From Donald Scott, Investor Newsletter, March 17th, 2018

CNX Resources Corp (NYSE:CNX) was the target of some unusual options trading activity on Thursday. Traders acquired 4,328 put options on the company. This represents an increase of approximately 2,674% compared to the average volume of 156 put options.

Source: https://www.thelincolnianonline.com/2018/03/17/cnx-resources-target-of-unusually-large-options-trading-cnx.html
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NOTE: The most obvious use of a put is as a type of insurance. In the protective put strategy, the investor buys enough puts to cover his holdings of the underlying so that if a drastic downward movement of the underlying’s price occurs, he has the option to sell the holdings at the strike price. Another use is for speculation: an investor can take a short position in the underlying stock without trading in it directly.

From an Article of Kallanish Energy News, January 17, 2018

A New Mexico-based energy company wants to drill six natural gas wells at U.S. Steel Corp.’s Edgar Thomson steel mill near Pittsburgh.

Merrion Oil & Gas said it will likely submit a drilling permit application to the Pennsylvania Department of Environmental Protection in the first quarter of 2018, the Pittsburgh Post-Gazette newspaper reported. The independent producer has had preliminary meetings with the state agency.

The company, with headquarters in Farmington, has leased a 10-acre tract from U.S. Steel and the Union Railroad. The site on the mill’s grounds is on the North Versailles-East Pittsburgh border, about four miles east of Pittsburgh on the Monongahela River, in Allegheny County.

The company has received conditional use permits from North Versailles and East Pittsburgh municipalities.

The company intends to provide the Marcellus Shale natural gas produced to U.S. Steel for its operations at Edgar Thomson, where 600 are employed. The gas will be used to heat the mill’s blast furnaces.

The results from the first well will determine when the additional wells are drilled, company spokesman Ryan Davis told the Post-Gazette.

The company might also drill from the pad to the deeper Utica Shale and the shallower Upper Devonian Shale, officials said.

The wells will be Merrion’s first shale wells and its first wells drilled in Pennsylvania. It previously has drilled conventional wells in New Mexico, Colorado, Wyoming and Montana.

Source: https://www.kallanishenergy.com/2018/01/17/company-seeks-to-drill-at-u-s-steel-mill-near-pittsburgh/

From Samantha Guadardo, Muck Rack, January 13, 2018

Noble Midstream Partners (NYSE:NBLX) was downgraded by Zacks Investment Research from a “buy” rating to a “hold” rating in a note issued to investors on Wednesday, December 20th.

According to Zacks, “Noble Midstream Partners LP is engaged in crude oil and natural gas exploration and production. Its operating area includes onshore which consists of US DJ Basin, Marcellus Shale, Eagle Ford Shale and Permian Basin as well as offshore in deepwater Gulf of Mexico, Eastern Mediterranean and West Africa. Noble Midstream Partners LP is based in Houston, United States. “

Noble Midstream Partners (NYSE:NBLX) traded up $1.49 on Wednesday, reaching $56.54. The company’s stock had a trading volume of 194,322 shares, compared to its average volume of 112,814. Noble Midstream Partners has a twelve month low of $38.07 and a twelve month high of $56.88. The company has a debt-to-equity ratio of 0.59, a quick ratio of 0.40 and a current ratio of 0.40. The company has a market capitalization of $1,278.95, a P/E ratio of 15.28 and a beta of 0.44.
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Noble Midstream Partners LP is engaged in owning, operating, developing and acquiring a range of domestic midstream infrastructure assets. The Company’s areas of focus are in the area of Denver-Julesburg (DJ) Basin in Colorado and the Southern Delaware Basin position of the Permian Basin in Texas (Delaware Basin).

From the Street Insider, January 9, 2018

CNX Resources Corporation (NYSE: CNX) (“CNX” or the company) announced today an updated 2018 capital expenditure forecast of $790-$880 million, excluding the recent acquisition of the general partner interest of CNX Midstream Partners LP (NYSE: CNXM) (“CNXM”).

The 2018 budget includes $515-$580 million of drilling and completion (“D&C”) capital and approximately $275-$300 million of capital associated with land, midstream, and water infrastructure. The 2018 D&C capital budget is allocated approximately 65% to the Marcellus Shale and 35% to the Utica Shale.

“CNX’s updated 2018 capital plan reflects an industry leading balance sheet and the company’s commitment to invest in high rate of return projects, which will result in substantial value creation in 2018 and beyond,” commented Nicholas J. DeIuliis, president and CEO. “Our development program in 2018 is largely supported by our robust hedge book, which, as of December 31, 2017, has fully-covered volumes with both NYMEX and basis hedges of approximately 375 Bcfe, or 70% of 2018 production volumes, based on the midpoint of guidance. This de-risking of our revenue allows us to lock in attractive rates of return and confidently execute our development plans.”

The company expects 2018 non-D&C capital for midstream, water, and land to drive future stacked pay development and further differentiate CNX’s unique asset base. With CNX recently closing the acquisition to now control 100% of CNXM, stacked pay development has begun to directly impact the capital budgeting process and 2018 represents the initial investment required. This non-D&C capital is primarily driving production over the course of 2019, 2020 and beyond. The new stacked pay development lifecycle allows CNX to develop a single formation first and then come back on a pad to take advantage of existing, first formation, infrastructure.

This development sequencing is essentially doubling the life and value of a field. As a result, rates of return on future development should benefit meaningfully from this infrastructure build-out as CNX capitalizes on the sequencing of dual formation development.

With the company’s recent purchase of Noble Energy’s general partner interest in CNXM, CNX has absorbed Noble Energy’s 50% of capital contributions that they previously made to CNXM. As a result, CNX expects midstream capital in 2018 to be approximately $100 million. Much of the 2018 midstream capital will go towards building out development companies (DevCo’s) outside of DevCo I, which will create future dropdown opportunities.

The company is increasing water capital in 2018 to approximately $75-$100 million, which includes building water infrastructure for two major stacked pay project areas that the company expects to be ready in the fourth quarter of 2019.

This additional infrastructure will increase completion efficiencies by improving cycle times, resulting in additional production, lower costs per barrel, and lower future capital costs. Overall, the company estimates material cost savings by building out water infrastructure, compared to the alternative of trucking water. This water capital investment will benefit the company through future dropdowns of ownership interest into CNXM.

The company’s 2018 land capital is approximately $100 million, which includes title, land acquisition, and permitting, in order to maximize future development. Land capital in 2018 will help CNX build out its core Marcellus and extensional stacked pay Utica areas that are part of the company’s 5-year development plan. A negligible amount of land capital is associated with 2018 development, but instead, the capital that the company is spending in the current year is driving net asset value per share growth by securing future development beyond 2018.

CNX is maintaining its 2018 expected production volumes of 520-550 Bcfe, which equates to an approximately 30% annual increase, compared to 2017 expected volumes, based on the midpoint of guidance. CNX plans to run three rigs through the first half of 2018 and will add a fourth rig starting in July.

Source: https://www.streetinsider.com/dr/news.php?id=13668418&gfv=1

Thursday, January 4, 2018 by Sara Welch

CNX Gas Company recently agreed to two civil penalties totaling $433,500 for violations at well sites in Greene County, according to an announcement by the Pennsylvania Department Of Environmental Protection.

A penalty of $241,000 was assessed for violations at CNX’s GH9AHSU And GH53BHS well sites, and $192,400 for violations at the GH58HHS and GH46AHS well sites.

CNX was cited for the following violations:

>> Failure to properly control, dispose and collect flowback and drilling fluids.

>> Failure to maintain containment during drilling and hydraulic fracturing activities.

>> Unauthorized disposal of residual waste.

>> Unauthorized discharge of industrial waste into the waters of the Commonwealth.

>> Failure to maintain erosion and sedimentation Best Management Practices (BMPs) in accordance with the associated permit.

>> Failure to implement effective BMPs to minimize erosion and sedimentation.

>> Failure to maintain alternate waste storage practices requested by CNX and approved by DEP.

Posted by Nicole Wilson on Jan 5th, 2018 //

Zacks Investment Research lowered shares of CNX Resources
(NYSE:CNX) from a hold rating to a strong sell rating in a report released on Wednesday, December 27th.

According to Zacks, “CNX Resources Corporation was formed from the separation of natural gas and coal business of CONSOL Energy Inc.’s (CONSOL). This oil and natural gas company is focused on low-cost Appalachian region but will have to fight a difficult battle with the existing major natural gas companies.

Failure on the part of the company to replenish its reserves may impact its production and cash flow. Exploration and production of natural gas involve lots of risks and could impact its operating results.

Since its formation, CNX Resources’ shares have gained higher than the industry it belongs to. CNX Resources’ low cost natural gas production areas of CNX Resources and increasing consciousness to lower emissions will drive demand for natural gas and are going to act as tailwinds for the company.”