CNX Update: Production Slipped in 2022, Better Days Ahead in 2023
And so begins the quarterly earnings report season. Yesterday CNX Resources issued its fourth quarter and full-year 2022 update. The company doubled its profits in 4Q22, making $1.2 billion, versus a profit of $630 million in 4Q21. However, as big as the profit was in 4Q, CNX still lost $142 million for the entire year–mainly due to $2.6 billion in losses on derivatives for the year. CNX generated $270 million in free cash flow for 4Q and cumulatively generated $707 million of free cash flow for the entire year. Production took a hit, down to 1.53 MMcfe/d (million cubic feet equivalent per day), compared to 1.72 MMcfe/d in 4Q21. The stated reason for the drop in production was a bad well and the cold snap (freeze-offs) during 4Q.
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In February 2022, Equitrans Midstream announced it had filed a new pipeline expansion project with the Federal Energy Regulatory Commission (see 
Freeport LNG, which has been offline since an explosion and fire in June 2022, asked the Federal Energy Regulatory Commission (FERC) for permission to begin the restart procedure this past Sunday (see 
The Ohio Court of Appeals recently issued a decision in a case involving lease language about a “depth severance clause” that is very important for both landowners and drillers to know about. In Tera LLC v. Rice Drilling D LLC, et al., a landowner in Belmont County, OH, signed a lease with language that leases both the Marcellus and Utica shale layers, but all other formations were “reserved to the lessor” (i.e. the landowner). However, the driller, Rice (now EQT), drilled into and produced hydrocarbons from the Point Pleasant layer that sits immediately below the Utica. According to the lease (and the decision by the court), that was a no-no.
Last April, MDN introduced readers to the developing issue of landowners being approached to lease “pore space” rights (see 
It’s brutal out there–with respect to the price of the NYMEX Henry Hub futures price. Yesterday the HH dropped below, and stayed below, $3/MMBtu. The price “settled” at $2.94, down 12 cents (4%) for the day. That is the lowest settlement price for the HH in 20 months–since May 2021. Not even the good news that Freeport LNG received permission from FERC to begin some restart operations (see our companion story today) was enough to lift the price. So why did the price crash further yesterday?
What a difference 20 years can make. In 2001, natural gas was used to produce 2% of the electricity produced in Pennsylvania, and coal produced 57% of the state’s electricity. Then the Marcellus Shale miracle happened–the first Marcellus well was drilled in PA in 2004. By 2021, 52% of PA’s electricity was produced by natural gas, and 12% was produced by coal. A complete reversal. Most of that change came over just eight years–from 2008 to 2016. There are multiple reasons for the change, including regulations (against coal), low cost (for newfound supplies of gas), and emissions (more for coal, less for gas).
New shale permits issued for Jan. 16-22 in the Marcellus/Utica included only 7 new permits in Pennsylvania, 5 new permits in Ohio, and 2 new permits in West Virginia–for a grand total of 14. The top recipient of permits for last week, scoring nearly half, was Coterra Energy (the former Cabot Oil & Gas), with 6 permits issued in northeastern PA’s Susquehanna County.