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CNX Gas Reports that Proved Reserves Increase 6% to 1.4 Tcf; 3P Reserves Increase 20% to 2.7 Tcf; Net Unrisked Resource Potential of 4.7 to 12.6 Tcf

Posted on: Tuesday, 17 February 2009, 15:00 CST

PITTSBURGH, Feb. 17 /PRNewswire-FirstCall/ -- CNX Gas Corporation (NYSE: CXG) has proved reserves of 1,422 billion cubic feet (Bcf) as of December 31, 2008, or an increase of 6% from the 1,343 Bcf reported at year-end 2007. Proved reserves would have increased by 8%, to 1,450 Bcf, if the year-earlier pricing had been used.

An additional 1,323 Bcf are categorized as probable or possible reserves as of December 31, 2008, or an increase of 41% from the 941 Bcf probable or possible reserves reported at year-end 2007. This means that total proved, probable, and possible reserves (also known as "3P reserves") were 2,745 Bcf as of December 31, 2008. This is a 20% increase in 3P reserves from the 2,284 Bcf reported at year-end 2007.

Additionally, CNX Gas updated its estimates of net unrisked resource potential of the company's extensive Eastern Shale position in a range from 4.7 trillion cubic feet (Tcf) to 12.6 Tcf. When combined with the 3P reserves, it means that total recoverable reserves and resources could range from 7.4 Tcf to 15.3 Tcf.

J. Brett Harvey, chairman and chief executive officer, said, "CNX Gas continued to show meaningful growth in proved reserves in 2008. We also booked proved reserves for the first time from our successful Chattanooga and Marcellus Shale exploration program.

"CNX Gas invested $290.8 million in drilling capital expenditures in 2008," Mr. Harvey continued. "This yielded extensions and discoveries of 182.7 Bcf, resulting in a finding cost of $1.59 per Mcf. This figure, although impressive in and of itself, is even more so when one considers that CNX Gas drilled 213 infill wells in Virginia. These wells, which don't create offset locations, cost $67 million."

CNX Gas drills infill wells to accelerate the monetization of its fields and improve its return on capital employed. Additional reserves from infill locations are booked in the year in which the company receives regulatory approval for downspacing, not the year in which the wells are ultimately drilled.

The 182.7 Bcf from extensions and discoveries which were booked during 2008, when divided by 2008 production of 76.6 Bcf, means that the company replaced 238% of production in 2008.

Of the 1,422 Bcf of proved reserves, 783 Bcf, or 55%, are categorized as proved developed. At year-end 2007, 671 Bcf, or 51% were categorized as proved developed. This is another measure of the increased efficiency of capital employed. If CNX Gas achieves its production guidance of 85 Bcf for 2009, it means that the company has a reserves-to-production ratio, or R/P, of 16.7 years. This is a reduction from 17.5 years in 2008, when CNX Gas produced 76.6 Bcf from a starting proved reserve base of 1,343 Bcf. To put this into perspective, in 2005 when CNX Gas became a public company, the R/P ratio was over 21 years.

The proved reserve estimates for both 2008 and 2007 were prepared by Data & Consulting Services Division of Schlumberger Technology Corporation.

The following table shows the breakdown of reserves, in Bcf, from the company's current development and exploration plays. Over 99 percent of the company's proved reserves are gas:

Proved Proved Total Total Developed Undeveloped Proved Probable Possible 3P --------- ----------- ------ -------- -------- -- Virginia Operations (CBM) 679 601 1,280 284 375 1,939 Mountaineer (CBM) 55 17 72 31 214 317 Nittany (CBM) 20 5 25 11 47 83 --- --- ----- --- --- ----- Total Appalachian CBM 754 623 1,377 326 636 2,339 Chattanooga Shale 4 7 11 9 23 43 Marcellus Shale 4 6 10 40 59 109 Other 21 3 24 2 228 254 --- --- ----- --- --- ----- Total 783 639 1,422 377 946 2,745 Definition: Total 3P is a summation of total proved, probable, and possible reserves.

Schlumberger calculated that the future net cash flows of the CNX Gas proved gas reserves have a present value of nearly $2.0 billion before income taxes, assuming a ten percent discount rate, as of December 31, 2008. This compares with a value of nearly $2.3 billion at December 31, 2007. The decrease in value was largely driven by lower prices, and was partially offset by a 6% increase in proved reserves. As is customary, the values assume flat pricing and constant unit costs. The December 31 price used in the 2008 reserve study was $6.23 per Mcf, including basis. In 2007, a $7.08 per Mcf price was used. Both prices exclude the effects of hedged production.

CNX Gas has also updated its estimated range of net unrisked resource potential of the company's extensive Eastern Shale position.

Low High Acres (Bcf) (Bcf) ----- ----- ----- Chattanooga Shale 244,000 1,100 2,500 Huron Shale 203,000 450 1,100 Marcellus Shale 186,000 2,000 7,000 ------- ----- ----- Total Appalachian Shale 633,000 3,550 10,600 New Albany Shale 337,000 1,100 2,000 ------- ----- ------ Total Eastern Shale 970,000 4,650 12,600

The range of net unrisked resource potential is based on both internal and external sources. In the Marcellus Shale, no value is assigned to the 79,000 acres that are in Ohio. And, the range represents 1,100 horizontal locations, based on 80-acre spacing, and 250 vertical locations, based on 40-acre spacing within Pennsylvania, northern West Virginia, and upstate New York. Similarly for the Huron acreage, the range shown is only for the 62,000 acres in eastern Kentucky. Seven hundred horizontal locations are assumed, based on 80-acre spacing.

CNX GAS CORPORATION is an independent natural gas exploration, development, production and gathering company operating in the Appalachian and Illinois basins of the United States.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

Various statements in this release, including those that express a belief, expectation, or intention, as well as those that are not statements of historical fact, are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934). These statements involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: our business strategy; our financial position; our cash flow and liquidity; declines in the prices we receive for our gas affecting our operating results and cash flow; uncertainties in estimating our gas reserves; replacing our gas reserves; uncertainties in exploring for and producing gas; our inability to obtain additional financing necessary in order to fund our operations, capital expenditures and to meet our other obligations; disruptions, capacity constraints in or other limitations on the pipeline systems which deliver our gas; competition in the gas industry; the availability of personnel and equipment; increased costs; the effects of government regulation and permitting and other legal requirements; legal uncertainties regarding the ownership of the coalbed methane estate; costs associated with perfecting title for gas rights in some of our properties; our need to use unproven technologies to extract coalbed methane in some properties; our relationships and arrangements with CONSOL Energy; and other factors discussed under "Risk Factors" in the 10-K for the year ended December 31, 2008. We are including this cautionary statement in this release to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf, of us.

CAUTIONARY STATEMENT CONCERNING 3P AND PROBABLE AND POSSIBLE RESERVES AND RESOURCES

The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation, such as "3P" and "probable" and "possible" reserves and/or "resource potential" that the SEC's guidelines strictly prohibit us from including in filings with the SEC. We also caution you that the SEC views such "3P" and "probable" and "possible" reserves and/or "resource potential" estimates as inherently unreliable and these estimates may be misleading to investors unless the investor is an expert in the gas industry.

The "3P" and "probable" and "possible" reserve data and/or "resource potential" contained in this release is based on a summary review of the title to coalbed methane and other gas rights we hold, as well as a summary review of the title to the coal from which many of our rights derive. As is customary in the gas industry, prior to the commencement of gas drilling operations on our properties, we conduct a thorough title examination and perform curative work with respect to significant defects. We are typically responsible for curing any title defects at our expense. This curative work may include the acquisition of additional property rights in order to perfect our ownership for development and production of the gas estate.

Contact: Dan Zajdel Vice President - Investor Relations (724) 485-4169 danzajdel@cnxgas.com www.cnxgas.com

SOURCE CNX Gas Corporation

Source: PR Newswire

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