CNX Resources Q3 Earnings Call Highlights

Key Points

• CNX Resources plans to maintain steady production through 2027 unless higher natural-gas prices create an incentive to increase output. Strong hedging and storage levels support the maintenance-production strategy.
• Share repurchases remain CNX’s preferred capital-allocation option, with acquisitions evaluated against their ability to improve long-term free cash flow per share. The company views buybacks as a way to increase production and value per share without growing total output.
• CNX expects to prioritize its most economic Southwest Pennsylvania Marcellus inventory before shifting primarily toward Central Pennsylvania Utica and Marcellus development. Management remains bullish on long-term Appalachian gas demand but noted that regional prices and supply economics will constrain near-term growth.

CNX Resources NYSE: CNX said it expects to remain in a maintenance-production posture heading into 2027 unless natural-gas prices provide an incentive to increase output, with the company citing its hedge position and current storage levels as factors supporting that approach.

During the company’s third-quarter 2026 question-and-answer call, President and Chief Executive Officer Alan Shepard said U.S. gas storage was near its five-year average and could approach 4 trillion cubic feet entering winter. While CNX did not provide forward guidance, Shepard said the company’s current outlook supports keeping production steady.

“Unless we see something that incentivizes producers to bring on more gas, we will be staying steady state,” Shepard said. “Obviously, if it sort of degrades from here, we will make adjustments as necessary.”

Shepard added that CNX is “pretty hedged” going into 2027, distinguishing its position from that of some other producers and supporting its maintenance-mode mindset despite current gas-price conditions.

Capital Allocation and Buybacks

Asked about consolidation in Appalachia following an in-basin transaction announced during the week, Shepard declined to comment on other companies’ merger activity. He said consolidation is common in commodity industries and that CNX will monitor how combined companies approach production levels.

On CNX’s own acquisition strategy, Shepard said mergers and acquisitions remain one potential use of capital but must compete with share repurchases. The company evaluates opportunities based on whether they are accretive to long-term free cash flow per share, he said.

“Right now, share repurchases are sort of the bar we test all of that against, and they continue to be extremely attractive,” Shepard said.

Shepard also addressed questions about CNX’s use of its balance sheet while conducting substantial repurchases in consecutive quarters. He declined to discuss short-term buyback tactics but said the company has historically increased purchases when the sector sells off and reduced activity when valuations improve.

He characterized buybacks as a way to build long-term per-share value, particularly given CNX’s view that Appalachian natural-gas demand will strengthen over time. Rather than growing total production, a company can increase production per share through repurchases, he said.

Costs and Infrastructure Plans

Chief Operating Officer Navneet Behl said CNX has seen higher costs for diesel and steel, though the expected effect on its capital program remains limited. Behl said the impact is less than 1% of capital spending.

Shepard said CNX has reduced its diesel exposure over time through emissions-reduction efforts, including the use of electric fracturing fleets and in-field water transportation. As a result, exposure to the categories experiencing inflation is relatively limited moving into 2027, he said.

Regarding development of the company’s Central Pennsylvania, or CPA, acreage, Shepard said CNX does not anticipate major infrastructure spending spikes as it advances through the field. He said annual infrastructure spending could fluctuate but would generally be around $25 million, plus or minus.

CNX expects its all-in capital-efficiency target, including drilling, completion and infrastructure spending, to be in the range of $0.85 to $0.90, subject to inflation and annual infrastructure requirements. Shepard said the company sees continued opportunity to reduce costs by improving drilling times in the Utica.

Development Transition Toward the Utica

Shepard said CNX intends to prioritize its remaining Southwest Pennsylvania Marcellus inventory because it is the company’s most economic opportunity, supported by existing infrastructure and largely involving return trips.

The company expects to finish development of its Southwest Pennsylvania Marcellus position as it exits the decade, leaving roughly four to five years of remaining activity in that area, according to Shepard. CNX would then shift predominantly toward the CPA Utica and CPA Marcellus, before ultimately returning to Southwest Pennsylvania for Utica and other horizons later.

For 2027, Shepard said the company expects a development mix broadly similar to the current year, blending Deep Utica activity with remaining Southwest Pennsylvania development. He did not provide a specific well count, saying annual program details should not be interpreted with “false precision.”

Still, Shepard called the Deep Utica a core part of CNX’s development plans for the coming decades.

Natural-Gas Demand and Pricing

CNX remains highly positive on long-term demand for Appalachian natural gas, Shepard said, though he declined to quantify projected demand from areas such as artificial intelligence-related power needs.

“What is clear is natural gas, every drop of it here in Appalachia is going to get developed,” Shepard said.

However, he said production growth will remain constrained by the supply curve. CNX would bring additional volumes to market when longer-term gas prices rise enough to support the required investment, while maintenance production remains the company’s approach until then.

Shepard also said CNX is participating in discussions around direct gas sales to potential customers, similar to other basin producers. The challenge, he said, is whether potential buyers offer sufficient premiums to justify producers committing to long-term fixed-delivery contracts. CNX did not provide a timeline for potential agreements.

On regional pricing, Shepard said about two-thirds of CNX’s portfolio has in-basin exposure. He attributed third-quarter differential pressure to weather-related softness in the region, noting that moving volumes to markets such as Michigan was not always economic.

CNX did curtail some production when in-basin prices fell below $1 per unit, though Shepard said total curtailments were less than 1 billion cubic feet for the quarter. The company’s hedge book reduced the need for more extensive shut-ins, he said.

About CNX Resources (NYSE:CNX)

CNX Resources Corporation NYSE: CNX is an independent natural gas exploration and production company focused on the Appalachian Basin. The company develops and produces natural gas from unconventional shale formations, with its operations concentrated in the Marcellus and Utica shale areas.

CNX's activities include leasing, drilling, completing and operating natural gas wells, as well as managing related gathering and infrastructure arrangements used to transport production to market.

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