Edgar Filing: CNX Resources Corp

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________

FORM 10-Q

__________________________________________________

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 2019



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

For the transition period from to

Commission file number: 001-14901

__________________________________________________

CNX Resources Corporation

(Exact name of registrant as specified in its charter)



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

CNX Center

1000 CONSOL Energy Drive Suite 400

Canonsburg, PA 15317-6506

(724) 485-4000

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

__________________________________________________

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 x No o

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 x No o

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 x Accelerated filer o Non-accelerated filer o Smaller Reporting Company o

Emerging Growth Company o 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. o

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

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



Class		Shares outstanding as of April 15, 2019
Common stock, $0.01 par value		195,467,633

TABLE OF CONTENTS

		Page
PART I FINANCIAL INFORMATION

ITEM 1.	Condensed Consolidated Financial Statements
	Consolidated Statements of Income for the three months ended March 31, 2019 and 2018	4
	Consolidated Statements of Comprehensive Income for the three months ended March 31, 2019 and 2018	5
	Consolidated Balance Sheets at March 31, 2019 and December 31, 2018	6
	Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2019 and 2018	8
	Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018	9
	Notes to Unaudited Consolidated Financial Statements	10

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	48

ITEM 4.	Controls and Procedures	49

PART II OTHER INFORMATION

ITEM 1.	Legal Proceedings	50

ITEM 1A.	Risk Factors	50

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50

ITEM 6.	Exhibits	51

GLOSSARY OF CERTAIN OIL AND GAS MEASUREMENT TERMS

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

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

Bcf - One billion cubic feet of natural gas.

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

Btu - One British Thermal unit.

BBtu - billion British Thermal units.

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

Mcf - One thousand cubic feet of natural gas.

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

MMbtu - One million British Thermal units.

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

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

NGL - Natural gas liquids - those hydrocarbons in natural gas that are separated from the gas as liquids through the process.

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

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

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

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

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

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

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

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

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

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

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

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

royalty interest - the land owner’s share of oil or gas production, typically 1/8.

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

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

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

PART I : FINANCIAL INFORMATION


ITEM 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CNX RESOURCES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME



(Dollars in thousands, except per share data)	Three Months Ended
(Unaudited)	March 31,
Revenues and Other Operating Income:	2019			2018
Natural Gas, NGLs and Oil Revenue	$	435,946		$	405,623
(Loss) Gain on Commodity Derivative Instruments	(195,376		)	35,087
Purchased Gas Revenue	16,221			18,055
Midstream Revenue	18,443			26,254
Other Operating Income	3,197			10,710
Total Revenue and Other Operating Income	278,431			495,729
Costs and Expenses:
Operating Expense
Lease Operating Expense	18,627			36,810
Transportation, Gathering and Compression	79,409			86,261
Production, Ad Valorem, and Other Fees	6,946			9,233
Depreciation, Depletion and Amortization	125,161			124,667
Exploration and Production Related Other Costs	3,258			2,380
Purchased Gas Costs	16,214			17,054
Selling, General, and Administrative Costs	35,738			31,349
Other Operating Expense	23,474			16,047
Total Operating Expense	308,827			323,801
Other Expense (Income)
Other Income	(579		)	(6,493		)
Loss (Gain) on Asset Sales and Abandonments	3,085			(11,342		)
Gain on Previously Held Equity Interest	—			(623,663		)
Loss on Debt Extinguishment	7,537			15,635
Interest Expense	35,771			38,551
Total Other Expense (Income)	45,814			(587,312		)
Total Costs and Expenses	354,641			(263,511		)
(Loss) Earnings Before Income Tax	(76,210		)	759,240
Income Tax (Benefit) Expense	(11,559		)	213,694
Net (Loss) Income	(64,651		)	545,546
Less: Net Income Attributable to Noncontrolling Interest	22,686			17,983
Net (Loss) Income Attributable to CNX Resources Shareholders	$	(87,337	)	$	527,563

(Loss) Earnings per Share
Basic	$	(0.44	)	$	2.38
Diluted	$	(0.44	)	$	2.35

Dividends Declared	$	—		$	—

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

CNX RESOURCES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



	Three Months Ended
(Dollars in thousands)	March 31,
(Unaudited)	2019			2018
Net (Loss) Income	$	(64,651	)	$	545,546
Other Comprehensive Income:
Actuarially Determined Long-Term Liability Adjustments (Net of tax: ($15), ($94))	44			170

Comprehensive (Loss) Income	(64,607		)	545,716

Less: Comprehensive Income Attributable to Noncontrolling Interest	22,686			17,983

Comprehensive (Loss) Income Attributable to CNX Resources Shareholders	$	(87,293	)	$	527,733

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

CNX RESOURCES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



	(Unaudited)
(Dollars in thousands)	March 31, 2019		December 31, 2018
ASSETS
Current Assets:
Cash and Cash Equivalents	$	23,972	$	17,198
Accounts and Notes Receivable:
Trade	157,908		252,424
Other Receivables	10,276		11,077
Supplies Inventories	16,642		9,715
Recoverable Income Taxes	113,592		149,481
Prepaid Expenses	42,576		61,791
Total Current Assets	364,966		501,686
Property, Plant and Equipment:
Property, Plant and Equipment	9,835,181		9,567,428
Less—Accumulated Depreciation, Depletion and Amortization	2,741,661		2,624,984
Total Property, Plant and Equipment—Net	7,093,520		6,942,444
Other Assets:
Operating Lease Right-of-Use Assets	243,916		—
Investment in Affiliates	17,860		18,663
Goodwill	796,359		796,359
Other Intangible Assets	101,562		103,200
Other	159,178		229,818
Total Other Assets	1,318,875		1,148,040
TOTAL ASSETS	$	8,777,361	$	8,592,170

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

CNX RESOURCES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



	(Unaudited)
(Dollars in thousands, except per share data)	March 31, 2019			December 31, 2018
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable	$	230,371		$	229,806
Current Portion of Finance Lease Obligations	7,182			6,997
Current Portion of Operating Lease Obligations	70,345			—
Other Accrued Liabilities	280,597			286,172
Total Current Liabilities	588,495			522,975
Non-Current Liabilities:
Long-Term Debt	2,430,494			2,378,205
Finance Lease Obligations	12,270			13,299
Deferred Income Taxes	387,137			398,682
Operating Lease Obligations	150,739			—
Asset Retirement Obligations	33,303			37,479
Other	200,114			159,787
Total Non-Current Liabilities	3,214,057			2,987,452
TOTAL LIABILITIES	3,802,552			3,510,427
Stockholders’ Equity:
Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 196,052,504 Issued and Outstanding at March 31, 2019; 198,663,342 Issued and Outstanding at December 31, 2018	1,964			1,990
Capital in Excess of Par Value	2,249,511			2,264,063
Preferred Stock, 15,000,000 shares authorized, None issued and outstanding	—			—
Retained Earnings	1,971,898			2,071,809
Accumulated Other Comprehensive Loss	(7,860		)	(7,904		)
Total CNX Resources Stockholders’ Equity	4,215,513			4,329,958
Noncontrolling Interest	759,296			751,785
TOTAL STOCKHOLDERS' EQUITY	4,974,809			5,081,743
TOTAL LIABILITIES AND EQUITY	$	8,777,361		$	8,592,170

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

CNX RESOURCES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY



	Three Months Ended
(Unaudited)	March 31,
Dollars in Thousands	2019			2018
Total Stockholders’ Equity, Beginning Balance	$	5,081,743		$	3,899,899

Common Stock and Capital in Excess of Par Value:
Beginning Balance	2,266,053			2,452,564
Issuance of Common Stock	99			1,056
Purchase and Retirement of Common Stock	(24,968		)	(46,286		)
Amortization of Stock-Based Compensation Awards	10,291			4,331
Ending Balance	2,251,475			2,411,665

Retained Earnings:
Beginning Balance	2,071,809			1,455,811
Net (Loss) Income	(87,337		)	527,563
Purchase and Retirement of Common Stock	(8,529		)	(37,677		)
Shares Withheld for Taxes	(4,045		)	(4,815		)
Ending Balance	1,971,898			1,940,882

Accumulated Other Comprehensive Loss:
Beginning Balance	(7,904		)	(8,476		)
Other Comprehensive Income	44			170
Ending Balance	(7,860		)	(8,306		)

Total CNX Resources Corporation Stockholders' Equity	4,215,513			4,344,241

Non-Controlling Interest:
Beginning Balance	751,785			—
Net Income	22,686			17,983
Shares Withheld for Taxes	(664		)	(347		)
Amortization of Stock-Based Compensation Awards	612			579
Distributions to CNXM Noncontrolling Interest Holders	(15,123		)	(13,127		)
Acquisition of CNX Gathering, LLC	—			718,577
Ending Balance	759,296			723,665

Total Stockholders' Equity, Ending Balance	$	4,974,809		$	5,067,906

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

CNX RESOURCES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS



(Unaudited)	Three Months Ended
Dollars in Thousands	March 31,
Cash Flows from Operating Activities:	2019			2018
Net (Loss) Income	$	(64,651	)	$	545,546
Adjustments to Reconcile Net (Loss) Income to Net Cash Provided by Operating Activities:
Depreciation, Depletion and Amortization	125,161			124,667
Amortization of Deferred Financing Costs	1,707			3,043
Stock-Based Compensation	10,903			4,910
Loss (Gain) on Asset Sales and Abandonments	3,085			(11,342		)
Gain on Previously Held Equity Interest	—			(623,663		)
Loss on Debt Extinguishment	7,537			15,635
Loss (Gain) on Commodity Derivative Instruments	195,376			(35,087		)
Net Cash Paid in Settlement of Commodity Derivative Instruments	(41,382		)	(16,991		)
Deferred Income Taxes	(11,559		)	213,694
Equity in Earnings of Affiliates	(503		)	(1,778		)
Return on Equity Investment	1,306			—
Changes in Operating Assets:
Accounts and Notes Receivable	94,480			14,505
Recoverable Income Taxes	35,888			11,345
Supplies Inventories	(6,927		)	66
Prepaid Expenses	3,961			(1,055		)
Changes in Operating Liabilities:
Accounts Payable	(5,962		)	2,152
Accrued Interest	2,180			24,905
Other Operating Liabilities	(34,434		)	(5,251		)
Changes in Other Liabilities	(7,508		)	(5,500		)
Other	(6		)	(461		)
Net Cash Provided by Operating Activities	308,652			259,340
Cash Flows from Investing Activities:
Capital Expenditures	(299,138		)	(232,485		)
CNX Gathering LLC Acquisition, Net of Cash Acquired	—			(299,272		)
Proceeds from Asset Sales	5,806			101,763
Net Distributions from Equity Affiliates	—			3,650
Net Cash Used in Investing Activities	(293,332		)	(426,344		)
Cash Flows from Financing Activities:
Payments on Miscellaneous Borrowings	(1,747		)	(2,042		)
Payments on Long-Term Notes	(405,876		)	(405,419		)
Net Proceeds from (Payments on) CNXM Revolving Credit Facility	52,650			(129,500		)
Payments on CNX Revolving Credit Facility	(98,000		)	—
Proceeds from Issuance of CNX Senior Notes	500,000			—
Proceeds from Issuance of CNXM Senior Notes	—			394,000
Distributions to CNXM Noncontrolling Interest Holders	(15,123		)	(13,127		)
Proceeds from Issuance of Common Stock	99			1,056
Shares Withheld for Taxes	(4,709		)	(5,162		)
Purchases of Common Stock	(32,498		)	(80,879		)
Debt Repurchase and Financing Fees	(3,342		)	(18,600		)
Net Cash Used in Financing Activities	(8,546		)	(259,673		)
Net Increase (Decrease) in Cash and Cash Equivalents	6,774			(426,677		)
Cash and Cash Equivalents at Beginning of Period	17,198			509,167
Cash and Cash Equivalents at End of Period	$	23,972		$	82,490

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

CNX RESOURCES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 1—BASIS OF PRESENTATION:

The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 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 the notes required by generally accepted accounting principles for complete financial statements. For further information, refer to the Consolidated Financial Statements and related notes for the year ended December 31, 2018 included in CNX Resources Corporation's ("CNX," "CNX Resources," the "Company," "we," "us," or "our") Annual Report on Form 10-K as filed with the Securities and Exchange Commission (SEC) on February 7, 2019.

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

The Consolidated Balance Sheet at March 31, 2019 reflects the full consolidation of CNX Gathering LLC's assets and liabilities as a result of the acquisition by CNX Gas Company LLC ("CNX Gas") an indirect wholly owned subsidiary of CNX, of NBL Midstream, LLC's ("Noble") 50% interest in CNX Gathering LLC on January 3, 2018 (See Note 5 - Acquisitions and Dispositions for more information).

NOTE 2—EARNINGS PER SHARE:

Basic earnings per share is computed by dividing net income attributable to CNX shareholders by the weighted average shares outstanding during the reporting period. Diluted earnings per share are computed similarly to basic earnings per share, except that the weighted average shares outstanding are increased to include additional shares from stock options, performance stock options, restricted stock units and performance share units, if dilutive. The number of additional shares is calculated by assuming that outstanding stock options and performance share options were exercised, 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. CNX Midstream Partners LP's ("CNXM") dilutive units did not have a material impact on the Company's earnings per share calculations for the three months ended March 31, 2019 or the period from January 3, 2018 through March 31, 2018.

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



	For the Three Months Ended March 31,
	2019	2018
Anti-dilutive Options	4,756,292	2,293,506
Anti-dilutive Restricted Stock Units	1,708,610	11,480
Anti-dilutive Performance Share Units	540,400	312,296
Anti-dilutive Performance Stock Options	927,268	927,268
	7,932,570	3,544,550

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



	For the Three Months Ended March 31,
	2019	2018
Options	13,748	153,718
Restricted Stock Units	457,969	171,137
Performance Share Units	342,882	357,596
	814,599	682,451

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



	For the Three Months Ended March 31,
	2019			2018
Net (Loss) Income	$	(64,651	)	$	545,546
Less: Net Income Attributable to Non-Controlling Interest	22,686			17,983
Net (Loss) Income Attributable to CNX Resources Shareholders	$	(87,337	)	$	527,563

Weighted-average shares of common stock outstanding	197,475,702			221,930,165
Effect of diluted shares*	—			2,252,371
Weighted-average diluted shares of common stock outstanding	197,475,702			224,182,536

(Loss) Earnings per Share:
Basic	$	(0.44	)	$	2.38
Diluted	$	(0.44	)	$	2.35

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

NOTE 3—CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS:

Changes in Accumulated Other Comprehensive Loss related to pension obligations, net of tax, were as follows:



	Amount
Balance at December 31, 2018	$	(7,904	)
Amounts Reclassified from Accumulated Other Comprehensive Loss, net of tax	44
Balance at March 31, 2019	$	(7,860	)

The following table shows the reclassification of adjustments out of Accumulated Other Comprehensive Loss:



	For the Three Months Ended March 31,
	2019			2018
Actuarially Determined Long-Term Liability Adjustments
Amortization of Prior Service Costs	$	(4	)	$	(90	)
Recognized Net Actuarial Loss	63			354
Total	59			264
Less: Tax Benefit	15			94
Net of Tax	$	44		$	170

NOTE 4—REVENUE FROM CONTRACTS WITH CUSTOMERS:

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

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

Midstream revenue consists of revenues generated from natural gas gathering activities. The gas gathering services are interruptible in nature and include charges for the volume of gas actually gathered and do not guarantee access to the system. Volumetric based fees are based on actual volumes gathered. The Company generally considers the interruptible gathering of each unit (MMBtu) of natural gas as a separate performance obligation. Payment terms for these contracts typically require payment within 25 days of the end of the calendar month in which the hydrocarbons are gathered.

Disaggregation of Revenue

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



	For the Three Months Ended March 31,
	2019			2018
Revenue from Contracts with Customers
Natural Gas Revenue	$	403,687		$	347,348
NGLs Revenue	29,766			50,884
Condensate Revenue	2,327			6,503
Oil Revenue	166			888
Total Natural Gas, NGLs and Oil Revenue	435,946			405,623

Purchased Gas Revenue	16,221			18,055
Midstream Revenue	18,443			26,254

Other Sources of Revenue and Other Operating Income
(Loss) Gain on Commodity Derivative Instruments	(195,376		)	35,087
Other Operating Income	3,197			10,710
Total Revenue and Other Operating Income	$	278,431		$	495,729

The disaggregated revenue corresponds with the Company’s segment reporting found in Note 16 - Segment Information.

Contract Balances

CNX invoice its customers once a performance obligation has been satisfied, at which point payment is unconditional. Accordingly, CNX's contracts with customers do not give rise to contract assets or liabilities under ASC 606. The Company has no contract assets recognized from the costs to obtain or fulfill a contract with a customer. The opening and closing balances of the Company’s receivables related to contracts with customers were $252,424 and $157,908, respectively.

Transaction Price Allocated to Remaining Performance Obligations

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

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

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

For revenue associated with contract terms greater than one year with a fixed price component, the aggregate amount of the transaction price allocated to remaining performance obligations was $156,564 as of March 31, 2019. The Company expects to recognize net revenue of $53,838 in the next 12 months and $38,449 over the following 12 months, with the remainder recognized thereafter.

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

Prior-Period Performance Obligations

CNX records revenue in the month production is delivered to the purchaser. However, settlement statements for certain natural gas and NGL revenue may not be received for 30 to 90 days after the date production is delivered, and as a result, the Company is required to estimate the amount of production delivered to the purchaser and the price that will be received for the sale of the product. CNX records the differences between the estimate and the actual amount received in the month that payment is received from the purchaser. The Company has existing internal controls for its revenue estimation process and the related accruals, and any identified differences between its revenue estimates and the actual revenue received historically have not been significant. For the three months ended March 31, 2019, revenue recognized in the current reporting period related to performance obligations satisfied in a prior reporting period was not material.

NOTE 5—ACQUISITIONS AND DISPOSITIONS:

On March 30, 2018, CNX Gas completed the sale of substantially all of its shallow oil and gas assets and certain Coalbed Methane (CBM) assets in Pennsylvania and West Virginia for $87,510 in cash consideration. In connection with the sale, the buyer assumed approximately $196,514 of asset retirement obligations. The net gain on the sale was $4,751 and is included in Loss (Gain) on Asset Sales and Abandonments in the Consolidated Statements of Income.

On December 14, 2017, CNX Gas entered into a purchase agreement with Noble, pursuant to which CNX Gas acquired Noble’s 50% membership interest in CONE Gathering LLC ("CNX Gathering"), for a cash purchase price of $305,000 and the mutual release of all outstanding claims (the "Midstream Acquisition"). CNX Gathering owns a 100% membership interest in CONE Midstream GP LLC (the "general partner"), which is the general partner of CONE Midstream Partners LP ("CNXM" or the "Partnership"), which is a publicly traded master limited partnership formed in May 2014 by CNX Gas and Noble. In conjunction with the Midstream Acquisition, which closed on January 3, 2018, the general partner, the Partnership and CONE Gathering LLC changed their names to CNX Midstream GP LLC, CNX Midstream Partners LP, and CNX Gathering LLC, respectively.

Prior to the Midstream Acquisition, the Company accounted for its 50% interest in CNX Gathering as an equity method investment as the Company had the ability to exercise significant influence, but not control, over the operating and financial policies of the midstream operations. In conjunction with the Midstream Acquisition, the Company obtained a controlling interest in CNX Gathering and, through CNX Gathering's ownership of the general partner, control over the Partnership. Accordingly, the Midstream Acquisition has been accounted for as a business combination using the acquisition method of accounting pursuant to ASC Topic 805, Business Combinations, or ASC 805. ASC 805 requires that, in circumstances where a business combination is

achieved in stages (or step acquisition), previously held equity interests are remeasured at fair value and any difference between the fair value and the carrying value of the equity interest held be recognized as a gain or loss on the statement of income.

The fair value assigned to the previously held equity interest in CNX Gathering and CNXM for purposes of calculating the gain or loss was $799,033 and was determined using the income approach, based on a discounted cash flow methodology. The resulting gain on remeasurement to fair value of the previously held equity interest in CNX Gathering and CNXM of $623,663 is included in Gain on Previously Held Equity Interest in the Consolidated Statements of Income.

The fair value of the previously held equity interests was based on inputs that are not observable in the market and therefore represent Level 3 inputs (See Note 14 - Fair Value of Financial Instruments). The fair value was measured using valuation techniques that convert future cash flows into a single discounted amount. Significant inputs to the valuation included estimates of: (i) gathering volumes; (ii) future operating costs; and (iii) a market-based weighted average cost of capital. These inputs required significant judgments and estimates by management.

The fair value of midstream facilities and equipment, generally consisting of pipeline systems and compression stations, were estimated using the cost approach. Significant unobservable inputs in the valuation include management's assumptions about the replacement costs for similar assets, the relative age of the acquired assets and any potential economic or functional obsolescence associated with the acquired assets. As a result, the fair value estimates of the midstream facilities and equipment represents a Level 3 fair value measurement.

As part of the purchase price allocation, the Company identified intangible assets for customer relationships with third-party customers. The fair value of the identified intangible assets was determined using the income approach, which requires a forecast of the expected future cash flows generated and an estimated market-based weighted average cost of capital. Significant unobservable inputs in the valuation include future revenue estimates, future cost assumptions, and estimated customer retention rates. As a result, the fair value estimate of the identified intangible assets represents a Level 3 fair value measurement.

The noncontrolling interest in the acquired business is comprised of the limited partner units in CNXM, which were not acquired by the Company. The CNXM limited partner units are actively traded on the New York Stock Exchange and were valued based on observable market prices as of the transaction date and therefore represent a Level 1 fair value measurement.

Allocation of Purchase Price (Midstream Acquisition)

The following table summarizes the purchase price and the amounts of identified assets acquired and liabilities assumed based on the fair value as of January 3, 2018, with any excess of the purchase price over the fair value of the identified net assets acquired recorded as goodwill. The purchase price allocation was finalized as of December 31, 2018.

Fair Value of Consideration Transferred:



	Amount
Cash Consideration	$	305,000
CNX Gathering Cash on Hand at January 3, 2018 Distributed to Noble	2,620
Fair Value of Previously Held Equity Interest	799,033
Total Estimated Fair Value of Consideration Transferred	$	1,106,653

The following is a summary of the fair values of the net assets acquired:



Fair Value of Assets Acquired:	Amount
Cash and Cash Equivalents	$	8,348
Accounts and Notes Receivable	21,199
Prepaid Expense	2,006
Other Current Assets	163
Property, Plant and Equipment, Net	1,043,340
Intangible Assets	128,781
Other	593
Total Assets Acquired	1,204,430

Fair Value of Liabilities Assumed:
Accounts Payable	26,059
CNXM Revolving Credit Facility	149,500
Total Liabilities Assumed	175,559

Total Identifiable Net Assets	1,028,871
Fair Value of Noncontrolling Interest in CNXM	(718,577		)
Goodwill	796,359
Net Assets Acquired	$	1,106,653

Post-Acquisition Operating Results (Midstream Acquisition)

The Midstream Acquisition contributed the following to the Company's Midstream segment:



	Three Months Ended
	March 31,
	2019		2018
Midstream Revenue	$	72,569	$	64,178
Earnings Before Income Tax	$	32,584	$	35,534

NOTE 6—INCOME TAXES:

The effective tax rates for the three months ended March 31, 2019 and 2018 were 15.2% and 28.8%, respectively. The effective tax rate for the three months ended March 31, 2019 differs from the U.S. federal statutory rate of 21% primarily due to the impact of noncontrolling interest, equity compensation and state income taxes. The effective rate for the three months ended March 31, 2018 differs from the U.S. federal statutory rate of 21% primarily due to state income taxes.

On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the "Act") which, among other things, lowered the U.S. Federal income tax rate from 35% to 21%, repealed the corporate alternative minimum tax ("AMT"), and provided for a refund of previously accrued AMT credits. As of December 31, 2018, the Company reclassified $102,482 from Deferred Income Taxes to Recoverable Income Taxes in the Consolidated Balance Sheets in anticipation of the AMT refund to be received in 2019.

The total amount of uncertain tax positions at March 31, 2019 and December 31, 2018 was $31,516. If these uncertain tax positions were recognized, approximately $31,516 would affect CNX's effective tax rate at March 31, 2019 and December 31, 2018. There were no changes in unrecognized tax benefits during the three months ended March 31, 2019.

CNX recognizes accrued interest related to uncertain tax positions in interest expense. As of March 31, 2019 and December 31, 2018, CNX had no accrued liabilities for interest related to uncertain tax positions.

CNX recognizes penalties accrued related to uncertain tax positions in its income tax expense. As of March 31, 2019 and December 31, 2018, CNX had no accrued liabilities for tax penalties related to uncertain tax positions.

CNX and its subsidiaries file federal income tax returns with the United States and tax returns within various states. With few exceptions, the Company is no longer subject to United States federal, state, local, or non-U.S. income tax examinations by

tax authorities for the years before 2016. The Company expects the Internal Revenue Service to conclude its audit of tax years 2016 through 2017 in the third quarter of 2019.

NOTE 7—PROPERTY, PLANT AND EQUIPMENT:



	March 31, 2019		December 31, 2018
Property, Plant and Equipment
Intangible Drilling Cost	$	4,254,127	$	4,120,283
Proved Gas Properties	1,135,717		1,135,411
Gas Gathering Equipment	2,207,853		2,126,895
Unproved Gas Properties	939,975		927,667
Gas Wells and Related Equipment	912,227		859,359
Surface Land and Other Equipment	236,006		238,487
Other Gas Assets	149,276		159,326
Total Property, Plant and Equipment	9,835,181		9,567,428
Less: Accumulated Depreciation, Depletion and Amortization	2,741,661		2,624,984
Total Property, Plant and Equipment - Net	$	7,093,520	$	6,942,444

NOTE 8—GOODWILL AND OTHER INTANGIBLE ASSETS:

In connection with the Midstream Acquisition that closed on January 3, 2018 (See Note 5 - Acquisitions and Dispositions for more information), CNX recorded $796,359 of goodwill and $128,781 of other intangible assets which are comprised of customer relationships.

All goodwill is attributed to the Midstream reportable segment and there have been no changes in the carrying amount since the date of the Midstream Acquisition.

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



	March 31, 2019		December 31, 2018
Other Intangible Assets
Gross Amortizable Asset - Customer Relationships	$	109,752	$	109,752
Less: Accumulated Amortization - Customer Relationships	8,190		6,552
Total Other Intangible Assets, net	$	101,562	$	103,200

During the second quarter of 2018, CNX determined that the carrying value of a portion of the customer relationship intangible assets exceeded their fair value as a result of an Asset Exchange Agreement with HG Energy II Appalachia, LLC. Accordingly, CNX recognized an impairment on this intangible asset of $18,650. There were no such impairments in the current period.

Amortization expense related to other intangible assets for the three months ended March 31, 2019 and 2018 was $1,638 and $1,922, respectively.

The customer relationship intangible asset is being amortized on a straight-line basis over approximately 17 years. The estimated annual amortization expense is expected to approximate $6,552 per year for each of the next five years.

NOTE 9—REVOLVING CREDIT FACILITIES:

CNX Resources Corporation (CNX)

In March 2018, CNX amended and restated its senior secured revolving credit facility ("Credit Facility"), which expires in March 2023. The CNX Credit Facility increased lenders' commitments from $1,500,000 to $2,100,000 with an accordion feature that allows the Company to increase the commitments to $3,000,000. The initial borrowing base increased from $2,000,000 to $2,500,000, and the letters of credit aggregate sub-limit remained unchanged at $650,000. The borrowing base was reduced to $2,100,000 in August 2018 primarily based on the sale of substantially all of CNX's Ohio Utica Joint Venture Assets and shallow oil and gas assets. If the aggregate principal amount of our existing 5.875% Senior Notes due in April 2022 and certain other

publicly traded debt securities outstanding 91 days prior to the earliest maturity of such debt (the "Springing Maturity Date") is greater than $500,000, then the Credit Facility will mature on the Springing Maturity Date.

The CNX Credit Facility is secured by substantially all of the assets of CNX and certain of its subsidiaries. Fees and interest rate spreads are based on the percentage of facility utilization, measured quarterly. Availability under the Credit Facility is limited to a borrowing base, which is determined by the lenders' syndication agent and approved by the required number of lenders in good faith by calculating a value of CNX's proved natural gas reserves.

The CNX Credit Facility contains a number of affirmative and negative covenants including those that, except in certain circumstances, limit the Company and the subsidiary guarantors' ability to create, incur, assume or suffer to exist indebtedness, create or permit to exist liens on properties, dispose of assets, make investments, purchase or redeem CNX common stock, pay dividends, merge with another corporation and amend the senior unsecured notes. The Company must also mortgage 80% of the value of its proved reserves and 80% of the value of its proved developed producing reserves, in each case, which are included in the borrowing base, maintain applicable deposit, securities and commodities accounts with the lenders or affiliates thereof, and enter into control agreements with respect to such applicable accounts.

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

The CNX Credit Facility also requires that CNX maintain a maximum net leverage ratio of no greater than 4.00 to 1.00, which is calculated as the ratio of debt less cash on hand to consolidated EBITDA, measured quarterly. CNX must also maintain a minimum current ratio of no less than 1.00 to 1.00, which is calculated as the ratio of current assets, plus revolver availability, to current liabilities, excluding borrowings under the revolver, measured quarterly. The calculation of all of the ratios exclude CNXM. CNX was in compliance with all financial covenants as of March 31, 2019.

At March 31, 2019, the CNX Credit Facility had $514,000 of borrowings outstanding and $193,106 of letters of credit outstanding, leaving $1,392,894 of unused capacity. At December 31, 2018, the Credit Facility had $612,000 of borrowings outstanding and $198,396 of letters of credit outstanding, leaving $1,289,604 of unused capacity.

On April 24, 2019, CNX amended its revolving credit facility, extended its maturity to April 2024 and reaffirmed its borrowing base at $2,100,000. In addition, the Cumulative Credit Basket for dividends and distributions was replaced with a basket for dividends and distributions subject to a pro forma Net Leverage Ratio of at least 3.00 to 1.00 and availability under the credit facility of at least 15% of the aggregate commitments.

Under the terms of the amended agreement, borrowings under the revolving credit facility will bear interest at our option at either:


•	the base rate, which is the highest of (i) the federal funds open rate plus 0.50%, (ii) PNC Bank, N.A.’s prime rate, or (iii) the one-month LIBOR rate plus 1.0%, in each case, plus a margin ranging from 0.25% to 1.25%; or


•	the LIBOR rate, which is the LIBOR rate plus a margin ranging from 1.25% to 2.25%.

CNX Midstream Partners LP (CNXM)

In March 2018, CNXM entered into a new $600,000 senior secured revolving credit facility that matures in March 2023. The CNXM credit facility replaced its prior $250,000 senior secured revolving credit facility.

Fees and interest rate spreads under the CNXM credit facility are based on the total leverage ratio, measured quarterly. The CNXM credit facility includes the ability to issue letters of credit up to $100,000 in the aggregate.

The CNXM credit facility contains a number of affirmative and negative covenants that include, among others, covenants that, except in certain circumstances, restrict the ability of CNXM, its subsidiary guarantors and certain of its non-guarantor, non-wholly-owned subsidiaries, except in certain circumstances, to: (i) create, incur, assume or suffer to exist indebtedness; (ii) create or permit to exist liens on their properties; (iii) prepay certain indebtedness unless there is no default or event of default under the facility; (iv) make or pay any dividends or distributions in excess of certain amounts; (v) merge with or into another person, liquidate or dissolve; or acquire all or substantially all of the assets of any going concern or going line of business or acquire all or a substantial portion of another person’s assets; (vi) make particular investments and loans; (vii) sell, transfer, convey, assign or dispose of its assets or properties other than in the ordinary course of business and other select instances; (viii) deal with any affiliate except in the ordinary course of business on terms no less favorable to CNXM than it would otherwise receive in an arm’s length transaction; and (ix) amend in any material manner its certificate of incorporation, bylaws, or other organizational documents without giving prior notice to the lenders and, in some cases, obtaining the consent of the lenders.

In addition, CNXM is obligated to maintain at the end of each fiscal quarter (x) a maximum total leverage ratio of no greater than between 4.75 to 1.00 ranging to no greater than 5.50 to 1.00 in certain circumstances; (y) a maximum secured leverage ratio of no greater than 3.50 to 1.00 and (z) a minimum interest coverage ratio of no less than 2.50 to 1.00. CNXM was in compliance with all financial covenants as of March 31, 2019.

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

At March 31, 2019, the CNXM credit facility had $136,650 of borrowings outstanding. CNXM had the maximum amount of revolving credit available for borrowing at March 31, 2019, or $463,350. At December 31, 2018, the CNXM credit facility had $84,000 of borrowings outstanding.

On April 24, 2019, CNXM amended its revolving credit facility and extended its maturity to April 2024. Among other things, the revolving credit facility now includes the ability to repurchase and/or cancel Incentive Distribution Rights (IDRs), including (i) the addition of a restricted payment basket permitting cash repurchases of IDRs subject to a secured leverage ratio of 3.00x, a total leverage ratio of 4.00x and pro forma availability of 20% of commitments and (ii) a basket for the repurchase of LP units tied to Available Cash (as defined in the partnership agreement and in the aggregate with the existing Available Cash LP basket) of up to $150,000 per year and up to $200,000 during the life of the facility.

Under the terms of the amended agreement, borrowings under the revolving credit facility will bear interest at our option at either:


•	the base rate, which is the highest of (i) the federal funds open rate plus 0.50%, (ii) PNC Bank, N.A.’s prime rate, or (iii) the one-month LIBOR rate plus 1.0%, in each case, plus a margin ranging from 0.50% to 1.50%; or


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

NOTE 10—LONG-TERM DEBT:



	March 31, 2019		December 31, 2018
Debt:
Senior Notes due April 2022 at 5.875% (Principal of $894,307 and $1,294,307 plus Unamortized Premium of $1,322 and $2,069, respectively)	$	895,629	$	1,296,376
CNX Credit Facility	514,000		612,000
Senior Notes due March 2027 at 7.25%, Issued at Par Value	500,000		—
CNX Midstream Partners LP Senior Notes due March 2026 at 6.50% (Principal of $400,000 less Unamortized Discount of $5,187 and $5,375, respectively)	394,813		394,625
CNX Midstream Partners LP Revolving Credit Facility	136,650		84,000
Less: Unamortized Debt Issuance Costs	10,598		8,796
Long-Term Debt	$	2,430,494	$	2,378,205

During the three months ended March 31, 2019, CNX completed a private offering of $500,000 of 7.25% senior notes due in March 2027. The notes are guaranteed by most of CNX's subsidiaries but does not include CNXM's general partner or CNXM.

During the three months ended March 31, 2019, CNX purchased $400,000 of its outstanding 5.875% senior notes due in April 2022. As part of this transaction, a loss of $7,537 was included in Loss on Debt Extinguishment in the Consolidated Statements of Income.

During the three months ended March 31, 2018, CNXM completed a private offering of $400,000 of 6.50% senior notes due in March 2026 less $6,000 of unamortized bond discount. CNX is not a guarantor of CNXM's 6.50% senior notes due in March 2026 or CNXM's senior secured revolving credit facility.

During the three months ended March 31, 2018, CNX purchased $391,375 of its outstanding 5.875% senior notes due in April 2022. As part of this transaction, a loss of $15,635 was included in Loss on Debt Extinguishment in the Consolidated Statements of Income.

NOTE 11—LEASES:

On January 1, 2019, the Company adopted Accounting Standard Update (ASU) 2016-02, and all related amendments, using the transition method, which allows for a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. CNX has elected the transition relief package of practical expedients by applying previous accounting conclusions under ASC 840 to all leases that existed prior to the transition date. As a result, CNX did not reassess 1) whether existing or expired contracts contain leases 2) lease classification for any existing or expired leases or 3) whether lease origination costs qualified as initial direct costs. Additionally, the Company elected the short-term practical expedient for all asset classes by establishing an accounting policy to exclude leases with a term of 12 months or less. CNX will not separate lease components from non-lease components for any asset class. Lastly, CNX adopted the easement practical expedient, which allows the Company to apply ASC 842 prospectively to land easements after the adoption date. Easements that existed or expired prior to the adoption date that were not previously assessed under ASC 840 will not be reassessed.

CNX's leasing activities primarily consist of operating and finance leases for electric fracturing equipment, natural gas drilling rigs, CNX's corporate headquarters as well as field offices, a natural gas gathering pipeline and commercial vehicles. Some leases include options to renew ranging from a period of 1 to 10 years, which are not recognized as part of the lease right-of-use (ROU) assets or liabilities as they are not reasonably certain to be exercised.

Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of the lease payments over the lease term. As most of CNX's leases do not provide an implicit rate, an incremental borrowing rate is used to determine the present value of lease payments.

The components of lease cost, which approximates cash paid, were as follows:



	For the Three Months Ended March 31, 2019
Operating Lease Cost	$	9,905
Finance Lease Cost:
Amortization of Right-of-Use Assets	1,318
Interest on Lease Liabilities	352
Short-term Lease Cost	1,824
Variable Lease Cost*	4,000
Total Lease Cost	$	17,399

*Amounts recognized on the balance sheet for natural gas drilling rigs are measured using the rates that would be paid if the rigs were idle, as this represents the minimum payment that could be made under the contract. Variable lease cost represents amounts paid for natural gas drilling rigs above this minimum when the rigs are in use. Amounts recognized on the balance sheet for electric fracturing equipment are measured using minimum pumping hours under the contract; however, pumping hours may exceed the minimum and vary period to period.

Amounts recognized in the Consolidated Balance Sheet are as follows:



	March 31,
	2019
Operating Leases:
Operating Lease Right-of-Use Asset	$	243,916

Current Portion of Operating Lease Obligations	70,345
Operating Lease Obligations	150,739
Total Operating Lease Liabilities	$	221,084

Finance Leases:
Property, Plant and Equipment	$	73,192
Less—Accumulated Depreciation, Depletion and Amortization	60,024
Property, Plant and Equipment—Net	$	13,168

Current Portion of Finance Lease Obligations	$	7,182
Finance Lease Obligations	12,270
Total Finance Lease Liabilities	$	19,452

ROU assets obtained in exchange for lease obligations during the three months ended March 31, 2019:



	Amount
Operating Leases	$	15,020
Finance Leases	$	956

Maturities of lease liabilities are as follows:



	Operating		Finance
	Leases		Leases
Twelve months ended March 31,
2020	$	79,557	$	8,349
2021	63,814		7,662
2022	60,496		5,097
2023	5,471		220
2024	5,452		196
Thereafter	34,477		—
Total Lease Payments	249,267		21,524
Less: Interest	28,183		2,072
Present Value of Lease Liabilities	$	221,084	$	19,452

Lease terms and discount rates are as follows:



	March 31,
	2019
Weighted Average Remaining Lease Term (years):
Operating Leases	4.54
Finance Leases	2.70

Weighted Average Discount Rate:
Operating Leases	4.93	%
Finance Leases	7.08	%

NOTE 12—COMMITMENTS AND CONTINGENT LIABILITIES:

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

At March 31, 2019, CNX has provided the following financial guarantees, unconditional purchase obligations, and letters of credit to certain third-parties as described by major category in the following tables. These amounts represent the maximum potential of total future payments that the Company could be required to make under these instruments. These amounts have not been reduced for potential recoveries under recourse or collateralization provisions. Generally, recoveries under reclamation bonds would be limited to the extent of the work performed at the time of the default. No amounts related to these unconditional purchase obligations and letters of credit are recorded as liabilities in the financial statements. CNX management believes that the commitments in the following table will expire without being funded, and therefore will not have a material adverse effect on financial condition.



	Amount of Commitment Expiration Per Period
	Total Amounts Committed		Less Than 1 Year		1-3 Years		3-5 Years		Beyond 5 Years
Letters of Credit:
Firm Transportation	$	192,841	$	191,869	$	972	$	—	$	—
Other	265		265		—		—		—
Total Letters of Credit	193,106		192,134		972		—		—
Surety Bonds:
Employee-Related	1,850		1,850		—		—		—
Environmental	11,136		9,211		1,925		—		—
Financial Guarantees	81,670		81,670		—		—		—
Other	9,885		8,770		1,115		—		—
Total Surety Bonds	104,541		101,501		3,040