CNX Resources Corporation (NYSE: CNX) has taken a significant step in its operational expansion by announcing the acquisition of Apex Energy II, LLC’s natural gas upstream and midstream assets in the Appalachian Basin. The deal, valued at approximately $505 million, is slated to close in the first quarter of 2025, subject to customary closing conditions. CNX’s President and CEO, Nick Deiuliis, described this acquisition as “a rare opportunity to acquire a highly complementary asset adjacent to our existing operations,” emphasizing the strategic importance of this move in unlocking the stacked pay development opportunities in the deep Utica region.
This acquisition will expand CNX’s footprint in the Central Pennsylvania Area (CPA) by integrating around 36,000 net acres of land, primarily in Westmoreland County, Pennsylvania. This expansion includes significant undeveloped acreage in both the Marcellus and Utica shale formations, offering CNX a chance to capitalize on its pioneering work in these regions.
Financially, the deal is expected to be immediately accretive to CNX’s free cash flow per share, bolstered by the robust production profile of the acquired assets. Apex’s assets are projected to yield between 180 – 190 million cubic feet equivalent per day (MMcfe/d) in 2025, contributing to an expected EBITDA of $150 – $160 million at current strip prices. The integration of Apex’s midstream capabilities also aligns with CNX’s strategy to maintain low operational costs, with an expected cost of around $0.16 per Mcfe for these new assets. This infrastructure not only supports current production but also sets the stage for future development, enhancing their cost efficiency and operational scale.
Funding for this acquisition will come from CNX’s secured credit facility, which was recently expanded to offer up to $2.0 billion in borrowing capacity. With approximately $1.8 billion available as of late September 2024, CNX ensures it can fund this transaction while maintaining a strong balance sheet and significant flexibility in capital allocation.
This strategic move by CNX underscores its commitment to growth and efficiency in the natural gas sector. By leveraging existing infrastructure and focusing on areas with known high potential, CNX is positioning itself for sustained success in an increasingly competitive energy market. The industry will be keenly observing how this integration unfolds, particularly in terms of operational synergies, production enhancement, and CNX’s evolving role within the broader energy landscape.
