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CNX Resources Continues to Gain From Focus on Appalachian

Zacks

CNX Resources Corporation’s CNX shares have gained 11.6% in a year’s time, against a decline of 10.7% in the Zacks Domestic E&P Oil and Gas industry.. CNX Resources is benefiting on the back of strong production from its Marcellus and Utica Shale holdings, and cost improvement.


CNX Resources planned its 2018 drilling and completion (D&C) expenditures in the range of $515-$580 million. Out of the D&C expenditures for 2018, 65% will be for the Marcellus Shale and 35% for the Utica Shale.

Investments in both the resource-rich regions will help the company increase production volumes and meet its 2018 production volumes of 520-550 billion cubic feet equivalent (Bcfe), or nearly 31% annual increase based on the midpoint of its guidance. The company expects to drill 75 wells in 2018 and turn-in-line 59, and out of those 59 wells 46 will be in the Marcellus.

CNX Resources was able to lower total quarterly natural gas production costs to $2.17 per thousand cubic feet equivalent (Mcfe), compared with the year-earlier quarter of $2.27 per Mcfe, driven primarily by reductions in operating and gathering, and transportation expenses, due to increased volumes. The company aims to lower costs further in 2018.

However, exploration & production of natural gas involves loads of operational risks. The cost of drilling, completing and operating its shale gas wells, shallow oil and gas wells, and coalbed methane wells is often uncertain. A number of factors can delay or prevent drilling operations, decrease production and/or increase the cost of its natural gas operations at particular sites for varying lengths of time, thereby adversely affecting its operating results.

CNX Resources Corporation has a Zacks Rank#3 (Hold). A few better-ranked stocks in the same industry worth considering are Concho Resources Inc. ( CXO, Pioneer Natural Resources Co. PXD and Energen Corp. EGN, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.


Concho Resources delivered an average positive earnings surprise of 48.89% in the last four quarters. Its 2018 and 2019 earnings estimates moved up 23.3% and 23.6%, respectively, in the last 30 days.

Pioneer Natural Resources reported an average positive earnings surprise of 66.92% in the trailing four quarters. Its 2018 and 2019 earnings estimates moved up 51.6% and 33.7%, respectively, in the last 30 days.

Energen reported an average positive earnings surprise of 19.67% in the last four quarters. Its 2018 and 2019 earnings estimates moved up 24.1% and 21.4%, respectively, over the last 30 days.

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