CNX

• 45Z Credit Monetization Update: Confirmed that methane captured in the first four months of 2025 qualified for 45Z credits, leading to an upward adjustment in 2026 monetization. Updated regulatory modeling from the U.S. Treasury increased the expected annual value of 45Z credit monetization to approximately $40 million. When combined with existing environmental attribute sales, CNX targets a $90 million annual run rate for low-carbon revenue starting in 2027. The $30 million in already sold 45Z credits will be recorded as a cash flow impact in Q3 2026, reflected through the income tax expense line on financial statements, and will not impact EBITDA.
• Capital Allocation Strategy: CNX has maintained a consistent, 6.5-year capital allocation philosophy focused on growing long-term per-share value. The company retains significant flexibility to deploy capital and is currently seeing attractive opportunities to repurchase its own equity when a sufficient margin of safety exists. The company is open to using revolving debt to fund additional share repurchases within appropriate risk constraints, reflecting CNX management's bullish long-term outlook for Appalachian natural gas relative to peer operators in the basin.
• Operational Activity: Q2 2026 drilling activity was in line with the company's full-year plan; only two Utica wells were drilled during the quarter as scheduled. The company recently set new 24-hour drilling records in the Utica, with well costs remaining steady at approximately $1,700 per foot. Drilling efficiency continues to improve incrementally with ongoing activity, and the company plans to provide an updated well cost outlook once a full dataset is available. Longer lateral lengths in Southwest Pennsylvania during Q2 are a function of available acreage positions, as longer laterals generally improve well economics, and are not a one-off quarterly anomaly. New Utica wells are performing in line with management expectations and are considered top-tier in the basin. Scheduled production growth will see a greater volume of new wells come online in Q4 2026, resulting in Q4 hitting the expected full-year production peak.

• Full-year 2026 CapEx is still expected to land at the midpoint of the previously guided range. A planned increase in Q3 2026 CapEx, followed by a decrease in Q4 2026, reflects only timing of field activity, not inflationary pressures or a departure from the original full-year guidance.
• Total well timing for the back half of 2026: 12 to 13 wells from a large Marcellus pad are expected to come online in Q3 2026, while the remaining Utica wells from the current active pad will come online in Q4 2026.
• A final ruling on 45Z credits from the U.S. Treasury is expected in the second half of 2026. No additional 45Z credit remediation expansion is planned for the remainder of 2026, but management is actively evaluating expansion opportunities for longer-term growth as carbon credit values rise, with nothing definitive finalized at this time.

No detailed product segment financial performance data, including absolute results and revenue contribution percentages, was disclosed in the provided Q2 2026 earnings call transcript. The call was structured exclusively for a question-and-answer session following the release of pre-written prepared remarks and earnings materials posted to the investor relations website, and no segment-level financial results were discussed during the call.

• All forward-looking statements made during the call are subject to a variety of known and unknown risks and uncertainties, and actual future results may differ materially from projected outcomes. Key risk factors are detailed in CNX's existing SEC filings and the Q2 2026 earnings release. No additional operational or financial risks were specifically disclosed during the call.

Q: What is the updated outlook for 45Z credit monetization, including timing of a final Treasury ruling and expected annual revenue? Can you also update on capital allocation strategy amid near-term macro weakness and ongoing share buybacks? / A: A final Treasury ruling on 45Z is expected in the second half of 2026. Recent regulatory updates confirmed early 2025 captured methane qualifies for credits and raised projected annual 45Z revenue to $40 million. Combined with other environmental attributes, CNX targets a $90 million annual low-carbon revenue run rate starting in 2027. Capital allocation strategy remains unchanged: management still prioritizes long-term per-share value, has ample flexibility, and sees attractive current opportunities for equity buybacks.

Q: Why is Q3 2026 CapEx higher than Q2, with a Q4 decline? Is this due to inflation, and does it push full-year 2026 CapEx above the prior guidance range? Also, is production being timed to peak in Q4 for higher winter natural gas prices? / A: The quarterly CapEx shift only reflects timing of field activity, not inflation. Full-year 2026 CapEx is still on track to hit the midpoint of the previous guidance range. The Q4 production peak is a natural result of the current activity schedule, with most new wells coming online toward the end of the year, not an intentional over-engineered move to capture higher winter prices. 12-13 Marcellus wells will come online in Q3, with Utica wells following in Q4.

Q: What is management's willingness to use revolving debt to fund additional counter-cyclical share buybacks? Also, can you update on lateral length trends and how new Utica wells are performing relative to expectations? / A: Given soft near-term natural gas prices and a very strong long-term outlook for Appalachian gas, management is open to using debt to fund additional buybacks within appropriate risk constraints. CNX is already one of the most bullish Appalachian operators based on its current activity level. Longer lateral lengths in Q2 are a function of available acreage, as longer laterals improve well economics, and reflect a general ongoing trend rather than a one-off shift. New Utica wells are performing in line with guidance and are top-tier in the basin, which management finds very encouraging.

Q: Are there plans to expand 45Z remediation activities beyond the current Buchanan line, given the higher credit values? Also, what is the current status of well costs in the Utica after recent drilling efficiency records? / A: As carbon intensity scores fall and credit values rise, expansion of 45Z remediation is becoming increasingly economically attractive. Management is actively evaluating expansion opportunities, which it holds the rights to pursue, but no definitive expansion is planned for the remainder of 2026. Well costs remain steady at roughly $1,700 per foot, with drilling efficiency continuing to improve incrementally with each new well. Management will provide an updated well cost outlook once a complete dataset is available.