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The Gaut well pad, owned by CNX Resources Corp., near the Beaver Run Reservoir, can be seen in this photo taken on Thursday, Feb. 14, 2019, in Washington Township.
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CNX will continue to 'acquire ourselves,' CEO Nick DeIuliis says

Andrew Rush/Post-Gazette

CNX will continue to 'acquire ourselves,' CEO Nick DeIuliis says

With cash flowing as predicted at CNX Resources Corp., the asset that the company is most interested in acquiring is itself.

Since it launched a share buyback program in the third quarter of 2020, the Cecil-based oil and gas firm has purchased and retired 24% of its outstanding shares, spending $868 million to do so.

“And we're potentially just getting started,” CEO Nick DeIuliis said during a call with analysts on Thursday after the company issued financial results for 2022.

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Typically, companies buy back shares when they feel the stock price is too low and isn’t reflective of the value of the company. Removing shares from circulation increases the market power of existing shareholders.

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CNX is in good company. Many oil and gas firms have poured profits from increased fuel prices over the past two years into share repurchases.

On Thursday, Chevron announced a $75 billion share buyback program.

In a letter to shareholders in March, CNX promised to “continue to opportunistically (but relentlessly) repurchase shares” if its stock continues trading at what the company believes is a discount.

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In investor documents, CNX says increasing the metric “free cash flow per share” is the company’s “North Star.”

Decreasing the denominator in that equation by making fewer shares available to the public furthers that goal.

Mr. DeIuliis and CNX’s board chair, Will Thorndike, concluded that investment letter with two quotes:

  • "When stock can be bought below a business's value, it probably is the best use of cash." — Warren Buffet
  • "Pay close attention to the cannibals — the businesses that are devouring themselves by buying back their stock." — Charlie Munger

Shares of CNX finished the day at $16.22, up 3% from Wednesday’s closing.

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The company reported a net loss of $142 million, or 75 cents per share, for 2022, driven largely by losses on commodity derivatives earlier in the year. In 2021, the company posted a loss of $499 million, or $2.31 per share.

Its capital plan for 2023 includes a range between $575 million and $675 million, the bulk of which will be spent operating a 1.5 rig and 1 frack crew development program.

About $15 million will be spent on the company’s New Technologies business segment, geared toward emission reduction efforts. Falling under that category is a project that CNX announced earlier this week in partnership with Houston-based ICE Thermal Harvesting, LLC to capture and use waste heat from a CNX compressor station in West Virginia to generate electricity.

Another $17.5 million will go toward a well pad “related to the Pittsburgh International Airport project,” for which CNX will not be the operating company, Mr. DeIuliis said during the call.

The company declined to provide further details on the project.

Anya Litvak: alitvak@post-gazette.com

First Published: January 27, 2023, 11:00 a.m.
Updated: January 27, 2023, 11:18 a.m.

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The Gaut well pad, owned by CNX Resources Corp., near the Beaver Run Reservoir, can be seen in this photo taken on Thursday, Feb. 14, 2019, in Washington Township.  (Andrew Rush/Post-Gazette)
CNX Resources Corp. CEO Nick DeIuliis for CNX0131  (Courtesy of CNX Resources Corp.)
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