CNX Resources Corporation Announces Private Offering of $200 Million of Additional Senior Notes

Rhea-AI Summary

CNX Resources (NYSE: CNX) has announced a private placement offering of $200 million in 7.250% senior notes due 2032. These notes are additional to the previously issued $400 million aggregate principal amount under the same terms. The new notes will be guaranteed by CNX's restricted subsidiaries that guarantee its revolving credit facility.

The proceeds will be used for general corporate purposes, including funding transaction costs for the pending acquisition of Apex Energy entities and temporarily paying down borrowings under the company's senior secured revolving credit facility. The notes will be offered exclusively to qualified institutional buyers under Rule 144A and non-U.S. persons under Regulation S.

As of December 31, 2023, CNX had 8.74 trillion cubic feet equivalent of proved natural gas reserves.

Positive

• Additional $200 million financing secured through senior notes
• Strong asset base with 8.74 trillion cubic feet equivalent of proved natural gas reserves
• Strategic acquisition of Apex Energy entities advancing company growth

Negative

• Increased debt load with 7.250% interest rate
• Additional leverage could impact financial flexibility

Insights

Financial Analyst

CNX's $200 million senior notes offering, supplementing the existing $400 million 7.250% notes due 2032, represents a strategic financial maneuver to fund the pending Apex Energy acquisition. The 7.25% interest rate, while reflecting current market conditions, suggests moderate borrowing costs in today's environment.

The decision to tap the debt market rather than rely solely on the revolving credit facility demonstrates prudent capital structure management. This approach provides more financial flexibility and helps maintain liquidity buffers. The offering's structure as additional notes under the existing indenture streamlines the process and ensures consistent terms with the Initial Notes, which is favorable for both administrative efficiency and market reception.

For investors, this funding strategy indicates CNX's confidence in executing the Apex acquisition and its ability to service additional debt through its natural gas operations. With 8.74 trillion cubic feet equivalent of proved reserves, the company maintains a solid asset base to support this leverage. The timing aligns with the company's strategic expansion in the Appalachian basin, potentially enhancing its operational scale and efficiency.

Energy Sector Analyst

The debt issuance signals CNX's strategic positioning in the Appalachian basin through the Apex Energy acquisition. This consolidation move could strengthen CNX's market position in one of North America's most prolific natural gas regions. The acquisition target's assets - including mineral rights and midstream operations - suggests a vertically integrated approach to expand operations.

The transaction's timing is noteworthy given the current natural gas market dynamics. With CNX's focus on ultra-low carbon intensive operations, this expansion aligns with the industry's emphasis on environmental performance while maintaining operational scale. The integration of Apex's assets could potentially improve operational synergies and enhance CNX's competitive position in the basin.

For market participants, this move reflects ongoing consolidation trends in the natural gas sector, where operators are seeking scale and operational efficiency to maintain profitability in a challenging price environment. The company's emphasis on free cash flow deployment and long-term value creation suggests a disciplined approach to growth, which is important in the current market context.

PITTSBURGH, Jan. 13, 2025 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX," "we" or "our") today announced that it intends, subject to market and other conditions, to offer and sell in a private placement to eligible purchasers $200.0 million aggregate principal amount of 7.250% senior notes due 2032 (the "New Notes"). The New Notes are being offered as additional notes under that certain indenture, dated February 23, 2024 (the "Indenture"), pursuant to which CNX previously issued $400.0 million aggregate principal amount of 7.250% senior notes due 2032 (the "Initial Notes"). The New Notes will be guaranteed by all of CNX's restricted subsidiaries that guarantee its revolving credit facility and will have identical terms as the Initial Notes, other than the issue date, the initial offering price and the first interest payment date, and the New Notes and the Initial Notes will be treated as a single class of securities under the Indenture and will vote together as a single class. CNX intends to use the net proceeds of the sale of the New Notes for general corporate purposes, including funding a portion of the transaction costs associated with our pending acquisition of all of the issued and outstanding membership interests in Apex Energy (PA), LLC, Apex Energy Minerals, LLC and Apex WML Midstream, LLC (the "Transaction") and, prior to the closing of the Transaction, paying down borrowings under our senior secured revolving credit facility. The Transaction is not conditioned on the consummation of the offering and the offering is not conditioned on the consummation of the Transaction.

The New Notes have not been, and will not be, registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The New Notes will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act.

CNX Resources Corporation (NYSE: CNX) is a premier, ultra-low carbon intensive natural gas development, production, midstream, and technology company centered in Appalachia, one of the most energy abundant regions in the world. With the benefit of a 160-year regional legacy, substantial asset base, leading core operational competencies, technology development and innovation, and astute capital allocation methodologies, we responsibly develop our resources and deploy free cash flow to create long-term per share value for our shareholders, employees, and the communities where we operate. As of December 31, 2023, CNX had 8.74 trillion cubic feet equivalent of proved natural gas reserves.

Cautionary Statements:

This press release does not and shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any offer, solicitation or sale of securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The offering of New Notes may be made only by means of an offering memorandum.

Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "estimate," "plan," "predict," "project," "will" or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release, including those relating to the Transaction and the offering of New Notes and the use of proceeds therefrom, speak only as of the date of this press release; we disclaim any obligation to update these statements unless required by securities laws and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the factors discussed in our 2023 Annual Report on Form 10-K under "Risk Factors," which is on file at the U.S. Securities and Exchange Commission.

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/cnx-resources-corporation-announces-private-offering-of-200-million-of-additional-senior-notes-302349255.html

SOURCE CNX Resources Corporation

FAQ

What is the size and interest rate of CNX's new senior notes offering?

CNX is offering $200 million in senior notes with a 7.250% interest rate, due 2032.

How will CNX use the proceeds from the $200M senior notes?

The proceeds will fund transaction costs for the Apex Energy acquisition and temporarily pay down revolving credit facility borrowings.

What are CNX's proved natural gas reserves as of December 2023?

CNX reported 8.74 trillion cubic feet equivalent of proved natural gas reserves as of December 31, 2023.

Who is eligible to purchase CNX's new senior notes?

The notes are only available to qualified institutional buyers under Rule 144A and non-U.S. persons under Regulation S.

How do the new CNX notes relate to the previously issued notes?

The new notes are additional to the $400 million previously issued notes, sharing identical terms and will be treated as a single class under the Indenture.