What are CNX's updated thoughts on capital allocation given the weaker near-term macro environment but improving longer-term picture, especially regarding the buyback cadence?

The company's capital allocation philosophy remains unchanged, focusing on long-term value per share. They have flexibility and see attractive opportunities on the equity side, especially given a bullish long-term outlook for Appalachian gas, and will continue to allocate capital to the best use. “So we don't sort of signal as to what we're going to do, but we have a lot of flexibility, and we're seeing some attractive opportunities right now on the equity side.”

The prepared remarks indicated higher Q3 CapEx and lower Q4 CapEx, suggesting the higher end of the 2026 CapEx range. Is this accurate, and are you seeing inflation?

The company is still guiding to the midpoint of the full-year CapEx range. The quarterly fluctuations reflect the timing of field activity, with no significant inflation noted. “No, I would never read into that, Leo. We're still guiding to the midpoint of those numbers. And the commentary is more just about reflecting of the timing of the activity we have going on in the field, right?”

Given the Q4 production peak and gas weakness, are you managing turned-in-lines (TILs) to peak production in winter for better prices, implying a weaker Q3 and stronger Q4?

The schedule naturally sets up with pads coming on towards year-end. A large Marcellus pad will come on in Q3, and a Utica pad will surge in Q4, leading to a Q4 peak. “But yes, the way it lines up this year, you'll see a big couple of wells come on in Q3, and then you'll see the rest of them sort of surge into Q4.”

CNX

CNX Resources (CNX) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Energy· Jul 30, 2026

Source: earnings call transcript

Executive summary

CNX Resources Q2 FY26 — 45Z Credit Monetization Uplift and Strategic Capital Allocation

CNX Resources held a Q&A-only call to discuss Q2 FY26 results, highlighting a significant uplift in 45Z credit monetization and environmental attribute value, targeting a $90 million annual run rate. The company reiterated its long-standing capital allocation philosophy focused on long-term value per share, including a countercyclical buyback strategy. Production scheduling for the back half of the year will see a large Marcellus pad come online in Q3, followed by a Utica pad in Q4, with Utica wells performing strongly.

Highlights

Confirmed methane stream for first 4 months of '25 qualified for 45Z credit, stepping up cash flows for current year.
Treasury's refined carbon intensity calculations raised annual 45Z monetization value to approximately $40 million per year.
Targeting approximately $90 million annual run rate from 45Z sales and environmental attributes.
Utica wells performing as guided and considered top tier in the basin.

Concerns

Weaker near-term macro environment for gas in 2026 and 2027.

Guidance & targets

Category	Target	Timeline	Confidence
Annual 45Z monetization	$40 million high materiality	Annual · FY27	High
Total annual monetization (45Z + environmental attributes)	$90 million high materiality	Annual · FY27	High
Full-year 2026 CapEx	Midpoint of range medium materiality	FY26	High
Q3 TILs	12 to 13 wells medium materiality	Q3 · FY26	High
Q4 TILs	Utica pad medium materiality	Q4 · FY26	High

Risks & headwinds

Weaker near-term macro environment for gas 2026-2027

Soft outlook

Mitigation:Countercyclical capital allocation strategy, focus on long-term value per share, bullish long-term outlook for Appalachian gas.

What to watch in Q3 FY26

45Z credit monetization cash flow impact

Q3 FY26

Current Expected

Target Confirmation of $30M cash flow in Q3

Why it matters

This represents a significant cash flow step-up for the current year, impacting financial performance.

Yes. As a reminder, you'll see it come through in the cash flow in Q3. That's why we disclosed it sort of early July activity.

Find out whether CNX delivers this. Inve re-checks your case every morning.

Q&A highlights

How should we think about the timing of the Treasury's final ruling for 45Z credits and the $40 million revenue number for 2027?

Treasury guidance is expected in the second half of the year. The refined carbon intensity calculations increased the annual 45Z monetization to $40 million for 2027, contributing to a $90 million annual run rate when combined with environmental attributes.

“So when you combine our 45Z sales going forward, which will be monetized in '27, plus our environmental attributes, we're targeting approximately a $90 million a year run rate between the two.”

asked by Gabe Daoud · answered by Everett Good

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Detailed narrative

45Z Credit Monetization and Environmental Attributes

CNX provided an update on its 45Z credit monetization, confirming that methane captured for the first four months of 2025 qualified for credit, leading to a step-up in current year cash flows. Treasury's refined carbon intensity calculations increased the annual monetization value to approximately $40 million for 2027.

Combined with environmental attributes, the company is targeting an annual run rate of $90 million, with the cash flow impact from the $30 million credit sale expected in Q3.

Capital Allocation Strategy

The company reaffirmed its consistent capital allocation philosophy, now in its 6.5th year, which prioritizes creating long-term value per share. Management emphasized flexibility and a willingness to capitalize on attractive opportunities, particularly on the equity side, given a strong belief in the long-term outlook for Appalachian gas.

This includes a countercyclical buyback approach, with a philosophical openness to outspending if it aligns with risk management and value creation.

Production and Capital Expenditure Timing

CNX clarified that its full-year 2026 CapEx guidance remains at the midpoint, despite anticipated quarterly fluctuations. Q3 is expected to see slightly higher CapEx due to the timing of field activity, specifically a large Marcellus pad coming online. This will be followed by a Utica pad in Q4, which will contribute to a production surge towards the end of the year, naturally peaking in Q4.

Utica Well Performance and Drilling Efficiency

The company expressed satisfaction with the performance of its Utica wells, noting they are performing as guided and are considered 'top tier' in the basin. CNX continues to achieve 24-hour drilling records in the Utica, with well costs remaining around $1,700 per foot.

Management indicated ongoing efforts to improve drilling efficiency and may provide further updates on well costs once a more comprehensive data set is available.

Pennsylvania AEC Market Outlook

Regarding the Pennsylvania AEC (Alternative Energy Credit) market, management expects relative stability, marking it to market based on current trade-off ICE. While some volatility is acknowledged, the current outlook assumes a stable to flat run rate for this component of their environmental attributes, contributing to the overall $90 million annual monetization target.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.