Tim Dugan, executive vice president and COO for CNX Resources Corp. (NYSE: CNX), sat down with Jessica Morales at Hart Energy’s recent DUG East conference and exhibition in Pittsburgh. Dugan explains how CNX puts technology and big data to use to succeed in the Appalachian Basin.

Jessica Morales, Hart Energy: Tell us how CNX Resources uses technology and big data to succeed in the Appalachian Basin?

Dugan: We have gotten to a point where we are letting the data guide our decisions. It helps us understand what impacts our results most significantly. We aren’t guessing or making decisions without data. We are letting the data drive our decisions. The end result is it shortens our learning cycle.

When I look at what we have done with the dry Utica wells in central Pennsylvania, the Gaut and Aikens wells we have been able to get to an optimized completion much sooner than we would have several years ago. Several years ago it would have been a trial and error process; something we wait for 12 to 24 months of production to understand the results. Now, with the models and all of the data and using that data properly, we can make our decision and understand the benefits and the results from the work that we do much quicker and make decisions that will improve our economics.

Hart Energy: Are there any challenges for CNX Resources in the area?

Dugan: There is always a regulatory challenge. [A few] of our core values are responsibility, being safe, being environmentally compliant, [and] being a good corporate citizen and a good partner in the community. That is always a challenge. We want to exceed the expectations of the communities and the regulatory agencies, but that is an ever-changing world. It’s a challenge to sometimes keep up with that. We put a lot of effort into doing that and making sure that we present the right image and [do] the right thing in the community. We want to make sure that we understand how [we] impact the communities that we work and live in. It is important to understand that we live in the communities that we work in. There is a social license that we work hard to maintain. There are a lot of benefits, but it is also a challenge.

Hart Energy: How has the first half of the year been for CNX Resources?

Dugan: The first half of the year has gone really well, with us completing the spin of the coal company at the end of 2017. This is really our first step into going from a transactional event driven company into an operational executional company. We have put together a long-term plan over the next five years. Our primary task now is executing that plan. It’s gone well. We are hitting the targets and the goals that we have laid out. There are also challenges, but we continue to find ways [this gets back to the big data] to meet those challenges and overcome them.

Hart Energy: Any pipeline takeaway constraints?

Dugan: We don’t have any constraints right now. We have our plan over the next five years and we have our midstream infrastructure buildout built into that plan. We have always had a flexible takeaway portfolio [with] a lot of different options. We have not been hit with some of the high [takeaway] costs that others have. We have been able to keep our [takeaway] costs down below 30 cents and maintain a flexible portfolio. We are in good shape from the standpoint of takeaway. The new pipelines are going to help. We get eight to ten more [billion cubic feet] capacity in the next year or two, and there will be more beyond that into 2020 to 2021. The additional capacity can only help.

Hart Energy: CNX has a long history and lineage. Tell us how since roots tracing back to John Rockefeller you all have come to be what CNX is today.

Dugan: I haven’t been here for the whole 154 years but when you look back at the changes that have occurred throughout our history, I think the key has been that we have been able to adapt and adjust to changes in the market place, changes to the environment and the culture that we work in. We have been able to adapt and adjust accordingly and find new ways to grow and thrive as a business.

Hart Energy: What are you hearing overall about the Marcellus-Utica?

Dugan: I think people are excited about the potential that lies ahead. We are about 10 years into this Marcellus play. When you look at a lot of the other plays in the nation, after five or six years they start to fizzle out and they go to the next play, well the Marcellus and the Utica have so much potential that they are going to be here a long time. I think the operators in the basin realize and understand that and I also think as an industry, we have learned how to operate successfully and profitably in the current price environment. We are not dependent on gas prices like we were several years ago. I think the future of the Marcellus and Utica—as we move into stacked pays and we find ways to be more economical, more productive and drill better wells—is really exciting.

Hart Energy: Are there any final thoughts you would like to share?

Dugan: We are truly excited about the opportunities that lie ahead, for CNX and the industry. CNX is in a position where we feel we are in a forefront of driving some of the next big changes in the development of the Marcellus and the Utica. We are excited about that and we like being a leader.

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