Third-quarter results were solid considering the weakness in the natural gas market. Overall, the gas driller posted an adjusted net loss of $11 million, or $0.06 per share. But that was better than the loss of $0.09 per share that analysts expected. The company was able to somewhat offset lower natural gas prices by growing its volumes 8% year over year.
The gas driller's strong performance during the third quarter allowed it to increase its full-year production outlook. It now expects to produce between 530 billion to 540 billion cubic feet equivalent (Bcfe) this year, up from its prior view of 510 to 530 Bcfe.
CNX Resources also updated its view on 2020. It now expects production to grow to a range of 535 to 565 Bcfe, down from its initial outlook of 570 to 595 Bcfe. But by completing fewer wells, the gas driller expects to produce more free cash flow (FCF) next year, leading it to boost its forecast to $146 million. Furthermore, CEO Nicholas DeIuliis noted that "based on this activity, we expect to grow production and generate significant FCF in 2021." That will give it even more money to pay down debt or return to investors through its share repurchase program.
CNX Resources is adjusting to the slump in natural gas prices by tapping the brakes on its growth rate. While it still expects to increase output next year, it's shifting capital from drilling more wells to paying down debt and buying back stock. That will put it in a better position to create value for investors in what remains a challenging market environment.