EX-99.1 2 ex991q22019pressrelease.htm EXHIBIT 99.1 Exhibit


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CNX Midstream Reports Second Quarter Results and
Provides Updated 2020 Guidance

PITTSBURGH (July 30, 2019) - CNX Midstream Partners LP (NYSE: CNXM) ("CNXM", "CNX Midstream" or the "Partnership") today reported financial and operational results for the three and six months ended June 30, 2019(1).  
Second Quarter Results
The Partnership continued its solid financial performance during the three and six months ended June 30, 2019. Comparative results net to the Partnership, with the exception of operating cash flows, which is presented on a gross consolidated basis, were as follows:

 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
(in millions)
2019
 
2018
 
2019
 
2018
Net income
$
46.7

 
$
30.0

 
$
81.9

 
$
57.9

Net cash provided by operating activities
$
74.8

 
$
53.7

 
$
124.7

 
$
95.5

Adjusted EBITDA (non-GAAP)(2)
$
59.3

 
$
41.3

 
$
113.8

 
$
76.2

Distributable cash flow (non-GAAP)(2)
$
46.9

 
$
31.6

 
$
89.9

 
$
60.9

•
Cash distribution coverage(2) of 1.53x on an as-declared basis

"CNXM continued to deliver strong results as evidenced by the second quarter," commented Nicholas J. DeIuliis, CEO of CNX Midstream GP LLC (the "General Partner"). "As compared to the second quarter of 2018, Adjusted EBITDA and distributable cash flow were up by 44% and 48%, respectively. This marks the 17th consecutive quarterly cash distribution increase at the targeted 15% annual growth rate, and CNXM's focus on operational execution resulting in strong financial performance supports our plan to continue 15% annual distribution growth through 2023 without drop-down transactions or need to access the equity capital markets. The 2019 capital build out is rapidly coming to an end, and we expect that the company will generate approximately $130 million in free cash flow in 2020."

Page 1


2019 and 2020 Guidance
Based on current expectations, management provides the following update:
($ in millions)
 
2019E
 
2020E
 
 
Reaffirmed
 
Updated
Throughput (BBtu/d)*
 
1,400

-
1,500
 
1,650

-
1,800
Capital Expenditures
 
$310
-
$330
 
$80
-
$100
Adjusted EBITDA
 
$200
-
$220
 
$250
-
$270
Distributable Cash Flow
 
$150
-
$170
 
$185
-
$205
Distribution Coverage
 
1.2x

-
1.4x
 
1.2x

-
1.3x
LP Distribution Growth Target
 
15%
 
15%
* Excludes third-party volumes under high-pressure short-haul agreements.

Quarterly Distribution
As previously announced, the Board of Directors of its general partner, CNX Midstream GP LLC, has declared a cash distribution of $0.3865 per unit with respect to the second quarter of 2019. The distribution will be made on August 14, 2019 to unitholders of record as of the close of business on August 6, 2019. The distribution, which equates to an annual rate of $1.546 per unit, represents an increase of 3.6% over the prior quarter, and an increase of 15% over the distribution paid with respect to the second quarter of 2018.
Capital Investment and Resources
For the second quarter of 2019, CNX Midstream's total capital investment net to the Partnership was $103.4 million, which includes investment in expansion projects of $98.2 million and maintenance capital of $5.2 million.

As of June 30, 2019, CNX Midstream had outstanding borrowings of $208.0 million under its $600.0 million revolving credit facility.
Second Quarter Financial and Operational Results Conference Call
A conference call and webcast, during which management will discuss second quarter 2019 financial and operational results, is scheduled for July 30, 2019 at 11:00 a.m. Eastern Time. Prepared remarks by members of management will be followed by a question and answer period. Interested parties may listen via webcast at www.cnxmidstream.com. Participants who would like to ask questions may join the conference by phone by dialing 888-349-0097 (international 412-902-0126) five to ten minutes prior to the scheduled start time (reference the CNX Midstream call). An on-demand replay of the webcast will also be available at www.cnxmidstream.com shortly after the conclusion of the conference call. A telephonic replay will be available through August 6, 2019 by dialing 877-344-7529 (international: 412-317-0088) and using the conference playback number 10133226.
_____________
(1)  
Unless otherwise indicated, the reporting measures included in this news release reflect the unallocated total activity of the three development companies that have or had been jointly owned, as applicable, by the Partnership and CNX Gathering LLC (“CNX Gathering”) since completion of the Partnership’s initial public offering ("IPO") in September 2014. In connection with the transaction with HG Energy, the Partnership distributed its 5% interest in the Growth System to CNX Gathering and has no remaining interests in the Growth Systems. The Partnership's current financial interests in the development companies are: 100% in the Anchor Systems and 5% in the Additional Systems. Because the Partnership owns a controlling interest in

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each of these two development companies, it fully consolidates their financial results. CNX Gathering, which is wholly owned by CNX Resources Corporation, owns a 95% noncontrolling interest in the Additional Systems of the Partnership.
(2) 
Adjusted EBITDA, DCF, and cash distribution coverage are not measures or ratios that are recognized under accounting principles generally accepted in the U.S. (“GAAP”). Definitions and reconciliations of these non-GAAP measures to GAAP reporting measures appear in the financial tables which follow.
Contacts:
Investor Relations:
 
Media:
Tyler Lewis
 
Brian Aiello
724-485-3157
 
724-485-3078
tylerlewis@cnx.com
 
brianaiello@cnx.com
* * * * *
CNX Midstream is a growth-oriented master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia.  Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities.  More information is available at our website www.cnxmidstream.com.

* * * * *
This press release is intended to be a qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of CNX Midstream’s distributions to non-U.S. investors as being attributed to income that is effectively connected with a United States trade or business. Accordingly, CNX Midstream's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate. Nominees, and not CNX Midstream, are treated as withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.

* * * * *
This press release contains forward-looking statements within the meaning of the federal securities laws. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words “will,” “believe,” “expect,” “anticipate,” “intend,” “estimate” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. You should not place undue reliance on forward-looking statements. Forward-looking statements include, among others, statements regarding the payment of our quarterly distribution for the quarter ended March 31, 2019 and our anticipated 2019 financial performance. Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, and there can be no assurance that actual outcomes and results will not differ materially from those expected by our management. You should not place undue reliance on forward-looking statements. Although forward-looking statements reflect our good faith beliefs at the time they are made, they involve known and unknown risks, uncertainties and other factors. 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: if either or both of our two largest customers, who account for substantially all of our revenue, change their business strategies, or take actions that otherwise significantly reduce the volumes of natural gas and condensate transported through our gathering systems, our revenue would decline and we could be materially and adversely affected; under our gathering agreements, our customers may transfer their leasehold, working and mineral fee interests in their dedicated acreage; we may not generate sufficient distributable cash flow to make the payment of the minimum quarterly distribution to our unitholders; because of the natural decline in production from existing wells, our success, in part, depends on our ability to maintain or increase natural gas and condensate throughput volumes on our midstream systems, which depends on the level of development and completion activity on acreage dedicated to us; many of our gathering agreements do not include minimum volume commitments; certain of our dedicated acreage is either not held by production by our customers or has not yet been earned by them; the highly competitive nature of our industry may adversely impact our ability to attract dedications of third-party volumes, which could limit our ability to grow and continue our dependence on our existing customers; increased competition from other companies that provide midstream services could have a negative impact on the demand for our services, which could adversely affect our financial results; we may not be able to make attractive offers to CNX on our ROFO acreage;  our

Page 3


only assets are controlling ownership interests in our operating subsidiaries, so our cash flow will depend entirely on the performance of our operating subsidiaries and their ability to distribute cash to us; some of our gathering agreements with our customers provide for the release of dedicated acreage or fee credits in certain situations; we are responsible for any mine subsidence costs in the future; our midstream systems are exclusively located in the Appalachian Basin, making us vulnerable to risks associated with operating in a single geographic area; we may be unable to grow by acquiring the noncontrolling interests in, or assets of, our operating subsidiaries owned by CNX Gathering or CNX, which could limit our ability to increase our distributable cash flow; we may be unable to acquire additional properties from third parties in the future and any acquired properties may not provide the anticipated benefits; if third-party pipelines, whether upstream or downstream, or other midstream facilities interconnected to our gathering systems become partially or fully unavailable, our operating margin, cash flow and ability to make cash distributions to our unitholders could be adversely affected; to maintain and grow our business, we will be required to make substantial capital expenditures; if we are unable to obtain needed capital or financing on satisfactory terms, our ability to make cash distributions may be diminished or our financial leverage could increase; the amount of cash we have available for distribution to our unitholders depends primarily on our cash flow and not solely on our profitability, which may prevent us from making distributions, even during periods in which we record net income; our construction of new gathering, compression, dehydration, treating or other midstream assets may not result in revenue increases and may be subject to regulatory, environmental, political, legal and economic risks, which could adversely affect our cash flows, results of operations and financial condition and, as a result, our ability to distribute cash to our unitholders; the provisions and restrictions in our revolving credit facility and other debt agreements, and the risks associated therewith, could adversely affect our business, financial condition, results of operations and ability to make quarterly cash distributions to our unitholders; environmental regulations can increase costs and introduce uncertainty that could adversely impact our or our customers' operations; existing and future governmental laws, regulations and other legal requirements and judicial decisions that govern our business may increase our costs of doing business and may restrict our operations; we may incur significant costs and liabilities as a result of pipeline operations and related increases in the regulation of gas gathering pipelines; climate change laws and regulations restricting emissions of greenhouse gases at the federal or state level could result in increased operating costs and reduced demand for the natural gas that we gather, while potential physical effects of climate change could disrupt our production and cause us to incur significant costs in preparing for or responding to those effects; our business involves many hazards and operational risks, some of which may not be fully covered by insurance, and the occurrence of a significant accident or other event that is not fully insured could curtail our operations and have a material adverse effect on our ability to distribute cash and, accordingly, the market price for our common units; cyber-incidents could have a material adverse effect on our business, financial condition or results of operations; we may not own in fee the land on which our pipelines and facilities are located, which could result in disruptions to our operations; a shortage of equipment and skilled labor in the Appalachian Basin could reduce equipment availability and labor productivity and increase labor and equipment costs, which could have a material adverse effect on our business and results of operations; we do not have any officers or employees and rely on officers of our general partner and employees of CNX; our success depends on key members of our general partner's senior management team and our ability to attract and retain experienced technical and other professional personnel; increases in interest rates could adversely impact our business, common unit price, our ability to issue equity or incur debt for acquisitions, capital expenditures or other purposes and our ability to make cash distributions at our intended levels; terrorist activities could materially and adversely affect our business and results of operations; negative public perception regarding our industry could have an adverse effect on our operations; our general partner and its affiliates, including CNX, have conflicts of interest with us and limited fiduciary duties to us and our unitholders, and they may favor their own interests to our detriment and that of our unitholders; we have no control over the business decisions and operations of CNX, and CNX is under no obligation to adopt a business strategy that favors us; our general partner's discretion in establishing cash reserves may reduce the amount of cash we have available to distribute to unitholders; affiliates of our general partner, including CNX and CNX Gathering, may compete with us, and neither our general partner nor its affiliates have any obligation to present business opportunities to us except with respect to rights of first offer contained in our omnibus agreement; our tax treatment depends on our status as a partnership for federal income tax purposes; as a result of investing in our common units, you may become subject to state and local taxes and return filing requirements in jurisdictions where we operate or own or acquire properties.

Although forward-looking statements reflect our good faith beliefs at the time they are made, they involve known and unknown risks, uncertainties and other factors. For more information concerning factors that could cause actual results to differ materially from those conveyed in the forward-looking statements, including, among others, that our business plans may change as circumstances warrant, please refer to the “Risk Factors” and “Forward-Looking Statements” sections of our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Commission on February 7, 2019 and subsequent Quarterly Reports on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.

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CNX MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit data)
(unaudited)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Revenue
 
 
 
 
 
 
 
Gathering revenue — related party
$
59,205

 
$
37,576

 
$
112,981

 
$
75,306

Gathering revenue — third party
18,896

 
23,438

 
37,339

 
49,577

Total Revenue
78,101

 
61,014

 
150,320

 
124,883

Expenses
 
 
 
 
 
 
 
Operating expense — related party
6,514

 
5,079

 
12,062

 
9,514

Operating expense — third party
6,188

 
7,406

 
12,162

 
15,874

General and administrative expense — related party
4,027

 
3,620

 
7,994

 
7,232

General and administrative expense — third party
1,364

 
2,319

 
2,900

 
4,868

(Gain) loss on asset sales and abandonments
—

 
(254
)
 
7,229

 
2,501

Depreciation expense
5,860

 
5,443

 
11,510

 
11,299

Interest expense
7,685

 
7,119

 
15,024

 
9,608

Total Expense
31,638

 
30,732

 
68,881

 
60,896

Net Income
46,463

 
30,282

 
81,439

 
63,987

Less: Net (loss) income attributable to noncontrolling interest
(282
)
 
277

 
(413
)
 
6,135

Net Income Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP
$
46,745

 
$
30,005

 
$
81,852

 
$
57,852

 
 
 
 
 
 
 
 
Calculation of Limited Partner Interest in Net Income:
 
 
 
 
 
 
 
Net Income Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP
$
46,745

 
$
30,005

 
$
81,852

 
$
57,852

Less: General partner interest in net income, including incentive distribution rights
6,325

 
2,903

 
11,604

 
5,055

Limited partner interest in net income
$
40,420

 
$
27,102

 
$
70,248

 
$
52,797

 
 
 
 
 
 
 
 
Earnings per limited partner unit:
 
 
 
 
 
 
 
Basic
$
0.63

 
$
0.43

 
$
1.10

 
$
0.83

Diluted
$
0.63

 
$
0.43

 
$
1.10

 
$
0.83

 
 
 
 
 
 
 
 
Weighted average number of limited partner units outstanding:
 
 
 
 
 
 
 
Basic
63,732

 
63,638

 
63,715

 
63,630

Diluted
63,755

 
63,677

 
63,759

 
63,670

 
 
 
 
 
 
 
 
Cash distributions declared per unit (*)
$
0.3865

 
$
0.3361

 
$
0.7597

 
$
0.6606

(*)
Represents the cash distributions declared during the month following the end of each respective quarterly period.

Page 5

CNX MIDSTREAM PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except number of units)
(unaudited)

 
June 30,
2019
 
December 31,
2018
ASSETS
 
 
 
Current Assets:
 
 
 
Cash
$
11,677

 
$
3,966

Receivables — related party
19,028

 
17,073

Receivables — third party
6,681

 
7,028

Other current assets
1,648

 
2,383

Total Current Assets
39,034

 
30,450

Property and Equipment:
 
 
 
Property and equipment
1,171,084

 
974,394

Less — accumulated depreciation
94,107

 
82,619

Property and Equipment — Net
1,076,977

 
891,775

Other Assets:
 
 
 
Operating lease right of use asset
7,875

 
—

Other assets
3,731

 
3,203

Total Other Assets
11,606

 
3,203

 
 
 
 
TOTAL ASSETS
$
1,127,617

 
$
925,428

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current Liabilities:
 
 
 
Trade accounts payable
$
33,299

 
$
9,401

Accrued interest payable
7,901

 
7,761

Accrued liabilities
55,095

 
26,757

Due to related party
3,425

 
4,980

Total Current Liabilities
99,720

 
48,899

Other Liabilities:
 
 
 
Revolving credit facility
208,000

 
84,000

Long-term debt
393,688

 
393,215

Long-term operating lease liabilities
1,171

 
—

Total Other Liabilities
602,859

 
477,215

 
 
 
 
Total Liabilities
702,579

 
526,114

 
 
 
 
Partners' Capital and Noncontrolling Interest:
 
 
 
Limited partner units (63,735,464 issued and outstanding at June 30, 2019 and 63,639,676 issued and outstanding at December 31, 2018)
344,530

 
320,543

General partner interest
13,050

 
10,900

Partners' capital attributable to CNX Midstream Partners LP
357,580

 
331,443

Noncontrolling interest
67,458

 
67,871

Total Partners' Capital and Noncontrolling Interest
425,038

 
399,314

TOTAL LIABILITIES AND PARTNERS' CAPITAL
$
1,127,617

 
$
925,428


Page 6

CNX MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)

 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2019
 
2018
 
2019
 
2018
Cash Flows from Operating Activities:
 
 
 
 
 
 
 
Net income
$
46,463

 
$
30,282

 
$
81,439

 
$
63,987

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
Depreciation expense and amortization of debt issuance costs
6,328

 
5,833

 
12,449

 
11,872

Unit-based compensation
541

 
690

 
1,153

 
1,269

(Gain) loss on asset sales and abandonments
—

 
(254
)
 
7,229

 
2,501

Other
30

 
270

 
41

 
387

Changes in assets and liabilities:
 
 
 
 
 
 
 
Due to/from affiliate
(1,346
)
 
878

 
(3,269
)
 
1,888

Receivables — third party
(101
)
 
2,099

 
347

 
705

Other current and non-current assets
1,932

 
758

 
(7,039
)
 
108

Accounts payable and other accrued liabilities
20,906

 
13,118

 
32,316

 
12,824

Net Cash Provided by Operating Activities
74,753

 
53,674

 
124,666

 
95,541

 
 
 
 
 
 
 
 
Cash Flows from Investing Activities:
 
 
 
 
 
 
 
Capital expenditures
(104,310
)
 
(25,615
)
 
(182,867
)
 
(41,587
)
Proceeds from sale of assets
—

 
646

 
—

 
6,462

Net Cash Used in Investing Activities
(104,310
)
 
(24,969
)
 
(182,867
)
 
(35,125
)
 
 
 
 
 
 
 
 
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
Contributions from (distributions to) general partner and noncontrolling interest holders, net
—

 
2,004

 
30

 
(3,505
)
Vested units withheld for unitholders taxes
(26
)
 
—

 
(690
)
 
(347
)
Quarterly distributions to unitholders
(28,940
)
 
(22,700
)
 
(56,208
)
 
(44,189
)
Net payments on unsecured $250.0 million credit facility
—

 
—

 
—

 
(149,500
)
Net borrowings on secured $600.0 million credit facility
71,350

 
(9,000
)
 
124,000

 
11,000

Proceeds from issuance of long-term debt, net of discount
—

 
—

 
—

 
394,000

Debt issuance costs
(1,220
)
 
(268
)
 
(1,220
)
 
(5,362
)
Acquisition of Shirley-Penns System
—

 
—

 
—

 
(265,000
)
Net Cash Provided by (Used in) Financing Activities
41,164

 
(29,964
)
 
65,912

 
(62,903
)
 
 
 
 
 
 
 
 
Net Increase (Decrease) in Cash
11,607

 
(1,259
)
 
7,711

 
(2,487
)
Cash at Beginning of Period
70

 
1,966

 
3,966

 
3,194

Cash at End of Period
$
11,677

 
$
707

 
$
11,677

 
$
707











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CNX MIDSTREAM PARTNERS LP
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW
(Dollars in thousands)


Definition of Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
We define EBITDA as net income (loss) before net interest expense, depreciation and amortization, and Adjusted EBITDA as EBITDA adjusted for gains or losses on asset sales and abandonments and other non-cash items which should not be included in the calculation of distributable cash flow. EBITDA and Adjusted EBITDA are used as supplemental financial measures by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:
•
our operating performance as compared to those of other companies in the midstream energy industry, without regard to financing methods, historical cost basis or capital structure;
•
the ability of our assets to generate sufficient cash flow to make distributions to our partners;
•
our ability to incur and service debt and fund capital expenditures; and
•
the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
We believe that the presentation of EBITDA and Adjusted EBITDA provides information that is useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to EBITDA and Adjusted EBITDA are net income and net cash provided by operating activities. EBITDA and Adjusted EBITDA should not be considered alternatives to net income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA and Adjusted EBITDA exclude some, but not all, items that affect net income or net cash, and these measures may vary from those of other companies. As a result, EBITDA and Adjusted EBITDA as presented below may not be comparable to similarly titled measures of other companies.
Distributable Cash Flow
We define distributable cash flow as Adjusted EBITDA less net income attributable to noncontrolling interest, cash interest expense and maintenance capital expenditures, each net to the Partnership. Distributable cash flow does not reflect changes in working capital balances.
Distributable cash flow is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:
•
the ability of our assets to generate cash sufficient to support our indebtedness and make future cash distributions to our unitholders; and
•
the attractiveness of capital projects and acquisitions and the overall rates of return on alternative investment opportunities.
We believe that the presentation of distributable cash flow in this release provides information that is useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to distributable cash flow are net income and net cash provided by operating activities. Distributable cash flow should not be considered an alternative to net income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Distributable cash flow excludes some, but not all, items that affect net income or net cash, and these measures may vary from those of other companies. As a result, our distributable cash flow may not be comparable to similarly titled measures that other companies may use.




Page 8

The following table presents a reconciliation of the non-GAAP measures of Adjusted EBITDA and distributable cash flow to the most directly comparable GAAP financial measures of net income and net cash provided by operating activities.
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(unaudited)
 
2019
 
2018
 
2019
 
2018
Net Income
 
$
46,463

 
$
30,282

 
$
81,439

 
$
63,987

Depreciation expense
 
5,860

 
5,443

 
11,510

 
11,299

Interest expense
 
7,685

 
7,119

 
15,024

 
9,608

EBITDA
 
60,008

 
42,844

 
107,973

 
84,894

Non-cash unit-based compensation expense
 
541

 
690

 
1,153

 
1,269

(Gain) loss on asset sales and abandonments
 
—

 
(254
)
 
7,229

 
2,501

Adjusted EBITDA
 
60,549

 
43,280

 
116,355

 
88,664

Less:
 
 
 
 
 
 
 
 
Net (loss) income attributable to noncontrolling interest
 
(282
)
 
277

 
(413
)
 
6,135

Depreciation expense attributable to noncontrolling interest
 
395

 
674

 
789

 
2,339

Other expenses attributable to noncontrolling interest
 
1,098

 
1,224

 
2,218

 
1,660

(Gain) loss on asset sales attributable to noncontrolling interest
 
—

 
(242
)
 
—

 
2,375

Adjusted EBITDA Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP
 
$
59,338

 
$
41,347

 
$
113,761

 
$
76,155

Less: cash interest expense, net to the Partnership
 
7,282

 
5,573

 
13,886

 
7,588

Less: maintenance capital expenditures, net to the Partnership
 
5,168

 
4,125

 
10,003

 
7,708

Distributable Cash Flow
 
$
46,888

 
$
31,649

 
$
89,872

 
$
60,859

 
 
 
 
 
 
 
 
 
Net Cash Provided by Operating Activities
 
$
74,753

 
$
53,674

 
$
124,666

 
$
95,541

Interest expense
 
7,685

 
7,119

 
15,024

 
9,608

(Gain) loss on asset sales and abandonments
 
—

 
(254
)
 
7,229

 
2,501

Other, including changes in working capital
 
(21,889
)
 
(17,259
)
 
(30,564
)
 
(18,986
)
Adjusted EBITDA
 
60,549

 
43,280

 
116,355

 
88,664

Less:
 
 
 
 
 
 
 
 
Net (loss) income attributable to noncontrolling interest
 
(282
)
 
277

 
(413
)
 
6,135

Depreciation expense attributable to noncontrolling interest
 
395

 
674

 
789

 
2,339

Other expenses attributable to noncontrolling interest
 
1,098

 
1,224

 
2,218

 
1,660

(Gain) loss on asset sales attributable to noncontrolling interest
 
—

 
(242
)
 
—

 
2,375

Adjusted EBITDA Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP
 
$
59,338

 
$
41,347

 
$
113,761

 
$
76,155

Less: cash interest expense, net to the Partnership
 
7,282

 
5,573

 
13,886

 
7,588

Less: maintenance capital expenditures, net to the Partnership
 
5,168

 
4,125

 
10,003

 
7,708

Distributable Cash Flow
 
$
46,888

 
$
31,649

 
$
89,872

 
$
60,859








Page 9

The following table presents a reconciliation of the non-GAAP measures Adjusted EBITDA and distributable cash flow by quarter and for the most recently completed twelve month period with the most directly comparable GAAP financial measures, which are net income and net cash provided by operating activities.
(unaudited)
 
Q3 2018
 
Q4 2018
 
Q1 2019

Q2 2019
 
Twelve Months Ended June 30, 2019
Net Income
 
$
33,575

 
$
41,433

 
$
34,976


$
46,463

 
$
156,447

Depreciation expense
 
5,306

 
5,334

 
5,650


5,860

 
22,150

Interest expense
 
7,255

 
6,751

 
7,339


7,685

 
29,030

EBITDA
 
46,136

 
53,518

 
47,965


60,008

 
207,627

Non-cash unit-based compensation expense
 
506

 
636

 
612


541

 
2,295

Loss on asset sales and abandonments
 
—

 
—

 
7,229


—

 
7,229

Adjusted EBITDA
 
46,642

 
54,154

 
55,806


60,549

 
217,151

Less:
 
 
 
 
 
 

 
 

Net loss attributable to noncontrolling interest
 
(64
)
 
(1,118
)
 
(131
)

(282
)
 
(1,595
)
Depreciation expense attributable to noncontrolling interest
 
396

 
393

 
394

 
395

 
1,578

Other expenses attributable to noncontrolling interest
 
1,280

 
1,389

 
1,120


1,098

 
4,887

Adjusted EBITDA Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP
 
$
45,030

 
$
53,490

 
$
54,423


$
59,338

 
$
212,281

Less: cash interest expense, net to the Partnership
 
5,593

 
6,040

 
6,604


7,282

 
25,519

Less: maintenance capital expenditures, net to the Partnership
 
4,449

 
4,735

 
4,835


5,168

 
19,187

Distributable Cash Flow
 
$
34,988

 
$
42,715

 
$
42,984


$
46,888

 
$
167,575

 
 
 
 
 
 
 

 
 

Net Cash Provided by Operating Activities
 
$
35,666

 
$
48,908

 
$
49,913


$
74,753

 
$
209,240

Interest expense
 
7,255

 
6,751

 
7,339


7,685

 
29,030

Loss on asset sales and abandonments
 
—

 
—

 
7,229


—

 
7,229

Other, including changes in working capital
 
3,721

 
(1,505
)
 
(8,675
)

(21,889
)
 
(28,348
)
Adjusted EBITDA
 
46,642

 
54,154

 
55,806


60,549

 
217,151

Less:
 
 
 
 
 
 

 
 

Net loss attributable to noncontrolling interest
 
(64
)
 
(1,118
)
 
(131
)

(282
)
 
(1,595
)
Depreciation expense attributable to noncontrolling interest
 
396

 
393

 
394

 
395

 
1,578

Other expenses attributable to noncontrolling interest
 
1,280

 
1,389

 
1,120


1,098

 
4,887

Adjusted EBITDA Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP
 
$
45,030

 
$
53,490

 
$
54,423


$
59,338

 
$
212,281

Less: cash interest expense, net to the Partnership
 
5,593

 
6,040

 
6,604


7,282

 
25,519

Less: maintenance capital expenditures, net to the Partnership
 
4,449

 
4,735

 
4,835


5,168

 
19,187

Distributable Cash Flow
 
$
34,988

 
$
42,715

 
$
42,984


$
46,888

 
$
167,575

Distributions Declared
 
$
25,678

 
$
27,268

 
$
28,940


$
30,637

 
$
112,523

Distribution Coverage Ratio - Declared
 
1.36
x
 
1.57
x
 
1.49
x

1.53
x
 
1.49
x
 
 
 
 
 
 
 

 
 

Distributable Cash Flow
 
$
34,988

 
$
42,715

 
$
42,984


$
46,888

 
$
167,575

Distributions Paid
 
$
24,176

 
$
25,678

 
$
27,268


$
28,940

 
$
106,062

Distribution Coverage Ratio - Paid
 
1.45
x
 
1.66
x
 
1.58
x

1.62
x
 
1.58
x

Page 10

The following table presents a reconciliation of the non-GAAP measures of the Partnership's projected Adjusted EBITDA and projected distributable cash flow with the most directly comparable GAAP financial measure, which is projected net income. The following projections represent the approximate midpoint of the announced full year 2019 and 2020 expected guidance ranges of Adjusted EBITDA (2019: $200-$220 million; 2020: $250-$270 million) and full year distributable cash flow (2019: $150-$170 million; 2020: $185-$205 million) attributable to the Partnership. CNX Midstream’s financial guidance is based on numerous assumptions about future events and conditions and, therefore, could vary materially from actual results.  These estimates are meant to provide guidance only and are subject to revision for acquisitions or operating environment changes.
(unaudited) (Dollars in millions)
 
Forecast 2019 Estimate
 
Forecast 2020 Estimate
Net Income
 
$
151

 
$
194

Depreciation expense
 
26

 
29

Interest expense
 
35

 
43

EBITDA
 
212

 
266

Non-cash unit-based compensation expense
 
3

 
3

Adjusted EBITDA
 
215

 
269

Less:
 
 
 
 
Net income attributable to noncontrolling interest
 
3

 
7

Depreciation and other expenses attributable to noncontrolling interest
 
2

 
2

Adjusted EBITDA Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP
 
$
210

 
$
260

Less: cash interest expense, net to the Partnership
 
33

 
40

Less: maintenance capital expenditures, net to the Partnership
 
17

 
25

Distributable Cash Flow
 
$
160

 
$
195

The Partnership is unable to project net cash provided by operating activities or provide the related reconciliation of projected net cash provided by operating activities to projected distributable cash flow, the most comparable financial measure calculated in accordance with GAAP, because net cash provided by operating activities includes the impact of changes in operating assets and liabilities. Changes in operating assets and liabilities relate to the timing of the Partnership’s cash receipts and disbursements that may not relate to the period in which the operating activities occurred, and the Partnership is unable to project these timing differences with any reasonable degree of accuracy.

























Page 11


Development Companies Jointly Owned by CNX Gathering LLC and CNX Midstream Partners LP
Operating Income Summary, Selected Operating Statistics and Capital Investment
(Dollars in thousands)
(unaudited)

 
Three Months Ended June 30, 2019
 
 Development Company
 
Anchor
 
Additional
 
 Total
Income Summary
 
 
 
 
 
Revenue
$
76,298

 
$
1,803

 
$
78,101

Expenses
29,538

 
2,100

 
31,638

Net Income (Loss)
$
46,760

 
$
(297
)
 
$
46,463

 
 
 
 
 
 
Operating Statistics - Gathered Volumes
 
 
 
 
 
Dry gas (BBtu/d)
879

 
3

 
882

Wet gas (BBtu/d)
670

 
61

 
731

Other (BBtu/d)*
178

 
—

 
178

Total Gathered Volumes
1,727

 
64

 
1,791

 
 
 
 
 
 
Capital Investment
 
 
 
 
 
Maintenance capital
$
5,155

 
$
251

 
$
5,406

Expansion capital
98,167

 
737

 
98,904

Total Capital Investment
$
103,322

 
$
988

 
$
104,310

 
 
 
 
 
 
Capital Investment Net to CNX Midstream Partners LP
 
 
 
 
 
Maintenance capital
$
5,155

 
$
13

 
$
5,168

Expansion capital
98,167

 
37

 
98,204

Total Capital Investment Net to CNX Midstream Partners LP
$
103,322

 
$
50

 
$
103,372

*Includes condensate handling and third-party volumes we gather under high-pressure short-haul agreements.













Page 12