CONSOL Energy Inc

NYSE:CEIX

Earnings Call Transcript 2022-Q1

[Operator]

00:05 Good day, and welcome to the CONSOL Energy First Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

00:39 I would now like to turn the conference over to Nathan Tucker, Director of Finance and Investor Relations. Please go ahead.

[Nathan Tucker, Director of Finance and Investor Relations]

0:47 Thank you, and good morning everyone. Welcome to CONSOL Energy's first quarter 2022 earnings conference call. Any forward-looking statements or comments we make about future expectations are subject to some risks, certain of which we have outlined in our press release and in our SEC filings, and are considered forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. We do not undertake any obligations of updating any forward-looking statements for future events or otherwise.

01:14 We will also be discussing certain non-GAAP financial measures, which are defined and reconciled to comparable GAAP financial measures in our press release and furnished to the SEC on Form 8-K, which is also posted on our website. Additionally, we filed our quarterly report on Form 10-Q for the quarter ended March 31st, 2022, with the SEC this morning. You can find additional information regarding the company on our website, www.consolenergy.com, which includes the supplemental slide deck that was posted this morning.

01:44 On the call with me today are Jimmy Brock, our Chief Executive Officer; Mitesh Thakkar, our Chief Financial Officer; Dan Connell, our Senior Vice President of Strategy; and Bob Braithwaite, our Senior Vice President of Marketing and Sales.

01:56 In his prepared remarks, Jimmy will provide a recap of our key achievements during the first quarter of 2022 and specific insights on operations and sales. Mitesh will then provide an update on our liability management initiatives, financial performance and 2022 guidance. In his closing comments, Jimmy will lay out our key priorities for the remainder of 2022. After the prepared remarks, there will be a Q&A session in which Dan and Bob will also participate.

02:21 With that, let me turn it over to our CEO, Jimmy Brock.

[Jimmy Brock, Chief Executive Officer]

02:24 Thank you, Nate, and good morning everyone. CONSOL Energy achieved very strong operational and financial performances in the first quarter of 2022 across all of our key business segments. The Pennsylvania Mining Complex shipped 6.5 million tons from its four available longwalls in Q1 of '22, and achieved the highest quarterly average coal revenue per ton sold since becoming an independent public company in 2017.

02:54 After adjusting for the effects of settlements of commodity, derivative, instruments, we achieved a net realized sales price of nearly $60 per ton. Additionally in the quarter, we increased our PAMC contracted position by approximately 5 million tons for 2023. The CONSOL Marine Terminal shipped 3.6 million tons in the quarter, generating its highest ever quarterly terminal revenue and adjusted EBITDA.

03:24 Financially CEIX achieved a Q1 '22 adjusted EBITDA of $169 million and generated nearly $120 million in free cash flow. On the growth and diversification front, our Itmann project continues to progress as expected and remains on track for an expected start-up in the second half of 2022. Given the strong market backdrop, we are very eager to complete this project and place our high-quality low-vol met product into the marketplace.

03:58 Let's now discuss our operational performance in more detail. Coal production at the Pennsylvania Mining Complex came in at 6.4 million tons in Q1 '22, an impressive accomplishment considering we produce from just four of our five longwalls, as our fifth wall is still in development mode after pulling back in 2020. Additionally, we benefited from moving past the operational challenges when countered in the second half of 2021 and railroad performance steadily improved during the first quarter of 2022, as our transportation partners continued to increase their staffing levels.

04:39 As a result, productivity at the PAMC in Q1 '22, measured as tons per employee hour improved by 9%, compared to Q4 '21, and we accomplished this while achieving a total recordable incident rate at the Pennsylvania Mining Complex of 0.52, our lowest at the PAMC since 1989, when the Bailey Mine was the only active operation. On the cost front, our PAMC average cash cost of coal sold per ton for Q1 '22 was $29.91, despite incurring ongoing development cost associated with the fifth longwall and continued inflationary pressures on goods and services. The development of the fifth longwall continues to progress as expected and will enhance our production optionality once completed later this year.

05:37 The CONSOL Marine Terminal had a throughput volume of 3.6 million tons during Q1 '22, compared to 4.1 million tons in the prior year period. Despite lower throughput volumes, terminal revenue for the quarter came in at $21.4 million, a significant increase over $18.2 million in Q1 of '21, as the throughput rate per ton was substantially improved due to increased export demand and commodity pricing strength.

06:08 CMT operating cash cost came in at $5.9 million for the quarter, compared to $5.3 million in Q1 of '21. This resulted in CMT adjusted EBITDA of $14.5 million in Q1 '22, compared to $12 million in the prior year period. Lastly, on the operation side, our Itmann project continued to progress as expected and on track in the quarter with preparation plant commissioning and scale up to full run rate production expected during the second half of 2022.

06:44 Relocation of the existing prep plant to the Itmann side is proceeding on schedule. This assembly of the existing plant is complete and roughly 80% of the structure and equipment have been transported to the Itmann site. The main plant building foundations are complete with structural steel erections, plant circuitry installation and new rail siding and mainline construction activities well underway.

07:11 Additionally, we have continued to build out our workforce and mining equipment fleet in preparation for full production ramp up. The Itmann Mine produced approximately 44,000 tons of low-vol metallurgical coal on a clean coal equivalent basis, and sold 19,000 tons in Q1 of ‘22. We have continued our marketing efforts to introduce Itmann to both domestic and international customers, and it has been well received. As such, the Itmann product is scheduled for its first export shipment to our CONSOL Marine Terminal in the second quarter, and we are engaged in discussions regarding domestic trials of the product as well. We remain very optimistic that there will be strong and sustained demand for this product, both domestically and internationally.

08:04 On the marketing front, the demand for our product remained elevated in the first quarter of 2022, due to the ongoing supply tightness across the energy landscape and improvements in the commodity markets as a whole. As such, we sold 6.5 million tons at an average realized coal revenue per ton of $59.60 in Q1 '22, compared to 6.9 million tons at $41.39 in the year ago period.

08:36 Looking across the broader coal market. We expect coal demand to remain robust domestically, as well as internationally due to tight supply. As such, we have witnessed elevated commodity prices across the board. Domestically, Henry Hub natural gas spot prices averaged $4.67 per million Btu, and PJM West day-ahead power prices averaged $56 per megawatt hour in the quarter, which are some of the highest quarterly levels we've seen since becoming a standalone public company.

09:13 Internationally, prices have continued their upward trend with the API2 prices averaging $234 per ton during Q1 of '22. Although API2 prices have been elevated, they have remained extremely volatile, propped up by the ongoing conflict between Russia and Ukraine. We saw API2 prices bounce from the mid-100s in late February to over $400 per ton by early March. And while we saw a retreat from those hires at the end of the first quarter, pricing has remained elevated due to increasing ban on Russian Energy.

09:53 Most recently, the European Union announced a ban on Russian coal imports, and it is expected that this dynamic coupled with supply constraints will extend the duration of the current market tightness as the UK looks to secure alternative energy suppliers. Additionally in the export market, we are excited to announce that we sold our first cargo into Turkey during the first quarter. In the midst of this market strength, our sales team opportunistically secured additional sales contracts. We remain nearly fully contracted for 2022 and have 16.3 million tons contracted for 2023.

10:35 Let me pass the call over to Mitesh, to provide an update on our financial performance in the quarter.

[Mitesh Thakkar, Chief Financial Officer]

10:42 Thank you, Jimmy, and good morning everyone. First, let me provide a quick update on the ongoing progress we have made on our key financial priorities. We have continued to take advantage of strong market fundamentals to accelerate our stated financial goals of maximizing free cash flow, reducing total debt and boosting liquidity.

11:02 First, it starts with maximizing our free cash flow generation. In 1Q '22, we generated $118 million of free cash flow, which is 63% of our full-year 2021 level. Strong market or not? We have consistently generated positive free cash flow in each year. Since the start of 2018, we have generated more than $700 million in free cash flow. This has been the driving force behind our financial execution. Second, we continue to make strides on our overall debt reduction goal. In 1Q '22, we made total debt payments and repurchases of approximately $39 million, which included $25 million of open market repurchases of our outstanding second-lien notes.

11:48 We have now made total debt repayments of more than $500 million since the beginning of 2018. While we are certainly pleased with our debt reduction efforts, there is some more work to do on this front, and we plan to use ongoing strength in the commodity markets to rightsize our balance sheet and provide additional financial flexibility in the coming quarters. As such, I'm pleased to announce that we made a $25 million discretionary payment on our Term Loan B at the end of April, that is not reflected in our first quarter results.

12:19 Third, our cash balance increased by more than $70 million during 1Q '22, bringing our total unrestricted cash and cash equivalents to $223 million at the end of March '22. When accounting for our restricted cash of $46 million, our total cash balance set at $269 million at quarter end.

12:40 Fourth, we ended 1Q '22 with a liquidity position of $459 million. In the short-term, while we prioritize completing our Itmann development spending, we expect to balance faster debt reduction with liquidity preservation as we look to refinance and rightsize our $400 million revolving credit facility maturing in 1Q '23.

13:01 Lastly, we reduced our net leverage ratio to just under 1 times at the end of 1Q '22. We are extremely excited by our progress, but also understand that as earnings improve, leverage ratios and strong commodity markets may not perfectly align that long-term mid cycle debt reduction targets. To that extent, we expect to continue down the path of significant and accelerated debt reduction to a goal of approximately $300 million to $350 million of total debt. The majority of which consist of tax-exempt bonds and equipment financing.

13:35 In summary, over the last 24 months, we have demonstrated an at most sense of urgency on liability risk mitigation efforts. I'm very pleased to note that since becoming public through the combined efforts of the entire CONSOL team, we have never been in such a strong financial position based on leverage and liquidity as we are today. Furthermore, our revenue, visibility and outlook remains very strong for the next 12 to 24-months, given the commodity backdrop that Jimmy touched upon.

14:04 With that, let me recap our first quarter financial results. We have seen significant volatility in the API2 market and its impacts on core pricing in the first quarter of 2022. As you would expect, this has also impacted our net income. In the first quarter of '22, we recorded an additional $102 million of unrealized mark-to-market loss on commodity derivatives associated with our remaining API2 hedges for the balance of '22, as well as $86 million in losses on the settlement of API2 hedges that concluded during the quarter.

14:40 As we progress through the year and we expect that the volatility associated with these hedges were decline as settlements occur both on the physical and financial sites. The good news as we settle approximately 40% of our 2022 hedges in the first quarter. So our quarterly hedge volume exposure will be meaningfully reduced for the balance of the year, compared to Q1.

15:02 This morning we reported a very strong first quarter 2022 financial performance. While the previously discussed unrealized mark-to-market loss on commodity derivatives drove a net loss of $4.5 million in the quarter, excluding these unrealized losses and the associated income tax effect would yield a net income of $72 million. Furthermore, adjusted EBITDA came in at $169.2 million and regenerated $118 million of free cash flow, primarily driven by $148.2 million of cash flow from operations and capital expenditures of $36.6 million.

15:40 Now let me provide you with our updated outlook for 2022. For the PAMC, we are pleased to announce that due to a strong 1Q '22 performance and improved outlook, we are raising our expected average realized coal revenue guidance to a range of $58 to $61 per ton, net of settlements of commodity derivatives. Our updated guidance assumes PJM West day-ahead power forwards of $54 per megawatt hour at the midpoint, for the 2Q through 4Q. For every dollar per megawatt hour change in PJM West power prices, we estimate the weighted average realization across our entire portfolio for the full-year of 2022 would change by approximately $0.12 per ton at the midpoint price.

16:25 Additionally for the PAMC, we are reaffirming our 2022 sales volume range of 23 million to 25 million tons, as the operations ran very well in the first quarter, and transportation bottlenecks have gradually improved since the end of 2021. We are reaffirming our PAMC cash cost of coal sold guidance of $29 to $31 per ton. While ongoing pressures continue to create an upward push, our team has done a good job of managing our costs, and we were able to keep our 1Q '22 cash cost slightly below the midpoint of our guidance range. However, given the challenges created by the current inflationary environment, this will clearly be a key focus for us to monitor and mitigate as we progress through the rest of 2022.

17:12 For Itmann, our preparation plant project is progressing as expected, and we are reaffirming our guidance of a second half 2022 start up and our production guidance of 300,000 to 500,000 tons on a clean coal equivalent basis for 2022. We are working diligently to ensure the preparation plant starts as soon as possible. We are encouraged by the progress and believe there is a potential to begin processing coal at some point in the third quarter of 2022.

17:44 Finally, we are reaffirming our CEIX capital expenditure guidance range of $162 million to $195 million. This includes a modest increase in anticipated capital expenditures on our Itmann project to keep it on an accelerated schedule in the current labor and supply chain environment, offset by modest reductions in other business segments. While we are pleased with how 2022 is shaping up for us, financially, we firmly believe that the future could be even brighter.

18:15 As Jimmy mentioned, we are currently building a very strong book of business for 2023 and beyond. And we remain confident in achieving higher sales volumes from both the PAMC and from Itmann next year. Furthermore, with our ongoing debt reduction trajectory, we expect to have lower debt servicing cost despite a rising interest rate environment. While changes in commodity prices are always a wild card, we expect that our financial flexibility and cash flow generation will be tremendous drivers of shareholder value creation in 2023 and beyond.

18:49 With that, let me turn it back to Jimmy to touch on our key priorities for the rest of 2022.

[Jimmy Brock, Chief Executive Officer]

18:57 Thank you, Mitesh. Our doors for the remainder of 2022 are fairly simple. First, we want to continue to take advantage of the ongoing strength in the core markets to maximize our free cash flow generation, this entails maintaining the wrap priorities at our operations. We are always focused on our cash cost. And we will certainly do everything we can to mitigate inflationary pressures as much as possible. However, regardless of cost pressures, we will do what is needed to maintain our standards and ensure that we're running safely, compliantly and efficiently.

19:35 Second, from a sales perspective, we will remain opportunistic in our marketing strategy, balancing revenue visibility with market optionality as we continue to layer in additional business for 2023 and beyond. Third, we will continue to focus on strengthening our balance sheet and liquidity. This has been an ongoing theme for us, but it is important from multiple standpoints. We obviously want to reduce our long-term total debt levels to better line up with reduced access to capital. But from a strategic standpoint, less fixed cost in the business allows us the flexibility to be more selective and patient in our marketing strategy.

20:19 The good news is, that due to our strong Q1 2022 free cash flow generation and expectations for the rest of 2022, we are optimistic that we can accelerate this goal moving forward. Fourth, we are fully committed to executing our growth and diversification goals. The most immediate of which are getting our Itmann project up and running and restarting our fifth longwall at the PAMC as quickly as possible. Both are on target and both add revenue growth and diversification. The Itmann Mine will give us an entirely new low-vol met product stream and the fifth longwall at the PAMC has lower sulfur, which will increase the potential for crossover met sales as well.

21:05 Finally, we expect to be in a strong position to return capital to our shareholders in short order. In the near-term, we are committed to finishing our capital investment and developing the Itmann project in optimizing our balance sheet priorities. With continued coal market strength and free cash flow generation, we expect to be in a position to do all of the above in the coming quarters. We have begun analyzing shareholder return options and have already started engaging with our shareholders around structural preferences, stay tuned.

21:40 Before handing the call over, I'm pleased to announce that our 2021 corporate sustainability report will be released shortly, which will be our fifth since becoming an independent public company in 2017. Over the past four plus years, we have worked diligently to evolve and fundamentally change the trajectory of our business, with a focus on diversification and ESG responsibility. For example, we recently became one of the first coal companies to publicly commit to reducing our carbon footprint with a goal of a 50% reduction in Scope one and two greenhouse gas emissions by 2026, compared to 2019 baseline levels, and net zero Scope one and two admissions by 2040.

22:30 We also are committed to diversifying our company and Board of Directors, and we have already committed to adding an ethnically diverse Board member with the qualified skill sets. We continue to make positive strides on our ESG goals and targets. And we're excited to share our progress in more detail once our report is released later this month.

With that, I will now hand the call back over to Nate for further instructions.

[Nathan Tucker, Director of Finance and Investor Relations]

22:57 Thank you, Jimmy. We will now move to the Q&A session of our call. At this time, I'd like to ask our operator to please provide the instructions to our callers.

[Operator]

23:06 Thank you. [Operator Instructions] Today's first question comes from Lucas Pipes of B. Riley Securities. Please go ahead.

[Lucas Pipes, B. Riley Securities]

23:27 Thank you very much, and good morning everyone, and a nice start to the year. Just a few questions, mostly on the pricing side. And I want to start with 2023, so you put some additional tons to bed, and I wondered could you share the mix between export and domestic of the tons that you sold since three months ago? And could you share the pricing -- the netback respectively on both the export and domestic tons? Thank you very much.

[Bob Braithwaite, Senior Vice President of Marketing and Sales]

23:57 Sure. Good morning, Lucas. This is Bob. So if you recall last quarter, we said we had a 11.4 million tons sold, the breakdown there was 7.4 million tons domestic, of which 1.5 million tons was related to power prices, and 4 million tons of exports. And if you recall, we said the pricing on those tons were slightly lower than our 2022 guidance at the time, so call it low-50s. Today, we have about 10.8 million tons of the 16.3 million tons are domestic and 5.5 million tons are export. And based on where power and API2 futures are, the average pricing on the total 16.3 million tons is in the mid-60s.

24:47 So good news for us is, we certainly have a healthy contracted position for 2023, being that we're not even halfway through 2022. And furthermore, our plan today would be to run five longwalls next year, which would imply that we've approximately, call it 10 million tons maybe even a little bit more or less to sell for next year. And sitting here today, based on where API2 futures are, I will tell you that, I would expect majority of the additional volumes that we sell for next year will be into the export market. And as you could see where those prices basically netback today, every ton that we sell going forward, again, my expectations, it will only improve our current average price for next year.

[Lucas Pipes, B. Riley Securities]

25:32 Very, very helpful. And on that -- so if I understand it right, you have about 10 million tons left to sell, and the majority of that will go export. If I were to say 8 million tons, if I were to assume that in my model 8 million tons or so going export of the ones you've left open, how would you walk me back to the netback? You're selling some into India, some into Europe, there is API4, API2, rail rates have reportedly been rising. So can you help me kind of reconcile what we see on our screen in terms of API2, API4 prices to your netbacks on 2023 forward year?

[Bob Braithwaite, Senior Vice President of Marketing and Sales]

26:17 Yes. Actually we're not really providing full pricing guidance for next year. But to kind of help you here, I think we will have a mixture of tons into India and also tons into Europe next year. And if you look at API2 prices today, to call it $210 rough numbers for cal '23. Your netback to Bailey at that point in time is, call it close to mid-100s. So call it $150 for sake of this discussion. And then obviously into India, it's more priced off the pet coke price. CFR India pet coke pricing today is, call it mid-200s, which is slightly lower than what the API2 price would yield back, will obviously be subject to what the pet coke prices at that time. But again, my expectations are that every ton we sell moving forward will continue to improve our 2023 pricing portfolio.

[Lucas Pipes, B. Riley Securities]

27:20 Very helpful. Thank you very much for that. And then two more questions on unrelated topics. But first, I do want to turn to the net gas market, back above $8 today on the Henry Hub. And from a kind of industry perspective, what if any capacity is left domestically for gas to coal switching?

[Bob Braithwaite, Senior Vice President of Marketing and Sales]

27:48 Well, that -- here is what I can tell you Lucas. Inventories across every utility we serve today are extremely low. And I will tell you that pretty much every utility we serve are in the single-digits. At the end of April, which typically this is when utilities build inventory in preparation for summer. I'll tell you that there are probably two main reasons why I will take coal burn is not higher on a percentage basis today. One, you've heard from many is that there are several lanes where logistics has been quite a bit of a challenge, but I will also tell you that many utilities are just simply underbuy. I don't think anybody anticipated these gas prices getting to $8.

28:36 And we now have a handful of customers out looking for spot coal for the balance of this year, you probably saw this morning Southern Company, one customer that we have in our portfolio is out looking for additional volumes in 2022. But we've seen a handful of customers out looking for spot coal for the balance of this year. I just don't think it's there and if you happen to have some spot coal to sell, well, now you're likely competing versus what the current export prices, which would be another challenge in itself for these domestic utilities. So I don't know if there is much switching that can happen balance of the year, and I think it's mainly just because there is just lack of coal available and inventories remain significantly low, which will only help us in 2023, obviously.

[Lucas Pipes, B. Riley Securities]

29:29 Really appreciate that perspective. Thank you. And last question, Jimmy, you mentioned starting discussions around shareholder return frameworks, and two-part question. One, when do you think is the right time to be more concrete with investors about how you've settled that debate. And then two, is there a front-runner today, some of your peers have payout as a percent of discretionary cash flow, that's received very positive reception from the market. How do you look at framework for returning capital to shareholders? Thank you.

[Jimmy Brock, Chief Executive Officer]

30:14 Well, on the first part, Lucas on the timing of it, as Mitesh stated in his remarks, we're near the timing. We've said that we would like to get somewhere near that one leverage ratio that we're approaching. And secondly, we want to finish the capital project that we have at Itmann. So we know what we have remaining there. We have started some shareholder engagements reaching out, as far as the structural preference. What I would like to say is to, I would like to see something that's not that's objective that we would have some sort of formulaic value worth X percent of free cash flow goes to whether it's share repurchases or share dividends, we're still engaging with shareholders on that. There's lots of different ways to look at it, I mean for some people, it's tax structures, it's other things to consider.

31:04 But I will tell you as Mitesh said in his remarks, we are very near that point and that's why we want to start preparing for it. And we think that it could become -- and as Mitesh said early in the quarter here, we obviously want to finish the capital project at Itmann to-date, we know where we stand there, it's going very well. So I would say pretty quickly would be to answer on that.

31:26 And then second part looking at the structure, we want to have some of our shareholder engagement on that, but again, I would certainly like to have some sort of formulaic style in place to worth, if it's X percent of free cash flows that we return to the shareholders and whatever mechanism that it may be. But that's our thought process, today, we have more work to do on that and more engagement to do. But I would think we would have answers for that -- concrete answers shortly.

[Lucas Pipes, B. Riley Securities]

31:57 Really appreciate that, Jimmy and team. Continue, best of luck. Thank you.

[Bob Braithwaite, Senior Vice President of Marketing and Sales]

32:03 Thank, Lucas.

[Jimmy Brock, Chief Executive Officer]

32:04 Thank you, Lucas.

[Operator]

32:06 [Operator Instructions] Today's next question comes from Nathan Martin of Benchmark. Please go ahead.

[Nathan Martin, Benchmark]

32:17 Hey, good morning guys. Congrats on the quarter and thanks for taking my questions. I think Lucas kind of touched on '23 pricing, maybe I'll take a step here to '22. Nice to see full-year pricing guidance this year increased, you guys mentioned before confirmed today essentially fully contracted for '22. So maybe can you talk about what's driving the increase in the range, is it PJM went tons, additional exports maybe? What you think gets you to the high end of that range or the low end of the range? And then maybe somewhat related, do you think there is a good chance you can hit the high end of your sales guidance, and how would that affect pricing as well? Thanks.

[Bob Braithwaite, Senior Vice President of Marketing and Sales]

32:56 Good morning, Nate. It's Bob. Yes, I would say most of the improvement to-date has been the power price that has improved our overall sales price for the quarter and for the new year guidance. If you recall in the first quarter, we suggested that for every dollar above $41.33 we had a $0.17 improvement. So, first quarter was $55.58, the new updated was $54.03 that we provided for the April through December. So call it $2 in change is related to power price, the balance is related to a couple of export deals that we secured which we expect to deliver later this year.

33:42 Now when you look at the forwards today, you could suggest that there is still meaningful upside and there certainly is, should the forward remain at these elevated levels. The only caution I give is, is that the way our power contract is structured, it is based on tons consumed, not necessarily delivered. So there could be a bit of a disconnect between the actual price we received versus where the power forwards are, and this works both ways up or down. So at the end of the day, I think what you're trying to get at, yes, there is certainly opportunity for us to improve on our '22 pricing, should these current forward power prices hold.

[Nathan Martin, Benchmark]

34:27 Very helpful, Bob. Appreciate that. And then Bob, and you also just mentioned the expectation at this point is to run fifth long wall next year kind of all now given the current market, what you guys are seeing the future here. Any update maybe on the timing of that fifth longwall? I think, Jimmy, you mentioned before likely December maybe the earliest being late November. Any way to pull that forward at all anymore, just given the demand out there? Thanks.

[Jimmy Brock, Chief Executive Officer]

34:55 Yes, it's a very good question, Nate. And that's something we're certainly looking at. And I will tell you, we have made a little bit of progress on the timing there, but it still looks like it's going to be late in Q4 of this year. There's only so much that we can do as far as the development goes. This is a longer panel, as we talked about before, but the operation team is fully engaged in that, they understand the importance. The market is there now for those incremental tons that as Bobby talked about, even we could provide some of these customers that's real and even coal for the balance of 2022. So if we can get that long wall up and running faster, we certainly want to do that. But right now it looks like, we'll have at least a month of production in 2022 after that long wall.

35:41 And we still have, when you get halfway down a panel, there's still a lot of uncertainties left to get it at there. So we're not ready at this time to commit to a date that will be sooner. But rest assured that our entire operation team is well aware of how important it is to get it started as quickly as possible safely.

[Nathan Martin, Benchmark]

36:04 It sounds good, Jimmy. Thank you for that update. And then maybe just shifting gears a little bit to CMT, you mentioned highest ever quarterly revenue and EBITDA. Is that something you guys see kind of as repeatable, given the strength in the market? And then maybe if we look ahead to next year, just talk about your optionality there, again, to refresh us with, as far as how many export tons you guys could possibly move through that terminal. I don't think you have any long-term agreement. So just any color there would be great too. Thank you.

[Jimmy Brock, Chief Executive Officer]

36:38 Yes. I'll take the first part of that, and obviously we have Dan with us, so we'll let him hop in on the second part. But I will say that the terminal remains one of our critical assets, and we are looking for ways that we can move more throughput volumes through there, obviously worthy net pricing is today and everything we have opportunities for third-party coal to get through. But it's not as simple as many would think of just adding the coal, we have some blending capabilities, store additions that we have there, but we are looking at all options for the CONSOL Marine Terminal, and there's a lot that we can do there. And Dan and his team are fully aware of that, and staying on top of that. But we think that terminal can be very well utilized for the next few years. Dan, do you have anything you want to add to that?

[Daniel Connell, Senior Vice President, Strategy]

37:23 No, I would just say Nate, maybe near-term looking ahead to the upcoming quarter, obviously, in Q1, we achieved the record revenue and EBITDA numbers without achieving a record throughput volume. Looking at Q2, I would say we have a strong book of business. So we'd expect to be similar to or above where we were in Q1 on throughput and the markets continue to be strong and support our pricing at CMT. So, I do think we have a combination of volume and market factors in our favor here, and should lead to the ability to see a repeat performance at CMT going forward.

[Nathan Martin, Benchmark]

38:09 Great to hear, Dan. Jimmy, thanks for your comments as well. I'll leave it there. Thank you guys for the time, and best of luck.

[Jimmy Brock, Chief Executive Officer]

38:18 Thank you.

[Operator]

38:19 Ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to the management team for any final remarks.

[Bob Braithwaite, Senior Vice President of Marketing and Sales]

38:28 Thank you. We appreciate everyone's time this morning and thank you for your interest in and support of CEIX. We hope, we addressed your questions this morning and we look forward to our next quarterly earnings call. Thanks everybody.

[Operator]

38:38 And thank you, sir. This concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day.