From CONSOL Energy:



The E&P Division grew production by 23% to 48.4 Bcfe in the just-ended quarter. Within this growth, higher margin Marcellus Shale production increased 94% to 20.7 Bcfe. As a result of the Marcellus growth, rising gas prices, and rising liquids production, all-in unit margins increased 145% to $1.89 per Mcfe from $0.77 per Mcfe in the year-earlier quarter. Gas price realizations increased, year-over-year, to $5.37 per Mcf from $4.21 per Mcf, while oil/NGL/condensate decreased to $53.95 per Bbl from $60.20 per Bbl, as the production of NGLs expanded faster than oil and condensate. Our unhedged gas price realizations improved to $5.71 per Mcf, versus NYMEX first-of-month settlements of approximately $4.94 per MMBtu.



In the Marcellus Shale, CONSOL Energy and its joint venture partner drilled 35 wells, completed 23 wells, and had 11 wells turned in line. In the Utica Shale, CONSOL Energy and its joint venture partner drilled 7 wells, completed 3 wells, and had 10 wells turned in line. A detailed schedule appears later in the release. CONSOL recently re-affirmed its 2014 natural gas production guidance range to 215 - 235 Bcfe. For 2015 and 2016, CONSOL has also reaffirmed annual production guidance increases of 30%.



In the quarter, CONSOL's active coal operations generated $213 million of cash before capital expenditures and depreciation, depletion, and amortization, as detailed later in the release. The thermal coal segment achieved cash production costs of $36.50 per ton, as detailed in a table later in the release.



CONSOL's fully-capitalized coal operations are poised to run for the next 20-30 years to meet the market. Over the past seven years, the company maintained an organic investment goal to re-capitalize the existing mines and build the BMX Mine. As a result of the nearly $2 billion of capital invested to create state of the art complexes, the mines will require mostly maintenance capital for the foreseeable future. Industry-leading managerial talent at this complex ensures that safety remains our top value, and that we continue to improve our cost competitiveness.



(1) The terms "Adjusted Pre-Tax Income" and "Adjusted EBITDA" are non-GAAP financial measures, which are defined and reconciled to the GAAP Pre-Tax Income and GAAP net income below, under the caption "Non-GAAP Financial Measures."



CONSOL continues to actively assess the monetization options for our midstream assets and expects to identify the highest NAV accretion impact and lowest execution risk of either sale or MLP within the next few months.



"CONSOL Energy is off to a strong start in 2014," stated Nick DeIuliis, CONSOL President. "Our E&P segment continues to grow production, to deliver more efficient drilling and completions results, and is becoming a larger contributor to our earnings. The Pennsylvania coal operations are poised for the coming decades to deliver a premium product to a strong thermal market, to operate at industry leading productivity and cost levels, and to contribute substantial free cash flow and earnings to the bottom line. As the current market environment for Buchanan low-vol metallurgical coal remains weak, it is increasingly likely we will forgo low margin sales opportunities, adjust 2014 production accordingly, and be well prepared for when that market turns to our favor."



E&P Division Operational Improvements and Drilling and Completion Results:



CONSOL continues to make great strides throughout the E&P division. In an effort to streamline communication and accountability, varying levels of leadership and disciplines throughout the E&P division have consolidated operations out of the company headquarters. This centralization has allowed for the establishment of asset teams that are directly responsible for successfully implementing and supervising the execution of the company's growth strategy. The company continues to focus on reducing cycle time across drilling and completions.



In drilling, CONSOL increased air directional use, which reduced the number of days needed to drill the curve and vertical portions of a well. On the completions side, CONSOL is focused on increasing the number of stages per day and reducing the time it takes to rig-up and rig-down, drill-outs, and flowbacks. The company also continues to focus on enhanced production techniques and has removed bottlenecks from pipelines, as well as installed compression to increase production.



The table below summarizes the Marcellus Shale drilling and completion results during the first quarter:










# Horizontal











Avg. Drilled









District





Rigs





Drilled





Completed





Turned In Line





Lateral Length (ft)





Counties







SW Pa.





2





7





5









8,919





Washington







Central Pa.





1





5





3









7,009





Westmoreland







W. Va.





1





4









4





6,704





Upshur, Barbour







Wet





5





19





15





7





7,703





Marshall, Ritchie, Tyler







Total





9





35





23





11





7,733










In the Marcellus Shale, the WFN3 pad in Majorsville came online during the quarter at a peak rate of 35 MMcfe/d from four wells averaging 7,500 lateral feet. One of the wells was completed using reduced stage and cluster spacing and experienced rates over 25 percent higher than similar wells on the same pad. Also during the quarter, two 8,000 foot lateral sections were drilled in less than 48 hours each, which is a 50 percent reduction in drilling time versus last year.



The table below summarizes the Utica Shale drilling and completion results during the first quarter:










# Horizontal











Avg. Drilled









District





Rigs





Drilled





Completed





Turned In Line





Lateral Length (ft)





Counties







Noble County





1





1





2





6





4,798





Noble







Surrounding Core





3





6





1





4





7,119





Belmont, Harrison







Total





4





7





3





10





6,787










In the Utica Shale, CONSOL turned in line two three-well pads in Noble County, Ohio: NBL 11 and NBL 33. The wells are highly liquids rich and have displayed encouraging results. The pads are flowing into constrained lines through Blue Racer Midstream, and the wells are averaging around 70 Bbls of condensate and 50 Bbls of NGLs per million cubic feet of gas. CONSOL expects these wells to flow unconstrained sometime in the latter part of next quarter, following the completion of the midstream build out in Noble County.



The table below summarizes the quarterly comparison of key metrics for the E&P Division:










E&P DIVISION RESULTS Quarter-to-Quarter Comparison





























Quarter









Quarter











Ended









Ended











March 31, 2014









March 31, 2013







Sales - Gas







$





265.1









$





138.8







Hedging Impact - Gas









(16.0)











23.8







Sales - Oil









2.2











1.7







Sales - NGLs









12.4











3.3







Sales - Condensate









3.5











1.1







Total Sales Revenue ($ MM)







$





267.2









$





168.7





















Net Income Attributable to CONSOL Energy Shareholders







$





46.9









$





(0.1)







Net Cash Provided By (Used In) Operating Activities ($ MM)





$





219.1









$





190.0







Total Period Production (Bcfe)







48.4









39.2







Average Daily Production (MMcfe)







537.8









435.9







Capital Expenditures ($ MM)







$





266.0









$





207.1






















CONSOL's E&P division production in the quarter came from the following categories:










Quarter







Quarter













Ended







Ended













March 31, 2014







March 31, 2013







% Increase/

(Decrease)







GAS

















Marcellus Sales Volumes (Bcf)





19.2







10.2







88.2%







CBM Sales Volumes (Bcf)





19.8







20.7







(4.3)%







Shallow Oil and Gas Sales Volumes (Bcf)





5.7







7.0







(18.6)%







Other Sales Volumes (Bcf)





1.7







0.7







142.9%





















LIQUIDS*

















NGLs Sales Volumes (Bcfe)





1.6







0.4







300.0%







Oil Sales Volumes (Bcfe)





0.1







0.1







%







Condensate Sales Volumes (Bcfe)





0.3







0.1







200.0%





















TOTAL





48.4







39.2







23.5%






















Production results are net of royalties. *NGLs, Oil, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas.





PRICE AND COST DATA PER MCFE Quarter-to-Quarter Comparison:



The company experienced increased profitability within the E&P Division when compared with the quarter ended March 31, 2013. The average sales price increased by $1.22 per Mcfe. Unit costs increased by $0.10 per Mcfe, with $0.05 per Mcfe related to additional liquids being processed. Total depreciation, depletion, and amortization increased by a combined $0.13 per Mcfe, as more production from higher investment cost segments was in the mix. Higher volumes, conversely, spread fixed pipeline costs more broadly. Unit ad valorem, severance, and other taxes increased as a result of higher prices.



All-in unit costs in the Marcellus Shale were $3.18 per Mcfe in the just-ended quarter, or a decrease of $0.06 from the $3.24 per Mcfe in the year-earlier quarter. The decrease in unit costs was primarily related to the 94% increase in sales volumes during the just-ended quarter.














Quarter









Quarter











Ended









Ended







(Per Mcfe)







March 31, 2014









March 31, 2013







Average Sales Price - Gas







$





5.71









$





3.59







Hedging Impact - Gas







$





(0.34)









$





0.62







Average Sales Price - Oil*







$





15.03









$





13.17







Average Sales Price - NGLs*







$





7.92









$





8.39







Average Sales Price - Condensate*





$





11.72









$





13.12



































Average Sales Price - Total Company





$





5.52









$





4.30







Costs - Production

















Lifting







$





0.60









$





0.56







Ad Valorem, Severance and Other Taxes





0.21







0.12







DD&A







1.31







1.14







Total Production Costs







$





2.12









$





1.82







Costs - Gathering

















Transportation







$





0.57









$





0.56







Operating Costs







0.54







0.67







DD&A







0.16







0.20







Total Gathering Costs







$





1.27









$





1.43





















Gas Direct Administrative Selling & Other





$





0.24









$





0.28





















Total Costs







$





3.63









$





3.53





















Margin







$





1.89









$





0.77




























*Oil, NGLs, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices.





Note: Costs - The line item "gas direct administrative, selling, & other" excludes general administration, incentive compensation, and other corporate expenses.







Gas Marketing and Transportation Update:



First quarter 2014 average dry gas prices, including the impact of our hedging program and net of basis, averaged $5.37 per Mcf. CONSOL's expansion into wet gas production areas provided a liquids value uplift of $0.15/Mcfe, bringing our overall average sales price to $5.52 per Mcfe. Our liquids volumes were 232% higher than in the 2013 first quarter. The continued growth of our wet gas production volumes will increase the uplift on our future average sales prices.



CONSOL Energy continues to develop a diversified portfolio of firm capacity options to support our three-year production growth plan. We benefit by the strategic location of our primary production areas in Southwestern Pennsylvania, Northern West Virginia, and Eastern Ohio. These areas are served by a large concentration of major pipelines that provide us with the capacity to move our production to the major gas markets.



The company currently has a total of 1.3 Bcf per day of effective firm transportation capacity. This is comprised of 0.8 Bcf per day of firm capacity on existing pipelines, contracted volumes of 0.3 Bcf per day on several pipeline projects that will be completed over the next several years, and an additional 0.2 Bcf per day of long-term firm sales with a major customer that has their own firm capacity. Our firm capacity portfolio will support all of the 2014 production and the majority of our projected volumes for the three-year plan. We are in active negotiations with several pipelines to extend our firm capacity coverage for the longer term. The average cost for the existing and committed firm capacity is approximately $0.23 per MMBtu.



In addition to firm capacity, we have developed a processing portfolio to support the projected volumes from our wet production areas. We have agreements to support the processing of over 115 MMcf per day of gross gas volumes growing to more than 380 MMcf per day in the next twelve months. These commitments are sufficient to cover our processing requirements for the next two years. We will continue to layer in processing capacity to support the liquids development plan.