts. Other guarantees have been extended to support insurance policies, legal matters, full and timely payments of mining equipment leases, and various other items necessary in the normal course of business.

The following is a summary, as of September 30, 2019, of the financial guarantees, unconditional purchase obligations and letters of credit to certain third parties. These amounts represent the maximum potential of total future payments that the Company could be required to make under these instruments, or under the separation and distribution agreement to the extent retained by the Company's former parent on behalf of the Coal Business. 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 financial guarantees and letters of credit are recorded as liabilities in the financial statements. The Company’s management believes that these guarantees will expire without being funded, and therefore, the commitments will not have a material adverse effect on the Company’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:
Employee-Related	$	65,292	$	40,044	$	25,248	$	—	$	—
Environmental	398		398		—		—		—
Other	47,944		39,150		8,794		—		—
Total Letters of Credit	113,634		79,592		34,042		—		—
Surety Bonds:
Employee-Related	87,174		74,424		12,750		—		—
Environmental	532,027		437,422		94,605		—		—
Other	3,898		3,607		291		—		—
Total Surety Bonds	623,099		515,453		107,646		—		—
Guarantees:
Other	17,928		7,224		9,875		398		431
Total Guarantees	17,928		7,224		9,875		398		431
Total Commitments	$	754,661	$	602,269	$	151,563	$	398	$	431

Included in the above table are commitments and guarantees entered into in conjunction with the sale of Consolidation Coal Company and certain of its subsidiaries, which contain all five of its longwall coal mines in West Virginia and its river operations, to a third party. As part of the separation and distribution, the Company's former parent agreed to indemnify the Company and the Company agreed to indemnify its former parent in each case with respect to guarantees of certain equipment lease obligations that were assumed by the third party. In the event that the third party would default on the obligations defined in the agreements, the Company would be required to perform under the guarantees. If the Company would be required to perform, the stock purchase agreement provides various recourse actions. As of September 30, 2019, the Company has not been required to perform under these guarantees. The equipment lease obligations are collateralized by the underlying assets. The current maximum estimated exposure under these guarantees as of September 30, 2019 and December 31, 2018 is believed to be approximately $22,000 and $28,000, respectively. At September 30, 2019 and December 31, 2018, the fair value of these guarantees was $547 and $734, respectively, and is included in Other Accrued Liabilities on the Consolidated Balance Sheets. The fair value of certain of the guarantees was determined using the Company’s risk-adjusted interest rate. Significant increases or decreases in the risk-adjusted

interest rates may result in a significantly higher or lower fair value measurement. No other amounts related to financial guarantees and letters of credit are recorded as liabilities in the financial statements. Significant judgment is required in determining the fair value of these guarantees. The guarantees of the leases are classified within Level 3 of the fair value hierarchy.

The Company regularly evaluates the likelihood of default for all guarantees based on an expected loss analysis and records the fair value, if any, of its guarantees as an obligation in the consolidated financial statements.

NOTE 14—DERIVATIVES:

The Company enters into interest rate swaps in order to achieve a mix of fixed and variable rate debt that it deems appropriate. The interest rate swaps have been designated as cash flow hedges of future variable interest payments, which are considered probable of occurring. Based on the Company's assessment, all of the critical terms of each of the hedges matched the underlying terms of the hedged debt and related forecasted interest payments, and as such, these hedges were considered highly effective. There is no ineffective portion or amount excluded from effectiveness testing.

The following table presents information related to interest rate contracts entered into by the Company and designated as cash flow hedges:



	September 30, 2019			December 31, 2018
Pay fixed swaps - notional amount	$	350,000		—
Net unrealized loss	$	(525	)	—
Weighted-average maturity period (years)	1.51			—
Weighted-average received rate	—			—
Weighted-average pay rate	—			—

The fair value of the interest rate swaps reflected an unrealized loss of $525 (net of $(167) tax) at September 30, 2019 and $0 at December 31, 2018. The unrealized loss is included on the Consolidated Statements of Stockholders' Equity as part of accumulated other comprehensive loss, as well as on the Consolidated Statements of Comprehensive Income as unrealized loss on cash flow hedges.

At September 30, 2019 and December 31, 2018, the interest rate swap contracts were reflected in the Consolidated Balance Sheets as follows:



	September 30, 2019		December 31, 2018
Current assets:
Other current assets	—		—
Long-term assets:
Other assets	—		—
Current liabilities:
Other current liabilities	$	243	—
Long-term liabilities:
Other liabilities	$	448	—
Total derivatives	$	691	$	—

No gains or losses were recognized in interest expense in the Consolidated Statements of Income, as no interest rate swaps have reached their effective date. During 2020, notional amounts of $150,000 will become effective. In the next 12 months, the Company expects a loss of approximately $(20) to be reclassified into earnings.

NOTE 15—FAIR VALUE OF FINANCIAL INSTRUMENTS:

CONSOL Energy 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 LIBOR-based discount rates), 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 One - Quoted prices for identical instruments in active markets.

Level Two - 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 LIBOR-based discount rates.

Level Three - Unobservable inputs significant to the fair value measurement supported by little or no market activity. The significant unobservable inputs used in the fair value measurement of the Company’s third party guarantees are the credit risk of the third party and the third party surety bond markets. A significant increase or decrease in these values, in isolation, would have a directionally similar effect resulting in higher or lower fair value measurement of the Company’s Level 3 guarantees.

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 instruments measured at fair value on a recurring basis are summarized below:



	Fair Value Measurements at								Fair Value Measurements at
	September 30, 2019								December 31, 2018
Description	Level 1		Level 2			Level 3			Level 1		Level 2		Level 3
Lease Guarantees	$	—	$	—		$	(547	)	$	—	$	—	$	(734	)
Derivatives ⁽¹⁾	$	—	$	(691	)	$	—		$	—	$	—	$	—

(1) Interest rate swaps are valued based on observable market swap rates and are classified within Level 2 of the fair value hierarchy.

The following methods and assumptions were used to estimate the fair value for which the fair value option was not elected:

Long-term debt: The fair value of long-term debt is measured using unadjusted quoted market prices or estimated using discounted cash flow analyses. The discounted cash flow analyses are based on current market rates for instruments with similar cash flows.

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



	September 30, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-Term Debt	$	716,820	$	719,361	$	842,899	$	881,711

Certain of the Company’s debt is actively traded on a public market and, as a result, constitutes 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, constitutes Level 2 fair value measurements.

NOTE 16—SEGMENT INFORMATION:

CONSOL Energy Inc. consists of one reportable segment: the Pennsylvania Mining Complex. The principal activities of the PAMC are mining, preparation and marketing of thermal coal, sold primarily to power generators. It also includes selling, general and administrative activities, as well as various other activities assigned to the PAMC.

CONSOL Energy Inc.’s Other division includes revenue and expenses from various corporate and diversified business activities that are not allocated to the PAMC. The diversified business activities include coal terminal operations, closed and idle mine activities, selling, general and administrative activities, as well as various other non-operated activities, none of which are individually significant to the Company.

Industry segment results for the three months ended September 30, 2019 are:



	PAMC		Other			Adjustments and Eliminations		Consolidated
Coal Revenue	$	301,542	$	—		$	—	$	301,542	(A)
Terminal Revenue	—		16,303			—		16,303
Freight Revenue	3,599		—			—		3,599
Total Revenue and Freight	$	305,141	$	16,303		$	—	$	321,444
Earnings (Loss) Before Income Tax	$	30,546	$	(21,107	)	$	—	$	9,439
Segment Assets	$	2,014,381	$	708,854		$	—	$	2,723,235
Depreciation, Depletion and Amortization	$	45,829	$	8,541		$	—	$	54,370
Capital Expenditures	$	45,232	$	3,289		$	—	$	48,521

Industry segment results for the three months ended September 30, 2018 are:



	PAMC		Other			Adjustments and Eliminations		Consolidated
Coal Revenue	$	294,797	$	—		$	—	$	294,797	(A)
Terminal Revenue	—		16,115			—		16,115
Freight Revenue	2,443		—			—		2,443
Total Revenue and Freight	$	297,240	$	16,115		$	—	$	313,355
Earnings (Loss) Before Income Tax	$	37,962	$	(29,568	)	$	—	$	8,394
Segment Assets	$	1,891,606	$	854,322		$	—	$	2,745,928
Depreciation, Depletion and Amortization	$	44,236	$	7,006		$	—	$	51,242
Capital Expenditures	$	32,309	$	8,347		$	—	$	40,656

Industry segment results for the nine months ended September 30, 2019 are:



	PAMC		Other			Adjustments and Eliminations		Consolidated
Coal Revenue	$	984,665	$	—		$	—	$	984,665	(A)
Terminal Revenue	—		50,829			—		50,829
Freight Revenue	14,115		—			—		14,115
Total Revenue and Freight	$	998,780	$	50,829		$	—	$	1,049,609
Earnings (Loss) Before Income Tax	$	156,029	$	(80,115	)	$	—	$	75,914
Segment Assets	$	2,014,381	$	708,854		$	—	$	2,723,235
Depreciation, Depletion and Amortization	$	136,124	$	15,121		$	—	$	151,245
Capital Expenditures	$	117,417	$	14,058		$	—	$	131,475

Industry segment results for the nine months ended September 30, 2018 are:



	PAMC		Other			Adjustments and Eliminations		Consolidated
Coal Revenue	$	1,016,503	$	—		$	—	$	1,016,503	(A)
Terminal Revenue	—		47,995			—		47,995
Freight Revenue	37,774		—			—		37,774
Total Revenue and Freight	$	1,054,277	$	47,995		$	—	$	1,102,272
Earnings (Loss) Before Income Tax	$	220,862	$	(79,584	)	$	—	$	141,278
Segment Assets	$	1,891,606	$	854,322		$	—	$	2,745,928
Depreciation, Depletion and Amortization	$	135,074	$	20,600		$	—	$	155,674
Capital Expenditures	$	81,025	$	15,830		$	—	$	96,855


(A)	For the three and nine months ended September 30, 2019 and 2018, the PAMC segment had revenues from the following customers, each comprising over 10% of the Company’s total sales:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Customer A	$	49,772	$	46,727	$	180,014	$	209,968
Customer B	$	95,953	$	84,110	$	358,882	$	181,236
Customer C	$	63,526	$	59,364	$	158,903	$	169,052

Reconciliation of Segment Information to Consolidated Amounts:

Total Assets:



	September 30,
	2019		2018
Segment assets for total reportable business segments	$	2,014,381	$	1,891,606
Segment assets for all other business segments	512,738		506,825
Items excluded from segment assets:
Cash, restricted cash and other investments	104,344		275,377
Deferred tax assets	91,772		72,120
Total Consolidated Assets	$	2,723,235	$	2,745,928

NOTE 17—GUARANTOR SUBSIDIARIES FINANCIAL INFORMATION:

The payment obligations under the $275,000, Term Loan B due in September 2024, the $300,000, 11.000% per annum senior notes due November 2025, and the $100,000, Term Loan A due in March 2023 issued by CONSOL Energy are jointly and severally, and also fully and unconditionally, guaranteed by certain subsidiaries of CONSOL Energy. In accordance with positions established by the SEC, the following financial information sets forth separate financial information with respect to the parent, guarantor subsidiaries, CCR, a non-guarantor subsidiary, and the remaining non-guarantor subsidiaries. The principal elimination entries include investments in subsidiaries and certain intercompany balances and transactions. CONSOL Energy, the parent, and a guarantor subsidiary manage several assets and liabilities of all other wholly owned subsidiaries. These include, for example, deferred tax assets, cash and other post-employment liabilities. These assets and liabilities are reflected as parent company or guarantor company amounts for purposes of this presentation.

Income Statement for the Three Months Ended September 30, 2019 (unaudited):



	Parent Issuer		Guarantor			CCR Non-Guarantor		Non-Guarantor		Elimination			Consolidated
Revenue and Other Income:
Coal Revenue	$	—	$	226,157		$	75,385	$	—	$	—		$	301,542
Terminal Revenue	—		16,303			—		—		—			16,303
Freight Revenue	—		2,699			900		—		—			3,599
Miscellaneous Other Income (Loss)	20,578		(4,311		)	1,096		9,701		(15,876		)	11,188
Gain (Loss) on Sale of Assets	717		(3		)	—		—		—			714
Total Revenue and Other Income	21,295		240,845			77,381		9,701		(15,876		)	333,346
Costs and Expenses:
Operating and Other Costs	—		180,488			53,998		363		—			234,849
Depreciation, Depletion and Amortization	—		43,284			11,086		—		—			54,370
Freight Expense	—		2,699			900		—		—			3,599
Selling, General and Administrative Costs	—		11,850			2,840		—		—			14,690
Loss on Debt Extinguishment	801		—			—		—		—			801
Interest Expense, net	13,739		272			1,587		—		—			15,598
Total Costs and Expenses	14,540		238,593			70,411		363		—			323,907
Earnings Before Income Tax	6,755		2,252			6,970		9,338		(15,876		)	9,439
Income Tax Expense	2,415		—			—		—		—			2,415
Net Income	4,340		2,252			6,970		9,338		(15,876		)	7,024
Less: Net Income Attributable to Noncontrolling Interest	—		—			—		—		2,684			2,684
Net Income Attributable to CONSOL Energy Inc. Shareholders	$	4,340	$	2,252		$	6,970	$	9,338	$	(18,560	)	$	4,340

Balance Sheet at September 30, 2019 (unaudited):



	Parent Issuer		Guarantor		CCR Non-Guarantor		Non-Guarantor		Elimination			Consolidated
Assets:
Current Assets:
Cash and Cash Equivalents	$	92,472	$	30,191	$	10,611	$	57	$	—		$	133,331
Restricted Cash	—		—		—		1,518		—			1,518
Accounts and Notes Receivable:
Trade	—		—		—		109,793		—			109,793
Other Receivables	22,772		6,376		56		—		—			29,204
Inventories	—		37,500		11,339		—		—			48,839
Prepaid Expenses and Other Assets	7,125		20,220		7,094		—		—			34,439
Total Current Assets	122,369		94,287		29,100		111,368		—			357,124
Property, Plant and Equipment:
Property, Plant and Equipment	—		3,995,982		977,418		—		—			4,973,400
Less-Accumulated Depreciation, Depletion and Amortization	—		2,307,111		559,538		—		—			2,866,649
Total Property, Plant and Equipment-Net	—		1,688,871		417,880		—		—			2,106,751
Other Assets:
Deferred Income Taxes	91,772		—		—		—		—			91,772
Affiliated Credit Facility	154,155		—		—		—		(154,155		)	—
Investment in Affiliates	882,762		—		—		—		(882,762		)	—
Right of Use Asset - Operating Leases	—		60,556		16,855		—		—			77,411
Other	34,187		42,692		13,298		—		—			90,177
Total Other Assets	1,162,876		103,248		30,153		—		(1,036,917		)	259,360
Total Assets	$	1,285,245	$	1,886,406	$	477,133	$	111,368	$	(1,036,917	)	$	2,723,235
Liabilities and Equity:
Current Liabilities:
Accounts Payable	$	88,838	$	7,671	$	23,405	$	5,406	$	—		$	125,320
Accounts Payable (Recoverable)-Related Parties	—		—		2,882		—		(2,882		)	—
Current Portion of Long-Term Debt	25,710		14,906		4,599		—		—			45,215
Other Accrued Liabilities	82,441		119,984		38,192		—		—			240,617
Total Current Liabilities	196,989		142,561		69,078		5,406		(2,882		)	411,152
Long-Term Debt:	579,148		108,330		156,240		—		(154,155		)	689,563
Deferred Credits and Other Liabilities:
Postretirement Benefits Other Than Pensions	—		427,442		—		—		—			427,442
Pneumoconiosis Benefits	—		160,075		4,897		—		—			164,972
Asset Retirement Obligations	—		231,877		10,939		—		—			242,816
Workers’ Compensation	—		56,178		2,914		—		—			59,092
Salary Retirement	54,622		—		—		—		—			54,622
Operating Lease Liability	—		52,208		14,224		—		—			66,432
Other	—		13,150		547		—		—			13,697
Total Deferred Credits and Other Liabilities	54,622		940,930		33,521		—		—			1,029,073
Total CONSOL Energy Inc. Stockholders’ Equity	454,486		694,585		218,294		105,962		(1,018,841		)	454,486
Noncontrolling Interest	—		—		—		—		138,961			138,961
Total Liabilities and Equity	$	1,285,245	$	1,886,406	$	477,133	$	111,368	$	(1,036,917	)	$	2,723,235

Income Statement for the Three Months Ended September 30, 2018 (unaudited):



	Parent Issuer			Guarantor			CCR Non-Guarantor		Non-Guarantor			Elimination			Consolidated
Revenue and Other Income:
Coal Revenue	$	—		$	221,097		$	73,700	$	—		$	—		$	294,797
Terminal Revenue	—			16,115			—		—			—			16,115
Freight Revenue	—			1,832			611		—			—			2,443
Miscellaneous Other Income	25,485			5,292			1,003		—			(20,802		)	10,978
Loss on Sale of Assets	—			(85		)	—		—			—			(85		)
Total Revenue and Other Income	25,485			244,251			75,314		—			(20,802		)	324,248
Costs and Expenses:
Operating and Other Costs	—			172,569			49,540		672			—			222,781
Depreciation, Depletion and Amortization	—			40,183			11,059		—			—			51,242
Freight Expense	—			1,832			611		—			—			2,443
Selling, General and Administrative Costs	—			14,627			3,899		—			—			18,526
Interest Expense, net	20,441			421			1,560		—			(1,560		)	20,862
Total Costs and Expenses	20,441			229,632			66,669		672			(1,560		)	315,854
Earnings (Loss) Before Income Tax	5,044			14,619			8,645		(672		)	(19,242		)	8,394
Income Tax Benefit	(690		)	—			—		—			—			(690		)
Net Income (Loss)	5,734			14,619			8,645		(672		)	(19,242		)	9,084
Less: Net Income Attributable to Noncontrolling Interest	—			—			—		—			3,350			3,350
Net Income (Loss) Attributable to CONSOL Energy Inc. Shareholders	$	5,734		$	14,619		$	8,645	$	(672	)	$	(22,592	)	$	5,734

Balance Sheet at December 31, 2018:



	Parent Issuer			Guarantor		CCR Non-Guarantor		Non-Guarantor		Elimination			Consolidated
Assets:
Current Assets:
Cash and Cash Equivalents	$	234,536		$	138	$	1,003	$	—	$	—		$	235,677
Restricted Cash	14,557			—		—		14,701		—			29,258
Accounts and Notes Receivable:
Trade	—			—		—		87,589		—			87,589
Other Receivables	24,352			15,935		1,068		—		—			41,355
Inventories	—			37,580		11,066		—		—			48,646
Prepaid Expenses and Other Assets	10,883			15,451		5,096		—		—			31,430
Total Current Assets	284,328			69,104		18,233		102,290		—			473,955
Property, Plant and Equipment:
Property, Plant and Equipment	—			3,891,873		946,298		—		—			4,838,171
Less-Accumulated Depreciation, Depletion and Amortization	—			2,204,896		526,747		—		—			2,731,643
Total Property, Plant and Equipment-Net	—			1,686,977		419,551		—		—			2,106,528
Other Assets:
Deferred Income Taxes	77,545			—		—		—		—			77,545
Affiliated Credit Facility	141,129			—		—		—		(141,129		)	—
Investment in Affiliates	605,981			—		—		—		(605,981		)	—
Other	40,760			47,031		14,908		—		—			102,699
Total Other Assets	865,415			47,031		14,908		—		(747,110		)	180,244
Total Assets	$	1,149,743		$	1,803,112	$	452,692	$	102,290	$	(747,110	)	$	2,760,727
Liabilities and Equity:
Current Liabilities:
Accounts Payable	$	(721	)	$	102,995	$	24,834	$	—	$	3,822		$	130,930
Accounts Payable (Recoverable)-Related Parties	(2,291		)	36,220		3,831		87,593		(125,353		)	—
Current Portion of Long-Term Debt	8,157			11,139		3,503		—		112,013			134,812
Other Accrued Liabilities	92,534			105,806		31,916		—		(3,822		)	226,434
Total Current Liabilities	97,679			256,160		64,084		87,593		(13,340		)	492,176
Long-Term Debt:	577,957			151,202		146,196		—		(141,129		)	734,226
Deferred Credits and Other Liabilities:
Postretirement Benefits Other Than Pensions	—			441,246		—		—		—			441,246
Pneumoconiosis Benefits	—			160,741		4,260		—		—			165,001
Asset Retirement Obligations	—			226,209		9,775		—		—			235,984
Workers’ Compensation	—			56,623		3,119		—		—			59,742
Salary Retirement	64,172			—		—		—		—			64,172
Other	—			16,051		518		—		—			16,569
Total Deferred Credits and Other Liabilities	64,172			900,870		17,672		—		—			982,714
Total CONSOL Energy Inc. Stockholders’ Equity	409,935			494,880		224,740		14,697		(734,317		)	409,935
Noncontrolling Interest	—			—		—		—		141,676			141,676
Total Liabilities and Equity	$	1,149,743		$	1,803,112	$	452,692	$	102,290	$	(747,110	)	$	2,760,727

Income Statement for the Nine Months Ended September 30, 2019 (unaudited):



	Parent Issuer			Guarantor			CCR Non-Guarantor			Non-Guarantor		Elimination			Consolidated
Revenue and Other Income:
Coal Revenue	$	—		$	738,499		$	246,166		$	—	$	—		$	984,665
Terminal Revenue	—			50,829			—			—		—			50,829
Freight Revenue	—			10,586			3,529			—		—			14,115
Miscellaneous Other Income (Loss)	130,278			(10,648		)	3,445			28,701		(115,102		)	36,674
Gain (Loss) on Sale of Assets	2,008			(17		)	(5		)	—		—			1,986
Total Revenue and Other Income	132,286			789,249			253,135			28,701		(115,102		)	1,088,269
Costs and Expenses:
Operating and Other Costs	—			552,672			164,542			1,196		—			718,410
Depreciation, Depletion and Amortization	—			117,606			33,639			—		—			151,245
Freight Expense	—			10,586			3,529			—		—			14,115
Selling, General and Administrative Costs	—			42,548			10,353			—		—			52,901
Loss on Debt Extinguishment	25,444			—			—			—		—			25,444
Interest Expense, net	45,030			715			4,495			—		—			50,240
Total Costs and Expenses	70,474			724,127			216,558			1,196		—			1,012,355
Earnings Before Income Tax	61,812			65,122			36,577			27,505		(115,102		)	75,914
Income Tax Benefit	(243		)	—			—			—		—			(243		)
Net Income	62,055			65,122			36,577			27,505		(115,102		)	76,157
Less: Net Income Attributable to Noncontrolling Interest	—			—			—			—		14,102			14,102
Net Income Attributable to CONSOL Energy Inc. Shareholders	$	62,055		$	65,122		$	36,577		$	27,505	$	(129,204	)	$	62,055

Income Statement for the Nine Months Ended September 30, 2018 (unaudited):



	Parent Issuer		Guarantor		CCR Non-Guarantor		Non-Guarantor			Elimination			Consolidated
Revenue and Other Income:
Coal Revenue	$	—	$	762,377	$	254,126	$	—		$	—		$	1,016,503
Terminal Revenue	—		47,995		—		—			—			47,995
Freight Revenue	—		28,330		9,444		—			—			37,774
Miscellaneous Other Income	186,475		21,893		4,240		—			(165,374		)	47,234
Gain on Sale of Assets	—		211		62		—			—			273
Total Revenue and Other Income	186,475		860,806		267,872		—			(165,374		)	1,149,779
Costs and Expenses:
Operating and Other Costs	—		539,412		159,126		2,240			—			700,778
Depreciation, Depletion and Amortization	—		121,905		33,769		—			—			155,674
Freight Expense	—		28,330		9,444		—			—			37,774
Selling, General and Administrative Costs	—		37,455		10,260		—			—			47,715
Loss on Debt Extinguishment	3,149		—		—		—			—			3,149
Interest Expense, net	61,495		1,916		5,295		—			(5,295		)	63,411
Total Costs and Expenses	64,644		729,018		217,894		2,240			(5,295		)	1,008,501
Earnings (Loss) Before Income Tax	121,831		131,788		49,978		(2,240		)	(160,079		)	141,278
Income Tax Expense	8,527		—		—		—			—			8,527
Net Income (Loss)	113,304		131,788		49,978		(2,240		)	(160,079		)	132,751
Less: Net Income Attributable to Noncontrolling Interest	—		—		—		—			19,447			19,447
Net Income (Loss) Attributable to CONSOL Energy Inc. Shareholders	$	113,304	$	131,788	$	49,978	$	(2,240	)	$	(179,526	)	$	113,304

Condensed Statement of Cash Flows for the Nine Months Ended September 30, 2019 (unaudited):



	Parent Issuer			Guarantor			CCR Non-Guarantor			Non-Guarantor		Elimination			Consolidated
Net Cash Provided by (Used in) Operating Activities	$	182,938		$	(27,260	)	$	67,505		$	—	$	—		$	223,183
Cash Flows from Investing Activities:
Capital Expenditures	—			(102,121		)	(29,354		)	—		—			(131,475		)
Proceeds from Sales of Assets	—			2,011			4			—		—			2,015
(Investments in), net of Distributions from, Subsidiaries	(146,896		)	173,436			—			—		(26,540		)	—
Net Cash (Used in) Provided by Investing Activities	(146,896		)	73,326			(29,350		)	—		(26,540		)	(129,460		)
Cash Flows from Financing Activities:
Payments on Finance Leases	—			(10,931		)	(2,853		)	—		—			(13,784		)
Net (Payments on) Proceeds from Related Party Long-Term Notes	(18,400		)	—			18,400			—		—			—
Proceeds from Term Loan A	26,250			—			—			—		—			26,250
Payments on Term Loan A	(7,500		)	—			—			—		—			(7,500		)
Payments on Term Loan B	(123,062		)	(688		)	—			—		—			(123,750		)
Buyback of Second Lien Notes	(35,048		)	—			—			—		—			(35,048		)
Proceeds from Asset-Backed Financing	3,757			—			—			—		—			3,757
Purchases of CCR Units	(369		)	—			—			—		—			(369		)
Repurchases of Common Stock	(31,318		)	—			—			—		—			(31,318		)
Distributions to Noncontrolling Interest	—			—			(43,214		)	—		26,540			(16,674		)
Shares/Units Withheld for Taxes	—			(3,865		)	(880		)	—		—			(4,745		)
Debt-Related Financing Fees	(20,628		)	—			—			—		—			(20,628		)
Net Cash Used in Financing Activities	$	(206,318	)	$	(15,484	)	$	(28,547	)	$	—	$	26,540		$	(223,809	)

Condensed Statement of Cash Flows for the Nine Months Ended September 30, 2018 (unaudited):



	Parent Issuer			Guarantor			CCR Non-Guarantor			Non-Guarantor		Elimination			Consolidated
Net Cash (Used in) Provided by Operating Activities	$	(45,278	)	$	280,396		$	95,134		$	—	$	—		$	330,252
Cash Flows from Investing Activities:
Capital Expenditures	—			(76,599		)	(20,256		)	—		—			(96,855		)
Proceeds from Sales of Assets	—			1,198			170			—		—			1,368
Distributions from, net of (Investments in), Subsidiaries	30,237			(3,959		)	—			—		(26,278		)	—
Net Cash Provided by (Used in) Investing Activities	30,237			(79,360		)	(20,086		)	—		(26,278		)	(95,487		)
Cash Flows from Financing Activities:
Payments on Finance Leases	—			(8,894		)	(2,125		)	—		—			(11,019		)
Net Proceeds from (Payments on) Related Party Long-Term Notes	29,583			—			(29,583		)	—		—			—
Payments on Term Loan A	(26,250		)	—			—			—		—			(26,250		)
Payments on Term Loan B	(3,000		)	—			—			—		—			(3,000		)
Buyback of Second Lien Notes	(20,524		)	—			—			—		—			(20,524		)
Purchases of CCR Units	(1,142		)	—			—			—		—			(1,142		)
Repurchases of Common Stock	(9,724		)	—			—			—		—			(9,724		)
Spin Distribution to CNX Resources	—			(18,234		)	—			—		—			(18,234		)
Distributions to Noncontrolling Interest	—			—			(43,041		)	—		26,278			(16,763		)
Shares/Units Withheld for Taxes	—			(2,011		)	(912		)	—		—			(2,923		)
Debt Related Financing Fees	(2,851		)	—			—			—		—			(2,851		)
Net Cash Used in Financing Activities	$	(33,908	)	$	(29,139	)	$	(75,661	)	$	—	$	26,278		$	(112,430	)

Statement of Comprehensive Income for the Three Months Ended September 30, 2019 (unaudited):



	Parent Issuer			Guarantor		CCR Non-Guarantor			Non- Guarantor		Elimination			Consolidated
Net Income	$	4,340		$	2,252	$	6,970		$	9,338	$	(15,876	)	$	7,024
Other Comprehensive Income (Loss):
Net Actuarial Gain (Loss)	2,457			—		(5		)	—		5			2,457
Unrecognized Loss on Derivatives	(261		)	—		—			—		—			(261		)
Other Comprehensive Income (Loss)	2,196			—		(5		)	—		5			2,196
Comprehensive Income	6,536			2,252		6,965			9,338		(15,871		)	9,220
Less: Comprehensive Income Attributable to Noncontrolling Interest	—			—		—			—		2,681			2,681
Comprehensive Income Attributable to CONSOL Energy Inc. Shareholders	$	6,536		$	2,252	$	6,965		$	9,338	$	(18,552	)	$	6,539

Statement of Comprehensive Income for the Three Months Ended September 30, 2018 (unaudited):



	Parent Issuer		Guarantor		CCR Non-Guarantor			Non- Guarantor			Elimination			Consolidated
Net Income (Loss)	$	5,734	$	14,619	$	8,645		$	(672	)	$	(19,242	)	$	9,084
Other Comprehensive Income (Loss):
Net Actuarial Gain (Loss)	4,177		—		(2		)	—			2			4,177
Other Comprehensive Income (Loss)	4,177		—		(2		)	—			2			4,177
Comprehensive Income (Loss)	9,911		14,619		8,643			(672		)	(19,240		)	13,261
Less: Comprehensive Income Attributable to Noncontrolling Interest	—		—		—			—			3,346			3,346
Comprehensive Income (Loss) Attributable to CONSOL Energy Inc. Shareholders	$	9,911	$	14,619	$	8,643		$	(672	)	$	(22,586	)	$	9,915

Statement of Comprehensive Income for the Nine Months Ended September 30, 2019 (unaudited):



	Parent Issuer			Guarantor		CCR Non-Guarantor			Non- Guarantor		Elimination			Consolidated
Net Income	$	62,055		$	65,122	$	36,577		$	27,505	$	(115,102	)	$	76,157
Other Comprehensive Income (Loss):
Net Actuarial Gain (Loss)	7,376			—		(11		)	—		11			7,376
Unrecognized Loss on Derivatives	(525		)	—		—			—		—			(525		)
Other Comprehensive Income (Loss)	6,851			—		(11		)	—		11			6,851
Comprehensive Income	68,906			65,122		36,566			27,505		(115,091		)	83,008
Less: Comprehensive Income Attributable to Noncontrolling Interest	—			—		—			—		14,097			14,097
Comprehensive Income Attributable to CONSOL Energy Inc. Shareholders	$	68,906		$	65,122	$	36,566		$	27,505	$	(129,188	)	$	68,911

Statement of Comprehensive Income for the Nine Months Ended September 30, 2018 (unaudited):



	Parent Issuer		Guarantor		CCR Non-Guarantor			Non- Guarantor			Elimination			Consolidated
Net Income (Loss)	$	113,304	$	131,788	$	49,978		$	(2,240	)	$	(160,079	)	$	132,751
Other Comprehensive Income (Loss):
Net Actuarial Gain (Loss)	12,356		—		(6		)	—			6			12,356
Other Comprehensive Income (Loss)	12,356		—		(6		)	—			6			12,356
Comprehensive Income (Loss)	125,660		131,788		49,972			(2,240		)	(160,073		)	145,107
Less: Comprehensive Income Attributable to Noncontrolling Interest	—		—		—			—			19,444			19,444
Comprehensive Income (Loss) Attributable to CONSOL Energy Inc. Shareholders	$	125,660	$	131,788	$	49,972		$	(2,240	)	$	(179,517	)	$	125,663

NOTE 18—RELATED PARTY TRANSACTIONS:

Transactions with the Company's Former Parent (2017)

Transition Services Agreements

The Company entered into a transition services agreement and certain other agreements in connection with the separation and distribution agreement with its former parent to cover certain continued corporate services provided by the Company and its former parent to each other following the completion of the separation and distribution. In connection with the separation and distribution, the Company began to set up its own corporate functions, and pursuant to the transition services agreement, the Company's former parent provided various corporate support services, including certain accounting, human resources, information technology, office and building, risk, security, tax and treasury, building security and tax services, as well as certain regulatory compliance services required during the period in which the Company remained a majority-owned subsidiary of its former parent. The charges associated with these services were not material during the three and nine months ended September 30, 2019 and 2018, and are consistent with expenses that the Company's former parent has historically allocated or incurred with respect to such services. The transition services agreement with the Company's former parent expired in February 2019.

Former Parent Receivables and Payables

The Company had a receivable from its former parent of $6,666 and $11,788, of which $6,666 and $5,500 was recorded in Other Receivables on the Consolidated Balance Sheets at September 30, 2019 and December 31, 2018, respectively. Additionally, $6,288 was included in Other Assets on the Consolidated Balance Sheet at December 31, 2018. These items relate to the reimbursement of the one-time transaction costs as well as other reimbursements per the terms of the separation and distribution agreement.

During the year ended December 31, 2018, the Company paid its former parent $18,234 related to the final settlement of shared, spin-related fees. Per the separation and distribution agreement, these costs were split equally by the two companies. These costs consisted of consulting and professional fees associated with preparing for and executing the separation and distribution, as well as various other items.

CONSOL Coal Resources LP

CONSOL Energy, certain of its subsidiaries and the Partnership are party to an Omnibus Agreement, dated September 30, 2016, as amended on November 28, 2017 (the “Omnibus Agreement”). Under the Omnibus Agreement, CONSOL Energy provides the Partnership with certain services in exchange for payments by the Partnership for those services.

On November 28, 2017, the Company entered into an Affiliated Company Credit Agreement with the Partnership and certain of its subsidiaries (the Partnership Credit Parties) under which the Company provides as lender a revolving credit facility in an aggregate principal amount of up to $275 million to the Partnership Credit Parties. In connection with the completion of the separation, the Partnership drew an initial $201 million, the net proceeds of which were used to repay outstanding amounts under CCR's $400 million senior secured revolving credit facility with certain lenders and PNC Bank, National Association (“PNC”), as administrative agent (the “Original CCR Credit Facility”), and to provide working capital for the Partnership following the separation and for other general corporate purposes. The Original CCR Credit Facility was then terminated.

On March 28, 2019, the Affiliated Company Credit Agreement was amended to extend the maturity date from February 27, 2023 to December 28, 2024. Interest accrues at a rate ranging from 3.75% to 4.75%, subject to the Partnership's net leverage ratio. For the three months ended September 30, 2019 and 2018, $2,003 and $1,832 of interest expense is included in the Consolidated Statements of Income, respectively. For the nine months ended September 30, 2019 and 2018, $5,770 and $5,942 of interest expense is included in the Consolidated Statements of Income, respectively. The collateral obligations under the Affiliated Company Credit Agreement generally mirror the Original CCR Credit Facility, as does the list of entities that will act as guarantors thereunder. The Affiliated Company Credit Agreement is subject to financial covenants relating to a maximum first lien gross leverage ratio and a maximum total net leverage ratio, which will be calculated on a consolidated basis for the Partnership and its restricted subsidiaries at the end of each fiscal quarter. The Partnership was in compliance with each of these financial covenants at September 30, 2019. The Affiliated Company Credit Agreement also contains a number of customary affirmative covenants and negative covenants, including limitations on the ability of the Partnership to incur additional indebtedness, grant liens, and make investments, acquisitions, dispositions, restricted payments, and prepayments of junior indebtedness (subject to certain limited exceptions).

CCR is a party to a number of other agreements with CONSOL Energy, or its subsidiaries, that are described in detail in the section titled “Agreements with Affiliates” in Item 13 of CCR’s Form 10-K filed on February 8, 2019.

In August 2019, upon payment of the cash distribution with respect to the quarter ended June 30, 2019, the financial requirements for the conversion of all CCR subordinated units were satisfied. As a result, all 11,611,067 of the CCR subordinated units owned entirely by CONSOL Energy Inc. were converted into CCR common units on a one-for-one basis. The conversion did not impact the amount of the cash distribution paid or the total number of CCR's outstanding units representing limited partner interests.

Charges for services from the Company to CCR include the following:



	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2019		2018		2019		2018
Operating and Other Costs	$	838	$	725	$	2,368	$	2,172
Selling, General and Administrative Costs	1,902		2,345		6,932		5,943
Total Services from CONSOL Energy	$	2,740	$	3,070	$	9,300	$	8,115

Operating and Other Costs include pension service costs and insurance expenses. Selling, General and Administrative Costs include charges for incentive compensation, an annual administrative support fee and reimbursement for the provision of certain management and operating services provided by the Company.

At September 30, 2019 and December 31, 2018, CCR had a net payable to the Company in the amount of $2,882 and $3,831, respectively. This payable includes reimbursements for business expenses, executive fees, stock-based compensation and other items under the Omnibus Agreement.

In May 2019, CONSOL Energy Inc.'s Board of Directors approved an expansion of the stock, unit and debt repurchase program (see Note 19 - Stock, Unit and Debt Repurchase). The program expansion allows the Company to use up to $50 million of the program to purchase CCR's outstanding common units in the open market. For the three and nine months ended September 30, 2019, 19,413 and 26,297 of the Partnership's common units were purchased under this program at an average price of $12.88 and $14.05 per unit, respectively. During the three and nine months ended September 30, 2018, 77,536 of the Partnership's common units were purchased under this program at an average price of $17.86 per unit.

NOTE 19—STOCK, UNIT AND DEBT REPURCHASE:

In December 2017, CONSOL Energy’s Board of Directors approved a program to repurchase, from time to time, the Company’s outstanding shares of common stock or its 11.00% Senior Secured Second Lien Notes due 2025, in an aggregate amount of up to $50 million through the period ending June 30, 2019. The program was subsequently amended by CONSOL Energy’s Board of Directors in July 2018 to allow up to $100 million of repurchases of the Company’s common stock or its 11.00% Senior Secured Second Lien Notes due 2025, subject to certain limitations in the Company’s current credit agreement and the tax matters agreement (TMA). The Company’s Board of Directors also authorized the Company to use up to $25 million of the program to purchase CONSOL Coal Resources LP’s outstanding common units in the open market. In May 2019, CONSOL Energy's Board of Directors approved an expansion of the program in the amount of $75 million, bringing the aggregate limit of the program to $175 million. The May 2019 expansion also increased the aggregate limit of the amount of CCR's common units that can be purchased under the program to $50 million, which is consistent with the Company's credit facility covenants that prohibit the Company from using more than $50 million for the purchase of CCR's outstanding common units. The Company's Board of Directors also approved extending the termination date of the program, from June 30, 2019 to June 30, 2020. In July 2019, CONSOL Energy's Board of Directors approved an expansion of the program in the amount of $25 million, bringing the aggregate limit of the Company's stock, unit and debt repurchase program to $200 million.

Under the terms of the program, CONSOL Energy is permitted to make repurchases in the open market, in privately negotiated transactions, accelerated repurchase programs or in structured share repurchase programs. CONSOL Energy is also authorized to enter into one or more 10b5-1 plans with respect to any of the repurchases. Any repurchases of common stock, notes or units are to be funded from available cash on hand or short-term borrowings. The program does not obligate CONSOL Energy to acquire any particular amount of its common stock, notes or units, and can be modified or suspended at any time at the Company’s discretion. The program is conducted in compliance with applicable legal requirements and within the limits imposed by any credit agreement, receivables purchase agreement, indenture, or the TMA, and is subject to market conditions and other factors.

During the three and nine months ended September 30, 2019, the Company repurchased approximately $15,728 and $35,048 of its 11.00% Senior Secured Second Lien Notes due 2025, respectively. Also during the three and nine months ended September 30, 2019, 1,366,054 and 1,717,497 shares of the Company's common stock were repurchased and retired at an average price of $16.97 and $19.06 per share, respectively, and 19,413 and 26,297 of the Partnership's common units were purchased at an average price of $12.88 and $14.05 per unit, respectively.

During the nine months ended September 30, 2018, the Company repurchased approximately $20,524 of its 11.00% Senior Secured Second Lien Notes due 2025. During the three and nine months ended September 30, 2018, 190,272 and 281,272 shares of the Company's common stock were repurchased and retired at an average price of $41.93 and $40.03 per share, respectively, and 77,536 of the Partnership's common units were purchased at an average price of $17.86 per unit.

NOTE 20—SUBSEQUENT EVENTS:

On October 30, 2019, the Board of Directors of CCR's general partner declared a cash distribution of $0.5125 per unit to CCR's limited partner unitholders and the holder of the general partner interest. The cash distribution will be paid on November 15, 2019 to the unitholders of record at the close of business on November 11, 2019.

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

OF OPERATIONS

You should read the following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) in conjunction with the Consolidated Financial Statements and corresponding notes included elsewhere in this Form 10-Q. In addition, this Form 10-Q report should be read in conjunction with the Consolidated Financial Statements for the three-year period ended December 31, 2018 included in CONSOL Energy Inc.'s Form 10-K, filed on February 8, 2019. This MD&A contains forward-looking statements and the matters discussed in these forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those projected or implied in the forward-looking statements. Please see “Risk Factors” and “Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.

All amounts discussed are in millions of U.S. dollars, unless otherwise indicated.

The Separation and Distribution

On November 28, 2017, CONSOL Energy was separated from its former parent to become an independent, publicly-traded coal company. As part of the separation, the following assets of the Company's former parent were transferred to CONSOL Energy: (i) its interest in the Pennsylvania Mining Complex and certain related coal assets, (ii) its ownership interest in CNX Coal Resources LP, which owns a 25% undivided interest in the PAMC, (iii) the CONSOL Marine Terminal and, (iv) undeveloped coal reserves (Greenfield Reserves) located in the Northern Appalachian, Central Appalachian and Illinois basins, and certain related coal assets and liabilities. Following the separation, shares of the Company's common stock began “regular-way” trading on the New York Stock Exchange on November 29, 2017 under the symbol “CEIX”.

Our Business

We are a leading, low-cost producer of high-quality bituminous coal, focused on the extraction and preparation of coal in the Appalachian Basin due to our ability to efficiently produce and deliver large volumes of high-quality coal at competitive prices, the strategic location of our mines, and the industry experience of our management team. Our predecessors have been mining coal, primarily in the Appalachian Basin, since 1864.

Coal from the PAMC is valued because of its high energy content (as measured in Btu per pound), relatively low levels of sulfur and other impurities, and strong thermoplastic properties that enable it to be used in metallurgical as well as thermal applications. We take advantage of these desirable quality characteristics and our extensive logistical network, which is directly served by both the Norfolk Southern and CSX railroads, to aggressively market our product to a broad base of strategically selected, top-performing power plant customers in the eastern United States. We also capitalize on the operational synergies afforded by the CONSOL Marine Terminal to export our coal to thermal and metallurgical end-users in Europe, Asia, South America, and Africa, as well as Canada.

Our operations, including the PAMC and the CONSOL Marine Terminal, have consistently generated strong cash flows. As of December 31, 2018, the PAMC controls 698.5 million tons of high-quality Pittsburgh seam reserves, enough to allow for approximately 25 years of full-capacity production. In addition, we own or control approximately 1.6 billion tons of Greenfield Reserves located in the Northern Appalachian (“NAPP”), the Central Appalachian (“CAPP”) and the Illinois Basins (“ILB”), which we believe could provide a solid growth platform in the future. Our vision is to maximize cash flow generation through the safe, compliant, and efficient operation of this core asset base, while strategically reducing debt, returning capital through share buybacks or dividends, and, when prudent, allocating capital toward compelling growth opportunities.

Our core businesses consist of our:

•

Pennsylvania Mining Complex: The PAMC, which includes the Bailey Mine, the Enlow Fork Mine, the Harvey Mine and the Central Preparation Plant, has extensive high-quality coal reserves. We mine our reserves from the Pittsburgh No. 8 Coal Seam, which is a large contiguous formation of uniform, high-Btu coal that is ideal for high productivity, low-cost longwall operations. The design of the PAMC is optimized to produce large quantities of coal on a cost-efficient basis. We are able to sustain high production volumes at comparatively low operating costs due to, among other things, our technologically advanced longwall mining systems, logistics infrastructure and safety. All of our mines utilize longwall mining, which is a highly automated underground mining technique that produces large volumes of coal at lower costs compared to other underground mining methods. We own a 75% undivided interest in the PAMC, and the remaining 25% is owned by CCR, as discussed below.


•	CCR Ownership: CONSOL Energy owns, directly or indirectly, through CCR's general partner, 61.5% of the partnership, which is comprised of a 1.7% general partner interest and a 59.8% limited partner interest. At September 30, 2019, CCR's assets included a 25% undivided interest in, and full operational control over, the PAMC.


•	CONSOL Marine Terminal: Through our subsidiary CONSOL Marine Terminals LLC, we provide coal export terminal services through the Port of Baltimore. The terminal can either store coal or load coal directly into vessels from rail cars. It is also the only major east coast United States coal terminal served by two railroads, Norfolk Southern Corporation and CSX Transportation Inc.


•	Itmann Mine: Construction of the Itmann Mine, located in Wyoming County, West Virginia, began in the second half of 2019; full production is expected in 2021 upon the completion of a new preparation plant. The Company anticipates 600+ thousand tons per year of high-quality, low-vol coking coal production.


•	Greenfield Reserves: We own approximately 1.6 billion tons of high-quality, undeveloped coal reserves located in NAPP, CAPP, and the ILB.

These assets and the diverse markets they serve provide robust flexibility for generating cash across a wide variety of demand and pricing scenarios. This flexibility begins with the low-cost structure and optionality afforded by the PAMC. The three mines at the PAMC, which include the Bailey, Enlow Fork, and Harvey mines, produce coal from the Pittsburgh No. 8 Coal Seam using longwall mining, a highly automated underground mining technique that produces large volumes of coal at lower costs compared to alternative mining methods. These three mines collectively operate five longwalls, and the production from all three mines is processed at a single, centralized preparation plant, which is connected via conveyor belts to each mine. The Central Preparation Plant, which can clean and process up to 8,200 raw tons of coal per hour, provides economies of scale while also maintaining the ability to segregate and blend coal based on quality. This infrastructure enables us to tailor our production levels and quality specifications to meet market demands. It also results in a highly productive, low-cost operation as compared to other NAPP coal mines. The PAMC is the most productive and efficient coal mining complex in NAPP. For the year ending December 31, 2018, productivity averaged 7.62 tons of coal per employee hour, compared with an average of 5.18 tons per employee hour for all other currently operating NAPP longwalls. Our high productivity helps drive a low cost structure. Our efficiency strengthens our margins throughout the commodity cycle, and has allowed us to continue to generate positive margins even in challenging pricing environments.

Coal from the PAMC is versatile in that it can be sold either domestically or abroad, in the thermal coal market or as a crossover product in the high-volatile metallurgical coal market. We have a well-established and diverse blue chip customer base, comprised primarily of domestic electric-power-producing companies located in the eastern United States. For 2020 and 2021, our contracted position, as of November 5, 2019, is at 82% and 36%, respectively, assuming a 27 million ton annual coal sales volume. We believe our committed and contracted position is well-balanced in hedging against market downside risk while allowing us to continue to build out our customer portfolio strategically and opportunistically as the market evolves.

Q3 2019 Highlights:


•	Strongest third quarter production in the history of the PAMC


•	Net income of $7 million


•	Net payments, including premiums, on total debt of $21.5 million during the quarter


•	Repurchased approximately 5% of outstanding CONSOL Energy Inc. common shares for $23 million

How We Evaluate Our Operations

Our management team uses a variety of financial and operating metrics to analyze our performance. These metrics are significant factors in assessing our operating results and profitability. The metrics include: (i) coal production, sales volumes and average revenue per ton; (ii) cost of coal sold, a non-GAAP financial measure; (iii) cash cost of coal sold, a non-GAAP financial measure; and (iv) average cash margin per ton, an operating ratio derived from non-GAAP financial measures.

Cost of coal sold, cash cost of coal sold, and average cash margin per ton normalize the volatility contained within comparable GAAP measures by adjusting certain non-operating or non-cash transactions. Each of these non-GAAP metrics are used as supplemental financial measures by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:


•	our operating performance as compared to the operating performance of other companies in the coal industry, without regard to financing methods, historical cost basis or capital structure;


•	the ability of our assets to generate sufficient cash flow;


•	our ability to incur and service debt and fund capital expenditures;


•	the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities; and


•	the attractiveness of capital projects and acquisitions and the overall rates of return on alternative investment opportunities.

These non-GAAP financial measures should not be considered an alternative to total costs, net income, operating cash flow, or any other measure of financial performance or liquidity presented in accordance with GAAP. These measures exclude some, but not all, items that affect net income or net cash, and these measures and the way we calculate them may vary from those of other companies. As a result, the items presented below may not be comparable to similarly titled measures of other companies.

Reconciliation of Non-GAAP Financial Measures

We evaluate our cost of coal sold and cash cost of coal sold on a cost per ton basis. Our cost of coal sold per ton represents our costs of coal sold divided by the tons of coal we sell. We define cost of coal sold as operating and other production costs related to produced tons sold, along with changes in coal inventory, both in volumes and carrying values. The cost of coal sold per ton includes items such as direct operating costs, royalty and production taxes, direct administration costs, and depreciation, depletion and amortization costs on production assets. Our costs exclude any indirect costs, such as selling, general and administrative costs, freight expenses, interest expenses, depreciation, depletion and amortization costs on non-production assets and other costs not directly attributable to the production of coal. The GAAP measure most directly comparable to cost of coal sold is total costs and expenses. The cash cost of coal sold includes cost of coal sold less depreciation, depletion and amortization cost on production assets. The GAAP measure most directly comparable to cash cost of coal sold is total costs and expenses.

The following table presents a reconciliation of cost of coal sold and cash cost of coal sold to total costs and expenses, the most directly comparable GAAP financial measure, on a historical basis, for each of the periods indicated (in thousands).



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Total Costs and Expenses	$	323,907		$	315,854		$	1,012,355		$	1,008,501
Freight Expense	(3,599		)	(2,443		)	(14,115		)	(37,774		)
Selling, General and Administrative Costs	(14,690		)	(18,526		)	(52,901		)	(47,715		)
Loss on Debt Extinguishment	(801		)	—			(25,444		)	(3,149		)
Interest Expense, net	(15,598		)	(20,862		)	(50,240		)	(63,411		)
Other Costs (Non-Production)	(22,786		)	(30,801		)	(76,856		)	(103,513		)
Depreciation, Depletion and Amortization (Non-Production)	(12,105		)	(9,175		)	(23,111		)	(27,098		)
Cost of Coal Sold	$	254,328		$	234,047		$	769,688		$	725,841
Depreciation, Depletion and Amortization (Production)	(42,265		)	(42,067		)	(128,134		)	(128,576		)
Cash Cost of Coal Sold	$	212,063		$	191,980		$	641,554		$	597,265

We define average cash margin per ton sold as average coal revenue per ton, net of average cash cost of coal sold per ton. The GAAP measure most directly comparable to average cash margin per ton sold is total coal revenue.

The following table presents a reconciliation of average cash margin per ton sold to total coal revenue, the most directly comparable GAAP financial measure, on a historical basis, for each of the periods indicated (in thousands, except per ton information).



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Total Coal Revenue	$	301,542		$	294,797		$	984,665		$	1,016,503
Operating and Other Costs	234,849			222,781			718,410			700,778
Less: Other Costs (Non-Production)	(22,786		)	(30,801		)	(76,856		)	(103,513		)
Total Cash Cost of Coal Sold	212,063			191,980			641,554			597,265
Add: Depreciation, Depletion and Amortization	54,370			51,242			151,245			155,674
Less: Depreciation, Depletion and Amortization (Non-Production)	(12,105		)	(9,175		)	(23,111		)	(27,098		)
Total Cost of Coal Sold	$	254,328		$	234,047		$	769,688		$	725,841
Total Tons Sold (in millions)	6.5			6.2			20.6			20.7
Average Revenue per Ton Sold	$	46.59		$	47.21		$	47.84		$	49.11
Average Cash Cost of Coal Sold per Ton	32.78			30.88			31.16			28.87
Depreciation, Depletion and Amortization Costs per Ton Sold	6.51			6.60			6.23			6.20
Average Cost of Coal Sold per Ton	39.29			37.48			37.39			35.07
Average Margin per Ton Sold	7.30			9.73			10.45			14.04
Add: Depreciation, Depletion and Amortization Costs per Ton Sold	6.51			6.60			6.23			6.20
Average Cash Margin per Ton Sold	$	13.81		$	16.33		$	16.68		$	20.24

Three Months Ended September 30, 2019 Compared with the Three Months Ended September 30, 2018

Net Income Attributable to CONSOL Energy Inc. Shareholders

CONSOL Energy reported net income attributable to CONSOL Energy Inc. shareholders of $4 million for the three months ended September 30, 2019, compared to net income attributable to CONSOL Energy Inc. shareholders of $6 million for the three months ended September 30, 2018.

CONSOL Energy consists of the Pennsylvania Mining Complex, as well as various corporate and other business activities that are not allocated to the PAMC. The other business activities include the CONSOL Marine Terminal, the Greenfield Reserves, closed and idle mine activities, selling, general and administrative activities, and income taxes, as well as various other non-operated activities.

PAMC ANALYSIS:

The PAMC division's principal activities consist of mining, preparation and marketing of thermal coal, sold primarily to power generators. The division also includes selling, general and administrative costs, as well as various other activities assigned to the PAMC division, but not included in the cost components on a per unit basis.

The PAMC division had earnings before income tax of $31 million for the three months ended September 30, 2019, compared to earnings before income tax of $38 million for the three months ended September 30, 2018. Variances are discussed below.



	For the Three Months Ended
	September 30,
(in millions)	2019		2018		Variance
Revenue:
Coal Revenue	$	302	$	295	$	7
Freight Revenue	4		2		2
Miscellaneous Other Income	4		4		—
Total Revenue and Other Income	310		301		9
Cost of Coal Sold:
Operating Costs	212		192		20
Depreciation, Depletion and Amortization	42		42		—
Total Cost of Coal Sold	254		234		20
Other Costs:
Other Costs	3		8		(5		)
Depreciation, Depletion and Amortization	4		2		2
Total Other Costs	7		10		(3		)
Freight Expense	4		2		2
Selling, General and Administrative Costs	14		17		(3		)
Total Costs and Expenses	279		263		16
Earnings Before Income Tax	$	31	$	38	$	(7	)

Coal Production

The table below presents total tons produced (in thousands) from the Pennsylvania Mining Complex for the periods indicated:



	For the Three Months Ended September 30,
Mine	2019	2018	Variance
Bailey	2,782	2,394	388
Enlow Fork	2,384	2,584	(200	)
Harvey	1,326	1,394	(68	)
Total	6,492	6,372	120

Coal production was 6.5 million tons for the three months ended September 30, 2019, compared to 6.4 million tons for the three months ended September 30, 2018. Coal production increased as a result of one fewer longwall move in the current period compared to the year-ago quarter, partially offset by adverse geological conditions and other operational delays at the Enlow Fork and Harvey mines. The PAMC achieved record-high third quarter production during the three months ended September 30, 2019.

Coal Operations

The PAMC division's coal revenue and cost components on a per unit basis for the three months ended September 30, 2019 and 2018 are detailed in the table below. The PAMC division's operations also include various costs such as selling, general and administrative, freight and other costs not included in the unit cost analysis because these costs are not directly associated with coal production.



	For the Three Months Ended September 30,
	2019		2018		Variance
Total Tons Sold (in millions)	6.5		6.2		0.3
Average Revenue per Ton Sold	$	46.59	$	47.21	$	(0.62	)

Average Cash Cost of Coal Sold per Ton ⁽¹⁾	$	32.78	$	30.88	$	1.90
Depreciation, Depletion and Amortization Costs per Ton Sold (Non-Cash Cost)	6.51		6.60		(0.09		)
Average Cost of Coal Sold per Ton	$	39.29	$	37.48	$	1.81
Average Margin per Ton Sold	$	7.30	$	9.73	$	(2.43	)
Add: Depreciation, Depletion and Amortization Costs per Ton Sold	6.51		6.60		(0.09		)
Average Cash Margin per Ton Sold ⁽¹⁾	$	13.81	$	16.33	$	(2.52	)

(1) Average cash cost of coal sold per ton is a non-GAAP measure and average cash margin per ton sold is an operating ratio derived from non-GAAP measures. See “How We Evaluate Our Operations - Reconciliation of Non-GAAP Financial Measures” for a reconciliation of non-GAAP measures to the most directly comparable GAAP measures.

Coal Revenue

Coal revenue was $302 million for the three months ended September 30, 2019, compared to $295 million for the three months ended September 30, 2018. Total sales tons increased in the period-to-period comparison to meet market demand. The decrease in the average revenue per ton sold was mainly driven by lower domestic netback contract pricing.

Freight Revenue and Freight Expense

Freight revenue is the amount billed to customers for transportation costs incurred. This revenue is based on the weight of coal shipped, negotiated freight rates and method of transportation, primarily rail, used by the customers to which the Company contractually provides transportation services. Freight revenue is completely offset by freight expense. Freight revenue and freight expense were both $4 million for the three months ended September 30, 2019, compared to $2 million for the three months ended September 30, 2018. The $2 million increase was due to increased shipments to customers where the Company was contractually obligated to provide transportation services.

Cost of Coal Sold

Cost of coal sold is comprised of operating costs related to produced tons sold, along with changes in both the volumes and carrying values of coal inventory. The costs of coal sold include items such as direct operating costs, royalties and production taxes, direct administration costs and depreciation, depletion, and amortization costs on production assets. Total cost of coal sold was $254 million for the three months ended September 30, 2019, or $20 million higher than the $234 million for the three months ended September 30, 2018. Total costs per ton sold were $39.29 per ton for the three months ended September 30, 2019, compared to $37.48 per ton for the three months ended September 30, 2018. The increase in the total cost of coal sold was primarily driven by non-typical challenges faced in the current period including a roof fall and equipment breakdowns. These geological and equipment-related issues resulted in higher mine maintenance and project expenses.

Other Costs

Other costs include items that are assigned to the PAMC division but are not included in unit costs, such as coal reserve holding costs and purchased coal costs. Total other costs decreased $3 million in the three months ended September 30, 2019 compared to the three months ended September 30, 2018. The decrease was primarily attributable to additional costs incurred in the year-ago quarter related to discretionary employee benefit expenses.

Selling, General, and Administrative Costs

At September 30, 2019, CONSOL Energy was party to a service agreement with CCR that required CONSOL Energy to provide certain selling, general and administrative services to CCR. These services are paid monthly based on an agreed-upon fixed fee that is reset at least annually. See Note 18 - Related Party Transactions of the Notes to the Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information. An additional portion of CONSOL Energy's selling, general and administrative costs are allocated to the PAMC division, outside of the service agreement, based on a percentage of total revenue and a percentage of total projected capital expenditures. The amount of selling, general and administrative costs related to the PAMC division was $14 million for the three months ended September 30, 2019, compared to $17 million for the three months ended September 30, 2018. The $3 million decrease in the period-to-period comparison was primarily related to lower short-term incentive compensation.

OTHER ANALYSIS:

The other division includes revenue and expenses from various corporate and diversified business activities that are not allocated to the PAMC division. The diversified business activities include coal terminal operations, closed and idle mine activities, selling, general and administrative activities, interest expense and income taxes, as well as various other non-operated activities.

Other business activities had a loss before income tax of $22 million for the three months ended September 30, 2019, compared to a loss before income tax of $30 million for the three months ended September 30, 2018. Variances are discussed below.



	For the Three Months Ended
	September 30,
(in millions)	2019			2018			Variance
Revenue:
Terminal Revenue	$	16		$	16		$	—
Miscellaneous Other Income	7			7			—
Gain on Sale of Assets	1			—			1
Total Revenue and Other Income	24			23			1
Other Costs and Expenses:
Operating and Other Costs	20			23			(3		)
Depreciation, Depletion and Amortization	8			7			1
Selling, General and Administrative Costs	1			2			(1		)
Loss on Debt Extinguishment	1			—			1
Interest Expense, net	16			21			(5		)
Total Other Costs and Expenses	46			53			(7		)
Loss Before Income Tax	$	(22	)	$	(30	)	$	8

Terminal Revenue

Miscellaneous Other Income

Miscellaneous other income was $7 million for the three months ended September 30, 2019 and 2018.



	For the Three Months Ended September 30,
(in millions)	2019		2018		Variance
Royalty Income - Non-Operated Coal	$	5	$	5	$	—
Property Easements and Option Income	—		1		(1		)
Rental Income	1		1		—
Interest Income	1		—		1
Total Miscellaneous Other Income	$	7	$	7	$	—

Operating and Other Costs

Operating and other costs were $20 million for the three months ended September 30, 2019, compared to $23 million for the three months ended September 30, 2018. Operating and other costs decreased in the period-to-period comparison due to the following items:



	For the Three Months Ended September 30,
(in millions)	2019		2018		Variance
Terminal Operating Costs	$	6	$	7	$	(1	)
Employee-Related Legacy Liability Expense	9		11		(2		)
Lease Rental Expense	1		—		1
Coal Reserve Holding Costs	—		1		(1		)
Closed and Idle Mines	1		1		—
Litigation Expense	—		1		(1		)
Other	3		2		1
Total Operating and Other Costs	$	20	$	23	$	(3	)

Depreciation, Depletion and Amortization

There were no material changes in depreciation, depletion and amortization costs in the period-to-period comparison.

Selling, General and Administrative Costs

Loss on Debt Extinguishment

Loss on debt extinguishment of $1 million was recognized in the three months ended September 30, 2019 due to the open market repurchases of the Company's 11.00% Senior Secured Second Lien Notes due 2025. No loss on debt extinguishment was recognized in the three months ended September 30, 2018.

Interest Expense, net

Interest expense, net of amounts capitalized, is comprised of interest on the Company's Senior Secured Credit Facilities, the 11.00% Senior Secured Second Lien Notes and the 5.75% MEDCO Revenue Bonds. Interest expense, net of amounts capitalized, decreased $5 million in the period-to-period comparison, primarily related to the $110 million required repayment on the Term Loan B Facility, as well as the refinancing of the Company's Revolving Credit Facility, Term Loan A Facility and Term Loan B Facility, both of which occurred during the first quarter of 2019. The decrease in interest expense, net of amounts capitalized, is also attributable to current period repurchases of the Company's 11.00% Senior Secured Second Lien Notes (see Note 19 - Stock, Unit and Debt Repurchase of the Notes to the Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information).

Nine Months Ended September 30, 2019 Compared with the Nine Months Ended September 30, 2018

Net Income Attributable to CONSOL Energy Inc. Shareholders

CONSOL Energy reported net income attributable to CONSOL Energy Inc. shareholders of $62 million for the nine months ended September 30, 2019, compared to net income attributable to CONSOL Energy Inc. shareholders of $113 million for the nine months ended September 30, 2018.

PAMC ANALYSIS:

The PAMC division had earnings before income tax of $156 million for the nine months ended September 30, 2019, compared to earnings before income tax of $221 million for the nine months ended September 30, 2018. Variances are discussed below.



	For the Nine Months Ended
	September 30,
(in millions)	2019		2018		Variance
Revenue:
Coal Revenue	$	985	$	1,017	$	(32	)
Freight Revenue	14		38		(24		)
Miscellaneous Other Income	14		17		(3		)
Total Revenue and Other Income	1,013		1,072		(59		)
Cost of Coal Sold:
Operating Costs	642		597		45
Depreciation, Depletion and Amortization	128		129		(1		)
Total Cost of Coal Sold	770		726		44
Other Costs:
Other Costs	15		38		(23		)
Depreciation, Depletion and Amortization	8		6		2
Total Other Costs	23		44		(21		)
Freight Expense	14		38		(24		)
Selling, General and Administrative Costs	50		43		7
Total Costs and Expenses	857		851		6
Earnings Before Income Tax	$	156	$	221	$	(65	)

Coal Production

The table below presents total tons produced (in thousands) from the Pennsylvania Mining Complex for the periods indicated:



	For the Nine Months Ended September 30,
Mine	2019	2018	Variance
Bailey	8,955	9,659	(704	)
Enlow Fork	7,676	7,386	290
Harvey	3,933	3,709	224
Total	20,564	20,754	(190	)

Coal production was 20.6 million tons for the nine months ended September 30, 2019, compared to 20.8 million tons for the nine months ended September 30, 2018. Coal production decreased slightly, mainly due to reduced production at the Bailey mine resulting from one additional longwall move and other operational delays. This was partially offset by increased production at the Enlow Fork mine, as geological conditions improved throughout the first half of 2019 compared to the year-ago period, and at the Harvey mine.

Coal Operations

The PAMC division's coal revenue and cost components on a per unit basis for the nine months ended September 30, 2019 and 2018 are detailed in the table below. The PAMC division's operations also include various costs such as selling, general and administrative, freight and other costs not included in the unit cost analysis because these costs are not directly associated with coal production.



	For the Nine Months Ended September 30,
	2019		2018		Variance
Total Tons Sold (in millions)	20.6		20.7		(0.1		)
Average Revenue per Ton Sold	$	47.84	$	49.11	$	(1.27	)

Average Cash Cost of Coal Sold per Ton ⁽¹⁾	$	31.16	$	28.87	$	2.29
Depreciation, Depletion and Amortization Costs per Ton Sold (Non-Cash Cost)	6.23		6.20		0.03
Average Cost of Coal Sold per Ton	$	37.39	$	35.07	$	2.32
Average Margin per Ton Sold	$	10.45	$	14.04	$	(3.59	)
Add: Depreciation, Depletion and Amortization Costs per Ton Sold	6.23		6.20		0.03
Average Cash Margin per Ton Sold ⁽¹⁾	$	16.68	$	20.24	$	(3.56	)

Coal Revenue

Coal revenue was $985 million for the nine months ended September 30, 2019, compared to $1,017 million for the nine months ended September 30, 2018. The $32 million decrease was primarily attributable to a $1.27 lower average sales price per ton sold in the 2019 period, mainly driven by lower domestic netback contract pricing compared to the year-ago period, as well as a slight decrease in tons sold. This decrease was partially offset by an increase in prices the Company received for its export coal.

Freight Revenue and Freight Expense

Freight revenue is the amount billed to customers for transportation costs incurred. This revenue is based on the weight of coal shipped, negotiated freight rates and method of transportation, primarily rail, used by the customers to which the Company contractually provides transportation services. Freight revenue is completely offset by freight expense. Freight revenue and freight expense were both $14 million for the nine months ended September 30, 2019, compared to $38 million for the nine months ended September 30, 2018. The $24 million decrease was due to decreased shipments to customers where the Company was contractually obligated to provide transportation services.

Miscellaneous Other Income

Miscellaneous other income was $14 million for the nine months ended September 30, 2019, compared to $17 million for the nine months ended September 30, 2018. The $3 million decrease was primarily attributable to a decrease in sales of externally purchased coal to blend and resell, partially offset by customer contract buyouts in the current period.

Cost of Coal Sold

Cost of coal sold is comprised of operating costs related to produced tons sold, along with changes in both the volumes and carrying values of coal inventory. The costs of coal sold include items such as direct operating costs, royalties and production taxes, direct administration costs and depreciation, depletion, and amortization costs on production assets. Total cost of coal sold was $770 million for the nine months ended September 30, 2019, or $44 million higher than the $726 million for the nine months ended September 30, 2018. Total costs per ton sold were $37.39 per ton for the nine months ended September 30, 2019, compared to $35.07 per ton for the nine months ended September 30, 2018. The increase in the total cost of coal sold was primarily driven by additional equipment rebuilds and longwall overhauls due to the timing of longwall moves and panel development. Also, the Company faced non-typical challenges during the current year, including a roof fall and equipment breakdowns. These geological and equipment-related issues resulted in higher mine maintenance and project expenses.

Other Costs

Other costs include items that are assigned to the PAMC division but are not included in unit costs, such as coal reserve holding costs and purchased coal costs. Total other costs decreased $21 million in the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The decrease was primarily attributable to additional costs incurred in the year-ago period related to externally purchased coal to blend and resell, discretionary employee benefit expenses and demurrage charges.

Selling, General, and Administrative Costs

At September 30, 2019, CONSOL Energy was party to a service agreement with CCR that required CONSOL Energy to provide certain selling, general and administrative services to CCR. These services are paid monthly based on an agreed-upon fixed fee that is reset at least annually. See Note 18 - Related Party Transactions of the Notes to the Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information. An additional portion of CONSOL Energy's selling, general and administrative costs are allocated to the PAMC division, outside of the service agreement, based on a percentage of total revenue and a percentage of total projected capital expenditures. The amount of selling, general and administrative costs related to the PAMC division was $50 million for the nine months ended September 30, 2019, compared to $43 million for the nine months ended September 30, 2018. The $7 million increase in the period-to-period comparison was primarily related to accelerated non-cash amortization recorded in the current period for retiree-eligible employees who received awards under the Company's Performance Incentive Plan, as well as an increase in expenditures related to the conversion to and implementation of a different Enterprise Resource and Planning system.

OTHER ANALYSIS:

Other business activities had a loss before income tax of $80 million for the nine months ended September 30, 2019, compared to a loss before income tax of $80 million for the nine months ended September 30, 2018. Variances are discussed below.



	For the Nine Months Ended
	September 30,
(in millions)	2019			2018			Variance
Revenue:
Terminal Revenue	$	51		$	48		$	3
Miscellaneous Other Income	22			30			(8		)
Gain on Sale of Assets	2			—			2
Total Revenue and Other Income	75			78			(3		)
Other Costs and Expenses:
Operating and Other Costs	62			66			(4		)
Depreciation, Depletion and Amortization	15			21			(6		)
Selling, General and Administrative Costs	3			5			(2		)
Loss on Debt Extinguishment	25			3			22
Interest Expense, net	50			63			(13		)
Total Other Costs and Expenses	155			158			(3		)
Loss Before Income Tax	$	(80	)	$	(80	)	$	—

Terminal Revenue

Terminal revenue consists of sales from the CONSOL Marine Terminal, which is located on approximately 200 acres in the Port of Baltimore, Maryland and provides access to international coal markets. CONSOL Marine Terminal sales were $51 million for the nine months ended September 30, 2019, compared to $48 million for the nine months ended September 30, 2018. The $3 million increase in the period-to-period comparison was attributable to a 0.4 million increase in throughput tons, as well as additional revenue earned in the current year from one of the Company's customers. This customer's contractual arrangement, entered into during the second half of 2018, contains a take-or-pay element, which provides a certain level of monthly throughput tons for a fixed amount.

Miscellaneous Other Income

Miscellaneous other income was $22 million for the nine months ended September 30, 2019, compared to $30 million for the nine months ended September 30, 2018. The change is due to the following items:



	For the Nine Months Ended September 30,
(in millions)	2019		2018		Variance
Royalty Income - Non-Operated Coal	$	17	$	19	$	(2	)
Property Easements and Option Income	1		5		(4		)
Rental Income	2		3		(1		)
Interest Income	2		2		—
Other Income	—		1		(1		)
Total Miscellaneous Other Income	$	22	$	30	$	(8	)

Operating and Other Costs

Operating and other costs were $62 million for the nine months ended September 30, 2019, compared to $66 million for the nine months ended September 30, 2018. Operating and other costs decreased in the period-to-period comparison due to the following items:



	For the Nine Months Ended September 30,
(in millions)	2019		2018		Variance
Terminal Operating Costs	$	17	$	19	$	(2	)
Employee-Related Legacy Liability Expense	28		32		(4		)
Lease Rental Expense	4		2		2
Coal Reserve Holding Costs	—		2		(2		)
Closed and Idle Mines	2		3		(1		)
Litigation Expense	4		3		1
Bank Fees	1		2		(1		)
Other	6		3		3
Total Operating and Other Costs	$	62	$	66	$	(4	)

Depreciation, Depletion and Amortization

Depreciation, depletion and amortization decreased $6 million in the period-to-period comparison due to current year adjustments to the Company's asset retirement obligations based on current projected cash outflows.

Selling, General and Administrative Costs

Selling, general and administrative costs are allocated to the Company's Other division based on a percentage of total revenue and a percentage of total projected capital expenditures. The decrease of $2 million is a result of decreases in the portion of selling, general and administrative expenses allocated to the Other division due to various transactions that occurred throughout both periods, none of which were individually material.

Loss on Debt Extinguishment

Loss on debt extinguishment of $25 million was recognized in the nine months ended September 30, 2019 due to the open market repurchases of the Company's 11.00% Senior Secured Second Lien Notes due 2025, the $110 million required repayment on the Term Loan B Facility, and the refinancing of the Company's Revolving Credit Facility, Term Loan A Facility and Term Loan B Facility. See Note 12 - Long-Term Debt in the Notes to the Consolidated Financial Statements included in Item 1 of this Form 10-Q for additional information.

Loss on debt extinguishment of $3 million was recognized in the nine months ended September 30, 2018 due to accelerated payments made on the Term Loan A Facility and the open market repurchases of the Company's 11.00% Senior Secured Second Lien Notes due 2025.

Interest Expense, net

Interest expense, net of amounts capitalized, is comprised of interest on the Company's Senior Secured Credit Facilities, the 11.00% Senior Secured Second Lien Notes and the 5.75% MEDCO Revenue Bonds. Interest expense, net of amounts capitalized, decreased $13 million in the period-to-period comparison, primarily related to the $110 million required repayment on the Term Loan B Facility, as well as the refinancing of the Company's Revolving Credit Facility, Term Loan A Facility and Term Loan B Facility, both of which occurred during the nine months ended September 30, 2019. The decrease in interest expense, net of amounts capitalized, is also attributable to current year repurchases of the Company's 11.00% Senior Secured Second Lien Notes (see Note 19 - Stock, Unit and Debt Repurchase of the Notes to the Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information).

Liquidity and Capital Resources

CONSOL Energy expects its ongoing sources of liquidity to include cash generated from operations, cash on hand, borrowings under the revolving credit facility and securitization facility (which are discussed below), and, if necessary, the issuance of additional equity or debt securities. The Company believes that cash generated from these sources will be sufficient to meet its short-term working capital requirements, long-term capital expenditure requirements, and debt servicing obligations, as well as to provide required letters of credit.

The Company expects to generate adequate cash flow from operations in 2019 due to its strong contracted position and consistent cost control measures. The Company started a capital construction project on the coarse refuse disposal area in 2017, which is expected to continue through 2021. The Company's 2019 capital needs are expected to be between $155 million to $185 million, which is increased from 2018 levels due to additional expected capital expenditures related to the Itmann project, airshaft construction projects, and additional belt system related expenditures.

CONSOL Energy's coal is shipped to multiple geographies domestically and globally. From time to time, the Company changes its exposure to various countries depending on the economics and profitability of coal sales. Given that coal markets are global, the Company expects, if possible, to offset any potential adverse impact from tariffs that may be imposed by governments in the countries in which one or more of the Company's end users are located by reallocating its customer base to other countries or to the domestic U.S. markets.

CONSOL Energy believes its business will generate adequate cash flows and liquidity to meet reasonable increases in the cost of supplies that are passed on from suppliers. CONSOL Energy will also continue to seek alternate sources of supplies and replacement materials to offset any unexpected increase in the cost of supplies.

Uncertainty in the financial markets brings additional potential risks to CONSOL Energy. These risks include declines in the Company's stock price, less availability and higher costs of additional credit, potential counterparty defaults, and commercial bank failures. Financial market disruptions may impact the Company's collection of trade receivables. As a result, CONSOL Energy regularly monitors the creditworthiness of its customers and counterparties and manages credit exposure through payment terms, credit limits, prepayments and security. CONSOL Energy believes that its current group of customers does not present any abnormal business risk.

The Company owns an undivided interest in 75% of the PAMC and the Partnership owns the remaining undivided 25% interest of the PAMC. As of September 30, 2019, the Company had a 61.5% economic ownership interest in the Partnership through its various holdings of the general partner and limited partnership interests of the Partnership.

Cash Flows (in millions)



	For the Nine Months Ended September 30,
	2019			2018			Change
Cash Provided by Operating Activities	$	223		$	330		$	(107	)
Cash Used in Investing Activities	$	(129	)	$	(95	)	$	(34	)
Cash Used in Financing Activities	$	(224	)	$	(112	)	$	(112	)

Cash provided by operating activities decreased $107 million in the period-to-period comparison, primarily due to a $57 million decrease in net income, as well as changes in stock/unit-based compensation expense, loss on debt extinguishment, deferred taxes and other working capital changes that occurred throughout both periods.

Cash used in investing activities increased $34 million in the period-to-period comparison. Capital expenditures increased primarily due to an increase in airshaft construction projects and additional belt system related expenditures.



	For the Nine Months Ended September 30,
	2019		2018		Change
Building and Infrastructure	$	50	$	29	$	21
Equipment Purchases and Rebuilds	44		26		18
Refuse Storage Area	25		25		—
IS&T Infrastructure	5		8		(3		)
Other	7		9		(2		)
Total Capital Expenditures	$	131	$	97	$	34

Cash used in financing activities increased $112 million in the period-to-period comparison. During the nine months ended September 30, 2019, total payments of $166 million were made on the Company's Term Loan B Facility, 11.00% Senior Secured Second Lien Notes and the Term Loan A Facility, which included the required excess cash flow repayment of $110 million on the Term Loan B Facility (see Note 12 - Long-Term Debt for additional information). The Company received additional proceeds on its Term Loan A Facility in the amount of $26 million as a result of the debt refinancing that occurred during the nine months ended September 30, 2019. In connection with the debt refinancing, approximately $20 million of financing-related fees and charges were paid.

During the nine months ended September 30, 2018, total payments of $50 million were made on the Company's Term Loan A Facility, Term Loan B Facility and 11.00% Senior Secured Second Lien Notes. Also during the nine months ended September 30, 2018, the Company paid its former parent $18 million related to the final settlement of shared, spin-related fees.

Senior Secured Credit Facilities

In November 2017, the Company entered into a revolving credit facility with commitments up to $300 million (the “Revolving Credit Facility”), a Term Loan A Facility of up to $100 million (the “TLA Facility”) and a Term Loan B Facility of up to $400 million (the “TLB Facility”, and together with the Revolving Credit Facility and the TLA Facility, the “Senior Secured Credit Facilities”). On March 28, 2019, the Company amended the Senior Secured Credit Facilities (the “amendment”) to increase the borrowing commitment of the Revolving Credit Facility to $400 million and reallocate the principal amounts outstanding under the TLA Facility and TLB Facility. As a result, the principal amount outstanding under the TLA Facility was $100 million and the principal amount outstanding under the TLB Facility was $275 million. Borrowings under the Company's Senior Secured Credit Facilities bear interest at a floating rate which can be, at the Company's option, either (i) LIBOR plus an applicable margin or (ii) an alternate base rate plus an applicable margin. The applicable margin for the Revolving Credit Facility and TLA Facility depends on the total net leverage ratio, whereas the applicable margin for the TLB Facility is fixed. The amendment reduced the applicable margin by 50 basis points on both the Revolving Credit Facility and the TLA Facility, and by 150 basis points on the TLB Facility. The amendment also extended the maturity dates of the Senior Secured Credit Facilities. The maturity date of the Revolving Credit and TLA Facilities was extended from November 28, 2021 to March 28, 2023. The TLB Facility's maturity date was extended from November 28, 2022 to September 28, 2024. Beginning in June 2019, the TLA Facility will be amortized in equal quarterly installments of (i) 3.75% of the original principal amount thereof, for the first four quarterly installments, (ii) 6.25% of the original principal amount thereof for the subsequent eight quarterly installments and (iii) 8.75% of the original principal amount thereof for the quarterly installments thereafter, with the remaining balance due at final maturity. Beginning in June 2019, the TLB Facility

will be amortized in equal quarterly installments in an amount equal to 0.25% per annum of the amended principal amount thereof, with the remaining balance due at final maturity.

Obligations under the Senior Secured Credit Facilities are guaranteed by (i) all owners of the 75% undivided economic interest in the PAMC held by the Company, (ii) any other members of the Company’s group that own any portion of the collateral securing the Revolving Credit Facility, and (iii) subject to certain customary exceptions and agreed materiality thresholds, all other existing or future direct or indirect wholly owned restricted subsidiaries of the Company (excluding the Partnership and its wholly-owned subsidiaries). The obligations are secured by, subject to certain exceptions (including a limitation of pledges of equity interests in certain subsidiaries and certain thresholds with respect to real property), a first-priority lien on (i) the Company’s 75% undivided economic interest in the Pennsylvania Mining Complex, (ii) the limited partner units of the Partnership held by the Company, (iii) the equity interests in CONSOL Coal Resources GP LLC held by the Company (iv) the CONSOL Marine Terminal and (v) the 1.6 billion tons of Greenfield Reserves. The Senior Secured Credit Facilities contain a number of customary affirmative covenants. In addition, the Senior Secured Credit Facilities contain a number of negative covenants, including (subject to certain exceptions) limitations on (among other things): indebtedness, liens, investments, acquisitions, dispositions, restricted payments, and prepayments of junior indebtedness. The amendment expanded the covenants relating to finance leases, general investments, joint venture investments and annual share repurchase baskets. The amendment also amended the restricted payments covenant to permit up to a $50 million annual dividend.

During the nine months ended September 30, 2019, the Company entered into interest rate swaps, which effectively converted $150 million of the TLB Facility's floating interest rate to a fixed interest rate for the twelve months ending December 31, 2020 and 2021, and $50 million of the TLB Facility's floating interest rate to a fixed interest rate for the twelve months ending December 31, 2022.

The Senior Secured Credit Facilities contain customary events of default, including with respect to a failure to make payments when due, cross-default and cross-judgment default and certain bankruptcy and insolvency events.

At September 30, 2019, the Revolving Credit Facility had no borrowings outstanding and $74 million of letters of credit outstanding, leaving $326 million of unused capacity. From time to time, CONSOL Energy 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. CONSOL Energy sometimes uses letters of credit to satisfy these requirements and these letters of credit reduce the Company's borrowing facility capacity.

Securitization Facility

On November 30, 2017, (1)(i) CONSOL Marine Terminals LLC, as an originator of receivables, (ii) CONSOL Pennsylvania Coal Company LLC (“CONSOL Pennsylvania”), as an originator of receivables and as initial servicer of the receivables for itself and the other originators (collectively, the “Originators”), each a wholly owned subsidiary of CONSOL Energy, and (iii) CONSOL Funding LLC (the “SPV”), a Delaware special purpose entity and wholly owned subsidiary of CONSOL Energy, as buyer, entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”) and (2)(i) CONSOL Thermal Holdings LLC, an indirect, wholly-owned subsidiary of the Partnership, as sub-originator (the “Sub-Originator”), and (ii) CONSOL Pennsylvania, as buyer and as initial servicer of the receivables for itself and the Sub-Originator, entered into a Sub-Originator Sale Agreement (the “Sub-Originator PSA”). In addition, on that date, the SPV entered into a Receivables Financing Agreement (the “Receivables Financing Agreement”) by and among (i) the SPV, as borrower, (ii) CONSOL Pennsylvania, as initial servicer, (iii) PNC Bank, as administrative agent, LC Bank and lender, and (iv) the additional persons from time to time party thereto as lenders. Together, the Purchase and Sale Agreement, the Sub-Originator PSA and the Receivables Financing Agreement establish the primary terms and conditions of an accounts receivable securitization program (the “Securitization”). In August 2018, the securitization facility was amended to, among other things, extend the term of the securitization facility for three years ending August 30, 2021.

Pursuant to the Securitization, (i) the Sub-Originator sells current and future trade receivables to CONSOL Pennsylvania and (ii) the Originators sell and/or contribute current and future trade receivables (including receivables sold to CONSOL Pennsylvania by the Sub-Originator) to the SPV and the SPV, in turn, pledges its interests in the receivables to PNC Bank, which either makes loans or issues letters of credit on behalf of the SPV. The maximum amount of advances and letters of credit outstanding under the Securitization may not exceed $100 million.

Loans under the Securitization accrue interest at a reserve-adjusted LIBOR market index rate equal to the one-month Eurodollar rate. Loans and letters of credit under the Securitization also accrue a program fee and a letter of credit participation fee, respectively, ranging from 2.00% to 2.50% per annum depending on the total net leverage ratio of CONSOL Energy. In addition, the SPV paid certain structuring fees to PNC Capital Markets LLC and will pay other customary fees to the lenders, including a fee on unused commitments equal to 0.60% per annum.

The SPV’s assets and credit are not available to satisfy the debts and obligations owed to the creditors of CONSOL Energy, the Sub-Originator or any of the Originators. The Sub-Originator, the Originators and CONSOL Pennsylvania as servicer are independently liable for their own customary representations, warranties, covenants and indemnities. In addition, CONSOL Energy has guaranteed the performance of the obligations of the Sub-Originator, the Originators and CONSOL Pennsylvania as servicer, and will guarantee the obligations of any additional originators or successor servicer that may become party to the Securitization. However, neither CONSOL Energy nor its affiliates will guarantee collectability of receivables or the creditworthiness of obligors thereunder.

The agreements comprising the Securitization contain various customary representations and warranties, covenants and default provisions which provide for the termination and acceleration of the commitments and loans under the Securitization in certain circumstances including, but not limited to, failure to make payments when due, breach of representation, warranty or covenant, certain insolvency events or failure to maintain the security interest in the trade receivables, and defaults under other material indebtedness.

At September 30, 2019, eligible accounts receivable totaled approximately $38 million. At September 30, 2019, the facility had no outstanding borrowings and $40 million of letters of credit outstanding, leaving no unused capacity. The Company posted $2 million of cash collateral to secure the difference in the outstanding letters of credit and the eligible accounts receivable. Cash collateral of $2 million is included in Restricted Cash in the Consolidated Balance Sheets. Costs associated with the receivables facility totaled $344 thousand and $1,095 thousand for the three and nine months ended September 30, 2019. These costs have been recorded as financing fees which are included in Operating and Other Costs in the Consolidated Statements of Income. The Company has not derecognized any receivables due to its continued involvement in the collections efforts.

11.00% Senior Secured Second Lien Notes due 2025

On November 13, 2017, the Company issued $300 million in aggregate principal amount of 11.00% Senior Secured Second Lien Notes due 2025 (the “Second Lien Notes”) pursuant to an indenture (the “Indenture”) dated as of November 13, 2017, by and between the Company and UMB Bank, N.A., a national banking association, as trustee and collateral trustee (the “Trustee”). On November 28, 2017, certain subsidiaries of the Company executed a supplement to the Indenture and became party to the Indenture as a guarantor (the “Guarantors”). The Second Lien Notes are secured by second priority liens on substantially all of the assets of the Company and the Guarantors that are pledged and on a first-priority basis as collateral securing the Company’s obligations under the Senior Secured Credit Facilities (described above), subject to certain exceptions under the Indenture.

On or after November 15, 2021, the Company may redeem all or part of the Second Lien Notes at the redemption prices set forth below, plus accrued and unpaid interest, if any, to, but not including, the redemption date (subject to the rights of holders of the Second Lien Notes on the relevant record date to receive interest due on the relevant interest payment date), beginning on November 15 of the years indicated:



	Year	Percentage
	2021	105.50%
	2022	102.75%
	2023 and thereafter	100.00%

Prior to November 15, 2020, the Company may on one or more occasions redeem up to 35% of the principal amount of the Second Lien Notes with an amount of cash not greater than the amount of the net cash proceeds from one or more equity offerings at a redemption price equal to 111.00% of the principal amount of the Second Lien Notes to be redeemed, plus accrued and unpaid interest, if any, to, but not including, the date of redemption, as long as at least 65% of the aggregate principal amount of the Second Lien Notes originally issued on the issue date (excluding Second Lien Notes held by the Company and its subsidiaries) remains outstanding after each such redemption and the redemption occurs within less than 180 days after the date of the closing of the equity offering.

At any time or from time to time prior to November 15, 2021, the Company may also redeem all or a part of the Second Lien Notes, at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium, as defined in the Indenture, plus accrued and unpaid interest, if any, to, but not including, the redemption date (subject to the rights of holders of the Second Lien Notes on the relevant record date to receive interest due on the relevant interest payment date).

The Indenture contains covenants that will limit the ability of the Company and the Guarantors, to (i) incur, assume or guarantee additional indebtedness or issue preferred stock; (ii) create liens to secure indebtedness; (iii) declare or pay dividends on the Company’s common stock, redeem stock or make other distributions to the Company’s stockholders; (iv) make investments; (v) restrict dividends, loans or other asset transfers from the Company’s restricted subsidiaries; (vi) merge or consolidate, or sell, transfer, lease or dispose of substantially all of the Company’s assets; (vii) sell or otherwise dispose of certain assets, including equity interests in subsidiaries; (viii) enter into transactions with affiliates; and (ix) create unrestricted subsidiaries. These covenants are subject to important exceptions and qualifications. If the Second Lien Notes achieve an investment grade rating from both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc. and no default under the Indenture exists, many of the foregoing covenants will terminate and cease to apply. The Indenture also contains customary events of default, including (i) default for 30 days in the payment when due of interest on the Notes; (ii) default in payment when due of principal or premium, if any, on the Notes at maturity, upon redemption or otherwise; (iii) covenant defaults; (iv) cross-defaults to certain indebtedness, and (v) certain events of bankruptcy or insolvency with respect to the Company or any of the Guarantors. If an event of default occurs and is continuing, the Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Second Lien Notes may declare all the Notes to be due and payable immediately. If an event of default arises from certain events of bankruptcy or insolvency, with respect to the Company, any restricted subsidiary of the Company that is a significant subsidiary or any group of restricted subsidiaries of the Company that, taken together, would constitute a significant subsidiary, all outstanding Second Lien Notes will become due and payable immediately without further action or notice.

If the Company experiences certain kinds of changes of control, holders of the Second Lien Notes will be entitled to require the Company to repurchase all or any part of that holder’s Second Lien Notes pursuant to an offer on the terms set forth in the Indenture. The Company will offer to make a cash payment equal to 101% of the aggregate principal amount of the Second Lien Notes repurchased plus accrued and unpaid interest on the Second Lien Notes repurchased to, but not including, the date of purchase, subject to the rights of holders of the Notes on the relevant record date to receive interest due on the relevant interest payment date.

The Second Lien Notes were issued in a private offering that is exempt from the registration requirements of the Securities Act, to qualified institutional buyers in accordance with Rule 144A and to persons outside of the United States pursuant to Regulation S under the Securities Act.

Affiliated Company Credit Agreement with Partnership

On November 28, 2017, the Company also entered into an Affiliated Company Credit Agreement with the Partnership and certain of its subsidiaries (the “Partnership Credit Parties”) under which the Company provides as lender a revolving credit facility in an aggregate principal amount of up to $275 million to the Partnership Credit Parties. In connection with the completion of the separation, the Partnership drew an initial $201 million, the net proceeds of which were used to repay the Original CCR Credit Facility and to provide working capital for the Partnership following the separation and for other general corporate purposes.

On March 28, 2019, the Affiliated Company Credit Agreement was amended to extend the maturity date from February 27, 2023 to December 28, 2024. The collateral obligations under the Affiliated Company Credit Agreement generally mirror the Original CCR Credit Facility, as does the list of entities that will act as guarantors thereunder. The Affiliated Company Credit Agreement is subject to financial covenants relating to a maximum first lien gross leverage ratio and a maximum total net leverage ratio, which will be calculated on a consolidated basis for the Partnership and its restricted subsidiaries at the end of each fiscal quarter. The Partnership was in compliance with each of these financial covenants at September 30, 2019. The Affiliated Company Credit Agreement also contains a number of customary affirmative covenants and negative covenants, including limitations on the ability of the Partnership to incur additional indebtedness, grant liens, and make investments, acquisitions, dispositions, restricted payments, and prepayments of junior indebtedness (subject to certain limited exceptions).

Contractual Obligations

CONSOL Energy is required to make future payments under various contracts. CONSOL Energy also has commitments to fund its pension plans, provide payments for other postretirement benefit plans, and fund capital projects. There have been no material changes to these contractual obligations outside the ordinary course of business since March 31, 2019.

Debt

At September 30, 2019, CONSOL Energy had total long-term debt and finance lease obligations of $747 million outstanding, including the current portion of long-term debt of $45 million. This long-term debt consisted of:


•	An aggregate principal amount of $274 million in connection with the Term Loan B (TLB) Facility, due in September 2024, less $1 million of unamortized bond discount. Borrowings under the TLB Facility bear interest at a floating rate.


•	An aggregate principal amount of $239 million of 11.00% senior secured second lien notes due in November 2025. Interest on the notes is payable May 15 and November 15 of each year.


•	An aggregate principal amount of $93 million in connection with the Term Loan A (TLA) Facility, due in March 2023. Borrowings under the TLA Facility bear interest at a floating rate.


•	An aggregate principal amount of $103 million of industrial revenue bonds which were issued to finance the Baltimore port facility and bear interest at 5.75% per annum and mature in September 2025. Interest on the industrial revenue bonds is payable March 1 and September 1 of each year. Payment of the principal and interest on the notes is guaranteed by CONSOL Energy.


•	An aggregate principal amount of $8 million in connection with asset-backed financing. Approximately $4 million is due in December 2020 at a weighted average interest rate of 6.35%, and approximately $4 million is due in September 2024 at an interest rate of 3.61%.


•	Advance royalty commitments of $2 million with an average interest rate of 8.57% per annum.


•	An aggregate principal amount of $29 million of finance leases with a weighted average interest rate of 5.37% per annum.

At September 30, 2019, CONSOL Energy had no borrowings outstanding and approximately $74 million of letters of credit outstanding under the $400 million senior secured revolving credit facility. At September 30, 2019, CONSOL Energy had no borrowings outstanding and approximately $40 million of letters of credit outstanding under the $100 million securitization facility.

Stock, Unit and Debt Repurchases

In December 2017, CONSOL Energy’s Board of Directors approved a program to repurchase, from time to time, the Company's outstanding shares of common stock or its 11.00% Senior Secured Second Lien Notes due 2025, in an aggregate amount of up to $50 million through the period ending June 30, 2019. The program was subsequently amended by CONSOL Energy's Board of Directors in July 2018 to allow up to $100 million of repurchases of the Company's common stock or its 11.00% Senior Secured Second Lien Notes due 2025, subject to certain limitations in the Company's current credit agreement and that certain tax matters agreement entered into by and between the Company and its former parent on November 28, 2017 (the “TMA”). The Company's Board of Directors also authorized the Company to use up to $25 million of the program to purchase CONSOL Coal Resources LP's common units in the open market. In May 2019, CONSOL Energy's Board of Directors approved an expansion of the program in the amount of $75 million, bringing the aggregate limit of the program to $175 million. The May 2019 expansion also increased the aggregate limit of the amount of CONSOL Coal Resources LP's common units that can be purchased under the program to $50 million, which is consistent with the Company's credit facility covenants that prohibit the Company from using more than $50 million for the purchase of CONSOL Coal Resources LP's outstanding common units. The Company's Board of Directors also approved extending the termination date of the program, from June 30, 2019 to June 30, 2020. In July 2019, CONSOL Energy's Board of Directors approved an expansion of the program in the amount of $25 million, bringing the aggregate limit of the program to $200 million.

Under the terms of the program, CONSOL Energy is permitted to make repurchases in the open market, in privately negotiated transactions, accelerated repurchase programs or in structured share repurchase programs. CONSOL Energy is also authorized to enter into one or more 10b5-1 plans with respect to any of the repurchases. Any repurchases of common stock, notes or units are to be funded from available cash on hand or short-term borrowings. The program does not obligate CONSOL Energy to acquire any particular amount of its common stock, notes or units, and can be modified or suspended at any time at the Company’s discretion. The program is conducted in compliance with applicable legal requirements and within the limits imposed by any credit agreement, receivables purchase agreement, indenture or the TMA and is subject to market conditions and other factors.

During the nine months ended September 30, 2019, the Company repurchased approximately $35 million of its 11.00% Senior Secured Second Lien Notes due 2025. Also during the nine months ended September 30, 2019, 1,717,497 shares of the Company's common stock were repurchased and retired at an average price of $19.06 per share, and 26,297 of the Partnership's common units were purchased at an average price of $14.05 per unit.

Total Equity and Dividends

Total equity attributable to CONSOL Energy was $593 million at September 30, 2019 and $552 million at December 31, 2018. See the Consolidated Statements of Stockholders' Equity in Item 1 of this Form 10-Q for additional details.

The declaration and payment of dividends by CONSOL Energy is subject to the discretion of CONSOL Energy's Board of Directors, and no assurance can be given that CONSOL Energy will pay dividends in the future. The determination to pay dividends in the future will depend upon, among other things, general business conditions, CONSOL Energy's financial results, contractual and legal restrictions regarding the payment of dividends by CONSOL Energy, planned investments by CONSOL Energy and such other factors as the Board of Directors deems relevant. The Company's senior secured credit facilities limit CONSOL Energy's ability to pay dividends up to $25 million annually, which increases to $50 million annually when the Company's total net leverage ratio is less than 1.50 to 1.00 and subject to an aggregate amount up to a cumulative credit calculation set forth in the facilities. The total net leverage ratio was 1.78 to 1.00 and the cumulative credit was approximately $75 million at September 30, 2019. The cumulative credit starts with $50 million and builds with excess cash flow commencing in 2018. The calculation of the total net leverage ratio excludes the Partnership. The credit facilities do not permit dividend payments in the event of default. The Indenture to the 11.00% Senior Secured Second Lien Notes limits dividends when the Company's total net leverage ratio exceeds 2.00 to 1.00 and subject to an amount not to exceed an annual rate of 4.0% of the quoted public market value per share of such common stock at the time of the declaration. The Indenture does not permit dividend payments in the event of default.

In connection with the separation and distribution, the Partnership entered into an intercompany loan arrangement with the Company with an initial outstanding balance of $201 million. The Partnership used the initial loan to repay outstanding borrowings under the prior revolving credit facility, which was then terminated. The new intercompany loan arrangement similarly limits the Partnership's ability to pay distributions to its unitholders (including the Company) when the Partnership's net leverage ratio exceeds 3.25 to 1.00 or the Partnership's first lien gross leverage ratio exceeds 2.75 to 1.00.

Upon payment of the cash distribution with respect to the quarter ended June 30, 2019, the financial requirements for the conversion of all CCR subordinated units were satisfied. As a result, on August 16, 2019, all 11,611,067 subordinated units, owned entirely by CONSOL Energy Inc., were converted into common units on a one-for-one basis. The conversion did not impact the amount of the cash distribution paid or the total number of CCR's outstanding units representing limited partner interests.

Off-Balance Sheet Arrangements

CONSOL Energy 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 CONSOL Energy’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 Consolidated Financial Statements of this Form 10-Q. CONSOL Energy participates in the United Mine Workers of America (the “UMWA”) Combined Benefit Fund and the UMWA 1992 Benefit Plan which generally accepted accounting principles recognize on a pay-as-you-go basis. These benefit arrangements may result in additional liabilities that are not recognized on the Consolidated Balance Sheet at September 30, 2019. The various multi-employer benefit plans are discussed in Note 16—Other Employee Benefit Plans in the Notes to the Consolidated Financial Statements in Item 8 of the December 31, 2018 Form 10-K. CONSOL Energy's total contributions under the Coal Industry Retiree Health Benefit Act of 1992 were $1,556 and $1,770 for the three months ended September 30, 2019 and 2018, respectively. CONSOL Energy's total contributions under the Coal Industry Retiree Health Benefit Act of 1992 were $4,662 and $5,254 for the nine months ended September 30, 2019 and 2018, respectively. Based on available information at December 31, 2018, CONSOL Energy's obligation for the UMWA Combined Benefit Fund and 1992 Benefit Plan is estimated to be approximately $70,859. CONSOL Energy also uses a combination of surety bonds, corporate guarantees and letters of credit to secure its financial obligations for employee-related, environmental, performance and various other items which are not reflected on the Consolidated Balance Sheet at September 30, 2019. Management believes these items will expire without being funded. See Note 13—Commitments and Contingent Liabilities in the Notes to the Consolidated Financial Statements included in Item 1 of this Form 10-Q for additional details of the various financial guarantees that have been issued by CONSOL Energy.

Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of the federal securities laws. 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that involve risks and uncertainties that could cause actual results and outcomes to differ materially from results expressed in or implied by our forward-looking statements. 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 “anticipate,” “believe,” “could,” “continue,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” “will,” or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe 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:


•	deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital;


•	volatility and wide fluctuation in coal prices based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels;


•	an extended decline in the prices we receive for our coal affecting our operating results and cash flows;


•	the risk of our debt agreements, our debt and changes in interest rates affecting our operating results and cash flows;


•	the effect of our affiliated company credit agreement on our cash flows;


•	foreign currency fluctuations that could adversely affect the competitiveness of our coal abroad;


•	our customers extending existing contracts or entering into new long-term contracts for coal on favorable terms;


•	our reliance on major customers;


•	decreases in demand and changes in coal consumption patterns of U.S. electric power generators;


•	our inability to acquire additional coal reserves that are economically recoverable;


•	our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts;


•	our inability to acquire additional coal reserves and other assets;


•	the availability and reliability of transportation facilities and other systems, disruption of rail, barge, processing and transportation facilities and other systems that deliver our coal to market and fluctuations in transportation costs;


•	a loss of our competitive position because of the competitive nature of coal industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability;


•	coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions;


•	the impact of potential, as well as any adopted, regulations to address climate change, including any relating to greenhouse gas emissions on our operating costs as well as on the market for coal;


•	the effects of litigation seeking to hold energy companies accountable for the effects of climate change;

•

the risks inherent in coal operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, delays in moving out longwall equipment, railroad derailments, security breaches or terroristic acts and other hazards, timing of completion of significant construction or repair of equipment, fires, explosions, seismic activities, accidents and weather conditions which could impact financial results;


•	decreases in the availability of, or increases in, the price of commodities or capital equipment used in our coal mining operations;


•	obtaining, maintaining and renewing governmental permits and approvals for our coal operations;


•	the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our coal operations;


•	the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations;


•	the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current coal operations;


•	the effects of mine closing, reclamation and certain other liabilities;


•	defects in our chain of title for our undeveloped reserves or failure to acquire additional property to perfect our title to coal rights;


•	uncertainties in estimating our economically recoverable coal reserves;


•	the outcomes of various legal proceedings, including those which are more fully described herein;


•	exposure to employee-related long-term liabilities;


•	failure by one or more of the third parties to satisfy certain liabilities it acquired from our former parent, or failure to perform its obligations under various arrangements, which our former parent guaranteed and for which we have indemnification obligations to our former parent;


•	information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident;


•	operating in a single geographic area;


•	the effects of coordinating our operations with oil and natural gas drillers and distributors operating on our land;


•	certain provisions in our multi-year coal sales contracts may provide limited protection during adverse economic conditions, and may result in economic penalties or permit the customer to terminate the contract;


•	the potential failure to retain and attract skilled personnel of the Company;


•	unfavorable terms in our separation from our former parent, related agreements and other transactions and the Company’s agreement to provide certain indemnification to our former parent following the separation;


•	the Company’s failure to obtain any consents that may be required under existing contracts and other arrangements with third parties;


•	a determination by the IRS that the distribution or certain related transactions should be treated as a taxable transaction;


•	the Company’s ability to engage in desirable strategic or capital-raising transactions after the separation;


•	exposure to potential liabilities arising out of state and federal fraudulent conveyance laws and legal dividend requirements as a result of the separation and related transactions;


•	uncertainty with respect to the Company’s common stock, potential stock price volatility and future dilution;


•	the existence of certain anti-takeover provisions in our governance documents, which could prevent or delay an acquisition of the Company and negatively impact the trading price of the Company’s common stock;


•	recent action and the possibility of future action on trade made by U.S. and foreign governments;


•	our inability to obtain financing for capital expenditures on satisfactory terms;


•	the effect of new tariffs and other trade measures;


•	our inability to find suitable acquisition targets or integrating the operations of future acquisitions into our operations;


•	the effects of hedging transactions on our cash flow;


•	failure to maintain effective internal controls over financial reporting;


•	the failure to receive the benefits of certain contracts assigned to us in the separation but for which consent by our counterparty to such assignment was not given;


•	certain indemnification obligations that we may have to our former parent as a result of the separation and the failure of our former parent to indemnify us for certain indemnity obligations they owe us as a result of the separation;


•	uncertainty regarding the timing of any dividends we may declare;


•	uncertainty as to whether we will repurchase shares of our common stock or outstanding debt securities;


•	restrictions on the ability to acquire us in our certificate of incorporation, bylaws and Delaware law and the resulting effects on the trading price of our common stock;


•	inability of stockholders to bring legal action against us in any forum other than the state courts of Delaware; and


•	other unforeseen factors.

The above list of factors is not exhaustive or necessarily in order of importance. Additional information concerning factors that could cause actual results to differ materially from those in forward-looking statements include those discussed under “Risk Factors” elsewhere in this report. The Company disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise, except as required by applicable law.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For quantitative and qualitative disclosures about market risk, see Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the year ended December 31, 2018. There have been no material changes to the Company's exposures to market risk since December 31, 2018.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

CONSOL Energy, under the supervision and with the participation of its management, including CONSOL Energy'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 Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, CONSOL Energy's principal executive officer and principal financial officer have concluded that the Company's disclosure controls and procedures are effective as of September 30, 2019 to ensure that information required to be disclosed by CONSOL Energy in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and includes controls and procedures designed to ensure that information required to be disclosed by CONSOL Energy in such reports is accumulated and communicated to CONSOL Energy's management, including CONSOL Energy's principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Controls over Financial Reporting

During the fiscal quarter covered by this quarterly report on Form 10-Q, there were no changes in the Company's internal controls over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act, that materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

During the first half of fiscal year 2019, the Company completed the implementation of an enterprise resource planning (“ERP”) system and certain processes, and revised and updated the related controls. These changes did not materially affect the Company's internal control over financial reporting. As the Company implements the remaining functionality under this ERP system over the next year, it will continue to assess the impact on its internal control over financial reporting.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events.

PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to the first five paragraphs of Note 13 - Commitments and Contingent Liabilities within Part 1, Item 1 of this Form 10-Q, which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this quarterly report, you should carefully consider the factors described in “Part 1 - Item 1A. Risk Factors” of CONSOL Energy's 2018 Form 10-K. These described risks are not the only risks the Company faces. Additional risks and uncertainties not currently known to CONSOL Energy or that the Company currently deems to be immaterial also may materially adversely affect CONSOL Energy's business, financial condition and/or operating results.

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

The following table sets forth repurchases of the Company's common stock during the three months ended September 30, 2019:



	(a)	(b)		(c)	(d)
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	Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs (000s omitted) ⁽²⁾
July 1, 2019 - July 31, 2019	—	$	—	—	$	111,959	⁽³⁾
August 1, 2019 -August 31, 2019	734,673	$	17.28	734,673	$	90,083	⁽³⁾
September 1, 2019 - September 30, 2019	631,381	$	16.61	631,381	$	72,339	⁽³⁾
Total	1,366,054	$	16.97	1,366,054

(1) In December 2017, CONSOL Energy's Board of Directors approved a program to repurchase, from time to time, the Company's outstanding shares of common stock or its 11.00% Senior Secured Second Lien Notes due 2025, in an aggregate amount of up to $50 million through the period ending June 30, 2019. The program was subsequently amended in July 2018 to allow for the repurchase of up to $100 million of the Company's outstanding shares of common stock or its 11.00% Senior Secured Second Lien Notes due 2025. The Company's Board of Directors also authorized the Company to use up to $25 million of the program to purchase CCR's common units in the open market. The program was further amended in May 2019 to allow for the repurchase of up to $175 million of the Company's outstanding shares of common stock or its 11.00% Senior Secured Second Lien Notes due 2025. The May 2019 expansion also increased the aggregate limit of the amount of CCR's common units that can be purchased under the program to $50 million, which is consistent with the Company's credit facility covenants that prohibit the Company from using more than $50 million for the purchase of CCR's outstanding common units. The program's termination date was also extended, from June 30, 2019 to June 30, 2020. In July 2019, CONSOL Energy's Board of Directors approved an expansion of the program in the amount of $25 million, bringing the aggregate limit of the program to $200 million. The repurchases will be effected from time to time on the open market or in privately negotiated transactions or under a Rule 10b5-1 plan.

(2) Management cannot estimate the number of shares that will be repurchased because purchases are made based upon the Company's stock price, the Company's financial outlook and alternative investment options.

(3) In August 2019, CONSOL Energy utilized approximately $12.693 million to repurchase its common stock, approximately $0.121 million to purchase CONSOL Coal Resources LP's common units, and approximately $9.062 million to repurchase its 11.00% Senior Secured Second Lien Notes due 2025. In September 2019, CONSOL Energy utilized approximately $10.490 million to repurchase its common stock, approximately $0.129 million to purchase CONSOL Coal Resources LP's common units, and approximately $7.125 million to repurchase its 11.00% Senior Secured Second Lien Notes due 2025.

Limitation Upon Payment of Dividends

The Indenture and the Senior Secured Credit Facilities include certain covenants limiting the Company's ability to declare and pay dividends.

ITEM 4. MINE SAFETY DISCLOSURES

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95 to this Quarterly Report on Form 10-Q.

ITEM 6. EXHIBITS



Exhibits	Description	Method of Filing

31.1	Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002	Filed herewith

31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

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	Filed herewith

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	Filed herewith

95	Mine Safety and Health Administration Safety Data	Filed herewith

101	Interactive Data File (Form 10-Q for the quarterly period ended September 30, 2019, furnished in Inline XBRL)	Filed herewith

104	Cover Page Interactive Data File (formatted as Inline XBRL)	Contained in Exhibit 101

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, as of the 5th day of November, 2019.



	CONSOL ENERGY INC.

	By:		/s/ JAMES A. BROCK
			James A. Brock
			Director, Chief Executive Officer and President (Principal Executive Officer)

	By:		/s/ DAVID M. KHANI
			David M. Khani
			Chief Financial Officer (Principal Financial Officer)

	By:		/s/ JOHN M. ROTHKA
			John M. Rothka
			Chief Accounting Officer (Principal Accounting Officer)