CNX Resources Corporation CNX announced the pricing of $500 million of senior notes due 2027. The offering of notes is expected to close on Mar 14, 2019.
The company intends to utilize the net proceeds of the sale of the notes issued to purchase $400.0 million aggregate principal amount of its outstanding 5.875% senior notes due 2022. Further, it looks forward to use the rest of the net proceeds to repay existing indebtedness under its revolving credit facility.
Lower-Than-Industry Debt Levels
CNX Resources’ debt-to-capitalization ratio currently stands at 32%, lower than its industry’s average of 37.75%. The company is trying to manage its debt level efficiently, allowing it to lower interest burden, thereby positively impacting its margins.
Debt reduction by the company is resulting in a decline in interest payments. Total interest payment in 2018 was $122 million, down 24.2% from the 2017 level.
CNX Resources now expects total 2019 capital expenditure in the range of $1,000-$1,080 million. Majority of the capital expenditure will be directed toward exploration and production ("E&P"), and the rest will be used to strengthen its land, midstream as well as water infrastructure.
E&P expenditure for 2019 is planned in the range of $750-$800 million, in a bid to strengthen its operation. Strong production from Marcellus and Utica shales will enable the company to meet its targeted 2019 production volume of 495-515 billions of cubic feet equivalent, which reflects a 5% increase from the 2018 level.
Increasing focus on lowering emissions via producing electricity and stringent environmental regulations on emissions are expected to drive the demand for natural gas due to its clean burning nature. This in turn is likely to benefit the company.
Shares of CNX Resources have lost 28.2% over the past six months.
Zacks Rank & Key Picks
CNX Resources currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks from the same sector are Enbridge Inc. ENB, SunCoke Energy Inc. SXC and Par Pacific Holdings Inc. PARR, each holding a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for the current year for Enbridge, SunCoke Energy and Par Pacific Holdings has moved up 2.9%, 60.9% and 14.4%, respectively, in the past 30 days.
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