CNX Resources (CNX) to Gain From Appalachian Focus, Investments
CNX Resources Corp. CNX is well poised to benefit from strong production volumes from Marcellus and Utica shales. Efficient debt management and share repurchases will drive its performance.
CNX - which currently has a Zacks Rank #3 (Hold) – has a huge dependence on third-party assets for natural gas transportation.
Tailwinds
CNX Resources has a focus on the Appalachian Basin region. The company plans to develop locally available natural gas, assist in the clean energy transition by reducing emissions and promote exports of Appalachian natural gas. The company will utilize new technologies to develop the natural gas available in the region.
CNX Resources continues to maintain its high-quality asset holdings. For 2023, capital expenditure is expected to be in the range of $625-$675 million. A large portion of capital expenditure will be directed toward Drilling and Completion, and the rest will be used to strengthen its land, midstream and water infrastructures. Strong production from Marcellus and Utica shales will enable the company to meet the 2023 production target.
The company’s strong free cash flow generation will help meet debt obligations, improve liquidity and continue with its share buyback program. CNX Resources expects its 2023 free cash flow to be $325 million. Since the third quarter of 2020, CNX has repurchased 69 million shares.
Headwinds
CNX Resources largely depends on third-party assets for gathering, processing and transportation of natural gas. It is subject to huge competition, operational risks, high costs and failure to replenish natural gas reserves.
Stocks to Consider
Some better-ranked stocks in the same industry are California Resources Corp. CRC, Murphy Oil Corp. MUR and EOG Resources Inc. EOG, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for CRC’s 2023 earnings per share (EPS) indicates an improvement of 2.4% from that reported in 2022. The Zacks Consensus Estimate for 2023 sales indicates a year-over-year improvement of 1.1%.
The Zacks Consensus Estimate for MUR’s 2023 EPS has moved up 10.6% in the past 60 days. The stock delivered an average earnings surprise of 13.36% in the last four quarters.
The Zacks Consensus Estimate for EOG’s 2023 EPS has moved up 8% in the past 60 days. The stock delivered an average earnings surprise of 9.17% in the last four quarters.
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CNX Resources Corporation. (CNX) : Free Stock Analysis Report
EOG Resources, Inc. (EOG) : Free Stock Analysis Report
Murphy Oil Corporation (MUR) : Free Stock Analysis Report
California Resources Corporation (CRC) : Free Stock Analysis Report
