CNX Resources Sees Ocean of Possibilities with Natural Gas
Jim Willis on NGL Pipelines
Editor & Publisher, Marcellus Drilling News (MDN)
[Editor’s Note: CNX Resources is as innovative and forward-looking as a natural gas company could be, with excellent young leadership, new ideas, straight talk and enthusiasm!]
CNX Resources recently announced a couple of shuffles among senior management. Don Rush, CNX’s Chief Financial Officer, has become the company’s first Chief Strategy Officer (CSO). Alan Shepard, Vice President and Chief Accounting Officer, was promoted to the role of CFO. Both men have and will continue to work closely together. Rush is a CNX cheerleader and says there is “no reason” why CNX can’t be “leading the charge” in the coming energy transition. Rush says, “We’ve got an ocean of possibilities” in referring to the company’s future prospects with natural gas and hydrogen.
Here’s what we’ve noticed over the years. Smart and effective (i.e. the best) leaders surround themselves with people who are smarter than they are. That’s what it looks like here. This is not to denigrate, in any way, the very smart and savvy CEO of CNX–Nick DeIuliis. It is the biggest compliment we can give DeIuliis–that he has hired and promoted people like Don Rush and Alan Shepard.
Good things are on the horizon for CNX, according to the Pittsburgh Business Times:
When Alan K. Shepard was promoted to CFO of CNX Resources Corp. this month and succeeded Donald W. Rush who moved on to a new role in the company, it wasn’t the first time these two executives had worked closely.
Shepard and Rush, both CNX veterans, worked in the predecessor company Consol Energy’s strategy group more than a decade ago and they attended Carnegie Mellon University at the same time. And, since Shepard returned to CNX (NYSE: CNX) in 2020 as chief accounting officer, he and Rush have been working together on the natural gas driller’s finances.
Rush, who had been CNX’s CFO since 2017, was named CNX’s first chief strategy officer while Shepard will take over as CFO. But Shepard and Rush will continue to work closely, because both jobs are key to the future of CNX and how it will fit into the energy transition.
“There’s no reason this company can’t be leading the charge,” said Rush.
The past several years CNX, like other natural gas companies in the region, have weathered sharp ups and downs. The initial Marcellus Shale rush of more than a decade ago now had, by the time CNX split off from Consol Energy as a pure-play natural gas company, settled into a time of growing production and higher efficiency but substantially fewer drilling rigs and employment. Then came the pandemic, which led to historically low natural gas prices and drillers choking back or shutting off wells. And now have come new boom times, with much higher natural gas prices now and into the foreseeable future and potentially demand not only domestically but also overseas in the form of LNG. There’s also the challenge of the energy transition as well as the promise of hydrogen, which could replace large-scale fossil fuel use, as well as other potential technologies.
Rush said in a recent interview that CNX is in the financial position now to both work in the near term toward improving the Pittsburgh region’s economic and energy stature, as well as position the company and the region to grasp and hold the new opportunities as they come.
“We’ve got an ocean of possibilities,” Rush said.
CNX is in a better position than it has been to capitalize on those opportunities, whether it’s more natural gas drilling to meet the global energy needs or working on those emerging technologies like hydrogen production. Under CEO Nick DeIuliis’ leadership, CNX has laid down a strategy that allows it to generate free cash flow and scale its core natural gas drilling up or down depending on the market. And right now, much more so than when DeIuliis announced the strategy in the early months of the pandemic, the market is quite bullish on natural gas.
“It’s impossible to predict the world and what happens next. What we’ve tried to do is build a business model that works (in every outcome),” Rush said.
Shepard said CNX has a strong financial base to build upon, and its financial strategy of paying down debt and returning value to shareholders. There won’t be any material changes to the vision and execution with the change in CFOs.
“There’s complete alignment between Don, myself and Nick to continue on the path we’re on,” Shepard said.
Rush said his job as chief strategy officer is to find the opportunities in an ESG and sustainable world, whether that’s with a growing pace of natural gas drilling or whether it turns out differently than an increasing role for natural gas in the global energy mix.
“We’re cognizant that might not be the future,” he said. “It’s building a business that works in whatever comes in front of it.”
But Shepard and Rush are also confident that Appalachian natural gas has a lot to offer in a market that is increasingly focused on ESG. That’s the cleaner than coal and oil emissions profile, cheaper over time, less of a greenhouse gas emissions intensity and the production here is great for the region’s job market and economy. One of those examples is CNX’s drilling partnership with the Allegheny County Airport Authority, and its plans to work to convert natural gas produced on airport property for alternative fuels for the transportation industry.
“Our gas and our products can check a lot of the boxes,” Rush said.
Editor’s Note: Is there anything that speaks so well for the future of natural gas as the attitude and success of CNX Resources? I think not. It’s one of 2-3 gas companies with a “new school” approach that truly sets them apart and illustrates why the oil and gas industry always adapts and ultimately succeeds in delivering the goods. CNX is the epitome of what Daniel Yergin profiled so well in “The Prize.”
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