trending Market Intelligence /marketintelligence/en/news-insights/trending/Tpqeiq64G_NF2WY8rhNIjw2 content esgSubNav
In This List

S&P lifts CNX Resources' ratings upon transition into a pure-play oil, gas E&P

Podcast

Next in Tech | Episode 49: Carbon reduction in cloud

Blog

Using ESG Analysis to Support a Sustainable Future

Research

US utility commissioners: Who they are and how they impact regulation

Blog

Q&A: Datacenters: Energy Hogs or Sustainability Helpers?


S&P lifts CNX Resources' ratings upon transition into a pure-play oil, gas E&P

S&P Global Ratings gave CNX Resources Corp. a ratings upgrade after it completed the spin-off of its coal business to its shareholders and transitioned into a pure-play oil and gas exploration and production company active in the Appalachian basin.

S&P Global raised its corporate credit rating on CNX Resources to BB- from B+, removed the company from CreditWatch and gave it a stable rating outlook.

The rating agency noted that the spin-off improves the company’s credit metrics because it allows CNX Resources to disposes significant legacy liabilities and receive a distribution from the new coal company, Consol Energy Inc., a portion of which it expects the company to use to partly pay down debt.

CNX received about $425 million in distributions from the coal company spin-off. The transaction also gave way to the termination of the coal company's credit facility with about $190 million outstanding, and CNX will no longer be obligated for substantial legacy liabilities. However, CNX will retain responsibility for $103 million of debt associated with the CNX Marine Terminal through a guarantee. The coal company provides indemnification to CNX for the guarantee, S&P Global noted.

Following the spin-off, CNX is now positioned as one of the largest natural gas producers in the Appalachian region.

S&P Global projects that the company's midstream operations, primarily held in the CONE Midstream Partners LP subsidiary, will boost profitability and upstream growth. The rating agency expects the company to develop its extensive Marcellus and Utica shales acreage, increasing natural gas production while modestly outspending internally generated cash flow under our gas price realization assumptions.

The company had estimated proved reserves of 6.3 Tcfe at the end of 2016 and daily production of 1.1 Bcfe in the third quarter of 2017. S&P Global noted that CNX Resources' geographic diversification is limited which may leave it vulnerable to regional price differentials when production outstrips local demand and takeaway capacity.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.