Appalachian gas producer CNX Resources issued its quarterly earnings report last week. The report noted that the company had reached two operational milestones in the past quarter: drilling one lateral that reached 23,369 feet and also setting “a company daily drilling record of 9,252 feet of lateral in 24 hours.” CNX is trumpeting the increasing length of its laterals to extract more gas per well. However, in view of low current market prices, the firm is maintaining its previous target to have 1.5 rigs and a partial year frac crew to maintain production at the current level.
In the earnings call, CNX acknowledged that it has been conducting more long-term hedging recently in response to changes in the futures market. CFO Everett Good said that as basis differentials have tightened, the company is able to get “a better all-in realized price in… the Cal ’28 market.” CNX’s CEO Alan Shepard noted that potential gas purchasers have recently announced “mind-boggling” projects that will create opportunities for companies that have the “resource depth and creditworthiness to enter into long-term arrangements.” However, he is “pretty agnostic” as to whether those projects will be more common in Ohio or Pennsylvania and said that this matters less to producers because they can “wheel gas around” between the two states easily. CNX believes that as a producer they can benefit from projects on either side of the border.
