CNX Resources Embarks on a Significant Acquisition Strategy

CNX Resources Expands Its Operations through Acquisition

CNX Resources Corporation (NYSE: CNX) recently made headlines with its announcement of a definitive agreement to acquire the natural gas upstream and midstream business of Apex Energy II, LLC, a well-regarded player in the Appalachian Basin. This acquisition comes with a cash consideration of approximately $505 million, a strategic move aimed at enhancing CNX's already robust operations in the region.

Strategic Importance of the Acquisition

The CEO of CNX, Nick Deiuliis, expressed that this acquisition represents a unique opportunity to add a highly compatible asset to their current structure. He highlighted the importance of this transaction in positioning CNX to leverage the full potential of the stacked pay development opportunities made available through their pioneering work in the region.

Expanding Footprint in Key Areas

By acquiring the assets of Apex, CNX is set to enhance its existing leasehold in the rich gas regions of the Marcellus and Utica formations. The deal not only extends CNX's operational footprint but also enhances the infrastructure they have in place for future projects. This strategic addition is anticipated to bolster operational efficiencies and increase value over time.

Immediate Financial Benefits

One of the significant advantages of this acquisition is its expected immediate accretion to CNX's free cash flow per share. The strong cash flow profile associated with Apex's existing production assets allows CNX to maintain its solid balance sheet while still preserving financial flexibility for future investments and operations.

Transaction Highlights

This acquisition is underscored by strong financial fundamentals:

• Reliable Cash Flow: Expected average daily production in 2025 from the acquired assets is projected to be between 180 to 190 million cubic feet equivalent per day (MMcfe/d).
• Economic Efficiency: Anticipated EBITDA for the same year is around $150 million to $160 million, showcasing the lucrative nature of this acquisition.
• Cost-Effective Operations: Operating costs for the acquired assets are expected to be approximately $0.16 per Mcfe, aligning with CNX's objective to maintain low-cost operations while expanding their development capabilities.
• Strategic Growth: The transaction will add about 36,000 net acres to CNX's portfolio, further advancing their position in the competitive natural gas industry.

Financial Aspects of the Acquisition

The entire cash amount required for acquiring Apex will be sourced from CNX's secured credit facility, which had recently been amended to extend its maturity to May 2029. Currently, CNX boasts an available borrowing capacity of approximately $1.8 billion, ensuring that the acquisition will not jeopardize their financial health.

Advisory Support

In this transaction, CNX is being advised by BofA Securities, which acts as its exclusive financial advisor, while Jones Day is providing legal assistance. Apex and Carnelian are being guided by Piper Sandler & Co. as their financial advisor, with legal counsel from Kirkland & Ellis LLP.

About CNX Resources

CNX Resources Corporation, trading on the NYSE under the ticker CNX, is widely recognized for its commitment to responsible natural gas development and production. The company focuses on leveraging its extensive asset base and advanced technological capabilities to maximize efficiency and long-term value creation for shareholders and stakeholders. As of now, CNX holds approximately 8.74 trillion cubic feet equivalent of proved natural gas reserves, reinforcing its status as a key player in the energy sector.

Frequently Asked Questions

What is the main purpose of the CNX acquisition?

The acquisition aims to enhance CNX’s existing operations in the Appalachian Basin by integrating Apex’s natural gas assets, thereby improving production efficiency and expanding their operational footprint.

How will this acquisition impact CNX’s financial standing?

CNX expects the acquisition to be immediately accretive to its free cash flow per share, allowing for continued capital flexibility and maintaining a strong balance sheet.

What are the benefits of the acquired assets?

Besides increased production, the acquired assets come with an operational cost structure that aligns with CNX's low-cost strategy, making them economically advantageous.

Who is advising CNX on this acquisition?

CNX is being advised by BofA Securities for financial matters and Jones Day for legal issues. Apex and Carnelian are receiving advice from Piper Sandler & Co. and Kirkland & Ellis LLP, respectively.

What is CNX’s focus as a company?

CNX Resources Corporation is focused on responsible natural gas development and production, with a strong emphasis on innovation and efficient capital allocation to generate long-term value for its stakeholders.

About The Author

Olivia Taylor here, a 26-year-old writer and financial advisor. After earning a degree in finance, I worked in the sector for years. I've always loved numbers and had a talent for simplifying difficult financial ideas so that anyone could understand. I wrote my first book because of this passion; it helps readers take charge of their financial futures by fusing real-life stories with useful financial advice.

Whether they are just beginning their careers, preparing for significant life events, or seeking to invest wisely, my goal with my writing is to enable people to make educated financial decisions. The foundation of my work is the conviction that security and freedom of the individual are largely determined by financial literacy. To further financial education, I run workshops and frequently write for financial blogs in addition to my books.

I like to travel, experience other cultures, and find inspiration in daily life when I'm not writing or examining market trends. My passion is utilizing sound financial practices to help people reach their financial objectives and lead the best lives possible.

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