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CNX Resources Offers ’18 View, Focuses on Marcellus Shale


CNX Resources Corporation CNX announced that it expects to invest in the range of $790-$880 million in 2018, which includes $515-$580 million of drilling and completion and $275-$300 million of capital associated with land, midstream and water infrastructure. The planned capital expenditure excludes the acquisition of the general partner interest of CNX Midstream Partners LP CNXM.

Drilling and Completion Expenses

Out of its planned drilling and competition expenditure for 2018, the company intends to spend $335 million to $377 million in Marcellus Shale and $180-$203 million in Utica Shale. Thanks to the planned investment in the projects based in these high return regions, the company will be able to produce 520-550 billion cubic feet per day (Bcfe) in 2018, reflecting nearly 30% increase from expected production volume in 2017.

Focus on Marcellus play will help the company to produce higher natural gas volume, plus the encouraging find from the dry Utica plays could provide competitive advantage to this recently listed natural gas focused company.

Moreover, nearly 70% or 375 Bcfe, midpoint of the expected 2018 production volume has been hedged by the company as of Dec 31, 2017. This no doubt will provide a surety of its forward revenues and allow the company to move ahead with its development plans.

The company will operate three rigs in the first half of 2018 and add one more in the second half.

Non-Drilling and Completion Expenses

The company expects to invest nearly $100 million in midstream operation in 2018, which will present more opportunities to gain from future dropdowns. The company will be investing in the range of $75 million to $100 million in water infrastructure. CNX Resources plans to spend $100 million in title, land acquisition and permitting, in order to maximize future development.

Price Movement

CNX Resources has returned 2.5% last month compared with the industry’s gain of 10.2%.

Zacks Rank & Key Picks

CNX Resources currently has a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the same industry worth considering are Pioneer Natural Resources Company PXD, and Continental Resources, Inc. CLR, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Pioneer Natural Resources delivered an average positive surprise of 67.62% in the last four quarters. Its 2018 Zacks Consensus Estimate has moved up by 20.8% to $3.66 in the last 30 days.

Continental Resources came up with an average positive surprise of 69.45% in the last four quarters. Its 2018 Zacks Consensus Estimate has moved up by 42.7% to $1.17 in last 30 days.

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