CONSOL Energy Inc. [CEIX] Filings

10-Q 1 ceix-20230331.htm 10-Q ceix-20230331

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, 2023


☐			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: 001-38147

CONSOL Energy Inc.

(Exact name of registrant as specified in its charter)


Delaware						82-1954058
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

275 Technology Drive Suite 101

Canonsburg, PA 15317-9565

(724) 416-8300

(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 each exchange on which registered
Common Stock, $0.01 par value	CEIX	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, a 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 ☒

CONSOL Energy Inc. had 33,919,253 shares of common stock, $0.01 par value, outstanding at April 21, 2023.

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TABLE OF CONTENTS


	Part I. Financial Information	Page

Item 1.	Unaudited Financial Statements
	Consolidated Statements of Income for the three months ended March 31, 2023 and 2022	4
	Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and 2022	5
	Consolidated Balance Sheets at March 31, 2023 and December 31, 2022	6
	Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2023 and 2022	8
	Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022	9
	Notes to Consolidated Financial Statements	10

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45

Item 4.	Controls and Procedures	45

	Part II. Other Information

Item 1.	Legal Proceedings	46

Item 1A.	Risk Factors	46

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46

Item 3.	Defaults Upon Senior Securities	47

Item 4.	Mine Safety Disclosures	47

Item 5.	Other Information	47

Item 6.	Exhibits	48

	Signatures	49

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IMPORTANT DEFINITIONS REFERENCED IN THIS QUARTERLY REPORT

•“CONSOL Energy,” “we,” “our,” “us,” “our Company” and “the Company” refer to CONSOL Energy Inc. and its subsidiaries;

•“Btu” means one British Thermal unit;

•“CONSOL Marine Terminal” refers to the Company's terminal operations located at the Port of Baltimore;

•“former parent” refers to CNX Resources Corporation and its consolidated subsidiaries;

•“Greenfield Reserves and Resources” means those undeveloped reserves and resources owned by the Company in the Northern Appalachian, Central Appalachian and Illinois basins that are not associated with the Pennsylvania Mining Complex or the Itmann Mining Complex;

•“Itmann Mining Complex” refers to the Company's Itmann No. 5 metallurgical coal mine and coal preparation plant located in Wyoming County, West Virginia, and surrounding reserves to be processed and sold through the Itmann Mining Complex coal preparation plant; and

•“Pennsylvania Mining Complex” or “PAMC” refers to the Bailey, Enlow Fork and Harvey coal mines, the Central Preparation Plant, and related coal reserves, assets and operations located in southwestern Pennsylvania and northern West Virginia.

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PART I : FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOL ENERGY INC.

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(unaudited)


	Three Months Ended March 31,
Revenue and Other Income:	2023		2022
Coal Revenue	$	583,379	$	476,384
Terminal Revenue	26,711		21,397
Freight Revenue	67,507		38,389
Loss on Commodity Derivatives, net	—		(188,154)
Miscellaneous Other Income	5,284		4,332
Gain on Sale of Assets	5,726		6,181
Total Revenue and Other Income	688,607		358,529
Costs and Expenses:
Operating and Other Costs	260,627		219,082
Depreciation, Depletion and Amortization	59,551		55,954
Freight Expense	67,507		38,389
General and Administrative Costs	17,298		36,602
Loss on Debt Extinguishment	1,375		2,122
Interest Expense	10,279		14,352
Total Costs and Expenses	416,637		366,501
Earnings (Loss) Before Income Tax	271,970		(7,972)
Income Tax Expense (Benefit)	41,593		(3,522)
Net Income (Loss)	$	230,377	$	(4,450)

Earnings (Loss) per Share:
Total Basic Earnings (Loss) per Share	$	6.67	$	(0.13)
Total Dilutive Earnings (Loss) per Share	$	6.55	$	(0.13)

Dividends Declared per Common Share	$	1.10	$	—

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

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CONSOL ENERGY INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(unaudited)


	Three Months Ended March 31,
	2023		2022
Net Income (Loss)	$	230,377	$	(4,450)

Other Comprehensive (Loss) Income:
Actuarially Determined Long-Term Liability Adjustments (Net of tax: $274, $(508))	(901)		1,525
Unrealized Gain on Investments in Available-for-Sale Securities (Net of tax: $(64), $—)	212		—
Unrealized Gain on Cash Flow Hedges (Net of tax: $—, $(130))	—		391
Other Comprehensive (Loss) Income	(689)		1,916

Comprehensive Income (Loss)	$	229,688	$	(2,534)

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

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CONSOL ENERGY INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)


	(Unaudited)
	March 31, 2023		December 31, 2022
ASSETS
Current Assets:
Cash and Cash Equivalents	$	192,826	$	273,070
Short-Term Investments	75,310		—
Restricted Cash - Current	45,797		40,366
Accounts and Notes Receivable
Trade Receivables, net	149,404		158,127
Other Receivables, net	36,209		38,517
Inventories	95,635		66,290
Prepaid Expenses	16,807		22,113
Total Current Assets	611,988		598,483
Property, Plant and Equipment:
Property, Plant and Equipment	5,442,735		5,408,577
Less - Accumulated Depreciation, Depletion and Amortization	3,502,386		3,448,495
Total Property, Plant and Equipment—Net	1,940,349		1,960,082
Other Assets:

Right of Use Asset - Operating Leases	18,267		19,799
Restricted Cash - Non-current	8,220		13,516
Salary Retirement	41,672		38,548
Other Noncurrent Assets, net	74,815		73,949
Total Other Assets	142,974		145,812
TOTAL ASSETS	$	2,695,311	$	2,704,377

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

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CONSOL ENERGY INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)


	(Unaudited)
	March 31, 2023		December 31, 2022
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable	$	120,539	$	130,232
Current Portion of Long-Term Debt	24,580		28,846
Operating Lease Liability, Current Portion	4,820		4,922
Commodity Derivatives	—		15,142
Other Accrued Liabilities	292,527		269,656
Total Current Liabilities	442,466		448,798
Long-Term Debt:
Long-Term Debt	252,977		342,110
Finance Lease Obligations	10,064		13,225
Total Long-Term Debt	263,041		355,335
Deferred Credits and Other Liabilities:
Postretirement Benefits Other Than Pensions	231,043		232,593
Pneumoconiosis Benefits	147,322		148,390
Asset Retirement Obligations	221,174		221,858
Workers’ Compensation	41,558		40,951
Salary Retirement	20,568		20,585
Operating Lease Liability	13,731		15,073
Deferred Income Taxes	21,704		21,914
Other Noncurrent Liabilities	11,807		33,054
Total Deferred Credits and Other Liabilities	708,907		734,418
TOTAL LIABILITIES	1,414,414		1,538,551

Stockholders' Equity:
Common Stock, $0.01 Par Value; 62,500,000 Shares Authorized, 33,872,287 Shares Issued and Outstanding at March 31, 2023; 34,746,904 Shares Issued and Outstanding at December 31, 2022	339		347
Capital in Excess of Par Value	615,872		646,237
Retained Earnings	815,015		668,882
Accumulated Other Comprehensive Loss	(150,329)		(149,640)
TOTAL EQUITY	1,280,897		1,165,826
TOTAL LIABILITIES AND EQUITY	$	2,695,311	$	2,704,377

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

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CONSOL ENERGY INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Dollars in thousands)


	Common Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Equity
December 31, 2022	$	347	$	646,237	$	668,882	$	(149,640)	$	1,165,826
(Unaudited)
Net Income	—		—		230,377		—		230,377
Actuarially Determined Long-Term Liability Adjustments (Net of $274 Tax)	—		—		—		(901)		(901)
Investments in Available-for-Sale Securities (Net of $64 Tax)	—		—		—		212		212
Comprehensive Income (Loss)	—		—		230,377		(689)		229,688
Issuance of Common Stock	3		(3)		—		—		—
Repurchases of Common Stock (1,207,409 Shares)	(11)		(22,446)		(44,676)		—		(67,133)
Excise Tax on Repurchases of Common Stock	—		—		(478)		—		(478)
Amortization of Stock-Based Compensation Awards	—		4,792		—		—		4,792
Shares Withheld for Taxes	—		(12,708)		—		—		(12,708)
Dividends on Common Shares ($1.10/share)	—		—		(38,287)		—		(38,287)
Dividend Equivalents Earned on Stock-Based Compensation Awards	—		—		(803)		—		(803)
March 31, 2023	$	339	$	615,872	$	815,015	$	(150,329)	$	1,280,897


	Common Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Equity
December 31, 2021	$	345	$	646,945	$	280,960	$	(255,437)	$	672,813
(Unaudited)
Net Loss	—		—		(4,450)		—		(4,450)
Actuarially Determined Long-Term Liability Adjustments (Net of $508 Tax)	—		—		—		1,525		1,525
Interest Rate Hedge (Net of $130 Tax)	—		—		—		391		391
Comprehensive (Loss) Income	—		—		(4,450)		1,916		(2,534)
Issuance of Common Stock	3		(3)		—		—		—
Amortization of Stock-Based Compensation Awards	—		4,201		—		—		4,201
Shares Withheld for Taxes	—		(6,072)		—		—		(6,072)
March 31, 2022	$	348	$	645,071	$	276,510	$	(253,521)	$	668,408

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

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CONSOL ENERGY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(unaudited)


	Three Months Ended March 31,
	2023		2022
Cash Flows from Operating Activities:
Net Income (Loss)	$	230,377	$	(4,450)
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities:
Depreciation, Depletion and Amortization	59,551		55,954
Gain on Sale of Assets	(5,726)		(6,181)
Stock-Based Compensation	4,792		4,201
Amortization of Debt Issuance Costs	2,141		2,020
Loss on Debt Extinguishment	1,375		2,122
Deferred Income Taxes	(210)		(5,078)
Other Adjustments to Net Income	(34)		162
Changes in Operating Assets:
Accounts and Notes Receivable	11,031		(74,050)
Inventories	(29,345)		4,078
Prepaid Expenses and Other Assets	5,306		2,165
Changes in Other Assets	(4,810)		(5,582)
Changes in Operating Liabilities:
Accounts Payable	(3,274)		23,456
Commodity Derivatives, net Liability	(15,142)		147,981
Other Operating Liabilities	21,888		(883)
Changes in Other Liabilities	(29,409)		2,292
Net Cash Provided by Operating Activities	248,511		148,207
Cash Flows from Investing Activities:
Capital Expenditures	(33,757)		(36,643)
Proceeds from Sales of Assets	6,000		6,478
Purchases of Short-Term Investments	(75,000)		—
Other Investing Activity	—		(1,329)
Net Cash Used in Investing Activities	(102,757)		(31,494)
Cash Flows from Financing Activities:
Payments on Finance Lease Obligations	(8,137)		(6,328)
Payments on Term Loan A	—		(6,250)
Payments on Term Loan B	(40,000)		(687)
Payments on Second Lien Notes	(51,375)		(26,387)


Payments on Other Debt	(235)		(187)
Shares Withheld for Taxes	(12,708)		(6,072)
Repurchases of Common Stock	(75,121)		—

Dividends	(38,287)		—
Net Cash Used in Financing Activities	(225,863)		(45,911)
Net (Decrease) Increase in Cash and Cash Equivalents and Restricted Cash	(80,109)		70,802
Cash and Cash Equivalents and Restricted Cash at Beginning of Period	326,952		198,206
Cash and Cash Equivalents and Restricted Cash at End of Period	$	246,843	$	269,008

Non-Cash Investing and Financing Activities:
Finance Lease	$	588	$	4,166

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

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CONSOL ENERGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars in thousands, except per share data)

NOTE 1—BASIS OF PRESENTATION:

Basis of Presentation

The accompanying Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for future periods.

The Consolidated Balance Sheet at December 31, 2022 has been derived from the Audited Consolidated Financial Statements at that date but does not include all disclosures required by GAAP. This Form 10-Q report should be read in conjunction with CONSOL Energy Inc.'s Annual Report on Form 10-K for the year ended December 31, 2022.

All dollar amounts discussed in these Notes to Consolidated Financial Statements are in thousands of U.S. dollars, except for per share amounts, and unless otherwise indicated.

Basis of Consolidation

The Consolidated Financial Statements include the accounts of CONSOL Energy Inc. and its wholly-owned and majority-owned and/or controlled subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation.

Recent Accounting Pronouncements

In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-02 - Investments—Equity Method and Joint Ventures (Topic 323). The amendments in this update permit reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. The amendments in this update apply to all reporting entities that hold (1) tax equity investments that meet the conditions for and elect to account for them using the proportional amortization method or (2) an investment in a low-income-housing tax credit (LIHTC) structure through a limited liability entity that is not accounted for using the proportional amortization method and to which certain LIHTC-specific guidance removed from Subtopic 323-740, Investments—Equity Method and Joint Ventures—Income Taxes, has been applied. The amendments in this update are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Management is currently evaluating the impact of this guidance, but does not expect this update to have a material impact on the Company's financial statements.

In March 2022, the FASB issued ASU 2022-02 - Financial Instruments—Credit Losses (Topic 326). The amendments in this update eliminate the accounting guidance for troubled debt restructurings by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. The amendments in this update require that an entity disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted this guidance in the three months ended March 31, 2023, and there was no material impact on the Company's financial statements.

In October 2021, the FASB issued ASU 2021-08 - Business Combinations (Topic 805). The amendments in this update apply to all entities that enter into a business combination within the scope of Subtopic 805-10, Business Combinations—Overall. The amendments in this update require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. The amendments in this update do not affect the accounting for other assets or liabilities that may arise from revenue contracts with customers in accordance with Topic 606. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted this guidance in the three months ended March 31, 2023, and there was no material impact on the Company's financial statements.

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Earnings per Share

Basic earnings per share are computed by dividing net income (loss) by the weighted average number of shares outstanding during the reporting period. Dilutive earnings per share are computed similarly to basic earnings per share, except that the weighted average number of shares outstanding is increased to include additional shares from restricted stock units and performance share units, if dilutive. The number of additional shares is calculated by assuming that outstanding restricted stock units and performance share units were released, and that the proceeds from such activities, as applicable, were used to acquire shares of common stock at the average market price during the reporting period.

The table below sets forth the share-based awards that have been excluded from the computation of diluted earnings per share because their effect would be anti-dilutive:


	Three Months Ended March 31,
	2023	2022
Anti-Dilutive Restricted Stock Units	67,420	952,942
Anti-Dilutive Performance Share Units	1,854	94,904
	69,274	1,047,846

The computations for basic and dilutive earnings (loss) per share are as follows:


Dollars in thousands, except per share data	Three Months Ended March 31,
	2023		2022
Numerator:
Net Income (Loss)	$	230,377	$	(4,450)

Denominator:
Weighted-average shares of common stock outstanding	34,535,268		34,660,713
Effect of dilutive shares*	616,333		—
Weighted-average diluted shares of common stock outstanding	35,151,601		34,660,713

Earnings (Loss) per Share:
Basic	$	6.67	$	(0.13)
Dilutive	$	6.55	$	(0.13)

*During periods in which the Company incurs a net loss, diluted weighted average shares outstanding are equal to basic weighted average shares outstanding because the effect of all equity awards would be anti-dilutive.

As of March 31, 2023, CONSOL Energy has 500,000 shares of preferred stock authorized, none of which are issued or outstanding.

Reclassifications

Certain amounts in prior periods have been reclassified to conform with the report classifications of the current period. These reclassifications had no effect on previously reported total assets, stockholders' equity, net income or cash flows from operating activities.

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NOTE 2—REVENUE FROM CONTRACTS WITH CUSTOMERS:

The following tables disaggregate CONSOL Energy's revenue from contracts with customers to depict how the nature, amount, timing and uncertainty of the Company's revenues and cash flows are affected by economic factors:


	Three Months Ended March 31, 2023
	Domestic		Export		Total
Power Generation	$	184,676	$	115,835	$	300,511
Industrial	6,508		185,610		192,118
Metallurgical	4,325		86,425		90,750
Total Coal Revenue	195,509		387,870		583,379
Terminal Revenue					26,711
Freight Revenue					67,507
Total Revenue from Contracts with Customers					$	677,597


	Three Months Ended March 31, 2022
	Domestic		Export		Total
Power Generation	$	223,503	$	120,454	$	343,957
Industrial	1,944		97,549		99,493
Metallurgical	—		32,934		32,934
Total Coal Revenue	225,447		250,937		476,384
Terminal Revenue					21,397
Freight Revenue					38,389
Total Revenue from Contracts with Customers					$	536,170

Coal Revenue

The Company has disaggregated its coal revenue, derived from the PAMC and Itmann Mining Complex, between domestic and export revenues, as well as industrial, power generation and metallurgical markets. Domestic coal revenue tends to be derived from contracts that typically have a term of one year or longer, and the pricing is typically fixed. Historically, export coal revenue tended to be derived from spot or shorter-term contracts with pricing determined closer to the time of shipment or based on a market index; however, the Company has recently begun to secure several long-term export contracts with varying pricing arrangements. Coal revenue derived from the Itmann Mining Complex consists primarily of metallurgical coal sales, while coal revenue derived from the PAMC services all markets due to the nature of its coal quality characteristics.

CONSOL Energy's coal revenue is recognized when the performance obligation has been satisfied, and the corresponding transaction price has been determined. Generally, title passes when coal is loaded at the coal preparation facilities, at terminal locations or other customer destinations. The Company's coal contract revenue per ton is fixed and determinable based upon either fixed forward pricing or pricing derived from established indices and adjusted for nominal quality characteristics. Some coal contracts also contain positive electric power price-related adjustments, which represent market-driven price adjustments, wherein no additional value is exchanged, in addition to a fixed base price per ton. The Company’s coal contracts generally do not allow for retroactive adjustments to pricing after title to the coal has passed and typically do not have significant financing components.

The estimated transaction price from each of the Company's contracts is based on the total amount of consideration to which the Company expects to be entitled under the contract. Included in the transaction price for certain coal supply contracts is the impact of variable consideration, including quality price adjustments, handling services and per ton price fluctuations based on certain coal sales price indices. The estimated transaction price for each contract is allocated to the Company's performance obligations based on relative stand-alone selling prices determined at contract inception. The Company has determined that each ton of coal represents a separate and distinct performance obligation. Some of the Company's contracts span multiple years and have annual pricing modifications, based upon market-driven or inflationary adjustments, where no additional value is exchanged.

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While CONSOL Energy does, from time to time, experience costs of obtaining coal customer contracts with amortization periods greater than one year, those costs are generally immaterial. At March 31, 2023 and December 31, 2022, the Company did not have any capitalized costs to obtain customer contracts on its Consolidated Balance Sheets. As of and for the three months ended March 31, 2023 and 2022, the Company has not recognized any amortization of previously existing capitalized costs of obtaining customer contracts. Further, the Company has not recognized any coal revenue in the current period that is not a result of current period performance.

Terminal Revenue

Terminal revenues are attributable to the Company's CONSOL Marine Terminal and include revenues earned from providing receipt and unloading of coal from rail cars, transporting coal from the receipt point to temporary storage or stockpile facilities located at the Terminal, stockpiling, blending, weighing, sampling, redelivery, and loading of coal onto vessels. Revenues for these services are earned and performance obligations are considered fulfilled as the services are performed.

The CONSOL Marine Terminal does not normally experience material costs of obtaining customer contracts with amortization periods greater than one year. At March 31, 2023 and December 31, 2022, the Company did not have any capitalized costs to obtain customer contracts on its Consolidated Balance Sheets. As of and for the three months ended March 31, 2023 and 2022, the Company has not recognized any amortization of previously existing capitalized costs of obtaining Terminal customer contracts. Further, the Company has not recognized any revenue in the current period that is not a result of current period performance.

Freight Revenue

Some of CONSOL Energy's coal contracts require that the Company sell its coal at locations other than its coal preparation plants. The cost to transport the Company's coal to the ultimate sales point is passed through to the Company's customers and CONSOL Energy recognizes the freight revenue equal to the transportation costs when title of the coal passes to the customer.

Contract Balances

Contract assets, when present, are recorded separately from trade receivables in the Company's Consolidated Balance Sheets and are reclassified to trade receivables as title passes to the customer and the Company's right to consideration becomes unconditional. Credit is extended based on an evaluation of a customer's financial condition and a customer's ability to perform its obligations. CONSOL Energy typically does not have material contract assets that are stated separately from trade receivables since the Company's performance obligations are satisfied as control of the goods or services passes to the customer, thereby granting the Company an unconditional right to receive consideration. Contract liabilities relate to consideration received in advance of the satisfaction of the Company's performance obligations. Contract liabilities are recognized as revenue at the point in time when control of the goods passes to the customer, or over time when services are provided.

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NOTE 3—COMPONENTS OF PENSION AND OTHER POST-EMPLOYMENT BENEFIT (OPEB) PLANS NET PERIODIC BENEFIT COSTS:

The components of Net Periodic Benefit (Credit) Cost are as follows:


	Pension Benefits				Other Post-Employment Benefits
	Three Months Ended March 31,					Three Months Ended March 31,
	2023		2022				2023		2022
Service Cost	$	304	$	302			$	—	$	—
Interest Cost	6,757		4,135				3,261		1,974
Expected Return on Plan Assets	(9,867)		(9,319)				—		—
Amortization of Prior Service Credits	—		—				(601)		(601)
Amortization of Actuarial Loss	185		758				—		879
Net Periodic Benefit (Credit) Cost	$	(2,621)	$	(4,124)			$	2,660	$	2,252

(Credits) expenses related to pension and other post-employment benefits are reflected in Operating and Other Costs in the Consolidated Statements of Income.

NOTE 4—COMPONENTS OF COAL WORKERS’ PNEUMOCONIOSIS (CWP) AND WORKERS’ COMPENSATION NET PERIODIC BENEFIT COSTS:

The components of Net Periodic Benefit Cost are as follows:


	CWP				Workers' Compensation
	Three Months Ended March 31,					Three Months Ended March 31,
	2023		2022				2023		2022
Service Cost	$	578	$	726			$	1,399	$	1,230
Interest Cost	2,071		1,265				628		342
Amortization of Actuarial (Gain) Loss	(261)		1,060				(512)		(105)
State Administrative Fees and Insurance Bond Premiums	—		—				545		437
Net Periodic Benefit Cost	$	2,388	$	3,051			$	2,060	$	1,904

Expenses related to CWP and workers’ compensation are reflected in Operating and Other Costs in the Consolidated Statements of Income.

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NOTE 5—INCOME TAXES:

The Company recorded its provision for income taxes for the three months ended March 31, 2023 of $41,593, or 15.3%, of earnings before income taxes, based on its annual estimated income tax rate adjusted for discrete items. The effective tax rate for the three months ended March 31, 2023 differs from the U.S. federal statutory rate of 21%, primarily due to the tax benefit for excess percentage depletion and foreign derived intangible income. These tax provision amounts also include discrete tax adjustments primarily related to equity compensation.

The provision for income taxes for the three months ended March 31, 2022 of ($3,522), or 44.2%, of earnings before income taxes was based on the Company's annual estimated income tax rate adjusted for discrete items. The effective tax rate for the three months ended March 31, 2022 differed from the U.S. federal statutory rate of 21%, primarily due to discrete tax benefits related to equity compensation, as well as effective tax rate impacts of excess percentage depletion and foreign derived intangible income, partially offset by compensation.

On August 16, 2022, the President of the United States signed into law the Inflation Reduction Act of 2022. This legislation does not have a material impact on the Company's current financial statements.

The Company is subject to taxation in the United States and certain of its various states, as well as Canada and certain of its various provinces. The Company is subject to examination for the tax periods 2018 through 2022 for federal and state returns.

NOTE 6—CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS:

During the three months ended March 31, 2023, the Company purchased $75,000 in marketable debt securities, primarily comprised of highly liquid U.S. Treasury securities. The investments are held in the custody of a financial institution. These securities are classified as available-for-sale securities and have maturity dates ranging from June 2023 through September 2023, and thus are classified as current assets.


	March 31,
	2023		2022
Cash and Cash Equivalents	$	192,826	$	222,901
Restricted Cash - Current	45,797		33,854
Restricted Cash - Non-current	8,220		12,253
Cash and Cash Equivalents and Restricted Cash	246,843		269,008
Short-Term Investments	75,310		—
Total	$	322,153	$	269,008

The Company's investments in available-for-sale securities are as follows:


	March 31, 2023
					Gross Unrealized
	Amortized Cost		Allowance for Credit Losses		Gains		Losses		Fair Value
U.S. Treasury Securities	$	75,034	$	—	$	276	$	—	$	75,310

Available-for-sale investments are reported at fair value and any unrealized gains or losses are recognized in other comprehensive income, net of tax. Interest and dividends are included in net income when earned.

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NOTE 7—CREDIT LOSSES:

Trade receivables are recorded at the invoiced amount and do not bear interest. The Company markets its coal to top-performing rail-served power plants in its core market areas and to industrial and metallurgical consumers in international markets. The Company also provides terminal services to facilitate the exporting of coal from both Company coal sales and third-party transactions. Credit is extended based on an evaluation of a customer's financial condition, the importance of the customer or market for future business and a customer's ability to perform its obligations. Trade receivable balances are monitored against approved credit terms. Credit terms are reviewed and adjusted as considered necessary based on changes to a customer's credit profile. If a customer's credit deteriorates, the Company may reduce credit risk exposure by reducing credit terms, obtaining letters of credit, obtaining credit insurance, or requiring pre-payment for shipments. Other non-trade contractual arrangements consist primarily of overriding royalty agreements and other financial arrangements between the Company and various counterparties.

The Company is exposed to credit losses primarily through sales of products and services. The Company's expected loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of customers' trade and other accounts receivables. Due to the short-term nature of such receivables, the estimate of the amount of accounts receivable that may not be collected is based on an aging of the accounts receivable balances and the financial condition of customers. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. The Company's monitoring activities include timely account reconciliations, dispute resolution, payment confirmation, consideration of customers' financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible.

Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for changes to the assessment of anticipated payment, changes in economic conditions, current industry trends in the markets the Company serves, and changes in the financial health of the Company's counterparties.

The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected.


	Trade Receivables		Other Non-Trade Contractual Arrangements

Beginning Balance, December 31, 2022	$	1,731	$	7,051
Provision for expected credit losses	257		182
Ending Balance, March 31, 2023	$	1,988	$	7,233

NOTE 8—INVENTORIES:

Inventory components consist of the following:


	March 31, 2023		December 31, 2022
Coal	$	31,846	$	11,315
Supplies	63,789		54,975
Total Inventories	$	95,635	$	66,290

Inventories are stated at the lower of cost or net realizable value. The cost of coal inventories is determined by the first-in, first-out (“FIFO”) method. Coal inventory costs include labor, supplies, equipment costs, operating overhead, depreciation, depletion, amortization and other related costs. The cost of supplies inventory is determined by the average cost method and includes operating and maintenance supplies to be used in the Company's coal operations.

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NOTE 9—ACCOUNTS RECEIVABLE SECURITIZATION:

At March 31, 2023, CONSOL Energy and certain of its U.S. subsidiaries are parties to a trade accounts receivable securitization facility with financial institutions for the sale on a continuous basis of eligible trade accounts receivable. In March 2020, the securitization facility was amended to, among other things, extend the maturity date from August 30, 2021 to March 27, 2023. In July 2022, the securitization facility was again amended to, among other things, extend the maturity date to July 29, 2025.

Pursuant to the securitization facility, CONSOL Thermal Holdings LLC, an indirect, wholly-owned subsidiary of the Company, sells current and future trade receivables to CONSOL Pennsylvania Coal Company LLC, a wholly-owned subsidiary of the Company. CONSOL Marine Terminals LLC, a wholly-owned subsidiary of the Company, and CONSOL Pennsylvania Coal Company LLC sell and/or contribute current and future trade receivables (including receivables sold to CONSOL Pennsylvania Coal Company LLC by CONSOL Thermal Holdings LLC) to CONSOL Funding LLC, a wholly-owned subsidiary of the Company (the “SPV”). The SPV, in turn, pledges its interests in the receivables to PNC Bank, N.A., which either makes loans or issues letters of credit on behalf of the SPV. The maximum amount of advances and letters of credit outstanding under the securitization facility may not exceed $100,000.

Loans under the securitization facility accrue interest at a reserve-adjusted market index rate equal to the applicable term Secured Overnight Financing Rate (“SOFR”). Loans and letters of credit under the securitization facility also accrue a program fee and a letter of credit participation fee, respectively, ranging from 2.00% to 2.50% per annum depending on the total net leverage ratio of CONSOL Energy. In addition, the SPV paid certain structuring fees to PNC Capital Markets LLC and pays other customary fees to the lenders, including a fee on unused commitments equal to 0.60% per annum.

At March 31, 2023, the Company's eligible accounts receivable yielded $42,022 of borrowing capacity. At March 31, 2023, the facility had no outstanding borrowings and $40,922 of letters of credit outstanding, leaving available borrowing capacity of $1,100. At December 31, 2022, the Company's eligible accounts receivable yielded $85,179 of borrowing capacity. At December 31, 2022, the facility had no outstanding borrowings and $83,465 of letters of credit outstanding, leaving available borrowing capacity of $1,714. Costs associated with the receivables facility totaled $413 and $275 for the three months ended March 31, 2023 and 2022, respectively. The Company has not derecognized any receivables due to its continued involvement in the collections efforts.

NOTE 10—PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment consists of the following:


	March 31, 2023		December 31, 2022
Plant and Equipment	$	3,359,934	$	3,330,755
Coal Properties and Surface Lands	901,364		898,628
Airshafts	482,641		481,090
Mine Development	366,241		366,241
Advance Mining Royalties	332,555		331,863
Total Property, Plant and Equipment	5,442,735		5,408,577
Less: Accumulated Depreciation, Depletion and Amortization	3,502,386		3,448,495
Total Property, Plant and Equipment - Net	$	1,940,349	$	1,960,082

Coal reserves are either owned in fee or controlled by lease. The duration of the leases vary; however, the lease terms are generally extended automatically to the exhaustion of economically recoverable reserves, as long as active mining continues. Coal interests held by lease provide the same rights as fee ownership for mineral extraction and are legally considered real property interests.

As of March 31, 2023 and December 31, 2022, property, plant and equipment includes gross assets under finance leases of $91,208 and $90,516, respectively. Accumulated amortization for finance leases was $60,928 and $54,028 at March 31, 2023 and December 31, 2022, respectively. Amortization expense for assets under finance leases approximated $6,901 and $6,230 for the three months ended March 31, 2023 and 2022, respectively, and is included in Depreciation, Depletion and Amortization in the accompanying Consolidated Statements of Income.

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NOTE 11—OTHER ACCRUED LIABILITIES:


	March 31, 2023		December 31, 2022
Subsidence Liability	$	94,440	$	96,623
Accrued Compensation and Benefits	54,693		67,893
Accrued Income Taxes	43,522		1,513
Accrued Other Taxes	8,590		10,551
Accrued Interest	5,147		7,942
Other	11,591		9,880
Current Portion of Long-Term Liabilities:
Asset Retirement Obligations	29,644		29,644
Postretirement Benefits Other than Pensions	22,190		22,436
Pneumoconiosis Benefits	12,673		12,723
Workers' Compensation	10,037		10,451
Total Other Accrued Liabilities	$	292,527	$	269,656

NOTE 12—LONG-TERM DEBT:


	March 31, 2023		December 31, 2022
Debt:
MEDCO Revenue Bonds in Series due September 2025 at 5.75%	$	102,865	$	102,865
9.00% PEDFA Solid Waste Disposal Revenue Bonds due April 2028	75,000		75,000
11.00% Senior Secured Second Lien Notes due November 2025	49,107		99,107
Term Loan B due in September 2024 (Principal of $23,590 and $63,590 less Unamortized Discount of $34 and $106, 11.50% and 8.92% Weighted Average Interest Rate, respectively)	23,556		63,484
Other Debt Arrangements	2,165		2,400
Advance Royalty Commitments (8.09% Weighted Average Interest Rate)	7,716		7,716
Less: Unamortized Debt Issuance Costs	(2,673)		(3,721)
	257,736		346,851
Less: Amounts Due in One Year*	(4,759)		(4,741)
Long-Term Debt	$	252,977	$	342,110

* Excludes current portion of Finance Lease Obligations of $19,821 and $24,105 at March 31, 2023 and December 31, 2022, respectively.

Senior Secured Credit Facilities

In November 2017, CONSOL Energy entered into a revolving credit facility with PNC Bank, N.A. with commitments up to $300,000 (the “Revolving Credit Facility”), a Term Loan A Facility of up to $100,000 (the “TLA Facility”) and a Term Loan B Facility of up to $400,000 (the “TLB Facility”, and together with the Revolving Credit Facility and the TLA Facility, the “Senior Secured Credit Facilities”). On March 28, 2019, the Company amended the Senior Secured Credit Facilities to increase the borrowing commitment of the Revolving Credit Facility to $400,000 and reallocate the principal amounts outstanding under the TLA Facility and the TLB Facility. On June 5, 2020, the Company amended the Senior Secured Credit Facilities (the “2020 amendment”) to provide eight quarters of financial covenant relaxation, effect an increase in the rate at which borrowings under the Revolving Credit Facility and the TLA Facility bear interest, and add an anti-cash hoarding provision. On March 29, 2021, the Company amended the Senior Secured Credit Facilities to revise the negative covenant with respect to other indebtedness to allow the Company to incur obligations under the tax-exempt solid waste disposal revenue bonds. On April 13, 2021, the Pennsylvania Economic Development Financing Authority (“PEDFA”) Solid Waste Disposal Revenue Bonds were issued. The Revolving Credit Facility was

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further amended in July 2022 (the “2022 amendment”) to, among other things, extend the maturity date of $260,000 of borrowing commitments from March 28, 2023 to July 18, 2026. The Company maintained full access to the $400,000 available under the Revolving Credit Facility until March 28, 2023. As of March 28, 2023, the Company's borrowing limit under the Revolving Credit Facility was reduced to $260,000.

Borrowings under the Company's Senior Secured Credit Facilities bear interest at a floating rate that is, at the Company's option, either (i) SOFR plus the applicable SOFR adjustment (as defined therein) depending on the applicable interest period plus an applicable margin or (ii) an alternate base rate plus an applicable margin. The applicable margin for the Revolving Credit Facility depends on the total net leverage ratio, whereas the applicable margin for the TLB Facility is fixed. The 2020 amendment increased the applicable margin by 50 basis points on both the Revolving Credit Facility and the TLA Facility. The maturity date of the Revolving Credit Facility is July 18, 2026 and the maturity date of the TLA Facility was March 28, 2023. The TLA Facility was paid in full on June 30, 2022. The TLB Facility's maturity date is September 28, 2024. Obligations under the Senior Secured Credit Facilities are guaranteed by (i) all owners of the PAMC held by the Company, (ii) any other members of the Company’s group that own any portion of the collateral securing the Revolving Credit Facility, and (iii) subject to certain customary exceptions and agreed materiality thresholds, all other existing or future direct or indirect wholly-owned restricted subsidiaries of the Company. The obligations are secured by, subject to certain exceptions (including a limitation of pledges of equity interests in certain subsidiaries and certain thresholds with respect to real property), a first-priority lien on (i) the Company’s interest in the PAMC, (ii) the equity interests in PA Mining Complex LP held by the Company, (iii) the CONSOL Marine Terminal, (iv) the Itmann Mining Complex and (v) the 1.4 billion tons of Greenfield Reserves and Resources.

The Senior Secured Credit Facilities contain a number of customary affirmative covenants. In addition, the Senior Secured Credit Facilities contain a number of negative covenants, including (subject to certain exceptions) limitations on (among other things): indebtedness, liens, investments, acquisitions, dispositions, restricted payments and prepayments of junior indebtedness. The 2020 amendment added additional conditions to be met for the covenants relating to investments in joint ventures, general investments, share repurchases, dividends and repurchases of Second Lien Notes (as defined below). The additional conditions require that the Company have no outstanding borrowings and no more than $200,000 of outstanding letters of credit on the Revolving Credit Facility. Further restrictions apply to investments in joint ventures, share repurchases and dividends that require the Company's total net leverage ratio shall not be greater than 2.00 to 1.00.

The Revolving Credit Facility also includes covenants relating to (i) a maximum first lien gross leverage ratio, (ii) a maximum total net leverage ratio, and (iii) a minimum fixed charge coverage ratio. The maximum first lien gross leverage ratio is calculated as the ratio of Consolidated First Lien Debt to Consolidated EBITDA. Consolidated EBITDA, as used in the covenant calculation, excludes non-cash compensation expenses, non-recurring transaction expenses, extraordinary gains and losses, gains and losses on discontinued operations, non-cash charges related to legacy employee liabilities and gains and losses on debt extinguishment, and subtracts cash payments related to legacy employee liabilities. The maximum total net leverage ratio is calculated as the ratio of Consolidated Indebtedness, minus Cash on Hand, to Consolidated EBITDA. The minimum fixed charge coverage ratio is calculated as the ratio of Consolidated EBITDA to Consolidated Fixed Charges. Consolidated Fixed Charges, as used in the covenant calculation, include cash interest payments, cash payments for income taxes, scheduled debt repayments, dividends paid and Maintenance Capital Expenditures. Under the Revolving Credit Facility, for the fiscal quarters ending on or after June 30, 2022, the maximum first lien gross leverage ratio shall be 1.50 to 1.00, the maximum total net leverage ratio shall be 2.50 to 1.00 and the minimum fixed charge coverage ratio shall be 1.10 to 1.00.

The Company's first lien gross leverage ratio was 0.06 to 1.00 at March 31, 2023. The Company's total net leverage ratio was 0.02 to 1.00 at March 31, 2023. The Company's fixed charge coverage ratio was 2.68 to 1.00 at March 31, 2023. The Company was in compliance with all of its financial covenants under the Senior Secured Credit Facilities as of March 31, 2023.

The TLB Facility also includes a financial covenant that requires the Company to repay a certain amount of its borrowings under the TLB Facility within ten business days after the date it files its Annual Report on Form 10-K with the Securities and Exchange Commission if the Company has excess cash flow (as defined in the credit agreement for the Senior Secured Credit Facilities) during the year covered by the applicable Annual Report on Form 10-K. As a result of achieving certain financial metrics as of December 31, 2022 and 2021, the Company was not required to make an excess cash flow payment with respect to the years ended December 31, 2022 and 2021. The required repayment is equal to a certain percentage of the Company’s excess cash flow for such year, ranging from 0% to 75% depending on the Company’s total net leverage ratio, less the amount of certain voluntary prepayments made by the Company, if any, under the TLB Facility during such fiscal year.

At March 31, 2023, the Revolving Credit Facility had no borrowings outstanding and $145,176 of letters of credit outstanding, leaving $114,824 of unused capacity. At December 31, 2022, the Revolving Credit Facility had no borrowings outstanding and $103,029 of letters of credit outstanding, leaving $296,971 of unused capacity. From time to time,

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CONSOL Energy is required to post financial assurances to satisfy contractual and other requirements generated in the normal course of business. Some of these assurances are posted to comply with federal, state or other government agencies' statutes and regulations. CONSOL Energy sometimes uses letters of credit to satisfy these requirements and these letters of credit reduce the Company's borrowing facility capacity.

Second Lien Notes

In November 2017, CONSOL Energy issued $300,000 in aggregate principal amount of 11.00% Senior Secured Second Lien Notes due 2025 (the “Second Lien Notes”) pursuant to an indenture (the “Indenture”) dated as of November 13, 2017, by and between the Company and UMB Bank, N.A., a national banking association, as trustee and collateral trustee (the “Trustee”). On November 28, 2017, certain subsidiaries of the Company executed a supplement to the Indenture and became party to the Indenture as a guarantor (the “Guarantors”). The Second Lien Notes are secured by second priority liens on substantially all of the assets of the Company and the Guarantors that are pledged on a first-priority basis as collateral securing the Company’s obligations under the Senior Secured Credit Facilities (described above), subject to certain exceptions under the Indenture. The Indenture contains covenants that limit the ability of the Company and the Guarantors to (i) incur, assume or guarantee additional indebtedness or issue preferred stock; (ii) create liens to secure indebtedness; (iii) declare or pay dividends on the Company’s common stock, redeem stock or make other distributions to the Company’s stockholders; (iv) make investments; (v) restrict dividends, loans or other asset transfers from the Company’s restricted subsidiaries; (vi) merge or consolidate, or sell, transfer, lease or dispose of substantially all of the Company’s assets; (vii) sell or otherwise dispose of certain assets, including equity interests in subsidiaries; (viii) enter into transactions with affiliates; and (ix) create unrestricted subsidiaries. These covenants are subject to important exceptions and qualifications. If the Second Lien Notes achieve an investment grade rating from both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc. and no default under the Indenture exists, many of the foregoing covenants will terminate and cease to apply.

The SPV is a non-guarantor subsidiary of the Second Lien Notes and the Senior Secured Credit Facilities, and the SPV holds the assets pledged to the lender in the securitization facility. The SPV had total assets of $150,132 and $158,877, comprised mainly of $149,404 and $158,127 trade receivables, net, at March 31, 2023 and December 31, 2022, respectively. Net income attributable to the SPV was $2,622 and $684 for the three months ended March 31, 2023 and 2022, respectively, which primarily reflected intercompany fees related to purchasing the receivables, which are eliminated in the Consolidated Financial Statements contained within this Quarterly Report on Form 10-Q. During the three months ended March 31, 2023 and 2022, there were no borrowings or payments under the Accounts Receivable Securitization Facility. See Note 9 - Accounts Receivable Securitization for additional information.

During the three months ended March 31, 2023, the Company spent $51,375 to redeem $50,000 of its outstanding Second Lien Notes. During the three months ended March 31, 2022, the Company spent $26,387 to repurchase $25,000 of its outstanding Second Lien Notes. As a result of these transactions, $1,375 and $2,122 was included in Loss on Debt Extinguishment on the Consolidated Statements of Income for the three months ended March 31, 2023 and 2022, respectively.

PEDFA Bonds

In April 2021, CONSOL Energy borrowed the proceeds received from the sale of tax-exempt bonds issued by PEDFA in an aggregate principal amount of $75,000 (the “PEDFA Bonds”). The PEDFA Bonds bear interest at a fixed rate of 9.00% for an initial term of seven years. The PEDFA Bonds mature on April 1, 2051 but are subject to mandatory purchase by the Company on April 13, 2028, at the expiration of the initial term rate period. The PEDFA Bonds were issued pursuant to an indenture (the “PEDFA Indenture”) dated as of April 1, 2021, by and between PEDFA and Wilmington Trust, N.A., a national banking association, as trustee (the “PEDFA Notes Trustee”). PEDFA made a loan of the proceeds of the PEDFA Bonds to the Company pursuant to a Loan Agreement (the “Loan Agreement”) dated as of April 1, 2021 between PEDFA and the Company. Under the terms of the Loan Agreement, the Company agreed to make all payments of principal, interest and other amounts at any time due on the PEDFA Bonds or under the PEDFA Indenture. PEDFA assigned its rights as lender under the Loan Agreement, excluding certain reserved rights, to the PEDFA Notes Trustee. Certain subsidiaries of the Company (the “PEDFA Notes Guarantors”) executed a Guaranty Agreement (the “Guaranty”) dated as of April 1, 2021 in favor of the PEDFA Notes Trustee, guarantying the obligations of the Company under the Loan Agreement to pay the PEDFA Bonds when and as due. The obligations of the Company under the Loan Agreement and of the PEDFA Notes Guarantors under the Guaranty are secured by second priority liens on substantially all of the assets of the Company and the PEDFA Notes Guarantors on parity with the Second Lien Notes. The Loan Agreement and Guaranty incorporate by reference covenants in the Indenture under which the Second Lien Notes were issued (discussed above).

The Company started a capital construction project on the PAMC coarse refuse disposal area in 2017, which is now funded, in part, by the $75,000 of PEDFA Bond proceeds loaned to the Company. The Company expects to expend these

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funds as qualified work is completed. During the three months ended March 31, 2023 and 2022, the Company utilized restricted cash in the amount of $3,244 and $3,031, respectively, for qualified expenses. Additionally, the Company had $32,645 and $35,516 in restricted cash at March 31, 2023 and December 31, 2022, respectively, associated with this financing that will be used to fund future spending on the coarse refuse disposal area.

Other Indebtedness

During the year ended December 31, 2019, the Company entered into interest rate swaps, which effectively converted $150,000 of the TLB Facility's floating interest rate to a fixed interest rate for the twelve months ending December 31, 2020 and 2021, and $50,000 of the TLB Facility's floating interest rate to a fixed interest rate for the twelve months ending December 31, 2022. The $50,000 interest rate swap was settled in August 2022 with the change in the floating rate on the TLB Facility to SOFR from LIBOR. The interest rate swaps qualified for cash flow hedge accounting treatment and as such, the change in the fair value of the interest rate swaps was recorded on the Company's Consolidated Balance Sheets as an asset or liability. The effective portion of the gains or losses was reported as a component of accumulated other comprehensive loss. No ineffective gains or losses were reported in earnings during the year ended December 31, 2022.

NOTE 13—COMMITMENTS AND CONTINGENT LIABILITIES:

The Company is subject to various lawsuits and claims with respect to such matters as personal injury, wrongful death, damage to property, exposure to hazardous substances, governmental regulations including environmental remediation, employment and contract disputes and other claims and actions arising out of the normal course of business. The Company accrues the estimated loss for these lawsuits and claims when the loss is probable and reasonably estimable. The Company’s estimated accruals related to these pending claims, individually and in the aggregate, are immaterial to the financial position, results of operations or cash flows of the Company as of March 31, 2023. It is possible that the aggregate loss in the future with respect to these lawsuits and claims could ultimately be material to the Company’s financial position, results of operations or cash flows; however, such amounts cannot be reasonably estimated. The amount claimed against the Company as of March 31, 2023 is disclosed below when an amount is expressly stated in the lawsuit or claim, which is not often the case.

Fitzwater Litigation: Three nonunion retired coal miners have sued Fola Coal Company LLC, Consolidation Coal Company (“CCC”) and CONSOL of Kentucky Inc. (“COK”) (as well as the Company's former parent) in the U.S. District Court for the Southern District of West Virginia alleging ERISA violations in the termination of retiree health care benefits. The Plaintiffs contend they relied to their detriment on oral statements and promises of “lifetime health benefits” allegedly made by various members of management during Plaintiffs’ employment and that they were allegedly denied access to Summary Plan Documents that clearly reserved to the Company the right to modify or terminate the Retiree Health and Welfare Plan subject to Plaintiffs’ claims. Pursuant to Plaintiffs’ amended complaint filed on April 24, 2017, Plaintiffs request that retiree health benefits be reinstated and seek to represent a class of all nonunion retirees who were associated with AMVEST and COK areas of operation. On October 15, 2019, Plaintiffs’ supplemental motion for class certification was denied on all counts. On July 15, 2020, Plaintiffs filed an interlocutory appeal with the Fourth Circuit Court of Appeals on the Order denying class certification. The Fourth Circuit denied Plaintiffs' appeal on August 14, 2020. On October 1, 2020, the District Court entered a pretrial order setting the trial date, which was held in February 2021. No ruling has been issued by the judge. The Company believes it has a meritorious defense and intends to vigorously defend this suit.

Casey Litigation: A class action lawsuit was filed on August 23, 2017 on behalf of two nonunion retired coal miners against CCC, COK, CONSOL Buchanan Mining Co., LLC and Kurt Salvatori, the Company's Chief Administrative Officer, in the U.S. District Court for the Southern District of West Virginia alleging ERISA violations in the termination of retiree health care benefits. Filed by the same lawyers who filed the Fitzwater litigation, and raising nearly identical claims, the Plaintiffs contend they relied to their detriment on oral promises of “lifetime health benefits” allegedly made by various members of management during Plaintiffs’ employment and that they were not provided with copies of Summary Plan Documents clearly reserving to the Company the right to modify or terminate the Retiree Health and Welfare Plan. Plaintiffs request that retiree health benefits be reinstated for them and their dependents and seek to represent a class of all nonunion retirees of any subsidiary of the Company's former parent that operated or employed individuals in McDowell or Mercer Counties, West Virginia, or Buchanan or Tazewell Counties, Virginia whose retiree welfare benefits were terminated. On December 1, 2017, the trial court judge in Fitzwater signed an order to consolidate Fitzwater with Casey. The Casey complaint was amended on March 1, 2018 to add new plaintiffs, add defendant CONSOL Pennsylvania Coal Company, LLC and eliminate defendant CONSOL Buchanan Mining Co., LLC in an attempt to expand the class of retirees. On October 15, 2019, Plaintiffs’ supplemental motion for class certification was denied on all counts. On July 15, 2020, Plaintiffs filed an interlocutory appeal with the Fourth Circuit Court of Appeals on the Order denying class certification. The Fourth Circuit denied Plaintiffs' appeal on August 14, 2020. On October 1, 2020, the District Court

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entered a pretrial order setting the trial date, which was held in February 2021. No ruling has been issued by the judge. The Company believes it has a meritorious defense and intends to vigorously defend this suit.

United Mine Workers of America 1992 Benefit Plan Litigation: In 2013, Murray Energy and its subsidiaries (“Murray”) entered into a stock purchase agreement (the “Murray sale agreement”) with the Company's former parent pursuant to which Murray acquired the stock of CCC and certain subsidiaries and certain other assets and liabilities. At the time of sale, the liabilities included certain retiree medical liabilities under the Coal Industry Retiree Health Benefit Act of 1992 (“Coal Act”) and certain federal black lung liabilities under the Black Lung Benefits Act (“BLBA”). Based upon information available, the Company estimates that the annual servicing costs of these liabilities are approximately $10 million to $20 million per year for the next ten years. The annual servicing cost would decline each year since the beneficiaries of the Coal Act consist principally of miners who retired prior to 1994. Murray filed for Chapter 11 bankruptcy in October 2019. As part of the bankruptcy proceedings, Murray unilaterally entered into a settlement with the United Mine Workers of America 1992 Benefit Plant (the “1992 Benefit Plan”) to transfer retirees in the Murray Energy Section 9711 Plan to the 1992 Benefit Plan. This was approved by the bankruptcy court on April 30, 2020. On May 2, 2020, the 1992 Benefit Plan filed an action in the United States District Court for the District of Columbia asking the court to make a determination whether the Company's former parent or the Company has any continuing retiree medical liabilities under the Coal Act (the “1992 Plan Lawsuit”). The Murray sale agreement includes indemnification by Murray with respect to the Coal Act and BLBA liabilities. In addition, the Company had agreed to indemnify its former parent relative to certain pre-separation liabilities. As of September 16, 2020, the Company entered into a settlement agreement with Murray and withdrew its claims in bankruptcy. On September 11, 2020, the Defendants in the 1992 Plan Lawsuit filed a Motion to Dismiss Plaintiffs' Second Amended Complaint which was denied by the Court on March 29, 2022. The Company will continue to vigorously defend any claims that attempt to transfer any of such liabilities directly or indirectly to the Company, including raising all applicable defenses against the 1992 Benefit Plan’s suit. With respect to this lawsuit, while a loss is possible, it is not probable and, as a result, no accrual has been recorded.

Other Matters: On July 27, 2021, the Company's former parent informed the Company that it had received a request from the UMWA 1974 Pension Plan for information related to the facts and circumstances surrounding the former parent's 2013 sale of certain of its coal subsidiaries to Murray (the “Letter Request”). The Letter Request indicates that litigation by the UMWA 1974 Pension Plan against the Company's former parent related to potential withdrawal liabilities from the plan created by the 2019 bankruptcy of Murray is reasonably foreseeable. There has been no indication of potential claims against the Company by the UMWA 1974 Pension Plan and, at this time, no liability of the Company's former parent has been assessed.

The Company and various subsidiaries are defendants in certain other legal proceedings. In the opinion of management, based upon an investigation of these matters and discussion with legal counsel, the ultimate outcome of such other legal proceedings, individually and in the aggregate, is not expected to have a material adverse effect on the Company’s financial position, results of operations or liquidity.

The following is a summary, as of March 31, 2023, of the financial guarantees, unconditional purchase obligations and letters of credit to certain third parties. Employee-related financial guarantees have primarily been provided to support the 1992 Benefit Plan and federal black lung and various state workers' compensation self-insurance programs. Environmental financial guarantees have primarily been provided to support various performance bonds related to reclamation and other environmental issues. Other financial guarantees have been extended to support sales contracts, insurance policies, surety indemnity agreements, legal matters, full and timely payments of mining equipment leases, and various other items necessary in the normal course of business. These amounts represent the maximum potential of total future payments that the Company could be required to make under these instruments. Certain letters of credit included in the table below were issued against other commitments included in this table. These amounts have not been reduced for potential recoveries under recourse or collateralization provisions. Generally, recoveries under reclamation bonds would be limited to the extent of the work performed at the time of the default. No amounts related to these commitments are recorded as liabilities in the financial statements. The Company's management believes that these commitments will not have a material adverse effect on the Company's financial condition.

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	Amount of Commitment Expiration per Period
	Total Amounts Committed		Less Than 1 Year		1-3 Years		3-5 Years		Beyond 5 Years
Letters of Credit:
Employee-Related	$	50,366	$	43,116	$	7,250	$	—	$	—
Environmental	398		398		—		—		—
Other	135,334		135,334		—		—		—
Total Letters of Credit	$	186,098	$	178,848	$	7,250	$	—	$	—
Surety Bonds:
Employee-Related	$	81,010	$	63,489	$	17,521	$	—