March 2011 Investor Presentation The leading diversified fuel producer in the Eastern U.S.
Cautionary Language This presentation contains statements, estimates and projections which are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934). These statements, which are described in detail in our annual report form 10-K filed with the Securities and Exchange Commission, 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 aprediction of actual results. The forward-looking statements include estimates of unproved reserves, projections and estimates concerning the timing and rates of return of future projects, and our future production, revenues, income and capital spending. The forward-looking statements in this presentation speak only as of the date of this presentation; we disclaim any obligation to update these statements unless required by the securities laws, and we caution you not to rely on them unduly. This presentation does not constitute an offer to sell any securitiesofconsolenergy Inc. The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation, such as unproved reserves and/or unproved resources that the SEC's guidelines strictly prohibit us from including in filings with the SEC. We also caution you that the SEC views such unproved reserves and/or unproved resources estimates as inherently unreliable and these estimates may be misleading to investors unless the investor is an expert in the gas industry. In this presentation, the term unproved reserves and/or unproved resources refers to gas that we believe is economically recoverable, based onavailabledata. The unproved reserve data contained in this presentation is based on asummary review of the title to coalbedmethane and other gas rightswe hold,as wellas asummary review of thetitle to the coal from which many of our rights derive. As is customary in the gas industry, prior to the commencement of gas drilling operations on our properties, we conduct athorough title examination and perform curative work with respect to significant defects. We are typically responsible for curing any title defects at our expense. This curative work may include the acquisition of additional property rights in order to perfect our ownershipfordevelopmentandproductionofthegas estate. 2
CONSOL Energy: Strength in Product Diversity Coal Low-volcoal High-volcoal PCI coal Thermal coal Gas CONSOL believes that it can create meaningful shareholder value by responsibly managing this unique portfolio. 3
CONSOL Energy: Strength in Product Diversity (2) Wall Street Journal headline, Feb. 22: BHP to Buy Shale Assets The world s largest mining company validates CONSOL Energy s strategy. 4
CONSOL Energy: Strength in Market Diversity U.S. China Europe Brazil CONSOL Energy s Pittsburgh seam coal is now being sold on four continents. 5
CONSOL Energy: The Nation s Largest Coal Exporter 2010 Exports Europe: 2.2 China: 3.0 Brazil: 1.6 Total: 6.8 mm tons CONSOL Energy aspires to increase its export sales in 2011, with India and S. Korea representing potential new markets. 6
Transshipping our Coal off the Coast of Nova Scotia Coal in the Panamax-size vessel (on the left) is loaded onto the Cape-size vessel (on the right). 7
CONSOL: Coal s Q4 Cash Generation Quarter Ended December 31, 2010 Low-Vol Met High-Vol Met Thermal Total Coal Sales (millions of tons) 1.1 0.5 15.4 Average Realized Price Per Ton Company Produced $164.62 $72.69 $52.98 Total Cost Per Ton, before DD&A $61.20 $36.64 $38.22 DD&A Per Ton $5.03 $5.72 $5.05 Total Cost Per Ton Company Produced $66.23 $42.36 $43.27 Average Margin Per Ton, before DD&A $103.42 $36.05 $14.76 Sales (millions of tons) times Average Margin Per Ton, before DD&A ($ MM) $114 $18 $227 37% of the cash generated in CONSOL s Coal Division came from the sales of met coal. 8
CONSOL s BMX Mine Opens in Early 2014 5 MM tons/year of low-cost NAPP coal Potential Markets: Asian mills European generators Brazilian mills Domestic generators CONSOL s Bailey Prep Plant will be expanding to serve the BMX Mine CONSOL can expand production of its premium product if world markets demand it. 9
CONSOL: Managing the Coal Portfolio Potential to Monetize CAPP Met Reserves in Southern West Virginia Amonate, Elk Creek, and Itmannproperties 5 MM tons/year of lowvol, medium-vol, and high-vol Potential EBITDA of $350 MM, assuming $150 per ton sales price CONSOL is assessing options, including joint-venturing, outright sale, and possible sole development. 10
CONSOL Energy s 2011 Gas Strategy Investing $675 million to grow the gas division of CONSOL $215 mm: delineate Dominion acreage $225 mm: grow production to 150-160 Bcf $35 mm: Utica Shale exploration program CONSOL believes that its shareholders will reap substantial value from these investments. 11
CONSOL Nearly Doubled Proved Reserves in 2010 4,000 3,500 3,732 3,000 2,500 PDPs Bcf 2,000 1,500 1,265 1,343 1,422 1,911 1,000 500 0 2006 2007 2008 2009 2010 CONSOL added 621 Bcf from extensions and discoveries. 12
2010 Drill Bit Finding Cost $/Mcf CONSOL Energy $0.41 Range Resources $0.60 Ultra Petroleum $1.48 CONSOL posts Best in Class finding cost.
Growth in Marcellus Shale Program 140 120 100 12/31 Exit Rate: MMcf/day 125 80 60 40 20 0 70 40 24 14 6 Estimated 2007 2008 2009 2010 2011 Our Marcellus Shale program is growing rapidly. #Wells Drilled 14
CONSOL has Three Marcellus Shale Operating Areas Central Pa. Ops Southwest Pa. Ops WV Ops CONSOL has 750,000 Net Acres in Marcellus Shale. 15
CONSOL is Long FT through 2013 DOMINION TETCO COLUMBIA DOMINION CONSOL has +400 MMcf per day of unused take-away capacity. 16
2010 Marcellus Shale Results All in Greene County, Pa.: EURs (p-50 case) range from 3.5 Bcf to 9.9 Bcf; 5.5 Bcf average Laterals average 3,400 feet D&C Costs average $ 4.1 million Maximum 24-hour production averaged 3.7 MMcf 30-day production averaged 3.4 MMcf per day CONSOL is achieving results much better than those suggested by the base case. 17
Marcellus Economic Assumptions Illustrative Well Parameters ($MM, except as noted) Base 2011 Type 2011 Type (10% D&C Efficiency) Gross EUR (Bcfe) 4.3 5.7 5.7 NRI 87.5% 87.5% 87.5% Net EUR (Bcfe) 3.7 4.9 4.9 Drilling Cost 1.9 2.1 1.9 Completion Cost 1.3 2.8 2.5 Total D&C 3.2 4.9 4.4 Gathering 0.4 0.4 0.4 Land & Title 0.1 0.1 0.1 Acquisition - - - Total 3.7 5.4 4.9 Margin Analysis ($ / Mcfe, except as noted) Base 2011 Type 2011 Type (10% D&C Efficiency) Henry Hub Cash Price ($ / MMBTU) 4.50 4.50 4.50 Realized Price ($ / Mcfe) 5.12 5.12 5.12 Lease Operating Expense 1.26 1.26 1.26 Production Taxes 0.26 0.26 0.26 Gross Margin 3.60 3.60 3.60 Total D&C,G,L,A Cost ($ / Mcfe) 1 1.02 1.13 1.02 ATAX IRR 22.9% 22.5% 26.8% Price Required for 20% ATAX IRR $4.27 $4.31 $4.03 1. Includes production loss (shrink) of 3.5% CONSOL s 2011 Type Case shows attractive economics, even before possible efficiencies. 18
Illustrative Marcellus Well Economics Well ATAX IRR Comparison - Type Curve Analysis 100.0% 95.0% 90.0% Internal Rate of Return % 85.0% 80.0% 75.0% 70.0% 65.0% 60.0% 55.0% 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% Base 2011 Type (10% D&C Efficiency) 2011 Type - $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $7.50 $8.00 Henry Hub Cash Price ($ / MMBTU) CONSOL expects a 22% After-Tax IRR at $4.50 / MMBTU. (1) Assumes 3,000 ft. laterals (2) Difference represents basis premium and gas quality characteristics (3) Includes production loss (shrink) of 3.5% 19
CONSOL Plans 6-Well Utica Shale Exploration Program Central Pa. Ops Southwest Pa. Ops WV Ops CONSOL drills vertical well in Belmont County, OH. 20
CONSOL Energy: Summary CONSOL has the asset and customer base that makes it the leading diversified fuel producer in the Northeast. CONSOL Coal Ops industry leading assets, margins and cash flows will allow the Gas business to reach a critical mass and become self funding. CONSOL Gas Ops advantaged acreage position and lease terms will allow positive IRRs even in a $4 natural gas market. CONSOL will manage this outstanding asset portfolio to optimize returns to our shareholders. CONSOL Energy America s Energy Starts Here. 21
March 2011 Investor Presentation The leading diversified fuel producer in the Eastern U.S.