Ladies and gentlemen, thank you for standing by. And welcome the CNX Resources Fourth Quarter 2017 Results Conference Call. As a reminder today's call is being recorded. I would now like to turn the conference over to the Vice President of Investor Relations. Tyler Lewis. Please go ahead.

Thank you and good morning everybody. Welcome to CNX Resources' fourth quarter conference call. We have in the room today Nick DeIuliis, our President and CEO; Don Rush, our Executive Vice President and Chief Financial Officer and Tim Dugan, our Chief Operating Officer. Today, we will be discussing our fourth quarter results, and we have posted an updated 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 have laid out for you on our press release today, as well as on our previous Securities and Exchange Commission filings. We will begin our call today with prepared remarks by Nick, followed by Don, and then Tim and then we will open the call for Q&A. A couple of housekeeping item. Similar to last quarter, you will notice on Slide 3 of our slide presentation, as well as in this morning's press releases, a description of the post-spin company names and stock trading symbols along with the recent Midstream acquisition. Again, a summary of these changes are laid out in detail on Slide 3 of the fourth quarter slide presentation, which is accessible on the Investor Relations portion of the Company's website. Also CNX's financial results for the fourth quarter reflect provisional amounts related to the December 2017 enactment of the Tax Cuts and Jobs Act. These provisional estimates are based on CNX's initial analysis and current interpretation of the legislation. Given the complexity of the legislation, anticipated guidance for the U.S. treasury and the potential for additional guidance from the Securities and Exchange Commission or the Financial Accounting Standards Boards, these estimates maybe adjusted to our 2018. As a result, despite our historical practice disclosing full financial statements as part of our earnings release. We have only provided the income statement in conjunction with the fourth quarter and full-year 2017 results. CNX continues to evaluate the impacts of the company's balance sheet and cash flow statements and expects to revise an update with its 10-K filing, which the Company anticipate to file on February 7. Also CNX and CNXM plan to host a Joint Analyst and Investor Day on Tuesday March 13, located at the CNX headquarters in Pittsburgh, Pennsylvania. The Analyst and Investor Day which is expected to last approximately four hours will feature presentations from members of CNX and CNXM's senior leadership team followed by a question-and-answer-session. We plan to distribute additional details in the coming weeks. Lastly, CNX will be participating in the upcoming Scotia Howard Will Energy Conference from March 26 to 28 and we look forward to seeing everyone in the New Orleans. With that, let me turn the call over to you, Nick.

Thank you Tyler and good morning everybody. Fourth quarter marks a watershed period in the history of our company as we completed the separation of our gas and former coal businesses. This final separation was many years into making it really goes back to around 2005 when we established our E&P business as a separate business unit with the standalone management team which at the time was CNX Gas. We drilled our first Marcellus shale well in Southwest PA around 2008 taking advantage of our fee acreage position and in 2010 we acquired the many resources Appalachian E&P assets, which really catapulted the CNX into a major player in unconventional gas in the Appalachian basin. In that transaction, we valued the deal really on the basis of the Marcellus shale we also received between 450,000 and 500,000 of Utica shale on top of it which has become very important looking forward. So much has changed since then, we have been hard at work. In addition to divesting 150 plus years of accumulated coal assets and the associated legacy liabilities, we also have reset our E&P operations to focus exclusively on driving capital efficiency and begin best-in-class E&P operators. We have introduced big data and reservoir modeling into our planning and operations coupled with our non-op participation in third-party wells resulting from our large acreage position, we think we have an unmatched data set in the Utica Shale. This has made the deep Pennsylvania dry Utica a reality for CNX. If you look at the fourth quarter, we announced preliminary results for two additional Utica wells, the Aikens 5J and 5M. Those are offset wells to our premier Gaut well. These Aikens wells are performing in-line to slightly better than the Gaut. That says a lot. And over the past 47…

Thank you, Nick, and good morning everyone. Since we have already discussed the CONE deal, I would like to take this time to spend a moment to recap our other major transaction, the coal spin-off that we completed in the fourth quarter. To remind everyone, we pursued the spinoff for a number of reasons. But ultimately, we believe that the market was under-appreciating our assets and its former structure. So consistent with our NAV-per-share-driven philosophy, we worked hard to address it and the results speak for themselves as you can see on slide 6. As of last week’s close in aggregate over the first two months, shares have increased by almost 20% compared to our Appalachian gas peers, who are flat over the same time period. Basically, we have created two world-class companies with great balance sheets and bright futures. And in doing so, we drove by value creation for our shareholders. The transaction was a success and we are really executed to have this strategic milestone behind us. So we can start our next chapter and begin to operate as a pure play E&P Company and we see plenty of opportunity to continue to grow the NAV per share of the company moving forward. Let’s discuss the quarterly results starting on slide 7. We had adjusted net income from continuing operations of $222 million or $0.98 per diluted share and adjusted EBITDA from continuing operations of approximately $173 million for the quarter. And we finished the year with EBITDA from continuing operations of $476 million. However, I think it is important to point out that if you were to simply annualize our Q4 EBITDA number; you would have an EBITDA run rate of over $690 million annually. I really think this helps to visualize the rapid quarter-to-quarter EBITDA growth;…

Thanks, Don and good morning everyone. Before I turn to the slides, I'd like to take a minute to reiterate some of the previous points on the importance of the CNX Midstream Transaction and what is means from an operational perspective. Now that the upstream and midstream entities have complete alignment from a management and development standpoint, the two companies can work in tandem to drive efficient production and EBITDA growth. The biggest change resulting from the transaction is the fact that a key portion of CNX's Utica acreage is now dedicated to the MLP, which greatly simplifies and accelerates our shift to stacked pay developments. The now single sponsored CNX Midstream is positioned to build out the infrastructure necessary to simultaneously gather Marcellus and Utica volumes in Southwest PA, which will help drive growing rates for return for CNX Resources. We expect to share some of the details about the stacked pay process and how we planned to implement it over the near term at our upcoming Analyst Day. Now turning to Slide 11. Let's look at our operational results for the quarter. Total sales volumes in the quarter were 119 Bcfe, up 17% quarter-over-quarter. The majority of this increase was driven by 68% increase in Utica volumes as production benefited from new wells in the Monroe County, Ohio in the early days of Aikens production of in the CPA deep drive Utica. Total production cost declined primarily due to the increased mix of lower cost Monroe county dry Utica volumes, which benefit from a favorable gathering rate. In full-year 2017. We experienced modest service costs inflation particularly in profit and pressure pumping services. For 2018, we currently have two frac crews under contract with an option on a third crew. And we don't anticipate meaningful service cost increases…

Thanks, Tim. Operator, if you can open the line up for Q&A at this time please.

[Operator Instructions]. We do have something from the line of Joe Allman with Baird. Please go ahead.

Thank you. Good morning everybody.

Good morning, Joe Allman.

So this one’s for Nick or Don. Nick, you mentioned the monetization of the AMT credit refund. At this point, what’s your estimate of the size of that refund?

At this point Joe, we are not ready to put forth a quantitative estimate of that, other than we do expect the monetization window to open up when we get to some time and sort of the early 2019 time period. But we have more color on that at the March Investor Analyst Day as the timing as well as perhaps at least a band or an estimate of magnitude.

Okay, great. That’s helpful. And this next one is for Tim. I guess there’s two questions on the Utica. So number one is what are the options for getting those wells cheaper? I know that these Aikens wells are a lot cheaper than the prior, but how much can you reduce the cost going forward. And then second, when you’re doing a managed drawdown and the choke management, have you run a bunch of iterations to see the impact on NPV at various production rates?

We have done a lot of modeling through our rate transient analysis to understand the impact of different drawdown rates on the dry Utica and have used the modeling results really to optimize that. And then I'm sorry what is the part of your question, Joe?

That $15 million well cost, what are the options for getting that lower, and what might be some estimates of rail or how you can get that?

We still hold the target of $12 million to $12.5 million for the dry Utica wells and so the larger our dataset gets the more we understand the specifics area-by-area. We still think there are some savings that we can capture on the drilling side to be more efficient in drilling and get our drilling cycle times down and we're working through some of those opportunities. And on the completion side, we did a little bit of testing with the Aikens wells and we will continue to do some optimization and modeling as we work our way through the next handful Utica wells, but completion optimization will also be a part of that. The Aikens was the first pad where we drilled two Utica wells one after the other. As we move into the end of the year, you'll start to see more and more of the pad drilling, and that's really where we will capture the largest benefit and getting our costs down.

Got it. And just a follow-up to that one on the choke management, are you going forward, you're going to be tweaking that or do you think you're pretty settled on the drawdown that you're working on right now.

Well I think, as I said we're understanding the differences area-by-area. So what we do in say Westmoreland County with the Aikens and Gaut wells, maybe different from what we do in Southwest PA slightly as far as the drawdown rates and the rates that we hold to pressure drawdown. So, we will continue to tweak it as the information and data dictates. But right now, we're pretty comfortable with where we are.

Okay, very helpful. Thank you very much guys.

Thank you. And next, we will go to the line of Holly Stewart with Scotia Howard Weil. Please go ahead.

Good morning, gentlemen.

Good morning.

Maybe just a quick one for Tim on the development plan for 2018 and just thinking about it versus 2017, it looks like you're moving back pretty significantly to Southwest PA, les West Virginia wells, less Monroe County wells. So can you talk about that process and then how you think that trend will ultimately impact the gathering cost? Maybe that's back half of the year, if it does.

Well, we continue to let economics drive our decisions. When you look back at 2017, when we came out of a late 2016 and 2017, and came out of the shutdown. Monroe County was - really provided us with the highest rate of returns, so we really focused on that early in 2017 and then we have moved back more into the Marcellus. But we do have some Monroe County drilling planned for 2018, but it is limited. So we're moving more back into the Marcellus and with the results we have seen in Greene Hill and Morris. We continue to follow the economics and rates of return. So you'll see about 55% of the capital deployed this year for a drilling and completion in the Marcellus. And really we just finished our first pad that we since coming off the shutdown that we actually drilled and completed started to finish that where we weren't going back to a pad, where we had top holes drilled or we had some level of work already done. So I think that gives us a lot of confidence moving into the Marcellus. We have done that so much and we have got the cost down there. It gives us a lot of confidence in the 2018 plan and it's also an area, where gathering costs are really pretty well set. So we understand what those are going to be. So 2018 has really down to execution, continuing to execute on our dry Utica plants to delineating, we are actually moving to development by continue in the growth mode with the Marcellus.

Okay, maybe one for Don. Don can you kind of help us with the quarterly cadence for production for 2018?

Yes. So, I didn’t quite hear the quarterly cadence of production. Yes, so you can kind of see it on the Slide 14 towards not exactly like its unfolded in 2017, this year is sort of more kind of gradual production growth throughout the year, all be it being offset by some of the year-to-year declines that you are sort of send overcome that, so a lots smoother as far as till the production timing although it is a bit lumpy.

Yes I think with adding the third rig in December and then a another rig coming on later this year, you will see a more even spread in 2018 of our turn in-lines, so you will see a more gradual increase throughout the year, where as in 2017. We had talked about being very heavily weighted towards the end of the year, that’s where we were, we ran an additional frac crew in the fourth quarter, but I think in 2018, it will be more evenly spread.

Okay great and then maybe just one final for me. On your I call it your pie chart on Slide 18 of your end market exposure. Do you have and Nexus built into that or is that a 2019 event?

I think that’s showing up in the year, Holly.

In 2019, okay. Thanks Tyler.

Thank you. And next we will go to the line of Jeffrey Campbell with Tuohy Brothers. Please go ahead.

Good morning and first I want to congratulate on the lean and mean slides, they seem to reflect the more focused company you have constructed very nice. On Slide 12, you mentioned that all the Morris Pads are being developed for stacked pay, so just wondering if you could kind of give us a little overview which is zones you have in-line to exploit in what order and over what time horizon?

We talk about stacked pay is primarily Marcellus and Utica, there will be maybe some Upper Devonian mixed in there on occasion, but we are talking Marcellus and Utica and there is a strategy behind that that allows us to take advantage of some blending of dry Utica gas with damp Marcellus gas to keep our gathering and processing costs at a minimal level. So to avoid some processing on the damp Marcellus gas. So the Utica wells are strategically scheduled in there to be able to blend with the damp Marcellus gas.

Okay, thank you. We have had some discussion about the after tax while return on the Aikens wells which are quite impressive and they are certainly strong enough to support single zone development and I was just wondering, as you are continuing to explore some of these later counties, do you have hopes to be able to co-mingle on the Marcellus and Utica and other areas beside Southwest PA and could you just give us a little color on what you are thinking there?

Yes we do, I think everywhere we look at dry Utica, we are looking at the potential for stacked pays gets back to having that infrastructure in place and the impact it has on a rate returns, up in Westmoreland and Indiana County on the Marcellus wells that we have drilled in the past, you coupled that the stacked pay with the advancements we have made in completions and we see the EURs on the Marcellus wells increasing and then the rates of returns increasing in two parts, one because of the enhanced completions and the other because of the stacked pays and the infrastructure that’s already in place when we return.

Yes. I think the improving Marcellus is also a point well taken. Last question for me on the slide that was discussing the Aikens wells. So the Aikens 5M, Slide 13 said that you used higher loadings and also ceramic proppant. And it looks like that well outranked the Aikens 5J based on saying it’s the second-best well. You can correct me if I’m wrong on that. So is your read so far that the ceramic proppant is paying for itself with production outperformance and are you planning any more ceramic tests in 2018?

I think we are believers of the ceramic proppant in the deep Utica. We think it’s necessary and we think the results show that. The 5J was an unbounded well, so we increased the proppant loading there as a test to understand the impacts of that. But we are firm believers in ceramic and we will continue to use it going forward. That being said, we talk about optimization, homing in on the exact percentage that we need. We may see some adjustments there, but I think you will continue to see ceramic proppant being used.

Okay, great. Thank you.

[Operator Instructions]. We do have something from the line of James Spicer with Wells Fargo. Please go ahead.

Yes, hi guys. I’m hoping you can provide a little bit more detail on the plan to get the year-end leverage down to your 2.5 times target, particularly in the context of the share purchase program and then related question just wondering what your thoughts are and taking advantage of the strength in the market to address your bonds, which become callable in the next few months?

Sure. Looking at the first part of that question. For us, it has always been the last number of years about NAV per share and really wanting to be the best-in-class capital allocators. When you look at everything from our incentive plans to our decision making, they’re all built off of that by design. And we want our team to be able to think and act as owners. So free cash flow of course, that’s a critically important metric within that overall context. But like a lot of other things that drive rates of return and NAV per share in the end, it’s only a tool to drive optimizing the valuation of the company. And we want to use that to along with our balance sheet in 2018 to do just that. So if you start with sort of just the 2018 plan and what we disclose today, you can see, I think, you can get a feel for what the allocation options are going to be. And I will take, in particular, the capital expenditure budget that we have released and the EBITDA guidance that we issued today. So you look at the M&A activity with Midstream, with the GP in any types of drops or things like that in the future, just put those all off to the side to keep it simple. And if you look at organic free cash flow from 2018 from a D&C perspective, we don’t think that’s the right way we are looking at, I know a lot in the industry want to look at just D&C capital and organic free cash flow. We are significantly positive in that metric. When you include all CapEx and so now, it goes to the 275 million to 300 million of land, midstream and water. In…

Yes. Just add to that for a minute on the debt side of the fence, the first part of your equation. I mean we're well of aware the debt market and how attractive sort of some of the opportunities out there that exist today. The good thing as we said here we have the ability to have a bunch of different corrections with that. We have currency to retire bonds as we see it. We have the ability to take advantage of these certain things, but I mean our majorities are further out in the future. So there is no need for anything today, but eyes wide open on the opportunity that's out there. And like anything we do will explore the best way to get it done.

Okay. I appreciate that. Thanks a lot guys.

Thank you. And we have no further questions in queue. And ladies and gentlemen, this conference will be available replay after today 12:30 through February 6 midnight. You may access the AT&T Teleconference Replay System at anytime by dialing 1-800-475-6701 and entering the access code 443105. International participants dial 320-365-3844. Those numbers again are 1-800-475-6701 and 320-365-3844 with access code 443105. And I will hand it back to the Mr. DeIuliis.

Great. Thank you everyone for joining. We look forward to speaking with you next quarter. Thank you.

Thank you. And ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using AT&T executive teleconference service. You may now disconnect.