Ladies and gentlemen, thank you for standing by, and welcome to CONSOL Energy's Fourth Quarter 2016 Earning Results Conference Call. As a reminder, today's call is being recorded. I would now like to turn the conference call over to the Vice President of Investor Relations, Mr. Tyler Lewis. Please go ahead, sir.

Thanks, John, and good morning to everybody. Welcome to CONSOL Energy's fourth quarter conference call. We have in the room today Nick DeIuliis, our President and CEO; Dave Khani, our Chief Financial Officer, and Tim Dugan, our Chief Operating Officer. Today, we'll be discussing our fourth quarter results and we have posted a slide presentation to our website. As a reminder, any forward-looking statements we make or comments about future expectations are subject to business risks, which we've laid out for you in our press release today, as well as in our previous Securities and Exchange Commission filings. We will begin our call today with prepared remarks by Nick, followed by Dave and then Tim. And then, we will open the call for Q&A. I wanted to highlight quickly that we plan to file our 2016 10-K and our annual reserve release next week on February 8th. With that, let me turn the call over to you, Nick.

Good morning, everybody. Given the recent Analyst and Investor Day that we hosted in Pittsburgh on December 13th of last year, I'd like to spend my time today briefly reiterating some of the main points that were discussed at the events, and while leaving more of the quarterly details for Dave Khani and Tim Dugan to discuss. As many investors know, CONSOL has gone through a period of intense change highlighted in-part by many strategic transactions that have contributed to our transformation into what is essentially a new company today. These changes also help to solidify our corporate culture by building upon the foundational goal of optimizing the allocation of all capital resources to enhance the long-term NAV per share of the company. This remains at the forefront of our decision-making matrix. On the operations front, the degree and rate of improvement over the past two, two-and-a-half years has been significant. In short, we recently raised EURs across our asset regions. And in some cases, we did that substantially. LOE has improved. IRRs are up. Capital efficiency is up and capital intensity is down. We've consistently beat many of our cost projections, especially when compared to those that were laid out during our 2014 Analyst Day a few years ago. Tim Dugan is going to highlight some of the operational improvements that we've continued seeing in the fourth quarter. Moving forward, we believe that there are two key developments that will further drive the NAV per share of the company. First one is how we're moving acreage in the non-core category over to the core category in an expedited yet methodical fashion. And the second development is our vast stack pay opportunity set being a big driver to the NAV per share. Our substantial footprint provides delineation opportunities both through…

Thanks, Nick, and good morning, everyone. I'll frame my remarks as they pertain to finance teams three NAV drivers, capital allocation, accurate forecasting and balance sheet and cost of capital. But before I hit on these drivers, I'd like to summarize our quarterly financial results as indicated on slide eight. CONSOL reported a fourth quarter net loss attributable to CONSOL Energy shareholders of $306 million, the GAAP loss this quarter included a $237 million impact from unrealized loss in commodity derivatives and AMT allowance an a few other items highlighted on this slide. After adjusting for these items, which is reconciled in our press release, CONSOL posted an adjusted income from continuing operations of positive $0.5 million and adjusted EBITDA attributable to CONSOL of $205 million. Now let's talk about the $167 million AMT allowance recognized this quarter. Related to taxes, this year, we reviewed current and historical tax positions taken by the company. These positions did put pressure on certain tax deferred assets related to alternative minimum tax credits. As a result, the company recorded a valuation allowance of $167 million during the fourth quarter related to these attributes. Cumulatively, this will result in a receipt of over $120 million in cash refunds of which we have already received $20 million during 2016. We expect to receive the remaining balance over the next 12 plus months. Now at the Analyst Day, we highlighted three main NAV drivers, and I'm happy to say that we're slightly ahead of our goals. First on capital allocation, we will be within the target leverage ratio zone of 2 times to 2.5 times, no later than the second half of 2017 with our improved forecast. Our management team is again assented to generate free cash flow and therefore the team will strive to beat…

Thanks, Dave. Good morning, everyone. We see three main drivers to improve our NAV per share; operating cost improvements, productivity improvements, and our Utica delineation and non-core to core program. Let me touch on how we're tracking on all three fronts while providing a brief summary of the quarter. First, an operation summary. During the quarter, we drilled seven dry Utica wells in Monroe County, Ohio, with an average lateral lengths of 9,600 feet while averaging 24 drilling days per well, or two days less than our previous projections. Over the course of the first nine wells that we've drilled since resuming activity, we averaged 25 days per well and an average lateral length of 9,500 feet. These drilling efficiencies in part continue to drive our cost performance. In the quarter, our total production costs were $2.27 per Mcfe, which is a decrease of $0.10 per Mcfe compared to the year earlier quarter. We expect further cost improvements across 2017 and 2018 driven by reductions in lifting costs and transportation gathering and compression costs. On the topic of costs, we've been getting a lot of questions around service costs and what we're seeing and ultimately what investors should expect. Our forecast and guidance include anticipated changes in cost due to market conditions, but as we've stated in the past, we may see some changes in service cost as activity increases but we don't anticipate across the board increases, and we expect that we'll be able to offset much of these potential increases through continued efficiency improvements and technological advancements. Offsets will come through things like continued focus on spud to turn in-line cycle times and the use of our production control room to reduce production downtime and more effectively deploy our well tending manpower. Currently we're not sourcing sand directly…

Thanks, Tim. This concludes our prepared remarks. John, can you please open the line up for questions at this time?

Certainly. And first from the line of Neal Dingmann with SunTrust. Please go ahead.

Good morning, guys. Nice details today. So first question is going to be maybe for Tim or maybe for Nick, whichever do you want to look. I'm looking at from the Analyst Day the slides that you show with all just the massive acreage both in the Utica and Marcellus. And so my question is, could you talk about maybe, Tim, the plans to – delineation plans, I guess, particularly in the Utica, does the fee acres come into play? I mean, mostly I guess, my question is, you've been drilling around Monroe and for the remainder of this year, where should we expect you to kind of focus the drilling?

I think for Analyst Day in our one slide, I don't remember the slide number, but we did lay out several delineation points, wells, both operated and non-operated that will be drilled in the next two years, and that is our plan going forward, the 11 delineation points that I talked about. And with that we expect that those points will really help us further characterize the Utica and bring some of that non-core acreage into the core category.

And have you guys thought what – I haven't asked you guys in a while, just versus others out there, you certainly have a much larger fee position both in Utica and Marcellus than others. Is that something you'd consider just in outright monetizing or is it still too valuable to drill on given what it does to your working interest?

I think with everything we do, we rank our opportunities. We rank them in our portfolio. And as economics dictate, we make the decisions on activity, where to go, and that remains – it's fairly fluid as these delineation points come in over the next couple of years, we've got a base plan in place, but that plan will be adjusted as we get more and more information in, so it's all economically driven.

All right. And then just last question on the takeaway, in particular, I think you mentioned at the Analyst Day about the dry gathering system. What about if you'd go further down, we've seen some pretty positive activity, surrounding some of your activity in West Virginia, do you have the takeaway down there, if you could just talk about any of the sort of southern takeaway you have or don't have?

We do. We've got one of the benefits, I guess to our acreage position and our marketing position is the flexibility we have in takeaway, the number of takeaway points we have. And we've looked at how we would handle dry Utica volumes in West Virginia and we've got a plan in place to be able to do that. But that's all part of the consideration, when we go through our asset assessments, we consider every aspect from our fee acreage and land position to marketing and takeaway capacity and ability to move the gas.

Very good. Thanks.

Yes. Just in addition, I would just give the CONE system is between the Anchor System, which is about 85% utilized in DevCos II and III which are sitting probably more in than 5% and 25% utilization. So there is spare utilization capacity on that CONE system.

Very good. Thanks, David.

Our next question is from Holly Stewart with Scotia Howard Weil. Please go ahead

Good morning, gentlemen. Just maybe few high level ones here for Nick. Nick, it looks like you added the potential sale of the coal business as one of the strategic options, it doesn't seem like you would have done that unless you had a reason to. So I guess are you getting any inquiries on selling the coal business outright? Why sort of add that to the list here over the last six weeks?

Sure. The three processes we've laid out, what we're trying to do is we're trying to give ourselves the most looks across these different avenues to effectuate a separation and choose the one that we feel has got the best NAV per share proposition moving forward. And we want to do that in a way where it's a competitive process. So we've got a horse race, so to speak that's ongoing. When you look at the M&A side, I think one of the biggest attributes that would make that attractive to a potential buyer is not just the asset base itself, and how it's Tier 1 and one of one, but the team they're operating at. So when you look at what the opportunity set is out there in the coal space, there's been so much topsy-turvy, up-down rollercoaster rides here over the last two years in the coal space within the United States and globally, frankly. And if you look at that team coupled with that asset, that would be an outstanding platform to build upon subsequent to just the Pennsylvania mining complex. So I think that reflects a couple of things. Like we said, getting as many different looks as we can across these avenues, a competitive process to make the best NAV per share decision, but also recognizing, on that one in particular, you've got an operating team and a coal mining complex that would be a great platform to build upon moving forward.

Okay, great. And then maybe just curious on CONE, sort of how you're thinking about that business. There's no real link to Noble now in the upstream side at this point. They have recently done another acquisition in the upstream space. So, just sort of thinking about, would you be interested in owning that whole, I guess, piece of the pie for CONE, kind of high level thoughts there?

Yeah. We like CONE. We see value in CONE. And you see we've put a value on CONE in our Analyst Day for an NAV. And so I think the question you need to ask Noble is, does Noble want to sell CONE? For us, we like CONE.

Understood. Thank you.

Next we will go to Joe Allman with FBR. Please go ahead. Joseph Allman - FBR Capital Markets & Co.: Thank you. Good morning, everybody.

Good morning.

Good morning.

Good morning. Joseph Allman - FBR Capital Markets & Co.: This is for Tim probably. So, Tim, could you just once again review what your current activity is, your current E&P activity and what the plans are over the next, say, few months? I know you're going to be – you've got two rigs in Utica, you're shifting to Southwest PA, then you're shifting back to Utica. Could you just review that for us again? And then talk about kind of key data points or key tests that you're focused on over the next few months.

Well, like I said, we've got both rigs right now in Monroe County, Ohio. In the late March/April timeframe, one of those rigs will move over to Southwest PA and drill some Marcellus wells. There are wells that we've already got some sunk capital there. We've got top holes drilled. So we've got to go in and drill laterals and then we've got some additional DUCs on that pad that we'll be able to complete. And then from there, we'll be moving up to Westmoreland County, PA to drill some offsets to our Gaut well. We've got two wells planned up there. And then we'll follow up with – we've got two frac crews running right now. We'll have one and a half to two frac crews running consistently throughout the year. So our activity is going to be pretty steady. It will move back and forth between Marcellus and Utica. And then as far as data points, as I mentioned, we've got a non-operated data point that will be coming in – well that will be drilled, will be spud this quarter. And we've got a couple others planned for later in the year, some operated, some non-operated. But as those come in, we'll update our plan and our earth model and make decisions accordingly based on the data that we get in and what we learn about the Utica. Joseph Allman - FBR Capital Markets & Co.: And so – just a quick follow up. Any changes to your drilling or completion techniques that you're looking at over the near-term that will be particularly interesting to you?

Nothing significant. I mean, we continually are looking at our drilling and our completion practices and how we can improve them, make them more efficient. There's always a certain amount of ongoing testing from prop and loading, lateral spacing, landing zone targets. All those things are continually being looked at and updated, but there's no step changes that I see coming. Certainly we have some things we're working on to improve efficiencies. We've talked about our frac plug drill out, trying to minimize the number of plugs or use plugs that will allow us to get through the drill out process quicker and get our wells turned-in-line sooner. We're continuing to see a decreased number of days per well on the completion side. And as you can see from our drilling numbers in Monroe County, we've already come down below what we were projecting as far as cycle time. So one thing I will say is we expect those learnings to carry over into Pennsylvania to the deep dry Utica and Pennsylvania and we expect to see significantly improved cycle times over there as well. Joseph Allman - FBR Capital Markets & Co.: Okay. Very helpful. Thank you.

Our next question is from Jeffrey Campbell with Tuohy Brothers. Please go ahead.

Good morning. Couple of quick ones, well maybe not that quick. But anyway, when will you provide results from your recent Upper Devonian tests?

When we have production results that we're comfortable with and we've got enough data to providing a sound update.

Okay. I just wondered if you kind of had a rough idea in mind, would it maybe be third quarter, fourth quarter, something like that?

Most likely, yes, second half of the year.

Okay. I noticed the five Marcellus wells that had the 60-day rate of 12.5 million cubic feet per day. I was just wondering, first, how much do you think you might be increasing recoveries or improving present value by choking back those wells? And then secondly is, was this approach special to that pad or that area or is this is pretty typical practice throughout your Pennsylvanian Marcellus production?

I think the managed pressure approach is becoming more of a common practice as we're bringing pads online and we are seeing a benefit from it. We think we're seeing an EUR uplift. And so it's become more of a standard practice.

Okay. Thank you. And my last question is you have quite a number – you've mentioned this, you have quite a number of passive interests in Utica wells over the course of 2017 and 2018. I was wondering first, is your decision concerning which wells to invest in, driven exclusively by location or does the operator matter? And do the goals for these wells differ from the Utica wells that you intend to operate in any way?

We look at everything. I mean it's probably driven more by location and what we aim to learn geologically about the rock. And so we can better identify the Utica boundaries, but we certainly look at each operator as well. But I don't think we would step into a deal with an operator that we didn't have full faith in.

Typically there's an overlap or correlation where the rate of return will be there with the capital investment coupled with where we're interested in acquiring the data because of things like geology that's been brought up.

Okay. Thank you. I appreciate it.

And then we'll go to the line of Jacob Gomolinski-Ekel with Morgan Stanley. Please go ahead.

Hey, guys. Thanks for taking the question. Just on the sale of the coal business, and the release said, a sale or a spin, so just wanted to understand how you're evaluating each option, a sale versus a spin to shareholders?

The ultimate metric will be our view taking a look out into the future on what the NAV per share proposition is for each, so those three processes of course offer up different points in time views of how they deliver value back to the ownership and that's the type of assessment that we'll go through. It's also one of the reasons and drivers why we want to run these in parallel to compare one versus the other. So, an example of a sale, it's a one-time decision and we need to make that assessment off of that one-time valuation. Whereas something like a spin-off is an ongoing view as to what that will do as time progresses. And we evaluate both of those, along with the third with the continued drops into CNXC and we see which one of those makes the most sense for the ownership as it sits today.

Yeah. Just we want to make sure that we'll look at tax efficiency, the goals of being a pure play E&P company when we come out of it, and allow for enough debt mapping and leverage at both entities so that we have both entities – the outcome where it'll be positive post-display.

Got it. And then in terms of the leverage ratio, so it sounds like – I mean you would have to get to that – given it's the 2 – 2.5 time requirement for share buybacks, I would imagine something similar for the spin?

Yes. I mean, I think right now we're on a path irregardless of the separation that we're going to get to that 2.5 times by year-end. And obviously our goal is to generate higher free cash flow to accelerate, and to give us the flexibility that we have all three of our options, including stock buyback to be in there. With the separation that could accelerate the leverage ratio decline and we'll view that as optionality, and if that's the case then we can execute a stock buyback even sooner.

Thanks. And then just the last question. In terms of the target leverage ratio, can you just talk about what you think – how you think about it in terms of including or excluding things like the mine closing cost, post-retirement benefits, gas well closing et cetera in the numerator, I get the bank calculation, but in terms of what you think is appropriate in terms of a run rate and sustainable cash structure?

Yeah. We look at it as in the denominator, so it's in the EBITDA cost already, so that's how we look at it right now and that's how the banks look at it right now too.

Okay. So you just have it in both. Okay. So the 2.5 times is inclusive of both the liability and the liability service cost?

Yeah. Well, you wouldn't put the numerator and the denominator. You'd pick one. So you're not double counting. So we count it in the denominator and not in the....

Always a negative. Sure. Got it. Okay. Okay. That's it for me. Thanks very much.

Welcome.

And we will go to James Spicer with Wells Fargo. Please go ahead.

Yeah. Hi. Good morning. On the $400 million to $600 million of asset sales, wondering if you could give us a sense at all of timing as to when we might hear some on that, whether you have processes that are already in place? And also what the near-term focus is?

The asset sales, as you stated, the target is $400 million to $600 million within this year. We do have, as we always do, over the past number of years a bunch of processes in the loop that are running in conjunction with one another. And just a couple of thoughts there, it's going to be somewhat difficult to time out with specificity month-by-month or quarter-by-quarter, but the expectation should be that you're going to see a significant portions of the $400 million to $600 million occur in the first half of this year, as well as the second half. And also the types of E&P assets that would be contributing to that would not materially affect our development plans and production plans and activity set within the next three to five years. So I don't think you'll see a material impact with what we have in store on the E&P operational side as a result of these asset sales.

Okay. Great. That's helpful. And then also just to clarify, your 2 to 2.5 times leverage target, is that on a – that is on a consolidated basis or that's just CNX standalone?

That is net CNX. So that's excluding the roughly $191 million of net debt that CNXC has.

Okay. Got it. Thank you.

And to the presenters, we have no further questions in queue.

Great. Thank you everyone for joining us this morning. We look forward to speaking with everyone again next quarter. Thank you.