Yahoo Finance CNX Resources (CNX) to Gain From Appalachian Focus & Hedges
CNX Resources Corporation CNX is an independent oil and gas exploration and production company. Its stable performance allows it to generate free cash flow.
However, this Zacks Rank #3 (Hold) stock is facing strong competition from other oil and gas companies.
Tailwinds
CNX Resources’ low-cost structure and high-quality asset holdings are expected to strengthen its operation. The company invested $565.7 million in 2022 to strengthen its existing operations. For 2023, capital expenditure is expected to be around $575-$675 million. Capital expenditure will be directed toward Drilling and Completion (D&C) and the rest will be used to strengthen its land, midstream and water infrastructures.
CNX Resources plans to utilize new technologies to develop the natural gas available in the Appalachian region to meet the regional demand for clean energy. Despite a recent drop in natural gas prices, CNX Resources remains well-poised to navigate through price fluctuations as a low-cost producer in Appalachia with one of the strongest hedge books in the industry.
CNX Resources expects its 2023 free cash flow to be $250 million. The company’s initiatives will enable it to achieve its seven-year target of generating cumulative free cash flow in excess of $3.3 billion. Free cash of $1.6 billion generated by CNX Resources in the first three years of the seven-year plan exceeded its guidance. The solid free cash flow generation will help the company meet debt obligations during the 2020-2026 period, improve liquidity and continue with the share buyback program.
Headwinds
CNX Resources Corporation is a relatively new entrant in the industry and will have to compete with larger companies that have a wider share of the market and more financial capabilities. The larger companies may be able to pay more to acquire new natural gas properties for future exploration, limiting CNX Resources’ ability to replace the natural gas produced or improve production.
Its natural gas business depends on gathering, processing and transportation facilities owned by others. Any disruption and capacity-constraints in the pipeline systems could limit sales of its natural gas and natural gas liquids and adversely impact earnings.
Price Performance
In the past three month, shares of CNX Resources have gained 1.8% against the industry’s 8.1% decline.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks in the same sector are Weatherford International WFRD, Eni E and Evolution Petroleum EPM, all currently sporting a Zacks Rank #1 (Strong Buy) . You can see the complete list of today’s Zacks #1 Rank stocks here.
The average earnings surprise in the last four quarters for Weatherford International, Eni and Evolution Petroleum is 0.5%, 8.8% and 38.4%, respectively.
The Zacks Consensus Estimate for Weatherford International and Eni’s 2023 earnings has moved up by 22.1% and 16.9%, respectively, in the past 60 days. For fiscal 2023, the Zacks Consensus Estimate for Evolution Petroleum’searnings has moved up by 20.7% in the same time frame.
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Eni SpA (E) : Free Stock Analysis Report
CNX Resources Corporation. (CNX) : Free Stock Analysis Report
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Weatherford International PLC (WFRD) : Free Stock Analysis Report
