CNX Gas Reports Record Quarterly Production of 22.2 Bcf, and 76.6 Bcf for the Year 2008; Quarterly Net Income Nearly Doubles to

Share Name	Share Symbol	Market	Type	Share ISIN	Share Description
Carlisle Gp	LSE:CXG	London	Ordinary Share	BZP212411151	ORD 10P

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PITTSBURGH, Jan. 29 /PRNewswire-FirstCall/ -- CNX Gas Corporation (NYSE: CXG) reported net income for the quarter ended December 31, 2008 of $57.5 million, or $0.38 per diluted share. This is nearly double the net income of $29.9 million, or $0.20 per share for the quarter ended December 31, 2007. For the year ended December 31, 2008, CNX Gas had record net income of $239.1 million, or $1.58 per share. This was 76% higher than $135.7 million of net income, or $0.90 per share, in 2007. Quarterly production was a record 22.2 billion cubic feet (Bcf), or an average of 241.8 million cubic feet (MMcf) per day, for the quarter ended December 31, 2008, or 53% higher than the 14.5 Bcf, or 157.8 MMcf per day, for the year-ago quarter. Annual production in 2008 was a record 76.6 Bcf, or 32% higher than the 57.9 Bcf produced in 2007. J. Brett Harvey, chairman and chief executive officer, said, "CNX Gas continued to gain production momentum in the fourth quarter. We achieved record production from each coalbed methane development play. In the Marcellus Shale, we achieved a peak daily flow rate of 6.5 MMcf from our first horizontal well. Even more remarkable is that this flow rate was achieved after the well had already produced more than 100 MMcf. Mr. Harvey continued, "In looking ahead to 2009, the future for CNX Gas has never been brighter. Despite challenging economic times, I believe that CNX Gas is poised to substantially outperform its competitors because of our great prospects, minimal debt, low unit cost structure, and industry-leading unit margins. Our 41.9 Bcf of production hedged at $9.74 per Mcf in 2009 enables us to self fund production growth in 2009. Not many companies have this ability." At December 31, 2008 the company had cash on hand of $1.9 million, while $72.7 million was drawn on its credit facility. Capital expenditures for the quarter were $154.5 million and annual return on capital employed was 18.5%, on after-tax basis. TABLE 1 FINANCIAL AND OPERATIONAL RESULTS - Period-To-Period Quarter Ended Quarter Ended Year Ended Year Ended December 31, December 31, December 31, December 31, 2008 2007 2008 2007 ---- ---- ---- ---- Total Revenue and Other Income $206.1 $119.7 $789.4 $479.5 Net Income $57.5 $29.9 $239.1 $135.7 Earnings per Share - Diluted $0.38 $0.20 $1.58 $0.90 Net Cash from Operating Activities $140.5 $61.4 $447.4 $272.4 EBITDA $113.7 $62.6 $470.2 $271.4 EBIT $94.1 $50.0 $400.1 $222.5 Total Period Production (Bcf) 22.2 14.5 76.6 57.9 Average Daily Production (MMcf) 241.8 157.8 209.2 158.7 Capital Expenditures $154.5 $92.1 $560.7 $357.2 Financial results are in millions of dollars except per share amounts. Production results are net of royalties. The average price realized for the company's gas production, including the effects of hedging, was $8.35 per Mcf for the quarter ended December 31, 2008, or up $1.26 per Mcf when compared to the $7.09 per Mcf received for the quarter ended December 31, 2007. Unit costs for company production, exclusive of royalties, were $4.39 per Mcf in the just-ended quarter, or up $0.32 per Mcf from the $4.07 per Mcf for the quarter ended December 31, 2007. As a result, pre-tax unit margins for company production were $3.96 per Mcf in the December 31, 2008 quarter, an increase of $0.94 from $3.02 per Mcf in the December 31, 2007 quarter. Administration costs for the quarter ended December 31, 2008 were affected by $9 million (pre-tax) in stock-based compensation, versus $1 million (pre-tax) for the quarter ended December 31, 2007. The remaining increase in administration costs was due to higher staffing added as a result of the on-going growth of the company. TABLE 2 PRICE AND COST DATA PER NET MCF - Period-To-Period** Quarter Ended Quarter Ended Year Ended Year Ended December 31, December 31, December 31, December 31, 2008 2007 2008 2007 ---- ---- ---- ---- Average Sales Price $8.35 $7.09 $8.99 $7.20 Costs - Production Lifting $0.60 $0.69 $0.63 $0.46 Production Taxes $0.19 $0.22 $0.26 $0.22 DD&A $0.67 $0.57 $0.66 $0.54 ----- ----- ----- ----- Total Production Costs $1.46 $1.48 $1.55 $1.22 Costs - Gathering Operating Costs $0.92 $0.89 $0.94 $0.90 Transportation $0.19 $0.16 $0.15 $0.16 DD&A $0.21 $0.30 $0.25 $0.30 ----- ----- ----- ----- Total Gathering Costs $1.32 $1.35 $1.34 $1.36 ----- ----- ----- ----- Total Operating Costs $2.78 $2.83 $2.89 $2.58 Exploration Expense $0.14 $0.05 $0.06 $0.04 Administration $1.33 $1.09 $1.05 $0.95 Other Non Operating* $0.14 $0.10 $0.11 $0.09 ----- ----- ----- ----- Total Costs $4.39 $4.07 $4.11 $3.66 ----- ----- ----- ----- Margin $3.96 $3.02 $4.88 $3.54 *Note: Other non operating costs include interest expense, other costs, and minority interest. ** Includes the proportional consolidation of Knox Energy in 2007. Operations Update During the fourth quarter, CNX Gas employees worked another quarter without incurring a lost time accident. This raises the cumulative time worked by employees without a lost time incident to over 3.5 million hours. CNX Gas continued to add to its acreage position during the quarter. Gross acres were 4.2 million at December 31, 2008, including over 1 million acres in the Eastern shales. Also during the quarter, CNX Gas drilled 73 vertical frac wells in its Virginia CBM Operations. This raised the yearly total to a record 315 vertical frac wells. Virginia CBM Operations also continued its heightened efforts in performing workovers of older wells, with 261 having been performed in the quarter. Legacy frac production (from wells online prior to January 1, 2007) increased by 0.4 Bcf in the quarter, when compared to the year-earlier quarter. The Mountaineer CBM play in Northern Appalachia saw 29 horizontal wells drilled during the quarter, and 114 during all of 2008. This exceeded the yearly goal of 100 wells, and the previous year's 62 wells. In Nittany, the company's vertical CBM play in central Pennsylvania, 31 wells were drilled during the quarter, and 106 during all of 2008. This exceeded the yearly goal of 100 wells, and the previous year's 14 wells. During the fourth quarter, CNX Gas drilled its first four shallow conventional wells in eastern Ohio, in a play known as Buckeye. So far, one well has been stimulated. CNX Gas holds 80,000 net acres in this area. In the shales, CNX Gas had continued success in the quarter. In the Marcellus Shale, as earlier reported, CNX Gas announced daily production from its first horizontal well of 6.5 MMcf. The company's second and third horizontal wells were drilled to total depth in December. The second well was fraced on January 20, while the third well will be fraced soon. In the company's Knox Operations, which contains the Chattanooga Shale program in Tennessee and the Huron Shale program in eastern Kentucky, CNX Gas drilled 9 wells during the quarter and 20 wells during 2008. Six of these wells were connected in 2008 along with one well drilled in late 2007. Financial Update The company ended the year with $72.7 million drawn on its credit facility. Capital expenditures were $154.5 million during the fourth quarter. CNX Gas also has $14.9 million of outstanding letters of credit against its $200 million credit facility. Investor Day CNX Gas will be hosting an investor day in New York City on the morning of February 24. The company will be providing a comprehensive review of its current and planned activity in the Marcellus and Chattanooga shales, as well as its coalbed methane development plays. Institutional investors are encouraged to register on the investor relations portion of the company's web site, at http://www.cnxgas.com/. Space is limited. Guidance CNX Gas is maintaining its 2009 production guidance of 85 Bcf and its 2010 production guidance of 100 Bcf and initiating 2011 production guidance of 115 Bcf. The company is altering its usual practice of issuing an annual capital expenditure projection. Instead, CNX Gas expects to self fund its production growth as long as it can earn a meaningful spread over its cost of capital. TABLE 3 GUIDANCE - Three-Year 2009 2010 2011 Total Yearly Production (Bcf) 85 100 115 Volumes Hedged (Bcf) 41.9 23.3 0 Average Hedge Price ($/Mcf) $9.74 $9.59 N/A CNX Gas will host a conference call today at 10:00 a.m. Eastern time to discuss the company's fourth quarter and 2008 results. The teleconference can be heard "live" at the investor relations portion of the company web site: http://www.cnxgas.com/. Contact: Dan Zajdel Vice President - Investor Relations (412) 200-6719 Laural Ziemba, (412) 200-6758 http://www.cnxgas.com/ Definition: EBIT is defined as earnings (excluding cumulative effect of accounting change) before deducting net interest expense (interest expense less interest income) and income taxes. EBITDA is defined as earnings (excluding cumulative effect of accounting change) before deducting net interest expense (interest expense less interest income), income taxes, and depreciation, depletion and amortization. Although EBIT and EBITDA are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that they are useful to an investor in evaluating CNX Gas because they are widely used to evaluate a company's operating performance before debt expense and its cash flow. EBIT and EBITDA do not purport to represent cash generated by operating activities and should not be considered in isolation or as a substitute for measures of performance in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT and EBITDA identically, the presentation here may not be comparable to similarly titled measures of other companies. Reconciliation of EBITDA and EBIT to the income statement is as follows: CNX Gas EBIT & EBITDA Reconciliation (000) Omitted Quarter Quarter Ended Ended Year Ended Year Ended December 31, December 31, December 31, December 31, 2008 2007 2008 2007 ---- ---- ---- ---- Net Income $57,482 $29,898 $239,073 $135,678 Add: Interest Expense 2,253 1,920 7,820 5,606 Less: Interest Income 42 430 400 3,793 Add: Income Taxes 34,369 18,574 153,656 84,961 Earnings Before ------ ------ ------- ------ Interest & Taxes (EBIT) 94,062 49,962 400,149 222,452 Add: Depreciation, Depletion, & Amortization 19,670 12,636 70,010 48,961 ------ ------ ------ ------ EBITDA $113,732 $62,598 $470,159 $271,413 ======== ======= ======== ======== CNX Gas Capital Employed and Return on Capital Employed (000) Omitted Capital employed is a measure of net investment. When viewed from the perspective of how the capital is used, it includes CNX Gas' property, plant, and equipment and other assets less liabilities. As of As of Capital Employed December 31, December 31, 2008 2007 ------------ ------------ Total assets $2,124,973 $1,380,703 Less liabilities: Total current liabilities (other than indebtedness) (199,888) (56,865) Total long-term liabilities (other than indebtedness) (384,367) (227,833) --------- --------- Total Capital Employed $1,540,718 $1,096,005 ========== ========== Return on average capital employed (ROCE) is a performance measure ratio. ROCE is defined as net income plus after-tax interest expense, divided by average capital employed. Below are calculations of ROCE for the years ended December 31, 2008 and 2007. Year Ended Year Ended Return on Capital Employed December 31, December 31, 2008 2007 ---- ---- Net Income $239,073 $135,678 Financing costs (after-tax) (4,760) (3,131) ------- ------- Earnings excluding financing costs $243,833 $138,809 Average capital employed $1,318,362 $1,021,345 Return on average capital employed 18.5% 13.6% Management believes that ROCE is a useful measure because it indicates the return on all capital, which includes equity and debt, employed in the business. Management believes that ROCE is an additional measure of efficiency when considered in conjunction with return on equity, which measures the return on only the shareholders' equity component of total capital employed. CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS Various statements in this release, including those that express a belief, expectation, or intention, as well as those that are not statements of historical fact, are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934). These statements 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 a prediction of actual results. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: our business strategy; our financial position; our cash flow and liquidity; declines in the prices we receive for our gas affecting our operating results and cash flow; uncertainties in estimating our gas reserves; replacing our gas reserves; uncertainties in exploring for and producing gas; our inability to obtain additional financing necessary in order to fund our operations, capital expenditures and to meet our other obligations; disruptions, capacity constraints in or other limitations on the pipeline systems which deliver our gas; competition in the gas industry; the availability of personnel and equipment; increased costs; the effects of government regulation and permitting and other legal requirements; legal uncertainties regarding the ownership of the coalbed methane estate; costs associated with perfecting title for gas rights in some of our properties; our need to use unproven technologies to extract coalbed methane in some properties; our relationships and arrangements with CONSOL Energy; factors affecting CONSOL Energy's coal mining operations, such as changes in the coal market, the risk inherent in coal mining, and compliance with laws, and other factors discussed under "Risk Factors" in the 10-K for the year ended December 31, 2007 and other factors discussed in the 10-Qs filed during 2008. We are including this cautionary statement in this release to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf, of us. CNX GAS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands, except per share data) For the Three For the Twelve Months Ended Months Ended December 31, December 31, ---------------- --------------- 2008 2007 2008 2007 ---- ---- ---- ---- Revenue and Other Income: Outside Sales $184,169 $98,220 $678,793 $404,835 Related Party Sales 1,497 4,638 9,532 11,618 Royalty Interest Gas Sales 17,381 9,745 79,302 46,586 Purchased Gas Sales 1,604 4,331 8,464 7,628 Other Income 1,401 2,810 13,330 8,815 ----- ----- ------ ----- Total Revenue and Other Income 206,052 119,744 789,421 479,482 Costs and Expenses: Lifting Costs 17,477 13,104 67,653 38,721 Gathering and Compression Costs 24,718 15,205 83,752 61,798 Royalty Interest Gas Costs 14,984 8,275 74,041 40,011 Purchased Gas Costs 1,568 4,175 8,175 7,162 Other 3,986 201 4,995 1,759 General and Administrative 29,545 15,756 80,246 54,825 Depreciation, Depletion and Amortization 19,670 12,636 70,010 48,961 Interest Expense 2,253 1,920 7,820 5,606 ----- ----- ----- ----- Total Costs and Expenses 114,201 71,272 396,692 258,843 ------- ------ ------- ------- Earnings Before Income Taxes 91,851 48,472 392,729 220,639 Income Taxes 34,369 18,574 153,656 84,961 ------ ------ ------- ------ Net Income $57,482 $29,898 $239,073 $135,678 ======= ======= ======== ======== Earnings Per Share: Basic $0.38 $0.20 $1.58 $0.90 ===== ===== ===== ===== Dilutive $0.38 $0.20 $1.58 $0.90 ===== ===== ===== ===== Weighted Average Number Of Common Shares Outstanding: Basic 150,971,636 150,914,225 150,947,516 150,886,433 =========== =========== =========== =========== Dilutive 151,240,785 151,241,316 151,331,953 151,133,520 =========== =========== =========== =========== CNX Gas Corporation CONSOLIDATED BALANCE SHEETS (Dollars in thousands - except per share data) (Unaudited) December 31, December 31, 2008 2007 ASSETS ---- ---- ------ Current Assets: Cash and Cash Equivalents $1,926 $32,048 Accounts and Notes Receivable: Trade 61,764 38,680 Related Parties 1,022 Other Receivables 3,080 1,406 Recoverable Income Taxes 30,302 972 Derivatives 150,564 10,711 Other 2,222 3,148 ----- ----- Total Current Assets 249,858 87,987 Property, Plant and Equipment: Property, Plant and Equipment 2,111,383 1,509,060 Less - Accumulated Depreciation, Depletion and Amortization 322,470 254,154 ------- ------- Total Property, Plant and Equipment - Net 1,788,913 1,254,906 Other Assets: Investment in Affiliates 25,204 28,284 Derivatives 55,945 Other 5,053 9,526 ----- ----- Total Other Assets 86,202 37,810 ------ ------ TOTAL ASSETS $2,124,973 $1,380,703 ========== ========== CNX Gas Corporation CONSOLIDATED BALANCE SHEETS (Dollars in thousands - except per share data) (Unaudited) December December 31, 31, 2008 2007 ---- ---- LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current Liabilities: Accounts Payable $100,565 $30,263 Accrued Royalties 20,301 12,896 Accrued Severance Taxes 3,672 2,620 Related Parties 2,234 Short-Term Notes Payable 72,700 Deferred Income Taxes 55,000 1,269 Current Portion of Long-Term Debt 8,462 5,819 Other Current Liabilities 18,116 9,817 ------ ----- Total Current Liabilities 281,050 62,684 Long-Term Debt: Long-Term Debt 15,386 5,799 Capital Lease Obligations 59,296 61,150 ------ ------ Total Long-Term Debt 74,682 66,949 Deferred Credits and Other Liabilities: Derivatives 1,092 Deferred Income Taxes 331,338 188,415 Asset Retirement Obligations 7,401 3,981 Postretirement Benefits Other Than Pensions 2,728 2,700 Other 42,900 31,645 ------ ------ Total Deferred Credits and Other Liabilities 384,367 227,833 Total Liabilities 740,099 357,466 Stockholders' Equity: Common Stock, $.01 par value; 200,000,000 Shares Authorized, 150,971,636 Issued and Outstanding at December 31, 2008 and 150,915,198 Issued And Outstanding at December 31, 2007 1,510 1,509 Capital in Excess of Par Value 789,625 785,575 Preferred Stock, 5,000,000 Shares Authorized; None Issued and Outstanding - - Retained Earnings 468,955 229,962 Other Comprehensive Income 124,784 6,191 ------- ----- Total Stockholders' Equity 1,384,874 1,023,237 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,124,973 $1,380,703 ========== ========== CNX GAS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (Dollars in Thousands - except per share data) Accumulated Capital Other In Compre- Total Excess hensive Stock- Common of Par Retained Income holders' Stock Value Earnings (Loss) Equity ------ -------- -------- ------ ---------- Balance-December 31, 2007 $1,509 $785,575 $229,962 $6,191 $1,023,237 ------ -------- -------- ------ ---------- (Unaudited) Net Income 239,073 239,073 Gas Cash Flow Hedge (Net of ($77,291) tax) 118,646 118,646 Issuance of Common Stock 1 1 Amortization of Prior Service Costs and Actuarial Losses (Net of $52 tax) (83) (83) FAS 158 Pension Adjustment (Net of $38 tax) (59) (59) FAS 158 OPEB Adjustment (Net of ($70) tax) 109 109 ------ -------- -------- ------ ---------- Comprehensive Income (Loss) 1 239,073 118,613 357,687 Cumulative Effect of FAS 158 Measurement Adoption (Net of $64 tax) (80) (20) (100) Stock Options Exercised 292 292 Tax Benefit from Stock Based Compensation 380 380 Amortization of Stock Based Compensation Awards 3,378 3,378 ------ -------- -------- ------ ---------- Balance - December 31, 2008 $1,510 $789,625 $468,955 $124,784 $1,384,874 ====== ======== ======== ======= ========== CNX GAS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) For the Twelve Months Ended December 31, ------------ 2008 2007 ---- ---- Operating Activities: Net Income $239,073 $135,678 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation, Depletion and Amortization 70,010 48,961 Stock-based Compensation 3,378 3,260 Deferred Income Taxes 117,870 70,352 Equity in Earnings of Affiliates (551) (2,174) Changes in Operating Assets: Accounts Receivable (21,789) 8,267 Related Party Receivable 3,256 1,723 Other Current Assets 191 770 Changes in Other Assets 3,861 2,294 Changes in Operating Liabilities: Accounts Payable 33,531 2,732 Income Taxes (28,515) (4,171) Other Current Liabilities 16,668 3,193 Changes in Other Liabilities 10,611 1,968 Other (219) (405) --- --- Net Cash Provided by Operating Activities 447,375 272,448 Investing Activities: Capital Expenditures (524,663) (295,422) Acquisition of Knox Energy (36,000) Acquisition of Mineral Rights (61,777) Investment in Equity Affiliates 1,081 2,785 Proceeds From Sales of Assets 450 187 --- --- Net Cash Used in Investing Activities (559,132) (354,227) Financing Activities: Capital Lease Payments (2,769) (2,552) Proceeds from Variable Interest Equity Debt 11,032 8,851 Proceeds from Short-Term Borrowings 72,700 Exercise of Stock Options 292 302 Tax Benefit from Stock Based Compensation 380 53 --- -- Net Cash Provided by Financing Activities 81,635 6,654 Net Decrease in Cash and Cash Equivalents (30,122) (75,125) Cash and Cash Equivalents at Beginning of Period 32,048 107,173 ------ ------- Cash and Cash Equivalents at End of Period $1,926 $32,048 ====== ======= DATASOURCE: CNX Gas Corporation CONTACT: Dan Zajdel, Vice President, Investor Relations, +1-412-200-6719, , or Laural Ziemba, +1-412-200-6758, both of CNX Gas Corporation

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