10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 __________________________________________________

FORM 10-Q

  __________________________________________________ 

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number: 001-36635

__________________________________________________

 

CNX MIDSTREAM PARTNERS LP

(Exact name of registrant as specified in its charter)

Delaware	47-1054194
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1000 CONSOL Energy Drive

Canonsburg, PA 15317-6506

(724) 485-4000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Units Representing Limited Partner Interests	CNXM	New York Stock Exchange

__________________________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ☒    Accelerated filer  ☐   Non-accelerated filer ☐ Smaller Reporting Company  ☐ Emerging Growth Company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐    No  ☒

As of April 27, 2020, CNX Midstream Partners LP had 89,799,224 common units outstanding.

TABLE OF CONTENTS

		Page
PART I FINANCIAL INFORMATION
ITEM 1.	Unaudited Consolidated Financial Statements
	Consolidated Statements of Operations for the Three Months Ended March 31, 2020 and 2019	3
	Consolidated Balance Sheets at March 31, 2020 and December 31, 2019	4
	Consolidated Statements of Partners’ Capital and Noncontrolling Interest for the Three Months Ended March 31, 2020 and 2019	5
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019	6
	Notes to Unaudited Consolidated Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	29
ITEM 4.	Controls and Procedures	30
PART II OTHER INFORMATION
ITEM 1.	Legal Proceedings	30
ITEM 1A.	Risk Factors	30
ITEM 6.	Exhibits	32

PART I: FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

CNX MIDSTREAM PARTNERS LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per unit data)

(Unaudited)

	Three Months Ended   March 31,
	2020		2019
Revenue
Gathering revenue — related party	$	62,178	$	53,776
Gathering revenue — third party	17,953		18,443
Miscellaneous income	65		—
Total Revenue	80,196		72,219
Expenses
Operating expense — related party (Note 4)	3,828		5,548
Operating expense — third party	8,596		5,974
General and administrative expense — related party (Note 4)	2,857		3,967
General and administrative expense — third party	2,765		1,536
(Gain) loss on asset sales and abandonments	(11)		7,229
Depreciation expense	7,578		5,650
Interest expense	8,793		7,339
Total Expense	34,406		37,243
Net Income	45,790		34,976
Less: Net income (loss) income attributable to noncontrolling interest	571		(131)
Net Income Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP	$	45,219	$	35,107
Calculation of Limited Partner Interest in Net Income:
Net Income Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP	$	45,219	$	35,107
Less: General partner interest in net income, including incentive distribution rights	—		5,279
Limited partner interest in net income	$	45,219	$	29,828
Earnings per limited partner unit:
Basic	$	0.50	$	0.47
Diluted	$	0.49	$	0.47
Weighted average number of limited partner units outstanding (in thousands):
Basic	89,797		63,698
Diluted	92,822		63,758
Cash distributions declared per unit (*)	$	0.0829	$	0.3732

(*) Represents the cash distributions declared during the month following the end of each respective quarterly period. See Note 10.

The accompanying notes are an integral part of these unaudited financial statements.

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CNX MIDSTREAM PARTNERS LP

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except number of limited partner units)

	(Unaudited)
	March 31, 2020		December 31, 2019
ASSETS
Current Assets:
Cash	$	5,235	$	31
Receivables — related party	21,714		21,076
Receivables — third party, net (Note 2)	4,980		7,935
Other current assets	2,064		1,976
Total Current Assets	33,993		31,018
Property and Equipment (Note 5):
Property and equipment	1,315,118		1,302,566
Less — accumulated depreciation	114,574		106,975
Property and Equipment — Net	1,200,544		1,195,591
Other Assets:
Operating lease right-of-use assets	3,225		4,731
Other assets	2,945		3,262
Total Other Assets	6,170		7,993
TOTAL ASSETS	$	1,240,707	$	1,234,602
LIABILITIES AND PARTNERS’ CAPITAL
Current Liabilities:
Trade accounts payable	$	9,696	$	15,683
Accrued interest payable	1,256		7,973
Accrued liabilities	21,271		43,634
Due to related party (Note 4)	51,688		4,787
Total Current Liabilities	83,911		72,077
Other Liabilities:
Long-term liabilities — related party (Note 4)	85,000		—
Long-Term Debt:
Revolving credit facility (Note 6)	347,000		311,750
Senior Notes (Note 6)	394,399		394,162
Total Long-Term Debt	741,399		705,912
TOTAL LIABILITIES	910,310		777,989
Partners’ Capital and Noncontrolling Interest:
Limited partner units (89,799,224 issued and outstanding at March 31, 2020 and 63,736,622 issued and outstanding at December 31, 2019)	226,376		380,473
Class B units (3,000,000 issued and outstanding at March 31, 2020 and none issued and outstanding at December 31, 2019)	34,590		—
General partner interest	—		7,280
Partners’ capital attributable to CNX Midstream Partners LP	260,966		387,753
Noncontrolling interest	69,431		68,860
Total Partners’ Capital and Noncontrolling Interest	330,397		456,613
TOTAL LIABILITIES AND PARTNERS’ CAPITAL	$	1,240,707	$	1,234,602

The accompanying notes are an integral part of these unaudited financial statements.

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CNX MIDSTREAM PARTNERS LP

CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL AND NONCONTROLLING INTEREST

(Dollars in thousands)

(Unaudited)

	Three Months Ended March 31, 2020
	Partners’ Capital						Total
							Capital
	Limited		Class B		General		Attributable		Noncontrolling
	Partners		Units		Partner		to Partners		Interest		Total
Balance at December 31, 2019	$	380,473	$	—	$	7,280	$	387,753	$	68,860	$	456,613
Net income	45,219		—		—		45,219		571		45,790
Quarterly distributions to unitholders	(37,201)		—		—		(37,201)		—		(37,201)
IDR Elimination Transaction	(162,310)		34,590		(7,280)		(135,000)		—		(135,000)
Unit-based compensation	504		—		—		504		—		504
Vested units withheld for taxes	(309)		—		—		(309)		—		(309)
Balance at March 31, 2020	$	226,376	$	34,590	$	—	$	260,966	$	69,431	$	330,397

	Three Months Ended March 31, 2019
	Partners’ Capital				Total
					Capital
	Limited		General		Attributable		Noncontrolling
	Partners		Partner		to Partners		Interest		Total
Balance at December 31, 2018	$	320,543	$	10,900	$	331,443	$	67,871	$	399,314
Net income (loss)	29,828		5,279		35,107		(131)		34,976
Contributions from general partner and noncontrolling interest holders, net	—		30		30		—		30
Quarterly distributions to unitholders	(22,939)		(4,329)		(27,268)		—		(27,268)
Unit-based compensation	612		—		612		—		612
Vested units withheld for taxes	(664)		—		(664)		—		(664)
Balance at March 31, 2019	$	327,380	$	11,880	$	339,260	$	67,740	$	407,000

The accompanying notes are an integral part of these unaudited financial statements.

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CNX MIDSTREAM PARTNERS LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	Three Months Ended   March 31,
	2020		2019
Cash Flows from Operating Activities:
Net income	$	45,790	$	34,976
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense and amortization of debt issuance costs	8,050		6,121
Unit-based compensation	504		612
(Gain) loss on asset sales and abandonments	(11)		7,229
Other	11		11
Changes in assets and liabilities:
Due to/from affiliate	(3,706)		(1,923)
Receivables — third party	2,955		448
Other current and non-current assets	1,500		(8,971)
Accounts payable and other accrued liabilities	(14,970)		11,410
Net Cash Provided by Operating Activities	40,123		49,913
Cash Flows from Investing Activities:
Capital expenditures	(32,659)		(78,557)
Net Cash Used in Investing Activities	(32,659)		(78,557)
Cash Flows from Financing Activities:
Contributions from general partner and noncontrolling interest holders, net	—		30
Vested units withheld for unitholder taxes	(309)		(664)
Quarterly distributions to unitholders	(37,201)		(27,268)
Net borrowings on secured $600.0 million credit facility	35,250		52,650
Net Cash (Used in) Provided by Financing Activities	(2,260)		24,748
Net Increase (Decrease) in Cash	5,204		(3,896)
Cash at Beginning of Period	31		3,966
Cash at End of Period	$	5,235	$	70
Cash paid during the period for:
Interest	$	15,756	$	14,251
Noncash investing activities:
Accrued capital expenditures	$	8,366	$	26,298

The accompanying notes are an integral part of these unaudited financial statements.

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CNX MIDSTREAM PARTNERS LP

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — DESCRIPTION OF BUSINESS

CNX Midstream Partners LP (the “Partnership”, or “we”, “us”, or “our”) is a growth-oriented master limited partnership focused on the ownership, operation, development and acquisition of midstream energy infrastructure in the Appalachian Basin. We currently provide midstream services to our customers’ production in the Marcellus Shale and Utica Shale in Pennsylvania and West Virginia under long-term, fixed-fee contracts. Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. We are managed by our general partner, CNX Midstream GP LLC (our “general partner”), a wholly owned subsidiary of CNX Gathering LLC (“CNX Gathering”). CNX Gathering is a wholly owned subsidiary of CNX Gas Company LLC (“CNX Gas”), which is a wholly owned subsidiary of CNX Resources Corporation (NYSE: CNX) (“CNX Resources”). Accordingly, CNX Resources is the Sponsor of the Partnership, and we may refer to CNX Resources as the “Sponsor” throughout this Quarterly Report on Form 10-Q.

Description of Business

Our midstream assets consist of two operating segments that we refer to as our “Anchor Systems” and “Additional Systems” based on their relative current cash flows, growth profiles, capital expenditure requirements and the timing of their development.

•Our Anchor Systems, in which the Partnership owns a 100% controlling interest, include our most developed midstream systems that generate the largest portion of our current cash flows, including our five primary midstream systems (the McQuay, Majorsville, Dry Ridge, Mamont and Shirley-Penns Systems), a 20” high-pressure pipeline contributed to us in the CNX Transaction, that occurred in 2018, and related assets.

•Our Additional Systems, in which the Partnership owns a 5% controlling interest, include several gathering systems throughout our dedicated acreage. Revenues from our Additional Systems are currently derived primarily from the Pittsburgh Airport area, which is within the wet gas region of our dedicated acreage and the Wadestown area in the dry gas region. Currently, the substantial majority of capital investment in these systems would be funded directly by CNX Resources in proportion to CNX Gathering’s 95% retained ownership interest.

In order to maintain operational flexibility, our operations are conducted through, and our operating assets are owned by, our operating subsidiaries. However, neither we nor our operating subsidiaries have any employees. Our general partner has the sole responsibility for providing the personnel necessary to conduct our operations, whether through directly hiring employees or by obtaining the services of others, which may include personnel of CNX Resources as provided through contractual relationships with the Partnership. All of the personnel who conduct our business are employed or contracted by our general partner and its affiliates, including our Sponsor, but we sometimes refer to these individuals as our employees because they provide services directly to us. See Note 4–Related Party Transactions for additional information.

IDR Elimination Transaction

On January 29, 2020, CNX and CNXM entered into and closed definitive agreements to eliminate CNXM’s incentive distribution rights (“IDRs”) held by its general partner and to convert the 2.0% general partner interest in CNXM into a non-economic general partnership interest (collectively, the "IDR Elimination Transaction"). 

Pursuant to the IDR Elimination Transaction agreements, CNX received the following consideration in exchange for the cancellation of the IDRs and conversion of the 2.0% general partner interest:

•26 million CNXM common units;

•3 million new CNXM Class B units, which will not receive or accrue distributions until January 1, 2022, at which time they will automatically convert into CNXM common units on a one-for-one basis; and

•$135.0 million, to be paid in three installments of $50.0 million due December 31, 2020, $50.0 million due December 31, 2021 and $35.0 million due December 31, 2022.

After giving effect to the IDR Elimination Transaction, CNX now owns 47.7 million CNXM common units, or approximately 53.1%, of the outstanding limited partner interests in CNXM, excluding the CNXM Class B units. Following the conversion of the CNXM Class B units into CNXM common units on January 1, 2022, CNX’s ownership will increase to 50.7 million CNXM units, or approximately 54.6% of the outstanding limited partner interests in CNXM, on a proforma basis.

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NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Use of Estimates

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and various disclosures. Actual results could differ from those estimates, which are evaluated on an ongoing basis, utilizing historical experience and other methods considered reasonable under the particular circumstances. Although these estimates are based on management’s best available knowledge at the time, changes in facts and circumstances or discovery of new facts or circumstances may result in revised estimates and actual results may differ from these estimates. Effects on the Partnership’s business, financial position and results of operations resulting from revisions to estimates are recognized when the facts that give rise to the revision become known. In the opinion of management, all adjustments considered necessary for a fair presentation of the accompanying consolidated financial statements have been included.

The balance sheet at December 31, 2019 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the Consolidated Financial Statements and related notes for the year ended December 31, 2019 included in CNX Midstream Partners LP’s (the “Partnership”, or “we”, “us”, or “our”) Annual Report on Form 10-K as filed with the Securities and Exchange Commission (SEC) on February 10, 2020.

Principles of Consolidation

The consolidated financial statements include the accounts of the Partnership and all of its controlled subsidiaries, including 100% of each of the Anchor Systems and Additional Systems in the applicable periods presented within this Quarterly Report on Form 10-Q. Although the Partnership has less than a 100% economic interest in the Additional Systems, it has been consolidated fully with the results of the Partnership in the applicable periods as the Partnership is considered to be the primary beneficiary and has a controlling financial interest and the power through its ownership to direct the activities of the Additional Systems. After adjusting for noncontrolling interests, net income attributable to general and limited partner ownership interests in the Partnership reflect only that portion of net income that is attributable to the Partnership’s unitholders.

Transactions between the Partnership and CNX Resources have been identified in the consolidated financial statements as transactions between related parties and are disclosed in Note 4–Related Party Transactions.

Revenue Recognition

We record revenue when obligations under the terms of the contracts with our shippers are satisfied; generally, this occurs on a daily basis as we gather natural gas at the wellhead. Revenue is measured as the amount of consideration we expect to receive in exchange for providing the natural gas gathering services.

Nature of performance obligations

At contract inception, we assess the services promised in our contracts with customers and identify a performance obligation for each promised service that is distinct. To identify the performance obligations, we consider all of the services promised in the contract, regardless of whether they are explicitly stated or are implied by customary business practices.

Our revenue is generated from natural gas gathering activities. The gas gathering services are interruptible in nature and include charges for the volume of gas actually gathered and do not guarantee access to the system. Volumetric-based fees relate to actual volumes gathered. In general, the interruptible gathering of each unit one million British Thermal Units (MMBtu) of natural gas represents a separate performance obligation. Payment terms for these contracts require payment within 25 days of the end of the calendar month in which the hydrocarbons are gathered.

Transaction price allocated to remaining performance obligations

We are required to disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied. However, the guidance provides certain practical expedients that limit this requirement. Substantially all of our revenues are derived from contracts that have terms of greater than one year. Under these contracts, the interruptible gathering of each unit of natural gas represents a separate performance obligation.

For revenue associated with the Shirley-Penns System, for which we have remaining contractual performance obligations, the aggregate amount of the transaction price allocated to those remaining performance obligations was $350.8 million at March 31, 2020. See Note 4–Related Party Transactions for a detailed breakout of the minimum revenue by year.

The amount of revenue associated with this contract up to the minimum volume commitment (“MVC”) is fixed in nature, and volumes that we may gather above the MVC will be variable in nature. As of March 31, 2020, no future performance obligations exist relative to volumes to be gathered in excess of the MVC as the related volumes have not yet been nominated

8

for gathering. Therefore, we have not disclosed the value of unsatisfied performance obligations for the variable aspect of this agreement, nor have we disclosed the value of other unsatisfied performance obligations that are variable in nature.

Prior-period performance obligations

We record revenue when obligations under the terms of the contracts with our shippers are satisfied; generally this occurs on a daily basis when we gather gas at the wellhead. In some cases, we are required to estimate the amount of natural gas that we have gathered during an accounting period and record any differences between our estimates and the actual units of natural gas that we gathered in the following month. We have existing internal controls for our revenue estimation process and related accruals; historically, any identified differences between our revenue estimates and actual revenue received have not been significant. For the quarters ended March 31, 2020 and 2019, revenue recognized in the reporting period related to performance obligations satisfied in prior reporting periods was not material.

Disaggregation of revenue

See Note 8–Segment Information for additional information.

Contract balances

We invoice customers once our performance obligations have been satisfied, at which point payment becomes unconditional. Accordingly, our contracts with customers do not give rise to contract assets or liabilities. We also have no contract assets recognized from the costs to obtain or fulfill a contract with a customer.

Classification

The fees we charge our affiliates, including our Sponsor, are recorded in gathering revenue — related party in our consolidated statements of operations. Fees from midstream services we perform for third-party shippers are recorded in gathering revenue — third-party in our consolidated statements of operations.

Cash

Cash includes cash on hand and on deposit at banking institutions.

Receivables

On January 1, 2020, the Partnership adopted the guidance under the Financial Accounting Standards Board (the “FASB”) Accounting Standard Update (“ASU”) 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The Partnership adopted Topic 326 using the prospective transition method.

Prior to adopting Topic 326, the Partnership reserved for specific accounts receivable when it was probable that all or a part of an outstanding balance would not be collected, such as customer bankruptcies. Collectability was determined based on terms of sale, credit status of customers and various other circumstances. We regularly reviewed collectability and established or adjusted the reserve as necessary using the specific identification method. Account balances were charged off against the reserve after all means of collection had been exhausted and the potential for recovery was considered remote.

Under Topic 326, management recorded an allowance for credit losses related to the collectability of third-party customers receivables using the historical aging of the customer receivable balance. Related party receivables between entities under common control are excluded from Topic 326. The collectibility was determined based on past events, including historical experience, customer credit rating, as well as current market conditions. We will continue to monitor customer ratings and collectability on a quarterly basis. Account balances will be charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The allowance for credit losses is as follows:

(in thousands)	March 31, 2020
Receivables — Third-Party	$	5,056
Allowance for Credit Losses	(76)
Receivables — Third-Party, Net	$	4,980

Fair Value Measurement

The FASB Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, clarifies the definition of fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This guidance also relates to all nonfinancial assets and liabilities that are not recognized or disclosed on a

9

recurring basis (e.g., the initial recognition of asset retirement obligations and impairments of long-lived assets). The fair value is the price that we estimate we would receive upon selling an asset or that we would pay to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy is used to prioritize input to valuation techniques used to estimate fair value. An asset or liability subject to the fair value requirements is categorized within the hierarchy based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The highest priority (Level 1) is given to unadjusted quoted market prices in active markets for identical assets or liabilities, and the lowest priority (Level 3) is given to unobservable inputs. Level 2 inputs are data, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly.

The carrying values on our balance sheets of our current assets, current liabilities and revolving credit facility approximate fair values due to their short maturities. We estimate the fair value of our long-term debt, which is not actively traded, using an income approach model that utilizes a discount rate based on market rates for other debt with similar remaining time to maturity and credit risk (Level 2). The estimated fair value of our long-term debt was approximately $280.0 million on March 31, 2020.

Property and Equipment

Property and equipment is recorded at cost upon acquisition and is depreciated on a straight-line basis over the assets’ estimated useful lives or over the lease terms of the assets. Expenditures which extend the useful lives of existing property and equipment are capitalized. When properties are retired or otherwise disposed, the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss on disposition is recognized.

The Partnership evaluates whether long-lived assets have been impaired during any given quarter and has processes in place to ensure that we become aware of such indicators. Impairment indicators may include, but are not limited to, sustained decreases in commodity prices, a decline in customer well results and lower throughput forecasts, and increases in construction or operating costs. For such long-lived assets, impairment exists when the carrying amount of an asset or group of assets exceeds our estimates of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or group of assets. If the carrying amount of the long-lived asset(s) is not recoverable, based on the estimated future undiscounted cash flows, the impairment loss would be measured as the excess of the asset’s carrying amount over its estimated fair value. In the event that impairment indicators exist, we conduct an impairment test.

Fair value represents the estimated price between market participants to sell an asset in the principal or most advantageous market for the asset, based on assumptions a market participant would make. When warranted, management assesses the fair value of long-lived assets using commonly accepted techniques and may use more than one source in making such assessments. Sources used to determine fair value include, but are not limited to, recent third-party comparable sales, internally developed discounted cash flow analyses and analyses from outside advisors. Significant changes, such as the condition of an asset or management’s intent to utilize the asset, generally require management to reassess the cash flows related to long-lived assets. No property and equipment impairments were identified during the periods presented in the accompanying consolidated financial statements.

Leases

In February 2016, the FASB issued ASU 2016-02–Leases (Topic 842), which increases transparency and comparability among organizations by recognizing right-of-use (“ROU”) lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU maintains a distinction between finance leases and operating leases, which is substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous lease guidance. Retaining this distinction allows the recognition, measurement and presentation of expenses and cash flows arising from a lease to remain similar to the previous accounting treatment. A lessee is permitted to make an accounting policy election by class of underlying asset to exclude from balance sheet recognition any lease assets and lease liabilities with a term of 12 months or less, and instead to recognize lease expense on a straight-line basis over the lease term. For both financing and operating leases, the ROU asset and lease liability are initially measured at the present value of the lease payments. In July 2018, the FASB issued ASU 2018-11 which provides entities with the option to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, if necessary.

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease ROU assets and accrued liabilities on our consolidated balance sheets. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date of the lease in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

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Environmental Matters

We are subject to various federal, state and local laws and regulations relating to the protection of the environment. Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or clean-ups are probable, and the costs can be reasonably estimated. At this time, we are unable to assess the timing and/or effect of potential liabilities related to greenhouse gas emissions or other environmental issues. As of March 31, 2020 and December 31, 2019, we had no material environmental matters that required the recognition of a separate liability or specific disclosure.

Asset Retirement Obligations

Our gathering pipelines and compressor stations have an indeterminate life. If properly maintained, they will operate for an indeterminate period as long as supply and demand for natural gas exists, which we expect for the foreseeable future. We are under no legal or contractual obligation to restore or dismantle our gathering system upon abandonment. Therefore, we have not recorded any liabilities for asset retirement obligations at March 31, 2020 or December 31, 2019.

Variable Interest Entities

Each of the Anchor and Additional Systems is structured as a limited partnership (the “Limited Partnerships”) and a variable interest entity (“VIE”). These VIEs correspond with the manner in which we report our segment information in Note 8–Segment Information, which also includes information regarding the Partnership’s involvement with each of these VIEs and their relative contributions to our financial position, operating results and cash flows.

The Partnership fully consolidates each of the Limited Partnerships through its ownership of CNX Midstream Operating Company LLC (the “Operating Company”). The Operating Company, through its general partner ownership interest in each of the Limited Partnerships during the period in which any ownership interest exists, is considered to be the primary beneficiary for accounting purposes and has the power to direct all substantive strategic and day-to-day operational decisions of the Limited Partnerships.

Income Taxes

We are treated as a partnership for federal and state income tax purposes, with each partner being separately taxed on its share of the Partnership’s taxable income. Accordingly, no provision for federal or state income taxes has been recorded in the Partnership’s consolidated financial statements for any period presented in the accompanying consolidated financial statements.

Equity Compensation

Equity compensation expense for all unit-based compensation awards is based on the grant date fair value estimated in accordance with the provisions of ASC 718–Compensation–Stock Compensation. We recognize unit-based compensation costs on a straight-line basis over the requisite service period of an award, which is generally the same as the award’s vesting term. See Note 9–Long-Term Incentive Plan for further discussion.

Net Income Per Limited Partner Unit and General Partner Interest

Net income per limited partner unit is calculated using the two-class method, under which income is allocated to participating securities in accordance with the terms of our partnership agreement. The two-class method uses an earnings allocation method under which earnings per limited partner unit are calculated for each class of common unit and any participating security considering all distributions declared and participation rights in undistributed earnings as if all earnings had been distributed during the period. Diluted net income per limited partner unit reflects the potential dilution that could occur if securities or agreements to issue common units were exercised, settled or converted into common units.

Prior to the IDR Elimination Transaction on January 29, 2020, we allocated net income between our general partner and limited partners, which included allocations of net income to our limited partners, our general partner and the holders of our IDRs in accordance with the terms of our partnership agreement. We also allocated any distributions in excess of earnings for the period to our general partner and our limited partners based on their respective proportionate ownership interests in us, after taking into account distributions to be paid with respect to the IDRs, as set forth in our partnership agreement. Following the IDR Elimination Transaction, the Partnership’s common unitholders are entitled to all distributions until the Class B units are converted to common units on January 1, 2022. Class B unitholders have no rights to distributions until they are converted into common units.

Historical Earnings per Unit

The Partnership calculates historical earnings per unit under the two-class method and allocates the earnings or losses of a transferred business before the date of a dropdown transaction entirely to the general partner. If applicable, the previously reported earnings per unit of the limited partners would not change as a result of a dropdown transaction.

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Diluted net income per limited partner unit reflects the potential dilution that could occur if securities or agreements to issue common units, such as awards under the long-term incentive plan, were exercised, settled or converted into common units. When it is determined that potential common units resulting from an award subject to performance or market conditions should be included in the diluted net income per limited partner unit calculation, the impact is calculated by applying the treasury stock method. There were 200,086 and 34,566 phantom units that were not included in the calculation for the three months ended March 31, 2020 and 2019, respectively, because the effect would have been antidilutive.

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04 - Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848). This ASU provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates and, particularly, the risk of cessation of the London Interbank Offered Rate (LIBOR), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. The Partnership is still evaluating the effect of adopting this guidance.

In March 2020, the FASB issued ASU 2020-03 - Codification Improvements to Financial Instruments. This ASU improves and clarifies various financial instruments topics, including the CECL standard. The ASU includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments in this ASU have different effective dates. The adoption of this guidance is not expected to have a material impact on the Partnership's financial statements.

NOTE 3 — CASH DISTRIBUTIONS

Our partnership agreement requires that we distribute all of our Available Cash from Operating Surplus, as those terms are defined in the partnership agreement, within 45 days after the end of each quarter to unitholders of record on the applicable record date, in accordance with the terms below.

Allocations of Available Cash from Operating Surplus and Incentive Distribution Rights

Prior to the IDR Elimination Transaction on January 29, 2020 (See Note 1 – Description of Business), the percentage allocations of available cash from operating surplus between the unitholders and our general partner was based on the specified target distribution levels. IDRs represented the right to receive an increasing percentage, up to a maximum of 48% (which did not include the 2% general partner interest), of quarterly distributions of available cash from operating surplus after the minimum quarterly distribution and the target distribution levels had been achieved.

Cash Distributions

The Board of Directors declared the following cash distributions to the Partnership’s common unitholders and to the general partner for the periods presented:

(in thousands, except per unit information)
Quarters Ended	Quarterly Distribution Per Unit		Total Cash Distribution		Date of Distribution
March 31, 2019	$	0.3732	$	28,940	May 14, 2019
June 30, 2019	$	0.3865	$	30,637	August 14, 2019
September 30, 2019	$	0.4001	$	32,371	November 12, 2019
December 31, 2019	$	0.4143	$	37,201	February 13, 2020

See Note 10–Subsequent Events for information regarding the distribution that was approved by the Board of Directors with respect to the quarter ended March 31, 2020.

NOTE 4 — RELATED PARTY TRANSACTIONS

In the ordinary course of business, we engage in related party transactions with CNX Resources (and certain of its subsidiaries) and CNX Gathering, which include the fees we charge and revenues we receive under a fixed fee gathering

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agreement (including fees associated with electrically-powered compression that CNX Resources reimburses to us) and our reimbursement of certain expenses to CNX Resources under several agreements, discussed below. In addition, we may waive or modify certain terms under these arrangements in the ordinary course of business, including the provisions of the fixed fee gathering agreement, when we determine it is in the best interests of the Partnership to do so. Any material transactions are reviewed by the Board of Directors or the Audit Committee, together with oversight by our conflicts committee, as deemed appropriate.

Operating expense and general and administrative expense – related party were derived from CNX Resources and consisted of the following:

	Three Months Ended   March 31,
(in thousands)	2020		2019
Operational services	$	1,909	$	3,633
Electrical compression	1,919		1,915
Total Operating Expense — Related Party	$	3,828	$	5,548

Total General and Administrative Expense — Related Party $ 2,857  $ 3,967 

Related party liabilities due to CNX Resources consisted of the following:

(in thousands)	March 31, 2020		December 31, 2019
Expense reimbursements	$	564	$	489
Capital expenditures reimbursements	61		—
General and administrative services	1,063		4,298
IDR Transaction - current portion	50,000		—
Total Due to Related Party - Current Portion	51,688		4,787
IDR Transaction - long-term portion	85,000		—
Total Due to Related Party - Current and Long-Term	$	136,688	$	4,787

All related party receivables were due from CNX Resources at March 31, 2020 and December 31, 2019.

Operational Services Agreement

Upon the closing of the initial public offering of our common units (our “IPO”), we entered into an operational services agreement with CNX Resources, which was amended and restated on December 1, 2016. Under the agreement, CNX Resources provides certain operational services to us in support of our gathering pipelines and dehydration, treating and compressor stations and facilities, including routine and emergency maintenance and repair services, routine operational activities, routine administrative services, construction and related services and such other services as we and CNX Resources may mutually agree upon from time to time. CNX Resources prepares and submits for our approval a maintenance, operating and capital budget on an annual basis. CNX Resources submits actual expenditures for reimbursement on a monthly basis, and we reimburse CNX Resources for any direct third-party costs incurred by CNX Resources in providing these services.

Omnibus Agreement

We are party to an omnibus agreement with CNX Resources, CNX Gathering and our general partner that addresses the following matters:

• our payment of an annually-determined administrative support fee (approximately $7.3 million for the year ending December 31, 2020 and $7.9 million for the year ended December 31, 2019) for the provision of certain services by CNX Resources and its affiliates, including executive costs. Such costs may not necessarily reflect the actual expenses that the Partnership would incur on a stand-alone basis, and we are unable to estimate what those expenses would be on a stand-alone basis;

• our obligation to reimburse CNX Resources for all other direct or allocated costs and expenses incurred by CNX Resources in providing general and administrative services (which reimbursement is in addition to certain expenses of our general partner and its affiliates that are reimbursed under our partnership agreement);

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• our right of first offer to acquire (i) CNX Gathering’s retained interests in our Additional Systems, (ii) CNX Gathering’s other ancillary midstream assets and (iii) any additional midstream assets that CNX Gathering develops; and

• our obligation to indemnify CNX Gathering for events and conditions associated with the use, ownership or operation of our assets that occur after the closing of the IPO, including environmental liabilities.

The omnibus agreement will remain in full force and effect throughout the period in which CNX Gathering controls our general partner. If CNX Gathering ceases to control our general partner, either party may terminate the omnibus agreement, provided that the indemnification obligations will remain in full force and effect in accordance with their terms.

Gathering Agreements

On January 3, 2018, we entered into the Second Amended and Restated gas gathering agreement (“GGA”) with CNX Gas, which is a 20-year, fixed-fee gathering agreement. Under the Second Amended and Restated GGA, we continue to gather, compress, dehydrate and deliver all of CNX Gas’ dedicated natural gas in the Marcellus Shale on a first-priority basis and gather, inject, stabilize and store all of CNX Gas’ dedicated condensate on a first-priority basis. Under this agreement, during the year ending December 31, 2020, we will receive a fee based on the type and scope of the midstream services we provide, summarized as follows:

•For the services we provide with respect to natural gas from the Marcellus Shale formation that does not require downstream processing, or dry gas, we will receive a fee of $0.4531 per MMBtu.

•For the services we provide with respect to natural gas from the Marcellus Shale formation that requires downstream processing, or wet gas, we will receive:

◦a fee of $0.3116 per MMBtu in the Pittsburgh International Airport area; and

◦a fee of $0.6222 per MMBtu for all other areas in the dedication area.

•Our fees for condensate services will be $5.6580 per Bbl in the Majorsville area and in the Shirley-Penns area.

Each of the foregoing fees escalates by 2.5% on January 1 each year through the end of the initial term. Commencing on January 1, 2035, and as of January 1 thereafter, each of the applicable fees will be adjusted pursuant to the percentage change in CPI-U, but such fees will never escalate or decrease by more than 3% per year.

The Second Amended and Restated GGA also dedicated an additional 63,000 acres in the Utica Shale in and around the McQuay and Wadestown areas and introduced the following gas gathering and compression rates (rates shown effective January 1, 2020):

•Gas Gathering:

◦McQuay area Utica - a fee of $0.2368 per MMBtu; and

◦Wadestown Marcellus and Utica - a fee of $0.3678 per MMBtu.

•Compression:

◦For areas not benefiting from system expansion pursuant to the Second Amended and Restated GGA, compression services are included in the base fees; and

◦In the McQuay and Wadestown areas, for wells turned in line beginning January 1, 2018 and beyond, we will receive additional fees of $0.0683 per MMBtu for Tier 1 pressure services (maximum receipt point of pressure of 600 psi) and $0.1366 per MMBtu for Tier 2 pressure services (maximum receipt point of pressure of 300 psi).

In addition, the Second Amended and Restated GGA committed CNX Gas to drill and complete 140 total wells in the McQuay area within the Anchor Systems, provided that if 125 wells have been drilled and completed in the Marcellus Shale, then the remainder of such planned wells must be drilled in the Utica Shale. To the extent the requisite number of wells are not drilled and completed by CNX Gas in a given period, we will be entitled to a deficiency payment per shortfall well as set forth below:

•January 1, 2018 to December 31, 2018 - 30 wells (CNX Gas exceeded this requirement by eight wells)

•January 1, 2019 to April 30, 2020 - 40 wells (CNX Gas has met this requirement as of April 27, 2020)

•May 1, 2020 to April 30, 2021 - 40 wells (deficiency payment of $2.0 million per well)

•May 1, 2021 to April 30, 2022 - 30 wells (deficiency payment of $2.0 million per well)

In the event that CNX Gas drills wells and completes a number of wells in excess of the number of wells required to be drilled and completed in such period, (i) the number of excess wells drilled and completed during such period will be applied to the minimum well requirement in the succeeding period or (ii) to the extent CNX Gas was required to make deficiency payments for shortfalls in the preceding period, CNX Gas may elect to cause the Partnership to pay a refund in an amount equal to (x) the number of excess wells drilled and completed during the period, multiplied by (y) the deficiency payment paid per well during the period in which the shortfall occurred.

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On March 16, 2018, we entered into the First Amendment to the Second Amended and Restated GGA, which added the MVC on volumes associated with the Shirley-Penns System through December 31, 2031. The MVC commits CNX Gas to pay the Partnership the wet gas fee under the GGA for all natural gas we gather up to a specified amount per day through December 31, 2031. During the MVC period, if CNX Gas actually delivers volumes in a given quarter in excess of the volume commitment for such quarter, CNX Gas is entitled to credit such excess volumes against amounts otherwise payable under the MVC in the future.

We will recognize minimum revenue on volumes throughout the term of the GGA, as set forth below:

(in millions)	Minimum Revenue per MVC
Remainder of year ending December 31, 2020	$	6.0
Year ending December 31, 2021	40.7
Year ending December 31, 2022	47.7
Year ending December 31, 2023	42.8
Year ending December 31, 2024	39.6
Remainder of term	174.0
Total minimum revenue to be recognized pursuant to Shirley-Penns MVC	$	350.8

For all natural gas the Partnership gathers in excess of the MVC, the Partnership will receive a fee of $0.3678 per MMBtu in 2020, which escalates by 2.5% on January 1 of each year. Since the Shirley-Penns Acquisition, CNX Gas has exceeded the required MVC each quarter.

On May 2, 2018, we completed the CNX Transaction, pursuant to which we entered into the Second Amendment to the Second Amended and Restated GGA, which committed CNX Gas to drill and complete an additional 40 wells in the Majorsville/Mamont area within the Anchor Systems by the end of 2023. To the extent the requisite number of wells are not drilled and completed by CNX Gas in a given period, we will be entitled to a deficiency payment per shortfall well as set forth below:

•July 1, 2018 to December 31, 2020 - 15 wells (As of March 31, 2020, CNX Gas has exceeded the minimum well commitment by six wells)

•January 1, 2021 to December 31, 2023 - 25 wells (deficiency payment of $2.8 million per well)

CNX Gas provides us with quarterly updates on its drilling and development operations, which include detailed descriptions of the drilling plans, production details and well locations for periods that range from up to 24-48 months, as well as more general development plans that may extend as far as ten years. In addition, we regularly meet with CNX Gas to discuss our current plans to timely construct the necessary facilities to be able to provide midstream services to them on our dedicated acreage. In the event that we do not perform our obligations under our GGA, CNX Gas will be entitled to certain rights and procedural remedies thereunder, including the temporary and/or permanent release from dedication and indemnification from us.

There are no restrictions under our GGAs with CNX Gas on the ability of CNX Gas to transfer acreage in the right of first offer (“ROFO”) area, and any such transfer of acreage in the ROFO area will not be subject to our right of first offer. 

Upon completion of its 20-year term in 2037, our GGA with CNX Gas will continue in effect from year to year until such time as the agreement is terminated by either us or CNX Gas on or before 180 days prior written notice.

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NOTE 5 — PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

(in thousands)	March 31, 2020		December 31, 2019		Estimated Useful Lives in Years
Land	$	79,948	$	79,829	N/A
Gathering equipment	747,118		717,277		25 — 40
Compression equipment	387,365		332,358		30 — 40
Processing equipment	30,979		30,979		40
Assets under construction	69,708		142,123		N/A
Total Property and Equipment	$	1,315,118	$	1,302,566
Less: Accumulated depreciation
Gathering equipment	$	80,725	$	75,879
Compression equipment	26,857		24,311
Processing equipment	6,992		6,785
Total Accumulated Depreciation	$	114,574	$	106,975
Property and Equipment — Net	$	1,200,544	$	1,195,591

The Partnership capitalized approximately $0.7 million and $0.8 million of interest on assets under construction during the three months ended March 31, 2020 and 2019, respectively.

During the three months ended March 31, 2019, the Partnership abandoned the construction of a compressor station that was designed to support additional production within certain areas of the Anchor Systems, incurring a loss of $7.2 million.

NOTE 6 — LONG-TERM DEBT

Revolving Credit Facility

In March 2018, we entered into a five-year $600.0 million secured revolving credit facility with an accordion feature that allows, subject to certain terms and conditions, the Partnership to increase the available borrowings under the revolving credit facility by up to an additional $250.0 million. The revolving credit facility includes the ability to issue letters of credit up to $100.0 million in the aggregate. The available borrowing capacity is limited by certain financial covenants pertaining to leverage and interest coverage ratios as defined in the revolving credit facility agreement.

On April 24, 2019, the Partnership amended its revolving credit facility and extended its maturity to April 2024. Among other things, we received an annual interest rate reduction of 0.25% on borrowings compared to the original agreement. Under the terms of the amended agreement, borrowings under the revolving credit facility will bear interest at our option at either:

•the base rate, which is the highest of (i) the federal funds open rate plus 0.50%, (ii) PNC Bank, N.A.’s prime rate, or (iii) the one-month LIBOR rate plus 1.00%, in each case, plus a margin ranging from 0.50% to 1.50%; or

•the LIBOR rate plus a margin ranging from 1.50% to 2.50%.

Following the amendment, the revolving credit facility now includes (i) the addition of a restricted payment basket permitting cash repurchases of IDRs subject to a pro forma secured leverage ratio of 3.00 to 1.00, a pro forma total leverage ratio of 4.00 to 1.00 and pro forma availability of 20% of commitments and (ii) a restricted payment basket for the repurchase of limited partner units not to exceed Available Cash (as defined in the partnership agreement) in any quarter of up to $150.0 million per year and up to $200.0 million during the life of the facility.

Interest on base rate loans is payable on the first business day of each calendar quarter. Interest on LIBOR loans is payable on the last day of each interest period or, in the case of interest periods longer than three months, every three months. The unused portion of our revolving credit facility is subject to a commitment fee ranging from 0.375% to 0.500% per annum depending on our most recent consolidated leverage ratio.

The revolving credit facility contains a number of affirmative and negative covenants that include, among others, covenants that restrict the ability of the Partnership, its subsidiary guarantors and certain of its non-guarantor, non-wholly-owned subsidiaries, except in certain circumstances, to: (i) create, incur, assume or suffer to exist indebtedness; (ii) create or permit to exist liens on their properties; (iii) prepay certain indebtedness unless there is no default or event of default under the

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revolving credit facility; (iv) make or pay any dividends or distributions in excess of certain amounts; (v) merge with or into another person, liquidate or dissolve; or acquire all or substantially all of the assets of any going concern or going line of business or acquire all or a substantial portion of another person’s assets; (vi) make particular investments and loans; (vii) sell, transfer, convey, assign or dispose of its assets or properties other than in the ordinary course of business and other select instances; (viii) deal with any affiliate except in the ordinary course of business on terms no less favorable to the Partnership than it would otherwise receive in an arm’s length transaction; and (ix) amend in any material manner its certificate of incorporation, bylaws, or other organizational documents without giving prior notice to the lenders and, in some cases, obtaining the consent of the lenders. The agreement also contains customary events of default, including, but not limited to, a cross-default to certain other debt, breaches of representations and warranties, change of control events and breaches of covenants. The obligations under the revolving credit facility agreement are secured by substantially all of the assets of the Partnership and its wholly owned subsidiaries.

In addition, the Partnership is obligated to maintain at the end of each fiscal quarter:

•for as long as at least $150.0 million of the Senior Notes are outstanding (see below), a maximum total leverage ratio of no greater than 5.25 to 1.00 (which increases to no greater than 5.50 to 1.00 during qualifying acquisition periods);

•if less than $150.0 million of the Senior Notes are outstanding (see below), a maximum total leverage ratio of no greater than 4.75 to 1.00 (which increases to no greater than 5.25 to 1.00 during qualifying acquisition periods);

•a maximum secured leverage ratio of no greater than 3.50 to 1.00; and

•a minimum interest coverage ratio of no less than 2.50 to 1.00.

The Partnership was in compliance with all financial covenants at March 31, 2020.

On March 31, 2020, the outstanding balance on the revolving credit facility was $347.0 million at an interest rate of 2.40%. The Partnership had the maximum amount of remaining revolving credit available for borrowing at March 31, 2020, or $253.0 million.

At December 31, 2019, the outstanding balance on the revolving credit facility was $311.8 million at an interest rate of 3.26%.

Senior Notes

In March 2018, the Partnership, together with its wholly owned subsidiary CNX Midstream Finance Corp (“Finance Corp”) and (collectively with the Partnership, the “Issuers”), completed a private offering of the Senior Notes, with related guarantees (the “Guarantees”) and received net proceeds of approximately $394.0 million, after deducting the initial purchasers’ discount. In connection with the issuance of the Senior Notes, the Partnership capitalized related offering expenses, which are recorded in our consolidated balance sheet as a reduction to the principal amount. Net proceeds from the Senior Notes offering were primarily used to fund the Shirley-Penns Acquisition and repay existing indebtedness under our prior $250.0 million unsecured revolving credit facility. The Senior Notes mature on March 15, 2026 and accrue interest at a rate of 6.5% per year, which is payable semi-annually in arrears on March 15 and September 15. There are no principal payment requirements on the Senior Notes prior to maturity.

The Senior Notes and Guarantees were issued pursuant to an indenture (the “Indenture”), dated March 16, 2018, among the Partnership, Finance Corp, the guarantors party thereto (the “Guarantors”) and UMB Bank, N.A., as trustee (the “Trustee”). The Senior Notes rank equally in right of payment with all of the Issuers’ existing and future senior indebtedness and senior to any subordinated indebtedness that the Issuers’ may incur. The Guarantees rank equally in right of payment to all of the Guarantors’ existing and future senior indebtedness.

The Issuers may redeem all or part of the Senior Notes at redemption prices ranging from 104.875% beginning March 15, 2021 to 100.0% beginning March 15, 2024. Prior to March 15, 2021, the Issuers may on one or more occasions redeem up to 35.0% of the principal amount of the Senior Notes with an amount of cash not greater than the amount of the net cash proceeds from one or more equity offerings at a redemption price of 106.50%. At any time or from time to time prior to March 15, 2021, the Issuers may also redeem all or a part of the Senior Notes, at a redemption price equal to 100.0% of the principal amount thereof plus the Applicable Premium, as defined in the Indenture, plus accrued and unpaid interest.

If the Partnership experiences certain kinds of changes of control, holders of the Senior Notes will be entitled to require the Partnership to repurchase all or any part of that holder’s Senior Notes pursuant to an offer on the terms set forth in the Indenture. The Partnership will offer to make a cash payment equal to 101.0% of the aggregate principal amount of the Senior Notes repurchased plus accrued and unpaid interest on the Senior Notes repurchased to, but not including, the date of purchase, subject to the rights of holders of the Senior Notes on the relevant record date to receive interest due on the relevant interest payment date.

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The Partnership’s long-term debt consisted of the following:

(in thousands)	March 31, 2020		December 31, 2019
Senior Notes due March 2026 at 6.5%	$	400,000	$	400,000
Less: Unamortized debt issuance costs	1,164		1,213
Less: Unamortized bond discount	4,437		4,625
Total Senior Notes	$	394,399	$	394,162

NOTE 7 — COMMITMENTS AND CONTINGENCIES

Litigation

The Partnership may become involved in certain legal proceedings from time to time, and where appropriate, we have accrued our estimate of the probable costs for the resolution of these claims. The Partnership believes that the ultimate outcome of any matter currently pending against the Partnership will not materially affect the Partnership’s business, financial condition, results of operations, liquidity or ability to make distributions.

NOTE 8 — SEGMENT INFORMATION

Operating segments are the revenue-producing components of a company for which separate financial information is produced internally and is subject to evaluation by the chief operating decision maker in deciding how to allocate resources. In order to effectively manage the Partnership, we have divided our current midstream assets among two separate categories that we refer to as our “Anchor Systems” and “Additional Systems” based on their relative current cash flows, growth profiles, capital expenditure requirements and the timing of their development. All of the Partnership’s operating revenues, income from operations and assets are generated or located in the United States.

Segment results for the periods presented were as follows:

	Three Months Ended March 31,
(in thousands)	2020		2019
Gathering Revenue:
Anchor Systems	$	76,546	$	70,171
Additional Systems	3,650		2,048
Total Gathering Revenue	$	80,196	$	72,219
Net Income (Loss):
Anchor Systems	$	45,190	$	35,114
Additional Systems	600		(138)
Total Net Income	$	45,790	$	34,976
Depreciation Expense:
Anchor Systems	$	7,073	$	5,236
Additional Systems	505		414
Total Depreciation Expense	$	7,578	$	5,650
Capital Expenditures for Segment Assets:
Anchor Systems	$	31,308	$	75,799
Additional Systems	1,351		2,758
Total Capital Expenditures	$	32,659	$	78,557

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Segment assets as of the dates presented were as follows:

(in thousands)	March 31, 2020		December 31, 2019
Segment Assets
Anchor Systems	$	1,129,043	$	1,123,488
Additional Systems	111,664		111,114
Total Segment Assets	$	1,240,707	$	1,234,602

NOTE 9 — LONG-TERM INCENTIVE PLAN

Under the Partnership’s 2014 Long-Term Incentive Plan (our “LTIP”), our general partner may issue long-term equity-based awards to directors, officers and employees of the general partner or its affiliates, or to any consultants, affiliates of our general partner or other individuals who perform services on behalf of the Partnership. The Partnership is responsible for the cost of awards granted under the LTIP, which limits the number of units that may be delivered pursuant to vested awards to 5.8 million common units, subject to proportionate adjustment in the event of unit splits and similar events. Common units subject to awards that are canceled, forfeited, withheld to satisfy tax withholding obligations or otherwise terminated without delivery of the common units will be available for delivery pursuant to other awards.

The following table presents phantom unit activity during the three months ended March 31, 2020:

	Number of Units	Weighted Average Grant Date Fair Value
Total awarded and unvested at December 31, 2019	174,465	$	16.83
Granted	133,852	15.98
Vested	(83,188)	17.32
Forfeited	(9,767)	16.38
Total awarded and unvested at March 31, 2020	215,362	$	16.13

The Partnership accounts for phantom units as equity awards and records compensation expense on a straight-line basis over the vesting period based on the fair value of the awards on their grant dates. Awards granted to independent directors vest over a period of one year, and awards granted to certain officers and employees of the general partner vest 33% per year over a period of three years.

The Partnership recognized $0.5 million and $0.6 million of compensation expense related to phantom units for the three months ended March 31, 2020 and 2019, which was included in general and administrative expense–related party in the consolidated statements of operations.

At March 31, 2020, the unrecognized compensation related to all outstanding awards was approximately $3.0 million, which we expect to recognize through 2022.

NOTE 10 — SUBSEQUENT EVENTS

On April 24, 2020, the Board of Directors of the Partnership’s general partner declared a cash distribution to the Partnership’s unitholders with respect to the first quarter of 2020 of $0.0829 per common unit. The cash distribution will be paid on May 15, 2020 to unitholders of record at the close of business on May 7, 2020.

In March of 2020, the Partnership was notified of temporary production curtailments by one of its third-party customers that will reduce the Partnership’s future wet gas gathering revenues, of which the length and severity is still unknown. There was minimal impact on the current quarter. As of April 27, 2020, we have not received any other notifications from our customers.

COVID-19 Update

CNXM is closely monitoring the impact of the COVID-19 pandemic on all aspects of our business and geographies, including how it may impact our customers, the employees provided by our Sponsor, our vendors and contractors. While we did not incur significant disruptions during the three months ended March 31, 2020 from COVID-19, we are unable to predict the impact that the COVID-19 pandemic will have on us, including our financial position, operating results, ability to obtain future financing, the impact to our customers and demand for our services due to numerous uncertainties.

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The federal Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020. The Partnership continues to assess the potential impacts of this recently enacted legislation on its financial position and results of operations.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion of the financial condition and results of operations of CNX Midstream Partners LP in conjunction with the historical and unaudited interim consolidated financial statements and notes to the consolidated financial statements. Among other things, those historical unaudited interim consolidated financial statements include more detailed information regarding the basis of presentation for the following information. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified under “forward-looking statements” below and those discussed in the section entitled “Risk Factors” in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2019, which we filed with the SEC on February 10, 2020, as updated in this Quarterly Report on Form 10-Q. In this Item 2, all references to “we,” us,” “our,” the “Partnership,” “CNXM,” or similar terms refer to CNX Midstream Partners LP and its subsidiaries.

Executive Overview

We are a growth-oriented master limited partnership focused on the ownership, operation, development and acquisition of midstream energy infrastructure in the Appalachian Basin. We currently provide midstream services to our customers’ production in the Marcellus Shale and Utica Shale in Pennsylvania and West Virginia under long-term, fixed-fee contracts. Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. We are managed by our general partner, CNX Midstream GP LLC (our “general partner”), which is a wholly-owned subsidiary of CNX Gathering LLC (“CNX Gathering”). CNX Gathering is a wholly owned subsidiary of CNX Gas Company LLC (“CNX Gas”), which is a wholly-owned subsidiary of our Sponsor, CNX Resources Corporation (NYSE: CNX) (“CNX Resources”).

In the current environment, the Partnership has been re-evaluating its current capital allocation opportunities and will remain flexible based on market conditions and availability of opportunities. We remain committed to growing value for our investors over the long term by allocating capital investment to high rate of return midstream projects, delivering cash distributions to our investors over the long term while remaining flexible based on market conditions and availability of opportunities.

The markets for crude oil, natural gas and NGLs remain volatile, and prices may continue to fluctuate in response to, among other things: Geopolitical factors, such as events that may reduce or increase production from particular oil-producing regions and/or from members of the Organization of Petroleum Exporting Countries ("OPEC"), and global events, such as the ongoing coronavirus COVID-19 (“COVID-19”) outbreak. Since the beginning of 2020, NYMEX oil prices have moved downward due in part to concerns about COVID-19 and its impact on near-term worldwide oil demand and due to the increase in oil production by certain members of OPEC. This oversupply of oil has caused historically low oil prices, which has compounded the impact of the domestic oversupply of NGLs as well as current export constraints and has driven NGL prices to historic lows. While OPEC agreed in April to cut production, downward pressure on prices has continued and could continue for the foreseeable future, particularly given concerns over available storage capacity for refined products such as crude, and refinery inputs including condensate, c5+ and butane.

Continued strength in natural gas production, along with reduced heating demand for natural gas as a result of relatively mild winter temperatures throughout most of the United States, accounted for relatively higher inventory levels. Despite an April 12 agreement by the OPEC and its allies to reduce global production by approximately 10%, the economic slowdown and stay-at-home orders has continued to decrease demand for natural gas. The U.S. Energy Information Administration’s (“EIA”) Short-Term Energy Outlook for April 2020 forecasts are subject to heightened uncertainty because of the economic slowdown and significant changes in energy markets recently.

In March of 2020, the Partnership was notified of temporary production curtailments by one of its third-party customers that will reduce the Partnership’s future wet gas gathering revenues, of which the length and severity is still unknown. There was minimal impact on the current quarter. As of April 27, 2020, we have not received any other notifications from our customers, however our Sponsor is still determining the impact to their wet gas production and the potential for future curtailments.

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COVID-19 Update

While CNXM did not incur significant disruptions to our operations during the three months ended March 31, 2020 as a result of the COVID-19 pandemic, CNXM is unable to predict the impact that the COVID-19 pandemic will have on us, including our financial position, operating results, liquidity and ability to obtain financing in future reporting periods, due to numerous uncertainties. These uncertainties include the severity of the virus, the duration of the outbreak, governmental or other actions taken to combat the virus (which could include limitations on our operations or the operations of our customers and vendors), and the effect that the COVID-19 pandemic and the current oil price wars have on the demand for natural gas and natural gas liquids. The health of our Sponsor’s employees, contractors and vendors, and our ability to meet staffing needs in our operations and certain critical functions cannot be predicted and is vital to our operations. Further, the impacts of a potential worsening of global economic conditions and the continued disruptions to, and volatility in, the credit and financial markets as well as other unanticipated consequences remain unknown. In addition, CNXM cannot predict the impact that COVID-19 will have on our customers, vendors and contractors; however, any material effect on these parties could adversely impact CNXM. For instance, in the short term, CNXM is starting to see a reduction in overall service and materials costs, due to oversupply of those services and costs, since industrial production has waned. However, if service providers to our industry are forced into bankruptcy or otherwise consolidate due to weakening economic conditions, demand could outpace supply in the long-term and cause these costs to increase. The situation surrounding COVID-19 remains fluid, and CNXM is actively managing our response in collaboration with our contractors, customers, Sponsors employees and vendors and assessing potential impacts to our financial position and operating results, as well as any adverse developments that could impact our business.

CNXM has also taken, and is continuing to take, proactive steps to manage any disruption in our business caused by COVID-19. For instance, even though our operations were not required to close, CNXM and our sponsor were early adopters in employing a work-from-home system, even before any government mandate on non-essential businesses was enacted. CNXM increased its technology platform, infrastructure and security to allow for a work-from-home environment ahead of the actual need, and therefore, once the hypothetical became a reality, we believe CNXM was ahead of many companies in this respect. CNXM has also deployed additional safety protocols at our field sites in order to keep our Sponsors employees and contractors safe and to keep our operations running without material disruption.

For further information regarding the impact of COVID-19 see Risk factors in Item 1A of this Form 10-Q.

First Quarter Financial Highlights

The Partnership continued its solid financial performance during the three months ended March 31, 2020 with Distributable Cash Flow exceeding expansion capital by $21.2 million. 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 March 31,
(in millions)	2020		2019
Net income	$	45.2	$	35.1
Net cash provided by operating activities	$	40.1	$	49.9
Adjusted EBITDA (non-GAAP)	$	60.4	$	54.4
Distributable cash flow (non-GAAP)	$	46.9	$	43.0
Expansion Capital	$	25.7	$	71.1

For a discussion of why the above non-GAAP metrics are viewed as important by management, and how the non-GAAP financial measures reconcile to their nearest comparable financial measures prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), see “Non-GAAP Financial Measures” below for additional information.

Quarterly Cash Distribution

On April 24, 2020, the Board of Directors of the Partnership’s general partner declared a cash distribution to the Partnership’s unitholders with respect to the first quarter of 2020 of $0.0829 per common unit. The cash distribution will be paid on May 15, 2020 to unitholders of record at the close of business on May 7, 2020.

Factors Affecting the Comparability of Our Financial Results

The Partnership continues to monitor a number of factors that may cause actual results of operations and financial results to differ from our historical results or current expectations. These factors include: the impact of the COVID-19 pandemic and the related economic downturn, the historically low natural gas and natural gas liquid prices and ramifications of the crude oil price war between OPEC/Saudi Arabia and Russia that occurred in March which has also led to concerns over available storage capacity for refined products such as crude, and refinery inputs including condensate, c5+ and butane. These and other factors could affect the Partnership’s operations, earnings and cash flow for any period and could cause such results to not be

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comparable to those of the same period in previous years. The results presented in this Form 10-Q are not necessarily indicative of future operating results.

Results of Operations

Three Months Ended March 31, 2020 Compared to the Three Months Ended March 31, 2019

	Three Months Ended March 31,
	2020		2019		Change ($)		Change (%)
(in thousands)
Revenue
Gathering revenue — related party	$	62,178	$	53,776	$	8,402	15.6	%
Gathering revenue — third party	17,953		18,443		(490)		(2.7)	%
Miscellaneous income	65		—		65		—	%
Total Revenue	80,196		72,219		7,977		11.0	%
Expenses
Operating expense — related party	3,828		5,548		(1,720)		(31.0)	%
Operating expense — third party	8,596		5,974		2,622		43.9	%
General and administrative expense — related party	2,857		3,967		(1,110)		(28.0)	%
General and administrative expense — third party	2,765		1,536		1,229		80.0	%
(Gain) loss on asset sales and abandonments	(11)		7,229		(7,240)		(100.2)	%
Depreciation expense	7,578		5,650		1,928		34.1	%
Interest expense	8,793		7,339		1,454		19.8	%
Total Expense	34,406		37,243		(2,837)		(7.6)	%
Net Income	$	45,790	$	34,976	$	10,814	30.9	%
Less: Net income (loss) attributable to noncontrolling interest	571		(131)		702		(535.9)	%
Net Income Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP	$	45,219	$	35,107	$	10,112	28.8	%

Operating Statistics - Gathered Volumes for the Three Months Ended March 31, 2020

	Anchor	Additional	TOTAL
Dry Gas (BBtu/d) 1	1,037	65	1,102
Wet Gas (BBtu/d) 1	548	49	597
Other (BBtu/d) 2	299	—	299
Total Gathered Volumes	1,884	114	1,998

Operating Statistics - Gathered Volumes for the Three Months Ended March 31, 2019

	Anchor	Additional	TOTAL
Dry Gas (BBtu/d) 1	828	3	831
Wet Gas (BBtu/d) 1	629	71	700
Other (BBtu/d) 2	134	—	134
Total Gathered Volumes	1,591	74	1,665

¹ (One billion British Thermal Units per day - BBtu/d) Classification as dry or wet is primarily based upon system area. In certain situations, we may elect to allow customers to access alternate delivery points within our system, which would be a negotiated change addressed on a case-by-case basis.

² Includes third-party volumes we gather under high-pressure short-haul agreements (294 BBtu/d and 126 BBtu/d for the three months ended March 31, 2020 and 2019, respectively) as well as condensate handling.

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Revenue    

Our revenue typically increases or decreases as our customers’ production on our dedicated acreage increases or decreases. Since we charge a higher fee for natural gas that is shipped through our wet system than through our dry system, our revenue can also be impacted by the relative mix of gathered volumes by area, which may vary dependent upon our customers’ elections as to where to deliver their produced volumes, which may change dynamically depending on the most current commodity prices at the time of shipment.

Total revenue increased 11.0% to approximately $80.2 million for the three months ended March 31, 2020 compared to approximately $72.2 million for the three months ended March 31, 2019 primarily due to an 11.0% increase in gathered volumes of dry gas and wet gas. Significantly contributing to the volume increase was a 32.6% increase in gathered volumes of dry gas in the current quarter compared to the prior year quarter. The increase was the result of continued significant well turn-in-line activity that occurred after March 31, 2019 and continued into the first quarter of 2020.

In addition, there was an increase of 165.0 BBtu/d in other volumes compared with the prior year quarter, due primarily to activity under short-haul gathering contracts. Volumes gathered under short-haul gathering contracts do not have as significant an impact on revenues as volumes gathered at our standard dry or wet gas rates.

Operating Expense    

Operating expense primarily includes electrically-powered compression, direct labor, repairs and maintenance and compression expenses. Total operating expenses were approximately $12.4 million in the three months ended March 31, 2020 compared to approximately $11.5 million in the three months ended March 31, 2019. Included in total operating expense was electrically-powered compression expense of $3.7 million for the three months ended March 31, 2020 compared to $3.3 million for the three months ended March 31, 2019, which was reimbursed by our customers pursuant to our GGAs. Although dry gas and wet gas volumes gathered increased 11.0%, operating expenses only increased 6.1% after adjusting for the electrically-powered compression expense reimbursement in the current quarter compared to the prior year quarter. This was primarily due to continued adherence to cost control initiatives implemented by our operations team over the past few years.

General and Administrative Expense    

General and administrative expense primarily includes direct charges for the management and operation of our assets. Total general and administrative expense was approximately $5.6 million for the three months ended March 31, 2020 compared to approximately $5.5 million for the three months ended March 31, 2019. For the three months ended March 31, 2020, the Partnership incurred transaction costs associated with the IDR Elimination Transaction during the current quarter (see Note 1-Description of Business, in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q). The increase was offset, in part by a decrease in personnel related costs as part of continuing cost reductions.

(Gain) Loss on Asset Sales and Abandonments

During the three months ended March 31, 2019, due in part to changes in customer drilling plan timing and ongoing assessments of projects that generate the highest returns on invested capital, the Partnership abandoned the construction of a compressor station that was designed to support additional production within certain areas of the Anchor Systems. After evaluating the amount of project spending that could be repurposed to other ongoing projects, management determined that the loss on abandoning the project was $7.2 million. No such transactions occurred in the three months ended March 31, 2020.

Depreciation Expense    

Depreciation expense is recognized on gathering and other equipment on a straight-line basis, with useful lives ranging from 25 years to 40 years. Total depreciation expense was approximately $7.6 million in the three months ended March 31, 2020 compared to approximately $5.7 million in the three months ended March 31, 2019. The increase was the result of additional assets placed into service over time.

Interest Expense 

Interest expense is comprised of interest on our 6.5% Senior Notes due 2026 (the “Senior Notes”) as well as on the outstanding balance of our revolving credit facility. Interest expense was approximately $8.8 million for the three months ended March 31, 2020 compared to approximately $7.3 million for the three months ended March 31, 2019. The increase in interest expense was primarily due to an increase in borrowings on our revolving credit facility which was related to our long-term capital program that was completed in 2019. The increase was also related to a reduction in the amount of interest that was capitalized in the first quarter of 2020 and was partially offset by lower interest rates on our revolving credit facility.

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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 in this Quarterly Report on Form 10-Q 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 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. EBITDA and Adjusted EBITDA exclude some, but not all, items that affect Net Income or Net Cash Provided by Operating Activities, 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 Quarterly Report on Form 10-Q 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 Provided by Operating Activities, 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.

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The following table presents a reconciliation of the non-GAAP measures of EBITDA, 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   March 31,
(in thousands)	2020		2019
Net Income	$	45,790	$	34,976
Depreciation expense	7,578		5,650
Interest expense	8,793		7,339
EBITDA	62,161		47,965
Non-cash unit-based compensation expense	504		612
(Gain) loss on asset sales and abandonments	(11)		7,229
Adjusted EBITDA	62,654		55,806
Less:
Net income (loss) attributable to noncontrolling interest	571		(131)
Depreciation expense attributable to noncontrolling interest	480		394
Other expenses attributable to noncontrolling interest	1,173		1,120
Adjusted EBITDA Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP	$	60,430	$	54,423
Less: cash interest expense, net to the Partnership	7,905		6,604
Less: maintenance capital expenditures, net to the Partnership	5,673		4,835
Distributable Cash Flow	$	46,852	$	42,984
Net Cash Provided by Operating Activities	$	40,123	$	49,913
Interest expense	8,793		7,339
(Gain) loss on asset sales and abandonments	(11)		7,229
Other, including changes in working capital	13,749		(8,675)
Adjusted EBITDA	62,654		55,806
Less:
Net income (loss) attributable to noncontrolling interest	571		(131)
Depreciation expense attributable to noncontrolling interest	480		394
Other expenses attributable to noncontrolling interest	1,173		1,120
Adjusted EBITDA Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP	$	60,430	$	54,423
Less: cash interest expense, net to the Partnership	7,905		6,604
Less: maintenance capital expenditures, net to the Partnership	5,673		4,835
Distributable Cash Flow	$	46,852	$	42,984

Distributable Cash Flow is a non-GAAP measure that is net to the Partnership. The $3.9 million increase in Distributable Cash Flow in the three months ended March 31, 2020 compared to the 2019 period was primarily attributable to an increase in volumes gathered under our fixed-fee gathering agreement with our Sponsor due to significant well turn-in-line activity over the last 12 months, coupled with continued adherence to cost control measures implemented by our operations team over the past few years.

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Liquidity and Capital Resources

Liquidity and Financing Arrangements

We have historically satisfied our working capital requirements, funded capital expenditures, acquisitions and debt service obligations, and made cash distributions with cash generated from operations, borrowings under our revolving credit facility and issuance of debt and equity securities. If necessary, we may issue additional equity or debt securities to satisfy the expenditure requirements necessary to fund future growth. We believe that cash generated from these sources will continue to be sufficient to meet these needs in the future. Nevertheless, the ability of the Partnership to satisfy its working capital requirements, to service its debt obligations, to fund planned capital expenditures, or to pay dividends will depend upon future operating performance, which will be affected by prevailing economic conditions in the natural gas industry and other financial and business factors, including the current COVID 19 pandemic, some of which are beyond our control.

We continuously review our liquidity and capital resources. If market conditions were to change, for instance due to the significant decline in natural gas, NGLs and/or crude oil prices or uncertainty created by the COVID-19 pandemic, and our revenue was reduced significantly or operating costs were to increase significantly, our cash flows and liquidity could be reduced.

As of March 31, 2020, we were in compliance with all our debt covenants. After considering the current and potential effect of the significant decline in natural gas, NGLs and/or crude oil prices and uncertainty created by the COVID-19 pandemic on our operations, the Partnership currently expects to remain in compliance with its debt covenants.

Cash Flows

Net cash provided by or used in operating activities, investing activities and financing activities were as follows for the periods presented:

	Three Months Ended March 31,
(in millions)	2020		2019		Change
Net Cash Provided by Operating Activities	$	40.1	$	49.9	$	(9.8)
Net Cash Used in Investing Activities	$	(32.7)	$	(78.6)	$	45.9
Net Cash (Used in) Provided by Financing Activities	$	(2.3)	$	24.7	$	(27.0)

Net Cash Provided by Operating Activities decreased approximately $9.8 million for the three months ended March 31, 2020 compared to the three months ended March 31, 2019. The Partnership’s consolidated Adjusted EBITDA increased by $6.8 million in the current year period compared to the prior year period. The remainder of the change was primarily due to a reduction in accounts payable resulting from lower capital spend.

Net Cash Used in Investing Activities decreased $45.9 million in the current quarter compared to the prior year quarter due primarily to the long-term capital program being completed during 2019 and the go-forward capital intensity of the Partnership being lower.

Net Cash (Used in) Provided by Financing Activities in the current year period decreased compared to the prior year period due to a reduction in borrowings required to support lower levels of capital spending (investing activities). Also contributing to the decrease was the 15% growth in our distribution payments, which were $37.2 million in the current year compared to $27.3 million in the prior year.

Indebtedness

Revolving Credit Facility

We are party to a $600.0 million secured revolving credit facility, as amended in April 2019 (our “revolving credit facility”), that matures on April 24, 2024 and includes the ability to issue letters of credit up to $100.0 million in the aggregate. The revolving credit facility has an accordion feature that allows, subject to certain terms and conditions, the Partnership to increase the available borrowings under the revolving credit facility by up to an additional $250.0 million. The available borrowing capacity under the revolving credit facility is limited by certain financial covenants pertaining to leverage and interest coverage ratios as defined in the revolving credit facility agreement.

Borrowings under the amended revolving credit facility bear interest at our option at either:

•the base rate, which is the highest of (i) the federal funds open rate plus 0.50%, (ii) PNC Bank, N.A.’s prime rate, or (iii) the one-month LIBOR rate plus 1.00%, in each case, plus a margin ranging from 0.50% to 1.50%; or

•the LIBOR rate plus a margin ranging from 1.50% to 2.50%.

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We incurred interest expense of $2.5 million on our revolving credit facility (not including amortization of revolver fees) during the three months ended March 31, 2020. At March 31, 2020, the outstanding balance on our revolving credit facility was $347.0 million, and we had the maximum remaining amount of revolving credit, or $253.0 million, available for borrowing.

For additional information on our revolving credit facility, including details relating to the amendment that was completed in April 2019, see Note 6–Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q.

Senior Notes due 2026

On March 16, 2018, the Partnership completed a private offering of $400.0 million in 6.5% senior notes due 2026 (the “Senior Notes”), and received net proceeds of approximately $394.0 million, after deducting the initial purchasers’ discount. In connection with the issuance of the Senior Notes, the Partnership capitalized related offering expenses, which are recorded in our consolidated balance sheet as a reduction to the principal amount. Net proceeds from the Senior Notes offering were primarily used to fund the Shirley-Penns Acquisition and repay existing indebtedness under our revolving credit facility.

The Senior Notes mature on March 15, 2026 and accrue interest at a rate of 6.5% per year, which is payable semi-annually, in arrears, on March 15 and September 15. We incurred interest expense of $6.5 million (not including amortization of capitalized bond issue costs) on the Senior Notes during the three months ended March 31, 2020.

For additional information regarding our Senior Notes, see Note 6–Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q.

Capital Expenditures

The midstream energy business is capital intensive and requires maintenance of existing gathering systems and other midstream assets and facilities, as well as the acquisition or construction and development of new gathering systems and other midstream assets and facilities. Our partnership agreement requires that we categorize our capital expenditures as either:

•Maintenance capital expenditures, which are cash expenditures (including expenditures for the construction or development of new capital assets or the replacement, improvement or expansion of existing capital assets) made to maintain, over the long-term, our operating capacity, operating income or revenue. Examples of maintenance capital expenditures are expenditures to repair, refurbish and replace pipelines, to maintain equipment reliability, integrity and safety and to comply with environmental laws and regulations. In addition, we designate a portion of our capital expenditures to connect new wells to maintain gathering throughput as maintenance capital to the extent such capital expenditures are necessary to maintain, over the long-term, our operating capacity, operating income or revenue; or

•Expansion capital expenditures, which are cash expenditures to construct new midstream infrastructure and those expenditures incurred in order to extend the useful lives of our assets, reduce costs, increase revenues or increase system throughput or capacity from current levels, including well connections that increase existing system throughput. Examples of expansion capital expenditures include the construction, development or acquisition of additional gathering pipelines and compressor stations, in each case to the extent such capital expenditures are expected to expand our operating capacity, operating income or revenue. In the future, if we make acquisitions that increase system throughput or capacity, the associated capital expenditures may also be considered expansion capital expenditures.

Capital Expenditures for the Three Months Ended March 31, 2020

	Anchor		Additional		Total
Capital Investment
Maintenance capital	$	5,655	$	346	$	6,001
Expansion capital	25,653		1,005		26,658
Total Capital Investment	$	31,308	$	1,351	$	32,659
Capital Investment Net to the Partnership
Maintenance capital	$	5,655	$	18	$	5,673
Expansion capital	25,653		50		25,703
Total Capital Investment Net to the Partnership	$	31,308	$	68	$	31,376

We anticipate that we will continue to make expansion capital expenditures in the future. Consequently, our ability to develop and maintain sources of funds to meet our capital requirements is critical to our ability to meet our growth objectives.

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We expect that any significant future expansion capital expenditures will be funded by borrowings under our revolving credit facility and/or the issuance of debt and equity securities.

Cash Distribution

The amount of distributions paid under the Partnership’s cash distribution policy and the decision to make any distribution will be determined by our general partner, taking into consideration the terms of the partnership agreement. Under that agreement, the Partnership makes quarterly distributions on its common units to the extent the Partnership has available cash after the establishment of cash reserves. However, we do not have a legal or contractual obligation to pay distributions quarterly or on any other basis at any rate.

On April 24, 2020, the board of directors of our general partner declared a cash distribution to our unitholders of $0.0829 per common unit with respect to three months ended March 31, 2020. The cash distribution will be paid on May 15, 2020 to unitholders of record as of the close of business on May 7, 2020.

For additional information on our cash distribution policy, see Note 3–Cash Distributions in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q.

Insurance Program

We share an insurance program with our Sponsor, and we reimburse our Sponsor for the costs of the insurance program, which includes insurance policies with insurers in amounts and with coverage and deductibles that we believe are reasonable and prudent. We cannot, however, assure that this insurance will be adequate to protect us from all material expenses related to potential future claims for personal and property damage or that these levels of insurance will be available in the future at economical prices.

Off-Balance Sheet Arrangements

We do not maintain any off-balance sheet transactions, arrangements, obligations or other relationships with unconsolidated entities or others that are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources which are not disclosed in the notes to the unaudited consolidated financial statements of this Quarterly Report on Form 10-Q.

Contractual Obligations

For a discussion of amounts outstanding under our Revolving Credit Facility and Senior Notes, see Note 6–Long-Term Debt, in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q.

Critical Accounting Policies

For a description of the Partnership’s accounting policies and any new accounting policies or updates to existing accounting policies as a result of new accounting pronouncements, see Note 2–Significant Accounting Policies, in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q. The application of the Partnership’s accounting policies may require management to make judgments and estimates about the amounts reflected in the Consolidated Financial Statements. If applicable, management uses historical experience and all available information to make these estimates and judgments. Different amounts could be reported using different assumptions and estimates.

As of March 31, 2020, the Partnership did not have any accounting policies that we deemed to be critical or that would require significant judgment.

Forward-Looking Statements

This report contains forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “will” 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. Our forward-looking statements include statements about our business strategy, our industry, our future profitability, our expected capital expenditures and the impact of such expenditures on our performance, the costs of being a publicly traded partnership and our capital programs.

A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. We believe that we have chosen these assumptions or bases in good faith and that they are reasonable. You are cautioned not to place undue reliance on any forward-looking statements, as these statements involve risks, uncertainties and other factors that could cause our actual future outcomes to differ materially from those set forth in such statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the following list to be a

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complete statement of all potential risks and uncertainties. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include:

•our ability to grow, or maintain, our current rate of cash distributions;

•our reliance on our customers, including our Sponsor, CNX Resources Corporation;

•the effects of changes in market prices of natural gas, NGLs and crude oil on our customers’ drilling and development plans on our dedicated acreage and the volumes of natural gas and condensate that are produced on our dedicated acreage;

•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;

•changes in our customers’ drilling and development plans in the Marcellus Shale and Utica Shale, and our customers’ ability to meet such plans;

•our ability to maintain or increase volumes of natural gas and condensate on our midstream systems;

•the demand for natural gas and condensate gathering services, changes in general economic condition, and competitive conditions in our industry, including competition from the same and alternative energy sources;

•actions taken by third-party operators, gatherers, processors and transporters;

•our ability to successfully implement our business plan;

•our ability to complete internal growth projects on time and on budget;

•our ability to generate adequate returns on capital;

•the price and availability of debt and equity financing;

•the availability and price of oil, NGLs and natural gas to the consumer compared to the price of alternative and competing fuels;

•the availability of storage capacity for refined products such as crude, and refinery inputs including condensate, c5+ and butane;

•prolonged customer curtailments;

•energy efficiency and technology trends;

•operating hazards and other risks incidental to our midstream services;

•natural disasters, weather-related delays, casualty losses and other matters beyond our control;

•the impact of outbreaks of communicable diseases such as the novel highly transmissible and pathogenic coronavirus (“COVID-19”) on business activity, the Partnership’s operations and national and global economic conditions, generally;

•interest rates;

•labor relations;

•defaults by our customers under our gathering agreements;

•changes in availability and cost of capital;

•changes in our tax status;

•the effect of existing and future laws and government regulations;

•the effects of future litigation; and

•certain factors discussed elsewhere in this report.

You should not place undue reliance on our forward-looking statements. Although forward-looking statements reflect our good faith beliefs at the time they are made, forward-looking statements involve known and unknown risks, uncertainties and other factors, including the factors described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, as supplemented by our Quarterly Reports on Form 10-Q (including those set forth in Part II, Item IA below), which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity Price Risk

We generate substantially all of our revenues pursuant to fee-based gathering agreements under which we are paid based on the volumes of natural gas and condensate that we gather and compress, rather than the underlying value of the commodity. Consequently, our existing operations and cash flows do not have significant direct exposure to commodity price risk. However, we are indirectly exposed to commodity price risks through our customers, who may reduce or shut-in production during periods of depressed commodity prices or as a result of an economic downturn resulting from the COVID-19 pandemic, or other health crisis. We have been able to mitigate this exposure to a limited extent through the use of minimum volume

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commitments and minimum well commitments in our gas gathering agreements with our customers. Although we intend to enter into similar fee-based gathering agreements with new customers in the future, our efforts to negotiate terms with third parties may not be successful.

In the future, we may acquire or develop additional midstream assets in a manner that increases our exposure to commodity price risk. Such exposure to the volatility of natural gas, NGLs and crude oil prices could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to make cash distributions to our unitholders.

Interest Rate Risk

We maintain a $600.0 million secured revolving credit facility and pay interest at a variable rate. Assuming the March 31, 2020 outstanding balance on our revolving credit facility of $347.0 million was outstanding for the entire year, an increase of one percentage point in the interest rates would have resulted in an increase to interest expense of $3.5 million. Accordingly, our results of operations, cash flows and financial condition, all of which affect our ability to make cash distributions to our unitholders, could be materially and adversely affected by significant increases in interest rates.

Credit Risk

We are subject to credit risk due to the concentration of receivables from our most significant customer, our Sponsor, for gas gathering services. We generally do not require our customers to post collateral. We maintain credit policies intended to minimize overall credit risk and actively monitor these policies to reflect changes and scope of operations. The inability or failure of our significant customers to meet their obligations to us, or their insolvency or liquidation, may adversely affect our financial results.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of management of our general partner, including the principal executive officer and principal financial officer, we evaluated the effectiveness of the Partnership’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, management, including the principal executive officer and principal financial officer of our general partner, have concluded that the Partnership’s disclosure controls and procedures are effective as of March 31, 2020 to ensure that information required to be disclosed by the Partnership in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission (“SEC”) rules and forms, and includes controls and procedures designed to ensure that information required to be disclosed by the Partnership in such reports is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in the Partnership's internal controls over financial reporting that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

PART II: OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

Refer to Note 7–Commitments and Contingencies in the Notes to the Unaudited Consolidated Financial Statements included in Item 1 of this Form 10-Q is incorporated herein by reference.

ITEM 1A. RISK FACTORS

The Partnership is subject to certain risks and hazards due to the nature of the business activities it conducts. For a discussion of these risks, see “Item 1A. Risk Factors” in the Partnership’s 2019 Annual Report on Form 10-K as filed with the SEC on February 10, 2020 ("2019 Form 10-K"). The risks described in the 2019 Form 10-K could materially and adversely affect the Partnership's business, financial condition, cash flows, and results of operations. Other than as set forth below, there have been no additional material changes to the risks described in the 2019 Form 10-K. The Partnership may experience additional risks and uncertainties not currently known; or, as a result of developments occurring in the future, conditions that are currently deemed to be immaterial may also materially and adversely affect the Partnership's business, financial condition, cash flows, and results of operations.

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Events beyond our control, including a global or domestic health crisis, may result in unexpected adverse operating and financial results.

The recent outbreak of the coronavirus pandemic (COVID-19) has affected, and may materially and adversely affect, our business, operating and financial results and liquidity. The severity, magnitude and duration of the current COVID-19 outbreak is uncertain, rapidly changing and hard to predict. While the full impact of this virus and the long-term worldwide reaction to it and impact from it remains unknown at this time, government reaction to the pandemic and restrictions and limitations applied by the government as a result, continued widespread growth in infections, travel restrictions, quarantines, or site closures as a result of the virus could, among other things, impact the ability of our Sponsor’s employees and our contractors to perform their duties, cause increased technology and security risk due to extended and company-wide telecommuting, lead to disruptions in our supply chain (including necessary vendors or service providers), lead to a disruption in our infrastructure acquisition or permitting activities and cause disruption in our relationship with our customers. Additionally, the COVID-19 outbreak has significantly impacted economic activity and markets around the world, and COVID-19 or another similar outbreak could negatively impact our business in numerous ways, including, but not limited to, the following:

•our revenue may be reduced if the outbreak results in an economic downturn or recession, as many experts predict, to the extent it leads to a prolonged decrease in the demand for natural gas, to a lesser extent, NGLs and/or crude oil;

•our operations may be disrupted or impaired if a significant portion of our Sponsor’s employees or our contractors are unable to work due to illness or if our operations are suspended or temporarily shut-down or restricted due to control measures designed to contain the outbreak;

•the operations of our upstream counterparties may be curtailed by many of the same challenges we face and, as such, may not be able to meet their minimum volume delivery obligations under their agreements with us and further, because of these challenges, have difficulties paying applicable shortfall or deficiency fees; and

•the disruption and instability in the financial markets and the uncertainty in the general business environment may affect opportunities to enhance our liquidity position and long-term financial flexibility.

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks set forth in Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, such as those relating to our financial performance and debt obligations. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on our business, which will depend on numerous evolving factors and future developments that we are not able to predict, including the length of time that the pandemic continues, its effect on the demand for natural gas, NGLs and/or crude oil, the response of the overall economy and the financial markets as well as the effect of governmental actions taken in response to the pandemic.

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ITEM 6.EXHIBITS

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	SEC File Number	Exhibit	Filing Date
10.1†	CNX Midstream Partners LP 2014 Long-Term Incentive Plan
31.1†	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
31.2†	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
32.1‡	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350
32.2‡	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350
101.INS	XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH†	XBRL Taxonomy Extension Schema Document.
101.CAL†	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF†	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB†	XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE†	XBRL Taxonomy Extension Presentation Linkbase Document.

^† Filed herewith.

^‡ Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q to be signed on April 27, 2020 on its behalf by the undersigned thereunto duly authorized.

CNX MIDSTREAM PARTNERS LP
By:	CNX MIDSTREAM GP, LLC, its general partner
By:	/S/ NICHOLAS J. DEIULIIS
	Nicholas J. DeIuliis
	Chief Executive Officer and Chairman of the Board (Duly Authorized Officer and Principal Executive Officer)
By:	/S/ DONALD W. RUSH
	Donald W. Rush
	Chief Financial Officer and Director (Duly Authorized Officer and Principal Financial Officer)
By:	/S/ JASON L. MUMFORD
	Jason L. Mumford
	Chief Accounting Officer (Duly Authorized Officer and Principal Accounting Officer)

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EX-10.1

CNX MIDSTREAM PARTNERS LP

2014 LONG-TERM INCENTIVE PLAN

PHANTOM UNIT AWARD AGREEMENT

This Phantom Unit Award Agreement set forth below (this “Agreement”) is dated as of the grant date (the “Grant Date”) set forth on Exhibit A and is between CNX Midstream Partners LP (formerly known as CONE Midstream Partners LP), a Delaware limited partnership (the “Partnership”), CNX Midstream GP LLC (formerly known as CONE Midstream GP LLC), a Delaware limited liability company (the “Company”), and the individual to whom the Board has made this Award and whose name is set forth on Exhibit A (the “Participant”).

The Company has established the CONE Midstream Partners LP 2014 Long-Term Incentive Plan (the “Plan”), to promote the interests of the Partnership and the Company by providing incentive compensation awards denominated in or based on Units to certain eligible persons to encourage superior performance, and enhance the ability of the of the Partnership, the Company and their Affiliates to attract and retain the services of individuals who are essential for the growth and profitability of the Partnership, the Company and their Affiliates and encourage them to devote their best efforts to advancing the business of the Partnership, the Company and their Affiliates. Unless the context otherwise requires, all capitalized terms not otherwise defined in this Agreement have the same meaning given such capitalized terms in the Plan.

Pursuant to the provisions of the Plan, the Board has full power and authority to direct the execution and delivery of this Agreement in the name and on behalf of the Company, and has authorized the execution and delivery of this Agreement.

1.Phantom Unit Award. Subject to and pursuant to all terms and conditions stated in this Agreement and in the Plan, as of the Grant Date, the Company hereby grants an Award to the Participant in the form of the number of Phantom Units set forth on Exhibit A (the “Phantom Units”). Each Phantom Unit awarded under this Agreement shall represent a contingent right to receive one Unit following the vesting date of such Phantom Unit as described on Exhibit A (each such vesting date, a “Vesting Date”). Notwithstanding, Phantom Units as initially awarded have no independent economic value, but rather are mere units of measurement used for purposes of calculating the value of any benefits to be paid under this Agreement.

2.Issuance and Distribution.

2.1Subject to the terms and conditions of this Agreement, and except as otherwise provided in Section 2.2 or Section 4, Phantom Units will be settled and paid in Units issued to the Participant (to the extent not previously settled) on the applicable Vesting Date, or if the applicable Vesting Date is not a business day, on the immediately following business day, or as soon as reasonably practicable but in no event later than 60 days following such date, subject to the Participant’s satisfaction of all applicable income and employment withholding taxes.

2.2Notwithstanding any other provision of this Agreement, in the event of a Change in Control, as defined in Section 2 of the Plan, the Phantom Units (to the extent not previously vested or forfeited) will be deemed to have vested, and will be settled, on the closing date of the Change in Control transaction (the “CiC Payment Date”).

2.3The Participant is required to hold, and not sell, transfer or otherwise dispose of fifty percent (50%) of the Units issued to the Participant following the vesting of the Phantom Units (after accounting for the payment of any related taxes in connection with the

1

vesting of the Phantom Units) until the earlier of (i) ten (10) years from the Grant Date; or (ii) the Participant’s attainment of age sixty-two (62).¹

3.Dividends. Each Phantom Unit granted under this Agreement is hereby granted in tandem with a corresponding DER, which shall remain outstanding from the Grant Date until the earlier of the payment or forfeiture of the related Phantom Unit, and which shall be subject to all of the terms and conditions contained in this Agreement and the Plan. Each vested DER shall entitle the Participant to receive additional Phantom Units, subject to and in accordance with this Agreement, having a value equal to any distributions made by the Partnership following the Grant Date in respect of the Unit underlying the Phantom Unit to which such DER relates. All such DERs shall be credited to Participant and be deemed reinvested in additional Phantom Units as of the date of payment of any such distributions based on the Fair Market Value of a Unit on such date. Each additional Phantom Unit which results from such deemed reinvestment of DERs granted hereunder shall be subject to the same vesting, distribution or payment, adjustment and other provisions which apply to the underlying Phantom Unit to which such additional Phantom Unit relates. The DER corresponding to a Phantom Unit shall expire upon the settlement of that Phantom Unit. Similarly, upon the forfeiture of a Phantom Unit, the DER with respect to such forfeited Phantom Unit shall also be forfeited without payment of consideration.

4.Change in Participant’s Status. In the event the Participant’s Service is terminated (i) on account of death or Disability (and, for the avoidance of doubt, the Participant shall have a termination from Service upon the Participant’s becoming Disabled), or (ii) by action taken by the Company (including any Affiliate) without Cause and after a decision by the Board², in its sole and absolute discretion, that such termination of Service without Cause qualifies for special vesting treatment hereunder (a “Qualifying Separation from Service without Cause”), prior to any Vesting Date or the CiC Payment Date, as applicable, the Participant shall vest in any unvested Phantom Units (to the extent not previously forfeited) and receive payment therefore on the date of such termination of Service (or as soon as reasonably practicable thereafter, but in no event later than 60 days after such termination of Service). In the event the Participant’s Service is terminated for any other reason, including, but not limited to, by the Participant voluntarily, or by the Company, the Partnership or any of their Affiliates with Cause or without Cause (other than in connection with a Qualifying Separation from Service without Cause), prior to any Vesting Date or the CiC Payment Date, as applicable, the unvested Phantom Units awarded to the Participant shall be cancelled and forfeited, without payment by the Company, the Partnership or any of their Affiliates; provided that in the event the Participant’s Service is terminated by action taken by the Company, the Partnership or any of their Affiliates with Cause, any vested Phantom Units that are held by the Participant shall also be forfeited (with any Units issued thereunder returned to the Company) and, to the extent that the Participant has sold any of his or her Units issued under the Award within the six (6)-month period ending with the date of the Participant’s date of termination of Service for Cause or at any time thereafter, the Participant will be required to repay to the Company, within ten (10) days after receipt of written demand from the Company or the Partnership, the cash proceeds that the Participant received upon each such sale, provided such demand is made by the Company or the Partnership within one year after the date of that sale. Any payments due a deceased Participant may be transferred pursuant to the provisions of his or her will or the laws of inheritance following the Participant’s death.

5.Cash Settlement. Notwithstanding anything herein to the contrary, in lieu of Units, the Board may elect in its discretion to pay some or all of the Phantom Units in cash in an amount equal to the Fair Market Value of the Units that would otherwise be distributed pursuant to this Agreement.

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6.Tax Consequences/Withholding.

6.1It is intended that the Participant shall have merely an unfunded, unsecured promise to be paid a benefit, and such unfunded promise shall not consist of a transfer of “property” within the meaning of Code Section 83.

6.2Participant acknowledges that any income for federal, state, local or foreign tax purposes, including payroll taxes, that the Participant is required to recognize on account of the vesting of the Phantom Units and/or issuance of the Units under this Award to the Participant shall be subject to withholding of tax by the Company. The Participant must pay all applicable taxes when due. The Company will automatically withhold from the total number of Units deliverable to the Participant upon the applicable payment date, the number of Units having a Fair Market Value equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates in accordance with the terms of the Plan. In the event of any remaining tax balance,the Participant will be required to deliver a check for that amount payable to the Company before the Units are deposited into Participant’s plan account.

6.3This Agreement is intended to comply with, or be excepted from coverage under, Section 409A and the regulations promulgated thereunder and shall be administered, interpreted and construed accordingly. Notwithstanding any provision of this Agreement to the contrary, if any benefit provided under this Agreement is subject to the provisions of Section 409A and the regulations issued thereunder (and not excepted therefrom), the provisions of the Agreement shall be administered, interpreted and construed in a manner necessary to comply with Section 409A (or disregarded to the extent such provision cannot be so administered, interpreted, or construed). Notwithstanding, Section 409A may impose upon the Participant certain taxes or other charges for which the Participant is and shall remain solely responsible, and nothing contained in this Agreement or the Plan shall be construed to obligate any member of the Board, the Company, the Partnership or any of their Affiliates (or their employees, officers or directors) for any such taxes or other charges.

6.4None of the Board, the Company, the Partnership nor any Affiliate of any of the foregoing has made any warranty or representation to Participant with respect to the tax consequences of the issuance, holding, vesting, payment, settlement or other occurrence with respect to the Phantom Units, the DERs, the Units or the transactions contemplated by this Agreement, and the Participant represents that he or she is in no manner relying on such entities or their representatives for tax advice or an assessment of such tax consequences. The Participant understands that the Participant may suffer adverse tax consequences in connection with the Phantom Units and DERs granted pursuant to this Agreement. The Participant represents that the Participant has consulted with his or her tax consultants that the Participant deems advisable in connection with the Phantom Units and DERs.

7.Non-Competition.

7.1The Participant hereby agrees that this Section 7 is reasonable and necessary in order to protect the legitimate business interests and goodwill of the Company, the Partnership and their Affiliates, including the Company’s, the Partnership’s and their Affiliates’ trade secrets, valuable confidential business and professional information, substantial relationships with prospective and existing customers and clients, and specialized training provided to the Participant and other employees of the Company, the Partnership and their Affiliates. The Participant acknowledges and recognizes the highly competitive

3

nature of the business of the Company, the Partnership and their Affiliates and accordingly agrees that during the term of Participant’s employment and for a period of two (2) years³ after the termination thereof (the “Restriction Period”):

a.The Participant will not directly or indirectly engage in any business substantially similar to any line of business conducted by the Company, the Partnership or any of their Affiliates, including, but not limited to, where such engagement is as an officer, director, proprietor, employee, partner, investor (other than as a holder of less than 1% of the outstanding capital stock of a publicly traded corporation), consultant, advisor, agent or sales representative, in any geographic region in which the Company, the Partnership or any of their Affiliates conducted business;

b.The Participant will not contact, solicit, perform services for, or accept business from any customer or prospective customer of the Company, the Partnership or any of their Affiliates;

c.The Participant will not directly or indirectly induce any employee of the Company, the Partnership or any of their Affiliates to: (1) engage in any activity or conduct which is prohibited pursuant to subparagraph 7.1(a); or (2) terminate such employee’s employment with the Company, the Partnership or any of their Affiliates. Moreover, the Participant will not directly or indirectly employ or offer employment (in connection with any business substantially similar to any line of business conducted by the Company, the Partnership or any of their Affiliates) to any person who was employed by the Company, the Partnership or any of their Affiliates unless such person shall have ceased to be employed by the Company, the Partnership or any of their Affiliates for a period of at least 12 months; and

d.The Participant will not directly or indirectly assist others in engaging in any of the activities, which are prohibited under subparagraphs (a) — (c) above.

Notwithstanding the foregoing, if the Restriction Period set forth herein is shorter in duration following the Participant’s termination of employment with the Company, the Partnership and their Affiliates than in any other prior Award Agreement, the Restriction Period set forth herein shall be the Restriction Period for all such prior Award Agreements and related Awards. Similarly, if the Restriction Period is longer in this Agreement than in prior Award Agreements, the Restriction Period set forth in such prior Award Agreements and related Awards shall be amended hereby and have the same applicable Restriction Period following Participant’s termination of employment with the Company, the Partnership and their Affiliates as set forth herein (and the Participant shall be deemed to have consented to such amendment by executing this Agreement).

7.2It is expressly understood and agreed that although the Participant, the Company and the Partnership consider the restrictions contained in this Section 7 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against the Participant, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable against such Participant. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such

4

restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein. The restrictive covenants set forth in this Section 7 shall be extended by any amount of time that the Participant is in breach of such covenants, such that the Company and the Partnership receive the full benefit of the time duration set forth above.

8.Confidential Information and Trade Secrets. The Participant, the Company and the Partnership agree that certain materials, including, but not limited to, information, data and other materials relating to customers, development programs, costs, marketing, trading, investment, sales activities, promotion, credit and financial data, manufacturing processes, financing methods, plans or the business and affairs of the Company, the Partnership and their Affiliates, constitute proprietary confidential information and trade secrets. Accordingly, the Participant will not at any time during or after the Participant’s employment with the Company or the Partnership (including their Affiliates) disclose or use for such Participant’s own benefit or purposes or the benefit or purposes of any other person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company, the Partnership and any of their Affiliates, any proprietary confidential information or trade secrets, provided that the foregoing shall not apply to information which is not unique to the Company, the Partnership or any of their Affiliates or which is generally known to the industry or the public other than as a result of such Participant’s breach of this covenant. The Participant agrees that upon termination of employment with the Company or the Partnership (including any of their Affiliates) for any reason, the Participant will immediately return to the Company all memoranda, books, papers, plans, information, letters and other data, and all copies thereof or therefrom, which in any way relate to the business of the Company, the Partnership and their Affiliates, except that the Participant may retain personal notes, notebooks and diaries. The Participant further agrees that the Participant will not retain or use for the Participant’s own account at any time any trade names, trademark or other proprietary business designation used or owned in connection with the business of the Company, the Partnership or any of their Affiliates.

Notwithstanding anything contained herein to the contrary, this Agreement shall not prohibit disclosure of proprietary confidential information if (i) it is required by law or by a court of competent jurisdiction or (ii) it is in connection with any judicial, arbitration, dispute resolution or other legal proceeding in which your legal rights and obligations as an employee or under this Agreement are at issue; provided, however, that the Participant shall, to the extent practicable and lawful in any such event, give prior notice to the Company of the Participant’s intent to disclose proprietary confidential information so as to allow the Company an opportunity (which the Participant shall not oppose) to obtain such protective orders or similar relief with respect thereto as may be deemed appropriate.

Notwithstanding the foregoing, nothing in this Agreement is intended to restrict, prohibit, impede or interfere with the Participant providing information to, or from reporting possible violations of law or regulation to, any governmental agency or entity, from participating in investigations, testifying in proceedings regarding the Company’s or the Partnership’s past or future conduct, or from making other disclosures that are protected under state or federal law or regulation, engaging in any future activities protected under statutes administered by any government agency (including but not limited, to the Department of Justice, the SEC, the Congress, and any agency Inspector General), or from receiving and retaining a monetary award from a government-administered whistleblower award program for providing information directly to a government-administered whistleblower award program. The Participant does not need the prior authorization of the Company or the Partnership to make such reports or disclosures. The Participant is not required to notify the Company or the Partnership that he or she has made any such reports or

5

disclosures. The Company and the Partnership nonetheless assert, and do not waive, their attorney-client privilege over any information appropriately protected by the privilege.

9.Remedies/Forfeiture.

9.1The Participant acknowledges that a violation or attempted violation on the Participant’s part of Sections 7 and/or 8 will cause irreparable damage to the Company, the Partnership and their Affiliates, and the Participant therefore agrees that the Company, the Partnership and their Affiliates shall be entitled as a matter of right to an injunction, out of any court of competent jurisdiction, restraining any violation or further violation of such promises by the Participant or the Participant’s employees, partners or agents. The Participant agrees that such right to an injunction is cumulative, in addition to whatever other remedies the Company and the Partnership (including their Affiliates) may have under law or equity and to the Participant’s obligations to make timely payment to the Company as set forth in Section 9.2 of this Agreement. The Participant further acknowledges and agrees that the Participant’s Phantom Units (whether vested or unvested) shall be cancelled and forfeited (with any Units issued thereunder returned to the Company), without payment by the Company, if the Participant breaches any of his obligations set forth in Sections 7 and 8 herein.

9.2At any point after becoming aware of a breach of any obligation set forth in Sections 7 and 8 of this Agreement, the Company shall provide notice of such breach to the Participant. By agreeing to receive the Phantom Units pursuant to this Agreement, the Participant agrees that, to the extent the Participant has sold any of his or her Units issued under the Award, within ten (10) days after the date the Company provides such notice, the Participant shall pay to the Company in cash an amount equal to the cash proceeds that the Participant received upon each such sale that occurred after the date that was six (6) months prior to the date of the earliest breach, provided that such notice is provided by the Company or the Partnership within one year after the date of that sale. The Participant agrees that failure to make such timely payment to the Company constitutes an independent and material breach of the terms and conditions of this Agreement, for which the Company may seek recovery of the unpaid amount as liquidated damages, in addition to all other rights and remedies the Company may have resulting from the Participant’s breach of the obligations set forth in Sections 7 and/or 8. The Participant agrees that timely payment to the Company as set forth in this provision of this Agreement is reasonable and necessary because the compensatory damages that will result from breaches of Sections 7 and/or 8 cannot readily be ascertained. Further, the Participant agrees that timely payment to the Company as set forth in this provision of this Agreement is not a penalty, and it does not preclude the Company or the Partnership from seeking all other remedies that may be available to the Company, including without limitation those set forth in this Section 9.

10.Assignment/Nonassignment.

10.1The Company or the Partnership shall have the right to assign this Agreement, including without limitation Sections 7 and/or 8, and the Participant agrees to remain obligated by all provisions of this Agreement that are assigned to any successor, assign or surviving entity. Any successor to the Company or the Partnership is an intended third party beneficiary of this Agreement.

10.2The Phantom Units shall not be sold, pledged, assigned, alienated, hypothecated, or otherwise transferred or encumbered (a “Transfer”) in any manner, other than by will or the laws of descent and distribution. Any attempt by the Participant to Transfer the Phantom Units in violation of the terms of this Agreement shall render the Phantom Units

6

null and void, and result in the immediate forfeiture of such Phantom Units, without payment by the Company or the Partnership.

10.3Sales of the Units issued to the Participant following the vesting of the Phantom Units will be subject to any market black-out periods the Company or the Partnership may impose from time to time and must be made in compliance with the Company’s or the Partnership’s insider trading policies and applicable securities laws.

11.Impact on Benefit Plans. Payments under this Agreement shall not be considered as earnings for purposes of the Company’s, the Partnership’s and/or their Affiliates’ qualified retirement plans or any other retirement or benefit plan unless specifically provided for therein. Nothing herein shall prevent the Company, the Partnership or any of their Affiliates from maintaining additional compensation plans and arrangements for its employees.

12.Distribution of Units. Unless otherwise determined by the Board or required by any applicable law, rule or regulation, neither the Company nor the Partnership shall deliver to the Participant certificates evidencing Units issued pursuant to this Agreement and instead such Units shall be recorded in the books of the Partnership (or, as applicable, its transfer agent or equity plan administrator). All certificates for Units issued pursuant to this Agreement and all Units issued pursuant to book entry procedures hereunder shall be subject to such stop transfer orders and other restrictions as the Company may deem advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such Units are then listed, and any applicable federal or state laws, and the Company may cause a legend or legends to be inscribed on any such certificates or book entry to make appropriate reference to such restrictions. In addition to the terms and conditions provided herein, the Company may require that the Participant make such covenants, agreements, and representations as the Company, in its sole discretion, deems advisable in order to comply with any such laws, regulations, or requirements. No fractional Units shall be issued or delivered pursuant to the Phantom Units and the Board shall determine, in its discretion, whether cash, other securities, or other property shall be paid or transferred in lieu of fractional Units or whether such fractional Units or any rights thereto shall be canceled, terminated, or otherwise eliminated.

13.Lock-Up Agreement. The Participant shall agree, if so requested by the Company or the Partnership and any underwriter in connection with any public offering of securities of the Partnership or any Affiliate thereof, not to directly or indirectly offer, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of or otherwise dispose of or transfer any Units held by him or her for such period, not to exceed 180 days following the effective date of the relevant registration statement filed under the Securities Act in connection with such public offering, as such underwriter shall specify reasonably and in good faith. The Company or the Partnership may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such 180-day period. Notwithstanding the foregoing, the 180-day period may be extended in the discretion of the Company for up to such number of additional days as is deemed necessary by such underwriter or the Company or Partnership to continue coverage by research analysts in accordance with FINRA Rule 2711 or any successor or other applicable rule.

14.Conformity to Securities Laws. The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act, any and all regulations and rules promulgated by the SEC thereunder, and all applicable state securities laws and regulations. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Phantom Units and DERs are granted, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable

7

law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

15.Rights as a Unit Holder. Neither the Participant nor any person claiming under or through the Participant shall have any of the rights or privileges of a holder of Units in respect of any Units that may become deliverable hereunder unless and until certificates representing such Units shall have been issued or recorded in book entry form on the records of the Partnership or its transfer agents or registrars, and delivered in certificate or book entry form to the Participant or any person claiming under or through the Participant.

16.Successors; Adjustments. The obligation of the Company under this Agreement shall be binding upon the successors and assigns of the Company. The Participant acknowledges that the Phantom Units are subject to adjustment and forfeiture in certain events as provided in this Agreement and Sections 4(c) and 7(c) of the Plan.

17.Governing Law, Jurisdiction, and Venue.

17.1This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law.

17.2The Participant hereby irrevocably submits to the personal and exclusive jurisdiction of the United States District Court for the Western District of Pennsylvania or the Court of Common Pleas of Allegheny County, Pennsylvania in any action or proceeding arising out of, or relating to, this Agreement (whether such action or proceeding arises under contract, tort, equity or otherwise). The Participant hereby irrevocably waives any objection which the Participant now or hereafter may have to the laying of venue or personal jurisdiction of any such action or proceeding brought in said courts.

17.3Jurisdiction over, and venue of, any such action or proceeding shall be exclusively vested in the United States District Court for the Western District of Pennsylvania or the Court of Common Pleas of Allegheny County, Pennsylvania.

17.4Provided that the Company or the Partnership commences any such action or proceeding in the courts identified in Section 17.3, the Participant irrevocably waives the Participant’s right to object to or challenge the above selected forum on the basis of inconvenience or unfairness under 28 U.S.C. § 1404, 42 Pa. C.S. § 5322 or similar state or federal statutes. The Participant agrees to reimburse the Company or the Partnership, as applicable, for all of the attorneys’ fees and costs they incur to oppose the Participant’s efforts to challenge or object to litigation proceeding in the courts identified in Section 17.3 with respect to actions arising out of or relating to this Agreement (whether such actions arise under contract, tort, equity or otherwise).

18.Failure to Enforce Not a Waiver. The failure of the Company or the Partnership to enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof.

19.Severability. In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

20.Funding. This Agreement is not funded and all amounts payable hereunder, if any, shall be paid from the general assets of the Company, the Partnership or one of their Affiliates, as applicable. No provision contained in this Agreement or the Plan and no action taken pursuant to the

8

provisions of this Agreement or the Plan shall create a trust of any kind or require the Company or the Partnership to maintain or set aside any specific funds to pay benefits hereunder. To the extent the Participant acquires a right to receive payments from the Company or the Partnership under this Agreement, such right shall be no greater than the right of any unsecured general creditor of the Company or the Partnership, as applicable.

21.Headings. The descriptive headings of the Sections of this Agreement are inserted for convenience of reference only and shall not constitute a part of this Agreement.

22.Awards Subject to Plan. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

23.Amendment or Termination of this Agreement. This Agreement may be modified, amended, suspended or terminated by the Board at any time; provided, however, that no modification, amendment, suspension or termination of the Plan or this Agreement shall materially reduce the rights or benefits of the Participant under this Agreement without the consent of such Participant. Notwithstanding the foregoing or any provision of this Agreement to the contrary, the Company may, in its sole discretion and without the Participant’s consent, modify or amend the terms of the Agreement or a Phantom Unit award, or take any other action it deems necessary or advisable, to cause the Agreement to comply with Section 10D of the Exchange Act or Section 409A (or an exception thereto). Any modification, amendment, suspension or termination shall only be effective upon a writing issued by the Company or the Partnership, and the Participant shall not offer evidence of any purported oral modifications or amendments to vary or contradict the terms of this Agreement document.

24.Entire Agreement. Except as otherwise provided in this Agreement or in any other agreement between the Participant and the Company or the Partnership, this Agreement and the Plan are: (i) intended to be the final, complete, and exclusive statement of the terms of the agreement between the Participant, the Company and the Partnership with regard to the subject matter of this Agreement; (ii) supersede all other prior agreements, communications, and statements, whether written or oral, express or implied, pertaining to that subject matter; and (iii) may not be contradicted by evidence of any prior or contemporaneous statements or agreements, oral or written, and may not be explained or supplemented by evidence of consistent additional terms.

25.No Effect on Service. Nothing in this Agreement or in the Plan shall be construed as giving the Participant the right to be retained in the employ or service of the Company or any Affiliate thereof. Furthermore, the Company and its Affiliates may at any time dismiss the Participant from employment or consulting free from any liability or any claim under the Plan or this Agreement, unless otherwise expressly provided in the Plan, this Agreement or any other written agreement between the Participant and the Company or an Affiliate thereof.

26.Clawback. Notwithstanding any provisions in this Agreement to the contrary, any compensation, payments, or benefits provided hereunder (or amounts paid or payable pursuant to or with respect to the Award), whether in the form of cash or otherwise, shall be subject to the clawback provisions of Section 8(o) of the Plan, and shall be subject to recoupment and recapture to the extent necessary to comply with the requirements of any Company- or Partnership-adopted policy and/or laws or regulations, including, but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Exchange Act, Section 304 of the Sarbanes Oxley Act of 2002, the New York Stock Exchange Listed Company Manual or any rules or regulations promulgated thereunder with respect to such laws, regulations and/or securities exchange listing requirements, as may be in effect from time to time, and which may operate to create additional

9

rights for the Company or the Partnership with respect to this grant and recovery of amounts relating thereto. By accepting this grant of Phantom Units, the Participant agrees and acknowledges that he or she is obligated to cooperate with, and provide any and all assistance necessary to, the Company and the Partnership to recover, recoup or recapture this grant of Phantom Units or amounts paid under the Plan pursuant to such law, government regulation, stock exchange listing requirement or Company or Partnership policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to recover, recoup or recapture this grant of Phantom Units or amounts paid under the Plan from a Participant’s accounts, or pending or future compensation or other grants.

[Remainder of this page intentionally left blank]

10

IN WITNESS WHEREOF, the undersigned have executed this Agreement on the day and year indicated below. This Agreement may be executed in more than one counterpart, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

	PARTICIPANT
Dated:
	[_____________]
	CNX MIDSTREAM PARTNERS LP
	By: CNX Midstream GP LLC
	(its General Partner)
	Name:	[_____________]
	Title:	[_____________]

Any failure of the Participant to sign and return this Agreement to the HR Department within 60 days of the Grant Date will result in revocation of this Phantom Unit Award and all provisions of this Agreement will expire and will be canceled and forfeited.

11

Exhibit A

Participant: [_____________]

Grant Date: [_____________]

Number of Phantom Units Subject to Award: [_________]

Vesting Schedule: Except as otherwise provided in the Agreement, three (3) successive equal annual installments upon the Participant’s completion of each year of continuous Service with the Company, the Partnership and any of their Affiliates over the three (3)-year period measured from the Grant Date.

¹ This provision is only applicable for VP and above forms.

² The CEO, rather than the Board, has this discretion for non-Section 16 employees.

³ This section is solely for VP and above; provided, however, that certain employees may, upon CEO discretion, have to comply with a one-year or six-month non-compete.

12

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Nicholas J. DeIuliis, certify that:

1.I have reviewed this quarterly report on Form 10-Q of CNX Midstream Partners LP;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	April 27, 2020
/S/ Nicholas J. DeIuliis
Nicholas J. DeIuliis
Chief Executive Officer
CNX Midstream GP LLC (the general partner of CNX Midstream Partners LP)
(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Donald W. Rush, certify that:

1.I have reviewed this quarterly report on Form 10-Q of CNX Midstream Partners LP;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	April 27, 2020
/S/ Donald W. Rush
Donald W. Rush
Chief Financial Officer
CNX Midstream GP LLC (the general partner of CNX Midstream Partners LP)
(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,

18 U.S.C. Section 1350

I, Nicholas J. DeIuliis, Chairman of the Board and Chief Executive Officer (principal executive officer) of CNX Midstream GP LLC, the general partner of CNX Midstream Partners LP (the “Registrant”), certify that to my knowledge, based upon a review of the Quarterly Report on Form 10-Q for the period ended March 31, 2020, of the Registrant (the “Report”):

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:	April 27, 2020
/S/ Nicholas J. DeIuliis
Nicholas J. DeIuliis
Chief Executive Officer
CNX Midstream GP LLC (the general partner of CNX Midstream Partners LP)
(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,

18 U.S.C. Section 1350

I, Donald W. Rush, Chief Financial Officer and Director (principal financial officer) of CNX Midstream GP LLC, the general partner of CNX Midstream Partners LP (the “Registrant”), certify that to my knowledge, based upon a review of the Quarterly Report on Form 10-Q for the period ended March 31, 2020, of the Registrant (the “Report”):

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:	April 27, 2020
/S/ Donald W. Rush
Donald W. Rush
Chief Financial Officer
CNX Midstream GP LLC (the general partner of CNX Midstream Partners LP)
(Principal Financial Officer)

XML

LONG-TERM INCENTIVE PLAN - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation costs	$ 3.0
Common Units | 2014 LTIP | Stock Compensation Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common units authorized (in units)	5,800,000
Common Units | 2014 LTIP | Phantom Share Units (PSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unit based compensation	$ 0.5	$ 0.6
Director | 2014 LTIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	1 year
Officer | 2014 LTIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	3 years
Annual award vesting percentage	33.00%

XML

SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Accounting Policies [Abstract]
Payment terms	25 days
Contract term	Substantially all of our revenues are derived from contracts that have terms of greater than one year.
Performance obligations expected to be satisfied	$ 350,800,000
Fair value of long-term debt	280,000,000.0
Property and equipment impairments	0	$ 0
Asset retirement obligation	0		$ 0
Provision for federal or state income taxes	$ 0	$ 0
Antidilutive securities excluded from computation of earnings per share (in units)	200,086	34,566

XML

LONG-TERM DEBT (Tables)

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Schedule of Debt

The Partnership’s long-term debt consisted of the following:

(in thousands)	March 31, 2020		December 31, 2019
Senior Notes due March 2026 at 6.5%	$	400,000	$	400,000
Less: Unamortized debt issuance costs	1,164		1,213
Less: Unamortized bond discount	4,437		4,625
Total Senior Notes	$	394,399	$	394,162

XML

RELATED PARTY TRANSACTIONS - Payables (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Related Party Transaction [Line Items]
Accounts payable, related party, current portion	$ 51,688	$ 4,787
CNX Resources Corporation
Related Party Transaction [Line Items]
Accounts payable, related party, current portion	51,688	4,787
Total accounts payable, related parties, current and long-term	136,688	4,787
Expense reimbursements | CNX Resources Corporation
Related Party Transaction [Line Items]
Accounts payable, related party, current portion	564	489
Capital expenditures reimbursements | CNX Resources Corporation
Related Party Transaction [Line Items]
Accounts payable, related party, current portion	61	0
General and administrative services | CNX Resources Corporation
Related Party Transaction [Line Items]
Accounts payable, related party, current portion	1,063	4,298
IDR Transaction | CNX Resources Corporation
Related Party Transaction [Line Items]
Accounts payable, related party, current portion	50,000	0
Accounts payable, related parties, long-term portion	$ 85,000	$ 0

XML

PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Total Property and Equipment	$ 1,315,118	$ 1,302,566
Less — accumulated depreciation	114,574	106,975
Property and Equipment — Net	1,200,544	1,195,591
Land
Property, Plant and Equipment [Line Items]
Total Property and Equipment	79,948	79,829
Gathering equipment
Property, Plant and Equipment [Line Items]
Total Property and Equipment	747,118	717,277
Less — accumulated depreciation	$ 80,725	75,879
Gathering equipment | Minimum
Property, Plant and Equipment [Line Items]
Estimated useful life	25 years
Gathering equipment | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful life	40 years
Compression equipment
Property, Plant and Equipment [Line Items]
Total Property and Equipment	$ 387,365	332,358
Less — accumulated depreciation	$ 26,857	24,311
Compression equipment | Minimum
Property, Plant and Equipment [Line Items]
Estimated useful life	30 years
Compression equipment | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful life	40 years
Processing equipment
Property, Plant and Equipment [Line Items]
Total Property and Equipment	$ 30,979	30,979
Less — accumulated depreciation	$ 6,992	6,785
Estimated useful life	40 years
Assets under construction
Property, Plant and Equipment [Line Items]
Total Property and Equipment	$ 69,708	$ 142,123

XML

SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Schedule of Receivables

The allowance for credit losses is as follows:

(in thousands)	March 31, 2020
Receivables — Third-Party	$	5,056
Allowance for Credit Losses	(76)
Receivables — Third-Party, Net	$	4,980

XML

SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

Operating segments are the revenue-producing components of a company for which separate financial information is produced internally and is subject to evaluation by the chief operating decision maker in deciding how to allocate resources. In order to effectively manage the Partnership, we have divided our current midstream assets among two separate categories that we refer to as our “Anchor Systems” and “Additional Systems” based on their relative current cash flows, growth profiles, capital expenditure requirements and the timing of their development. All of the Partnership’s operating revenues, income from operations and assets are generated or located in the United States.

Segment results for the periods presented were as follows:

	Three Months Ended March 31,
(in thousands)	2020		2019
Gathering Revenue:
Anchor Systems	$	76,546	$	70,171
Additional Systems	3,650		2,048
Total Gathering Revenue	$	80,196	$	72,219
Net Income (Loss):
Anchor Systems	$	45,190	$	35,114
Additional Systems	600		(138)
Total Net Income	$	45,790	$	34,976
Depreciation Expense:
Anchor Systems	$	7,073	$	5,236
Additional Systems	505		414
Total Depreciation Expense	$	7,578	$	5,650
Capital Expenditures for Segment Assets:
Anchor Systems	$	31,308	$	75,799
Additional Systems	1,351		2,758
Total Capital Expenditures	$	32,659	$	78,557

Segment assets as of the dates presented were as follows:

(in thousands)	March 31, 2020		December 31, 2019
Segment Assets
Anchor Systems	$	1,129,043	$	1,123,488
Additional Systems	111,664		111,114
Total Segment Assets	$	1,240,707	$	1,234,602

XML

RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2020

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONSIn the ordinary course of business, we engage in related party transactions with CNX Resources (and certain of its subsidiaries) and CNX Gathering, which include the fees we charge and revenues we receive under a fixed fee gathering

agreement (including fees associated with electrically-powered compression that CNX Resources reimburses to us) and our reimbursement of certain expenses to CNX Resources under several agreements, discussed below. In addition, we may waive or modify certain terms under these arrangements in the ordinary course of business, including the provisions of the fixed fee gathering agreement, when we determine it is in the best interests of the Partnership to do so. Any material transactions are reviewed by the Board of Directors or the Audit Committee, together with oversight by our conflicts committee, as deemed appropriate.

Operating expense and general and administrative expense – related party were derived from CNX Resources and consisted of the following:

	Three Months Ended   March 31,
(in thousands)	2020		2019
Operational services	$	1,909	$	3,633
Electrical compression	1,919		1,915
Total Operating Expense — Related Party	$	3,828	$	5,548

Total General and Administrative Expense — Related Party $ 2,857  $ 3,967 

Related party liabilities due to CNX Resources consisted of the following:

(in thousands)	March 31, 2020		December 31, 2019
Expense reimbursements	$	564	$	489
Capital expenditures reimbursements	61		—
General and administrative services	1,063		4,298
IDR Transaction - current portion	50,000		—
Total Due to Related Party - Current Portion	51,688		4,787
IDR Transaction - long-term portion	85,000		—
Total Due to Related Party - Current and Long-Term	$	136,688	$	4,787

All related party receivables were due from CNX Resources at March 31, 2020 and December 31, 2019.

Operational Services Agreement

Upon the closing of the initial public offering of our common units (our “IPO”), we entered into an operational services agreement with CNX Resources, which was amended and restated on December 1, 2016. Under the agreement, CNX Resources provides certain operational services to us in support of our gathering pipelines and dehydration, treating and compressor stations and facilities, including routine and emergency maintenance and repair services, routine operational activities, routine administrative services, construction and related services and such other services as we and CNX Resources may mutually agree upon from time to time. CNX Resources prepares and submits for our approval a maintenance, operating and capital budget on an annual basis. CNX Resources submits actual expenditures for reimbursement on a monthly basis, and we reimburse CNX Resources for any direct third-party costs incurred by CNX Resources in providing these services.

Omnibus Agreement

We are party to an omnibus agreement with CNX Resources, CNX Gathering and our general partner that addresses the following matters:

• our payment of an annually-determined administrative support fee (approximately $7.3 million for the year ending December 31, 2020 and $7.9 million for the year ended December 31, 2019) for the provision of certain services by CNX Resources and its affiliates, including executive costs. Such costs may not necessarily reflect the actual expenses that the Partnership would incur on a stand-alone basis, and we are unable to estimate what those expenses would be on a stand-alone basis;

• our obligation to reimburse CNX Resources for all other direct or allocated costs and expenses incurred by CNX Resources in providing general and administrative services (which reimbursement is in addition to certain expenses of our general partner and its affiliates that are reimbursed under our partnership agreement);

• our right of first offer to acquire (i) CNX Gathering’s retained interests in our Additional Systems, (ii) CNX Gathering’s other ancillary midstream assets and (iii) any additional midstream assets that CNX Gathering develops; and

• our obligation to indemnify CNX Gathering for events and conditions associated with the use, ownership or operation of our assets that occur after the closing of the IPO, including environmental liabilities.

The omnibus agreement will remain in full force and effect throughout the period in which CNX Gathering controls our general partner. If CNX Gathering ceases to control our general partner, either party may terminate the omnibus agreement, provided that the indemnification obligations will remain in full force and effect in accordance with their terms.

Gathering Agreements

On January 3, 2018, we entered into the Second Amended and Restated gas gathering agreement (“GGA”) with CNX Gas, which is a 20-year, fixed-fee gathering agreement. Under the Second Amended and Restated GGA, we continue to gather, compress, dehydrate and deliver all of CNX Gas’ dedicated natural gas in the Marcellus Shale on a first-priority basis and gather, inject, stabilize and store all of CNX Gas’ dedicated condensate on a first-priority basis. Under this agreement, during the year ending December 31, 2020, we will receive a fee based on the type and scope of the midstream services we provide, summarized as follows:

•For the services we provide with respect to natural gas from the Marcellus Shale formation that does not require downstream processing, or dry gas, we will receive a fee of $0.4531 per MMBtu.

•For the services we provide with respect to natural gas from the Marcellus Shale formation that requires downstream processing, or wet gas, we will receive:

◦a fee of $0.3116 per MMBtu in the Pittsburgh International Airport area; and

◦a fee of $0.6222 per MMBtu for all other areas in the dedication area.

•Our fees for condensate services will be $5.6580 per Bbl in the Majorsville area and in the Shirley-Penns area.

Each of the foregoing fees escalates by 2.5% on January 1 each year through the end of the initial term. Commencing on January 1, 2035, and as of January 1 thereafter, each of the applicable fees will be adjusted pursuant to the percentage change in CPI-U, but such fees will never escalate or decrease by more than 3% per year.

The Second Amended and Restated GGA also dedicated an additional 63,000 acres in the Utica Shale in and around the McQuay and Wadestown areas and introduced the following gas gathering and compression rates (rates shown effective January 1, 2020):

•Gas Gathering:

◦McQuay area Utica - a fee of $0.2368 per MMBtu; and

◦Wadestown Marcellus and Utica - a fee of $0.3678 per MMBtu.

•Compression:

◦For areas not benefiting from system expansion pursuant to the Second Amended and Restated GGA, compression services are included in the base fees; and

◦In the McQuay and Wadestown areas, for wells turned in line beginning January 1, 2018 and beyond, we will receive additional fees of $0.0683 per MMBtu for Tier 1 pressure services (maximum receipt point of pressure of 600 psi) and $0.1366 per MMBtu for Tier 2 pressure services (maximum receipt point of pressure of 300 psi).

In addition, the Second Amended and Restated GGA committed CNX Gas to drill and complete 140 total wells in the McQuay area within the Anchor Systems, provided that if 125 wells have been drilled and completed in the Marcellus Shale, then the remainder of such planned wells must be drilled in the Utica Shale. To the extent the requisite number of wells are not drilled and completed by CNX Gas in a given period, we will be entitled to a deficiency payment per shortfall well as set forth below:

•January 1, 2018 to December 31, 2018 - 30 wells (CNX Gas exceeded this requirement by eight wells)

•January 1, 2019 to April 30, 2020 - 40 wells (CNX Gas has met this requirement as of April 27, 2020)

•May 1, 2020 to April 30, 2021 - 40 wells (deficiency payment of $2.0 million per well)

•May 1, 2021 to April 30, 2022 - 30 wells (deficiency payment of $2.0 million per well)

In the event that CNX Gas drills wells and completes a number of wells in excess of the number of wells required to be drilled and completed in such period, (i) the number of excess wells drilled and completed during such period will be applied to the minimum well requirement in the succeeding period or (ii) to the extent CNX Gas was required to make deficiency payments for shortfalls in the preceding period, CNX Gas may elect to cause the Partnership to pay a refund in an amount equal to (x) the number of excess wells drilled and completed during the period, multiplied by (y) the deficiency payment paid per well during the period in which the shortfall occurred.

On March 16, 2018, we entered into the First Amendment to the Second Amended and Restated GGA, which added the MVC on volumes associated with the Shirley-Penns System through December 31, 2031. The MVC commits CNX Gas to pay the Partnership the wet gas fee under the GGA for all natural gas we gather up to a specified amount per day through December 31, 2031. During the MVC period, if CNX Gas actually delivers volumes in a given quarter in excess of the volume commitment for such quarter, CNX Gas is entitled to credit such excess volumes against amounts otherwise payable under the MVC in the future.

We will recognize minimum revenue on volumes throughout the term of the GGA, as set forth below:

(in millions)	Minimum Revenue per MVC
Remainder of year ending December 31, 2020	$	6.0
Year ending December 31, 2021	40.7
Year ending December 31, 2022	47.7
Year ending December 31, 2023	42.8
Year ending December 31, 2024	39.6
Remainder of term	174.0
Total minimum revenue to be recognized pursuant to Shirley-Penns MVC	$	350.8

For all natural gas the Partnership gathers in excess of the MVC, the Partnership will receive a fee of $0.3678 per MMBtu in 2020, which escalates by 2.5% on January 1 of each year. Since the Shirley-Penns Acquisition, CNX Gas has exceeded the required MVC each quarter.

On May 2, 2018, we completed the CNX Transaction, pursuant to which we entered into the Second Amendment to the Second Amended and Restated GGA, which committed CNX Gas to drill and complete an additional 40 wells in the Majorsville/Mamont area within the Anchor Systems by the end of 2023. To the extent the requisite number of wells are not drilled and completed by CNX Gas in a given period, we will be entitled to a deficiency payment per shortfall well as set forth below:

•July 1, 2018 to December 31, 2020 - 15 wells (As of March 31, 2020, CNX Gas has exceeded the minimum well commitment by six wells)

•January 1, 2021 to December 31, 2023 - 25 wells (deficiency payment of $2.8 million per well)

CNX Gas provides us with quarterly updates on its drilling and development operations, which include detailed descriptions of the drilling plans, production details and well locations for periods that range from up to 24-48 months, as well as more general development plans that may extend as far as ten years. In addition, we regularly meet with CNX Gas to discuss our current plans to timely construct the necessary facilities to be able to provide midstream services to them on our dedicated acreage. In the event that we do not perform our obligations under our GGA, CNX Gas will be entitled to certain rights and procedural remedies thereunder, including the temporary and/or permanent release from dedication and indemnification from us.

There are no restrictions under our GGAs with CNX Gas on the ability of CNX Gas to transfer acreage in the right of first offer (“ROFO”) area, and any such transfer of acreage in the ROFO area will not be subject to our right of first offer. 

Upon completion of its 20-year term in 2037, our GGA with CNX Gas will continue in effect from year to year until such time as the agreement is terminated by either us or CNX Gas on or before 180 days prior written notice.

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CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Current Assets:
Cash	$ 5,235	$ 31
Receivables — related party	21,714	21,076
Receivables — third party, net (Note 2)	4,980	7,935
Other current assets	2,064	1,976
Total Current Assets	33,993	31,018
Property and Equipment (Note 5):
Property and equipment	1,315,118	1,302,566
Less — accumulated depreciation	114,574	106,975
Property and Equipment — Net	1,200,544	1,195,591
Other Assets:
Operating lease right-of-use assets	3,225	4,731
Other assets	2,945	3,262
Total Other Assets	6,170	7,993
TOTAL ASSETS	1,240,707	1,234,602
Current Liabilities:
Trade accounts payable	9,696	15,683
Accrued interest payable	1,256	7,973
Accrued liabilities	21,271	43,634
Due to related party (Note 4)	51,688	4,787
Total Current Liabilities	83,911	72,077
Other Liabilities:
Revolving credit facility (Note 6)	347,000	311,750
Senior Notes (Note 6)	394,399	394,162
Long-term liabilities — related party (Note 4)	85,000	0
Total Long-Term Debt	741,399	705,912
TOTAL LIABILITIES	910,310	777,989
Partners’ Capital and Noncontrolling Interest:
Limited partner units (89,799,224 issued and outstanding at March 31, 2020 and 63,736,622 issued and outstanding at December 31, 2019)	226,376	380,473
Class B units (3,000,000 issued and outstanding at March 31, 2020 and none issued and outstanding at December 31, 2019)	34,590	0
General partner interest	0	7,280
Partners’ capital attributable to CNX Midstream Partners LP	260,966	387,753
Noncontrolling interest	69,431	68,860
Total Partners’ Capital and Noncontrolling Interest	330,397	456,613
TOTAL LIABILITIES AND PARTNERS’ CAPITAL	$ 1,240,707	$ 1,234,602

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parenthetical) - Credit Facility	Mar. 31, 2020 USD ($)
Revolving credit facility	$ 600,000,000.0
Secured Debt
Revolving credit facility	$ 600,000,000.0

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RELATED PARTY TRANSACTIONS - Omnibus Agreement (Details) - CNX - Affiliated Entity - Administrative Services - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Related Party Transaction [Line Items]
General and administrative expenses		$ 7.9
Scenario, Forecast
Related Party Transaction [Line Items]
General and administrative expenses	$ 7.3

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PROPERTY AND EQUIPMENT - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Property, Plant and Equipment [Line Items]
Gain (loss) on asset sales and abandonments	$ 11	$ (7,229)
Assets under construction
Property, Plant and Equipment [Line Items]
Interest costs capitalized	$ 700	800
Anchor Systems
Property, Plant and Equipment [Line Items]
Gain (loss) on asset sales and abandonments		$ (7,200)

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COMMITMENTS AND CONTINGENCIES	3 Months Ended
	Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIESLitigationThe Partnership may become involved in certain legal proceedings from time to time, and where appropriate, we have accrued our estimate of the probable costs for the resolution of these claims. The Partnership believes that the ultimate outcome of any matter currently pending against the Partnership will not materially affect the Partnership’s business, financial condition, results of operations, liquidity or ability to make distributions.

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CASH DISTRIBUTIONS

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

CASH DISTRIBUTIONS

CASH DISTRIBUTIONS

Our partnership agreement requires that we distribute all of our Available Cash from Operating Surplus, as those terms are defined in the partnership agreement, within 45 days after the end of each quarter to unitholders of record on the applicable record date, in accordance with the terms below.

Allocations of Available Cash from Operating Surplus and Incentive Distribution Rights

Prior to the IDR Elimination Transaction on January 29, 2020 (See Note 1 – Description of Business), the percentage allocations of available cash from operating surplus between the unitholders and our general partner was based on the specified target distribution levels. IDRs represented the right to receive an increasing percentage, up to a maximum of 48% (which did not include the 2% general partner interest), of quarterly distributions of available cash from operating surplus after the minimum quarterly distribution and the target distribution levels had been achieved.

Cash Distributions

The Board of Directors declared the following cash distributions to the Partnership’s common unitholders and to the general partner for the periods presented:

(in thousands, except per unit information)
Quarters Ended	Quarterly Distribution Per Unit		Total Cash Distribution		Date of Distribution
March 31, 2019	$	0.3732	$	28,940	May 14, 2019
June 30, 2019	$	0.3865	$	30,637	August 14, 2019
September 30, 2019	$	0.4001	$	32,371	November 12, 2019
December 31, 2019	$	0.4143	$	37,201	February 13, 2020

See Note 10–Subsequent Events for information regarding the distribution that was approved by the Board of Directors with respect to the quarter ended March 31, 2020.

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Basis of Accounting

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and various disclosures. Actual results could differ from those estimates, which are evaluated on an ongoing basis, utilizing historical experience and other methods considered reasonable under the particular circumstances. Although these estimates are based on management’s best available knowledge at the time, changes in facts and circumstances or discovery of new facts or circumstances may result in revised estimates and actual results may differ from these estimates. Effects on the Partnership’s business, financial position and results of operations resulting from revisions to estimates are recognized when the facts that give rise to the revision become known.

Principles of Consolidation

The consolidated financial statements include the accounts of the Partnership and all of its controlled subsidiaries, including 100% of each of the Anchor Systems and Additional Systems in the applicable periods presented within this Quarterly Report on Form 10-Q. Although the Partnership has less than a 100% economic interest in the Additional Systems, it has been consolidated fully with the results of the Partnership in the applicable periods as the Partnership is considered to be the primary beneficiary and has a controlling financial interest and the power through its ownership to direct the activities of the Additional Systems. After adjusting for noncontrolling interests, net income attributable to general and limited partner ownership interests in the Partnership reflect only that portion of net income that is attributable to the Partnership’s unitholders.

Transactions between the Partnership and CNX Resources have been identified in the consolidated financial statements as transactions between related parties and are disclosed in Note 4–Related Party Transactions.

Revenue Recognition

We record revenue when obligations under the terms of the contracts with our shippers are satisfied; generally, this occurs on a daily basis as we gather natural gas at the wellhead. Revenue is measured as the amount of consideration we expect to receive in exchange for providing the natural gas gathering services.

Nature of performance obligations

At contract inception, we assess the services promised in our contracts with customers and identify a performance obligation for each promised service that is distinct. To identify the performance obligations, we consider all of the services promised in the contract, regardless of whether they are explicitly stated or are implied by customary business practices.

Our revenue is generated from natural gas gathering activities. The gas gathering services are interruptible in nature and include charges for the volume of gas actually gathered and do not guarantee access to the system. Volumetric-based fees relate to actual volumes gathered. In general, the interruptible gathering of each unit one million British Thermal Units (MMBtu) of natural gas represents a separate performance obligation. Payment terms for these contracts require payment within 25 days of the end of the calendar month in which the hydrocarbons are gathered.

Transaction price allocated to remaining performance obligations

We are required to disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied. However, the guidance provides certain practical expedients that limit this requirement. Substantially all of our revenues are derived from contracts that have terms of greater than one year. Under these contracts, the interruptible gathering of each unit of natural gas represents a separate performance obligation.

For revenue associated with the Shirley-Penns System, for which we have remaining contractual performance obligations, the aggregate amount of the transaction price allocated to those remaining performance obligations was $350.8 million at March 31, 2020. See Note 4–Related Party Transactions for a detailed breakout of the minimum revenue by year.

The amount of revenue associated with this contract up to the minimum volume commitment (“MVC”) is fixed in nature, and volumes that we may gather above the MVC will be variable in nature. As of March 31, 2020, no future performance obligations exist relative to volumes to be gathered in excess of the MVC as the related volumes have not yet been nominated

for gathering. Therefore, we have not disclosed the value of unsatisfied performance obligations for the variable aspect of this agreement, nor have we disclosed the value of other unsatisfied performance obligations that are variable in nature.

Prior-period performance obligations

We record revenue when obligations under the terms of the contracts with our shippers are satisfied; generally this occurs on a daily basis when we gather gas at the wellhead. In some cases, we are required to estimate the amount of natural gas that we have gathered during an accounting period and record any differences between our estimates and the actual units of natural gas that we gathered in the following month. We have existing internal controls for our revenue estimation process and related accruals; historically, any identified differences between our revenue estimates and actual revenue received have not been significant. For the quarters ended March 31, 2020 and 2019, revenue recognized in the reporting period related to performance obligations satisfied in prior reporting periods was not material.

Disaggregation of revenue

See Note 8–Segment Information for additional information.

Contract balances

We invoice customers once our performance obligations have been satisfied, at which point payment becomes unconditional. Accordingly, our contracts with customers do not give rise to contract assets or liabilities. We also have no contract assets recognized from the costs to obtain or fulfill a contract with a customer.

Classification

The fees we charge our affiliates, including our Sponsor, are recorded in gathering revenue — related party in our consolidated statements of operations. Fees from midstream services we perform for third-party shippers are recorded in gathering revenue — third-party in our consolidated statements of operations.

Cash

Cash includes cash on hand and on deposit at banking institutions.

Receivables

On January 1, 2020, the Partnership adopted the guidance under the Financial Accounting Standards Board (the “FASB”) Accounting Standard Update (“ASU”) 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The Partnership adopted Topic 326 using the prospective transition method.

Prior to adopting Topic 326, the Partnership reserved for specific accounts receivable when it was probable that all or a part of an outstanding balance would not be collected, such as customer bankruptcies. Collectability was determined based on terms of sale, credit status of customers and various other circumstances. We regularly reviewed collectability and established or adjusted the reserve as necessary using the specific identification method. Account balances were charged off against the reserve after all means of collection had been exhausted and the potential for recovery was considered remote.

Under Topic 326, management recorded an allowance for credit losses related to the collectability of third-party customers receivables using the historical aging of the customer receivable balance. Related party receivables between entities under common control are excluded from Topic 326. The collectibility was determined based on past events, including historical experience, customer credit rating, as well as current market conditions. We will continue to monitor customer ratings and collectability on a quarterly basis. Account balances will be charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The allowance for credit losses is as follows:

(in thousands)	March 31, 2020
Receivables — Third-Party	$	5,056
Allowance for Credit Losses	(76)
Receivables — Third-Party, Net	$	4,980

Fair Value Measurement

The FASB Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, clarifies the definition of fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This guidance also relates to all nonfinancial assets and liabilities that are not recognized or disclosed on a recurring basis (e.g., the initial recognition of asset retirement obligations and impairments of long-lived assets). The fair value is the price that we estimate we would receive upon selling an asset or that we would pay to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy is used to prioritize input to valuation techniques used to estimate fair value. An asset or liability subject to the fair value requirements is categorized within the hierarchy based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The highest priority (Level 1) is given to unadjusted quoted market prices in active markets for identical assets or liabilities, and the lowest priority (Level 3) is given to unobservable inputs. Level 2 inputs are data, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly.The carrying values on our balance sheets of our current assets, current liabilities and revolving credit facility approximate fair values due to their short maturities. We estimate the fair value of our long-term debt, which is not actively traded, using an income approach model that utilizes a discount rate based on market rates for other debt with similar remaining time to maturity and credit risk (Level 2).

Property and Equipment

Property and equipment is recorded at cost upon acquisition and is depreciated on a straight-line basis over the assets’ estimated useful lives or over the lease terms of the assets. Expenditures which extend the useful lives of existing property and equipment are capitalized. When properties are retired or otherwise disposed, the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss on disposition is recognized.

The Partnership evaluates whether long-lived assets have been impaired during any given quarter and has processes in place to ensure that we become aware of such indicators. Impairment indicators may include, but are not limited to, sustained decreases in commodity prices, a decline in customer well results and lower throughput forecasts, and increases in construction or operating costs. For such long-lived assets, impairment exists when the carrying amount of an asset or group of assets exceeds our estimates of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or group of assets. If the carrying amount of the long-lived asset(s) is not recoverable, based on the estimated future undiscounted cash flows, the impairment loss would be measured as the excess of the asset’s carrying amount over its estimated fair value. In the event that impairment indicators exist, we conduct an impairment test.

Fair value represents the estimated price between market participants to sell an asset in the principal or most advantageous market for the asset, based on assumptions a market participant would make. When warranted, management assesses the fair value of long-lived assets using commonly accepted techniques and may use more than one source in making such assessments. Sources used to determine fair value include, but are not limited to, recent third-party comparable sales, internally developed discounted cash flow analyses and analyses from outside advisors. Significant changes, such as the condition of an asset or management’s intent to utilize the asset, generally require management to reassess the cash flows related to long-lived assets. No property and equipment impairments were identified during the periods presented in the accompanying consolidated financial statements.

Leases

In February 2016, the FASB issued ASU 2016-02–Leases (Topic 842), which increases transparency and comparability among organizations by recognizing right-of-use (“ROU”) lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU maintains a distinction between finance leases and operating leases, which is substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous lease guidance. Retaining this distinction allows the recognition, measurement and presentation of expenses and cash flows arising from a lease to remain similar to the previous accounting treatment. A lessee is permitted to make an accounting policy election by class of underlying asset to exclude from balance sheet recognition any lease assets and lease liabilities with a term of 12 months or less, and instead to recognize lease expense on a straight-line basis over the lease term. For both financing and operating leases, the ROU asset and lease liability are initially measured at the present value of the lease payments. In July 2018, the FASB issued ASU 2018-11 which provides entities with the option to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, if necessary.

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease ROU assets and accrued liabilities on our consolidated balance sheets. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date of the lease in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Environmental Matters

We are subject to various federal, state and local laws and regulations relating to the protection of the environment. Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or clean-ups are probable, and the costs can be reasonably estimated. At this time, we are unable to assess the timing and/or effect of potential liabilities related to greenhouse gas emissions or other environmental issues.

Asset Retirement Obligations

Our gathering pipelines and compressor stations have an indeterminate life. If properly maintained, they will operate for an indeterminate period as long as supply and demand for natural gas exists, which we expect for the foreseeable future. We are under no legal or contractual obligation to restore or dismantle our gathering system upon abandonment.

Variable Interest Entities

Each of the Anchor and Additional Systems is structured as a limited partnership (the “Limited Partnerships”) and a variable interest entity (“VIE”). These VIEs correspond with the manner in which we report our segment information in Note 8–Segment Information, which also includes information regarding the Partnership’s involvement with each of these VIEs and their relative contributions to our financial position, operating results and cash flows. The Partnership fully consolidates each of the Limited Partnerships through its ownership of CNX Midstream Operating Company LLC (the “Operating Company”). The Operating Company, through its general partner ownership interest in each of the Limited Partnerships during the period in which any ownership interest exists, is considered to be the primary beneficiary for accounting purposes and has the power to direct all substantive strategic and day-to-day operational decisions of the Limited Partnerships.

Income Taxes

We are treated as a partnership for federal and state income tax purposes, with each partner being separately taxed on its share of the Partnership’s taxable income. Accordingly, no provision for federal or state income taxes has been recorded in the Partnership’s consolidated financial statements for any period presented in the accompanying consolidated financial statements.

Equity Compensation

Equity compensation expense for all unit-based compensation awards is based on the grant date fair value estimated in accordance with the provisions of ASC 718–Compensation–Stock Compensation. We recognize unit-based compensation costs on a straight-line basis over the requisite service period of an award, which is generally the same as the award’s vesting term. See Note 9–Long-Term Incentive Plan for further discussion.

Net Income Per Limited Partner Unit and General Partner Interest

Net income per limited partner unit is calculated using the two-class method, under which income is allocated to participating securities in accordance with the terms of our partnership agreement. The two-class method uses an earnings allocation method under which earnings per limited partner unit are calculated for each class of common unit and any participating security considering all distributions declared and participation rights in undistributed earnings as if all earnings had been distributed during the period. Diluted net income per limited partner unit reflects the potential dilution that could occur if securities or agreements to issue common units were exercised, settled or converted into common units.

Prior to the IDR Elimination Transaction on January 29, 2020, we allocated net income between our general partner and limited partners, which included allocations of net income to our limited partners, our general partner and the holders of our IDRs in accordance with the terms of our partnership agreement. We also allocated any distributions in excess of earnings for the period to our general partner and our limited partners based on their respective proportionate ownership interests in us, after taking into account distributions to be paid with respect to the IDRs, as set forth in our partnership agreement. Following the IDR Elimination Transaction, the Partnership’s common unitholders are entitled to all distributions until the Class B units are converted to common units on January 1, 2022. Class B unitholders have no rights to distributions until they are converted into common units.

Historical Earnings per Unit

The Partnership calculates historical earnings per unit under the two-class method and allocates the earnings or losses of a transferred business before the date of a dropdown transaction entirely to the general partner. If applicable, the previously reported earnings per unit of the limited partners would not change as a result of a dropdown transaction.

Diluted net income per limited partner unit reflects the potential dilution that could occur if securities or agreements to issue common units, such as awards under the long-term incentive plan, were exercised, settled or converted into common units. When it is determined that potential common units resulting from an award subject to performance or market conditions should be included in the diluted net income per limited partner unit calculation, the impact is calculated by applying the treasury stock method.

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04 - Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848). This ASU provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates and, particularly, the risk of cessation of the London Interbank Offered Rate (LIBOR), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. The Partnership is still evaluating the effect of adopting this guidance.In March 2020, the FASB issued ASU 2020-03 - Codification Improvements to Financial Instruments. This ASU improves and clarifies various financial instruments topics, including the CECL standard. The ASU includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments in this ASU have different effective dates. The adoption of this guidance is not expected to have a material impact on the Partnership's financial statements.

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CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands		3 Months Ended
		Mar. 31, 2020	Mar. 31, 2019
Revenue
Gathering revenue — related party		$ 62,178	$ 53,776
Gathering revenue — third party		17,953	18,443
Miscellaneous income		65	0
Total Revenue		80,196	72,219
Expenses
Operating expense — related party (Note 4)		3,828	5,548
Operating expense — third party		8,596	5,974
General and administrative expense — related party (Note 4)		2,857	3,967
General and administrative expense — third party		2,765	1,536
(Gain) loss on asset sales and abandonments		(11)	7,229
Depreciation expense		7,578	5,650
Interest expense		8,793	7,339
Total Expense		34,406	37,243
Net Income		45,790	34,976
Less: Net income (loss) income attributable to noncontrolling interest		571	(131)
Net Income Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP		45,219	35,107
Calculation of Limited Partner Interest in Net Income:
Net Income Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP		45,219	35,107
Less: General partner interest in net income, including incentive distribution rights		0	5,279
Limited partner interest in net income		$ 45,219	$ 29,828
Earnings per limited partner unit:
Basic (in dollars per unit)		$ 0.50	$ 0.47
Diluted (in dollars per unit)		$ 0.49	$ 0.47
Weighted average number of limited partner units outstanding (in thousands):
Basic (in shares)		89,797	63,698
Diluted (in shares)		92,822	63,758
Cash distributions declared per unit (in dollars per share)	[1]	$ 0.0829	$ 0.3732

[1] Represents the cash distributions declared during the month following the end of each respective quarterly period. See Note 10.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash Flows from Operating Activities:
Net income	$ 45,790	$ 34,976
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense and amortization of debt issuance costs	8,050	6,121
Unit-based compensation	504	612
(Gain) loss on asset sales and abandonments	(11)	7,229
Other	11	11
Changes in assets and liabilities:
Due to/from affiliate	(3,706)	(1,923)
Receivables — third party	2,955	448
Other current and non-current assets	1,500	(8,971)
Accounts payable and other accrued liabilities	(14,970)	11,410
Net Cash Provided by Operating Activities	40,123	49,913
Cash Flows from Investing Activities:
Capital expenditures	(32,659)	(78,557)
Net Cash Used in Investing Activities	(32,659)	(78,557)
Cash Flows from Financing Activities:
Contributions from general partner and noncontrolling interest holders, net	0	30
Vested units withheld for unitholder taxes	(309)	(664)
Quarterly distributions to unitholders	(37,201)	(27,268)
Net borrowings on secured $600.0 million credit facility	35,250	52,650
Net Cash (Used in) Provided by Financing Activities	(2,260)	24,748
Net Increase (Decrease) in Cash	5,204	(3,896)
Cash at Beginning of Period	31	3,966
Cash at End of Period	5,235	70
Cash paid during the period for:
Interest	15,756	14,251
Noncash investing activities:
Accrued capital expenditures	$ 8,366	$ 26,298

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LONG-TERM INCENTIVE PLAN - Schedule of Nonvested Performance-based Units Activity (Details) - Phantom Share Units (PSUs)	3 Months Ended
	Mar. 31, 2020 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Total awarded and unvested, beginning balance (in shares) | shares	174,465
Granted (in shares) | shares	133,852
Vested (in shares) | shares	(83,188)
Forfeited (in shares) | shares	(9,767)
Total awarded and unvested, ending balance (in shares) | shares	215,362
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Total awarded and unvested, beginning balance (in shares) | $ / shares	$ 16.83
Granted (in dollars per share) | $ / shares	15.98
Vested (in dollars per share) | $ / shares	17.32
Forfeited (in dollars per share) | $ / shares	16.38
Total awarded and unvested, ending balance (in shares) | $ / shares	$ 16.13

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DESCRIPTION OF BUSINESS (Details) shares in Millions, $ in Millions			1 Months Ended			3 Months Ended	25 Months Ended
	Jan. 01, 2022 shares	Jan. 29, 2020 shares	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Mar. 31, 2020 system segment	Dec. 31, 2022 USD ($)
Schedule of Equity Method Investments [Line Items]
Number of operating segments | segment						2
Number of primary midstream systems | system						5
Shirley-Penns System | Anchor Systems
Schedule of Equity Method Investments [Line Items]
Ownership interest						100.00%
Shirley-Penns System | Additional Systems
Schedule of Equity Method Investments [Line Items]
Ownership interest						5.00%
CNX Midstream Partners LP
Schedule of Equity Method Investments [Line Items]
General partner's ownership interest (as a percent)		2.00%
Ownership percentage		53.10%
Additional Systems | Additional Systems | CONE Gathering
Schedule of Equity Method Investments [Line Items]
Noncontrolling interest, percent						95.00%
Senior Notes
Schedule of Equity Method Investments [Line Items]
Stated rate						6.50%
Beneficial Owner
Schedule of Equity Method Investments [Line Items]
Related party, shares owned		47.7
Ownership percentage		54.60%
Beneficial Owner | Scenario, Forecast
Schedule of Equity Method Investments [Line Items]
Related party, shares owned	50.7
Beneficial Owner | CNX Midstream Partners LP
Schedule of Equity Method Investments [Line Items]
Number of installments for partners' capital contributions		3
Beneficial Owner | CNX Midstream Partners LP | Scenario, Forecast
Schedule of Equity Method Investments [Line Items]
Noncash contribution of assets held by general partner | $			$ 35.0	$ 50.0	$ 50.0		$ 135.0
Beneficial Owner | CNX Midstream Partners LP | Common Units
Schedule of Equity Method Investments [Line Items]
Partners' capital account, units, contributed		26.0
Beneficial Owner | CNX Midstream Partners LP | Class B Units [Member]
Schedule of Equity Method Investments [Line Items]
Partners' capital account, units, contributed		3.0

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PROPERTY AND EQUIPMENT (Tables)

3 Months Ended

Mar. 31, 2020

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and equipment consisted of the following:

(in thousands)	March 31, 2020		December 31, 2019		Estimated Useful Lives in Years
Land	$	79,948	$	79,829	N/A
Gathering equipment	747,118		717,277		25 — 40
Compression equipment	387,365		332,358		30 — 40
Processing equipment	30,979		30,979		40
Assets under construction	69,708		142,123		N/A
Total Property and Equipment	$	1,315,118	$	1,302,566
Less: Accumulated depreciation
Gathering equipment	$	80,725	$	75,879
Compression equipment	26,857		24,311
Processing equipment	6,992		6,785
Total Accumulated Depreciation	$	114,574	$	106,975
Property and Equipment — Net	$	1,200,544	$	1,195,591

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LONG-TERM INCENTIVE PLAN

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

LONG-TERM INCENTIVE PLAN

LONG-TERM INCENTIVE PLAN

Under the Partnership’s 2014 Long-Term Incentive Plan (our “LTIP”), our general partner may issue long-term equity-based awards to directors, officers and employees of the general partner or its affiliates, or to any consultants, affiliates of our general partner or other individuals who perform services on behalf of the Partnership. The Partnership is responsible for the cost of awards granted under the LTIP, which limits the number of units that may be delivered pursuant to vested awards to 5.8 million common units, subject to proportionate adjustment in the event of unit splits and similar events. Common units subject to awards that are canceled, forfeited, withheld to satisfy tax withholding obligations or otherwise terminated without delivery of the common units will be available for delivery pursuant to other awards.

The following table presents phantom unit activity during the three months ended March 31, 2020:

	Number of Units	Weighted Average Grant Date Fair Value
Total awarded and unvested at December 31, 2019	174,465	$	16.83
Granted	133,852	15.98
Vested	(83,188)	17.32
Forfeited	(9,767)	16.38
Total awarded and unvested at March 31, 2020	215,362	$	16.13

The Partnership accounts for phantom units as equity awards and records compensation expense on a straight-line basis over the vesting period based on the fair value of the awards on their grant dates. Awards granted to independent directors vest over a period of one year, and awards granted to certain officers and employees of the general partner vest 33% per year over a period of three years.

The Partnership recognized $0.5 million and $0.6 million of compensation expense related to phantom units for the three months ended March 31, 2020 and 2019, which was included in general and administrative expense–related party in the consolidated statements of operations.

At March 31, 2020, the unrecognized compensation related to all outstanding awards was approximately $3.0 million, which we expect to recognize through 2022.

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PROPERTY AND EQUIPMENT

3 Months Ended

Mar. 31, 2020

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

(in thousands)	March 31, 2020		December 31, 2019		Estimated Useful Lives in Years
Land	$	79,948	$	79,829	N/A
Gathering equipment	747,118		717,277		25 — 40
Compression equipment	387,365		332,358		30 — 40
Processing equipment	30,979		30,979		40
Assets under construction	69,708		142,123		N/A
Total Property and Equipment	$	1,315,118	$	1,302,566
Less: Accumulated depreciation
Gathering equipment	$	80,725	$	75,879
Compression equipment	26,857		24,311
Processing equipment	6,992		6,785
Total Accumulated Depreciation	$	114,574	$	106,975
Property and Equipment — Net	$	1,200,544	$	1,195,591

The Partnership capitalized approximately $0.7 million and $0.8 million of interest on assets under construction during the three months ended March 31, 2020 and 2019, respectively.

During the three months ended March 31, 2019, the Partnership abandoned the construction of a compressor station that was designed to support additional production within certain areas of the Anchor Systems, incurring a loss of $7.2 million.

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RELATED PARTY TRANSACTIONS - Schedule of Related Party Transactions (Details) - CNX Resources Corporation - Affiliated Entity - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Related Party Transaction [Line Items]
General and administrative expenses	$ 2,857	$ 3,967
Operating Expense
Related Party Transaction [Line Items]
Charges for services	3,828	5,548
Operating Expense | Shared Service Agreement
Related Party Transaction [Line Items]
Charges for services	1,909	3,633
Operating Expense | Electrically-Powered Compression Reimbursement
Related Party Transaction [Line Items]
Charges for services	$ 1,919	$ 1,915

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RELATED PARTY TRANSACTIONS - Schedule of MVC per Gathering Agreements (Details) $ in Millions	Mar. 31, 2020 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations expected to be satisfied	$ 350.8
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations expected to be satisfied, expected timing	9 months
Performance obligations expected to be satisfied	$ 6.0
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations expected to be satisfied, expected timing	1 year
Performance obligations expected to be satisfied	$ 40.7
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations expected to be satisfied, expected timing	1 year
Performance obligations expected to be satisfied	$ 47.7
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations expected to be satisfied, expected timing	1 year
Performance obligations expected to be satisfied	$ 42.8
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations expected to be satisfied, expected timing	1 year
Performance obligations expected to be satisfied	$ 39.6
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations expected to be satisfied, expected timing
Performance obligations expected to be satisfied	$ 174.0

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LONG-TERM DEBT - Schedule of Debt (Details) - Senior Notes - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2018
Debt Instrument [Line Items]
Stated rate	6.50%
Senior Notes due March 2026 at 6.5%	$ 400,000	$ 400,000
Less: Unamortized debt issuance costs	1,164	1,213
Less: Unamortized bond discount	4,437	4,625
Total Senior Notes	$ 394,399	$ 394,162	$ 394,000

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DESCRIPTION OF BUSINESS

3 Months Ended

Mar. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS

CNX Midstream Partners LP (the “Partnership”, or “we”, “us”, or “our”) is a growth-oriented master limited partnership focused on the ownership, operation, development and acquisition of midstream energy infrastructure in the Appalachian Basin. We currently provide midstream services to our customers’ production in the Marcellus Shale and Utica Shale in Pennsylvania and West Virginia under long-term, fixed-fee contracts. Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. We are managed by our general partner, CNX Midstream GP LLC (our “general partner”), a wholly owned subsidiary of CNX Gathering LLC (“CNX Gathering”). CNX Gathering is a wholly owned subsidiary of CNX Gas Company LLC (“CNX Gas”), which is a wholly owned subsidiary of CNX Resources Corporation (NYSE: CNX) (“CNX Resources”). Accordingly, CNX Resources is the Sponsor of the Partnership, and we may refer to CNX Resources as the “Sponsor” throughout this Quarterly Report on Form 10-Q.

Description of Business

Our midstream assets consist of two operating segments that we refer to as our “Anchor Systems” and “Additional Systems” based on their relative current cash flows, growth profiles, capital expenditure requirements and the timing of their development.

•Our Anchor Systems, in which the Partnership owns a 100% controlling interest, include our most developed midstream systems that generate the largest portion of our current cash flows, including our five primary midstream systems (the McQuay, Majorsville, Dry Ridge, Mamont and Shirley-Penns Systems), a 20” high-pressure pipeline contributed to us in the CNX Transaction, that occurred in 2018, and related assets.

•Our Additional Systems, in which the Partnership owns a 5% controlling interest, include several gathering systems throughout our dedicated acreage. Revenues from our Additional Systems are currently derived primarily from the Pittsburgh Airport area, which is within the wet gas region of our dedicated acreage and the Wadestown area in the dry gas region. Currently, the substantial majority of capital investment in these systems would be funded directly by CNX Resources in proportion to CNX Gathering’s 95% retained ownership interest.

In order to maintain operational flexibility, our operations are conducted through, and our operating assets are owned by, our operating subsidiaries. However, neither we nor our operating subsidiaries have any employees. Our general partner has the sole responsibility for providing the personnel necessary to conduct our operations, whether through directly hiring employees or by obtaining the services of others, which may include personnel of CNX Resources as provided through contractual relationships with the Partnership. All of the personnel who conduct our business are employed or contracted by our general partner and its affiliates, including our Sponsor, but we sometimes refer to these individuals as our employees because they provide services directly to us. See Note 4–Related Party Transactions for additional information.

IDR Elimination Transaction

On January 29, 2020, CNX and CNXM entered into and closed definitive agreements to eliminate CNXM’s incentive distribution rights (“IDRs”) held by its general partner and to convert the 2.0% general partner interest in CNXM into a non-economic general partnership interest (collectively, the "IDR Elimination Transaction"). 

Pursuant to the IDR Elimination Transaction agreements, CNX received the following consideration in exchange for the cancellation of the IDRs and conversion of the 2.0% general partner interest:

•26 million CNXM common units;

•3 million new CNXM Class B units, which will not receive or accrue distributions until January 1, 2022, at which time they will automatically convert into CNXM common units on a one-for-one basis; and

•$135.0 million, to be paid in three installments of $50.0 million due December 31, 2020, $50.0 million due December 31, 2021 and $35.0 million due December 31, 2022.

After giving effect to the IDR Elimination Transaction, CNX now owns 47.7 million CNXM common units, or approximately 53.1%, of the outstanding limited partner interests in CNXM, excluding the CNXM Class B units. Following the conversion of the CNXM Class B units into CNXM common units on January 1, 2022, CNX’s ownership will increase to 50.7 million CNXM units, or approximately 54.6% of the outstanding limited partner interests in CNXM, on a proforma basis.

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CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Allowance for credit losses	$ 76
Units issued (in shares)	89,799,224	89,799,224
Units outstanding (in shares)	63,736,622	63,736,622
Class B
Common stock, shares issued (in shares)	3,000,000	0
Common stock, shares outstanding (in shares)	3,000,000	0

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SEGMENT INFORMATION - Schedule of Segment Results (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Segment Reporting Information [Line Items]
Gathering Revenue	$ 80,196	$ 72,219
Net Income (Loss)	45,790	34,976
Depreciation Expense	7,578	5,650
Capital Expenditures for Segment Assets	32,659	78,557
Segment Assets	1,240,707		$ 1,234,602
Anchor Systems
Segment Reporting Information [Line Items]
Gathering Revenue	76,546	70,171
Net Income (Loss)	45,190	35,114
Depreciation Expense	7,073	5,236
Capital Expenditures for Segment Assets	31,308	75,799
Segment Assets	1,129,043		1,123,488
Additional Systems
Segment Reporting Information [Line Items]
Gathering Revenue	3,650	2,048
Net Income (Loss)	600	(138)
Depreciation Expense	505	414
Capital Expenditures for Segment Assets	1,351	$ 2,758
Segment Assets	$ 111,664		$ 111,114

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SIGNIFICANT ACCOUNTING POLICIES - Receivables (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Accounting Policies [Abstract]
Receivables — Third-Party	$ 5,056
Allowance for Credit Losses	(76)
Receivables — Third-Party, Net	$ 4,980	$ 7,935

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SEGMENT INFORMATION (Tables)

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Schedule of Operating Revenues and Income from Operations

Segment results for the periods presented were as follows:

	Three Months Ended March 31,
(in thousands)	2020		2019
Gathering Revenue:
Anchor Systems	$	76,546	$	70,171
Additional Systems	3,650		2,048
Total Gathering Revenue	$	80,196	$	72,219
Net Income (Loss):
Anchor Systems	$	45,190	$	35,114
Additional Systems	600		(138)
Total Net Income	$	45,790	$	34,976
Depreciation Expense:
Anchor Systems	$	7,073	$	5,236
Additional Systems	505		414
Total Depreciation Expense	$	7,578	$	5,650
Capital Expenditures for Segment Assets:
Anchor Systems	$	31,308	$	75,799
Additional Systems	1,351		2,758
Total Capital Expenditures	$	32,659	$	78,557

Reconciliation of Assets from Segment to Consolidated

Segment assets as of the dates presented were as follows:

(in thousands)	March 31, 2020		December 31, 2019
Segment Assets
Anchor Systems	$	1,129,043	$	1,123,488
Additional Systems	111,664		111,114
Total Segment Assets	$	1,240,707	$	1,234,602

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CASH DISTRIBUTIONS (Tables)

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Cash Distributions

The Board of Directors declared the following cash distributions to the Partnership’s common unitholders and to the general partner for the periods presented:

(in thousands, except per unit information)
Quarters Ended	Quarterly Distribution Per Unit		Total Cash Distribution		Date of Distribution
March 31, 2019	$	0.3732	$	28,940	May 14, 2019
June 30, 2019	$	0.3865	$	30,637	August 14, 2019
September 30, 2019	$	0.4001	$	32,371	November 12, 2019
December 31, 2019	$	0.4143	$	37,201	February 13, 2020

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SEGMENT INFORMATION - Narrative (Details)	3 Months Ended
	Mar. 31, 2020 segment
Segment Reporting [Abstract]
Number of operating segments	2

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SUBSEQUENT EVENTS (Details) - $ / shares			3 Months Ended
		Apr. 24, 2020	Mar. 31, 2020	Mar. 31, 2019
Subsequent Event [Line Items]
Cash distributions declared per unit (in dollars per share)	[1]		$ 0.0829	$ 0.3732
Subsequent Event
Subsequent Event [Line Items]
Cash distributions declared per unit (in dollars per share)		$ 0.0829

[1] Represents the cash distributions declared during the month following the end of each respective quarterly period. See Note 10.

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LONG-TERM INCENTIVE PLAN (Tables)

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

Schedule of Nonvested Performance-based Units Activity

The following table presents phantom unit activity during the three months ended March 31, 2020:

	Number of Units	Weighted Average Grant Date Fair Value
Total awarded and unvested at December 31, 2019	174,465	$	16.83
Granted	133,852	15.98
Vested	(83,188)	17.32
Forfeited	(9,767)	16.38
Total awarded and unvested at March 31, 2020	215,362	$	16.13

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RELATED PARTY TRANSACTIONS (Tables)

3 Months Ended

Mar. 31, 2020

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

Operating expense and general and administrative expense – related party were derived from CNX Resources and consisted of the following:

	Three Months Ended   March 31,
(in thousands)	2020		2019
Operational services	$	1,909	$	3,633
Electrical compression	1,919		1,915
Total Operating Expense — Related Party	$	3,828	$	5,548

Total General and Administrative Expense — Related Party $ 2,857  $ 3,967 

Related party liabilities due to CNX Resources consisted of the following:

(in thousands)	March 31, 2020		December 31, 2019
Expense reimbursements	$	564	$	489
Capital expenditures reimbursements	61		—
General and administrative services	1,063		4,298
IDR Transaction - current portion	50,000		—
Total Due to Related Party - Current Portion	51,688		4,787
IDR Transaction - long-term portion	85,000		—
Total Due to Related Party - Current and Long-Term	$	136,688	$	4,787

Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction

We will recognize minimum revenue on volumes throughout the term of the GGA, as set forth below:

(in millions)	Minimum Revenue per MVC
Remainder of year ending December 31, 2020	$	6.0
Year ending December 31, 2021	40.7
Year ending December 31, 2022	47.7
Year ending December 31, 2023	42.8
Year ending December 31, 2024	39.6
Remainder of term	174.0
Total minimum revenue to be recognized pursuant to Shirley-Penns MVC	$	350.8

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CASH DISTRIBUTIONS - Narrative (Details)	3 Months Ended
	Mar. 31, 2020
Distribution Made to Limited Partner [Line Items]
Period to distribute available cash (in days)	45 days
General Partnership
Distribution Made to Limited Partner [Line Items]
General partner's ownership interest (as a percent)	2.00%
Maximum
Distribution Made to Limited Partner [Line Items]
Incentive distribution, rate (as a percent)	48.00%

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

On April 24, 2020, the Board of Directors of the Partnership’s general partner declared a cash distribution to the Partnership’s unitholders with respect to the first quarter of 2020 of $0.0829 per common unit. The cash distribution will be paid on May 15, 2020 to unitholders of record at the close of business on May 7, 2020.

In March of 2020, the Partnership was notified of temporary production curtailments by one of its third-party customers that will reduce the Partnership’s future wet gas gathering revenues, of which the length and severity is still unknown. There was minimal impact on the current quarter. As of April 27, 2020, we have not received any other notifications from our customers.

COVID-19 Update

CNXM is closely monitoring the impact of the COVID-19 pandemic on all aspects of our business and geographies, including how it may impact our customers, the employees provided by our Sponsor, our vendors and contractors. While we did not incur significant disruptions during the three months ended March 31, 2020 from COVID-19, we are unable to predict the impact that the COVID-19 pandemic will have on us, including our financial position, operating results, ability to obtain future financing, the impact to our customers and demand for our services due to numerous uncertainties.

The federal Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020. The Partnership continues to assess the potential impacts of this recently enacted legislation on its financial position and results of operations.

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LONG-TERM DEBT

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

LONG-TERM DEBT

LONG-TERM DEBT

Revolving Credit Facility

In March 2018, we entered into a five-year $600.0 million secured revolving credit facility with an accordion feature that allows, subject to certain terms and conditions, the Partnership to increase the available borrowings under the revolving credit facility by up to an additional $250.0 million. The revolving credit facility includes the ability to issue letters of credit up to $100.0 million in the aggregate. The available borrowing capacity is limited by certain financial covenants pertaining to leverage and interest coverage ratios as defined in the revolving credit facility agreement.

On April 24, 2019, the Partnership amended its revolving credit facility and extended its maturity to April 2024. Among other things, we received an annual interest rate reduction of 0.25% on borrowings compared to the original agreement. Under the terms of the amended agreement, borrowings under the revolving credit facility will bear interest at our option at either:

•the base rate, which is the highest of (i) the federal funds open rate plus 0.50%, (ii) PNC Bank, N.A.’s prime rate, or (iii) the one-month LIBOR rate plus 1.00%, in each case, plus a margin ranging from 0.50% to 1.50%; or

•the LIBOR rate plus a margin ranging from 1.50% to 2.50%.

Following the amendment, the revolving credit facility now includes (i) the addition of a restricted payment basket permitting cash repurchases of IDRs subject to a pro forma secured leverage ratio of 3.00 to 1.00, a pro forma total leverage ratio of 4.00 to 1.00 and pro forma availability of 20% of commitments and (ii) a restricted payment basket for the repurchase of limited partner units not to exceed Available Cash (as defined in the partnership agreement) in any quarter of up to $150.0 million per year and up to $200.0 million during the life of the facility.

Interest on base rate loans is payable on the first business day of each calendar quarter. Interest on LIBOR loans is payable on the last day of each interest period or, in the case of interest periods longer than three months, every three months. The unused portion of our revolving credit facility is subject to a commitment fee ranging from 0.375% to 0.500% per annum depending on our most recent consolidated leverage ratio.

The revolving credit facility contains a number of affirmative and negative covenants that include, among others, covenants that restrict the ability of the Partnership, its subsidiary guarantors and certain of its non-guarantor, non-wholly-owned subsidiaries, except in certain circumstances, to: (i) create, incur, assume or suffer to exist indebtedness; (ii) create or permit to exist liens on their properties; (iii) prepay certain indebtedness unless there is no default or event of default under the

revolving credit facility; (iv) make or pay any dividends or distributions in excess of certain amounts; (v) merge with or into another person, liquidate or dissolve; or acquire all or substantially all of the assets of any going concern or going line of business or acquire all or a substantial portion of another person’s assets; (vi) make particular investments and loans; (vii) sell, transfer, convey, assign or dispose of its assets or properties other than in the ordinary course of business and other select instances; (viii) deal with any affiliate except in the ordinary course of business on terms no less favorable to the Partnership than it would otherwise receive in an arm’s length transaction; and (ix) amend in any material manner its certificate of incorporation, bylaws, or other organizational documents without giving prior notice to the lenders and, in some cases, obtaining the consent of the lenders. The agreement also contains customary events of default, including, but not limited to, a cross-default to certain other debt, breaches of representations and warranties, change of control events and breaches of covenants. The obligations under the revolving credit facility agreement are secured by substantially all of the assets of the Partnership and its wholly owned subsidiaries.

In addition, the Partnership is obligated to maintain at the end of each fiscal quarter:

•for as long as at least $150.0 million of the Senior Notes are outstanding (see below), a maximum total leverage ratio of no greater than 5.25 to 1.00 (which increases to no greater than 5.50 to 1.00 during qualifying acquisition periods);

•if less than $150.0 million of the Senior Notes are outstanding (see below), a maximum total leverage ratio of no greater than 4.75 to 1.00 (which increases to no greater than 5.25 to 1.00 during qualifying acquisition periods);

•a maximum secured leverage ratio of no greater than 3.50 to 1.00; and

•a minimum interest coverage ratio of no less than 2.50 to 1.00.

The Partnership was in compliance with all financial covenants at March 31, 2020.

On March 31, 2020, the outstanding balance on the revolving credit facility was $347.0 million at an interest rate of 2.40%. The Partnership had the maximum amount of remaining revolving credit available for borrowing at March 31, 2020, or $253.0 million.

At December 31, 2019, the outstanding balance on the revolving credit facility was $311.8 million at an interest rate of 3.26%.

Senior Notes

In March 2018, the Partnership, together with its wholly owned subsidiary CNX Midstream Finance Corp (“Finance Corp”) and (collectively with the Partnership, the “Issuers”), completed a private offering of the Senior Notes, with related guarantees (the “Guarantees”) and received net proceeds of approximately $394.0 million, after deducting the initial purchasers’ discount. In connection with the issuance of the Senior Notes, the Partnership capitalized related offering expenses, which are recorded in our consolidated balance sheet as a reduction to the principal amount. Net proceeds from the Senior Notes offering were primarily used to fund the Shirley-Penns Acquisition and repay existing indebtedness under our prior $250.0 million unsecured revolving credit facility. The Senior Notes mature on March 15, 2026 and accrue interest at a rate of 6.5% per year, which is payable semi-annually in arrears on March 15 and September 15. There are no principal payment requirements on the Senior Notes prior to maturity.

The Senior Notes and Guarantees were issued pursuant to an indenture (the “Indenture”), dated March 16, 2018, among the Partnership, Finance Corp, the guarantors party thereto (the “Guarantors”) and UMB Bank, N.A., as trustee (the “Trustee”). The Senior Notes rank equally in right of payment with all of the Issuers’ existing and future senior indebtedness and senior to any subordinated indebtedness that the Issuers’ may incur. The Guarantees rank equally in right of payment to all of the Guarantors’ existing and future senior indebtedness.

The Issuers may redeem all or part of the Senior Notes at redemption prices ranging from 104.875% beginning March 15, 2021 to 100.0% beginning March 15, 2024. Prior to March 15, 2021, the Issuers may on one or more occasions redeem up to 35.0% of the principal amount of the Senior Notes with an amount of cash not greater than the amount of the net cash proceeds from one or more equity offerings at a redemption price of 106.50%. At any time or from time to time prior to March 15, 2021, the Issuers may also redeem all or a part of the Senior Notes, at a redemption price equal to 100.0% of the principal amount thereof plus the Applicable Premium, as defined in the Indenture, plus accrued and unpaid interest.

If the Partnership experiences certain kinds of changes of control, holders of the Senior Notes will be entitled to require the Partnership to repurchase all or any part of that holder’s Senior Notes pursuant to an offer on the terms set forth in the Indenture. The Partnership will offer to make a cash payment equal to 101.0% of the aggregate principal amount of the Senior Notes repurchased plus accrued and unpaid interest on the Senior Notes repurchased to, but not including, the date of purchase, subject to the rights of holders of the Senior Notes on the relevant record date to receive interest due on the relevant interest payment date.

The Partnership’s long-term debt consisted of the following:

(in thousands)	March 31, 2020		December 31, 2019
Senior Notes due March 2026 at 6.5%	$	400,000	$	400,000
Less: Unamortized debt issuance costs	1,164		1,213
Less: Unamortized bond discount	4,437		4,625
Total Senior Notes	$	394,399	$	394,162

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LONG-TERM DEBT - Narrative (Details)					1 Months Ended	3 Months Ended
	Mar. 15, 2024	Mar. 15, 2021	Apr. 24, 2019 USD ($)	Mar. 16, 2018	Mar. 31, 2018 USD ($)	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Debt Instrument [Line Items]
Interest rate decrease			0.25%
Debt covenant, maximum secured leverage ratio			3.00
Deb covenant, maximum total leverage ratio			4.00
Pro forma commitment percentage			20.00%
Maximum borrowing capacity, per year			$ 150,000,000.0
Maximum borrowing capacity, per life of facility			$ 200,000,000.0
Debt covenant, minimum interest coverage ratio						2.50
Credit Facility
Debt Instrument [Line Items]
Revolving credit facility						$ 600,000,000.0
Additional borrowing capacity available					$ 250,000,000.0
Debt covenant, maximum secured leverage ratio						3.50
Long term line of credit						$ 347,000,000.0	$ 311,800,000
Credit facility interest rate						2.40%	3.26%
Remaining borrowing capacity						$ 253,000,000.0
Debt term					5 years
Repayments of debt					$ 250,000,000.0
Credit Facility | Federal Funds Rate
Debt Instrument [Line Items]
Basis spread on variable rate			0.50%
Credit Facility | Base Rate, London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate			1.00%
Letter of Credit
Debt Instrument [Line Items]
Revolving credit facility					100,000,000.0
Leverage Ratio 1 | Credit Facility
Debt Instrument [Line Items]
Deb covenant, maximum total leverage ratio						5.25
Debt covenant, maximum, aggregate unsecured notes						$ 150,000,000.0
Debt covenant, maximum total leverage ratio during qualifying acquisition periods						5.50
Leverage Ratio 2 | Credit Facility
Debt Instrument [Line Items]
Deb covenant, maximum total leverage ratio						4.75
Debt covenant, maximum, aggregate unsecured notes						$ 150,000,000.0
Debt covenant, maximum total leverage ratio during qualifying acquisition periods						5.25
Minimum | Credit Facility
Debt Instrument [Line Items]
Commitment fee percentage						0.375%
Minimum | Credit Facility | LIBOR plus 1%
Debt Instrument [Line Items]
Basis spread on variable rate			0.50%
Minimum | Credit Facility | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate			1.50%
Maximum | Credit Facility
Debt Instrument [Line Items]
Commitment fee percentage						0.50%
Maximum | Credit Facility | LIBOR plus 1%
Debt Instrument [Line Items]
Basis spread on variable rate			1.50%
Maximum | Credit Facility | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate			2.50%
Senior Notes
Debt Instrument [Line Items]
Senior Notes (Note 6)					$ 394,000,000.0	$ 394,399,000	$ 394,162,000
Stated rate						6.50%
Redemption price including premium, percent				106.50%
Percent of principal amount able to be redeemed				35.00%
Redemption price of principal, percent				100.00%
Change of control, cash payment of aggregate principal amount repurchased, percentage				101.00%
Senior Notes | Scenario, Forecast
Debt Instrument [Line Items]
Redemption price including premium, percent	100.00%	104.875%

XML

CASH DISTRIBUTIONS - Schedule of Cash Distributions (Details) - USD ($) $ / shares in Units, $ in Thousands					3 Months Ended
	Feb. 13, 2020	Nov. 12, 2019	Aug. 14, 2019	May 14, 2019	Mar. 31, 2020	Mar. 31, 2019
Equity [Abstract]
Total Quarterly Distribution Per Unit (in dollars per share)	$ 0.4143	$ 0.4001	$ 0.3865	$ 0.3732
Total Quarterly Cash Distribution	$ 37,201	$ 32,371	$ 30,637	$ 28,940	$ 37,201	$ 27,268

XML

RELATED PARTY TRANSACTIONS - Gathering Agreements (Details) a in Thousands, $ in Millions			3 Months Ended	12 Months Ended			16 Months Ended	30 Months Ended	36 Months Ended
	May 02, 2018 well	Jan. 03, 2018 a well	Mar. 31, 2020 $ / MMBTU $ / bbl	Apr. 30, 2022 USD ($) well	Apr. 30, 2021 USD ($) well	Dec. 31, 2018 well	Apr. 30, 2020 well	Dec. 31, 2020 well	Dec. 31, 2023 USD ($) well	Jan. 01, 2018 $ / MMBTU
Related Party Transaction [Line Items]
Downstream fees receivable (in dollars per MMBtu)			0.6222
Conditional increase, percent			2.50%
Maximum change in fees, commencing January 1, 2035, percent			3.00%
MVC, gas gathering fee (in dollars per MMBtu)			0.3678
CNX Gas | Affiliated Entity | Gas Gathering Agreements
Related Party Transaction [Line Items]
Term of agreement		20 years
Additional acres dedicated (in acres) | a		63
Termination period to either party		180 days
Marcellus Shale formation
Related Party Transaction [Line Items]
Fees receivable, excluding downstream (in dollars per MMBtu)			0.4531
Marcellus Shale formation | CNX Gas | Affiliated Entity | Gas Gathering Agreements
Related Party Transaction [Line Items]
Number of wells drilled and completed (in wells) | well		125				30
Number of wells exceeding requirement | well						8
Pittsburgh International Airport Areas
Related Party Transaction [Line Items]
Downstream fees receivable (in dollars per MMBtu)			0.3116
Majorsville area
Related Party Transaction [Line Items]
Condensate fees receivable (in dollars per Bbl) | $ / bbl			5.6580
Utica Shale, McQuay Area | CNX Gas | Affiliated Entity | Gas Gathering Agreements
Related Party Transaction [Line Items]
Gas gathering fee (in dollars per MMBtu)			0.2368
Marcellus and Utical Shale, Wadestown Area | CNX Gas | Affiliated Entity | Gas Gathering Agreements
Related Party Transaction [Line Items]
Gas gathering fee (in dollars per MMBtu)			0.3678
McQuay And Wadestown Areas | CNX Gas | Affiliated Entity | Gas Gathering Agreements
Related Party Transaction [Line Items]
Compression fee, tier 1 pressure services, maximum of 600 psi (in dollars per MMBtu)										0.0683
Compression fee, tier 2 pressure services, maximum of 300 psi (in dollars per MMBtu)										0.1366
Majorsville And Mamont Areas | CNX Gas | Affiliated Entity | Gas Gathering Agreements
Related Party Transaction [Line Items]
Number of wells drilled and completed (in wells) | well	40
Shirley-Penns area
Related Party Transaction [Line Items]
Condensate fees receivable (in dollars per Bbl) | $ / bbl			5.6580
McQuay Area [Member] | CNX Gas | Affiliated Entity | Gas Gathering Agreements
Related Party Transaction [Line Items]
Number of wells drilled and completed (in wells) | well		140
Subsequent Event | Marcellus Shale formation | CNX Gas | Affiliated Entity | Gas Gathering Agreements
Related Party Transaction [Line Items]
Number of wells drilled and completed (in wells) | well				30	40		40
Deficiency payment, per well | $				$ 2.0	$ 2.0
Subsequent Event | Majorsville And Mamont Areas | CNX Gas | Affiliated Entity | Gas Gathering Agreements
Related Party Transaction [Line Items]
Number of wells drilled and completed (in wells) | well								15	25
Number of wells exceeding requirement | well								6
Deficiency payment, per well | $									$ 2.8
Minimum | CNX Gas | Affiliated Entity | Gas Gathering Agreements
Related Party Transaction [Line Items]
Quarterly update, historical period			24 months
Maximum | CNX Gas | Affiliated Entity | Gas Gathering Agreements
Related Party Transaction [Line Items]
Quarterly update, historical period			48 months
Quarterly update, future outlook period			10 years

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	Apr. 27, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2020
Document Transition Report	false
Entity File Number	001-36635
Entity Registrant Name	CNX MIDSTREAM PARTNERS LP
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-1054194
Entity Address, Address Line One	1000 CONSOL Energy Drive
Entity Address, City or Town	Canonsburg
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	15317-6506
City Area Code	724
Local Phone Number	485-4000
Title of 12(b) Security	Common Units Representing Limited Partner Interests
Trading Symbol	CNXM
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		89,799,224
Entity Central Index Key	0001610418
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL AND NONCONTROLLING INTEREST (Unaudited) - USD ($) $ in Thousands	Total	Total Capital Attributable to Partners	Total Capital Attributable to Partners Limited Partners	Total Capital Attributable to Partners Class B Units	Total Capital Attributable to Partners General Partner	Noncontrolling Interest
Partners' Capital, beginning balance at Dec. 31, 2018	$ 399,314	$ 331,443	$ 320,543		$ 10,900	$ 67,871
Increase (Decrease) in Partners' Capital [Roll Forward]
Net income	34,976	35,107	29,828		5,279	(131)
Contributions from general partner and noncontrolling interest holders, net	30	30			30	0
Quarterly distributions to unitholders	(27,268)	(27,268)	(22,939)		(4,329)
Unit-based compensation	612	612	612
Vested units withheld for taxes	(664)	(664)	(664)
Partners' Capital, ending balance at Mar. 31, 2019	407,000	339,260	327,380		11,880	67,740
Partners' Capital, beginning balance at Dec. 31, 2019	456,613	387,753	380,473	$ 0	7,280	68,860
Increase (Decrease) in Partners' Capital [Roll Forward]
Net income	45,790	45,219	45,219		0	571
Quarterly distributions to unitholders	(37,201)	(37,201)	(37,201)		0
IDR Elimination Transaction	(135,000)	(135,000)	(162,310)	34,590	(7,280)
Unit-based compensation	504	504	504
Vested units withheld for taxes	(309)	(309)	(309)
Partners' Capital, ending balance at Mar. 31, 2020	$ 330,397	$ 260,966	$ 226,376	$ 34,590	$ 0	$ 69,431

XML

SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Use of Estimates

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and various disclosures. Actual results could differ from those estimates, which are evaluated on an ongoing basis, utilizing historical experience and other methods considered reasonable under the particular circumstances. Although these estimates are based on management’s best available knowledge at the time, changes in facts and circumstances or discovery of new facts or circumstances may result in revised estimates and actual results may differ from these estimates. Effects on the Partnership’s business, financial position and results of operations resulting from revisions to estimates are recognized when the facts that give rise to the revision become known. In the opinion of management, all adjustments considered necessary for a fair presentation of the accompanying consolidated financial statements have been included.

The balance sheet at December 31, 2019 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the Consolidated Financial Statements and related notes for the year ended December 31, 2019 included in CNX Midstream Partners LP’s (the “Partnership”, or “we”, “us”, or “our”) Annual Report on Form 10-K as filed with the Securities and Exchange Commission (SEC) on February 10, 2020.

Principles of Consolidation

The consolidated financial statements include the accounts of the Partnership and all of its controlled subsidiaries, including 100% of each of the Anchor Systems and Additional Systems in the applicable periods presented within this Quarterly Report on Form 10-Q. Although the Partnership has less than a 100% economic interest in the Additional Systems, it has been consolidated fully with the results of the Partnership in the applicable periods as the Partnership is considered to be the primary beneficiary and has a controlling financial interest and the power through its ownership to direct the activities of the Additional Systems. After adjusting for noncontrolling interests, net income attributable to general and limited partner ownership interests in the Partnership reflect only that portion of net income that is attributable to the Partnership’s unitholders.

Transactions between the Partnership and CNX Resources have been identified in the consolidated financial statements as transactions between related parties and are disclosed in Note 4–Related Party Transactions.

Revenue Recognition

We record revenue when obligations under the terms of the contracts with our shippers are satisfied; generally, this occurs on a daily basis as we gather natural gas at the wellhead. Revenue is measured as the amount of consideration we expect to receive in exchange for providing the natural gas gathering services.

Nature of performance obligations

At contract inception, we assess the services promised in our contracts with customers and identify a performance obligation for each promised service that is distinct. To identify the performance obligations, we consider all of the services promised in the contract, regardless of whether they are explicitly stated or are implied by customary business practices.

Our revenue is generated from natural gas gathering activities. The gas gathering services are interruptible in nature and include charges for the volume of gas actually gathered and do not guarantee access to the system. Volumetric-based fees relate to actual volumes gathered. In general, the interruptible gathering of each unit one million British Thermal Units (MMBtu) of natural gas represents a separate performance obligation. Payment terms for these contracts require payment within 25 days of the end of the calendar month in which the hydrocarbons are gathered.

Transaction price allocated to remaining performance obligations

We are required to disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied. However, the guidance provides certain practical expedients that limit this requirement. Substantially all of our revenues are derived from contracts that have terms of greater than one year. Under these contracts, the interruptible gathering of each unit of natural gas represents a separate performance obligation.

For revenue associated with the Shirley-Penns System, for which we have remaining contractual performance obligations, the aggregate amount of the transaction price allocated to those remaining performance obligations was $350.8 million at March 31, 2020. See Note 4–Related Party Transactions for a detailed breakout of the minimum revenue by year.

The amount of revenue associated with this contract up to the minimum volume commitment (“MVC”) is fixed in nature, and volumes that we may gather above the MVC will be variable in nature. As of March 31, 2020, no future performance obligations exist relative to volumes to be gathered in excess of the MVC as the related volumes have not yet been nominated

for gathering. Therefore, we have not disclosed the value of unsatisfied performance obligations for the variable aspect of this agreement, nor have we disclosed the value of other unsatisfied performance obligations that are variable in nature.

Prior-period performance obligations

We record revenue when obligations under the terms of the contracts with our shippers are satisfied; generally this occurs on a daily basis when we gather gas at the wellhead. In some cases, we are required to estimate the amount of natural gas that we have gathered during an accounting period and record any differences between our estimates and the actual units of natural gas that we gathered in the following month. We have existing internal controls for our revenue estimation process and related accruals; historically, any identified differences between our revenue estimates and actual revenue received have not been significant. For the quarters ended March 31, 2020 and 2019, revenue recognized in the reporting period related to performance obligations satisfied in prior reporting periods was not material.

Disaggregation of revenue

See Note 8–Segment Information for additional information.

Contract balances

We invoice customers once our performance obligations have been satisfied, at which point payment becomes unconditional. Accordingly, our contracts with customers do not give rise to contract assets or liabilities. We also have no contract assets recognized from the costs to obtain or fulfill a contract with a customer.

Classification

The fees we charge our affiliates, including our Sponsor, are recorded in gathering revenue — related party in our consolidated statements of operations. Fees from midstream services we perform for third-party shippers are recorded in gathering revenue — third-party in our consolidated statements of operations.

Cash

Cash includes cash on hand and on deposit at banking institutions.

Receivables

On January 1, 2020, the Partnership adopted the guidance under the Financial Accounting Standards Board (the “FASB”) Accounting Standard Update (“ASU”) 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The Partnership adopted Topic 326 using the prospective transition method.

Prior to adopting Topic 326, the Partnership reserved for specific accounts receivable when it was probable that all or a part of an outstanding balance would not be collected, such as customer bankruptcies. Collectability was determined based on terms of sale, credit status of customers and various other circumstances. We regularly reviewed collectability and established or adjusted the reserve as necessary using the specific identification method. Account balances were charged off against the reserve after all means of collection had been exhausted and the potential for recovery was considered remote.

Under Topic 326, management recorded an allowance for credit losses related to the collectability of third-party customers receivables using the historical aging of the customer receivable balance. Related party receivables between entities under common control are excluded from Topic 326. The collectibility was determined based on past events, including historical experience, customer credit rating, as well as current market conditions. We will continue to monitor customer ratings and collectability on a quarterly basis. Account balances will be charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The allowance for credit losses is as follows:

(in thousands)	March 31, 2020
Receivables — Third-Party	$	5,056
Allowance for Credit Losses	(76)
Receivables — Third-Party, Net	$	4,980

Fair Value Measurement

The FASB Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, clarifies the definition of fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This guidance also relates to all nonfinancial assets and liabilities that are not recognized or disclosed on a

recurring basis (e.g., the initial recognition of asset retirement obligations and impairments of long-lived assets). The fair value is the price that we estimate we would receive upon selling an asset or that we would pay to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy is used to prioritize input to valuation techniques used to estimate fair value. An asset or liability subject to the fair value requirements is categorized within the hierarchy based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The highest priority (Level 1) is given to unadjusted quoted market prices in active markets for identical assets or liabilities, and the lowest priority (Level 3) is given to unobservable inputs. Level 2 inputs are data, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly.

The carrying values on our balance sheets of our current assets, current liabilities and revolving credit facility approximate fair values due to their short maturities. We estimate the fair value of our long-term debt, which is not actively traded, using an income approach model that utilizes a discount rate based on market rates for other debt with similar remaining time to maturity and credit risk (Level 2). The estimated fair value of our long-term debt was approximately $280.0 million on March 31, 2020.

Property and Equipment

Property and equipment is recorded at cost upon acquisition and is depreciated on a straight-line basis over the assets’ estimated useful lives or over the lease terms of the assets. Expenditures which extend the useful lives of existing property and equipment are capitalized. When properties are retired or otherwise disposed, the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss on disposition is recognized.

The Partnership evaluates whether long-lived assets have been impaired during any given quarter and has processes in place to ensure that we become aware of such indicators. Impairment indicators may include, but are not limited to, sustained decreases in commodity prices, a decline in customer well results and lower throughput forecasts, and increases in construction or operating costs. For such long-lived assets, impairment exists when the carrying amount of an asset or group of assets exceeds our estimates of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or group of assets. If the carrying amount of the long-lived asset(s) is not recoverable, based on the estimated future undiscounted cash flows, the impairment loss would be measured as the excess of the asset’s carrying amount over its estimated fair value. In the event that impairment indicators exist, we conduct an impairment test.

Fair value represents the estimated price between market participants to sell an asset in the principal or most advantageous market for the asset, based on assumptions a market participant would make. When warranted, management assesses the fair value of long-lived assets using commonly accepted techniques and may use more than one source in making such assessments. Sources used to determine fair value include, but are not limited to, recent third-party comparable sales, internally developed discounted cash flow analyses and analyses from outside advisors. Significant changes, such as the condition of an asset or management’s intent to utilize the asset, generally require management to reassess the cash flows related to long-lived assets. No property and equipment impairments were identified during the periods presented in the accompanying consolidated financial statements.

Leases

In February 2016, the FASB issued ASU 2016-02–Leases (Topic 842), which increases transparency and comparability among organizations by recognizing right-of-use (“ROU”) lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU maintains a distinction between finance leases and operating leases, which is substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous lease guidance. Retaining this distinction allows the recognition, measurement and presentation of expenses and cash flows arising from a lease to remain similar to the previous accounting treatment. A lessee is permitted to make an accounting policy election by class of underlying asset to exclude from balance sheet recognition any lease assets and lease liabilities with a term of 12 months or less, and instead to recognize lease expense on a straight-line basis over the lease term. For both financing and operating leases, the ROU asset and lease liability are initially measured at the present value of the lease payments. In July 2018, the FASB issued ASU 2018-11 which provides entities with the option to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, if necessary.

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease ROU assets and accrued liabilities on our consolidated balance sheets. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date of the lease in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Environmental Matters

We are subject to various federal, state and local laws and regulations relating to the protection of the environment. Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or clean-ups are probable, and the costs can be reasonably estimated. At this time, we are unable to assess the timing and/or effect of potential liabilities related to greenhouse gas emissions or other environmental issues. As of March 31, 2020 and December 31, 2019, we had no material environmental matters that required the recognition of a separate liability or specific disclosure.

Asset Retirement Obligations

Our gathering pipelines and compressor stations have an indeterminate life. If properly maintained, they will operate for an indeterminate period as long as supply and demand for natural gas exists, which we expect for the foreseeable future. We are under no legal or contractual obligation to restore or dismantle our gathering system upon abandonment. Therefore, we have not recorded any liabilities for asset retirement obligations at March 31, 2020 or December 31, 2019.

Variable Interest Entities

Each of the Anchor and Additional Systems is structured as a limited partnership (the “Limited Partnerships”) and a variable interest entity (“VIE”). These VIEs correspond with the manner in which we report our segment information in Note 8–Segment Information, which also includes information regarding the Partnership’s involvement with each of these VIEs and their relative contributions to our financial position, operating results and cash flows.

The Partnership fully consolidates each of the Limited Partnerships through its ownership of CNX Midstream Operating Company LLC (the “Operating Company”). The Operating Company, through its general partner ownership interest in each of the Limited Partnerships during the period in which any ownership interest exists, is considered to be the primary beneficiary for accounting purposes and has the power to direct all substantive strategic and day-to-day operational decisions of the Limited Partnerships.

Income Taxes

We are treated as a partnership for federal and state income tax purposes, with each partner being separately taxed on its share of the Partnership’s taxable income. Accordingly, no provision for federal or state income taxes has been recorded in the Partnership’s consolidated financial statements for any period presented in the accompanying consolidated financial statements.

Equity Compensation

Equity compensation expense for all unit-based compensation awards is based on the grant date fair value estimated in accordance with the provisions of ASC 718–Compensation–Stock Compensation. We recognize unit-based compensation costs on a straight-line basis over the requisite service period of an award, which is generally the same as the award’s vesting term. See Note 9–Long-Term Incentive Plan for further discussion.

Net Income Per Limited Partner Unit and General Partner Interest

Net income per limited partner unit is calculated using the two-class method, under which income is allocated to participating securities in accordance with the terms of our partnership agreement. The two-class method uses an earnings allocation method under which earnings per limited partner unit are calculated for each class of common unit and any participating security considering all distributions declared and participation rights in undistributed earnings as if all earnings had been distributed during the period. Diluted net income per limited partner unit reflects the potential dilution that could occur if securities or agreements to issue common units were exercised, settled or converted into common units.

Prior to the IDR Elimination Transaction on January 29, 2020, we allocated net income between our general partner and limited partners, which included allocations of net income to our limited partners, our general partner and the holders of our IDRs in accordance with the terms of our partnership agreement. We also allocated any distributions in excess of earnings for the period to our general partner and our limited partners based on their respective proportionate ownership interests in us, after taking into account distributions to be paid with respect to the IDRs, as set forth in our partnership agreement. Following the IDR Elimination Transaction, the Partnership’s common unitholders are entitled to all distributions until the Class B units are converted to common units on January 1, 2022. Class B unitholders have no rights to distributions until they are converted into common units.

Historical Earnings per Unit

The Partnership calculates historical earnings per unit under the two-class method and allocates the earnings or losses of a transferred business before the date of a dropdown transaction entirely to the general partner. If applicable, the previously reported earnings per unit of the limited partners would not change as a result of a dropdown transaction.

Diluted net income per limited partner unit reflects the potential dilution that could occur if securities or agreements to issue common units, such as awards under the long-term incentive plan, were exercised, settled or converted into common units. When it is determined that potential common units resulting from an award subject to performance or market conditions should be included in the diluted net income per limited partner unit calculation, the impact is calculated by applying the treasury stock method. There were 200,086 and 34,566 phantom units that were not included in the calculation for the three months ended March 31, 2020 and 2019, respectively, because the effect would have been antidilutive.

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04 - Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848). This ASU provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates and, particularly, the risk of cessation of the London Interbank Offered Rate (LIBOR), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. The Partnership is still evaluating the effect of adopting this guidance.

In March 2020, the FASB issued ASU 2020-03 - Codification Improvements to Financial Instruments. This ASU improves and clarifies various financial instruments topics, including the CECL standard. The ASU includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments in this ASU have different effective dates. The adoption of this guidance is not expected to have a material impact on the Partnership's financial statements.