CNX to Acquire Appalachian Assets for $505MM

CNX Resources Corporation is acquiring the natural gas upstream and associated midstream business of Apex Energy II, LLC in the Appalachian Basin for total cash consideration of approximately $505 million, subject to certain adjustments.

The transaction is expected to close in the first quarter of 2025, subject to the satisfaction of customary closing conditions, and is targeted to have an effective date of October 1, 2024, CNX said in a news release.

The acquisition “strategically expands CNX's existing stacked Marcellus and Utica undeveloped leasehold in the CPA region and provides an existing infrastructure footprint that can be leveraged for future development," the company remarked.

Further, CNX said it expects operational and other development synergies to add incremental value to the core business in the coming years.

CNX stated that the transaction will add an expected 2025 average daily production of 180 to 190 million cubic feet equivalent per day (MMcfepd), with "significant existing infrastructure that can be leveraged for future stacked pay development of the Marcellus and Utica”.

CNX president and CEO Nick Deiuliis said, "This transaction represents a rare opportunity to acquire a highly complementary asset adjacent to our existing operations. It underscores our confidence in the stacked pay development opportunities that have been unlocked from pioneering the deep Utica in this region”.

Apex is a portfolio company of funds managed by Carnelian Energy Capital Management, L.P.

Third-Quarter Operations

In its third-quarter operational update, CNX reported quarterly production volumes of 134.5 billion cubic feet equivalent (Bcfe), which were flat compared to the second quarter. The company expects volumes to increase in the fourth quarter as the remainder of its planned 2024 wells come on-line.

On the capital side, CNX said it continued to focus on “safe, efficient execution and optimizing lateral lengths to drive down costs”. During the third quarter, the company advanced its progress in the continued development of its deep Utica play by drilling three wells with an average total depth (TD) of 26,628 feet and an average lateral length of 12,783 feet.

CNX said that for the deep Utica wells drilled in the year, the average drilling time was reduced to 49.3 days, a 23 percent improvement year over year.

The initial reservoir performance across the recent deep Utica wells that the company brought online this year is in line with its expectations of approximately 3 Bcfe per 1,000 feet of lateral. “These early results continue to support CNX’s view of the deep Utica as a premier resource within the Appalachian basin. We are excited to be the leaders in the development of the deep Utica and will continue to provide updates in coming quarters, it said.

CNX said it is reaffirming the midpoint of annual production volume guidance of 545 to 555 Bcfe. The company expects production volumes to increase modestly in the fourth quarter.

The company also lowered its expected total 2024 capital expenditures to between $525 million and $550 million, with fourth quarter capital declining quarter-over-quarter as it executes “modest drilling and completion activity for the remainder of the year that is primarily limited to one horizontal drilling rig and a partially utilized completion crew”.

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