Tyler Lewis - Vice President of Investor Relations Nick DeIuliis - President and Chief Executive Officer David Khani - Executive Vice President and Chief Financial Officer Jim Grech - Chief Commercial Officer Tim Dugan - Chief Operating Officer.

Jeremy Sussman - Clarkson Capital Markets Joe Allman - JP Morgan Lucas Pipes - Brean Capital Neal Dingmann - SunTrust Robinson Humphrey Neil Mehta - Goldman Sachs Megan Repine - FBR Capital Markets Michael Dudas - Sterne Agee Holly Stewart - Howard Weil.

Ladies and gentlemen, thank you for standing by and welcome to CONSOL Energy’s First Quarter Earnings Conference Call. As a reminder, today’s call is being recorded. I’d now like to turn the conference call over to the Vice President of Investor Relations, Mr. Tyler Lewis. Please go ahead..

Thanks John and good morning to everybody. Welcome to CONSOL Energy’s first quarter conference call. We have in the room today Nick DeIuliis, our President and CEO; David Khani, our Chief Financial Officer; Jim Grech, our Chief Commercial Officer; and Tim Dugan, our Chief Operating Officer of our E&P Division.

Today we will be discussing our first quarter results. We have posted slides to our website and we will reference throughout the call. Due to feedback that we’ve received from the investment community, we’ve made the decision to condense our quarterly slide presentation to provide a small subset of updated slides.

As a reminder, any forward-looking statements we make or comments about future expectations are subject to business risks, which we’ve laid out for you in our press release today, as well as in our previous SEC filings.

As we announced on April 1st, CNX Coal Resources LP, which is our proposed thermal coal MLP filed a registration statement on Form S-1 with the Securities and Exchange Commission for an initial public offering. Because the MLP is currently in registration, the securities laws restrict our ability to discuss the MLP or the IPO.

As a result, we will not be providing any information or answering any questions about the MLP or the IPO during this call. We appreciate your understanding and cooperation with these restrictions during the registration process. As we’ve done in the past, we will begin our call today with prepared remarks by Nick followed by Dave.

Tim and Jim will then participate in the Q&A portion of the call. With that let me start the call with you Nick..

Good morning everybody. And before we turn it over to Dave, who is going to cover more of the details of the quarter, I want to provide some key highlights as well as some insight on the strategic transformation this continues unfold here at CONSOL Energy.

And we can start with the E&P division which had another great quarter with record production of 71.6 Bcf and the Marcellus Shale remains the dominant growth driver. We’re seeing strong wealth and continued to make big strides on efficiency improvements on both the drilling and completion sides of the equation.

These accomplishments continue to drive unit cost lower and lower and seeing by the $0.56 per Mcf drop in unit cost from a year ago.

The commodity environment continues to bring challenges that we’re managing through and in the earnings release we highlighted some of the changes regarding our development plan as well as provide some insight is to how we continue to high grade our activity level for the year.

Specifically in the Marcellus, we’re focused on our highest rate of return areas of Greene, Washington and Allegheny counties in Pennsylvania. We have a substantial acreage position and includes the bulk of our fee acreage which obviously corresponds to the higher NRIs ultimately translating to the better economics.

We now at Greene County, we are actively drilling wells on our 9,000 acres at the Pittsburgh International Airport property. And so those of you who are flying into the Pittsburgh and hopefully come into to visit CONSOL in near future, you should look out your window when you are landing.

What you see are CONSOL rigs actively developed in this area which we’re very proud of and very excited about in terms of operational potential. The excitements also continues for the Utica Shale and now includes new plan dry Utica wells, few dry Utica wells in Pennsylvania and Greene and Westmoreland counties.

One dry Utica well at our JV partners drilling in the PA and West Virginia and Marshall County and handful dry Utica in Monroe County, Ohio. We’re drilling these wells from existing pads that highlights the vast potential of our stack pay opportunity.

Besides the Marshall County well, the other dry Utica wells along with the corresponding Utica Shale acreage, Pennsylvania, West Virginia and Monroe County, Ohio, there are 100% owned by CONSUL and they fall outside our joint ventures.

So considering that we have over 5,000 net acres across the various, the offers set it’s robust and it could be a major driver on how we reduce capital intensity for targeted growth levels by utilizing stack pay, gas factory opportunity associated with the Marcellus to dry Utica and the Upper Devonian horizons.

This is not a shock that we are very excited to drill these Utica wells and we expect results sometime and throughout second half of the year for these areas. As we’re stated previously, our 15 development plans has been fluid due to the commodity price environment.

We’ve adopted to the environment by substantially decreasing our capital budget for the year down to $920 million which is 30% lower than last year’s.

The high graded drill plant that we have in place and the reduce level of capital intensity due to continues improvement and the still back capital that we’re putting work, they produced rate of returns that trade NAV per share prices.

And speaking of returns and activity levels, we analyzed key performance metrics every month and we meet with our joint venture partners every month to discuss these along with changes to our joint development plans to optimize our results.

As most of you might know, we did not come to an agreement in December of last year with Noble Energy, our Marcellus joint venture partner on a 2015 capital budget.

This was simply the result of the rapid deterioration and commodity prices that occur December when the budget typically set as each party work to determine the right level of capital expenditures in this environment. While I can tell you today that we and Noble Energy are aligned and we’re working together.

Our teams who worked together over the past three months to develop a joint working plan for 2015 that drives returns up and capital down.

And operationally, our teams are hitting the stride, we are seeing strong results coming from both CONSOL’s operated area and Noble’s operated area, so the process, it’s collaborative, it’s methodical and we feel good about where we are today with our capital budget.

To summarize on E&P side, as our division continues set a high bar on all factors of the operations expanding from safety to production. And Dugan and his team continue to impress paper change as it slow down.

The organizational transformation of establishing asset teams, centralizing operations, encouraging new ideas and even calculated risk, they’ve all come along way and Dugan and team stride for nothing sort of excellence on a daily basis and they started 2015 by far and also wonders. Now I want to shift over and talk about the Coal segment.

The Pennsylvania operations, better production guidance for the quarter but despite operational success with the northern Appalachia Thermal market still weaken from historical levels with the main driver been low natural gas prices which is probably no new news those out there.

Despite the market weakness, however I think it’s important to provide some insight on how we think about in northern App Thermal market and why we’ve remained very optimistic due to our marketing strategy and other strategic advantages that our Pennsylvania operations enjoy.

Our Thermal Coal marketing strategy fills for the reality for today and tomorrow not the history of yesterday. The worlds change and those who continue to believe that the coal market playbook, yesterday there are quite the success today if a fundamental misunderstanding of the dynamics that are driving the transformation of the industry.

We make no mistake about it. Today bigger is not better and the coal generation strategies of yesterday are not the same ones, they can be overlaid today on markets that have drastically changed.

Thermal Coal market now more than ever it’s a surgical and regional play with a Southeast quadrant of the United States proving to be the battleground for northern App, Central App and Illinois Basin. We’ve done our homework for years now and CONSOL identified and break these market changes.

And as a result, we developed our strategy by concentrating our footprint, high grading our portfolio and aligning ourselves the power plants will be around for many years to come.

The commencement in this strategy began back in 2010 with demining acquisition that help reshape CONSOL by launching us into the Marcellus and Utica Shale and it contributed that what we are today a leading Appalachia company, a Tier 1 coal assets.

We saw the energy landscape changing in way for the shale revolution and we have adopted and adapted accordingly on both the co and GAAP sides of our business. A prominent the shale gas grew and increasing gas demand over the years as reduced coals market share, the coals not going away and it continued to be a foundational fuel for decades to come.

All that being said, the industry is clearly changed and it’s changed permanently. There are going to be big winners and losers as the implications of the change take effect.

CONCOL is going to continue to benefit by strategically partnering with the must-run power plants that will survive and run even harder as they make up capacity that is scheduled to come offline. CONSOL is going to be a clear winner. We have a number of tactical advantages that really speaks to and it forms the strategy and our view.

Our Pennsylvania operations consist with mines with some of the highest quality coal in the world. Product that matches up with customer requirements in a post mac carbon constant work. We produced that coal at very low cost.

Our state-of-the-art plant and go real transportation network from the Pennsylvania complex, its second and nine can provide reliable access to those much grown plants. Ensure the customers know that we can deliver a high quality product, do safely, compliantly and reliably on a consistent basis.

Customers also note that we’ve got a strong balance sheet and also have the optionality to provide a range or fuels for generation whether it be coal, natural gas or both. So that’s our customer concept we go down of our Analyst Day last year, it’s a reality today across a range of transactions and partners.

That effected our wholly owned Baltimore Terminal provide easy access for our PA operations called international market both as an insurance policy when the domestic markets are challenging and also provide us as an opportunity to crank up that’s more capacity, take advantage of sea-bore market when appropriate, you can see why this is unquestionably the premier coal complex in the world.

To illustrate and help show the success that we are seeing with the strategy, in the first quarter, we continue to lockup long duration contracts with strategic partners with Pennsylvania operations Thermal Coal. And for 2017 and 2018 combined, we average approximately 40% sold.

We’re positioned as preferred supplier for the must-run plants in the northeast and we are equally well positioned because of the quality of our coal and transportation advantages in this hologram markets in the southeast. So stay tuned as we continue to execute our thermal marketing strategy.

On the Met side, Virginia operations had a great quarter particularly when you look at the all in unit cost for the first quarter of $42.31 per ton, the cash cost of $35.22 per ton. We know that there are headwinds in the industry for Met, but we also know we have a heck of a growth story organically as well as a great platform for Met.

That when the current weakness we see in a global Met market today, so that indicate to us and needed inevitable fallout on a supply side as closer than ever. In turn that means a rebound in the market is also closer in the door of plenty opportunities and going to be plenty of opportunity for asset acquisitions things that allow.

So strategically the picture is we execute operationally. We continue to pursue our strategic objective. Dave is going to talk more about the refinancing we completed in the first quarter.

Our thermal coal MLP remains on track for a mid-year 2015 IPO to reiterate our objectives with the coal MLP IPO, primary objective remains to create a new platform transparent pure play some of the parts evaluation are retaining control of the strategic asset.

Initial valuation and proceeds rate is certainly matter that they are secondary considerations. On the Met side, we continue to expect the MetCo IPO to occur around the only fourth quarter of 2015.

And like the thermal MLP, liquidity it’s not the primary driver for CONSOL but establishing a transparent platform after clear some of the parts evaluation that is the primary driver. I want to spend a minute talking about culture. Clearly if there is a lot going on at CONSOL and those type of the business and we are working hard to unlock value.

Our decision making process is driven by long term health of the company and increasing NAV per share.

In addition to the structural changes with the upcoming IPOs as well as the operational changes that we’ve seen, we’re going to continue to see within E&P division, there is still an addition to these things a lot happening across the CONSOL culture.

Our 150 year legacy that provide us with a lot of benefits but as much of that legacy is instructive in terms of how we’ve navigated this typical nature of the energy business in the past and make no mistake about it, we won’t be found by the past.

So the culture is one that frankly is embraces change and if now which is the shipping nature of the energy business, lean mean that’s the name of the game today. And in keeping with our core value that continues improvement, the company has implemented zero based budgeting across our team.

We are embracing zero based budgeting not as a reaction to respond a low commodity prices but more as a proactive cultural measure we reinvent the company.

We’ve already seen successes in the short time that zero based budgeting has been up and running and over the past two months, we’ve reduced approximately $55 million of administrative and overhead and nearly $85 million of service cost related to the company’s E&P program when you compare that for 2014.

These cost savings, they’ve got a meaningful impact on our EBITDA and we’re excited to continue making progress in this area, which is expect even more creation for 2016 as we continue to push this velocity deeper in the all of our activities across the company.

The zero based approach is very consistent with our filter of driving NAV per share, it’s a useful tool and are drives strategically reinvent CONSOL Energy and it’s something that team is getting more and more excited about as time marches on.

So in closing at least for my section, despite challenging markets, we are successfully managing those these cycles and face the change that CONSOL continues to accelerate, so lot of expecting things to look forward to you this year, probably in the upcoming IPOs, updates and progress on our Thermal Coal marketing strategy, our Utica results and also seeing what’s zero based budgeting with bring to the table.

It’s been a very active couple of years as we just strategically reposition the company and continue to build a structure and a culture which is going to be durable for the long term and we will won’t shy away from challenging the status quo in positioning the company for continued success. So with that I am going to turn it over to Dave Khani..

Thank you, Nick and good morning everyone. Today I will provide an overview of our first quarter results, details on our cost cutting efforts, each forecasting items and how we continue to manage the business through a challenging energy environment.

The company presentation is posted to our website and some of my comments will tie to slides three through seven and 35 through 45. But before jumping into the details, let me hit the key points for the quarter. One, we expect about $200 million of expensive permits to our operating, administrative and nonrecurring forecast.

Second, we’ve trimmed another $80 million of capital in the quarter, now expect after tax returns to be over 15% based upon this trip. Third, reduced service deflation by over 20% and now ahead of plan. Fourth, we refinanced and lower our interest expense by another $27 million which trimming out some of our debt and modernize our covenants.

Fifth, we acquired 20,000 continue acres of Utica and Upper Devonian rights. Sixth, we’ve repurchased over 2 million share. Seventh, we locked up some additional coal sales under multiyear contracts and eighth, we’ve worked towards our two coal transactions with the filing of a CNX Coal Resources S-1 registration statement.

So looking at net income and EBITDA which is Slide three. CONSOL’s net income for the first quarter of 2015 was $79 or $0.34 per diluted share. After excluding cost of one items, our adjusted net income was about $85 million or $0.37 per diluted share and adjusted EBITDA totaled $266.

During the quarter, the company’s effective tax rate was a negative 48% which is different from the federal statutory rate of a positive 35% on ordinary income. The company received a tax benefit largely driven by decrease depletion deduction related to the CONSOL’S coal and E&P operations.

Due to the depletion deduction, we anticipate a negative tax rate for the year based up on this depletion of benefits but our annual tax rate will move around quarter-to-quarter based upon our changes and forecasted pretax income and asset sales. Now let’s talk about our two main operating divisions, Coal and E&P.

Coal, for the first quarter of 2015 CONSOL’s active operations generate a 191 million in cash from operations before capital expenditure. In our PA operations, first quarter per unit cost were 42.73 per ton up $2.44 per ton versus the first quarter of last year.

The increase in cost were due to continued difficult geological conditions in our complex, lower recover rates and lower tonnage at our Enlow and Harvey mines. We expect the first half of 2015 cost to be higher than the second half of 2015.

However, we expect the overall 2015 total PA unit cost to continue to trend down about $2 to $3 below the average for 2014. For the Virginia operations, nick highlighted that our Virginia operations were successful of reducing cost and we’re extremely productive.

So overall cost for the mine averaged 42.31 or 36% decline of the first quarter of 2014 levels. We expected Virginia operations to average between 15.55 per year for 2015.

Besides the last several years of spending on capital projects reduced cost, we’re trimmed an initial $15 million this quarter for the year of additional cost on some of the key initiatives that help drive unit cost such as contractive benchmarking, decline of raw material costs and increase lifecycle management.

To put our overall cost controls and prospected over the last three years into 2015, we expect PA operations to unit cost to decline by about $5 per ton, Virginia operations by $12 per ton, and our Miller Creek operations by over $10 per ton. And that’s from 2013 and averaged to 2015. So let’s shift over to our E&P operations.

During the first quarter, CONSOL’s E&P division had net income of 30.9 million and cash flow provided from operating activities of 177.8 million. Despite increases in production, total first quarter sales revenues decreased by about $12 million when compared to the year earlier quarter to depress commodity prices.

Liquids production represented about 11% of our total E&P production volumes for the quarter and should strength within 10% to 15% through 2016. Now let’s look at E&P realizations. In the first quarter, total per unit sales prices declined to $3.56 per Mcfe compared to $5.52 per Mcfe in the first quarter of ’14.

For the quarter, we experienced a positive basis realized $0.48 hedging gain and had $0.04 uplift from liquids in the quarter. Despite liquids pricing weakening, we are still making positive margins on our liquids production. On our last call, we expected first quarter 2015 basis to be flat to a negative $0.20.

We’ve finished the quarter with a $0.05 positive basis over Henry Hub highlighting that our marketing team did a wonderful job optimizing an excess FT in our sales book. For the second quarter, we expect the basis to be between a negative $0.45 and $0.65 per Mcfe off to Henry Hub. Now let’s look into our unit cost.

During the quarter, unit cost declined $0.58 per Mcfe with Marcellus and Utica Shale oil cost coming in at $2.62 and $2.48 per Mcfe respectively, which help decline in realizations. Marcellus operating cost have declined fast with total cost down about 18% year-over-year and 7% sequentially.

Marcellus cash cost declined 8% year-over-year and 2% sequentially. Also important to note is that our Marcellus DD&A rate has trended down to $0.95 per Mcfe from a $1.36 reflecting our efforts to lower our capital intensity from improving cycle time and a completion techniques.

Across the E&P division, we expect total operating unit cost to decline 10% to 50% at 2016 faster than previously forecasted. Despite these total cost decline, the first quarter margin still declines a $0.51 from a $1.89 as a result of lower realizations. Now let’s move over to Slide seven on cash flow of reconciliation.

When we are looking at the first quarter, we have spent our operating cash flow by about $77 million and also used an incremental a $95 million to purchase Utica operative earnings acreage, buyback stock and complete our debt refinancing.

Our goal is to keep our debt levels relatively fast for 2015 and we should begin to see the benefits of our cost savings and capital routine effects kick in at second quarter 2015 and should get better as plan progresses.

Also we expect non-core asset sales to start to hit some point in the second quarter, third quarter and believe there is some upside to our fourth in 2015 from amortizations.

Now let’s move over to Slide 37, on the corporate side as Nick mentioned, we have implemented a zero based budgeting effort and are seeing a lot of success highlighted here on this slide.

As the slide highlights, the 2014 income statement have pulled what we believe is our administrative and operating type expenses, overhead expenses typically base flow through three line items on the income statement, general and administrative, direct admin and selling and other corporate expense.

We pull these three line items together to highlight where we see the reductions over the next two years. These reductions are combination of any things to improve zero based budgeting and headcount reductions to name a few.

Over the past two months, we’ve forecasted these expense decline by about 65 million in 2015 and expect to decline to 90 million in 2016. We’ve also reduced our coal and E&P operating expenses by about 80 million and expect nonrecurring items to decline an additional 40 million in 2015 and 70 million in 2016.

Many of these nonrecurring are unusual items are tied to restructuring of our debt, legacy liabilities and new capital structures. Now moving over to Slide 38, on serviced cost.

Over the past three months our supply chain team and cooperating with our operating team has been authority work that partnering with the service companies to lower unit pricing while maintaining productivity.

We’ve reduced service pricing by approximately 85 million based on our lower 2015 activity levels representing over 20% service deflation at 2015 versus 2014. This cyclic is our initial 15% expectations. This will also translate into a 20% reduction our total low cost and improves our capital of oil productivity flexibility for 2016.

Moving over to capital expenditures on Slide 39. This slide highlights that our 2015 versus 2014 E&P capitals down about 30% year-over-year reflecting our high graded activities.

Much of this capital really tie to production coming online in 2016, so the delicate balances spending in a weaker environment and looking out into 2016 commodity prices and expected improving unit cost.

The only area where we are actually increasing spending year-over-year is try to drilling six draw a Utica operated wells which Nick highlighted in Monroe, Westmoreland and Greene counties.

Based on our high graded development drilling, upgraded cycle times and reduced service deflation, our returns for this program should generate a 15% after tax rate return based on a $2.69 realized price. That’s $2.49 for our Marcellus program and $2.90 for our Utica program. The 2016 a five year natural gas is about $3.05 and $3.40 respectively.

If you net out a conservative $0.45 basis to rental looking that over this time period, you could see why we continue to allocate capital over these key areas. Also we are still in infancy stage of drilling our dry Utica well, so these return should improve meaningfully overtime.

Also I want to remind that our coal capital has declined about 45% to about $220 million reflecting of maintenance capital spending. So if you move over to Slide 42 and 43 and look at our capital structure here, Slide 42 and 43 provides highlights and pro forma view of the refinancing we accomplished last month.

We tended for 8.25 of senior notes unsecured notes due 2020 and 2021, we issued 500 million of eight years senior unsecured notes with an effective yield of 8.25 and used 761 million on our volume credit facility for the remaining balance. This accomplished a few important points for us.

One is these transaction reviews our annual interest expense by about $37 million create a flexibility allocate debt to our coal entities that help modernize our covenant package and turned out a portion of debt by additional three years. We expect to use proceeds from our asset sales and transactions to repay our credit facilities.

To protect our liquidity, we’ve also incorporated a $600 million term loan commitment in place as a wax off to the upcoming coal and E&P transaction. Now finally, let’s talk about our capital allocation and buyback program.

Our immediate goal is to keep our leverage ratio flat with 2014 levels and therefore we’ve maintained a cautious view on capital spending as well as stock buybacks. We have two year $250 million stock buyback authorization in place and began to departure and buy stock as well as moderate our capital spending.

This 150 oil company has accumulate a lot of cost as Nick has mentioned in many areas and our three year journey to ring these costs as have just begun. Over the past two years, we have removed over $500 million of annual fixed cost between all areas of corporate operating and balance sheet liabilities.

Our teams are laser focused improve our fund this figure. This waxed up create an opportunity to wind margins as commodity prices rebalanced and improve on our financial flexibility.

We will take advantage of this to further contract our hedge so we capitalize more when the discounts NAV one and be able to repurchase shares when we feel more comfortable with our operating cash flow.

So in summary, things remained very busy at CONSOL as Nick has mentioned and we have a long list of catalyst to drive this spark as we’ve highlighted on slide 45. We are proactively making steps to manage of this cycle and we believe we’ll exit this down cycle even stronger. With that, we’ll open it up for questions..

[Operator Instructions] And first with the line of Jeremy Sussman with Clarkson Capital. Please go ahead..

Yes, hello, good morning..

Good morning..

Good morning, Jeremy..

You know one thing I noticed in the release was you guys mentioned the bottom or terminal volume 2.5 million tons, I don’t think I’ve seen the actual tonnage broken out before. I guess any reason for this and this is something maybe I am getting ahead of myself put down the road, they could fit into maybe an MLP structure..

And the tonnage is - Jeremy this is Jim Grech. We broke that out because the terminal we thought had such an outstanding core in the first quarter the 3.5 million tons, for them in the first quarter was a record throughput for the terminal.

And it also reflects what we’ve been doing with our coal in the first quarter and the amount of export sales that we’ve been entering into in the first quarter..

And on the location of placement of the terminal longer term, as we’ve discussed before Jeremy that’s something that we’re going to - we’re going assess one, these other platforms are up and running on the terminal MLP and the MetCo structure and see what makes the most sense for CONSOL Energy after those are established as pure plays and get those out later this year..

Understood and just - thank you.

Just as a quick follow-up, David you mentioned, we should start to see some asset sales, one areas you guys highlighted in you Analyst Day last year was the Illinois basin, I know you’ve done something last year, but I still think you have about 550 million reserves left if my math is correct, is this scenario it seems like just overall activities kind of hitting up in this area, should we be keeping an eye on this one?.

I think the answer is yes, I think the Illinois basin is an area that I think we will continue to monetize overtime and as mine plans continue to get closer and closer to our reserves, increases a value of what we think is worth selling..

Great, thanks guys very much..

And next, we’ll go to Joe Allman with JP Morgan. Please go ahead..

Thank you. Hi everybody..

Hi Joe..

Could you give us an update on the RCS and SSL and any other completion design changes? And also give us an update on your fracking program..

Sure, we continue to - our completions continue to evolve and you know where we’ve gone I think as I stated last quarter, our completions are really going, we’re moving more to regional completions, looking at some of the area specifics area by area, looking at various stage links up and lowing and we continue to work through those changes and test different areas.

So we’re moving in the right direction, we are seeing the results and just it all falls in line with our capital efficiency and improve results..

Again on the refracking program, could you update us on that?.

The refracking, we again that’s something that just dipped into our portfolio and as we go through and assess rates and return and prioritize all of our activity, the work over are looked at same as our drilling of our new well.

One of the big factors there is logistics, timing usually when you go into work over well you’ve got a shut in existing production, so we are looking, actually looking at some techniques that would minimize the shut in time of existing production when we go into do recompletion.

So that is actively being, continually being reviewed and is part of our portfolio that we will continue to look at..

Okay, that’s helpful.

And then on the finance side, David what are the goals for the balance sheet and can you talk about any like finance plans or any other plans besides that two IPO that you are planning this year?.

Yeah, our goal would be to try to keep our debt levels flat. As we think we start just a little bit work to do, but we do have the noncore asset sales, we do have the coal structures and associated debt that would go with it. We have some more cost savings that to work through.

And we’ll always obviously look at the capital spending levels to see if we need a modulated commodity price just change because it rolled and be able about rig return driven. So our goal is really is to try to keep our debt levels flat, to keep our leverage ratios flat..

Alright, very helpful, thank you..

You’re welcome..

And we’ll go to Lucas Pipes with Brean Capital. Please go ahead..

Good morning, everyone..

Good morning..

My first question is for Jim.

Jim, on the cost side, average from prices for both ’15 and ’16 obviously still pretty strong about $61, but when I look at with incrementally sold kind of back of the envelop, my math would suggest somewhere - some prices in the 40s, could you maybe I mean now if there is some tons that moved around, shifted around that would explain this low prices?.

Yeah, Lucas, first of all thanks for asking the question. It is seems to one that historically causes confusion when we look at incremental pricing. And I just wanted to say clearly that when pricing as looked at incrementally, it gives the wrong pricing signals and I’ll explain that why.

The portfolio when we give the forecast for future quarters or years, we look at holistically, so we look on a total portfolio basis, so not only there is incremental tons in there but if there is any changes to the existing contract and our existing contracts can have some minor changes and that based on market conditions, we have net bags, the power, gas prices and so on, which can affect the base existing contracts up or down.

So the mistakes occur when we take all of the changes from the existing base and put all those changes on just incremental tons and it has to squeezing of the incremental prices either up or down. So Lucas I think that’s adopting with the calculation that you’re doing..

I understand.

And in light of that, could you maybe give us a flavor on how you see the current coal markets in northern App playing out for both ’15 and ’16?.

For ’15 right now, we see the current market since the beginning of the year is being not call it a spot markets because it’s been relatively weak and it’s led to us take an advantage of the assets we have and the strength we have to do to the export market.

And we see that weakness continuing here through the second quarter summer and as we get to later in year, there is some potential for some change, we have some indications or some stop coal and we’ve made some small sales, a little further out in the year.

But the weakness that we’ve see through the first quarter, we expect to continue to second quarter and with some potential for some changes we get to later in the year, again be highlighting depended on weather and gas prices. And when we went to 2015 and beyond, we have a very positive color a bullish outlook for the ability to contract coal.

And we have that perspective because we look at the coal market in total. We look at the segment of the coal markets are in the northern App coal market. And we think that when people get the northern App coal markets is too big of a generalization that is done with the northern App coal markets.

When you take a look at the northern App, there is 19 wrong wells in the northern App coal market. Then our river load outlines, we have one of them the metallurgical coal mine, two of them have very short reserve life left, so with the nine mines to be on the rail, rail contract and four those nine CONSOL mines we think are very heavily contracted.

So you come out of 19, you come left with a five CONSOL mines long wells, rail road out. And then so we look at the market, the market that is at and then look at cap production declining significantly, we think cap production is below as 80 ton this year.

You know that 80 million, 30 million is going to be Met, so given about 50 million for the thermal. So when you take the what’s left in the northern App market, long well market out into future years for contracting.

When you look at the reductions in the cap market which creates opportunities for the northern App coal that is contracted, we see a very good environment for term contracting for our northern App mines..

I appreciate that. That’s very helpful and thank you for that clarification.

To switch over on to the gas side, Nick could you maybe be give us an update on your Utica activity and what we should be looking forward to for the second half of this year?.

Sure, I’ll give you the maybe the overview and I’ll kick it over to Tim for additional detail. But Utica, we’ve really got two things going on there currently.

One is the I’ll call it the already established areas wet and dry within our joint venture with Hess is Ohio which has as Dave mentioned the preliminary returns at current price decks and we feel that that program driven NAV per share that currently sits in.

There is all kind of continues improvement and reducing capital intensity efforts that the Tim’s team remanufacturing is bring into, they are along with our JV partner has.

The other side of the Utica is really the story that’s developing which is what we got, what we call the drive footprint in West Virginia and Pennsylvania, that’s upwards of a half a million acres that doesn’t fall within either that the JVs.

And usually there as when we look towards and how we are thinking about this is results come in at that drilling program through the year. How do we think of the dry Utica is an opportunity to reduce - significantly reduce the capital intensity because the stack pays to head a certain production target.

So for example this year we wanted to do a 30% production growth and next year 20%, our current production guidance range.

Simple so we think a dry Utica is that the results coming in as we are hoping, how does that reduce capital intensity to hit those specific production growth targets and that can meaningful impact on liquidity, on NAV per share on returns and offer other opportunities that we talked about with regard to operation cash flow.

That sort of the big fisher for the Utica and then Tim can maybe speak that what we’re doing with the remanufacturing continues improvements sort of things..

With the initial wells that we’ve drilled that we’re drilling in Pennsylvania, the deep dry Utica those were really taken very conservative approach to those because we’re in a data acquisition mode trying to understand what we have, so that we can build development program around those.

And over in Monroe County, Ohio, we’ve got a four well pad that will be completing. In the second, third quarter, we should have some production results, dry production results by late third quarter, early fourth quarter.

So that will really help us in putting together our plan that Nick talked about looking at how we develop our stack pays and how Utica plays a role in there, but where it’s progressing nicely..

Excellent, well good luck with everything and thanks for all that color..

Thanks Lucas..

Our next is from Neal Dingmann with SunTrust. Please go ahead..

Good morning, guys. Say Nick maybe first question for you, just you broke out the 85,000 net for acres, nice contiguous position, southwest PA.

Thoughts on that doing anything with that anytime soon or just maybe any comments you can give about that position?.

I think we do have thoughts on that but I would also say that when you look at 2015, we got a pretty stack foreclosure to accomplish between what’s going out these coal platforms and coming out the refinancing and making sure that we got the dry Utica and gauging that and what it means for us longer term.

So I think that it will be more of a ’16 beyond opportunity set. And there is another potential location are levered full but what it looks like and whether or not we’re excited about at this point is probably a premature. So something I think to think about for ’16 and beyond..

Sure and you Dave, to quantify the revenue attributable to this?.

We have not - we have not given that out and I will just say that we have studied the whole mineral concept. And so when we have the little bit of breathing room, we’ll be able to maybe talk about it later in the year or early year as Nick mentioned..

It make sense, okay. And then just on the dry Utica gas, I know I guess sort of two questions around this. Just, what you guys assuming for well cost these days around the dry gas and what are you thinking you know as you sort of develop that area.

And then just kind generally, how do you think I know when there is other areas, I know probably you talked about well cost coming down 20%-30%, so I guess my question is sort of two fold. How have cost changed so far on those existing sort of Utica well as you’ve been drilling in those existing areas.

And then what do you all thinking about sort of cost wise on the dry gas going forward?.

Well I think like I said the first wells we’ve drilled in Pennsylvania and even the Monroe County, Ohio we’ve really been focusing on data acquisition. So we’ve drilling pilot holes with deck cores, we’ve been doing testing, so those costs are higher.

And we’re also we’ve taken a very conservative approach with those wells to make sure we don’t have issues when we’re acquiring the data. So we’ve got to evaluate our casing programs, we probably run our casing strength maybe deeper than what is needed. Our completions, we’re taking a very conservative approach there.

We’ll use ceramic and resin coated propane which are little higher cost. So initial well cost are going to be higher across the dry Utica. And then as we get results in, we’ll start work in those cost down, but I would expect we’ll see costs in the - now we’ve expect our development cost being $10 million to $12 million range..

Got it, got it, okay. And then just lastly over in the coal side, I don’t know you guys talked about contract, is it kind of your goal that continues to have the maximum contract.

I know it seem like this quarter just at least on this release, you talked about significant amount that I know you’ve got is already has hit this one, just that you are able to count - additional, you are able contract for ’16 as well ’17 and ‘18, is that something you’ll continue to do, does that change I guess ones in all piece happen or just kind of curious on the cost side that you are trying to lock as much as that up as possible?.

Neal, we’re going to keep contracting out for the out year ’16, ’17 and ’18 and regardless of the situation you know we are at with MLP that you talked about. We think there is a real opportunity for us with the contracting Nick refer to in his comments and maybe give you a little color on how we’re looking at Neal.

I refer Slide 33 in the package that we have there. And the way we look at the markets is with the math compliance that lines coming on, there is going to be about 50 million ton of coal generation that’s going to becoming offline.

And what we are doing here at CONSOL with our contracting out into later years, that generation coming offline but the electrical load is still there and there is still opportunity for coal to serve that electrical load.

So the plants that we are targeting for a term contracting Neal have the excess generation capacity, the capability to pick up a significant part of that 50 million tons of generation it’s coming offline. We think as much as half if not more it could taken up by coal.

And plants that we’re targeting to do business with to hit into that that portion of the market. So we think there is a very good contracting opportunity there that aligns with our strategy aligning with the must-run power plant. So we’re going keep trying to secure as much of that load under contract as we can..

So that’s what on that, on the right that it actually that suggesting is that even after retirements are still significant amounts that suggesting?.

What that suggesting Neal was at the power plants that we’re working with that they have excess generation capacity available and so as these other power plants shutdown, we can increase the generation capacity at these existing plants which in turn means they consume more coal and those are the ones that we are entering into these arrangements with..

Thanks a lot..

When you look at that to really the three takeaways at that slide didn’t write, that’s an important slide. The one takeaway the first one is that the coal markets are changing permanently that’s the retirement schedule.

The second takeaway is that under our whole strategy of CONSOL that that we would we had a different portfolio, we would have been impacted by the retirements which of course would been good news.

But the third takeaway I think it’s the most important which is under the new sales strategy we put in place because of the current portfolio with Pennsylvania operation not only going to be not impact, we’re going to benefit as the new dynamic take place with these plants to survey and we link up them on multiyear, multi-term arrangements..

Perfect, thanks Tim, I appreciate it..

And next we’ll go to Neil Mehta with Goldman Sachs. Please go ahead..

Good morning, guys..

Good morning..

So can you give us an initial thoughts on E&P spending and cash flow trends in 2016, recognizing that formal numbers are out there yet, just directionally assuming a 20% production type of growth?.

Neil, this is Dave. Our ’15 spending really is going to drive the ’16 production numbers and so as I try to talk to little bit that the capital efficiency that we’re getting is helping give us a little bit more flexibility either to potentially retch it back capital or grow production faster than that 20%.

So we’re running a little bit ahead what we’re originally thinking. I think it’s a little premature here to talk about ’16 overall capital. It will be a little bit of a function of what we think that my price will be for ’17 because all that capital of ’16 get spent, but we drive to ’17 commodity price.

So and obviously we have JV partners, we need to talk to as well as really we need to see what the Utica brings to there, because that can really be such a game changer for us. That could push out development and we could come back and really start to drill on existing hedge and we have a bunch of them to go and top of Utica go here and there.

So it will be very premature for us to give you an answer right now..

That’s very fair. Then in terms of what are the place that you are spending capital that were particularly interested in.

Is the Marcellus resource an economic here in Southern Virginia about the dry gas and the wet gas areas, can you just expand on that a little bit?.

Yeah, so we in this pull back in the commodity, we’ve really pulled back on the dry West Virginia acreage right now and we focus more and as Nick mentioned, were the core areas that have been developed and where we are by NRI and so we kind of push down our West Virginia development.

The wet side though is proving to improving and our JV partners are drilling better and better wells. We’re seeing wells beating the type curves and so that is an area we see were rates to return..

Okay and last question for me.

Dips in the quarter a little bit better than expected, can you talk about where specifically you are able to contract through to get through about beat?.

On - you talk about on survey?.

On the gas side, the bases differential from the first quarter the realize price was a little bit better, just thoughts in terms of where?.

Yeah, Neil what happened there is if we look at where we are selling our gas about three system that is in some variable - very favorable pricing markets, we’re in the pool, we are in east Tennessee, trends goes on five and three.

And so the basis in that quarter for the first quarter very good and very favorable to us versus the other 40% of our gas which we sell into the south pool and the M2 market which had some negative basis. But you put that all together in portfolio and we average that the positive basis for the first quarter.

Now the second quarter as David said in his comments, won’t be a duplicate of the first quarter, the basis in the shoulder months is going to weaken significantly. And as David said in his remarks to the rest of the year, we have this $0.45 to $0.55 range negative range that we think we are going to be.

But the reason for the first quarter was where we put our gas in some market were some very favorable basis..

Make sense, thank you very much guys..

Thank you..

Our next question is from Megan Repine with FBR Capital Markets. Please go ahead..

Hi good morning, guys. My first question is just on the 100% own acreage, we talked about cost expectation.

I was just curious, how we should think about modeling some of the initial wells and then how that might change as kind of we move into more development mode?.

I think lateral lines, when you get into the dry Utica, the 100% owned acreage, we’ve got - those are deeper wells than what we’ve drilled in the past. And lateral lines there will really probably, not probably, they would be dictated by hydraulic horsepower in completions what rates we can pump that actually break the rock down.

So we probably won’t see as long the lateral lines in the dry Utica as we see in the Marcellus and some areas we may be limited to 6,500 or 7,000 feet. The deeper we go the shorter that will be..

Okay, great, thanks.

And then my second question is, it looks like the lateral length on the stop last month sales gas and the surround core in the Utica were a little bit shorter this quarter, any particular reason for that and then how should we think about those for the reminder of ’15?.

I think we’ve continue to put together laterals that and optimize them based on our acreage position where we can. I think I don’t have the exact number in front of me but they may be slightly lower but I think our overall average will be fairly consistent with what we did last year..

Okay, great, thanks for taking my questions..

And we’ll got to Michael Dudas with Sterne Agee. Please go ahead..

Good morning, everybody. First question is for David. As you think about your program hedging due to the lower gas prices, given the fact that you can raising capital and doing some other things, did some great things in the balance sheet, allowed you to kind of hold off from that or is this going to be more program.

Could you just go through and remind us a little bit about that?.

So we have two types hedging. We have a program hedge which has a certain price threshold that when we cliff, our goal is to get closer to 50% of our production for the next year locked up. We also have an active hedging program which is a higher threshold which could take us up to as high as maybe 80% or so.

And so our goal would be to try to get up that 50% but again it has to clip to certain prices threshold. And that threshold will move down a little bit overtime because our cost coming down as well. So we’re trying to protect the margin and protect certain amount cash flow when rates are return..

I appreciate that. I mean next question for Jim, as you are marketing the coal, you continue to market to the similar customer on the gas side, is that you are having both helping, you get better terms of conditions of one versus the other.

And I assume that’s going to continue even with the restructuring of the ownership of the coal assets?.

Yeah, Mike, the stack customer concept that Nick referred to in his comments, the - our refining is because of our long term historic relationships with customers on the coal side. They are also the same customers that are turning out to be large gas customer with us as well.

So they are looking to us and we are entering into bring discussions for term agreements with the customers on gas as we are coal. So it’s served as agreed. For all the same reasons that we’re trusted on the coal side, there where liability, the environmental compliance all those thing that bring value on the coal, bring value on the gas.

And Mike as we noted in the earnings release, we did enter into the first of its kind that we’ve ever done contract with one of our customers that have the optionality to go between goal and gas on a monthly basis. And it’s not large quantities of coal or gas, yet it’s learning and experience for both us and the customer.

We in negotiations with another customer to do a similar contract, so again it does bring value to us having a different commodities to go to these customers that are both coal and gas customers and now we’re taking it to the next step of our evolution when we have these contracts so we can jump between the commodities.

So yeah, it’s been very beneficial..

No question, you’d clarify that for me release.

And my final question for Nick, could you just spend a little more about the relationship on the Noble joint venture, and you say you are working on 2015 budgeting, almost it’s May now, is this something that just more dynamic or as you think differentials relative to what happened in December, just to get a sense of how things are going to flow from what you put up in your slides?.

The historical summary, what happened at the end of last year was that the whole industry the whole world was upside down because everything changing so quickly on commodity prices.

And I mean as you got pinch to year end, two different companies, two different entities trying to get capital budgets lined up et cetera trades some inconsistencies in the short term.

If you look at where we are today, I’d say I think it’s fair to say we’re 95% agreement on capital levels for 15 activity, so there might be a well or pass year there on either side that still need to worked out and optimized but the big scheme of things, I think we both have our marching order on each side of the JV to go get done what we want to get done for 2015.

And again as we said, we talked regularly with our both our JV partners across a whole range of different disciplines and management et cetera to make sure that we are making the most the opportunities within the JV, because they are huge drives of any of ourselves will have some..

Well done gentlemen, thank you very much..

And our final question will be Holly Stewart with Howard Weil. Please go ahead..

Hey guys, thanks for squeezing me and maybe a couple of really for Jim.

Jim can you talk about the pricing first of those contracts for the 2017, ’18 for coal?.

Well Holly, we don’t get into specific pricing giving the that far out, but I will say that the contracts that we’re entering into with our customers should end up prices indicative of the market out in that timeframe.

What I mean by that is, these aren’t traditional contracts where we set a price and then we see who is right or who is wrong with the price out of few years out. We have contracts running into that are netback price that are based off a power market, we look at gas markets, we have colors on them, market reopeners.

And we use all of these different types of contract terms so that when we get out to ’17 and ’18 us and the customer I’ll say were locked up in a win-win situation. We build that market and we’re in together versus one having guessed right, one having guessed wrong on what the prices are going to be..

Sure. Okay, great.

And then maybe just the follow-up on the gas side, it looks like the numbers for SG&A FS [ph] positions are roughly the same but then within the slide presentation you mentioned a new agreement with what is that amount in your express pipeline, so just kind of trying to reconcile what the ultimate from transportation agreements are going forward?.

The - in the text there references us getting up to the 1.7 or 1.8 Bcf a year, I think it’s 1.7 at a average price of $0.33 that would have the amount near in those numbers hardly into that average, into those total volumes and into that average price..

Okay, great..

That is in the tables and the text section of that earnings release..

Got it, okay.

And then my final one would be just on condensate realizations, anything to highlight from the first quarter and then just how maybe we should be thinking about condensate realizations going forward?.

The condensate realizations in terms of CONSOL, we are producing which more of a light condensate versus a heavier condensate and there is - the challenge that we have up in the basin here is do other producers that have the slight condensate is getting adequate refining capacity.

And so the - we’re at the maximum in the basin, there is no more refining capital, they can handle like condensate are having the barge down to the gulf. And so you know that cuts into the netback price that we have and of course there is other parts of the country how that are have condensate going down to the gulf as well.

So that’s challenging our revenue side and the condensate is just the oversupply in this region and the lack of refining capacity. So we think their volatility how it’s going to probably continue in through ’16, maybe get us in the ’17 before we start seeing some stability, more refining capacity, more demand side.

So that’s how looking at the condensate market..

Great, thanks guys..

Thank you..

I’ll turn it back to presenters for any closing comments..

Yeah with that that concludes the call, John.

If you could please just instruct the callers on how to access replay information?.

Certainly and yes, ladies gentlemen this conference is available for replay. It starts today at 12:30 PM Eastern will lasts until May 5 at midnight. You may access the replay at any time by dialing 800-475-6701 or 320-365-3844. The access code is 353100. Those numbers again 800-475-6701 or 320-365-3844 with the access code 353100.

That does conclude your conference for today. Thank you for your participation. You may now disconnect..