CONSOL Energy
Annual Report 2017

Plain-text annual report

Morningstar® Document Research℠ FORM 10-KCONSOL Energy Inc. - CEIXFiled: February 16, 2018 (period: December 31, 2017)Annual report with a comprehensive overview of the companyThe information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The userassumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot belimited or excluded by applicable law. Past financial performance is no guarantee of future results. UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 __________________________________________________FORM 10-K __________________________________________________ (Mark One)xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2017ORoTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission file number: 001-38147 __________________________________________________CONSOL Energy Inc.(Exact name of registrant as specified in its charter)Delaware 82-1954058(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification No.)1000 CONSOL Energy Drive, Suite 100Canonsburg, PA 15317-6506(724) 485-3300(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices) __________________________________________________ Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of exchange on which registeredCommon Stock ($.01 par value) New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act: None__________________________________________________Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No xIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No xIndicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes x No oIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit andpost such files). Yes x No oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best ofregistrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. xIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growthcompany. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.(Check one):Large accelerated filer o Accelerated filer o Non-accelerated filer x Smaller Reporting Company o Emerging Growth Company oIf an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act. oIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No xAs of June 30, 2017, the registrant's common stock was not publicly traded.The number of shares outstanding of the registrant's common stock as of February 8, 2018 was 28,068,321 shares.DOCUMENTS INCORPORATED BY REFERENCE:Portions of CONSOL Energy Inc.'s Proxy Statement for the Annual Meeting of Shareholders to be held on May 9, 2018, are incorporated by reference in Items 10, 11, 12, 13 and14 of Part III. Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.TABLE OF CONTENTS PagePART I ITEM 1.Business7ITEM 1A.Risk Factors27ITEM 1B.Unresolved Staff Comments49ITEM 2.Properties49ITEM 3.Legal Proceedings49ITEM 4.Mine Safety and Health Administration Safety Data49 PART II ITEM 5.Market for Registrant's Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities50ITEM 6.Selected Financial Data52ITEM 7.Management's Discussion and Analysis of Financial Condition and Results of Operations53ITEM 7A.Quantitative and Qualitative Disclosures About Market Risk75ITEM 8.Financial Statements and Supplementary Data76ITEM 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosures128ITEM 9A.Controls and Procedures128ITEM 9B.Other Information130 PART III ITEM 10.Directors and Executive Officers of the Registrant131ITEM 11.Executive Compensation131ITEM 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters131ITEM 13.Certain Relationships and Related Transactions and Director Independence131ITEM 14.Principal Accounting Fees and Services131 PART IV ITEM 15.Exhibits and Financial Statement Schedules132SIGNATURES1342Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.PART IImportant Definitions Referenced in this Annual Report•“we,” “our,” “us,” “our Company,” “the Company” and “CONSOL Energy” refer to CONSOL Energy Inc. and its subsidiaries on or after November28, 2017 and to CONSOL Mining Corporation and its subsidiaries prior to November 28, 2017, except to the extent of any discussion of thefinancial condition, results of operations, cash flows, and other business activities of the Company on or prior to November 28, 2017 that relatespecifically to the Coal Business, in which case such references shall be to the Predecessor;•“Btu” means one British Thermal unit;•“Coal Business” prior to November 28, 2017 refers to all of ParentCo’s interest in the Pennsylvania Mining Operations (PAMC) and certain relatedcoal assets, including ParentCo’s ownership interest in the Partnership, which owns a 25% undivided interest stake in PAMC, the CONSOL MarineTerminal and undeveloped coal reserves (Greenfield Reserves) located in the Northern Appalachian, Central Appalachian and Illinois basins andcertain related coal assets and liabilities. References in this report to historical assets, liabilities, products, businesses or activities generally refer tothe historical assets, liabilities, products, businesses or activities of the Coal Business as it was conducted as part of ParentCo prior to the completionof the separation and distribution;•“Coal Business” on or after November 28, 2017 refers to CONSOL Energy Inc.’s interest in the Coal Business;•“distribution” refers to the pro rata distribution of the Company's issued and outstanding shares of common stock to ParentCo stockholders as of theclose of business on the record date for the distribution;•“CONSOL Marine Terminal” refers to the terminal operations located at the Port of Baltimore that were transferred from ParentCo to the Company aspart of the separation. Prior to November 28, 2017, the CONSOL Marine Terminal was named CNX Marine Terminal. As part of the separation anddistribution on November 28, 2017, the terminal changed its name to CONSOL Marine Terminal;•the “General Partner” refers to CONSOL Coal Resources GP LLC, a Delaware limited liability company, formerly known as CNX Coal Resources GPLLC;•“GasCo” refers to ParentCo after the completion of the separation and distribution. Prior to November 28, 2017, ParentCo was named CONSOLEnergy Inc. In connection with the separation and distribution on November 28, 2017, ParentCo changed its name to CNX Resources Corporation,and its business is now comprised of ParentCo’s oil and natural gas exploration and production business, focused on Appalachian area natural gasand liquids activity, including production, gathering, processing and acquisition of natural gas properties in the Appalachian Basin (collectively,the “Gas Business”);•“Greenfield Reserves” means those undeveloped reserves owned by the Company in the Northern Appalachian, Central Appalachian and Illinoisbasins;•“mmBtu” means one million British Thermal units;•“ParentCo” or “CNX” refers to CNX Resources Corporation and its consolidated subsidiaries on or after November 28, 2017 and to CONSOL EnergyInc. and its consolidated subsidiaries prior to November 28, 2017 (including the Company and the Coal Business prior to completion of theseparation and distribution on November 28, 2017);•“Partnership” or “CCR” refers to a Delaware limited partnership that holds a 25% undivided interest in, and is the sole operator of, the PennsylvaniaMining Complex. Prior to November 28, 2017, the Partnership was named CNX Coal Resources LP and its common units traded on the New YorkStock Exchange under the ticker “CNXC.” As part of the separation and distribution on November 28, 2017, the Partnership changed its name toCONSOL Coal Resources LP and changed its NYSE ticker to “CCR”;•“Pennsylvania Mining Complex” or “PAMC” refers to coal mines, coal reserves and related assets and operations, located primarily in southwesternPennsylvania and owned 75% by the Company and 25% by the Partnership;3Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.•“Predecessor” historical assets, liabilities, products, businesses or activities generally refers to the historical assets, liabilities, products, businesses oractivities of the Coal Business as the business was conducted as part of ParentCo prior to the completion of the separation; and•“separation” refers to the separation of the Coal Business from ParentCo’s other businesses and the creation, as a result of the distribution, of anindependent, publicly-traded company (the Company) to hold the assets and liabilities associated with the Coal Business after the distribution.4Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.FORWARD-LOOKING STATEMENTSCertain statements in this Annual Report on Form 10-K are “forward-looking statements” within the meaning of the federal securities laws. With theexception of historical matters, the matters discussed in this Annual Report on Form 10-K are forward-looking statements (as defined in Section 21E of theSecurities Exchange Act of 1934, as amended (the “Exchange Act”)) that involve risks and uncertainties that could cause actual results to differ materiallyfrom projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, incomeand capital spending. When we use the words “anticipate,” “believe,” “could,” “continue,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,”“project,” “should,” “will,” or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements.When we describe strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this AnnualReport on Form 10-K speak only as of the date of this Annual Report on Form 10-K; we disclaim any obligation to update these statements unless required bysecurities law, and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptionsabout future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significantbusiness, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which arebeyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following:•whether the operational, strategic and other benefits of the separation can be achieved;•whether the costs and expenses of the separation can be controlled within expectations;•deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair ourability to collect customer receivables and impair our ability to access capital;•volatility and wide fluctuation in coal prices based upon a number of factors beyond our control including oversupply relative to the demandavailable for our products, weather and the price and availability of alternative fuels;•an extended decline in the prices we receive for our coal affecting our operating results and cash flows;•the risk of our debt agreements, our debt and changes in interest rates affecting our operating results and cash flows;•the effect of our affiliated company credit agreement on our cash flows;•foreign currency fluctuations that could adversely affect the competitiveness of our coal abroad;•our customers extending existing contracts or entering into new long-term contracts for coal on favorable terms;•our reliance on major customers;•our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts;•our inability to acquire additional coal reserves and other assets;•our inability to control the timing of divestitures and whether they provide their anticipated benefits;•the availability and reliability of transportation facilities and other systems, disruption of rail, barge, gathering, processing and transportationfacilities and other systems that deliver our coal to market and fluctuations in transportation costs;•a loss of our competitive position because of the competitive nature of coal industries, or a loss of our competitive position because of overcapacityin these industries impairing our profitability;•coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions;•the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costsas well as on the market for coal;•the risks inherent in coal operations, including our reliance upon third party contractors, being subject to unexpected disruptions, includinggeological conditions, equipment failure, delays in moving out longwall equipment, railroad derailments, security breaches or terroristic acts andother hazards, timing of completion of significant construction or repair of equipment, fires, explosions, seismic activities, accidents and weatherconditions which could impact financial results;•decreases in the availability of, or increases in, the price of commodities or capital equipment used in our coal mining operations;•obtaining, maintaining and renewing governmental permits and approvals for our coal operations;•the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastesgenerated during our coal operations;•the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations;•the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or currentcoal operations;•the effects of mine closing, reclamation and certain other liabilities;•defects in our chain of title for our undeveloped reserves or failure to acquire additional property to perfect our title to coal rights;5Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.•uncertainties in estimating our economically recoverable coal reserves;•the outcomes of various legal proceedings, including those which are more fully described herein;•exposure to employee-related long-term liabilities;•failure by Murray Energy to satisfy certain liabilities it acquired from ParentCo, or failure to perform its obligations under various arrangements,which ParentCo guaranteed and for which we have indemnification obligations to ParentCo;•information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident;•operating in a single geographic area;•certain provisions in our multi-year coal sales contracts may provide limited protection during adverse economic conditions, and may result ineconomic penalties or permit the customer to terminate the contract;•the majority of our common units in the Partnership are subordinated, and we may not receive distributions from the Partnership;•the potential failure to retain and attract skilled personnel of the Company;•the impact of the separation and the distribution and risks relating to the Company's ability to operate effectively as an independent, publicly tradedcompany, including various costs associated with operation, and any difficulties associated with enhancing our accounting systems and internalcontrols and complying with financial reporting requirements;•unfavorable terms in our separation from ParentCo, related agreements and other transactions and the Company’s agreement to provide certainindemnification to ParentCo following the separation;•any failure of the Company’s customers, prospective customers, suppliers or other companies with whom the Company conducts business to besatisfied with the Company’s financial stability, or the Company’s failure to obtain any consents that may be required under existing contracts andother arrangements with third parties;•a determination by the IRS that the distribution or certain related transactions should be treated as a taxable transaction;•the Company’s ability to engage in desirable strategic or capital-raising transactions after the separation;•the existence of any actual or potential conflicts of interest of the Company’s directors or officers because of their equity ownership in ParentCofollowing the separation and distribution;•exposure to potential liabilities arising out of state and federal fraudulent conveyance laws and legal dividend requirements as a result of theseparation and related transactions;•uncertainty with respect to the Company’s common stock, including as to whether an active trading market will develop for the Company’s commonstock, potential stock price volatility and future dilution;•the existence of certain anti-takeover provisions in our governance documents, which could prevent or delay an acquisition of the Company andnegatively impact the trading price of the Company’s common stock; and•other unforeseen factors.The above list of factors is not exhaustive or necessarily in order of importance. Additional information concerning factors that could cause actualresults to differ materially from those in forward-looking statements include those discussed under “Risk Factors” elsewhere in this report. The Companydisclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise,except as required by applicable law.6Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ITEM 1.BusinessGeneralAll dollar amounts discussed in this section are in millions of U.S. dollars, except for per unit amounts, and unless otherwise indicated.Our business originated as part of the operations of our former parent company, CNX, formerly known as CONSOL Energy Inc., which was anintegrated energy company operating two primary divisions - a Pennsylvania mining division and an oil and natural gas exploration and productiondivision. CNX and its predecessors had been mining coal, primarily in the Appalachian Basin, since 1864. CNX entered the natural gas business in the 1980sand since that time continued to expand its oil and natural gas exploration and production operations as well as continuing to operate its coal mining assets.On November 28, 2017, CNX split into two, independently traded public companies, a natural gas company, now known as CNX Resources Corporation, andCONSOL Energy Inc. As part of the separation, CNX transferred to the Company substantially all of its coal-related assets, including its Pennsylvania MiningComplex (including all of its interest in CONSOL Coal Resources LP ), the CONSOL Marine Terminal and approximately 1.6 billion tons of GreenfieldReserves located in the Northern Appalachian (“NAPP”), the Central Appalachian (“CAPP”) and the Illinois Basins (“ILB”).The Company was incorporated in Delaware on June 21, 2017. The address of our principal executive offices is 1000 CONSOL Energy Drive, Suite100, Canonsburg, Pennsylvania 15317. We maintain a website at http://www.consolenergy.com/ and the information contained in or connected to thewebsite will not be deemed to be incorporated in this document, and you should not rely on any such information in making an investment decision.Our CompanyWe are a leading, low-cost producer of high-quality bituminous coal, focused on the extraction and preparation of coal in the Appalachian Basindue to our ability to efficiently produce and deliver large volumes of high-quality coal at competitive prices, the strategic location of our mines, and theindustry experience of our management team. Our predecessors have been mining coal, primarily in the Appalachian Basin, since 1864.Coal from the PAMC is valued because of its high energy content (as measured in Btu per pound), relatively low levels of sulfur and otherimpurities, and strong thermoplastic properties that enable it to be used in metallurgical as well as thermal applications. We take advantage of these desirablequality characteristics and our extensive logistical network, which is directly served by both the Norfolk Southern and CSX railroads, to aggressively marketour product to a broad base of strategically selected, top-performing power plant customers in the eastern United States. We also capitalize on the operationalsynergies afforded by the CONSOL Marine Terminal to export our coal to thermal and metallurgical end users in Europe, Asia, South America and Africa.Our operations, including the PAMC and the CONSOL Marine Terminal, have consistently generated strong cash flows. As of December 31, 2017,the PAMC controls 735.5 million tons of high-quality Pittsburgh seam reserves, enough to allow for approximately 26 years of full-capacity production. Inaddition, we own or control approximately 1.6 billion tons of Greenfield Reserves located in the NAPP, the CAPP and the ILB, which we believe couldprovide a solid growth platform in the future. Our vision is to maximize cash flow generation through the safe, compliant and efficient operation of this coreasset base, while strategically reducing debt, returning capital through share buybacks or dividends, and, when prudent, allocating capital toward compellinggrowth opportunities.Our core businesses consist of our:•Pennsylvania Mining Complex: The PAMC, which includes the Bailey Mine, the Enlow Fork Mine and the Harvey Mine, has extensive high-quality coal reserves. We mine our reserves from the Pittsburgh No. 8 Coal Seam, which is a large contiguous formation of uniform, high-Btuthermal coal that is ideal for high productivity, low-cost longwall operations. The design of the PAMC is optimized to produce large quantities ofcoal on a cost-efficient basis. We are able to sustain high production volumes at comparatively low operating costs due to, among other things, thetechnologically advanced longwall mining systems, logistics infrastructure and safety. All of our mines utilize longwall mining, which is a highlyautomated underground mining technique that produces large volumes of coal at lower costs compared to other underground mining methods. Weown a 75% undivided interest in PAMC, with the remaining 25% being owned by CCR, as discussed below.7Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.•CCR Ownership: Approximately 60% limited partnership ownership and 100% general partnership ownership interest in the Partnership, a masterlimited partnership originally formed by CNX to manage and further develop its active coal operations in Pennsylvania. At December 31, 2017,CCR’s assets included a 25% undivided interest in, and full operational control over, the PAMC.•CONSOL Marine Terminal: Through our subsidiary CONSOL Marine Terminals LLC we provide coal export terminal services through the Port ofBaltimore. The terminal can either store coal or load coal directly into vessels from rail cars. It is also one of the few terminals in the United Statesserved by two railroads, Norfolk Southern Corporation and CSX Transportation Inc.•Greenfield Reserves: Ownership of approximately 1.6 billion tons of high-quality, undeveloped coal reserves located in NAPP, CAPP and the ILB.A map showing the location of our significant properties is below:Our core values of safety, compliance, and continuous improvement are the foundation of the Company’s identity and are the basis for howmanagement defines continued success. We believe the Company’s rich resource base, coupled with these core values, allows management to create value forthe long-term. The U.S. Energy Information Administration (“EIA”) projects in its 2017 annual energy outlook that coal’s share of the U.S. electric powergeneration mix will rebound from 30% in 2016 to 32% in 2021, driven largely by rising gas prices and the prospects of a more favorable policy stance underthe current U.S. presidential administration. We believe that the use of coal as a principal fuel source for electricity in the United States will continue formany years. Additionally, we believe that as worldwide economies grow, the demand for electricity from fossil fuels will grow as well, resulting in expansionof worldwide demand for our coal.8Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Other information regarding the Company, including revenues, a measurement of profit or loss, total assets and financial information aboutgeographic areas, is provided in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.Our Relationship with CONSOL Coal Resources LPIn July 2015, CONSOL Coal Resources LP, formerly known as CNX Coal Resources LP, closed its initial public offering (“IPO”) of 5,000,000common units representing limited partnership interests at a price to the public of $15.00 per unit. The underwriters in the CCR initial public offeringexercised an over-allotment option to purchase and resell an additional 561,067 common units to the public at $15.00 per unit. In conjunction with the IPO,CCR sold an additional 5,000,000 common units representing limited partnership interests in a private placement. CCR’s general partner is CONSOL CoalResources GP LLC, formerly known as CNX Coal Resources GP LLC, which is a wholly owned subsidiary of the Company. The initial assets of CCR werecomprised of a 20% undivided interest in PAMC.CCR is managed and operated by the board of directors and executive officers of its general partner, CONSOL Coal Resources GP LLC, many ofwhom are also executive officers of the Company. The General Partner is a wholly owned subsidiary of the Company and the Company has the right toappoint the entire board of directors of the General Partner, including its independent directors. CCR’s unitholders are not entitled to elect the directors of theGeneral Partner nor can they directly or indirectly participate in the management of CCR. The executive officers of the General Partner are compensated by usor certain of our affiliates. Under our omnibus agreement with CCR, CCR reimburses us for compensation-related expenses (including salary, bonus,incentive compensation and other amounts) attributable to the portion of an executive’s compensation that is allocable to that executive’s service for theGeneral Partner.In September 2016, CCR and its wholly owned subsidiary, CONSOL Thermal Holdings LLC (“CONSOL Thermal”), formerly known as CNXThermal Holdings LLC, entered into a Contribution Agreement with CNX (at the time known as CONSOL Energy Inc.), Consol Pennsylvania Coal CompanyLLC and Conrhein Coal Company under which CONSOL Thermal acquired an additional 5% undivided interest in and to the Pennsylvania MiningComplex, in exchange for (i) cash consideration in the amount of $21.5 million and (ii) CCR’s issuance of 3,956,496 Class A Preferred Units representinglimited partnership interests in CCR at an issue price of $17.01 per Class A Preferred Unit, or an aggregate $67.3 million in equity consideration.On October 2, 2017, CNX provided a conversion notice to CCR with respect to all Class A Preferred Units owned by it, and thereafter caused all suchClass A Preferred Units to convert, on a 1-to-1 ratio, into common units representing limited partnership interests in CCR.In connection with the separation, CNX transferred all of its ownership interest in CCR to the Company, which consisted of (i) 5,006,496 commonunits and 11,611,067 subordinated units (representing a ~60% limited partnership interest), and (ii) 1.7% general partner interest and all incentivedistribution rights (“IDRs”). Subordinated units are not entitled to any distribution from CCR unless CCR makes a minimum quarterly distribution of$0.5125 per common unit. CCR made minimum distributions per subordinated unit equal to the distribution per common unit for nine of the ten quarterssince CCR’s IPO. CCR did not meet the requirement for a subordinated unit distribution with respect to fiscal quarter ended June 30, 2016. IDRs entitle theholder to receive increasing percentages, up to a maximum of 48%, of the available cash CCR distributes from operating surplus in excess of $0.5894 per unitper quarter. The maximum distribution of 48% does not include any distributions that the General Partner or its affiliates may receive on common units,subordinated units, or the General Partner interest that they own.Our StrategyOur strategy is to increase stockholder value by safely and compliantly operating our business, developing and growing our existing coal assets andparticipating in global coal markets. The Company’s coal assets align with our long-term strategic objectives. Our current production, which includesproduction from the Bailey, Enlow Fork and Harvey mines, can be sold domestically or abroad, as either thermal coal or high volatile metallurgical coal.These low-cost mines, with five longwalls, produce a high-Btu Pittsburgh-seam coal that is lower in sulfur than many Northern Appalachian coals. Our onsitelogistics infrastructure at the Bailey Central Preparation Plant includes a dual-batch train loadout facility capable of loading up to 9,000 tons of coal per hourand 19.3 miles of track linked to separate Class I rail lines owned by Norfolk Southern and CSX, which enables us to simultaneously accommodate multipleunit trains and significantly increases our efficiency in meeting our customers’ transportation needs. Our ability to accommodate multiple unit trains allowsfor the seamless transition from empty inbound trains to fully loaded outbound trains at our facility. These mines and their logistics infrastructure, along withour 100%-owned CONSOL Marine Terminal, which is served by both Norfolk Southern and CSX, will allow us to continue to participate in the world’sthermal and metallurgical coal markets. The ability to serve both domestic and international markets with premium thermal and crossover metallurgical coalprovides tremendous optionality.9Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.In order to continue to carry out our strategy, we will continue to adhere to and pursue the following strategic objectives:Selectively grow our business to maximize shareholder value by capitalizing on synergies with our assets and expertiseWe plan to judiciously direct the cash generated by our operations toward those opportunities that present the greatest potential for value creation toour shareholders, particularly those that take advantage of synergies with our asset base and/or with the expertise of our management team. To that end, weplan to regularly and rigorously evaluate opportunities both for organic growth and for acquisitions, joint ventures and other business arrangements in thecoal industry and related industries that complement our core operations. In addition, our ownership interest in CCR provides us with a unique vehicle forgenerating cash and raising capital, through the potential future drop down of assets into CCR which, if utilized, will allow us to generate cash to assist in theexecution of our growth strategy. Both the PAMC and our Greenfield Reserves present the potential for organic growth projects if long-term marketconditions are favorable. For example, we are currently evaluating a project to improve the recovery and processing of fine coal from the Bailey CentralPreparation Plant, which has the potential to add up to 1.5 million tons per year of additional clean coal production without additional mining of raw tons.Moreover, the Harvey Mine’s existing infrastructure, including its bottom development, slope belt and material handling system, is able to support anadditional permanent longwall mining system with moderate additional capital investment in mining equipment. Such an investment would further increasethe annual production capacity of the PAMC by 5 million tons. Our Greenfield Reserves associated with the potential Mason Dixon and River Mine projectspresent additional organic growth opportunities in NAPP, and our Greenfield Reserves associated with the Itmann Mine, Martinka Mine and Birch Mineprovide actionable organic growth opportunities in the metallurgical coal space, should market conditions warrant. Our management team has extensiveexperience in developing, operating and marketing a wide variety of coal assets previously owned by CNX, and is well qualified to evaluate organic andexternal growth opportunities. We intend to prudently use our interest in CCR to benefit our growth strategy, and plan to carefully weigh any capitalinvestment decisions against alternate uses of the cash to help ensure we are delivering the most value to our shareholders.Continue to grow our share at top-performing rail-served power plants in our core market areas, while opportunistically pursuing export and crossovermetallurgical opportunitiesWe plan to seek to minimize our market risk and maximize realizations by continuing to focus on selling coal to strategically-selected, top-performing, rail-served power plants located in our core market areas in the eastern United States. In 2017, our top domestic power plant customers includedthirteen plants that each took delivery of more than 500,000 tons of PAMC coal. These top power plant customers, which collectively accounted for 83% ofour domestic coal shipments in 2017, operated at a 13% greater weighted average capacity factor than other NAPP rail-served plants during January throughNovember (the most recent month for which data are available), and none have announced plans to retire. We have grown our share at these plants from 10%in 2012 to 35% in the first eleven months of 2017, and we believe we can continue to grow this share by displacing less competitive supply from NAPP,CAPP and other basins. We also plan to continue to work on optimizing our portfolio of top customer plants and identifying and penetrating new plants thatwe believe are aligned with our strategic objectives and would be a good fit for our coal. For example, one of our top customer plants in 2017 was not in our2016 portfolio, and another grew its volume from just over 100,000 tons of PAMC coal in 2016 to more than 900,000 tons of PAMC coal in 2017. While themajority of our production is directed toward our established base of domestic power plant customers, many of which are secured through annual or multi-year contracts, we also have continued to diversify our portfolio by placing a growing portion of our production in the export and crossover metallurgicalmarkets. These markets provide us with pricing upside when markets are strong and with volume stability when markets are weak. For 2018 and 2019, ourcontracted position, as of February 6, 2018, is at >95% and 70%, respectively, assuming a 27 million ton annual coal sales volume. We believe ourcommitted and contracted position is well-balanced in hedging against market downside risk while allowing us to continue to build out our portfoliostrategically and opportunistically as the market evolves.Drive operational excellence through safety, compliance, and continuous improvementWe intend to continue focusing on our core values of safety, compliance and continuous improvement. We operate some of the most productive,lowest-cost underground mines in the coal industry, while simultaneously setting some of the industry’s highest standards for safety and compliance. For2013 through 2017, our Mine Safety and Health Administration (“MSHA”) reportable incident rate was approximately 39% lower than the national averageunderground bituminous coal mine incident rate. Furthermore, our MSHA significant and substantial (“S&S”) citation rate per 100 inspection hours wasapproximately 33% lower than the industry’s average MSHA S&S citation rate over the twelve-month period ended December 31, 2017. We believe that ourfocus on safety and compliance promotes greater reliability in our operations, which fosters long-term customer relationships and lower operating costs thatsupport higher margins. Consistent with our core value of continuous improvement, we have improved our productivity from 5.69 tons per employee hour in2014 to 7.31 tons per employee hour in 2017, and have reduced our cash costs of coal sold per ton by 22% over this same period. We intend to continue togrow the economic competiveness of10Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.our operations by proactively identifying, pursuing and implementing efficiency improvements and new technologies that can drive down unit costs withoutcompromising safety or compliance.Ability to Grow Cash Flow through Drop-Downs into CCROur controlling ownership interest in the Partnership provides us with a unique vehicle for generating cash and raising capital to pursue our growthstrategy. Over time we may drop down assets into CCR. We believe that such drop-downs, if utilized, would allow us to grow CCR’s distributions andpotentially increase the value of the units and incentive distribution rights of CCR that we hold. Furthermore, the cash generated from these drop-downscould help us to accelerate the execution of our growth strategy. Finally, we believe that our different classes of securities (C-Corp and MLP) provide us withmultiple options for accessing capital markets and taking advantage of the best available cost of capital at any given point in time. We believe this is aunique advantage for us compared to other companies in the coal industry.Our Competitive StrengthsWe believe we are well-positioned to successfully execute our business strategies because of the following competitive strengths:Focus on free cash flow generation supported by industry-leading margins and optimized production levelsWe intend to continue our focus on maintaining high margins by optimizing production from our high-quality reserves and leveraging ourextensive logistics infrastructure and broad market reach. The PAMC’s low-cost structure, high-quality product, favorable access to rail and portinfrastructure and diverse base of end-use customers allow it to move large volumes of coal at positive cash margins throughout a variety of marketconditions. For example, despite recent challenging domestic market conditions driven largely by relatively mild weather, low natural gas prices, andstagnant electricity demand, which caused total U.S. coal production to fall by approximately 14% from 2015 to 2017, PAMC managed to grow productionby approximately 15% during this same period. For the year ended December 31, 2017, the PAMC generated an average cash margin per ton of $16.50.Through our recent capital investment program, we have optimized our mining operations and logistics infrastructure to sustainably drive down our cashoperating costs. Furthermore, our significant portfolio of multi-year, committed and priced contracts with our longstanding customer base will enhance ourability to sustain high margins in varied commodity price environments. We believe that these factors will help enable us to maintain higher margins per tonon average than our competitors and better position us to maintain profitability throughout commodity price cycles.Extensive, High-Quality Reserve BaseThe PAMC has extensive high-quality reserves of bituminous coal. We mine our reserves from the Pittsburgh No. 8 Coal Seam, which is a largecontiguous formation of uniform, high-Btu coal that is ideal for high productivity, low-cost longwall operations. As of December 31, 2017, the PAMCincluded 735.5 million tons of proven and probable coal reserves that are sufficient to support approximately 26 years of full-capacity production. Theadvantageous qualities of our coal enable us to compete for demand from a broader range of coal-fired power plants compared to mining operations in basinsthat typically produce coal with a comparatively lower heat content (ILB and the Powder River Basin (“PRB”)), higher sulfur content (ILB and most areas inNAPP) and higher chlorine content (certain areas of ILB). Our remaining reserves have an average as-received gross heat content of 12,915 Btu/lb (on an as-received basis), while production from the PRB, ILB, CAPP and the rest of NAPP averages approximately 8,700 Btu/lb, 11,400 Btu/lb, 12,300 Btu/lb and12,400 Btu/lb, respectively (based on the average quality reported by EIA for U.S. power plant deliveries for the three years ended June 30, 2017. Moreover,our remaining reserves have an average sulfur content of 2.30% (on an as-received basis), while production from the ILB averages ~2.9% sulfur andproduction from the rest of NAPP averages ~3.3% sulfur (again based on EIA power plant delivery data for the three years ended June 30, 2017). With ourhigh Btu content and low-cost structure, our 2017 total costs averaged $1.35 per mmBtu, which is lower than any monthly average Louisiana Henry Hubnatural gas spot price during the past 20+ years, and provides a strong foundation for competing against natural gas even after accounting for differences indelivered costs and power plant efficiencies. In addition to the substantial reserve base associated with the PAMC, our 1.6 billion tons of Greenfield Reservesin NAPP, CAPP and ILB feature both thermal and metallurgical reserves and provide additional optionality for organic growth or monetization as marketconditions allow.World-Class, Well-Capitalized, Low-Cost Longwall Mining ComplexSince 2006, we have invested over $2.0 billion at the PAMC ($1.4 billion of which has been invested in the past five years) to developtechnologically advanced, large-scale longwall mining operations and related production and logistics infrastructure. As a result, the PAMC is the mostproductive and efficient coal mining complex in NAPP, averaging 6.77 tons of coal production per employee hour in 2015-2016, compared to 4.94 tons ofcoal production per employee hour for other currently-11Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.operating NAPP longwall mines. For the year ending December 31, 2017, productivity further increased to 7.31 tons of coal per employee hour, comparedwith an average of 5.23 tons per employee hour for all other currently-operating NAPP longwalls. We believe our substantial capital investment in the PAMCwill enable us to maintain high production volumes, low operating costs and a strong safety and environmental compliance record, which we believe are keyto supporting stable financial performance and cash flows throughout business and commodity price cycles. As a result, we expect to be able to mine theremaining 26+ years of reserves at the PAMC with only maintenance-of-production levels of capital expenditure.Strategically Located Mining Operations with Advanced Distribution Capabilities and Excellent Access to Key Logistics InfrastructureOur logistics infrastructure and proximity to coal-fired power plants in the eastern United States provide us with operational and marketingflexibility, reduce the cost to deliver coal to our core markets and allow us to realize higher netback prices. We believe that we have a significanttransportation cost advantage compared to many of our competitors, particularly producers in the ILB and PRB, for deliveries to customers in our coremarkets and to East Coast ports for international shipping. For example, based on publicly available data and internal estimates, we believe that thetransportation cost advantage from our mines compared to ILB mines (not accounting for Btu differences) is approximately $3 to $8 per ton for coal deliveredto foreign consumers in Europe and India, $4 to $8 per ton for coal delivered to domestic customers in the Carolinas, and an even more pronounced costadvantage for coal delivered to domestic customers in the mid-Atlantic states. Our ability to accommodate multiple unit trains at the Bailey CentralPreparation Plant, which includes a dual-batch loadout facility capable of loading up to 9,000 tons of clean coal per hour and 19.3 miles of track with threesidings, allows for the seamless transition of locomotives from empty inbound trains to fully loaded outbound trains at our facility. Furthermore, the PAMChas exceptional access to export infrastructure in the United States. Through our 100%-owned CONSOL Marine Terminal, served by both the NorfolkSouthern and CSX railroads, we are able to participate in the world’s seaborne coal markets with premium thermal and crossover metallurgical coal.Strong, Well-Established Customer Base Supporting Contractual VolumesWe have a well-established and diverse blue chip customer base, comprised primarily of domestic electric-power-producing companies located inthe eastern United States. We have had success entering into multi-year coal sales agreements with our customers due to our longstanding relationships,reliability of production and delivery, competitive pricing and high coal quality. More than 90% of our sales in 2017 were to customer companies that werein our 2016 portfolio, and all but one of our top domestic power plant customers in 2017 (which represent the thirteen plants to which we shipped at least500,000 tons of PAMC coal in 2017), have been in our portfolio for at least four consecutive years. In addition, to mitigate our exposure with respect to coal-fired power plant retirements, we have strategically developed our customer base to include power plants that are economically positioned to continueoperating for the foreseeable future and that are equipped with state-of-the-art environmental controls. In 2017, only approximately 2% of our total sales wereto domestic power plant customers that have announced plans to retire through 2023. Moreover, none of our top thirteen customer plants, which accountedfor 83% of our shipments in 2017, have announced plans to retire. These top plants operated at a 13% higher weighted average capacity factor than otherNAPP rail-served plants in January-November 2017 (the most recent month for which data are available), highlighting their economic competitiveness in thechallenging power markets. Since 2012, the Company has increased its market share at these thirteen plants from 10% to 35%. In addition to our robustdomestic customer base, we also have favorable access to seaborne coal markets through our long-standing commercial relationship with a leading coaltrading and brokering customer that maintains a broad market presence with foreign coal consumers. We have grown our exports of PAMC coal to theseaborne thermal and crossover metallurgical markets from an average of 5.5 million tons per year (or approximately 23% of our annual sales volume) in2015-2016 to 8.3 million tons (or approximately 32% of our annual sales volume) in 2017.Highly Experienced Management Team and Operating TeamOur management and operating teams have (i) significant expertise owning, developing and managing complex thermal and metallurgical coalmining operations, (ii) valuable relationships with customers, railroads and other participants across the coal industry, (iii) technical wherewithal anddemonstrated success in developing new applications and customers for our coal products, in both the thermal and metallurgical markets, and (iv) a proventrack record of successfully building, enhancing and managing coal assets in a reliable and cost-effective manner throughout all parts of the commoditycycle. We intend to leverage these qualities to continue to successfully develop our coal mining assets while efficiently and flexibly managing ouroperations to maximize operating cash flow.CONSOL Energy’s Capital Expenditure BudgetIn 2018, CONSOL Energy expects to invest $125 - $145 million in maintenance capital expenditures. The Company is not expecting to invest inexpansion projects in 2018. However, the Company continually evaluates potential acquisitions.12Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Detail Coal OperationsCoal ReservesAt December 31, 2017, the Company had an estimated 2.3 billion tons of proven and probable coal reserves. As of December 31, 2017, the PAMCincluded 735.5 million tons of proven and probable coal reserves that are sufficient to support approximately 26 years of full-capacity production. Reservesare the portion of the proven and probable tonnage that meet the Company’s economic criteria regarding mining height, preparation plant recovery, depth ofoverburden and stripping ratio. Generally, these reserves would be commercially mineable at year-end price and cost levels. Spacing of points of observationfor confidence levels in reserve calculations is based on guidelines in U.S. Geological Survey Circular 891 (Coal Resource Classification System of the U.S.Geological Survey). Our estimates for proved reserves have the highest degree of geologic assurance. Estimates for proved reserves are based on points ofobservation that are equal to or less than 0.5 miles apart. Estimates for probable reserves have a moderate degree of geologic assurance and are computed frompoints of observation that are between 0.5 to 1.5 miles apart. An exception is made concerning spacing of observation points with respect to our PittsburghNo. 8 coal seam reserves. Because of the well-known continuity of this seam, spacing requirements are 3,000 feet or less for proved reserves and between3,000 and 7,920 feet for probable reserves.The Company’s estimates of proven and probable coal reserves do not rely on isolated points of observation. Small pools of reserves based on asingle observation point are not considered; continuity between observation points over a large area is necessary for proved or probable reserves. Estimates ofthe Company’s coal reserves have historically been calculated both by internal geologists and engineers employed by CNX, and independent third parties.Reserve estimates and evaluation processes are periodically audited by independent third parties to ensure accuracy. The Company’s proven and probablecoal reserves fall within the range of commercially marketed coals in the United States. The marketability of coal depends on its value-in-use for a particularapplication, and this is affected by coal quality, such as sulfur content, ash and heating value. Modern power plant boiler design aspects can compensate forcoal quality differences that occur. Therefore, any of the Company’s coals can be marketed for the electric power generation industry.The Company’s proven and probable coal reserves include 87.0 million tons of undeveloped reserves that are classified as high-vol, mid-vol or low-vol metallurgical coal. Additionally, worldwide demand for metallurgical coal allows some of our proven and probable coal reserves, currently classified asthermal coal but that possess certain qualities, to be sold as metallurgical coal. The extent to which we can sell thermal coal as crossover metallurgical coaldepends upon a number of factors, including the quality characteristics of the reserve, the specific quality requirements and constraints of the end-usecustomer and market conditions (which affect whether customers are compelled to substitute lower-quality crossover coal for higher-quality metallurgicalcoal in their blends to realize economic benefits). The addition of this cross-over market adds additional assurance to the Company that all of its proven andprobable coal reserves are commercially marketable.The Company assigns coal reserves to each mine within the Pennsylvania Mining Complex. The amount of coal we assign to the PennsylvaniaMining Complex generally is sufficient to support mining through the duration of our current mining permit. Under federal law, we must renew our miningpermits every five years. All assigned reserves have their required permits or governmental approvals, or there is a high probability that these approvals willbe secured. In addition, the Pennsylvania Mining Complex may have access to additional reserves that have not yet been assigned. We refer to these reservesas accessible. Accessible reserves are proven and probable coal reserves that can be accessed by an existing mining complex, utilizing the existinginfrastructure of the complex to mine and to process the coal in this area. Mining an accessible reserve does not require additional capital spending beyondthat required to extend or to continue the normal progression of the mine, such as the sinking of airshafts or the construction of portal facilities.Some reserves may be accessible by more than one mine because of the proximity of many of our mines to one another. In the table below, theaccessible reserves indicated for a mine are based on our review of current mining plans and reflect our best judgment as to which mine is most likely toutilize the reserve. Assigned and unassigned coal reserves are proven and probable coal reserves which are either owned or leased. The leases have termsextending up to 30 years and generally provide for renewal through the anticipated life of the associated mine. These renewals are exercisable by thepayment of minimum royalties. Under current mining plans, assigned reserves reported will be mined out within the period of existing leases or within thetime period of probable lease renewal periods.Pennsylvania Mining ComplexBailey Mine. The Bailey mine is located in Enon, Pennsylvania. The Bailey Mine is the first mine that CNX developed at the Pennsylvania MiningComplex. As of December 31, 2017, the Bailey mine’s assigned and accessible reserve base contained an aggregate of 245.2 million tons of clean recoverableproven and probable coal with an average as-received gross heat content13Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.of approximately 12,900 Btus per pound and an approximate average pounds of SO2 per million British thermal units (mmBtu) of 4.03. While operating twolongwalls, the production capacity of the Bailey mine is approximately 11.5 million tons of coal per year. Construction of the slope and initial air shaftbegan in 1982. The slope development reached the coal seam at a depth of approximately 600 feet and, following development of the slope bottom,commercial coal production began in 1984. Longwall mining production commenced in 1985, and the second longwall was placed into operation in 1987.In 2010, a new slope and overland belt system was commissioned, which allowed a large percentage of the Bailey mine to be sealed off. For the years endedDecember 31, 2017, 2016 and 2015, the Bailey mine produced 12.1, 12.1 and 10.2 million tons of coal, respectively. The Bailey mine uses approximately sixcontinuous mining units to develop the mains and gate roads for its longwall panels. On average, the longwalls have a panel width (or face length) ofapproximately 1,500 feet, a panel length of approximately 12,000 feet and a seam height of approximately 7.5 feet.Enlow Fork Mine. The Enlow Fork Mine is located directly north of the Bailey Mine. As of December 31, 2017, the Enlow Fork Mine’s assigned andaccessible reserve base contained an aggregate of 295.5 million tons of clean recoverable proven and probable coal with an average as-received gross heatcontent of approximately 12,900 Btus per pound and an approximate average lb SO2/mmBtu of 3.28. While operating two longwalls, the productioncapacity of the Enlow Fork mine is approximately 11.5 million tons of coal per year. Initial underground development was started from the Bailey mine whilethe Enlow Fork slope was being constructed. Once the slope bottom was developed and the slope belt became operational, seals were constructed to separatethe two mines. Following development of the slope bottom, commercial coal production began in 1989. Longwall mining production commenced in 1991with the second longwall coming online in 1992. In 2014, a new slope and overland belt system was commissioned and a substantial portion of the EnlowFork mine was sealed. For the years ended December 31, 2017, 2016 and 2015, the Enlow Fork mine produced 9.2, 9.6 and 9.0 million tons of coal,respectively. The Enlow Fork mine uses approximately six continuous mining units to develop the mains and gate roads for its longwall panels. On average,the longwalls have a panel width (or face length) of approximately 1,500 feet, a panel length of approximately 12,000 feet and a seam height ofapproximately 7.5 feet.Harvey Mine. The Harvey Mine is located directly east of the Bailey and Enlow Fork Mines. As of December 31, 2017, the Harvey mine’s assignedand accessible reserve base contained an aggregate of 194.8 million tons of clean recoverable proven and probable coal with an average as-received grossheat content of approximately 12,960 Btus per pound and an approximate average lb SO2/mmBtu of 3.42. While operating one longwall, the productioncapacity of the Harvey mine is approximately 5.5 million tons of coal per year. Similar to the Enlow Fork mine, the Harvey mine was developed off of theBailey mine’s slope bottom. Once the slope for the Harvey mine was placed into operation, seals were built to separate the two mines, and the original slopewas dedicated solely to the Harvey mine, which eliminated the need to make significant capital expenditures to develop, among other things, a new slope, airshaft and portal facility. Development of the Harvey mine began in 2009, and construction of the supporting surface facilities commenced in 2011. Longwallmining production commenced in March 2014. For the years ended December 31, 2017, 2016 and 2015, the Harvey mine produced 4.8, 3.0 and 3.6 milliontons of coal, respectively. The Harvey mine uses approximately four continuous mining units to develop the mains and gate roads for its longwall panels. Thelongwall has a panel width (or face length) of approximately 1,500 feet, a panel length of approximately 15,000 feet and a seam height of approximately 6.9feet. The Harvey mine’s existing infrastructure, including its bottom development, slope belt and material handling system, has the capacity to add oneincremental permanent longwall mining system with additional mine development and capital investment.14Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The following table provides the location of our active mining complexes that are part of the PAMC and the coal reserves associated with each operation.CONSOL ENERGY PENNSYLVANIA MINING COMPLEX Proven and Probable Assigned and Accessible Coal Reserves as of December 31, 2017 and 2016 Recoverable Average As Received Heat Reserves(2) Preparation Seam Value(1) Tons in Facility Reserve Coal Thickness (Btu/lb) Owned Leased Millions Mine/Reserve Location Class Seam (feet) Typical Range (%) (%) 12/31/2017 12/31/2016 ASSIGNED–OPERATING PA MiningOperations Bailey Enon, PA Assigned Operating Pittsburgh 7.5 12,940 12,780 – 13,040 42% 58% 75.4 89.0 Accessible Pittsburgh 7.5 12,880 12,670 – 13,140 78% 22% 169.8 170.7 Harvey Enon, PA Assigned Operating Pittsburgh 6.9 13,040 12,900 – 13,210 95% 5% 57.8 20.4 Accessible Pittsburgh 7.7 12,930 12,880 – 13,190 99% 1% 137.0 180.1 Enlow Fork Enon, PA Assigned Operating Pittsburgh 7.5 13,000 12,840 – 13,220 94% 6% 93.4 31.2 Accessible Pittsburgh 7.7 12,850 12,630 – 13,020 67% 33% 202.1 275.3 Total AssignedOperating andAccessible 735.5 766.7 (1)The heat values (gross calorific values) shown for Assigned Operating reserves are based on the 2017 actual quality and five-year forecasted quality foreach mine/reserve, assuming that the coal is washed to an extent consistent with normal full-capacity operation of each mine's/complex’spreparation plant. Actual quality is based on laboratory analysis of samples collected from coal shipments delivered in 2017. Forecasted quality isderived from exploration sample analysis results, which have been adjusted to account for anticipated moisture and for the effects of mining andcoal preparation. The heat values (gross calorific values) shown for Accessible Reserves are on an as-received basis (dry values obtained from drillhole analyses, adjusted for moisture) and are prorated by the associated Assigned Operating product values to account for similar mining andprocessing methods.(2)Recoverable reserves are calculated based on the area in which mineable coal exists, coal seam thickness, and average density determined by laboratorytesting of drill core samples. This calculation is adjusted to account for coal that will not be recovered during mining and for losses that occur if thecoal is processed after mining. Reserves tons are reported on an as-received basis, based on the anticipated product moisture. Reserves are reportedonly for those coal seams that are controlled by ownership or leases.15Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The following table sets forth our unassigned proven and probable coal reserves by region:CONSOL Energy UNASSIGNED Recoverable Coal Reserves as of December 31, 2017 and 2016 Recoverable Recoverable Reserves(2) Reserves Tons in (Tons in As Received Heat Owned Leased Millions Millions)Coal Producing Region Value(1) (Btu/lb) (%) (%) 12/31/2017 12/31/2016Northern Appalachia (Pennsylvania, Ohio, Northern WestVirginia) (3) 11,400 – 13,400 85% 15% 1,054.0 1,054.0Central Appalachia (Virginia, Southern West Virginia) 12,400 – 14,100 77% 23% 157.2 157.2Illinois Basin (Illinois, Western Kentucky, Indiana) 11,600 – 12,000 77% 23% 316.4 348.7Total 82% 18% 1,527.6 1,559.9_______________(1)The heat value (gross calorific values) estimates for Northern Appalachian and Central Appalachian Unassigned coal reserves include adjustments formoisture that may be added during mining or processing as well as for dilution by rock lying above or below the coal seam. The heat value estimatesfor the Illinois Basin Unassigned reserves are based primarily on exploration drill core data that may not include adjustments for moisture addedduring mining or processing, or for dilution by rock lying above or below the coal seam.(2)Recoverable reserves are calculated based on the area in which mineable coal exists, coal seam thickness, and average density determined bylaboratory testing of drill core samples. This calculation is adjusted to account for coal that will not be recovered during mining and for losses thatoccur if the coal is processed after mining. Reserve tons are reported on an as-received basis, based on the anticipated product moisture. Reserves arereported only for those coal seams that are controlled by ownership or leases.(3)140.8 million tons of the Northern Appalachia leased tons are controlled by Consolidation Coal Company, a former subsidiary of CNX that was sold inDecember 2013. As of filing, these tons are still controlled by Consolidation Coal Company but are shown in CONSOL Energy's reserves due to abinding agreement that these tons will be released to CONSOL Energy upon the assignment of the underlying lease to CONSOL Energy..16Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The following table classifies the Company's coal by rank, projected sulfur dioxide emissions and heating value (British thermal units per pound). Thetable also classifies bituminous coal as high, medium and low volatile which is based on fixed carbon and volatile matter.CONSOL Energy Proven and Probable Recoverable Coal ReservesBy Product (In Millions of Tons) as of December 31, 2017 ≤ 1.20 lbs. > 1.20 ≤ 2.50 lbs. > 2.50 lbs. S02/MMBtu S02/MMBtu S02/MMBtu Low Med High Low Med High Low Med High Percent ByBy Region Btu Btu Btu Btu Btu Btu Btu Btu Btu Total ProductMetallurgical(1): High Vol A Bituminous — — — — — 39.6 — — — 39.6 1.7% Med Vol Bituminous — 5.1 — — — — — — — 5.1 0.2% Low Vol Bituminous — — 16.0 — — 26.3 — — — 42.3 1.8% Total Metallurgical — 5.1 16.0 — — 65.9 — — — 87.0 3.7%Thermal(1): High Vol A Bituminous — 46.0 — 6.1 65.4 12.9 44.5 1,074.3 640.6 1,889.8 82.2% High Vol B Bituminous — — — — 101.1 — — 107.0 — 208.1 9.2% High Vol C Bituminous — — — — — — 108.3 — — 108.3 4.7% Low Vol Bituminous — — — — — — — — 4.5 4.5 0.2% Total Thermal — 46.0 — 6.1 166.5 12.9 152.8 1,181.3 645.1 2,210.7 96.3% Total — 51.1 16.0 6.1 166.5 78.8 152.8 1,181.3 645.1 2,297.7 100.0% Percent of Total —% 2.2% 0.7% 0.3% 7.2% 3.4% 6.7% 51.4% 28.1% 100.0% _______________(1)143.3 Million tons of the Northern Appalachia product are controlled by Consolidation Coal Company, a former subsidiary of CNX that was sold inDecember 2013. As of this filing, these tons are still controlled by Consolidation Coal Company but are shown in CONSOL Energy’s reserves due to abinding agreement that these tons will be released to CONSOL Energy upon the assignment of the underlying lease to CONSOL Energy. Title to coal properties that we lease or purchase and the boundaries of these properties are verified by law firms retained by us at the time we lease oracquire the properties. Consistent with industry practice, abstracts and title reports are reviewed and updated approximately five years prior to planneddevelopment or mining of the property. If defects in title or boundaries of undeveloped reserves are discovered in the future, control of and the right to minereserves could be adversely affected.The following table sets forth, with respect to properties that we lease to other coal operators, the total royalty tonnage and the amount of income (netof related expenses) we received from royalty payments for the years ended December 31, 2017, 2016 and 2015. Total Total Royalty Royalty Tonnage Income *Year (in thousands) (in thousands)2017 7,656 $26,0232016 7,847 $19,7252015 7,459 $14,914* Excludes advanced mining royalty payments received of $2,066, $14 and $442 during the years ended December 31, 2017, 2016 and 2015,respectively.Royalty tonnage leased to third parties is not included in the amounts of produced tons that we report. Proven and probable reserves do not includereserves attributable to properties that we lease to third parties.17Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ProductionIn the year ended December 31, 2017, 100% of the Company's production came from underground mines equipped with longwall mining systems. TheCompany employs longwall mining systems in our underground mines where the geology is favorable and reserves are sufficient. Underground longwallsystems are highly mechanized, capital intensive operations. Mines using longwall systems have a low variable cost structure compared with other types ofmines and can achieve high productivity levels compared with those of other underground mining methods. Because the Company has substantial reservesreadily suitable to these operations, the Company believes that these longwall mines can increase capacity at a low incremental cost. The following table shows the production, in millions of tons, for the Company's mines for the years ended December 31, 2017, 2016 and 2015, thelocation of each mine, the type of mine, the type of equipment used at each mine, method of transportation and the year each mine was established oracquired by us. Preparation Tons Produced Year Facility Mine Mining (in millions) EstablishedMine Location Type Equipment Transportation 2017 2016 2015 or AcquiredPA Mining Operations Bailey Enon, PA U LW/CM R R/B 12.1 12.1 10.2 1984Enlow Fork Enon, PA U LW/CM R R/B 9.2 9.6 9.0 1990Harvey Enon, PA U LW/CM R R/B 4.8 3.0 3.6 2014Total 26.1 24.7 22.8 S–SurfaceU–UndergroundLW–LongwallCM–Continuous MinerS/L–Stripping Shovel and Front End LoadersR–RailR/B–Rail to BargeT–TruckCoal Marketing and SalesThe following table sets forth the Company produced tons sold and average sales price for the period indicated: Years Ended December 31, 2017 2016 2015Company Produced PA Mining Operations Tons Sold (in millions) 26.1 24.6 22.9Average Sales Price Per Ton Sold– PA Mining Operations $45.52 $43.31 $56.36We sell coal produced by our mines and additional coal that is purchased by us for resale from other producers. We maintain a United States salesoffice in Pittsburgh. In addition, we sell coal through agents and to brokers and unaffiliated trading companies. Approximately 65% of our 2017 coal saleswere made to U.S. electric generators, 32% of our 2017 coal sales were priced on export markets and 3% of our 2017 coal sales were made to other domesticcustomers. Approximately 75% of our 2016 coal sales were made to U.S. electric generators, 22% of our 2016 coal sales were priced on export markets and3% of our 2016 coal sales were made to other domestic customers. Approximately 71% of our 2015 coal sales were made to U.S. electric generators, 24% ofour 2015 coal sales were priced on export markets and 5% of our 2015 coal sales were made to other domestic customers. We had sales to over 35 customersfrom our 2017 coal operations. During 2017, two customers each comprised over 10% of our coal sales, aggregating approximately 31% of our sales. Annualmetallurgical coal revenues for the past three years ranged from $58.3 million to $77.0 million.Coal Contracts and PricingWe sell coal to an established customer base through opportunities as a result of strong business relationships, or through a formalized biddingprocess. Contract volumes range from a single shipment to multi-year agreements for millions of tons of18Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.coal. The average contract term is between one to three years. As a normal course of business, efforts are made to renew or extend contracts scheduled toexpire. Although there are no guarantees, we generally have been successful in renewing or extending contracts in the past. For the year ended December 31,2017, approximately 68% of all the coal we produced was sold under contracts with terms of one year or more.We expect total consolidated Pennsylvania Mining Complex annual sales to be approximately 27 million tons for 2018 and 2019. Coal pricing forcontracts with terms of one year or less is generally fixed. Coal pricing for multiple-year agreements generally provide the opportunity to periodically adjustthe contract prices through pricing mechanisms consisting of one or more of the following:•Fixed price contracts with pre-established prices;•Periodically negotiated prices that reflect market conditions at the time;•Price restricted to an agreed-upon percentage increase or decrease;•Base-price-plus-escalation methods which allow for periodic price adjustments based on inflation indices, or other negotiated indices; or•Netback pricing The volume of coal to be delivered is specified in each of our coal contracts. Although the volume to be delivered under the coal contracts isstipulated, the parties may vary the timing of the deliveries within specified limits. Coal contracts typically contain force majeure provisions allowing for thesuspension of performance by either party for the duration of certain force majeure events. Force majeure events include, but are not limited to, unexpectedsignificant geological conditions or natural disasters. Depending on the language of the contract, some contracts may terminate upon continuance of anevent of force majeure that extends for a period greater than three to twelve months.Of our 2017 sales tons, approximately 65% were sold to U.S. electric generators, 32% were priced on export thermal markets and 3% were sold toother domestic customers. In 2017, we derived greater than 10% of our total coal sales revenue from two customers: Duke Energy Corporation (“DukeEnergy”) and Xcoal Energy & Resources (“Xcoal”). As of January 1, 2018, we had nine sales agreements with these customers that expire at various times in2018 and 2019. As of February 16, 2018, CONSOL Energy has entered into an additional contract with Xcoal. It is anticipated that these combined contractswith Xcoal will account for more than 10% of the Company's total revenue for the year ended December 31, 2018.During the past three years, our average realization (sales price per ton sold) for coal produced from the PAMC decreased from $56.36/ton in 2015 to$43.31/ton in 2016, and then increased to $45.52/ton in 2017. However, our average realization has since rebounded from a low of $40.61/ton during thesecond quarter of 2016 to $46.80 during the first quarter of 2017. Pricing for our product depends strongly on conditions in the domestic thermal coal market,which accounted for at least 68% of our total sales volumes in each of 2015, 2016, and 2017.The prices we are able to achieve in the domestic thermal market depend on a number of factors, including: (i) the supply-demand balance forNorthern Appalachian coal, (ii) prices for other competing sources of energy used for electricity generation, such as natural gas, (iii) power prices in theregions we serve, (iv) prices for coals from other basins (including the Central Appalachian Basin, Illinois Basin, and Powder River Basin) that compete inthese same regions, and (v) pricing under our longer-term contracts, which may have been entered into under different market conditions. For example, the19% decrease in our average realization from 2015 to 2017 occurred during a period when Henry Hub spot natural gas prices averaged relatively lower thanthey had during the previous couple of years, decreasing from an average of $4.05/mmBtu in 2013-2014 to an average of $2.71/mmBtu in 2015-2017. Theselower natural gas prices, coupled with increased capacity from new natural gas combined-cycle power plants, put pressure on power prices and on the demandfor coal-fired electric power generation. Based on the latest data from the EIA, U.S. coal-fired generation averaged approximately 20% lower in 2015-2017than in 2013-2014, and average day-ahead power prices at the PJM Western hub, which correlates with prices received by several of our top domesticcustomer plants, averaged 29% lower in the same period-to-period comparison. Moreover, abnormally mild weather during the winter of 2015-2016 causedU.S. power plant coal inventories to swell, and additional mild weather in the winter of 2016-2017 and summer of 2017 prolonged the impact on domesticcoal demand as power plants required fewer new coal deliveries while they worked to draw down their coal stockpiles to more-normal levels. These factorsaffected the prices that we were able to achieve in the domestic thermal markets as older contracts rolled off and were replaced by new contracts.At the same time, imbalances in global supply and demand for coal caused substantial variability in pricing in the two other primary markets weserve - the export thermal market and the export metallurgical market - during the 2015-2017 period. For example, prompt month API 2 index prices (thebenchmark price reference for coal imported into northwest Europe) averaged about 22% lower during the first six months of 2016 than they did during thefirst six months of 2015, and quarterly global coking coal benchmark prices also averaged about 27% lower during the same period-to-period comparison.Pricing in all three of our19Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.primary markets began to recover during the latter part of 2016, and in calendar year 2017, the API 2 index averaged 42% higher than in 2016, and globalcoking coal prices were up by an even greater percentage year-over-year. This helped to drive the rebound in pricing for our coal noted above.Terminal ServicesIn 2017, approximately 14.3 million tons of coal were shipped through the CONSOL Marine Terminal owned by our subsidiary, CONSOL MarineTerminals LLC. Approximately 53% of the tonnage shipped was produced by the Pennsylvania Mining Complex. The terminal can either store coal or loadcoal directly into vessels from rail cars. It is also one of the few terminals in the United States served by two railroads, Norfolk Southern Corporation and CSXTransportation Inc. CONSOL Marine Terminal has significant storage capacity of 1.1 million tons with more than thirty acres of capacity for stockpiles. Thefacility possesses extensive blending capabilities, and has handled over 10 million tons of coal per year on average since 2010, with a potential maximumthroughput capacity of 15 million tons annually.Non-Core Coal Assets and Surface PropertiesWe own significant coal assets that are not in our short or medium term development plans. We continually explore the monetization of these non-core assets by means of sale, lease, contribution to joint ventures, or a combination of the foregoing in order to bring the value of these assets forward for thebenefit of our stockholders.DistributionCoal is transported from the Company’s mining operations to customers by railroad cars, trucks, vessels or a combination of these means oftransportation. Most customers negotiate their own transportation rates and we employ transportation specialists who negotiate freight and equipmentagreements with various transportation suppliers, including railroads, barge lines, terminal operators, ocean vessel brokers and trucking companies for certaincustomers.SeasonalityOur business has historically experienced limited variability in its results due to the effect of seasonal changes. Demand for coal-fired power canincrease due to unusually hot or cold weather as power consumers use more air conditioning or heating, respectively. Conversely, mild weather can result inweaker demand for our coal. Adverse weather conditions, such as blizzards or floods, can impact our ability to transport coal over our overland conveyorsystems and to transport our coal by rail.CompetitionThe coal industry is highly competitive, with numerous producers selling into all markets that use coal. There are numerous large and smallproducers in all coal producing basins of the United States, and we compete with many of these producers, including those who export coal abroad. Potentialchanges to international trade agreements, trade concessions or other political and economic arrangements may benefit coal producers operating in countriesother than the United States. We may be adversely impacted on the basis of price or other factors with companies that in the future may benefit from favorableforeign trade policies or other arrangements. In addition, coal is sold internationally in U.S. dollars and, as a result, general economic conditions in foreignmarkets and changes in foreign currency exchange rates may provide our foreign competitors with a competitive advantage. If our competitors’ currenciesdecline against the U.S. dollar or against our foreign customers’ local currencies, those competitors may be able to offer lower prices for coal to our customers.Furthermore, if the currencies of our overseas customers were to significantly decline in value in comparison to the U.S. dollar, those customers may seekdecreased prices for the coal we sell to them. Consequently, currency fluctuations could adversely affect the competitiveness of our coal in internationalmarkets, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.The most important factors on which we compete are coal price, coal quality and characteristics, transportation costs and reliability of supply.Demand for coal and the prices that we will be able to obtain for our coal are closely linked to coal consumption patterns of the domestic electric generationindustry and foreign coal consumers. These coal consumption patterns are influenced by many factors that are beyond our control, including demand forelectricity, which is significantly dependent upon economic activity and summer and winter temperatures in the United States, government regulation,technological developments and the location, quality, price and availability of competing sources of fuel.20Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Laws and RegulationsOverviewOur coal mining operations are subject to various federal, state and local environmental, health and safety regulations. Regulations relating to ouroperations require us to obtain permits and other licenses; reclaim and restore our properties after mining operations have been completed; store, transportand dispose of materials used or generated by our operations; manage surface subsidence from underground mining; control water and air emissions; protectwetlands and endangered plant and wildlife; and to ensure employee health and safety. Furthermore, the electric power generation industry is subject toextensive regulation regarding the environmental impact of its power generation activities, which could affect demand for our coal.Compliance with these laws has substantially increased the cost of coal mining, and the possibility exists that new legislation or regulations may beadopted which would have a significant impact on our coal mining operations or our customers’ ability to use our coal and may require us or our customers tochange their operations significantly or incur substantial costs.The following is a summary of the more significant existing environmental and worker health and safety laws and regulations to which we and ourcustomers’ business operations are subject and for which compliance may have a material adverse impact on our capital expenditures, results of operationsand financial position.Environmental LawsAir Emissions. The Clean Air Act (“CAA”) and corresponding state and local laws and regulations affect all aspects of coal mining operations, bothdirectly and indirectly. The CAA directly impacts our coal mining and processing operations by requiring us to obtain pre-approval for the construction ormodification of certain facilities or to use specific equipment, technologies or best management practices to control emissions.The CAA also indirectly and more significantly affects the U.S. coal industry by extensively regulating the air emissions of coal-fired electric powergenerating plants operated by our customers. Coal contains impurities, such as sulfur, mercury and other constituents, many of which are released into the airwhen coal is burned. Carbon dioxide (“CO2”), a regulated greenhouse gas (“GHG”), is also emitted when coal is burned. Environmental regulationsgoverning emissions from coal-fired electric generating plants increase the costs to operate and could affect demand for coal as a fuel source and affect thevolume of our sales. Moreover, additional environmental regulations increase the likelihood that existing coal-fired electric generating plants will bedecommissioned, including plants to which the Company sells coal, and reduce the likelihood that new coal-fired plants will be built in the future.In early 2012, the United States Environmental Protection Agency (the “EPA”) promulgated or finalized several rules for New Source PerformanceStandards (“NSPS”) for coal- and oil-fired power plants which also have a negative effect on coal- generating facilities. The Utility Maximum ControlTechnology (“UMACT”) rule requires more stringent NSPS for particulate matter (“PM”), Sulfur dioxide (“SO2”) and nitrogen oxides (“NOX”) and theMercury and Air Toxics Standards (“MATS”) rule requires new mercury and air toxic standards. In November 2012, the EPA published a notice ofreconsideration of certain aspects of the UMACT and MATS rules. Following reconsideration in April 2013 and again in April 2014, the EPA promulgatedfinal UMACT and MATS rules in November 2014. The rule was rejected by the U.S. Supreme Court on June 29, 2015 and sent back to the D.C. Circuit Courtto determine whether to remand and allow the EPA to address the rule’s deficiencies or to vacate and nullify the rule; nevertheless most coal-fired electricpower generators have already taken steps to comply with the rule. On April 18, 2017 the EPA asked the Court to delay arguments over MATS to allow theTrump Administration time to fully review the findings. On April 21, 2017, the Court granted the requested stay.The CAA requires the EPA to set National Ambient Air Quality Standards (“NAAQS”) for certain pollutants and the CAA identifies two types ofNAAQS. Primary standards provide public health protection, including protecting the health of “sensitive” populations such as asthmatics, children and theelderly. Secondary standards provide public welfare protection, including protection against decreased visibility and damage to animals, crops, vegetationand buildings. On October 1, 2015, the EPA finalized the NAAQS for ozone pollution and reduced the limit to 70 parts per billion (“ppb”) from the previous75 ppb standard. The final rule could have a large impact on the coal mining industry as states would be required to update their permitting standards to meetthese potentially unachievable limits. Several states have filed a petition for review in the D.C. Circuit of Appeals. On April 7, 2017, the EPA advised theCourt that it intended to reconsider the final rule. On April 11, 2017, the Court stayed the litigation pending further action by the EPA. On August 10, 2017,EPA withdrew a previously-announced one-year extension to the compliance deadline.21Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.On January 17, 2018, New York and Connecticut filed suit against the EPA alleging that the EPA violated the CAA by failing to adequately preventozone transport from downwind states, including Pennsylvania and West Virginia. Delaware filed a similar lawsuit in 2016. If the states were successful, theEPA and the downstream states could be required to implement lower ozone levels through the states’ implementation plans, which could, in turn, result inlower ozone emissions thresholds for state permitting.On July 6, 2011, the EPA finalized a rule known as the Cross-State Air Pollution Rule (“CSAPR”). CSAPR regulates cross-border emissions of criteriaair pollutants such as SO2 and NOX, as well as byproducts, fine particulate matter and ozone by requiring states to limit emissions from sources that“contribute significantly” to noncompliance with air quality standards for the criteria air pollutants. If the ambient levels of criteria air pollutants are abovethe thresholds set by the EPA, a region is considered to be in “nonattainment” for that pollutant and the EPA applies more stringent control standards forsources of air emissions located in the region. In April 2014, the Supreme Court reversed a decision of the D.C. Circuit Court of Appeals that vacated the rule.Following remand and briefing the D.C. Circuit Court, in October 2014, granted a motion to lift a stay of the rule and allow the EPA to modify the CSAPRcompliance deadline by three-years, setting the stage for issuance of the proposed rule. Implementation of CSAPR Phase 1 began in 2015, with Phase 2scheduled to begin in 2017. On September 7, 2016, the EPA finalized an update to the CSAPR for the 2008 ozone NAAQS by issuing the final CSAPRUpdate. As of May 2017, this rule limits summertime (May - September) NOX emissions from power plants in 22 states in the eastern United States.On March 27, 2012, the EPA published its proposed NSPS for CO2 emissions from new coal-powered electric generating units. The proposed rulewould have applied to new power plants and to existing plants that make major modifications. If the rule had been adopted as proposed, only new coal-firedpower plants with CO2 capture and storage (“CCS”) could have met the proposed emission limits. Commercial scale CCS is not likely to be available in thenear future, and if available, it may make coal-fired electric generation units uneconomical compared to new gas-fired electric generation units. On January 8,2014, the EPA re-proposed NSPS for CO2 for new fossil fuel fired power plants and rescinded the rules that were proposed on April 13, 2012.On September 20, 2013, the EPA issued a new proposal, “Carbon Pollution Standard for New Power Plants”, to establish separate NSPS for CO2emissions for natural gas-fired turbines and coal-fired units. On June 2, 2014, the EPA announced the Clean Power Plan (“CPP Rule”) rules intended to cutcarbon emissions from existing power plants. Under this proposed rule, the EPA would create emission guidelines for states to follow in developing plans toaddress GHG emissions from existing fossil fuel- fired electric generating units. Specifically, the EPA proposed state-specific rate-based goals for CO2emissions from the power sector, as well as guidelines for states to follow in developing plans to achieve the state-specific goals. On August 3, 2015, the EPAfinalized the CPP Rule and the Carbon Pollution Standards for New Power Plants.Numerous petitions challenging the CPP Rule have been consolidated into one case, West Virginia v. EPA. While the litigation is still ongoing at thecircuit court level, a mid-litigation application to the Supreme Court resulted in a stay of the CPP Rule. On September 27, 2016, an en banc panel of the U.S.Court of Appeals for the D.C. Circuit heard oral arguments in the case. The decision, originally expected in early 2017, has been stayed as a result of a March28, 2017 executive order directing the EPA to begin the process of reviewing and possibly rescinding the CPP Rule. The EPA filed a motion and the motionwas granted by the U.S. Court of Appeals for the D.C. Circuit requesting the stay while the EPA conducts their review of the CPP Rule. If the review does notresult in any rule changes, the U.S. Court of Appeals for the D.C. Circuit will rule on the legality of the CPP Rule. On October 16, 2017, the EPA formallyproposed repeal of the CPP, which relies on a re-interpretation of CAA 111(d), on which the CPP was originally premised.Similarly, various states and industry groups challenged the Carbon Pollution Standards for New Power Plants. That litigation has also been stayedfollowing the March 28, 2017 executive order.The current Administration’s executive order promoting energy independence and economic growth issued on March 28, 2017 requires the review ofexisting regulations that potentially burden the development or use of domestically produced energy resources. On October 25, 2017, the EPA issued a reportin compliance with the March 28, 2017 executive order recommending changes to the NAAQS and NSPS programs. It also recommended that the EPA’sregulations consider employment impacts and that the EPA develop a database of industry-knowledgeable contacts. The review of existing regulations maynot result in any changes and any changes made to existing regulations may not produce the intended favorable results desired by the new Administration.The executive order also directed the Council on Environmental Quality to rescind its final guidance entitled, “Final Guidance for Federal Departments andAgencies on Consideration of Greenhouse Gas Emissions and the Effects of Climate Change in National Environmental Policy Act Reviews.” The guidancepreviously directed agencies to consider proposed actions and their effects on climate change (GHG emissions would have been a key indicator beingassessed under any National Environmental Policy Act (“NEPA”) review). Such review considerations may have created additional delays or costs in anyNEPA review processes for energy producers and generators and may have prevented the acquisition of any necessary federal approvals for energy producersand generators.22Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Clean Water Act. The federal Clean Water Act (“CWA”) and corresponding state laws affect our coal operations by regulating discharges into surfacewaters. Permits requiring regular monitoring and compliance with effluent limitations and reporting requirements govern the discharge of pollutants intoregulated waters. The CWA and corresponding state laws include requirements for: improvement of designated “impaired waters” (i.e., not meeting statewater quality standards) through the use of effluent limitations; anti-degradation regulations which protect state designated “high quality/exceptional use”streams by restricting or prohibiting discharges; requirements to treat discharges from coal mining properties for non-traditional pollutants, such as chlorides,selenium and dissolved solids; requirements to minimize impacts and compensate for unavoidable impacts resulting from discharges of fill materials toregulated streams and wetlands; and requirements to dispose of produced wastes and other oil and gas wastes at approved disposal facilities. In addition, theSpill Prevention, Control and Countermeasure requirements of the CWA apply to all the Company’s operations that use or produce fluids and require theimplementation of plans to address any spills and the installation of secondary containment around all storage tanks. These requirements may cause us toincur significant additional costs that could adversely affect our operating results, financial condition and cash flows.However, on June 29, 2015, the EPA issued a final rule effective August 28, 2015, clarifying which waterways are subject to federal jurisdiction underthe Clean Water Act (the “2015 Clean Water Rule”), which imposed additional permitting obligations on our operations. On August 27, 2015, the DistrictCourt for the District of North Dakota blocked implementation of the rule in 13 states. On October 9, 2015, the U.S. Circuit Court of Appeals for the SixthCircuit blocked implementation of the rule nationwide. On February 28, 2017, Presidential Executive Order on “Restoring the Rule of Law, Federalism, andEconomic Growth by reviewing the ‘Waters of the United States’ Rule” was issued. In response, on June 27, 2017, the EPA, Department of the Army, and theArmy Corps of Engineers issued a rule proposing to re-codify the definition of “Waters of the United States” to the text that existed prior to the 2015 CleanWater Rule. The proposed rule provides certainty in the interim period until a subsequent rulemaking on the definition of “waters of the United States” canbe finalized. On January 22, 2018, the U.S. Supreme Court ruled that challenges to the Clean Water Rule are properly decided in federal district courts andnot federal courts of appeal. This decision implicates the nationwide injunction previously enacted by the Sixth Circuit, but has no impact on the currentAdministration’s efforts to replace the rulemaking. Additionally, on January 31, 2018, the EPA finalized a rule delaying the effective date of the 2015 CleanWater Rule for two years.In order to obtain a permit for certain coal mining activities, including the construction of coal refuse areas and slurry impoundments, an operator mustobtain a permit for the discharge of fill material from the U.S. Army Corps of Engineers and a discharge permit from the state regulatory authority under thestate counterpart to the CWA. Beginning in early 2009, the EPA took a number of initiatives that have resulted in delays and obstruction of the issuance ofsuch permits for surface mining operations in the Appalachian states, including Pennsylvania where the Pennsylvania Mining Complex is located. Increasedoversight of delegated state programmatic authority, coupled with individual permit review and additional requirements imposed by the EPA, has resulted indelays in the review and issuance of permits.Resource Conservation and Recovery Act. The federal Resource Conservation and Recovery Act (“RCRA”) and corresponding state laws andregulations affect coal mining by imposing requirements for the treatment, storage and disposal of hazardous wastes. Facilities at which hazardous wasteshave been treated, stored or disposed of are subject to corrective action orders issued by the EPA that could adversely affect our results, financial conditionand cash flows. In 2010, the EPA proposed options for the regulation of Coal Combustion Residuals from the electric power sector as either hazardous wasteor non-hazardous waste. On December 19, 2014, the EPA announced the first national regulations for the disposal of Coal Combustion Receivables fromelectric utilities and independent power producers under RCRA. On April 17, 2015, the EPA finalized these regulations under the solid waste provisions(Subtitle D) of RCRA and not the hazardous waste provisions (Subtitle C) which became effective on October 19, 2015. The EPA affirms in the preamble tothe final rule that “this rule does not apply to Coal Combustion Receivables placed in active or abandoned underground or surface mines.” Instead, “the U.S.Department of Interior and the EPA will address the management of Coal Combustion Receivables in mine fills in a separate regulatory action(s).” OnSeptember 14, 2017, EPA stated its intention to reconsider certain Coal Combustion Receivables provisions. It is unclear whether this reconsideration willresult in changes to the Coal Combustion Receivables regulations.On November 3, 2015, the EPA published the final rule Effluent Limitations Guidelines and Standards (“ELG”), revising the regulations for the SteamElectric Power Generating category which became effective on January 4, 2016. The rule sets the first federal limits on the levels of toxic metals in wastewaterthat can be discharged from power plants, based on technology improvements in the steam electric power industry over the last three decades. On September13, 2017, the EPA finalized a rule postponing certain compliance dates for specific waste streams subject to the effluent limitations for a period of twoyears.The combined effect of the Coal Combustion Receivables and ELG regulations has forced power generating companies to close existing ash ponds andwill likely force the closure of certain older existing coal burning power plants that cannot comply with the new standards.23Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Surface Mining Control and Reclamation Act. The federal Surface Mining Control and Reclamation Act (“SMCRA”) establishes minimum nationaloperational and reclamation standards for all surface mines as well as most aspects of underground mines. SMCRA requires that comprehensiveenvironmental protection and reclamation standards be met during the course of and following completion of mining activities. Permits for all miningoperations must be obtained from the U.S. Office of Surface Mining (“OSM”) or, where state regulatory agencies have adopted federally approved stateprograms under SMCRA, the appropriate state regulatory authority. States that operate federally approved state programs may impose standards which aremore stringent than the requirements of SMCRA and OSM's regulations and in many instances have done so. The Pennsylvania Mining Complex is locatedin states which have achieved primary jurisdiction for enforcement of SMCRA through approved state programs. In addition, SMCRA imposes a reclamationfee on all current mining operations, the proceeds of which are deposited in the Abandoned Mine Reclamation Fund, which is used to restore unreclaimedand abandoned mine lands mined before 1977. The current per ton fee is $0.12 per ton for underground mined coal. This fee is currently scheduled to be ineffect until September 30, 2021.Federal and state laws require bonds to secure our obligations to reclaim lands used for mining and to satisfy other miscellaneous obligations. Thesebonds are provided by us and are typically renewable on a yearly basis. Surety bond costs have increased while the market terms of surety bonds havegenerally become less favorable. It is possible that surety-bond issuers may refuse to renew bonds or may demand additional collateral. Any failure by us tomaintain, or our inability to acquire, surety bonds that are required by state and federal laws would have a material adverse effect on our ability to producecoal, which could adversely affect our business, financial condition, liquidity, results of operations and cash flows.Excess Spoil, Coal Mine Waste, Diversions, and Buffer Zones for Perennial and Intermittent Streams. The OSM has issued final amendments toregulations concerning stream buffer zones, stream channel diversions, excess spoil, and coal mine waste to comply with an order issued by the U.S. DistrictCourt for the District of Columbia on February 20, 2014, which vacated the stream buffer zone rule that was published December 12, 2008. On July 27, 2015,the OSM published the proposed Stream Protection Rule (“SPR”). After much debate and thousands of comments, the final SPR was published by the OSM inthe Federal Register on December 20, 2016. The final SPR requires the restoration of the physical form, hydrologic function, and ecological function of thesegment of a perennial or intermittent stream that a permittee mines through. Additionally, it requires that the post-mining surface configuration of thereclaimed mine site include a drainage pattern, including ephemeral streams, similar to the pre-mining drainage pattern, with exceptions for stability,topographical changes, fish and wildlife habitat, etc. The rule also requires the establishment of a 100-foot-wide streamside vegetative corridor of nativespecies (including riparian species, when appropriate) along each bank of any restored or permanently-diverted perennial, intermittent, or ephemeral stream.This rulemaking was nullified by Congress under the Congressional Review Act in February 2017.Health and Safety LawsMine Safety. Legislative and regulatory changes have required us to purchase additional safety equipment, construct stronger seals to isolate minedout areas, and engage in additional training. We have also experienced more aggressive inspection protocols and with new regulations the volume of civilpenalties has increased. Recent actions taken by federal and state governments include requiring:•the caching of additional supplies of self-contained self-rescuer devices underground;•the purchase and installation of electronic communication and personal tracking devices underground;•the purchase and installation of proximity detection devices on continuous miner machines;•the placement of refuge chambers, which are structures designed to provide refuge for groups of miners during a mine emergency when evacuationfrom the mine is not possible, which will provide breathable air for 96 hours;•the purchase of new fire resistant conveyor belting underground;•additional training and testing that creates the need to hire additional employees;•more stringent rock dusting requirements; and•the purchase of personal dust monitors for collecting respirable dust samples from certain miners.On October 2, 2015, the MSHA published proposed rules for underground coal mining operations concerning proximity detection systems for coalhauling machines and scoops. The rulemaking record for this proposed rule was closed on December 15, 2016, but on January 9, 2017, MSHA published anotice reopening the record and extending the comment period for this proposed rule for 30 days. On January 15, 2015, MSHA published a final rulerequiring underground coal mine operations to equip continuous mining machines, except full-face continuous mining machines, with proximity detectionsystems. The proximity detection system strengthens protection for miners by reducing the potential of pinning, crushing and striking hazards that result inaccidents involving life-threatening injuries and death. The final rule became effective March 15, 2015 and included a phased in schedule for newlymanufactured and in-service equipment.24Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.In 2010, MSHA rolled out the “End Black Lung, Act Now” initiative. As a result, MSHA implemented a new final rule on August 1, 2014 to lowerminers’ exposure to respirable coal mine dust including using the new Personal Dust Monitor technology. This final rule was implemented in three phases.The first phase began on August 1, 2014 and utilized the current gravimetric sampling device to take full shift dust samples from the current designatedoccupations and areas. It also required additional record keeping and immediate corrective action in the event of overexposure. The second phase began onFebruary 1, 2016 and required additional sampling for designated and other occupations using the new continuous personal dust monitor (“CPDM”)technology, which provides real time dust exposure information to the miner. CPDM equipment was purchased and was placed into service which wasrequired to meet compliance with the new rule. Dust Coordinators and Dust Technicians were hired in order to meet the staffing demand to managecompliance with the new rule. The final phase of the rule went into effect on August 1, 2016. The current respirable dust standard was reduced from 2.0 to1.5mg/m3 for designated occupations and from 1.0 to 0.5mg/m3 for Part 90 Miners. Black Lung Legislation. Under federal black lung benefits legislation, each coal mine operator is required to make payments of black lung benefits orcontributions to:•current and former coal miners totally disabled from black lung disease;•certain survivors of miners who have died from black lung disease; and•a trust fund for the payment of benefits and medical expenses to claimants whose last mine employment was before January 1, 1970, where noresponsible coal mine operator has been identified for claims (where a coal miner's last coal employment was after December 31, 1969), or where theresponsible coal mine operator has defaulted on the payment of such benefits. The trust fund is funded by an excise tax on U.S. production of up to$1.10 per ton for deep mined coal and up to $0.55 per ton for surface-mined coal, neither amount to exceed 4.4% of the gross sales price.The Patient Protection and Affordable Care Act (“PPACA”) of 2010 made two changes to the Federal Black Lung Benefits Act. First, it providedchanges to the legal criteria used to assess and award claims by creating a legal presumption that miners are entitled to benefits if they have worked at least15 years in underground coal mines, or in similar conditions, and suffer from a totally disabling lung disease. To rebut this presumption, a coal companywould have to prove that a miner did not have black lung or that the disease was not caused by the miner's work. Second, it changed the law so black lungbenefits will continue to be paid to dependent survivors when the miner passes away, regardless of the cause of the miner's death. The changes have increasedthe cost to us of complying with the Federal Black Lung Benefits Act. In addition to the federal legislation, we are also liable under various state statutes forour portion of black lung claims.Other State and Local Laws Related to Our Coal BusinessOwnership of Coal Rights. The Company acquires ownership or leasehold rights to coal properties prior to conducting operations on those properties.As is customary in the coal industry, we have generally conducted only a summary review of the title to coal rights that are not in our development plans, butwhich we believe we control. This summary review is conducted at the time of acquisition or as part of a review of our land records to determine control ofcoal rights. Given our experience as a coal producer, we believe we have a well-developed ownership position relating to our coal control. Prior to thecommencement of development operations on coal properties, we conduct a thorough title examination and perform curative work with respect to significantdefects. We generally will not commence operations on a property until we have cured any material title defects on such property. We are typicallyresponsible for the cost of curing any title defects. We have completed title work on substantially all of our coal producing properties and believe that wehave satisfactory title to our producing properties in accordance with standards generally accepted in the industry.PermitsEnvironmental Proceedings. On September 4, 2017, the Pennsylvania Department of Environmental Protection (“DEP”) provided notice that itrequired additional time to review the technical merits of a prior permit submission (the “Application”) for continued longwall mining within the 4L panelunder Polen Run at the Bailey Mine, in light of a recent Environmental Hearing Board (the “EHB”) decision, which is discussed further below. As a result, thelongwall was idled at that time and workforce adjustments were made, pending further developments with the DEP and permit submission. This was the firsttime in the 35-year history of the Bailey Mine that a needed mining permit had not been received in a timely fashion.As noted above, the DEP’s consideration of the Application related to part of an August 2017 EHB decision that impacts the application of DEP-required stream mitigation techniques, specifically the installation of synthetic stream-channel liner systems. The EHB is the quasi-judicial agency that hearsappeals of DEP permitting decisions. The EHB decision held, in part, that the requirement to install a stream-channel liner system constituted impermissiblepollution under applicable environmental laws. That determination had direct and specific implications for the Application with respect to undermining oneparticular stream,25Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Polen Run, in the panel for which the DEP was proposing to require the installation of the stream-channel liner system as a mitigation measure. The DEPrequested alternative mitigation measures for consideration, which CNX supplied. Given the potential for a protracted review, CNX felt it prudent totemporarily idle the longwall and dismantle and relocate it to another panel where it held an operating permit.To that end, on September 18, 2017, CNX issued a press release stating that the DEP was requiring additional time to evaluate the approval of theApplication and that, as a result of this ongoing evaluation, CNX determined to move the longwall to another permitted panel in order to resume operations.The longwall was moved and resumed operations the first week of October 2017. CNX management implemented several measures to mitigate the productionimpact from this delay, including working additional unscheduled shifts as compared to the previous five and a half day schedule. Company managementcontinued to take steps to mitigate the production impact from this delay and worked closely with the necessary agencies to obtain operating permits toallow for continuity of longwall mining operations. In November 2017, the DEP issued permitting authorizing revised longwall mining plans in the 5L Paneland longwall mining in Panels 6L through 8L.The Application also sought authorization for continued longwall mining under the Polen Run stream in the Bailey Mine 5L Panel. Additionally, theApplication has been revised to conform to the DEP’s interpretation of the August 2017 EHB decision. The Application proposes to conduct streammitigation (grouting) through techniques approved by the DEP under existing permits. The Application remains under the DEP’s review with respect tolongwall mining under the Polen Run stream in the Bailey Mine 5L panel.The PAMC operates five total longwalls, with many of the approved permits as far out as ten years in advance.EmployeesAt December 31, 2017, we had 1,692 employees. Currently, 24 CONSOL Marine Terminal employees are in negotiations for representation by a laborunion or collective bargaining agreement.Available InformationWe maintain a website at www.consolenergy.com. We will make available, free of charge, on this website our future annual reports on Form 10-K,quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of theExchange Act, as soon as reasonably practicable after such reports are available, electronically filed with, or furnished to the Securities and ExchangeCommission (“SEC”), and are also available at the SEC’s website www.sec.gov. Apart from SEC filings, we also use our website to publish information whichmay be important to investors, such as presentations to analysts.26Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ITEM 1A.Risk FactorsYou should carefully consider the following risks and other information in this Annual Report on Form 10-K in evaluating us and our common stock. Therisk factors generally have been separated into three groups: risks related to our business, risks related to the separation and risks related to our commonstock and the securities market.Any of the following risks could materially and adversely affect our financial condition, results of operations or cash flows. Our operations could beaffected by various risks, many of which are beyond our control. Based on current information, we believe that the following list identifies the mostsignificant risk factors that could affect our financial condition, results of operations or cash flows. There may be additional risks and uncertainties thatadversely affect our financial condition, results of operations or cash flows in the future that are not presently known, are not currently believed to bematerial, or are not identified below because they are common to all businesses. Past financial performance may not be a reliable indicator of futureperformance and historical trends should not be used to anticipate results or trends in future periods. For more information, see “Forward-LookingStatements.”Risks Related to Our BusinessDeterioration in the global economic conditions in any of the industries in which our customers operate, or a worldwide financial downturn, or negativecredit market conditions may have a materially adverse effect on our liquidity, results of operations, cash flows, business and financial condition that wecannot predict.Economic conditions in a number of industries in which our customers operate, such as electric power generation and steelmaking, substantially deterioratedin recent years and reduced the demand for coal. The general economic challenges for some of our customers continued in 2017 and the outlook is uncertain.In addition, liquidity is essential to our business and developing our assets. Renewed or continued weakness in the economic conditions of any of theindustries we serve or are served by our customers could adversely affect our business, financial condition, results of operations, cash flows and liquidity in anumber of ways. For example:•demand for electricity in the United States is impacted by industrial production, which if weakened would negatively impact the revenues, marginsand profitability of our coal business;•demand for metallurgical coal depends on steel demand in the United States and globally, which, if weakened, would negatively impact therevenues, margins and profitability of our metallurgical coal business including our ability to sell our thermal coal as higher priced high volatilemetallurgical coal;•the tightening of credit or lack of credit availability to our customers could adversely affect our ability to collect our trade receivables;•our ability to access the capital markets may be restricted at a time when we would like, or need, to raise capital for our business including forexploration and/or development of our coal reserves, or for strategic acquisitions of assets; and•a decline in our creditworthiness, which may require us to post letters of credit, cash collateral, or surety bonds to secure certain obligations, all ofwhich would have an adverse effect on our liquidity.Prices for coal are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demandavailable for our coal, weather and the price and availability of alternative fuels. A substantial or extended decline in the prices we receive for our coalwill adversely affect our business, results of operations, financial condition and cash flows.Our financial results are significantly affected by the prices we receive for our coal and depend, in part, on the margins that we receive on sales of our coal.Our margins reflect the price we receive for our coal over our cost of producing and transporting our coal. Prices and quantities under our multi-year salescontracts are generally based on expectations of future coal prices at the time the contract is entered into, renewed, extended or re-opened. The expectation offuture prices for coal depends upon many factors. In addition, demand can fluctuate widely due to a number of matters beyond our control, including:•the market price for coal;•changes in the consumption pattern of industrial consumers, electricity generators and residential end-users of electricity;•weather conditions in our markets which affect the demand for thermal coal (for example, the unusually warm 2015 - 2016 winter left utilities withlarge coal stockpiles and depressed the demand for thermal coal);•competition from other coal suppliers;•the price and availability of alternative fuels and sources for electricity generation, especially natural gas and renewable energy sources;•with respect to thermal coal, the price and availability of natural gas and the price and supply of imported liquefied natural gas;27Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.•technological advances affecting energy consumption;•the costs, availability and capacity of transportation infrastructure;•overall domestic and global economic conditions, including the supply of and demand for domestic and foreign coal;•international developments impacting supply of metallurgical coal, including supply side reforms promulgated in China, and continued expectedgrowth in demand for seaborne metallurgical coal in India; and•the impact of domestic and foreign governmental laws and regulations, including environmental and climate change regulations and regulationsaffecting the coal mining industry and coal-fired power plants, and delays in the receipt of, failure to receive, failure to maintain or revocation ofnecessary governmental permits.The coal industry also faces concerns with respect to oversupply from time to time. For example, abnormally mild winter weather caused U.S. power plantcoal stockpiles to reach 196 million tons at the end of December 2015, putting them 44 million tons (29%) above the previous year-end total. Immediatelythereafter, U.S. coal exports decreased by 32% during the first half of 2016 compared with the first half of 2015, as global supply exceeded demand for boththermal and metallurgical coal. These factors impacted overall demand and pricing for U.S. coals, contributing to a 19% decline in U.S. coal production from2015 to 2016. The domestic and international supply-demand fundamentals for coal became more balanced in 2017 versus 2016, as domestic power plantcoal inventories were reduced to 143 million tons, or 27 million tons below year-ago levels, as of the end of November 2017, and U.S. coal exports were upby 67% in January-November 2017 versus the same period in 2016. As a result, our average sales price per ton sold increased by 5% from 2016 to 2017, afterhaving fallen by 23% from 2015 to 2016. Although these latest results suggest that prices for our product have begun to rebound, a substantial or extendeddecline in the prices we receive for our coal could adversely affect our business, results of operations, financial condition, cash flows and liquidity.Foreign currency fluctuations could adversely affect the competitiveness of our coal abroad.We compete in international markets against coal produced in other countries. Coal is sold internationally in U.S. dollars and, as a result, general economicconditions in foreign markets and changes in foreign currency exchange rates may provide our foreign competitors with a competitive advantage. As a result,mining costs in competing producing countries may be reduced in U.S. dollar terms based on currency exchange rates, providing an advantage to foreigncoal producers. If our competitors’ currencies decline against the U.S. dollar or against our foreign customers’ local currencies, those competitors may be ableto offer lower prices for coal to our customers. Furthermore, if the currencies of our overseas customers were to significantly decline in value in comparison tothe U.S. dollar, those customers may seek decreased prices for the coal we sell to them. Consequently, currency fluctuations could adversely affect thecompetitiveness of our products in international markets, which could have a material adverse effect on our business, financial condition, results ofoperations, and cash flows.Any significant downtime of our major pieces of mining equipment, including our central preparation plant, could impair our ability to supply coal to ourcustomers and materially and adversely affect our results of operations.We depend on several major pieces of mining equipment to produce and transport our coal, including, but not limited to, longwall mining systems,continuous mining units, our central preparation plant and related facilities, conveyors and transloading facilities. If any of these pieces of equipment orfacilities suffered major damage or were destroyed by fire, abnormal wear, flooding, incorrect operation or otherwise, we may be unable to replace or repairthem in a timely manner or at a reasonable cost, which would impact our ability to produce and transport coal and materially and adversely affect ourbusiness, results of operations, financial condition and cash flows.All of the coal from our mines is processed at a single, central-preparation plant and loaded on to rail cars using a dual-batch train loadout facility. If either ofour central preparation plant or train loadout facility suffers extended downtime, including from major damage, or is destroyed, our ability to process anddeliver coal to our customers would be materially impacted, which would materially adversely affect our business, results of operations, financial condition,and cash flows.If our coal customers do not extend existing contracts or do not enter into new multi-year coal sales contracts on favorable terms, profitability of ouroperations could be adversely affected.During the year ended December 31, 2017, approximately 68% of the coal the Company produced was sold under multi-year sales contracts. If a substantialportion of our multi-year sales contracts are modified or terminated, if force majeure is exercised, or if we are unable to replace or extend the contracts or newcontracts are priced at lower levels, our profitability would be adversely affected. In addition, if customers refuse to accept shipments of our coal for whichthey have existing contractual obligations, our revenues will decrease and we may have to reduce production at our mines until such customers honor theircontractual obligations and begin accepting shipments of our coal again.The profitability of our multi-year sales coal supply contracts depends on a variety of factors, which vary from contract to contract and fluctuate during thecontract term, including our production costs and other factors. Price changes, if any, provided in long-28Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.term supply contracts may not reflect our cost increases, and therefore, increases in our costs may reduce our profit margins. In addition, during periods ofdeclining market prices, provisions in our long-term coal contracts for adjustment or renegotiation of prices and other provisions may increase our exposureto short-term coal price and electric power price volatility. As a result, we may not be able to obtain long-term agreements at favorable prices compared toeither market conditions, as they may change from time to time, or our cost structure, which may reduce our profitability.The loss of, or significant reduction in, purchases by our largest coal customers or the failure of any of our customers to buy and pay for coal theycommitted to purchase could adversely affect our business, financial condition, results of operations and cash flows.We derive a significant portion of our revenues from two customers: Duke Energy and XCoal. For the year ended December 31, 2017, Duke Energy andXCoal each accounted for over 10% of our total coal sales revenue and aggregated approximately 31% of our coal sales in fiscal year 2017. At January 1,2018, we had nine coal supply agreements with Duke Energy and XCoal that expire at various times in 2018 and 2019. There are inherent risks whenever asignificant percentage of total revenues are concentrated with a limited number of customers. Revenues from our largest customers may fluctuate from time totime based on numerous factors, including market conditions, which may be outside of our control. If any of our largest customers experience decliningrevenues due to market, economic or competitive conditions, we could be pressured to reduce the prices that we charge for our coal, which could have anadverse effect on our margins, profitability, cash flows and financial position. Additionally, one of our customers is currently under bankruptcy protection,and, thus, may be unable to purchase coal from us at the same levels it did prior to entering into bankruptcy protection. If any customers were to significantlyreduce their purchases of coal from us, including by failing to buy and pay for coal they committed to purchase in sales contracts, our business, financialcondition, results of operations and cash flows could be adversely affected.Our ability to collect payments from our customers could be impaired if their creditworthiness declines or if they fail to honor their contracts with us.Our ability to receive payment for coal sold and delivered depends on the continued creditworthiness of our customers. Many utilities have sold their powerplants to non-regulated affiliates or third parties that may be less creditworthy, thereby increasing the risk we bear with respect to payment default. These newpower plant owners may have credit ratings that are below investment grade. In addition, some of our customers have been adversely affected by the currentindustry downturn, which may impact their ability to fulfill their contractual obligations. Competition with other coal suppliers could force us to extendcredit to customers and on terms that could increase the risk we bear with respect to payment default. We also have contracts to supply coal to energy tradingand brokering customers under which those customers sell coal to end users. If the creditworthiness of our energy trading and brokering customers declines,we may not be able to collect payment for all coal sold and delivered to these customers. If the creditworthiness of our customers declines significantly, ourbusiness could be adversely affected. In addition, if customers refuse to accept shipments of our coal for which they have an existing contractual obligation,our revenues will decrease and we may have to reduce production at our mines until our customers’ contractual obligations are honored. Our inability tocollect payment from counterparties to our sales contracts may have a materially adverse effect on our business, financial condition, results of operations andcash flows.Our inability to acquire additional coal reserves that are economically recoverable may have a material adverse effect on our future profitability.Our profitability depends substantially on our ability to mine, in a cost-effective manner, coal reserves that possess the quality characteristics that ourcustomers desire. Because our reserves decline as we mine our coal, our future profitability depends upon our ability to acquire additional coal reserves thatare economically recoverable to replace the reserves we produce. If we fail to acquire or develop sufficient additional reserves over the long term to replacethe reserves depleted by our production, our existing reserves will eventually be depleted, which may have a material adverse effect on our business, financialcondition, results of operations and cash flows.Decreases in demand for electricity and changes in coal consumption patterns of U.S. electric power generators could adversely affect our business.Our business is closely linked to domestic demand for electricity, and any changes in coal consumption by U.S. electric power generators would likelyimpact our business over the long term. According to the EIA, in 2017, the domestic electric power sector accounted for approximately 93% of total U.S. coalconsumption. In 2017, the Pennsylvania Mining Complex sold approximately 65% of its coal to U.S. electric power generators, and we have annual or multi-year contracts in place with these electric power generators for a significant portion of our future production. The amount of coal consumed by the electricpower generation industry is affected by, among other things:29Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.•general economic conditions, particularly those affecting industrial electric power demand, such as a downturn in the U.S. economy and financialmarkets;•overall demand for electricity;•indirect competition from alternative fuel sources for power generation, such as natural gas, fuel oil, nuclear, hydroelectric, wind and solar power,and the location, availability, quality and price of those alternative fuel sources;•environmental and other governmental regulations, including those impacting coal-fired power plants; and•energy conservation efforts and related governmental policies.For example, the relatively recent low price of natural gas has resulted, in some instances, in domestic electric power generators increasing natural gasconsumption while decreasing coal consumption. Federal and state mandates for increased use of electricity derived from renewable energy sources couldaffect demand for our coal. Such mandates, combined with other incentives to use renewable energy sources, such as tax credits, could make alternative fuelsources more competitive with coal. A decrease in coal consumption by the electric power generation industry could adversely affect the price of coal, whichcould have a material adverse effect on our business, financial condition, results of operations and cash flows.According to the EIA, although electricity demand fell in only three years between 1950 and 2007, it declined in five of the eight years between 2008 and2015. The largest drop in electricity demand occurred in 2009, primarily as the result of the steep economic downturn from late 2007 through 2009, whichled to a large drop in electricity sales in the industrial sector. Other factors, such as efficiency improvements associated with new appliance standards in thebuildings sectors and overall improvement in the efficiency of technologies powered by electricity, have slowed electricity demand growth and maycontribute to slower growth in the future, even as the U.S. economy continues its recovery. Further decreases in the demand for electricity, such as decreasesthat could be caused by a worsening of current economic conditions, a prolonged economic recession or other similar events, could have a material adverseeffect on the demand for coal and on our business over the long term.Changes in the coal industry that affect our customers, such as those caused by decreased electricity demand and increased competition, could also adverselyaffect our business. Indirect competition from natural gas-fired plants that are relatively more efficient, less expensive to construct and less difficult to permitthan coal-fired plants has the most potential to displace a significant amount of coal-fired electric power generation in the near term, particularly from older,less efficient coal-fired powered generators. For example, according to the EIA, installed U.S. natural gas-fired net summer generating capacity increased byabout 7 gigawatts from 2014-2015, while installed coal-fired net summer generating capacity decreased by about 19 gigawatts over the same period.Additionally, there are currently no new coal-fired plants under construction in the United States and there is no guarantee that new coal-fired power plantswill be constructed in the United States. If no new coal-fired power plants are constructed in the United States, the Company could be forced to rely moreheavily on foreign customers to purchase its coal. Finally, uncertainty caused by federal and state regulations could cause coal customers to be uncertain oftheir coal requirements in future years, which could adversely affect our ability to sell coal to our customers under multi-year sales contracts.The availability and reliability of transportation facilities and fluctuations in transportation costs could affect the demand for our coal, and anysignificant damage to the CONSOL Marine Terminal that impacts its use could impair our ability to supply coal to our customers.Transportation logistics play an important role in allowing us to supply coal to our customers. Any significant delays, interruptions or other limitations onthe ability to transport our coal could negatively affect our operations. Our coal is transported from the Pennsylvania Mining Complex by rail, truck or acombination of these methods. To reach markets and end customers, our coal may also be transported by barge or by ocean vessels loaded at terminals,including our CONSOL Marine Terminal. Disruption of transportation services because of weather-related problems, strikes, lock-outs, terrorism,governmental regulation, third-party action or other events could temporarily impair our ability to supply coal to customers and adversely affect ourprofitability. In addition, transportation costs represent a significant portion of the delivered cost of coal and, as a result, the cost of delivery is a critical factorin a customer’s purchasing decision. Increases in transportation costs, including increases resulting from emission control requirements and fluctuation in theprice of diesel fuel and demurrage, could make our coal less competitive. Any disruption of the transportation services we use or increase in transportationcosts could have a materially adverse effect on our business, financial condition, results of operations and cash flows. Disruption in shipment levels overlonger periods of time at the CONSOL Marine Terminal could cause our customers to look to other sources for their coal needs, negatively affecting ourrevenues and results of operations.Competition within the coal industry may adversely affect our ability to sell coal. Increased competition or a loss of our competitive position couldadversely affect our sales of, or our prices for, our coal, which could impair our profitability.We compete with other producers primarily on the basis of price, coal quality, transportation costs and reliability of delivery. We compete with coalproducers in various regions of the United States and with some foreign coal producers for domestic sales30Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.primarily to electric power generators. We also compete with both domestic and foreign coal producers for sales in international markets. Demand for our coalby our principal customers is affected by the delivered price of competing coals, other fuel supplies and alternative generating sources, including nuclear,natural gas, oil and renewable energy sources, such as hydroelectric, wind and solar power.We sell coal to foreign electricity generators and to the more specialized metallurgical coal market, both of which are significantly affected by internationaldemand and competition. Competition from other producers may or may not adversely affect us in the future. The coal industry has experiencedconsolidation in recent years, including consolidation among some of our major competitors. As a result, a substantial portion of coal production is fromcompanies that have significantly greater resources than we do. Current or further consolidation in the coal industry or current or future bankruptcyproceedings of coal competitors may or may not adversely affect us. In addition, increases in coal prices could encourage existing producers to expandcapacity or could encourage new producers to enter the market. If overcapacity results, the prices of and demand for our coal could significantly decline,which could have a material adverse effect on our business, financial condition, results of operations and cash flows.In addition, we face competition from foreign producers that sell their coal in the export market. Potential changes to international trade agreements, tradeconcessions or other political and economic arrangements may benefit coal producers operating in countries other than the United States. We may beadversely impacted on the basis of price or other factors with companies that in the future may benefit from favorable foreign trade policies or otherarrangements.The characteristics of coal may make it costly for electric power generators and other coal users to comply with various environmental standardsregarding the emissions of impurities released when coal is burned which could cause utilities to replace coal-fired power plants with alternative fuels. Inaddition, various incentives have been proposed to encourage the generation of electricity from renewable energy sources. A reduction in the use of coalfor electric power generation could decrease the volume of our domestic coal sales and adversely affect our results of operations.Coal contains impurities, including sulfur, mercury, chlorine and other elements or compounds, many of which are released into the air along with fineparticulate matter and carbon dioxide when it is burned. Complying with regulations on these emissions can be costly for electric power generators. Forexample, in order to meet the federal Clean Air Act limits for sulfur dioxide emissions from electric power plants, coal users will need to install scrubbers, usesulfur dioxide emission allowances (some of which they may purchase) or switch to other fuels. Each option has limitations. Lower sulfur coal may be morecostly to purchase on an energy basis than higher sulfur coal depending on mining and transportation costs. The cost of installing scrubbers is significant andemission allowances may become more expensive as their availability declines. Switching to other fuels may require expensive modification of existingplants. Because higher sulfur coal currently accounts for a significant portion of our sales, the extent to which electric power generators switch to alternativefuel could materially affect us. Recent EPA rulemaking proceedings requiring additional reductions in permissible emission levels of impurities by coal-firedplants will likely make it more costly to operate coal-fired electric power plants and may make coal a less attractive fuel alternative for electric powergeneration in the future. Examples are (i) implementation of the Cross-State Air Pollution Rule to require reductions of seasonal nitrogen oxides emissionsfrom power plants in the eastern United States to address ozone pollution; and (ii) the Utility Maximum Achievable Control Technology rule, better knownas the Mercury and Air Toxics Standard rule, which included more stringent new source performance standards for particulate matter, mercury, sulfur dioxideand nitrogen oxides, for new and existing coal-fired power plants. The rule was rejected by the U.S. Supreme Court on June 29, 2015 and sent back to theD.C. Circuit Court to determine whether to remand and allow the EPA to address the rule’s deficiencies or to vacate and nullify the rule; nevertheless mostcoal-fired electric power generators have already taken steps to comply with the rule. On April 18, 2017 the EPA asked the Court to delay arguments overMATS to allow the Trump Administration time to fully review the findings. On April 21, 2017, the Court granted the requested stay.Apart from actual and potential regulation of emissions, water use, waste water discharge and solid waste management from coal-fired plants, state and federalmandates for increased use of electricity from renewable energy sources could have an impact on the market for our coal. Several states have enactedlegislative mandates requiring electricity suppliers to use renewable energy sources to generate a certain percentage of power. There have been numerousproposals to establish a similar uniform, national standard although none of these proposals have been enacted to date. Possible advances in technologiesand incentives, such as tax credits, to enhance the economics of renewable energy sources could make these sources more competitive with coal. Anyreductions in the amount of coal consumed by domestic electric power generators as a result of current or new standards for the emission of impurities orincentives to switch to alternative fuels or renewable energy sources could reduce the demand for our coal, thereby reducing our revenues and adverselyaffecting our business and results of operations.31Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Regulation of greenhouse gas emissions may increase our operating costs and reduce the value of our coal assets and such regulation, as well asuncertainty concerning such regulation could adversely impact the market for coal, as well as for our securities.While climate change legislation in the U.S. is unlikely in the next several years, the issue of global climate change continues to attract considerable publicand scientific attention with widespread concern about the impacts of human activity, especially the emissions of GHGs such as carbon dioxide and methane.Combustion of fossil fuels, such as the coal we produce, results in the creation of carbon dioxide emissions into the atmosphere by coal end-users, such ascoal-fired electric power generation plants. Numerous proposals have been made and are likely to continue to be made at the international, national, regionaland state levels of government that are intended to limit emissions of GHGs. Several states have already adopted measures requiring reduction of GHGswithin state boundaries. Other states have elected to participate in voluntary regional cap-and-trade programs like the Regional Greenhouse Gas Initiative inthe northeastern U.S. Additionally, increasing attention to climate change risk has resulted in an increased possibility of governmental investigations and,potentially, private litigation against the Company.The Obama Administration laid out the Climate Action Plan to limit emissions of CO2 from coal-fired and natural gas-fired power plants. The EPA proposednumerous regulatory actions to address CO2, including New Source Performance Standards for CO2 from both new power plants and existing andmodified/reconstructed power plants. The agency’s CPP Rule, which went into effect on December 22, 2015, set state-specific rate-based goals for CO2emissions from existing fossil fuel-fired electric generating units, and created emission guidelines for states to follow in developing plans to addressgreenhouse gas emissions from existing fossil fuel-fired electric generating units. Numerous petitions challenging the CPP Rule were consolidated into onecase, West Virginia v. EPA. While the litigation was still ongoing at the circuit court level, a mid-litigation application to the Supreme Court resulted in astay of the CPP Rule. On September 27, 2016, an en banc panel of the U.S. Court of Appeals for the D.C. Circuit heard oral arguments in the case. Thedecision, originally expected in early 2017, has been stayed as a result of a March 28, 2017 executive order directing the EPA to begin the process ofreviewing and possibly rescinding the CPP Rule. The EPA filed a motion and the motion was granted by the U.S. Court of Appeals for the D.C. Circuitrequesting the stay while the EPA conducts their review of the CPP Rule. If the review does not result in any rule changes, the U.S. Court of Appeals for theD.C. Circuit will rule on the legality of the CPP Rule. On October 16, 2017, the EPA proposed a new rule which, if finalized, would rescind the CPP Rule.The current Administration’s executive order promoting energy independence and economic growth issued on March 28, 2017 requires the review ofexisting regulations that potentially burden the development or use of domestically produced energy resources. The review of existing regulations may notresult in any changes and any changes made to existing regulations may not produce the intended favorable results desired by the new Administration. Theexecutive order also directed the Council on Environmental Quality to rescind its final guidance entitled, “Final Guidance for Federal Departments andAgencies on Consideration of Greenhouse Gas Emissions and the Effects of Climate Change in National Environmental Policy Act (NEPA) Reviews.” Theguidance previously directed agencies to consider proposed actions and their effects on climate change (GHG emissions would have been a key indicatorbeing assessed under any NEPA review). Such review considerations may have created additional delays or costs in any NEPA review processes for energyproducers and generators and may have prevented the acquisition of any necessary federal approvals for energy producers and generators.Internationally, the Kyoto Protocol, which set binding emission targets for developed countries (which was not ratified by the United States) was nominallyextended past its expiration date of December 2012 with a requirement for a new legal construct to be put into place by 2015. In December 2015, the UnitedNations Climate Change Conference was held and an agreement was reached between the countries participating in the conference, including the UnitedStates, to limit global warming to less than 2 degrees Celsius (3.6° Fahrenheit) compared to pre-industrial levels. This agreement, known as the ParisAgreement, calls for zero net anthropogenic greenhouse gas emission to be reached during the second half of the 21st century. Each party is to prepare a planon its contributions to reach this goal; each plan is to be filed in a publicly available registry. The Paris Agreement does not create any binding obligationsfor nations to limit their GHG emissions but rather includes pledges to voluntarily limit or reduce future emissions. Although the United States became aparty to the Paris Agreement in April 2016, the current Administration subsequently terminated its participation in June 2017. However, the Paris Agreementstipulates that participating countries must wait four years before withdrawing from the agreement.Additionally, coalbed methane must be expelled from our underground coal mines for mining safety reasons and is vented into the atmosphere when the coalis mined. If regulation of GHG emissions does not exempt the release of coalbed methane, we may have to further reduce our methane emissions, pay highertaxes, incur costs to purchase credits that permit us to continue operations as they now exist at our underground coal mines or perhaps curtail coalproduction. In 2010, the EPA declined a petition to regulate methane emissions from coal mines, and on May 13, 2014 the U.S. Court of Appeals upheld theEPA’s denial of the petition.32Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Apart from governmental regulation, investment banks based both domestically and internationally have announced that they have adopted climate changeguidelines for lenders. The guidelines require the evaluation of carbon risks in the financing of electric power generation plants which may make it moredifficult for utilities to obtain financing for coal-fired plants.Adoption of comprehensive legislation or regulation focusing on GHG emission reductions for the United States or other countries where we sell coal, or theinability of utilities to obtain financing in connection with coal-fired plants, may make it more costly to operate fossil fuel fired (especially coal-fired)electric power generation plants and make fossil fuels less attractive for electric utility power plants in the future. Depending on the nature of the regulationor legislation, natural gas-fueled power generation could become more economically attractive than coal-fueled power generation. Apart from actualregulation, uncertainty over the extent of regulation of GHG emissions may inhibit utilities from investing in the building of new coal-fired plants to replaceolder plants or investing in the upgrading of existing coal-fired plants. Any reduction or substantial delay in the amount of coal consumed by domesticelectric power generators as a result of actual or potential regulation of greenhouse gas emissions could decrease demand for our fossil fuels, thereby reducingour revenues and materially and adversely affecting our business and results of operations. Our customers may also have to invest in carbon dioxide captureand storage technologies in order to burn coal and comply with future GHG emission standards.In addition, there have also been efforts in recent years affecting the investment community, including investment advisers, sovereign wealth funds, publicpension funds, universities and other groups, promoting the divestment of fossil fuel equities and also pressuring lenders to limit funding to companiesengaged in the extraction of fossil fuel reserves. The impact of such efforts may adversely affect the demand for and price of securities issued by us, andimpact our access to the capital and financial markets.Environmental regulations introduce uncertainty that could adversely impact the market for coal with potential short and long-term liabilities.The Company utilizes certain pipelines in connection with its coal businesses. Mitigation permits from the Army Corps of Engineers are typically requiredfor certain impacts these pipelines cause to streams and wetlands. On June 29, 2015 the EPA promulgated a proposed rule called Definition of ‘Waters of theUnited States’ Under the Clean Water Act. The rule expanded the scope of the CWA to include previously non-jurisdictional streams, wetlands, and waters,making these areas jurisdictional inter-coastal waters of the U.S. On August 27, 2015, the District Court of North Dakota blocked implementation of the rulein 13 states prior to the rule’s effective date of August 28, 2015. On October 9, 2015, the Court of Appeals for the Sixth Circuit blocked implementation ofthe rule nationwide. On February 28, 2017, Presidential Executive Order on Restoring the Rule of Law, Federalism, and Economic Growth by reviewing the‘Waters of the United States’ Rule was issued. In response, on June 27, 2017, the EPA, Department of the Army, and the Army Corps of Engineers issued a ruleproposing to re-codify the definition of waters of the United States to the text that existed prior to the 2015 Clean Water Rule. The proposed rule providescertainty in the interim period until a subsequent rulemaking on the definition of waters of the United States can be finalized. On January 22, 2018, the U.S.Supreme Court ruled that challenges to the rule are properly heard by federal district courts and not federal courts of appeal. This decision implicates thenationwide injunction previously enacted by the Sixth Circuit, but has no impact on the current Administration’s efforts to replace the rulemaking.Management and regulation of point source discharges covered under the National Pollutant Discharge Eliminations System (“NPDES”) of the CWA haveundergone recent changes and proposed changes at both the state and federal level that have the potential to affect the long-term treatment and discharge ofwater from coal mines. CWA section 304(b) requires the EPA to annually review and, if appropriate, revise Effluent Guidelines. States are required by theCWA to conduct a comprehensive review of the state water quality standards every three years. On December 23, 2016, the EPA published a draft Field-BasedMethods for Developing Aquatic Life Criteria for Specific Conductivity, which could impact NPDES permits with conductivity limits. However, this draftdocument is also under review pursuant to Executive Order 13783.Our business involves many hazards and operating risks, some of which may not be fully covered by insurance. The occurrence of a significant accident orother event that is not fully insured could curtail our operations and have a material adverse effect on our results of operations, financial condition andcash flows.Our coal mining operations are underground mines. Underground mining and related processing activities present inherent risks of injury to persons anddamage to property and equipment. Our mines are subject to a number of operating risks that could disrupt operations, decrease production and increase thecost of mining at particular mines for varying lengths of time thereby adversely affecting our operating results. In addition, if an operating risk occurs in ourmining operations, we may not be able to produce sufficient amounts of coal to deliver under our multi-year coal contracts. Our inability to satisfycontractual obligations could result in our customers initiating claims against us or canceling their contracts. The operating risks that may have a significantimpact on our coal operations include:33Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.•variations in thickness of the layer, or seam, of coal;•adverse geological conditions, including amounts of rock and other natural materials intruding into the coal seam that could affect the stability ofthe roof and the side walls of the mine - for example, unit costs were negatively impacted in 2017 and 2016 due to adverse geological conditions atEnlow Fork Mine, primarily related to sandstone intrusions, which resulted in reduced coal production at that mine;•environmental hazards;•equipment failures or unexpected maintenance problems;•fires or explosions, including as a result of methane, coal, coal dust or other explosive materials and/or other accidents;•inclement or hazardous weather conditions and natural disasters or other force majeure events;•seismic activities, ground failures, rock bursts or structural cave-ins or slides;•delays in moving our longwall equipment;•railroad derailments;•security breaches or terroristic acts; and•other hazards that could also result in personal injury and loss of life, pollution and suspension of operations.The occurrence of any of these risks at our coal mining operations could adversely affect our ability to conduct our operations or result in substantial loss tous as a result of claims for:•personal injury or loss of life;•damage to and destruction of property, natural resources and equipment, including our coal properties and our coal production or transportationfacilities;•pollution and other environmental damage to our properties or the properties of others;•potential legal liability and monetary losses;•regulatory investigations and penalties;•suspension of our operations; and•repair and remediation costs.In addition, the occurrence of any of these events in our coal mining operations which prevents our delivery of coal to a customer and which is not excusableas a force majeure event under our coal sales agreement, could result in economic penalties, suspension or cancellation of shipments or ultimatelytermination of the coal sales agreement.Although we maintain insurance for a number of risks and hazards, we may not be insured or fully insured against the losses or liabilities that could arise froma significant accident in our coal operations. We may elect not to obtain insurance for any or all of these risks if we believe that the cost of availableinsurance is excessive relative to the risks presented. In addition, pollution and environmental risks generally are not fully insurable. Moreover, a significantmine accident could potentially cause a mine shutdown. The occurrence of an event that is not fully covered by insurance could have a material adverseeffect on our business, financial condition, results of operations and cash flows.In addition, if any of the foregoing changes, conditions or events occurs and is not excusable as a force majeure event, any resulting failure on our part todeliver coal to the purchaser under our contracts could result in economic penalties, suspension or cancellation of shipments or ultimately termination of theagreement, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows. All of our mines are part of a single mining complex and are exclusively located in the Northern Appalachian Basin, making us vulnerable to risksassociated with operating in a single geographic area.All of our operations are conducted at a single mining complex located in the Northern Appalachian Basin in southwestern Pennsylvania. The geographicconcentration of our operations at the Pennsylvania Mining Complex may disproportionately expose us to disruptions in our operations if the regionexperiences adverse conditions or events, including severe weather, transportation capacity constraints, constraints on the availability of required equipment,facilities, personnel or services, significant governmental regulation or natural disasters. If any of these factors were to impact the Northern AppalachianBasin more than other coal producing regions, our business, financial condition and results of operations and cash flows will be adversely affected relative toother mining companies that have a more geographically diversified asset portfolio.Our mines are located in areas containing oil and natural gas shale plays, which may require us to coordinate our operations with oil and natural gasdrillers.All of our coal reserves are in areas containing shale oil and natural gas plays, including the Marcellus Shale, which are currently the subject of substantialexploration for oil and natural gas, particularly by horizontal drilling. If we have received a permit for34Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.our mining activities, then while we will have to coordinate our mining with such oil and natural gas drillers, our mining activities will have priority over anyoil and natural gas drillers with respect to the land covered by our permit. For reserves outside of our permits, we engage in discussions with drillingcompanies on potential areas on which they can drill that may have a minimal effect on our mine plan. If a well is in the path of our mining for coal on landthat has not yet been permitted for our mining activities, we may not be able to mine through the well unless we purchase it. Although in the past we havepurchased vertical wells, the cost of purchasing a producing horizontal well could be substantially greater than that of a vertical well. Horizontal wells withmultiple laterals extending from the well pad may access larger oil and natural gas reserves than a vertical well, which would typically result in a higher costto acquire. The cost associated with purchasing oil and natural gas wells that are in the path of our coal mining activities may make mining through thosewells uneconomical, thereby effectively causing a loss of significant portions of our coal reserves, which could materially and adversely affect our business,financial condition, results of operations and cash flows.To maintain and grow our business, we will be required to make substantial capital expenditures. If we are unable to obtain needed capital or financingon satisfactory terms, our financial leverage could increase.In order to maintain and grow our business, we will need to make substantial capital expenditures to fund our share of capital expenditures associated withour mines. Maintaining and expanding mines and infrastructure is capital intensive. Specifically, the exploration, permitting and development of coalreserves, mining costs, the maintenance of machinery and equipment and compliance with applicable laws and regulations require substantial capitalexpenditures. While a significant amount of the capital expenditures required to build out our mining infrastructure has been spent, we must continue toinvest capital to maintain or to increase our production. Decisions to increase our production levels could also affect our capital needs. Our production levelsmay decrease or may not be able or generate sufficient cash flow, or we may not have access to sufficient financing to continue our production, exploration,permitting and development activities at or above our present levels, and we may be required to defer all or a portion of our capital expenditures. If we do notmake sufficient or effective capital expenditures, we will be unable to maintain and grow our business. To fund our capital expenditures, we will be requiredto use cash from our operations, incur debt or sell additional equity securities. Our ability to obtain bank financing or our ability to access the capital marketsfor future equity or debt offerings may be limited by our financial condition at the time of any such financing or offering and the covenants in our existingdebt agreements, as well as by general economic conditions, contingencies and uncertainties that are beyond our control. In addition, incurring additionaldebt may significantly increase our interest expense and financial leverage, and issuing additional equity securities may result in significant stockholderdilution.We may not be able to obtain equipment, parts and raw materials in a timely manner, in sufficient quantities or at reasonable costs to support our coalmining operations.Coal mining consumes large quantities of commodities including steel, copper, rubber products and liquid fuels and requires the use of capital equipment.Some commodities, such as steel, are needed to comply with roof control plans required by regulation. The prices we pay for commodities and capitalequipment are strongly impacted by the global market. A rapid or significant increase in the costs of commodities or capital equipment we use in ouroperations could impact our mining operations costs because we may have a limited ability to negotiate lower prices, and, in some cases, may not have aready substitute.We use equipment in our coal mining and transportation operations such as continuous mining units, conveyors, shuttle cars, rail cars, locomotives, roofbolters, shearers and shields. We procure this equipment from a concentrated group of suppliers, and obtaining this equipment often involves long lead times.Occasionally, demand for such equipment by mining companies can be high and some types of equipment may be in short supply. Delays in receiving orshortages of this equipment, as well as the raw materials used in the manufacturing of supplies and mining equipment, which, in some cases, do not haveready substitutes, or the cancellation of our supply contracts under which we obtain equipment and other consumables, could limit our ability to obtain thesesupplies or equipment. In addition, if any of our suppliers experiences an adverse event, or decides to no longer do business with us, we may be unable toobtain sufficient equipment and raw materials in a timely manner or at a reasonable price to allow us to meet our production goals and our revenues may beadversely impacted. We use considerable quantities of steel in the mining process. If the price of steel or other materials increases substantially or if the valueof the U.S. dollar declines relative to foreign currencies with respect to certain imported supplies or other products, our operating expenses could increase.Any of the foregoing events could materially and adversely impact our business, financial condition, results of operations or cash flows.We must obtain, maintain and renew governmental permits and approvals which if we cannot obtain in a timely manner would reduce our production,cash flow and results of operations.Our coal production is dependent on our ability to obtain various federal and state permits and approvals to mine our coal reserves. The permitting rules, andthe interpretations of these rules, are complex, change frequently and are often subject to discretionary interpretations by regulators. The EPA also has theauthority to veto permits issued by the Army Corps of Engineers under the35Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Clean Water Act’s Section 404 program that prohibits the discharge of dredged or fill material into regulated waters without a permit. In addition, the public,including non-governmental organizations and individuals, have certain statutory rights to comment upon and otherwise impact the permitting process,including through court intervention. The pace with which the government issues permits needed for new operations and/or for on-goingoperations to continue mining continues to pose significant negative effects. Further, in 2011 the EPA revoked an Army Corps of Engineers issued Section404 permit to a coal mining operator. Following the U.S. Supreme Court’s refusal in March 2012 to hear an appeal from the D.C. Circuit Court’s rulingupholding the EPA’s power to revoke a permit, in September 2014 the U.S. Court of Appeals upheld the EPA’s action to revoke the permit. In addition, inJuly 2014 the D.C Circuit reversed a lower court’s decision and affirmed the EPA’s authority to adopt the Enhanced Coordination Process governingcoordination with the Army Corps of Engineers in the processing of CWA permits. The Court also rejected challenges to EPA’s 2012 “Final Guidance”document regarding appropriate permit conditions, namely those affecting acceptable conductivity limits (e.g., acceptable ionic strength to support aquaticlife). However, the Court left it up to the states on whether to adopt the guideline recommendations when issuing final NPDES permits. This decision has leftcoal mining permits in some degree of uncertainty as to whether the EPA will concur with a state’s draft permit conditions should they not contain specifiedlimits regarding conductivity, further increasing operational uncertainty and costs.Existing and future government laws, regulations and other legal requirements relating to protection of the environment, and others that govern ourbusiness may increase our costs of doing business for coal and may restrict our coal operations.We are subject to laws, regulations and other legal requirements enacted or adopted by federal, state and local authorities, as well as foreign authoritiesrelating to protection of the environment. These include those legal requirements that govern discharges of substances into the air and water, the managementand disposal of hazardous substances and wastes, the cleanup of contaminated sites, groundwater quality and availability, threatened and endangered plantand wildlife protection, reclamation and restoration of mining properties after mining is completed, the installation of various safety equipment in our mines,remediation of impacts of surface subsidence from underground mining, and work practices related to employee health and safety. Complying with theserequirements, including the terms of our permits, has had, and will continue to have, a significant effect on our costs of operations and competitive position.In addition, there is the possibility that we could incur substantial costs as a result of violations under environmental laws. Any additional laws, regulationsand other legal requirements enacted or adopted by federal, state and local authorities, as well as foreign authorities or new interpretations of existing legalrequirements by regulatory bodies relating to the protection of the environment could further affect our costs of operations and competitive position. TheClean Water Act is being used by opponents of mountain top removal mining as a means to challenge permits and bring citizen suits to make coal miningmore expensive. At CONSOL Energy's subsidiary Fola Coal Company, LLC (“Fola”), nine citizen suits have been filed challenging water discharge permits.Fola retained liability for six of these suits, and was indemnified from the remaining 3 suits in accordance with the 2016 sale of Fola's assets to SoutheasternLand, LLC. Of the six suits retained by Fola, one was dismissed, two were settled, and a federal court has issued liability rulings in the three remaining suits.Fola expects that any financial liability arising from these suits will not have a material impact on its, or the Company’s results of operations, financialposition and cash flows.Our mines are subject to stringent federal and state safety regulations that increase our cost of doing business at active operations and may placerestrictions on our methods of operation. In addition, government inspectors, under certain circumstances, have the ability to order our operations to beshutdown based on safety considerations.The Federal Coal Mine Safety and Health Act and Mine Improvement and New Emergency Response Act impose stringent health and safety standards onmining operations. Regulations that have been adopted are comprehensive and affect numerous aspects of mining operations, including training of minepersonnel, mining procedures, the equipment used in mine emergency procedures and other matters. States in which we operate have programs for mine safetyand health regulation and enforcement. The various requirements mandated by law or regulation can place restrictions on our methods of operations, andpotentially lead to penalties for the violation of such requirements, creating a significant effect on operating costs and productivity. In addition, governmentinspectors under certain circumstances, have the ability to order our operation to be shutdown based on safety considerations. If an incident were to occur atone of our coal mines, it could be shut down for an extended period of time and our reputation with our customers could be materially damaged.Our operations may impact the environment or cause exposure to hazardous substances, and our properties may have environmental contamination, whichcould result in liabilities to us.Our operations currently use hazardous materials and generate limited quantities of hazardous wastes from time to time. Drainage flowing from or caused bymining activities can be acidic with elevated levels of dissolved metals, a condition referred to as “acid mine drainage.” We could become subject to claimsfor toxic torts, natural resource damages and other damages, as well as for the investigation and clean-up of soil, surface water, groundwater and other media.Such claims may arise, for example, out of36Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.conditions at sites that we currently own or operate, as well as at sites that we previously owned or operated, or may acquire. Our liability for such claims maybe joint and several, so that we may be held responsible for more than our share of the contamination or other damages, or for the entire share.We maintain coal refuse areas and slurry impoundments at the Pennsylvania Mining Complex. Such areas and impoundments are subject to extensiveregulation. Structural failure of a slurry impoundment or coal refuse area could result in extensive damage to the environment and natural resources, such asbodies of water that the coal slurry reaches, as well as liability for related personal injuries and property damages, and injuries to wildlife. Some of ourimpoundments overlie mined out areas, which can pose a heightened risk of failure and of damages arising out of failure. If one of our impoundments were tofail, we could be subject to claims for the resulting environmental contamination and associated liability, as well as for fines and penalties. Our coal refuseareas and slurry impoundments are designed, constructed, and inspected by our company and by regulatory authorities according to stringent environmentaland safety standards.These and other similar unforeseen impacts that our operations may have on the environment, as well as exposures to hazardous substances or wastesassociated with our operations, could result in costs and liabilities that could adversely affect us. An example of this is Naturally Occurring RadioactiveMaterial (NORM) or Technologically-Enhanced, Naturally Occurring Radioactive Material (TENORM). NORM or TENORM is produced when activitiessuch as deep drilling concentrate or expose radioactive materials that occur naturally in ores, soils, water, or other natural materials. State and federal agenciesare examining the possibility for worker exposure or associated environmental hazards due to processing and disposal of wastes containing NORM orTENORM.We have reclamation, mine closing obligations and gas well plugging obligations. If the assumptions underlying our accruals are inaccurate, we could berequired to expend greater amounts than anticipated.The Surface Mining Control and Reclamation Act as well as various state laws establish operational, reclamation and closure standards for all our coalmining operations and require us, under certain circumstances, to plug natural gas wells. We accrue for the costs of current mine disturbance, gas wellplugging and of final mine closure, including the cost of treating mine water discharge where necessary. Estimates of our total reclamation, mine-closing anddegasification and well plugging liabilities, which are based upon permit requirements and our experience, were approximately $259 million at December31, 2017. The amounts recorded are dependent upon a number of variables, including the estimated future closure costs, estimated proved reserves,assumptions involving profit margins, inflation rates, and the assumed credit-adjusted risk-free interest rates. If these accruals are insufficient or our liabilityin a particular year is greater than currently anticipated, our future operating results could be adversely affected.Most states where we operate and/or have non-operating mines require us to post bonds for the full cost of coal mine reclamation (“full cost bonding”). WestVirginia is not a full cost bonding state. West Virginia has an alternative bond system for coal mine reclamation which consists of (i) individual site bondsposted by the permittee that are less than the full estimated reclamation cost plus (ii) a bond pool (“Special Reclamation Fund”) funded by a per ton fee oncoal mined in the State which is used to supplement the site specific bonds if needed in the event of bond forfeiture. In an effort to settle a citizen suit filed in2012 before the U.S. District Court in West Virginia related to the Special Reclamation Fund being underfunded the WV legislature authorized an increase inthe per ton fee levied on coal production to make up the shortfall. The Special Reclamation Fund became fully funded in June of 2016. There remains thepossibility that WV may move to full cost bonding in the future which could cause individual mining companies and/or surety companies to exceed bondingcapacity and would result in the need to post cash bonds or letters of credit which would reduce operating capital.Pennsylvania is expanding its full cost bonding program to cover all coal mine bonding, further increasing the amount of surety bonds we must seek in orderto permit its mining activities. We have been generally able to post surety bonds with the states to secure our reclamation obligations. If our creditworthinessdeclines, states may seek to require us to post letters of credit or cash collateral to secure those obligations, or we may be unable to obtain surety bonds, inwhich case we would be required to post letters of credit. Additionally, the sureties that post bonds on our behalf may require us to post security in order tosecure the obligations underlying these bonds. Posting letters of credit in place of surety bonds or posting security to support these surety bonds would havean adverse effect on our liquidity.We face uncertainties in estimating our economically recoverable coal reserves, and inaccuracies in our estimates could result in lower than expectedrevenues, higher than expected costs and decreased profitability.Coal reserves are economically recoverable when the price at which they are expected to be sold exceeds their expected cost of production and selling.Forecasts of our future performance are based on, among other things, estimates of our recoverable coal reserves. We base our coal reserve information ongeologic data, coal ownership information and current and proposed mine plans. These estimates are periodically updated to reflect past coal production, newdrilling information and other geologic or mining37Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.data. There are numerous uncertainties inherent in estimating quantities and qualities of economically recoverable coal reserves, including many factorsbeyond our control. As a result, estimates of economically recoverable coal reserves are by their nature uncertain. Information about our reserves consists ofestimates based on engineering, economic and geological data assembled and analyzed by our staff. Some of the factors and assumptions which impacteconomically recoverable coal reserve estimates include:•geologic and mining conditions;•historical production from the area compared with production from other producing areas;•the assumed effects of regulations and taxes by governmental agencies;•our ability to obtain, maintain and renew all required permits;•future improvements in mining technology;•assumptions governing future prices; and•future operating costs, including the cost of materials and capital expenditures.In addition, we hold substantial coal reserves in areas containing Marcellus Shale and other shales. These areas are currently the subject of substantialexploration for oil and natural gas, particularly by horizontal drilling. If a natural gas well is in the path of our mining for coal, we may not be able to minethrough the well unless we purchase it. Although in the past we have purchased vertical wells, the cost of purchasing a producing horizontal well could besubstantially greater. Horizontal wells with multiple laterals extending from the well pad may access larger natural gas reserves than a vertical well whichcould result in higher costs. In future years, the cost associated with purchasing natural gas wells which are in the path of our coal mining may make miningthrough those wells uneconomical thereby effectively causing a loss of significant portions of our coal reserves.Each of the factors which impacts reserve estimation may vary considerably from the assumptions used in estimating the reserves. For these reasons, estimatesof coal reserves may vary substantially. Actual production, revenues and expenditures with respect to our coal reserves will likely vary from estimates, andthese variances may be material. As a result, our estimates may not accurately reflect our actual coal reserves.Defects may exist in our chain of title for our undeveloped coal reserves where we have not done a thorough chain of title examination of our undevelopedcoal reserves. We may incur additional costs and delays to mine coal because we have to acquire additional property rights to perfect our title to coalrights. If we fail to acquire additional property rights to perfect our title to coal rights, we may have to reduce our estimated reserves.Title to most of our owned or leased properties and mineral rights is not usually verified until we make a commitment to mine a property, which may notoccur until after we have obtained necessary permits and completed exploration of the property. In some cases, we rely on title information or representationsand warranties provided by our lessors or grantors. Our right to mine certain of our reserves has in the past been, and may again in the future be, adverselyaffected if defects in title, boundaries or other rights necessary for mining exist or if a lease expires. Any challenge to our title or leasehold interests coulddelay the mining of the property and could ultimately result in the loss of some or all of our interest in the property. From time to time we also may be indefault with respect to leases for properties on which we have mining operations. In such events, we may have to close down or significantly alter thesequence of such mining operations which may adversely affect our future coal production and future revenues. If we mine on property that we do not own orlease, we could incur liability for such mining and be subject to regulatory sanction and penalties.In order to obtain, maintain or renew leases or mining contracts to conduct our mining operations on property where these defects exist, we may in the futurehave to incur unanticipated costs. In addition, we may not be able to successfully negotiate new leases or mining contracts for properties containingadditional reserves, or maintain our leasehold interests in properties where we have not commenced mining operations during the term of the lease. As aresult, our results of operations, business and financial condition may be materially adversely affected.We and our subsidiaries are subject to various legal proceedings, which may have an adverse effect on our business.We are party to a number of legal proceedings in the normal course of business activities. Defending these actions, especially purported class actions, can becostly, and can distract management. There is the potential that the costs of defending litigation in an individual matter or the aggregation of many matterscould have an adverse effect on our cash flows, results of operations or financial position. See Note 20 - Commitments and Contingent Liabilities in the Notesto the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for further discussion of pending legal proceedings.38Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.We have obligations for long-term employee benefits for which we accrue based upon assumptions which, if inaccurate, could result in our being requiredto expense greater amounts than anticipated.We provide various long-term employee benefits to inactive and retired employees. We accrue amounts for these obligations. At December 31, 2017, thecurrent and non-current portions of these obligations included:•postretirement medical and life insurance ($592 million);•coal workers’ pneumoconiosis benefits ($163 million);•pension benefits ($55 million); and•workers’ compensation ($79 million).However, if our assumptions are inaccurate, we could be required to expend greater amounts than anticipated. Salary retirement benefits are funded inaccordance with Employer Retirement Income Security Act of 1974 (“ERISA”) regulations. The other obligations are unfunded. In addition, the federalgovernment and several states in which we operate consider changes in workers’ compensation and black lung laws from time to time. Such changes, ifenacted, could increase our benefit expense and our collateral requirements. Additionally, former miners and their family members asserting claims forpneumoconiosis benefits have generally been more successful asserting such claims in recent years as a result of the presumption within The PPACA of 2010that a coal miner with 15 or more years of underground coal mining experience (or the equivalent) who develops a respiratory condition and meets therequirements for total disability under the Federal Act is presumed to be disabled due to coal dust exposure thereby shifting the burden of proof from theemployee to the employer/insurer to establish that this disability is not due to coal dust. The increasing success rate of such claims based upon the PPACAchanged presumption and, as a result, the increasing expense incurred by us to insure against such claims, could increase our expenses for long-termemployee benefit obligations.The provisions of our debt agreements and the risks associated with our debt could adversely affect our business, financial condition, liquidity and resultsof operations.As of December 31, 2017, our total long-term indebtedness was approximately $917 million, of which approximately $300 million was under our 11.00%senior secured notes due 2025, $103 million was under our Maryland Economic Development Corporation Port Facilities Refunding Revenue Bonds(“MEDCO”) 5.75% revenue bonds due September 2025, $100 million was under our Term Loan A Facility, $400 million was under our Term Loan BFacility, $12 million of capitalized leases due through 2021, and $2 million of miscellaneous debt. At December 31, 2017, no borrowings were outstandingunder our $300 million revolving credit facility or our $100 million accounts receivable securitization facility. The degree to which we are leveraged couldhave important consequences, including, but not limited to:•increasing our vulnerability to general adverse economic and industry conditions;•requiring us to dedicate a substantial portion of our cash flow from operations to the payment of interest and principal due under our outstandingdebt, which will limit our ability to obtain additional financing to fund future working capital, capital expenditures, share buy-back programs,acquisitions, pay dividends, development of our coal reserves or other general corporate requirements;•limiting our flexibility in planning for, or reacting to, changes in our business and in the coal industry;•placing us at a competitive disadvantage compared to our competitors with lower leverage and better access to capital resources; and•limiting our ability to implement our business strategy.Our senior secured credit agreement and the indenture governing our 11.00% senior secured notes limit the incurrence of additional indebtedness unlessspecified tests or exceptions are met. In addition, our senior secured credit agreement and the indenture governing our 11.00% senior secured notes subject usto financial and/or other restrictive covenants. Under our senior secured credit agreement, we must comply with certain financial covenants on a quarterlybasis including a minimum fixed charge coverage ratio, as defined therein. Our senior secured credit agreement and the indenture governing our 11.00%senior secured notes impose a number of restrictions upon us, such as restrictions on granting liens on our assets, making investments, paying dividends,stock repurchases, selling assets and engaging in acquisitions. Failure by us to comply with these covenants could result in an event of default that, if notcured or waived, could have a material adverse effect on us.If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to sell assets, seek additional capital or seek torestructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt serviceobligations. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to sell material assetsor operations to attempt to meet our debt service and other obligations. Our senior secured credit agreement and the indenture governing our 11.00% seniorsecured notes restrict our39Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ability to sell assets and use the proceeds from the sales. We may not be able to consummate those sales or to obtain the proceeds which we could realize fromthem and these proceeds may not be adequate to meet any debt service obligations then due.Increases in interest rates could adversely affect our business.We have exposure to increases in interest rates. Based on our current variable debt level of $492 million as of December 31, 2017, comprised of funds drawnon our revolving credit facility, Term Loan A and Term Loan B Facilities, an increase of one percentage point in the interest rate will result in an increase inannual interest expense of $5 million. As a result, our results of operations, cash flows and financial condition could be materially adversely affected bysignificant increases in interest rates.We have entered into an affiliated company credit agreement with CONSOL Coal Resources LP and we may need to secure additional financing for ourown operations.We have entered into an Affiliated Company Credit Agreement with CONSOL Coal Resources LP pursuant to which we, as lender, will provide for CCR arevolving credit facility in an aggregate principal amount of up to $275 million. In funding the Affiliated Company Credit Agreement, we have less cash flowavailable to support our operations and other activities. If we are unable to generate sufficient cash flows in the future to support our operations and serviceour debt as a result of funding the Affiliated Company Credit Agreement, we may be required to refinance all or a portion of our existing debt or to obtainadditional financing. There can be no assurance that any refinancing will be possible or that any additional financing could be obtained on acceptable terms.The inability to service or refinance our existing debt or to obtain additional financing would have a material adverse effect on our financial position,liquidity and results of operations. Furthermore, because we finance CCR’s operations through the affiliated company credit agreement and because thatcredit agreement contains covenants that may prevent CCR from acquiring additional indebtedness, CCR may be unable to finance the acquisition of anyassets we wish to drop down to it which could materially impact our financial condition and cash flows.A failure by Murray Energy to satisfy certain liabilities it assumed from CNX, perform its obligations under various agreements, the performance of whichby Murray Energy CNX guaranteed, or under various agreements with CNX, could require us to indemnify CNX, which could materially adversely affectour results of operations, financial position and cash flows.In 2013, Murray Energy and its subsidiaries (“Murray Energy”) acquired approximately $2.4 billion of liabilities which had been reflected on CNX’s books.The consolidated balance sheet liabilities at the time of sale were comprised of approximately $2.1 billion of other postemployment benefits and otherliabilities. In addition to these assumed liabilities, Murray Energy acquired or assumed certain CNX payment obligations, performance guarantees,equipment leases or subleases. The current maximum estimated exposure under the Murray Energy guarantees as of December 31, 2017 was believed to beapproximately $35 million. As of December 31, 2017, the leases and subleases with Murray Energy relate to approximately $33 million of equipment. Duringthe year ended December 31, 2017, Murray Energy exercised the purchase option on two of the subleases totaling approximately $41 million. Murray Energyis primarily liable for the acquired retiree medical liabilities under the Coal Industry Retiree Health Benefits Act of 1992, referred to herein as the “Coal Act”,but CNX remains secondarily liable. At the time of the sale, the Coal Act liabilities Murray Energy acquired were approximately $307 million and it wasestimated that the servicing cost for these liabilities would be approximately $25 million for 2018, and would decline thereafter since the beneficiariesconsist principally of miners who retired prior to 1994. Any failure by Murray Energy to satisfy these assumed liabilities or perform under these agreementscould result in substantial claims against CNX by third-parties. On November 12, 2013, in connection with the transaction with CNX Moody’s assignedMurray Energy a family credit rating of B3 (speculative and subject to high credit risk) and its secured second lien notes due 2021 a rating of Caa1 (poorstanding and subject to very high credit risk). Since the 2013 transaction, Murray Energy’s credit ratings have been downgraded by Moody’s. In June 2017,Moody’s upgraded Murray Energy to a family credit rating of B3 and the rating on its secured second lien notes to Caa2 with a stable outlook. As part of theseparation the Company has agreed to indemnify CNX as it relates to certain of these obligations. If Murray Energy fails to satisfy these assumed liabilities,payment obligations or Coal Act liabilities and we are called upon to perform our indemnity obligation to CNX, our results of operations, financial positionand cash flows could be materially adversely affected.Terrorist attacks or cyber incidents could result in information theft, data corruption, operational disruption and/or financial loss.We have become increasingly dependent upon digital technologies, including information systems, infrastructure and cloud applications and services, tooperate our businesses, to process and record financial and operating data, communicate with our employees and business partners, analyze seismic anddrilling information, estimate quantities of coal reserves, as well as other activities related to our businesses. Strategic targets, such as energy-related assets,may be at greater risk of future terrorist or cyber attacks than other targets in the United States. Deliberate attacks on our assets, or security breaches in oursystems or infrastructure, or the systems or infrastructure of third-parties, or cloud-based applications could lead to corruption or loss of our proprietary data40Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.and potentially sensitive data, delays in production or delivery, difficulty in completing and settling transactions, challenges in maintaining our books andrecords, environmental damage, communication interruptions, other operational disruptions and third-party liability. Our insurance may not protect usagainst such occurrences. Consequently, it is possible that any of these occurrences, or a combination of them, could have a material adverse effect on ourbusiness, financial condition, results of operations and cash flows. Further, as cyber incidents continue to evolve, we may be required to expend additionalresources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber incidents.Certain provisions in our multi-year coal sales contracts may provide limited protection during adverse economic conditions, may result in economicpenalties to us or permit the customer to terminate the contract.Price adjustment, “price reopener” and other similar provisions in our multi-year coal sales contracts may reduce the protection from coal price volatilitytraditionally provided by coal supply contracts. Price reopener provisions are present in several of our multi-year coal sales contracts. These price reopenerprovisions may automatically set a new price based on prevailing market price or, in some instances, require the parties to agree on a new price, sometimeswithin a specified range of prices. In a limited number of agreements, failure of the parties to agree on a price under a price reopener provision can lead totermination of the contract. Any adjustment or renegotiations leading to a significantly lower contract price could adversely affect our profitability.Most of our coal sales agreements contain provisions requiring us to deliver coal within certain ranges for specific coal quality characteristics such as heatcontent, sulfur, ash, moisture, volatile matter, grindability, ash fusion temperature and size consist. Failure to meet these conditions could result in penaltiesor rejection of the coal at the election of the customer. Our coal sales contracts also typically contain force majeure provisions allowing for the suspension ofperformance by either party for the duration of specified events. Force majeure events include, but are not limited to, floods, earthquakes, storms, fire, faults inthe coal seam or other geologic conditions, other natural catastrophes, wars, terrorist acts, civil disturbances or disobedience, strikes, railroad transportationdelays caused by a force majeure event and actions or restraints by court order and governmental authority or arbitration award. Depending on the languageof the contract, some contracts may terminate upon continuance of an event of force majeure that extends for a period greater than three to twelve months andsome contracts may obligate us to perform notwithstanding what would typically be a force majeure event.Some of our coal sales agreements contain electric power price-related adjustments which result only in positive monthly adjustments to the contracted baseprice that we receive for our coal. These adjustments vary month to month with the volatility in the electric power markets and during market downturnsyield contract prices below expectations. While management considers the expectations and assumptions regarding the electric power price-relatedadjustments to be reasonable, they are inherently subject to business, economic, competitive, regulatory, and other risks and uncertainties, most of which arebeyond our control.Our ability to operate our business effectively could be impaired if we fail to attract and retain skilled personnel, or if a meaningful segment of ouremployees become unionized.Our ability to operate our business and implement our strategies depends, in part, on our continued ability to attract and retain the skilled personnelnecessary to conduct our business. Efficient coal mining using modern techniques and equipment requires skilled employees in multiple disciplines such aselectricians, equipment operators, mechanics, engineers and welders, among others. Although we have not historically encountered shortages for these typesof skilled employees, competition in the future may increase for such positions, especially as it relates to needs of other industries with respect to thesepositions, including oil and gas. If we experience shortages of skilled employees in the future, our labor and overall productivity or costs could be materiallyadversely affected. In the future, we may utilize a greater number of external contractors for portions of our operations. The costs of these contractors havehistorically been higher than that of our employees. If our labor and contractor prices increase, or if we experience materially increased health and benefitcosts with respect to our employees, our results of operations could be materially adversely affected.None of our employees who conduct mining operations at the Pennsylvania Mining Complex are currently represented by a labor union or covered under acollective bargaining agreement, although many employers in our industry have employees who belong to a union. It is possible that our employees whoconduct mining operations at the Pennsylvania Mining Complex may join or seek recognition to form a labor union, or we may be required to become alabor agreement signatory. If some or all of the employees who conduct mining operations at the Pennsylvania Mining Complex were to become unionized,it could adversely affect productivity, increase labor costs and increase the risk of work stoppages at our mines. If a work stoppage were to occur, it couldinterfere with operations at the Pennsylvania Mining Complex and have a material adverse effect on our business, financial condition, results of operationsand cash flows. In addition, the mere fact that a portion of our labor force could be unionized may harm our reputation in the eyes of some investors andthereby negatively affect our share price.41Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The majority of our common units in CONSOL Coal Resources LP are subordinated to other common units and we may not receive distributions fromCONSOL Coal Resources LP.As of December 31, 2017, we held approximately 11.6 million subordinated units and 5.0 million common units (representing, collectively, a 59.6% percentlimited partnership interest) in CCR. The balance of our economic interest in CCR is in the form of incentive distribution rights, which represent a right toreceive increasing percentages of quarterly distributions in excess of specified amounts. Subordinated units are not entitled to any distribution from CCRunless CCR makes a minimum quarterly distribution of at least $0.5125 per common unit. CCR made minimum distributions per subordinated unit equal tothe distribution per common unit for nine of the ten quarters since CCR’s IPO. CCR did not meet the requirement for a subordinated unit distribution withrespect to fiscal quarter ended June 30, 2016, however, CCR was able to make minimum distributions per subordinated unit equal to the distribution percommon unit with respect to the fiscal quarters ended September 30, 2016 through September 30, 2017, and declared minimum distributions persubordinated unit equal to the distribution per common unit with respect to the fiscal quarter ended December 31, 2017. We cannot assure you that CCR willcontinue to be able to make or will make the required minimum quarterly distribution on its common units or that we will receive any future distributions onour subordinated units. Failure by CCR to make distributions to us on our subordinated units could adversely affect our liquidity.Risks Related to the SeparationWe may be unable to achieve some or all of the benefits that we expect to achieve from our separation from CNX.We believe that, as an independent, publicly traded company, we will continue to, among other things, focus our financial and operational resources on ourspecific business, growth profile and strategic priorities, design and implement corporate strategies and policies targeted to our operational focus andstrategic priorities, guide our processes and infrastructure to focus on our core strengths, implement and maintain a capital structure designed to meet ourspecific needs and more effectively respond to industry dynamics. However, we may be unable to achieve some or all of these benefits. For example, in orderto position ourselves for the separation, we undertook a series of strategic, structural and process realignment and restructuring actions within our operations.These actions may not provide the benefits we currently expect, and could lead to disruption of our operations, loss of, or inability to recruit, key personnelneeded to operate and grow our business, weakening of our internal standards, controls or procedures and impairment of our key customer and supplierrelationships. If we fail to achieve some or all of the benefits that we expect to achieve as an independent company, or do not achieve them in the time weexpect, our financial condition, results of operations and cash flows could be materially and adversely affected.We may be unable to complete, on a timely or cost-effective basis, the changes necessary to operate as an independent company.Although many components of operation as an independent company are well established as a result of our historic existence, there remain a number ofbusiness and organizational changes that will be required to complete our transition to a new standalone public company. We expect these changes, whichmay include staffing adjustments, new hires and reassignment of responsibilities, adoption of new processes, systems and controls, and transitioning servicesprovided by CNX to internally provided services, to continue for the foreseeable future.CNX has no obligation to provide us with assistance other than the transition services outlined in the transition services agreement, along with such otherarrangements as have otherwise been contractually agreed to as outlined in the other agreements between us and CNX. These services do not include everyservice we have received from CNX in the past, and CNX is only obligated to provide these services for limited periods from the separation date.Accordingly, we will need to provide internally or obtain from unaffiliated third parties the services we currently receive from CNX. These services includeinformation technology, tax, legal, insurance and other administrative activities, the effective and appropriate performance of which is critical to ouroperations. We may be unable to replace these services in a timely manner or on terms and conditions as favorable as those we receive from CNX. Inparticular, CNX’s information technology networks and systems are complex, and duplicating these networks and systems will be challenging. Because ourbusiness previously operated in part as a component of the wider CNX organization, we may be unable to successfully establish the infrastructure orimplement the changes necessary to operate independently, or we may incur additional costs that could adversely affect our business. Additionally, while wehave developed certain internal controls and procedures, such internal controls and procedures have not yet been fully implemented in connection with ouroperations as a standalone company. The process of implementing our internal controls could require significant attention from management and we cannotbe certain that we will successfully implement and maintain adequate controls over our financial processes and reporting in the future. Difficultiesencountered in their implementation could harm our results of operations or cause us to fail to meet our reporting obligations. If we fail to obtain the qualityof administrative services necessary to operate effectively or incur greater costs in obtaining these services, our financial condition, results of operations andcash flow may be materially and adversely affected.42Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.As an independent, publicly traded company, we may not enjoy the same benefits that we did as part of CNX.Because of our separation from CNX, we may be more susceptible to market fluctuations and other adverse events than we would have been if we were still apart of the current CNX organizational structure. As part of CNX, we were able to enjoy certain benefits from CNX’s operating diversity, purchasing powerand opportunities to pursue integrated strategies with CNX’s other businesses. As an independent, publicly traded company, we are smaller and, as such, donot have similar diversity or integration opportunities and may not have similar purchasing power or access to capital markets. Additionally, as part of CNXwe were able to leverage the CNX historical market reputation and performance and brand identity to recruit and retain key personnel to run our business. Asan independent, publicly traded company, we do not have the same historical market reputation and performance or brand identity as CNX and it may bemore difficult for us to recruit or retain such key personnel. Further, we may be more vulnerable to changing market conditions, such as changes in the coalindustry, which could result in increased volatility in our cash flows, working capital and financing requirements and could materially and adversely affectour business, financial condition and results of operations.We incurred significant costs in connection with the separation and distribution, as well as costs associated with operating as an independent, publiclytraded company, which may adversely affect our financial condition, results of operations and cash flows.Prior to the separation, we made a cash payment of $425 million to CNX, funded primarily by third-party indebtedness incurred by us prior to the separation.We incurred approximately $33 million in costs associated with raising the third-party indebtedness. In addition, we are subject to ongoing interest andprincipal payments during the term of this indebtedness. Through 2018, we expect to incur and pay transition, financing and other expenses. We also expectto incur certain ongoing costs associated with operating as an independent, publicly traded company and extra costs related to the creation of an IT functionand reporting systems. We expect to spend an appropriate amount of capital to relocate and/or augment some of our infrastructure and creating our new ITsystems. The ongoing costs of the separation may adversely impact our financial condition, results of operations and cash flows.The terms of our separation from CNX and the related agreements and other transactions with CNX were determined by CNX and thus may be lessfavorable to us than the terms we could have obtained from an unaffiliated third party.In connection with the separation and distribution, we entered into various agreements and amended certain of the existing agreements in place betweenCNX and CCR to complete the separation of our business from CNX and govern our ongoing relationships, including, among others, a separation anddistribution agreement, a transition services agreement, a tax matters agreement, an employee matters agreement, an intellectual property matters agreement, amaster cooperation and safety agreement and other agreements related to our operations.Under the transition services agreement, CNX will continue to provide various interim corporate support services to us and we will provide various interimsupport services to CNX. Under the transition services agreement for operations, we will be providing support services for CNX’s continuing operationsthrough the term of the existing contracts. The separation and distribution agreement provides for, among other things, our responsibility for liabilitiesrelating to our business and the responsibility of CNX for liabilities unrelated to our business. Among other things, the separation and distribution agreementcontains indemnification obligations and ongoing commitments of us and CNX designed to make our company financially responsible for substantially allliabilities that may exist relating to our business activities, whether incurred prior to or after the separation and including potential indemnificationobligations for veil-piercing actions brought by or on behalf of the Company. If we are required to indemnify CNX under the circumstances set forth in theseparation and distribution agreement or other agreements, we may be subject to substantial liabilities.If we fail to develop or maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As aresult, current and potential stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of ourshares.Effective internal controls are necessary for us to provide reliable financial reports, prevent fraud and operate successfully as a public company. If we cannotprovide reliable financial reports or prevent fraud, our reputation and operating results would be harmed. We cannot be certain that our efforts to develop andmaintain our internal controls will be successful, that we will be able to maintain adequate controls over our financial processes and reporting in the future orthat we will be able to comply with our obligations under Section 404 of the Sarbanes-Oxley Act of 2002. Any failure to develop or maintain effectiveinternal controls, or difficulties encountered in implementing or improving our internal controls, could harm our operating results or cause us to fail to meetour reporting obligations. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which would likelyhave a negative effect on the trading price of our shares.43Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Some contracts and other assets which were transferred or assigned from CNX or its affiliates to us in connection with the separation and distribution maystill require the consent or involvement of a third party. If such consent is not given, we may not be entitled to the benefit of such contracts and other assetsin the future, which could negatively impact our financial condition, results of operations and cash flows.The separation and distribution agreement provides that in connection with our separation from CNX, a number of contracts with third-parties and otherassets are to be transferred or assigned from CNX or its affiliates to us. However, the transfer or assignment of certain of these contracts or assets requireproviding guarantees or the consent of a third party to such a transfer or assignment. Similarly, in some circumstances, the Company and another businessunit of CNX are joint beneficiaries of contracts, and the Company will need to enter into a new agreement with the third-party to replicate the existingcontract or assign the portion of the existing contract related to the Company’s business. It is possible that some parties may use the requirement of aguarantee or consent or the fact that the separation is occurring to seek more favorable contractual terms from the Company or to seek to terminate thecontract. If the Company is unable to provide a guarantee or obtain such consents on commercially reasonable and satisfactory terms or if the contracts areterminated, the Company may be unable to obtain some of the benefits, assets and contractual commitments which are intended to be allocated to theCompany as part of the Company’s separation from CNX. The failure to timely complete the assignment of existing contracts or assets, or the negotiation ofnew arrangements, or a termination of any of those arrangements, could negatively impact the Company’s financial condition, results of operations and cashflows. In addition, where the Company does not intend to provide a guarantee or obtain consent from third party counterparties based on the Company’sbelief that no guarantee or consent is required, the third party counterparties may challenge a transfer of assets on the basis that the terms of the applicablecommercial arrangements require that a guarantee be provided or obtain the third party counterparty’s consent. The Company may incur substantial litigationand other costs in connection with any such claims and, if the Company does not prevail, the Company’s ability to use these assets could be adverselyimpacted.Our customers, prospective customers, suppliers or other companies with whom we conduct business may need assurances that our financial stability on astand-alone basis is sufficient to satisfy their requirements for doing or continuing to do business with them.Some of our customers, prospective customers, suppliers or other companies with whom we conduct business may need assurances that our financial stabilityon a stand-alone basis is sufficient to satisfy their requirements for doing or continuing to do business with them, and may require us to provide additionalcredit support, such as letters of credit or other financial guarantees. Any failure of parties to be satisfied with our financial stability could have a materialadverse effect on our financial condition, results of operations, liquidity and cash flows. In connection with the separation we agreed to assume, and indemnify CNX for, certain liabilities. If we are required to make payments pursuant to theseindemnities to CNX, we may need to divert cash to meet those obligations and our financial condition, results of operations and cash flows could benegatively impacted. In addition, CNX may indemnify us for certain liabilities. CNX’s indemnity may not be sufficient to insure us against the full amountof liabilities for which it will be allocated responsibility, and CNX may not be able to satisfy its indemnification obligations in the future.Pursuant to the terms of the separation and distribution agreement and certain other agreements entered into as part of the separation, we agreed to assume,and indemnify CNX for, certain liabilities for uncapped amounts, which may include, among other items, associated defense costs, settlement amounts andjudgments. Although such obligations are not currently quantifiable, such potential payments pursuant to these indemnities could be significant, and couldnegatively impact our financial condition, results of operations and cash flows, particularly indemnities relating to our actions that could impact the tax-freenature (for U.S. federal income tax purposes) of the contribution, the distribution and certain related transactions, which are set forth in detail in the taxmatters agreement and separation and distribution agreement, as well as the risk factor below entitled “If the distribution, together with certain relatedtransactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, CNX, the Company and the Company’sstockholders could be subject to significant tax liabilities and, in certain circumstances, the Company could be required to indemnify CNX for materialtaxes and other related amounts pursuant to indemnification obligations under the tax matters agreement.” Third parties could also seek to hold usresponsible for liabilities of CNX’s business. CNX agreed to indemnify us for such liabilities, but such indemnity from CNX may not be sufficient to protectus against the full amount of such liabilities, and CNX may not be able to fully satisfy its indemnification obligations. Moreover, even if we ultimatelysucceed in recovering from CNX any amounts for which we are held liable, we may be temporarily required to bear these losses ourselves. Each of these riskscould negatively affect our financial condition, results of operations and cash flows.44Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.If the distribution, together with certain related transactions, does not continue to qualify as a transaction that is generally tax-free for U.S. federal incometax purposes for a period of two years, CNX, the Company and the Company’s stockholders could be subject to significant tax liabilities and, in certaincircumstances, the Company could be required to indemnify CNX for material taxes and other related amounts pursuant to indemnification obligationsunder the tax matters agreement.It was a condition to the distribution that CNX receive a private letter ruling from the IRS, which was received on October 16, 2017, and one or more opinionsof its tax advisors, in each case satisfactory to the CNX Board of Directors, regarding certain U.S. federal income tax matters relating to the separation and thedistribution, including, the opinion of Wachtell, Lipton, Rosen & Katz that the separation and distribution will be a transaction described in Section 355(a)of the Internal Revenue Code of 1986, as amended (the “Code”). The IRS private letter ruling and the opinion(s) of tax advisors were based upon and rely on,among other things, various facts and assumptions, as well as certain representations, statements and undertakings of CNX and the Company, including thoserelating to the past and future conduct of CNX and the Company. If any of these representations, statements or undertakings is, or becomes, inaccurate orincomplete, or if CNX or the Company breaches any of its representations or covenants contained in any of the separation-related agreements and documentsor in any documents relating to the IRS private letter ruling and/or the opinion(s) of tax advisors, the IRS private letter ruling and/or opinion(s) of taxadvisors may be invalid and the conclusions reached therein could be jeopardized.Notwithstanding receipt of the IRS private letter ruling and the opinion(s) of tax advisors, the IRS could determine that the distribution and/or certain relatedtransactions should be treated as taxable transactions for U.S. federal income tax purposes if it determines that any of the representations, assumptions orundertakings upon which the IRS private letter ruling or the opinion(s) of tax advisors were based are false or have been violated. In addition, neither the IRSprivate letter ruling nor the opinion(s) of tax advisors addressed all of the issues that are relevant to determining whether the distribution, together withcertain related transactions, qualifies as a transaction that is generally tax-free for U.S. federal income tax purposes, and the opinion(s) of tax advisorsrepresent the judgment of such tax advisors and are not binding on the IRS or any court, and the IRS or a court may disagree with the conclusions in theopinion(s) of tax advisors. Accordingly, notwithstanding receipt by CNX of the IRS private letter ruling and the opinion(s) of tax advisors, there can be noassurance that the IRS will not assert that the distribution and/or certain related transactions do not qualify for tax-free treatment for U.S. federal income taxpurposes or that a court would not sustain such a challenge. In the event the IRS were to prevail with such challenge, CNX, the Company and the Company’sstockholders could be subject to significant U.S. federal income tax liability.If the distribution, together with related transactions, fails to qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, underSection 355 of the Code, in general, for U.S. federal income tax purposes, CNX would recognize taxable gain as if it had sold the Company common stock ina taxable sale for its fair market value, unless CNX and the Company jointly make an election under Section 336(e) of the Code with respect to thedistribution, in which case, in general, (i) the CNX group would recognize taxable gain as if the Company had sold all of its assets in a taxable sale inexchange for an amount equal to the fair market value of the Company common stock and the assumption of all the Company’s liabilities and (ii) theCompany would obtain a related step up in the basis of its assets and, if the distribution fails to qualify as a transaction that is generally tax-free for U.S.federal income tax purposes under Section 355 of the Code, in general, for U.S. federal income tax purposes, CNX stockholders who received Companyshares in the distribution would be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares.Under the tax matters agreement that CNX entered into with the Company, the Company may be required to indemnify CNX against any additional taxes andrelated amounts resulting from (i) an acquisition of all or a portion of the equity securities or assets of the Company, whether by merger or otherwise (andregardless of whether the Company participated in or otherwise facilitated the acquisition), (ii) other actions or failures to act by the Company or (iii) any ofthe Company’s representations, covenants or undertakings contained in any of the separation-related agreements and documents or in any documentsrelating to the IRS private letter ruling and/or the opinion(s) of tax advisors being incorrect or violated. Any such indemnity obligations could be material.We may not be able to engage in desirable strategic or capital-raising transactions as a result of the separation.Under current law, a spin-off can be rendered taxable as a result of certain post-spin-off acquisitions of shares or assets of the spun-off corporation. Forexample, a spin-off may result in taxable gain to the parent corporation under Section 355(e) of the Code if the spin-off were later deemed to be part of a plan(or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, shares representing a 50% or greater interest (by voteor value) in the spun-off corporation. To preserve the tax-free treatment of the separation and the distribution for U.S. federal income tax purposes, and inaddition to the Company’s indemnity obligation described above, the tax matters agreement restricts the Company, for the two-year period following theseparation, except in specific circumstances, from:45Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.•entering into any transaction pursuant to which all or a portion of the shares of the Company common stock would be acquired, whether by mergeror otherwise;•issuing equity securities beyond certain thresholds;•repurchasing shares of Company capital stock other than in certain open-market transactions; and•ceasing to actively conduct certain of its businesses.The tax matters agreement also prohibits the Company from taking or failing to take any other action that would prevent the distribution and certain relatedtransactions from qualifying as a transaction that is generally tax-free for U.S. federal income tax purposes under Section 355 of the Code. These restrictionsmay limit our ability to pursue certain strategic transactions, equity issuances or repurchases or other transactions that we may believe to be in the bestinterests of our stockholders or that might increase the value of our business.Certain of our directors and officers may have actual or potential conflicts of interest because of their equity ownership in CNX.Although no Company directors or officers serve at both companies, certain of our directors and executive officers may own shares of CNX common stock,and the individual holdings may be significant for some of these individuals compared to their total assets. This ownership in both companies may create, ormay create the appearance of, conflicts of interest when these directors and officers are faced with decisions that could have different implications for CNXand us. For example, potential conflicts of interest could arise in connection with the resolution of any dispute that may arise between CNX and us regardingthe terms of the agreements governing the internal reorganization, the distribution and the relationship thereafter between the companies, including withrespect to the indemnification of certain matters.As a public company, we must publish more detailed information about our business, operations and financial performance which will be available for ourcustomers, competitors and other third parties.Historically, information about our business and operations was presented as part of the broader CNX corporate organization. As an independent, publiclytraded company, we must publicly provide more detailed information about our business and operations, including financial information, as a stand-alonecompany. This information will be accessible to our customers, suppliers and competitors, each of which may factor the new information into theircommercial dealings with us or in the markets in which we operate. The use of such information by third parties in the marketplace could have an adverseeffect on us and our results of operations, including our relative level of profitability.The separation and distribution and related internal reorganization transactions may expose the Company to potential liabilities arising out of state andfederal fraudulent conveyance laws and legal dividend requirements.If the Company files for bankruptcy or is otherwise determined or deemed to be insolvent under federal bankruptcy laws, a court could deem the separationand distribution or certain internal reorganization transactions undertaken by CNX in connection with the separation to be a fraudulent conveyance ortransfer. Fraudulent conveyances or transfers are defined to include transfers made or obligations incurred with the actual intent to hinder, delay or defraudcurrent or future creditors or transfers made or obligations incurred for less than reasonably equivalent value when the debtor was insolvent, or that renderedthe debtor insolvent, inadequately capitalized or unable to pay its debts as they become due. A court could void the transactions or impose substantialliabilities upon the Company, which could adversely affect the Company’s financial condition and its results of operations. Among other things, the courtcould require Company stockholders to return to CNX some or all of the shares of Company common stock issued in the separation and distribution, orrequire the Company to fund liabilities of other companies involved in the reorganization transactions for the benefit of creditors.The distribution of Company common stock is also subject to review under state corporate distribution statutes. Under the Delaware General CorporationLaw (the “DGCL”), a corporation may only pay dividends to its stockholders either (i) out of its surplus (net assets minus capital) or (ii) if there is no suchsurplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. Although CNX made the distribution ofCompany common stock entirely out of surplus, the Company cannot assure you that a court will not later determine that some or all of the distribution toCNX stockholders was unlawful.46Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Risks Related to Our Common Stock and the Securities MarketOur stock price may fluctuate significantly.The market price of our common stock may fluctuate significantly due to a number of factors, some of which may be beyond our control, including:•our quarterly or annual earnings, or those of other companies in our industry;•the failure of securities analysts to cover our common stock after the distribution;•actual or anticipated fluctuations in our operating results;•changes in earnings estimates by securities analysts or our ability to meet those estimates or our earnings guidance;•the operating and stock price performance of other comparable companies;•overall market fluctuations and domestic and worldwide economic conditions; and•other factors described in these “Risk Factors” and elsewhere in this Annual Report on Form 10-KStock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad marketfluctuations may adversely affect the trading price of our common stock. As a result of these factors, holders of our common stock may not be able to reselltheir shares at or above the initial market price or may not be able to resell them at all. In addition, price volatility with our common stock may be greater iftrading volume is low.If securities analysts do not publish research or reports about our Company, or issue unfavorable commentary about us or downgrade our shares, the priceof our shares could decline.The trading market for our shares depends in part on the research and reports that third-party securities analysts publish about our Company and our industry.Because our ordinary shares were initially distributed to the public through the spin-off, there was not a marketing effort relating to the initial distribution ofour shares of the type that would typically be part of an initial public offering of shares. We may be unable or slow to attract research coverage and if one ormore analysts cease coverage of our Company, we could lose visibility in the market. In addition, one or more of these analysts could use estimation orvaluation methods that we do not agree with, downgrade our shares or issue other negative commentary about our company or our industry. As a result of oneor more of these factors, the trading price of our shares could decline.A future sale of a substantial number of shares of our common stock may cause our stock price to decline.Any sales of substantial amounts of shares of our common stock in the public market or the perception that such sales might occur, in connection with thedistribution or otherwise, may cause the market price of our common stock to decline. As a result of the distribution, we have an aggregate of approximately28.0 million shares of our common stock issued and outstanding. These shares are freely tradable without restriction or further registration under the U.S.Securities Act of 1933, as amended (the “Securities Act”), unless the shares are owned by one of our “affiliates,” as that term is defined in Rule 405 under theSecurities Act.We cannot guarantee the timing, amount, or payment of dividends on our common stock in the future.The payment and amount of any future dividend will be subject to the sole discretion of our board of directors and will depend upon many factors, includingour financial condition and prospects, our capital requirements and access to capital markets, covenants associated with certain of our debt obligations, legalrequirements and other factors that our board of directors may deem relevant, and there can be no assurance that we will pay a dividend in the future.There may be substantial changes in the Company’s stockholder base.Many investors holding CNX common stock at the time of the separation and distribution may have held that stock because of a decision to invest in acompany with CNX’s profile. The shares of Company common stock held by those investors as a result of the separation and distribution represent aninvestment in a company with a different profile. This may not be aligned with a holder’s investment strategy and may cause the holder to sell the shares. As aresult, the Company’s stock price may decline or experience volatility as its stockholder base changes.Your percentage of ownership in us may be diluted in the future.Your percentage ownership in us may be diluted because of equity issuances for acquisitions, capital market transactions or otherwise, including, withoutlimitation, equity awards that we may be granting to our directors, officers and employees. Such issuances may have a dilutive effect on our earnings pershare, which could adversely affect the market price of our common stock.47Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.It is anticipated that the compensation committee of the board of directors of the Company will grant additional equity awards to Company employees anddirectors, from time to time, under the Company’s compensation and employee benefit plans. These additional awards will have a dilutive effect on theCompany’s earnings per share, which could adversely affect the market price of the Company’s common stock.In addition, our amended and restated certificate of incorporation authorizes us to issue, without the approval of our stockholders, one or more classes orseries of preferred stock having such designation, powers, preferences and relative, participating, optional and other special rights, including preferences overour common stock with respect to dividends and distributions, as our board of directors generally may determine. The terms of one or more classes or series ofpreferred stock could dilute the voting power or reduce the value of our common stock. For example, we could grant the holders of preferred stock the right toelect some number of our directors in all events or on the happening of specified events or to veto specified transactions. Similarly, the repurchase orredemption rights or liquidation preferences we could assign to holders of preferred stock could affect the residual value of our common stock.There can be no assurance that we will continue to repurchase shares of our common stock or outstanding debt securities.In 2017, our Board of Directors authorized the repurchase of up to $50 million of our outstanding notes and other debt securities and shares of our commonstock continuing through June 30, 2019. Our share repurchase program does not obligate us to repurchase any specific number of debt securities or commonshares and may be suspended from time to time or terminated at any time prior to its expiration. There can be no assurance that we will repurchase shares ordebt securities under the repurchase program in the future in any particular amounts or at all. A reduction in, or elimination of, share repurchases could have anegative effect on our share price.Certain provisions of our amended and restated certificate of incorporation and amended and restated bylaws, and of Delaware law, may prevent or delayan acquisition of us, which could decrease the trading price of our common stock.The Company’s amended and restated certificate of incorporation and amended and restated by-laws and Delaware law contain provisions that are intendedto deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the bidder and to encourageprospective acquirers to negotiate with the Company’s board of directors rather than to attempt a hostile takeover. These provisions include, among others:•the inability of our stockholders to act by written consent unless such written consent is unanimous;•the inability of our stockholders to call special meetings;•rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings;•the right of our board of directors to issue preferred stock without stockholder approval;•the fact that our board of directors will initially be divided into three classes; and•the ability of our directors, and not stockholders, to fill vacancies (including those resulting from an enlargement of our board of directors) on ourboard of directors.In addition, we are subject to Section 203 of the DGCL. Section 203 provides that, subject to limited exceptions, persons that (without prior board approval)acquire, or are affiliated with a person that acquires, more than 15% of the outstanding voting stock of a Delaware corporation shall not engage in anybusiness combination with that corporation, including by merger, consolidation or acquisitions of additional shares, for a three-year period following thedate on which that person or its affiliate becomes the holder of more than 15% of the corporation’s outstanding voting stock.We believe these provisions will protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate withour board of directors and by providing our board of directors with more time to assess any acquisition proposal. These provisions are not intended to makeus immune from takeovers. However, these provisions could have the effect of delaying, deferring or preventing a change in control or the removal ofexisting management, of deterring potential acquirers from making an offer to our stockholders and of limiting any opportunity to realize premiums overprevailing market prices for our common stock in connection therewith. This could be the case notwithstanding that a majority of our stockholders mightbenefit from such a change in control or offer.In addition, an acquisition or further issuance of the Company’s stock could trigger the application of Section 355(e) of the Code, causing the distribution tobe taxable to CNX. Under the tax matters agreement, the Company would be required to indemnify CNX for the resulting tax, and this indemnity obligationmight discourage, delay or prevent a change of control that could be considered favorable.48Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Our certificate of incorporation designates the State Courts of the State of Delaware as the sole and exclusive forum for certain types of actions andproceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain an alternative judicial forum for disputes withus or our directors, officers, employees or agents.Our certificate of incorporation provides that unless we consent in writing to the selection of an alternative forum, a state court sitting in the State of Delaware(or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware) will, to the fullest extent permitted byapplicable law, be the sole and exclusive forum for:•any derivative action or proceeding brought on our behalf;•any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders;•any action asserting a claim arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our bylaws;•any action asserting a claim that is governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personaljurisdiction over the indispensable parties named as defendants therein; or•any action asserting an internal corporate claim as defined in Section 115 of the DGCL.Any person or entity purchasing or otherwise holding any interest in shares of our capital stock will be deemed to have notice of, and consented to, theprovisions of our certificate of incorporation described in the preceding sentence. This choice of forum provision may limit a stockholder’s ability to bring aclaim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuitsagainst us and such persons. Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, orunenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such mattersin other jurisdictions.ITEM 1B.Unresolved Staff CommentsNone.ITEM 2.PropertiesSee “Detail Coal Operations” in Item 1 of this Annual Report on Form 10-K for a description of our properties, incorporated herein by this reference.ITEM 3.Legal ProceedingsOur operations are subject to a variety of risks and disputes normally incidental to our business. As a result, we may, at any given time, be a defendant invarious legal proceedings and litigation arising in the ordinary course of business. However, we are not currently subject to any material litigation. Refer toNote 20 “Commitments and Contingent Liabilities,” in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K, incorporatedherein by this reference.ITEM 4.Mine Safety and Health Administration Safety DataInformation concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform andConsumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this annual report.49Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.PART IIITEM 5.Market for Registrant's Common Equity and Related Stockholder Matters and Issuer Purchases of Equity SecuritiesShares of the Company's common stock are listed on the New York Stock Exchange and trade under the symbol “CEIX”. Trading of the Company'scommon stock began as “when-issued” trading on November 3, 2017 and began as “regular-way” trading on November 29, 2017. The Company's high andlow trading stock prices and cash dividends declared on the common stock for the reporting periods since that time are shown below. High Low DividendsFiscal Year Ended December 31, 2017 4th Quarter (beginning November 3, 2017) $41.89 $19.51 $—As of February 8, 2018, there were 103 holders of record of our common stock.The following performance graph compares CONSOL Energy's cumulative two-month total shareholder return to the Company's peer group and theStandard & Poor's 500 Stock Index. The peer group is comprised of CONSOL Energy, Alliance Resource Partners, Arch Coal Inc., Cloud Peak Energy,Contura Energy, Foresight Energy, Hallador Energy, Peabody Energy Corp., Warrior Met Coal, and Westmoreland Coal.The graph above tracks the performance of an initial investment of $100 in CONSOL Energy's common stock and each member of the peer group andthe Standard & Poor's 500 Stock Index, including the reinvestment of any dividends, from November 3, 2017 (beginning of “when-issued” trading) throughDecember 31, 2017. November 3, 2017 November 30, 2017 December 31, 2017CONSOL Energy Inc. 100.0 200.0 359.2Peer Group 100.0 105.1 117.2S&P 500 Stock Index 100.0 102.3 103.3The above information is being furnished pursuant to Regulation S-K, Item 201 (e) (Performance Graph).The declaration and payment of dividends by CONSOL Energy is subject to the discretion of CONSOL Energy's Board of Directors, and no assurancecan be given that CONSOL Energy will pay dividends in the future. The determination to pay dividends in the future will depend upon, among other things,general business conditions, CONSOL Energy's financial results, contractual50Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.and legal restrictions regarding the payment of dividends by CONSOL Energy, planned investments by CONSOL Energy and such other factors as the Boardof Directors deems relevant. The Company's senior secured credit facilities limit CONSOL Energy's ability to pay dividends when the Company's total netleverage ratio exceeds 2.00 to 1.00 and subject to an aggregate amount up to a cumulative credit calculation set forth in the facilities. The total net leverageratio was 2.37 to 1.00 at December 31, 2017. The cumulative credit starts with $50 million and builds with excess cash flow commencing in 2018. Thecalculation of the total net leverage ratio excludes the Partnership. The credit facilities do not permit dividend payments in the event of default. Theindenture to the senior secured second lien notes limits dividends when the Company's total net leverage ratio exceeds 2.00 to 1.00 and subject to an amountnot to exceed an annual rate of 4.0% of the quoted public market value per share of such common stock at the time of the declaration. The indenture does notpermit dividend payments in the event of default.See Part III, Item 12. “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information relating toCONSOL Energy's equity compensation plans.51Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ITEM 6.Selected Financial DataThe following table presents the selected consolidated financial and operating data for, and as of the end of, each of the periods indicated. Theselected consolidated financial data for, and as of the end of, each of the years ended December 31, 2017, 2016, 2015, 2014 and 2013 are derived from theCompany's audited Consolidated Financial Statements. The selected consolidated financial and operating data are not necessarily indicative of the resultsthat may be expected for any future period. The selected consolidated financial and operating data should be read in conjunction with Item 7 “Management'sDiscussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and accompanying notes included inthis Annual Report.(Dollars in thousands) For the Years Ended December 31, 2017 2016 2015 2014 2013Statement of Income Information: Coal Revenue $1,187,654 $1,065,582 $1,289,036 $1,616,874 $1,357,319Terminal Revenue 60,066 31,464 30,967 41,255 43,364Freight Revenue 73,692 46,468 20,499 23,133 17,778Miscellaneous Other Income 73,279 82,120 68,193 123,604 61,034Gain on Sale of Assets 17,212 5,228 13,025 26,312 46,404Total Revenue and Other Income $1,411,903 $1,230,862 $1,421,720 $1,831,178 $1,525,899Net Income 82,569 50,450 317,421 290,952 313,773Net Income Attributable to CONSOL Energy Shareholders 67,629 41,496 307,011 290,952 313,773Dilutive Earnings per Share (1) $2.40 $1.48 $10.98 $10.40 $11.22Balance Sheet Data (at period end): Total Assets $2,707,099 $2,687,434 $2,867,733 $3,092,374 $3,156,312Total Long-Term Debt $865,289 $313,639 $286,526 $110,199 $108,332Cash Dividends Declared per Share of Common Stock N/A N/A N/A N/A N/A(1) Prior to 2017, the earnings per share was calculated based on the 27,968 shares of CONSOL Energy common stock distributed in conjunction with thecompletion of the separation and distribution, and is considered pro forma in nature. Prior to November 28, 2017, CONSOL Energy did not have any issuedor outstanding common stock.OTHER OPERATING DATA(unaudited) Years Ended December 31, 2017 2016 2015 2014 2013Coal: Tons sold (in thousands) 26,091 24,604 22,873 26,133 21,230Tons produced (in thousands) 26,109 24,666 22,790 26,066 21,433Average sales price of tons produced ($ per ton produced) $45.52 $43.31 $56.36 $61.88 $63.93Average cost of goods sold ($ per ton produced) $35.03 $34.35 $41.78 $43.63 $44.53Recoverable coal reserves (tons in millions) (A) 2,298 2,361 3,047 3,238 3,032Number of active mining complexes (at end of period) 1 1 1 1 1____________(A)Represents proven and probable coal reserves at period end.52Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ITEM 7.Management's Discussion and Analysis of Financial Condition and Results of Operations2017 Highlights:•Record total coal production of 26.1 million tons in 2017, an increase of 6% from 2016•Record annual throughput of 14.3 million tons through the CONSOL Marine Terminal in 2017, an increase of 77% from 2016•Became an independent publicly-traded low-cost producer and exporter of coal through the spin-off on November 28, 2017•Announced Board approval of $50 million share and notes repurchase plan through June 30, 20192018 Outlook:•The Company's 2018 coal production is expected to be approximately 27 million tons.•The Company's 2018 coal capital investment is expected to be approximately $125-$145 million.Reconciliation of Non-GAAP Financial MeasuresWe evaluate our cost of coal sold and cash cost of coal sold on a cost per ton basis. Our cost of coal sold per ton represents our costs of coal solddivided by the tons of coal we sell. We define cost of coal sold as operating and other production costs related to produced tons sold, along with changes incoal inventory, both in volumes and carrying values. The cost of coal sold per ton includes items such as direct operating costs, royalty and production taxes,direct administration, and depreciation, depletion and amortization costs. Our costs exclude any indirect costs, such as selling, general and administrativecosts, freight expenses, interest expenses and other costs not directly attributable to the production of coal. The GAAP measure most directly comparable tocost of coal sold is total costs. The cash cost of coal sold includes cost of coal sold less depreciation, depletion and amortization cost on production assets.The GAAP measure most directly comparable to cash cost of coal sold is total costs.We define average cash margin per ton as average coal revenue per ton, net of average cost of coal sold per ton, less depreciation, depletion andamortization. The GAAP measure most directly comparable to average cash margin per ton is total coal revenue.The following table presents a reconciliation of cost of coal sold and cash cost of coal sold to total costs, the most directly comparable GAAPfinancial measure, on a historical basis for each of the periods indicated (in thousands). Years Ended December 31, 2017 2016Total Costs and Expenses $1,242,106 $1,165,847Freight Expense (73,692) (46,468)Selling, General and Administrative Costs (83,605) (50,027)Interest Expense (26,098) (14,053)Other Costs (Non-Mining) (129,620) (186,492)Depreciation, Depletion and Amortization (Non-Mining) (15,001) (23,745)Cost of Coal Sold $914,090 $845,062Depreciation, Depletion and Amortization (Mining) (157,001) (154,377)Cash Cost of Coal Sold $757,089 $690,685The following table presents a reconciliation of average cash margin per ton for each of the periods indicated (in thousands, except per toninformation).53Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Years Ended December 31, 2017 2016Total Coal Revenue $1,187,654 $1,065,582 Operating and Other Costs 886,709 877,177 Less: Other Costs (Non-Mining) (129,620) (186,492)Total Cash Cost of Coal Sold 757,089 690,685 Depreciation, Depletion and Amortization 172,002 178,122 Less: Depreciation, Depletion and Amortization (Non-Mining) (15,001) (23,745)Total Cost of Coal Sold $914,090 $845,062Total Tons Sold (in millions) 26.1 24.6Average Revenue per Ton Sold $45.52 $43.31Average Cash cost per Ton Sold 29.02 28.09Depreciation, Depletion and Amortization Costs per Ton Sold 6.01 6.26Average Cost per Ton Sold 35.03 34.35Average Margin per Ton Sold 10.49 8.96Add: Depreciation, Depletion and Amortization Costs per Ton Sold 6.01 6.26Average Cash Margin per Ton Sold $16.50 $15.22Results of Operations: Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016Net Income Attributable to CONSOL Energy ShareholdersCONSOL Energy reported net income attributable to CONSOL Energy shareholders of $68 million for the year ended December 31, 2017, compared tonet income attributable to CONSOL Energy shareholders of $41 million for the year ended December 31, 2016.CONSOL Energy consists of the Pennsylvania Mining Complex, as well as various corporate and other business activities that are not allocated toPAMC. The other business activities include the CONSOL Marine Terminal, the Greenfield Reserves, closed and idle mine activities, selling, general andadministrative activities, and income taxes, as well as various other non-operated activities.54Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.PAMC ANALYSIS:The PAMC division's principal activities consist of mining, preparation and marketing of thermal coal, sold primarily to power generators. The divisionalso includes selling, general and administrative costs, as well as various other activities assigned to the PAMC division, but not included in the costcomponents on a per unit basis.The PAMC division had earnings before income tax of $189 million for the year ended December 31, 2017, compared to earnings before income tax of$131 million for the year ended December 31, 2016. Variances are discussed below. For the Years Ended December 31, (in millions)2017 2016 VarianceSales: Coal Revenue$1,188 $1,066 $122Freight Revenue74 46 28Miscellaneous Other Income23 13 10Gain on Sale of Assets6 — 6 Total Revenue and Other Income1,291 1,125 166Operating Costs and Expenses: Operating Costs757 691 66Depreciation, Depletion and Amortization157 154 3Total Operating Costs and Expenses914 845 69Other Costs and Expenses: Other Costs22 42 (20)Depreciation, Depletion and Amortization10 14 (4)Total Other Costs and Expenses32 56 (24)Freight Expense74 46 28Selling, General and Administrative Costs72 38 34Interest Expense10 9 1 Total Costs and Expenses1,102 994 108Earnings Before Income Tax$189 $131 $58Coal ProductionThe table below presents total tons produced (in thousands) from the Pennsylvania Mining Complex for the periods indicated: For the Years Ended December 31,Mine 2017 2016 VarianceBailey 12,124 12,056 68Enlow 9,180 9,638 (458)Harvey 4,805 2,971 1,834 Total 26,109 24,665 1,444Coal production was 26.1 million tons for the year ended December 31, 2017, compared to 24.7 million tons for the year ended December 31, 2016.Coal production increased 1.4 million tons primarily to satisfy market demand, offset, in part, by a decrease in coal production at the Enlow Fork mine due toadverse geological conditions.55Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Coal OperationsThe PAMC division's coal revenue and cost components on a per unit basis for these periods were as follows: For the Years Ended December 31, 2017 2016 VarianceTons Sold (in millions)26.1 24.6 1.5Average Sales Price per Ton Sold$45.52 $43.31 $2.21 Total Operating Costs per Ton Sold (Cash Cost)$29.02 $28.09 $0.93Total Depreciation, Depletion and Amortization Costs per Ton Sold (Non-Cash Cost)6.01 6.26 (0.25) Total Costs per Ton Sold$35.03 $34.35 $0.68 Average Margin per Ton Sold$10.49 $8.96 $1.53 Add: Depreciation, Depletion and Amortization Costs per Ton Sold6.01 6.26 (0.25) Average Cash Margin per Ton Sold (1)$16.50 $15.22 $1.28(1) Average cash margin per ton is an operating ratio derived from non-GAAP measures.Coal RevenueCoal revenue was $1,188 million for the year ended December 31, 2017, compared to $1,066 million for the year ended December 31, 2016. The $122million increase was attributable to a 1.5 million increase in tons sold and a $2.21 per ton higher average sales price per ton sold. The increase in tons soldwas driven by increased demand from the Company's customers in the export thermal market, primarily due to continued growth in demand from developingmarkets such as India, coupled with a variety of labor, weather and policy-related issues that affected the supply of seaborne thermal coal and petroleum cokethroughout the year. The higher average sales price per ton sold in the 2017 period was primarily the result of a tighter supply-demand balance in theinternational thermal and crossover metallurgical coal markets the Company serves. The API 2 index (the benchmark price reference for coal imported intonorthwest Europe) was up more than 42% for the year ended December 31, 2017 compared to the year ended December 31, 2016, and global coking coalprices were up by an even greater percentage in the period-to-period comparison.Freight Revenue and Freight ExpenseFreight revenue is the amount billed to customers for transportation costs incurred. This revenue is based on the weight of coal shipped, negotiatedfreight rates and method of transportation, primarily rail, used by the customers to which the Company contractually provides transportation services. Freightrevenue is completely offset in freight expense. Freight revenue and freight expense were both $74 million for the year ended December 31, 2017, comparedto $46 million for the year ended December 31, 2016. The $28 million increase was due to increased shipments to customers where the Company wascontractually obligated to provide transportation services.Miscellaneous Other IncomeMiscellaneous other income was $23 million for the year ended December 31, 2017, compared to $13 million for the year ended December 31, 2016.The $10 million increase was primarily attributable to customer contract buyouts and an increase in sales of externally purchased coal, for blending purposesonly.Gain on Sale of AssetsGain on sale of assets increased $6 million in the period-to-period comparison primarily due to the sale of certain coal rights during the year endedDecember 31, 2017.Operating Costs and ExpensesOperating costs and expenses are comprised of costs related to produced tons sold, along with changes in both the volumes and carrying values of coalinventory. Operating costs and expenses include items such as direct operating costs, royalty and production taxes, employee-related expenses anddepreciation, depletion, and amortization costs. Total operating costs and expenses were $914 million for the year ended December 31, 2017, or $69 millionhigher than the $845 million for the year ended56Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.December 31, 2016. Total costs per ton sold were $35.03 per ton in the year ended December 31, 2017, compared to $34.35 per ton in the year endedDecember 31, 2016. The increase in the cost of coal sold was primarily driven by additional operating expenses incurred at the Bailey Mine, related tooperational delays as a result of permitting issues, and adverse geological conditions at the Enlow Fork Mine. In addition, the average cost per ton soldincreased due to additional costs related to an increase in development mining footage.Other Costs and ExpensesOther costs and expenses include items that are assigned to the PAMC division but are not included in unit costs, such as coal reserve holding costs andpurchased coal costs. Total other costs and expenses decreased $24 million in the year ended December 31, 2017 compared to the year ended December 31,2016. The decrease is primarily attributable to $19 million of costs in the prior year related to the temporary idling of one longwall at the PAMC complex forapproximately 90 days to optimize operating schedules, $9 million of discretionary 401(k) contributions made in the prior year as a result of companyperformance, and $3 million of costs incurred in the prior year related to the proposed consent decree with respect to the Bailey Mine complex. These wereoffset, in part, by an increase of $7 million in the period-to-period comparison related to the cost of purchased coal sold for blending purposes only, and $4million of separation costs incurred in the current year related to organizational restructuring.Selling, General and Administrative CostsAt December 31, 2017, CONSOL Energy was party to a service agreement with CONSOL Coal Resources LP that required CONSOL Energy to providecertain selling, general and administrative services to CCR. These services are paid monthly based on an agreed-upon fixed fee that is reset at leastannually. See Note 23 - Related Party Transactions of the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for additionalinformation. An additional portion of CONSOL Energy's selling, general and administrative costs are allocated to the PAMC division, outside of the serviceagreement, based on a percentage of total revenue and a percentage of total projected capital expenditures. The amount of selling, general and administrativecosts related to the PAMC division was $72 million for the year ended December 31, 2017, compared to $38 million for the year ended December 31, 2016.The $34 million increase in the period-to-period comparison was primarily related to an increase in long-term incentive compensation recognized in relationto award modifications due to organizational restructuring, an increase in short-term incentive compensation paid to employees based on the results ofoperations achieved at the Company's mines, and increases in purchased services related to the conversion to a different Enterprise Resource and Planningsoftware.Interest ExpenseInterest expense, net of amounts capitalized, of $10 million and $9 million for the years ended December 31, 2017 and 2016, respectively, is primarilycomprised of interest on the Old Partnership Revolver. The Old Partnership revolver was refinanced through the Affiliated Company Credit Agreement onNovember 28, 2017.57Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.OTHER ANALYSIS:Other includes revenue and expenses from various corporate and diversified business activities that are not allocated to the PAMC division. Thediversified business activities include coal terminal operations, closed and idle mine activities, selling, general and administrative activities, and incometaxes, as well as various other non-operated activities, none of which are individually significant to the Company.Other business activities had a loss before income tax of $19 million for the year ended December 31, 2017, compared to a loss before income tax of$66 million for the year ended December 31, 2016. Variances are discussed below. For the Years Ended December 31,(in millions)2017 2016 VarianceRevenue: Terminal Revenue$60 $31 $29Miscellaneous Other Income50 69 (19)Gain on Sale of Assets11 5 6Total Revenue and Other Income121 105 16Other Costs and Expenses: Operating and Other Costs108 143 (35)Depreciation, Depletion and Amortization5 10 (5)Selling, General, and Administrative Costs11 13 (2)Interest Expense16 5 11Total Other Costs and Expenses140 171 (31)Loss Before Income Tax$(19) $(66) $47Terminal RevenueTerminal revenue consists of sales from the CONSOL Marine Terminal, which is located on 200 acres in the Port of Baltimore, Maryland and providesaccess to international coal markets. CONSOL Marine Terminal sales were $60 million for the year ended December 31, 2017, compared to $31 million forthe year ended December 31, 2016. The $29 million increase in the period-to-period comparison was attributable to a 6.2 million increase in throughput tons,from 8.1 million tons in the year ended December 31, 2016 to 14.3 million tons in the year ended December 31, 2017.Miscellaneous Other IncomeMiscellaneous other income was $50 million for the year ended December 31, 2017, compared to $69 million for the year ended December 31, 2016.The change is due to the following items: For the Years Ended December 31,(in millions) 2017 2016 VarianceRental Income $14 $35 $(21)Right of Way Sales 2 11 (9)Interest Income 3 — 3Royalty Income 28 20 8Other Income 3 3 —Total Miscellaneous Other Income $50 $69 $(19)•Rental Income decreased $21 million primarily due to a decrease in lease payments received as a result of the sale of certain subleased equipment toMurray Energy in the current period.•Right of Way Sales relate to an initiative to generate additional revenue from the Company's unutilized surface rights. The decrease of $9 million inthe period-to-period comparison was due to fewer sales in the current period.•Royalty Income related to non-operated coal properties increased $8 million in the period-to-period comparison primarily due to an increase inthird-party activity and higher coal prices in the current period.58Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Gain on Sale of AssetsGain on sale of assets increased $6 million in the period-to-period comparison, primarily due to the sale of coal reserves during the year endedDecember 31, 2017.Operating and Other CostsOperating and other costs were $108 million for the year ended December 31, 2017, compared to $143 million for the year ended December 31, 2016.Operating and other costs decreased in the period-to-period comparison due to the following items: For the Years Ended December 31,(in millions) 2017 2016 VarianceTerminal Operating Costs $21 $18 $3Employee-Related Legacy Liability Expense 55 66 (11)Lease Rental Expense 10 30 (20)Coal Reserve Holding Costs 5 19 (14)Closed and Idle Mines 7 9 (2)Other 10 1 9Miscellaneous Operating Expense $108 $143 $(35)•Terminal Operating Costs increased $3 million due to an increase in throughput tons.•Employee-Related Legacy Liability Expense decreased $11 million primarily due to modifications made to the actuarial calculation of net periodicbenefit cost at the beginning of each year. Additionally, pension settlement expense is required when lump sum distributions made for a given planyear exceed the total of the service and interest costs for that same plan year. Settlement accounting was triggered in both periods. See Note 13 -Pension and Other Postretirement Benefits Plans in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K foradditional information.•Lease Rental Expense decreased $20 million primarily due to the sale of certain subleased equipment to Murray Energy in the current period.•Coal Reserve Holding Costs decreased $14 million in the period-to-period comparison, primarily as a result of the voluntary surrender of variousleases during the year ended December 31, 2016.•Other includes miscellaneous corporate activity. Approximately $4 million of current year costs relates to a write-off of future expected royaltypayments now deemed uncollectible as a result of a lessee's bankruptcy.Depreciation, Depletion and AmortizationDepreciation, depletion and amortization decreased $5 million in the period-to-period comparison primarily due to changes in the Company's assetretirement obligations.Selling, General and Administrative CostsSelling, general and administrative costs are allocated to the Company's Other Division based on a percentage of total revenue and a percentage of totalprojected capital expenditures. The decrease of $2 million is a result of decreases in the portion of selling, general and administrative expenses allocated tothe Other Division.Interest ExpenseInterest expense, net of amounts capitalized, of $16 million for the year ended December 31, 2017 is comprised of interest on the 5.75% MEDCORevenue Bonds, as well as interest on the new debt facilities entered into as a result of the separation and distribution that occurred on November 28, 2017.Interest expense, net of amounts capitalized, of $5 million for the year ended December 31, 2016 is comprised of interest on the 5.75% MEDCO RevenueBonds.59Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Results of Operations: Year Ended December 31, 2016 Compared with the Year Ended December 31, 2015Net Income Attributable to CONSOL Energy ShareholdersCONSOL Energy reported net income attributable to CONSOL Energy shareholders of $41 million for the year ended December 31, 2016, compared tonet income attributable to CONSOL Energy shareholders of $307 million for the year ended December 31, 2015.CONSOL Energy consists of the Pennsylvania Mining Complex, as well as various corporate and other business activities that are not allocated toPAMC. The other business activities include the CONSOL Marine Terminal, the Greenfield Reserves, closed and idle mine activities, selling, general andadministrative activities, and income taxes, as well as various other non-operated activities.PAMC ANALYSIS:The PAMC division's principal activities consist of mining, preparation and marketing of thermal coal, sold primarily to power generators. The divisionalso includes selling, general and administrative costs, as well as various other activities assigned to the PAMC division but not included in the costcomponents on a per unit basis.The PAMC division had earnings before income tax of $131 million for the year ended December 31, 2016, compared to earnings before income tax of$405 million for the year ended December 31, 2015. Variances are discussed below. For the Years Ended December 31, (in millions)2016 2015 VarianceSales: Coal Revenue$1,066 $1,289 $(223)Freight Revenue46 20 26Miscellaneous Other Income13 4 9 Total Revenue and Other Income1,125 1,313 (188)Operating Costs and Expenses: Operating Costs691 789 (98)Depreciation, Depletion and Amortization154 167 (13)Total Operating Costs and Expenses845 956 (111)Other Costs and Expenses: Other Costs42 (122) 164Depreciation, Depletion and Amortization14 10 4Total Other Costs and Expenses56 (112) 168Freight Expense46 20 26Selling, General and Administrative Costs38 41 (3)Interest Expense9 3 6 Total Costs and Expenses994 908 86Earnings Before Income Tax$131 $405 $(274)Coal ProductionThe table below presents total tons produced (in thousands) from the Pennsylvania Mining Complex for the periods indicated: For the Years Ended December 31,Mine 2016 2015 VarianceBailey 12,056 10,186 1,870Enlow 9,638 8,999 639Harvey 2,971 3,605 (634) Total 24,665 22,790 1,87560Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Coal production was 24.7 million tons for the year ended December 31, 2016, compared to 22.8 million tons for the year ended December 31, 2015. The1.9 million ton increase was attributable to improved domestic and export demand in the second half of 2016, partially offset by a decrease in production atthe Harvey Mine due to the temporary idling of one longwall for 90 days.Coal OperationsThe PAMC division's coal revenue and cost components on a per unit basis for these periods were as follows: For the Years Ended December 31, 2016 2015 VarianceTons Sold (in millions)24.6 22.9 1.7Average Sales Price per Ton Sold$43.31 $56.36 $(13.05) Total Operating Costs per Ton Sold (Cash Cost)$28.09 $34.47 $(6.38)Total Depreciation, Depletion and Amortization Costs per Ton Sold (Non-Cash Cost)6.26 7.31 (1.05) Total Costs per Ton Sold$34.35 $41.78 $(7.43) Average Margin per Ton Sold$8.96 $14.58 $(5.62) Add: Depreciation, Depletion and Amortization Costs per Ton Sold6.26 7.31 (1.05) Average Cash Margin per Ton Sold (1)$15.22 $21.89 $(6.67)(1) Average cash margin per ton is an operating ratio derived from non-GAAP measures.Coal RevenueCoal revenue was $1,066 million for the year ended December 31, 2016, compared to $1,289 million for the year ended December 31, 2015. The $223million decrease was attributable to a $13.05 per ton lower average sales price, offset by a 1.7 million increase in tons sold. The lower average sales price perton sold was primarily the result of the continued decline in both the domestic and global thermal coal markets, particularly in the first half of 2016. Thedecline was related to higher customer inventories and lower gas prices after persistently mild 2015 weather. The increase in overall tons sold reflects theimprovement in both domestic and international coal demand throughout the second half of 2016.Freight Revenue and Freight ExpenseFreight revenue is the amount billed to customers for transportation costs incurred. This revenue is based on the weight of coal shipped, negotiatedfreight rates and method of transportation, primarily rail, used by the customers to which the Company contractually provides transportation services. Freightrevenue is completely offset in freight expense. Freight revenue and freight expense were both $46 million for the year ended December 31, 2016, comparedto $20 million for the year ended December 31, 2015. The $26 million increase was due to increased shipments to customers where the Company wascontractually obligated to provide transportation services.Miscellaneous Other IncomeMiscellaneous other income was $13 million for the year ended December 31, 2016, compared to $4 million for the year ended December 31, 2015. Themajority of the increase was the result of a partial coal contract buyout in the current period.Operating Costs and ExpensesOperating costs and expenses are comprised of costs related to produced tons sold, along with changes in both the volumes and carrying values of coalinventory. Operating costs and expenses include items such as direct operating costs, royalty and production taxes, employee-related expenses anddepreciation, depletion, and amortization costs. Total operating costs and expenses for the PAMC division were $845 million for the year endedDecember 31, 2016, or $111 million lower than the $956 million for the year ended December 31, 2015. Total costs per PAMC ton sold were $34.35 per tonin the year ended December 31, 2016, compared to $41.78 per ton in the year ended December 31, 2015. The decrease in the cost of coal sold was driven bythe idling of one longwall at the PAMC complex for approximately 90 days, a reduction of staffing levels, vendor concessions and a realignment ofemployee benefits. All of the above steps resulted in more consistent operating schedules, reduced labor costs and improved productivity. Productivity forthe year ended December 31, 2016, as measured by tons per employee hour, improved by 17% compared to the year earlier period, despite the reducednumber of longwalls in operation.61Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Other Costs And ExpensesOther costs and expenses include items that are assigned to the PAMC division but are not included in unit costs, such as coal reserve holding costs andpurchased coal costs. Total other costs and expenses increased $168 million in the year ended December 31, 2016 compared to the year ended December 31,2015. The increase was primarily attributable to income of $129 million in the year ended December 31, 2015 related to OPEB plan changes made in May2015 for retired employees. The increase was also attributable to the following incurred in the year ended December 31, 2016: $19 million of costs related tothe temporary idling of one longwall at the PAMC complex for approximately 90 days to optimize operating schedules, $9 million of discretionary 401(k)contributions made as a result of company performance and management approval, $6 million of costs related to purchased coal sold for blending purposesonly, and $3 million of costs incurred in relation to the proposed consent decree with respect to the Bailey Mine complex.Selling, General and Administrative CostsAt December 31, 2016, CONSOL Energy was party to a service agreement with CCR that required CONSOL Energy to provide certain selling, generaland administrative services to CCR. These services are paid monthly based on an agreed-upon fixed fee that is reset at least annually. See Note 23 - RelatedParty Transactions of the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for additional information. An additionalportion of CONSOL Energy's selling, general and administrative costs are allocated to the PAMC division, outside of the service agreement, based on apercentage of total revenue and a percentage of total projected capital expenditures. The amount of selling, general and administrative costs related to PAMCoperations was $38 million for the year ended December 31, 2016, compared to $41 million for the year ended December 31, 2015. The $3 million decreasein the period-to-period comparison was primarily related to lower short-term incentive compensation payouts in the current year, as well as a reduction ofemployee wages and related expenses as a result of the Company reorganization that occurred in the second half of 2015 and the first quarter of 2016, whichresulted in an overall decrease in employees.Interest ExpenseInterest expense, net of amounts capitalized, of $9 million and $3 million for the years ended December 31, 2016 and 2015, respectively, is primarilycomprised of interest on the Old Partnership Revolver, which was first drawn upon on July 7, 2015.OTHER ANALYSIS:Other includes revenue and expenses from various corporate and diversified business activities that are not allocated to the PAMC division. Thediversified business activities include coal terminal operations, closed and idle mine activities, selling, general and administrative activities, and incometaxes, as well as various other non-operated activities, none of which are individually significant to the Company.Other business activities had a loss before income tax of $66 million for the year ended December 31, 2016, compared to earnings before income tax of$38 million for the year ended December 31, 2015. Variances are discussed below. For the Years Ended December 31,(in millions)2016 2015 VarianceRevenue: Terminal Revenue$31 $31 $—Miscellaneous Other Income69 65 4Gain on Sale of Assets5 13 (8) Total Revenue and Other Income105 109 (4)Other Costs and Expenses: Operating and Other Costs143 33 110Depreciation, Depletion and Amortization10 18 (8)Selling, General and Administrative Costs13 15 (2)Interest Expense5 5 — Total Costs and Expenses171 71 100(Loss) Earnings Before Income Tax$(66) $38 $(104)62Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Terminal RevenueTerminal revenue consists of sales from the CONSOL Marine Terminal, which is located on 200 acres in the Port of Baltimore, Maryland and providesaccess to international coal markets. CONSOL Marine Terminal sales were $31 million for the years ended December 31, 2016 and 2015, respectively.Miscellaneous Other IncomeMiscellaneous other income was $69 million for the year ended December 31, 2016, compared to $65 million for the year ended December 31, 2015.The change is due to the following items: For the Years Ended December 31,(in millions) 2016 2015 VarianceRoyalty Income $20 $15 $5Right of Way Sales 11 8 3Purchased Coal Sales — 2 (2)Rental Income 35 37 (2)Other Income 3 3 —Total Miscellaneous Other Income $69 $65 $4•Royalty Income related to non-operated coal properties increased $5 million in the period-to-period comparison primarily due to an increase in thirdparty activity.•Right of Way Sales increased $3 million in the period-to-period comparison due to an initiative in the current year to generate additional revenuefrom the Company's unutilized surface rights.•Purchased Coal Sales decreased $2 million due to lower volumes of coal that needed to be purchased to fulfill various contracts in the currentperiod.Gain on Sale of AssetsGain on sale of assets decreased $8 million in the period-to-period comparison, primarily due to the sale of various coal reserves during each year.Operating and Other CostsOperating and other costs were $143 million for the year ended December 31, 2016, compared to $33 million for the year ended December 31, 2015.Operating and other costs increased in the period-to-period comparison due to the following items: For the Years Ended December 31,(in millions) 2016 2015 VarianceTerminal Operating Costs $18 $20 $(2)Employee-Related Legacy Liability Expense 66 (36) 102Coal Reserve Holding Costs 19 8 11Closed and Idle Mines 9 9 —Lease Rental Expense 30 31 (1)Other 1 1 —Miscellaneous Operating Expense $143 $33 $110•Terminal Operating Costs decreased $2 million due to a reduction in labor costs.•Employee-Related Legacy Liability Expense increased $102 million primarily due to modifications, as well as a change in actuarially-calculatedamortization, made to the OPEB plan in May 2015 for retired employees. Additionally, pension settlement expense is required when lump sumdistributions made for a given plan year exceed the total of the service and interest costs for that same plan year. Settlement accounting wastriggered in both periods. See Note 13 - Pension and Other Postretirement Benefit Plans in the Notes to the Audited Consolidated FinancialStatements in Item 8 of this Form 10-K for additional detail.•Coal Reserve Holding Costs increased $11 million in the period-to-period comparison, primarily as a result of the surrender of various leases in thecurrent period.63Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.•Lease Rental Expense decreased $1 million primarily due to the buyout of certain leased equipment in the current period.Depreciation, Depletion and AmortizationDepreciation, depletion, and amortization decreased $8 million in the period-to-period comparison due to changes in the asset retirement obligations attwo of the Company's closed mine locations, resulting in a reduction in accretion expense for these mines.Selling, General and Administrative CostsSelling, general and administrative costs are allocated to the Company's Other Division based on a percentage of total revenue and a percentage of totalprojected capital expenditures. The decrease of $2 million is a result of decreases in the portion of selling, general and administrative expenses allocated tothe Other Division.Interest Expense Interest expense, net of amounts capitalized, of $5 million for the years ended December 31, 2016 and 2015, is primarily comprised of interest on the5.75% MEDCO Revenue Bonds.Critical Accounting Policies and EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requiresmanagement to make judgments, estimates and assumptions that affect reported amounts of assets and liabilities, revenues and expenses, and relateddisclosure of contingent assets and liabilities in the Consolidated Financial Statements and at the date of the financial statements. See Note 1-SignificantAccounting Policies in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for further discussion. CONSOL Energy basesits estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form thebasis for making the judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The Company evaluates itsestimates on an on-going basis. Actual results could differ from those estimates upon subsequent resolution of identified matters. Management believes thatthe estimates utilized are reasonable. The following critical accounting policies are materially impacted by judgments, assumptions and estimates used in thepreparation of the Consolidated Financial Statements.Other Post Employment Benefits (“OPEB”), Salaried Pensions, Workers’ Compensation and Coal Workers’ Pneumoconiosis (“CWP”)Liabilities and expenses for OPEB, pension, workers’ compensation and CWP are determined using actuarial methodologies and incorporate significantassumptions, including the interest rate used to discount the future estimated liability, the expected long-term rate of return on plan assets, and severalassumptions relating to the employee workforce (salary increases, health care cost trend rates, retirement age, and mortality).The interest rate used to discount future estimated liabilities is determined using a Company-specific yield curve model (above-mean) developed withthe assistance of an external actuary. The Company-specific yield curve uses a subset of the expanded bond universe to determine the Company-specificdiscount rate. Bonds used in the yield curve are rated AA by Moody’s or Standard & Poor’s as of the measurement date. The yield curve model parallels theplans’ projected cash flows.The assumed rate of return on plan assets can also impact CONSOL Energy’s pension liability. The market related asset value is derived by taking thecost value of assets as of December 31, 2017 and multiplying it by the average 36-month ratio of the market value of assets to the cost value of assets.CONSOL Energy’s pension plan weighted average asset allocations at December 31, 2017 consisted of 50% equity securities and 50% debt securities.64Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The estimated liabilities recognized at December 31, 2017 and the benefit payments made for the year ended December 31, 2017 were as follows(dollars in thousands):Plan Estimated Liability as of December 31,2017 Benefit Payments for the year ended December31, 2017OPEB $591,563 $31,088Pension $54,745 $1,181Workers’ Compensation $78,528 $14,377CWP $162,840 $13,107Mine Closure and Gas Well Closing ObligationsThe Surface Mining Control and Reclamation Act established operational, reclamation and closure standards for all aspects of surface mining as well asmost aspects of deep mining. CONSOL Energy accrues for the costs of current coal mine disturbance and final coal mine and gas well closure, including thecost of treating mine water discharge where necessary. Estimates of the Company's total mine-closing and gas well closing liabilities, which are based uponpermit requirements and CONSOL Energy engineering expertise related to these requirements, including the current portion, were approximately $259million at December 31, 2017. This liability is reviewed annually, or when events and circumstances indicate an adjustment is necessary, by CONSOLEnergy management and engineers. The estimated liability can significantly change if actual costs vary from assumptions or if governmental regulationschange significantly.Accounting for Asset Retirement Obligations requires that the fair value of an asset retirement obligation be recognized in the period in which it isincurred if a reasonable estimate of fair value can be made. The present value of the estimated asset retirement costs is capitalized as part of the carryingamount of the long-lived asset. Asset retirement obligations primarily relate to the closure of mines and gas wells and the reclamation of land uponexhaustion of coal and gas reserves. Changes in the variables used to calculate the liabilities can have a significant effect on the mine closing and gas wellclosing liabilities. The amounts of assets and liabilities recorded are dependent upon a number of variables, including the estimated future retirement costs,estimated proved reserves, assumptions involving profit margins, inflation rates and the assumed credit-adjusted risk-free interest rate. Accounting for Asset Retirement Obligations also requires depreciation of the capitalized asset retirement cost and accretion of the asset retirementobligation over time. The depreciation will generally be determined on a units-of-production basis, whereas the accretion to be recognized will escalate overthe life of the producing assets, typically as production declines.The Company believes that the accounting estimates related to asset retirement obligations are “critical accounting estimates” because the Companymust assess the expected amount and timing of asset retirement obligations. In addition, the Company must determine the estimated present value of futureliabilities. Future results of operations for any particular quarterly or annual period could be materially affected by changes in the Company’s assumptions.Income TaxesDeferred tax assets and liabilities are recognized using enacted tax rates for the estimated future tax effects of temporary differences between the bookand tax basis of recorded assets and liabilities. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion of thedeferred tax asset will not be realized. All available evidence, both positive and negative, must be considered in determining the need for a valuationallowance. At December 31, 2017, CONSOL Energy has deferred tax assets in excess of deferred tax liabilities of approximately $75 million. At December 31,2017, CONSOL Energy had a valuation allowance of $1 million on deferred tax assets.CONSOL Energy evaluates all tax positions taken on the state and federal tax filings to determine if the position is more likely than not to be sustainedupon examination. For positions that meet the more likely than not to be sustained criteria, an evaluation to determine the largest amount of benefit,determined on a cumulative probability basis that is more likely than not to be realized upon ultimate settlement is determined. A previously recognized taxposition is reversed when it is subsequently determined that a tax position no longer meets the more likely than not threshold to be sustained. The evaluationof the sustainability of a tax position and the probable amount that is more likely than not is based on judgment, historical experience and on various otherassumptions that CONSOL Energy believes are reasonable under the circumstances. The results of these estimates, that are not readily apparent from othersources, form the basis for recognizing an uncertain tax liability. Actual results could differ from those estimates upon subsequent resolution of identifiedmatters.65Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The Company believes that accounting estimates related to income taxes are “critical accounting estimates” because the Company must assess thelikelihood that deferred tax assets will be recovered from future taxable income and exercise judgment regarding the amount of financial statement benefit torecord for uncertain tax positions. When evaluating whether or not a valuation allowance must be established on deferred tax assets, the Company exercisesjudgment in determining whether it is more likely than not (a likelihood of more than 50%) that some portion or all of the deferred tax assets will not berealized. The Company considers all available evidence, both positive and negative, to determine whether, based on the weight of the evidence, a valuationallowance is needed, including carrybacks, tax planning strategies, reversal of deferred tax assets and liabilities and forecasted future taxable income. Inmaking the determination related to uncertain tax positions, the Company considers the amounts and probabilities of the outcomes that could be realizedupon ultimate settlement of an uncertain tax position using the facts, circumstances and information available at the reporting date to establish theappropriate amount of financial statement benefit. To the extent that an uncertain tax position or valuation allowance is established or increased or decreasedduring a period, the Company must include an expense or benefit within tax expense in the income statement. Future results of operations for any particularquarterly or annual period could be materially affected by changes in the Company’s assumptions.ContingenciesCONSOL Energy is currently involved in certain legal proceedings. The Company has accrued its estimate of the probable costs for the resolution ofthese claims. This estimate has been developed in consultation with legal counsel involved in the defense of these matters and is based upon the nature of thelawsuit, progress of the case in court, view of legal counsel, prior experience in similar matters, and management's intended response. Future results ofoperations for any particular quarter or annual period could be materially affected by changes in the Company's assumptions or the outcome of theseproceedings. Legal fees associated with defending these various lawsuits and claims are expensed when incurred.The Company believes that the accounting estimates related to contingencies are “critical accounting estimates” because the Company must assess theprobability of loss related to contingencies. In addition, the Company must determine the estimated present value of future liabilities. Future results ofoperations for any particular quarterly or annual period could be materially affected by changes in the Company’s assumptions. See Note 20-Commitmentsand Contingent Liabilities in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K for more information.Coal ReservesThere are numerous uncertainties inherent in estimating quantities and values of economically recoverable coal reserves, including many factorsbeyond the Company's control. As a result, estimates of economically recoverable coal reserves are by their nature uncertain. Information about CONSOLEnergy's reserves consists of estimates based on engineering, economic and geological data assembled and analyzed by the Company's staff. CONSOLEnergy's coal reserves are periodically reviewed by an independent third party consultant. Some of the factors and assumptions which impact economicallyrecoverable reserve estimates include:•geological conditions;•historical production from the area compared with production from other producing areas;•the assumed effects of regulations and taxes by governmental agencies;•assumptions governing future prices; and•future operating costs.Each of these factors may in fact vary considerably from the assumptions used in estimating reserves. For these reasons, estimates of the economicallyrecoverable quantities of coal attributable to a particular group of properties, and classifications of these reserves based on risk of recovery and estimates offuture net cash flows, may vary substantially. Actual production, revenues and expenditures with respect to the Company's reserves will likely vary fromestimates, and these variances may be material. See “Risk Factors” in Item 1A of this report for a discussion of the uncertainties in estimating CONSOLEnergy's reserves.Impairment of Long-lived Assets:Impairment of long-lived assets is recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated bythose assets are less than the assets' carrying value. The carrying value of the assets is then reduced to its estimated fair value, which is usually measuredbased on an estimate of future discounted cash flows. There were no impairment losses recognized during the years ended December 31, 2017, 2016 and2015.66Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Liquidity and Capital ResourcesHistorically, ParentCo provided capital, cash management and other treasury services to ParentCo's Coal Business, which ParentCo continued toprovide until the separation was consummated on November 28, 2017. Following the separation, the Company's capital structure and sources of liquiditychanged significantly from its historical capital structure. The Company will no longer participate in capital management with ParentCo; rather, theCompany's ability to fund its cash needs will depend on its ongoing ability to generate and raise cash in the future. Transfers of cash, both to and fromParentCo’s centralized cash management system, are reflected as a component of Change in Parent Net Investment in the Consolidated Statements of CashFlows.The Company expects the cash flow generated from operations in 2018 to be comparable to 2017. The Company expects strong demand from theexport and thermal domestic markets. Through consistent cost control measures, The Company expects to provide adequate cash flows to meet itsmaintenance capital requirements. The Company started the course refuse disposal area project in 2017, which is expected to continue through 2021. TheCompany's 2018 capital needs are expected to be between $125 million to $145 million, which is increased from 2017 levels due to additional capitalexpenditures related to the refuse disposal area project, as well as additional maintenance equipment and other purchases.Uncertainty in the financial markets brings additional potential risks to CONSOL Energy. These risks include declines in the Company's stock price,less availability and higher costs of additional credit, potential counterparty defaults, and commercial bank failures. Financial market disruptions may impactthe Company's collection of trade receivables. As a result, CONSOL Energy regularly monitors the creditworthiness of its customers and counterparties andmanages credit exposure through payment terms, credit limits, prepayments and security. CONSOL Energy believes that its current group of customers isfinancially sound and represents no abnormal business riskCONSOL Energy expects its ongoing sources of liquidity to include cash generated from operations, cash on hand, borrowings under the revolvingcredit facility and A/R Securitization facility (which are discussed below), and, if necessary, the issuance of additional equity or debt securities. TheCompany believes that cash generated from these sources will be sufficient to meet its short-term working capital requirements, long-term capital expenditurerequirements, and debt servicing obligations, as well as to provide required letters of credit.Following the separation, the Company owns an undivided interest in 75% of the PAMC and the Partnership owns the remaining undivided 25%interest of the PAMC. The Company has a 61.3% economic ownership interest in the Partnership through its various holdings of the general partner andlimited partnership interests of the Partnership.Cash Flows (in millions) For the Years Ended December 31, 2017 2016 ChangeCash provided by operating activities$248 $329 $(81)Cash used in investing activities$(57) $(46) $(11)Cash used in financing activities$(51) $(277) $226Cash provided by operating activities decreased $81 million in the period-to-period comparison primarily due to a $75 million change in deferredtaxes, as well as an increase in the gain on sale of assets year over year. Changes in working capital that occurred throughout both periods also contributed tothe decrease in operating cash flows. These changes were offset, in part, by a $32 million increase in net income in the period-to-period comparison.Cash used in investing activities increased $11 million in the period-to-period comparison. Capital expenditures increased $28 million primarily due toan increase in refuse expenditures. This was offset, in part, by increased proceeds from the sale of assets of $17 million, primarily related to the sale of surfacerights and reserves.Cash used in financing activities decreased $226 million in the period-to-period comparison. During the year ended December 31, 2017, $201 millionof net payments were made under the Old Partnership Revolver, compared to net proceeds received during the year ended December 31, 2016 of $16 million.In connection with the separation and distribution, the Company entered into a revolving credit facility, a Term Loan A Facility, and a Term Loan B Facility,and issued Senior Secured Second Lien Notes. The net proceeds, including debt issuance fees, from these facilities were $760 million. Also in connectionwith the67Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.separation and distribution, the Company made a $425 million distribution to CNX Resources Corporation. Prior to the separation and distribution, thecompany's net distributions to ParentCo decreased $114 million.Senior Secured Credit FacilitiesIn connection with the separation and distribution, the Company entered into a revolving credit facility with commitments up to $300 million (the“Revolving Credit Facility”), a Term Loan A Facility of up to $100 million (the “TLA Facility”) and a Term Loan B Facility of up to $400 million (the “TLBFacility”, and together with the Revolving Credit Facility and the TLA Facility, the “Senior Secured Credit Facilities”). Borrowings under the Company’sSenior Secured Credit Facilities bear interest at a floating rate which can be, at the Company’s option, either (i) LIBOR plus an applicable margin or (ii) analternate base rate plus an applicable margin. The applicable margin for the Revolving Credit Facility and TLA Facility depends on the total net leverageratio, whereas the applicable margin for the TLB Facility is fixed. The Revolving Credit and TLA Facilities mature on November 28, 2021. The TLB Facilitymatures on November 28, 2022. Starting with the quarter ending March 31, 2018, the TLA Facility will amortize in equal quarterly installments of (i) 3.75%of the original principal amount thereof, for the first eight quarterly installments, (ii) 6.25% of the original principal amount thereof for the subsequent fourquarterly installments and (iii) 11.25% of the original principal amount thereof for the quarterly installments thereafter, with the remaining balance due atfinal maturity. Starting with the quarter ending March 31, 2018, the TLB Facility will amortize in equal quarterly installments in an amount equal to 0.25%per annum of the original principal amount thereof, with the remaining balance due at final maturity.Obligations under the Senior Secured Credit Facilities are guaranteed by (i) all owners of the 75% undivided economic interest in the PAMC held bythe Company, (ii) any other members of the Company’s group that own any portion of the collateral securing the Revolving Credit Facility, and (iii) subjectto certain customary exceptions and agreed materiality thresholds, all other existing or future direct or indirect wholly owned restricted subsidiaries of theCompany (excluding the Partnership and its wholly-owned subsidiaries). As currently contemplated, all obligations are secured by, subject to certainexceptions (including a limitation of pledges of equity interests in certain subsidiaries and certain thresholds with respect to real property), a first-priority lienon (i) the Company’s 75% undivided economic interest in the Pennsylvania Mining Complex, (ii) the limited partner units of the Partnership held by theCompany, (iii) the equity interests in CONSOL Coal Resources GP LLC held by the Company (iv) the CONSOL Marine Terminal and (v) the 1.6 billion tonsof Greenfield Reserves. The Senior Secured Credit Facilities contain a number of customary affirmative covenants. In addition, the Senior Secured CreditFacilities contain a number of negative covenants, including (subject to certain exceptions) limitations on (among other things): indebtedness, liens,investments, acquisitions, dispositions, restricted payments, and prepayments of junior indebtedness.The Revolving Credit Facility and TLA Facility also include financial covenants, including (i) a maximum first lien gross leverage ratio, (ii) amaximum total net leverage ratio, and (iii) a minimum fixed charge coverage ratio. CONSOL Energy must maintain a maximum first lien gross leverage ratiocovenant of no more than 2.25 to 1.00, measured quarterly, stepping down to 2.00 to 1.00 in March 2019 and 1.75 to 1.00 in March 2020. The maximum firstlien gross leverage ratio is calculated as the ratio of Consolidated First Lien Debt to Consolidated EBITDA, excluding the Partnership. The maximum firstlien gross leverage ratio was 1.58 to 1.00 at December 31, 2017. CONSOL Energy must maintain a maximum total net leverage ratio covenant of no morethan 3.25 to 1.00, measured quarterly, stepping down to 3.00 to 1.00 in March 2019 and 2.75 to 1.00 in March 2020. The maximum total net leverage ratio iscalculated as the ratio of Consolidated Indebtedness, minus Cash on Hand, to Consolidated EBITDA, excluding the Partnership. The maximum total netleverage ratio was 2.37 to 1.00 at December 31, 2017. Consolidated EBITDA, as used in the covenant calculation, excludes non-cash compensationexpenses, non-recurring transaction expenses, extraordinary gains and losses, gains and losses on discontinued operations, non-cash charges related to legacyemployee liabilities and gains and losses on debt extinguishment, and includes cash distributions received from the Partnership and subtracts cash paymentsrelated to legacy employee liabilities. The facilities also include a minimum fixed charge coverage covenant of no less than 1.00 to 1.00, measured quarterly,stepping up to 1.05 to 1.00 in March 2020 and 1.10 to 1.00 in March 2021. The minimum fixed charge coverage ratio is calculated as the ratio ofConsolidated EBITDA to Consolidated Fixed Charges, excluding the Partnership. Consolidated Fixed Charges, as used in the covenant calculation, includescash interest payments, cash payments for income taxes, scheduled debt repayments, dividends paid, and Maintenance Capital Expenditures. Compliancewith the minimum fixed charge coverage ratio is not required until the quarter ending March 31, 2018.The Senior Secured Credit Facilities contain customary events of default, including with respect to a failure to make payments when due, cross-defaultand cross-judgment default and certain bankruptcy and insolvency events.The aggregate gross proceeds of the borrowings under the TLA and TLB Facilities and the Second Lien Notes was $792 million and was used, amongother things, to (i) make a cash payment of $425 million to ParentCo on November 28, 2017, (ii) to refinance as an intercompany loan the existingindebtedness of the Partnership under its senior secured revolving credit facility (the “Old Partnership Revolver”), as described below, (iii) to pay related feesand expenses and (iv) otherwise fund the Company’s working capital needs and general corporate purposes following the separation.68Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.At December 31, 2017, the Revolving Credit Facility had no borrowings outstanding and $27 million of letters of credit outstanding, leaving $273million of unused capacity. From time to time, CONSOL Energy is required to post financial assurances to satisfy contractual and other requirementsgenerated in the normal course of business. Some of these assurances are posted to comply with federal, state or other government agencies' statutes andregulations. CONSOL Energy sometimes uses letters of credit to satisfy these requirements and these letters of credit reduce the Company's borrowing facilitycapacity.Securitization FacilityOn November 30, 2017, (1)(i) CONSOL Marine Terminals LLC, formerly known as CNX Marine Terminals LLC, as an originator of receivables, (ii)CONSOL Pennsylvania Coal Company LLC (“CONSOL Pennsylvania”), as an originator of receivables and as initial servicer of the receivables for itself andthe other originators (collectively, the “Originators”), each a wholly owned subsidiary of CONSOL Energy, and (iii) CONSOL Funding LLC (the “SPV”), aDelaware special purpose entity and wholly owned subsidiary of CONSOL Energy, as buyer, entered into a Purchase and Sale Agreement (the “Purchase andSale Agreement”) and (2)(i) CONSOL Thermal Holdings LLC, an indirect, wholly-owned subsidiary of the Partnership, as sub-originator (the “Sub-Originator”), and (ii) CONSOL Pennsylvania, as buyer and as initial servicer of the receivables for itself and the Sub-Originator, entered into a Sub-OriginatorSale Agreement (the “Sub-Originator PSA”). In addition, on that date, the SPV entered into a Receivables Financing Agreement (the “Receivables FinancingAgreement”) by and among (i) the SPV, as borrower, (ii) CONSOL Pennsylvania, as initial servicer, (iii) PNC Bank, as administrative agent, LC Bank andlender, and (iv) the additional persons from time to time party thereto as lenders. Together, the Purchase and Sale Agreement, the Sub-Originator PSA and theReceivables Financing Agreement establish the primary terms and conditions of an accounts receivable securitization program (the “Securitization”).Pursuant to the Securitization, (i) the Sub-Originator will sell current and future trade receivables to CONSOL Pennsylvania and (ii) the Originators willsell and/or contribute current and future trade receivables (including receivables sold to CONSOL Pennsylvania by the Sub-Originator) to the SPV and theSPV will, in turn, pledge its interests in the receivables to PNC Bank, which will either make loans or issue letters of credit on behalf of the SPV. Themaximum amount of advances and letters of credit outstanding under the Securitization may not exceed $100 million.Loans under the Securitization will accrue interest at a reserve-adjusted LIBOR market index rate equal to the one-month Eurodollar rate. Loans andletters of credit under the Securitization also will accrue a program fee and a letter of credit participation fee, respectively, equal to 4.00% per annum. Inaddition, the SPV paid certain structuring fees to PNC Capital Markets LLC and will pay other customary fees to the lenders, including a fee on unusedcommitments equal to 0.60% per annum.The SPV’s assets and credit are not available to satisfy the debts and obligations owed to the creditors of the CONSOL Energy, the Sub-Originator orany of the Originators. The Sub-Originator, the Originators and CONSOL Pennsylvania as servicer are independently liable for their own customaryrepresentations, warranties, covenants and indemnities. In addition, CONSOL Energy has guaranteed the performance of the obligations of the Sub-Originator, the Originators and CONSOL Pennsylvania as servicer, and will guarantee the obligations of any additional originators or successor servicer thatmay become party to the Securitization. However, neither CONSOL Energy nor its affiliates will guarantee collectability of receivables or thecreditworthiness of obligors thereunder.The Securitization contains various customary representations and warranties, covenants and default provisions which provide for the termination andacceleration of the commitments and loans under the Securitization in circumstances including, but not limited to, failure to make payments when due,breach of representation, warranty or covenant, certain insolvency events or failure to maintain the security interest in the trade receivables, and defaultsunder other material indebtedness.At December 31, 2017, eligible accounts receivable totaled approximately $61 million. At December 31, 2017, the facility had no outstandingborrowings and $61 million of letters of credit outstanding, leaving no unused capacity. Costs associated with the receivables facility totaled $171 thousandfor the year ended December 31, 2017. These costs have been recorded as financing fees which are included in Operating and Other Costs in the ConsolidatedStatements of Income. The Company has not derecognized any receivables due to its continued involvement in the collections efforts.11.00% Senior Secured Second Lien Notes due 2025On November 13, 2017, the Company issued $300 million in aggregate principal amount of 11.00% Senior Secured Second Lien Notes due 2025 (the“Second Lien Notes”) pursuant to an indenture (the “Indenture”) dated as of November 13, 2017, by and between the Company and, UMB Bank, N.A., anational banking association, as trustee and collateral trustee (the “Trustee”). On November 28, 2017, certain subsidiaries of the Company executed asupplement to the Indenture and became party to the Indenture as a guarantor (the “Guarantors”). The Second Lien Notes are secured by second priority lienson substantially all of69Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.the assets of the Company and the Guarantors that are pledged and on a first-priority basis as collateral securing the Company’s obligations under the SeniorSecured Credit Facilities (described above), subject to certain exceptions under the Indenture.On or after November 15, 2021, the Company may redeem all or part of the Second Lien Notes at the redemption prices set forth below, plus accruedand unpaid interest, if any, to, but not including, the redemption date (subject to the rights of holders of the Second Lien Notes on the relevant record date toreceive interest due on the relevant interest payment date), beginning on November 15 of the years indicated: YearPercentage 2021105.50% 2022102.75% 2023 and thereafter100.00% Prior to November 15, 2020, the Company may on one or more occasions redeem up to 35% of the principal amount of the Second Lien Notes with anamount of cash not greater than the amount of the net cash proceeds from one or more equity offerings at a redemption price equal to 111.00% of theprincipal amount of the Second Lien Notes to be redeemed, plus accrued and unpaid interest, if any, to, but not including, the date of redemption, as long asat least 65% of the aggregate principal amount of the Second Lien Notes originally issued on the issue date (excluding Second Lien Notes held by theCompany and its subsidiaries) remains outstanding after each such redemption and the redemption occurs within less than 180 days after the date of theclosing of the equity offering.At any time or from time to time prior to November 15, 2021, the Company may also redeem all or a part of the Second Lien Notes, at a redemptionprice equal to 100% of the principal amount thereof plus the Applicable Premium, as defined in the Indenture, plus accrued and unpaid interest, if any, to, butnot including, the redemption date (subject to the rights of holders of the Second Lien Notes on the relevant record date to receive interest due on therelevant interest payment date).In December 2017, CONSOL Energy’s Board of Directors approved a program to repurchase, from time to time, the Company's outstanding shares ofcommon stock or its 11.00% Senior Secured Second Lien Notes due 2025, in an aggregate amount of up to $50,000 through the period ending June 30, 2019.Under the terms of the program, CONSOL Energy is permitted to make repurchases in the open market, in privately negotiated transactions, acceleratedrepurchase programs or in structured share repurchase programs. Any repurchases of common stock or notes are to be funded from available cash on hand orshort-term borrowings. The program does not obligate CONSOL Energy to acquire any particular amount of its common stock or notes, and can be modifiedor suspended at any time at the Company’s discretion. The program is conducted in compliance with applicable legal requirements and within the limitsimposed by any credit agreement, receivables purchase agreement or indenture and is subject to market conditions and other factors. No shares or notes wererepurchased under this program during the year ended December 31, 2017.The Indenture contains covenants that will limit the ability of the Company and the Guarantors, to (i) incur, assume or guarantee additionalindebtedness or issue preferred stock; (ii) create liens to secure indebtedness; (iii) declare or pay dividends on the Company’s common stock, redeem stock ormake other distributions to the Company’s stockholders; (iv) make investments; (v) restrict dividends, loans or other asset transfers from the Company’srestricted subsidiaries; (vi) merge or consolidate, or sell, transfer, lease or dispose of substantially all of the Company’s assets; (vii) sell or otherwise disposeof certain assets, including equity interests in subsidiaries; (viii) enter into transactions with affiliates; and (ix) create unrestricted subsidiaries. Thesecovenants are subject to important exceptions and qualifications. If the Second Lien Notes achieve an investment grade rating from both Standard & Poor’sRatings Services and Moody’s Investors Service, Inc. and no default under the Indenture exists, many of the foregoing covenants will terminate and cease toapply. The Indenture also contains customary events of default, including (i) default for 30 days in the payment when due of interest on the Notes; (ii) defaultin payment when due of principal of or premium, if any, on the Notes at maturity, upon redemption or otherwise; (iii) covenant defaults, (iv) cross-defaults tocertain indebtedness and (v) certain events of bankruptcy or insolvency with respect to the Company or any of the Guarantors. If an event of default occursand is continuing, the Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Second Lien Notes may declare all theNotes to be due and payable immediately. If an event of default arises from certain events of bankruptcy or insolvency, with respect to the Company, anyrestricted subsidiary of the Company that is a significant subsidiary or any group of restricted subsidiaries of the Company that, taken together, wouldconstitute a significant subsidiary, all outstanding Second Lien Notes will become due and payable immediately without further action or notice.If the Company experiences certain kinds of changes of control, holders of the Second Lien Notes will be entitled to require the Company to repurchaseall or any part of that holder’s Second Lien Notes pursuant to an offer on the terms set forth in the70Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indenture. The Company will offer to make a cash payment equal to 101% of the aggregate principal amount of the Second Lien Notes repurchased plusaccrued and unpaid interest on the Second Lien Notes repurchased to, but not including, the date of purchase, subject to the rights of holders of the Notes onthe relevant record date to receive interest due on the relevant interest payment date.The Second Lien Notes were issued in a private offering that is exempt from the registration requirements of the Securities Act, to qualified institutionalbuyers in accordance with Rule 144A and to persons outside of the United States pursuant to Regulation S under the Securities Act.Affiliated Company Credit Agreement with PartnershipOn November 28, 2017, the Company also entered into an Affiliated Company Credit Agreement with the Partnership and certain of its subsidiaries (the“Partnership Credit Parties”) under which the Company provides as lender a revolving credit facility in an aggregate principal amount of up to $275 millionto the Partnership Credit Parties. In connection with the completion of the separation, the Partnership drew an initial $201 million, the net proceeds of whichwere used to repay the Old Partnership Revolver and to provide working capital for the Partnership following the separation and for other general corporatepurposes.The Affiliated Company Credit Agreement matures on February 27, 2023. The collateral obligations under the Affiliated Company Credit Agreementgenerally mirror the Old Partnership Revolver, as does the list of entities that will act as guarantors thereunder. The Affiliated Company Credit Agreement issubject to financial covenants relating to a maximum first lien gross leverage ratio and a maximum total net leverage ratio, which will be calculated on aconsolidated basis for the Partnership and its restricted subsidiaries at the end of each fiscal quarter. The Partnership was in compliance with each of thesefinancial covenants at December 31, 2017. The Affiliated Company Credit Agreement also contains a number of customary affirmative covenants andnegative covenants, including limitations on the ability of the Partnership to incur additional indebtedness, grant liens, and make investments, acquisitions,dispositions, restricted payments, and prepayments of junior indebtedness (subject to certain limited exceptions).Contractual ObligationsCONSOL Energy is required to make future payments under various contracts. CONSOL Energy also has commitments to fund its pension plans,provide payments for other postretirement benefit plans, and fund capital projects. The following is a summary of the Company's significant contractualobligations at December 31, 2017 (in thousands): Payments due by Year Less Than1 Year 1-3 Years 3-5 Years More Than5 Years TotalLong-Term Debt$19,318 $48,556 $433,411 $403,665 $904,950Interest on Long-Term Debt78,753 148,837 139,821 117,698 485,109Capital (Finance) Lease Obligations3,164 6,436 2,203 — 11,803Interest on Capital (Finance) Lease Obligations609 676 50 — 1,335Operating Lease Obligations73,223 53,646 33,153 21,796 181,818Long-Term Liabilities—Employee Related (a)65,519 121,348 116,452 544,927 848,246Other Long-Term Liabilities (b)186,274 47,318 40,205 154,187 427,984Total Contractual Obligations (c)$426,860 $426,817 $765,295 $1,242,273 $2,861,245 _________________________(a)Employee related long-term liabilities include other post-employment benefits, work-related injuries and illnesses. Estimated salaried retirementcontributions required to meet minimum funding standards under ERISA are excluded from the pay-out table due to the uncertainty regardingamounts to be contributed. CONSOL Energy does not expect to contribute to the pension in 2018.(b)Other long-term liabilities include mine reclamation and closure and other long-term liability costs.(c)The significant obligation table does not include obligations to taxing authorities due to the uncertainty surrounding the ultimate settlement ofamounts and timing of these obligations.71Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.DebtAt December 31, 2017, CONSOL Energy had total long-term debt and capital lease obligations of $909 million outstanding, including the currentportion of long-term debt of $22 million. This long-term debt consisted of:•An aggregate principal amount of $400 million in connection with the Term Loan B (TLB) Facility, due in November 2022, less $8 million ofunamortized bond discount. Borrowings under the TLB Facility bear interest at a floating rate.•An aggregate principal amount of $300 million of 11.00% senior secured second lien notes due in November 2025. Interest on the notes is payableMay 15 and November 15 of each year.•An aggregate principal amount of $100 million in connection with the Term Loan A (TLA) Facility, due in November 2021. Borrowings under theTLA Facility bear interest at a floating rate.•An aggregate principal amount of $103 million of industrial revenue bonds which were issued to finance the Baltimore port facility and bear interestat 5.75% per annum and mature in September 2025. Interest on the industrial revenue bonds is payable March 1 and September 1 of each year.Payment of the principal and interest on the notes is guaranteed by CONSOL Energy.•Advance royalty commitments of $2 million with an average interest rate of 9.42% per annum.•An aggregate principal amount of $12 million of capital leases with a weighted average interest rate of 5.82% per annum.At December 31, 2017, CONSOL Energy had no borrowings outstanding and approximately $27 million of letters of credit outstanding under the $300million senior secured revolving credit facility. At December 31, 2017, CONSOL Energy had no borrowings outstanding and approximately $61 million ofletters of credit outstanding under the $100 million securitization facility.Total Equity and DividendsTotal equity attributable to CONSOL Energy was $344 million at December 31, 2017 and $800 million at December 31, 2016. See the ConsolidatedStatements of Stockholders' Equity in Item 8 of this Form 10-K for additional details.The declaration and payment of dividends by CONSOL Energy is subject to the discretion of CONSOL Energy's Board of Directors, and no assurancecan be given that CONSOL Energy will pay dividends in the future. The determination to pay dividends in the future will depend upon, among other things,general business conditions, CONSOL Energy's financial results, contractual and legal restrictions regarding the payment of dividends by CONSOL Energy,planned investments by CONSOL Energy and such other factors as the Board of Directors deems relevant. The Company's senior secured credit facilities limitCONSOL Energy's ability to pay dividends when the Company's total net leverage ratio exceeds 2.00 to 1.00 and subject to an aggregate amount up to acumulative credit calculation set forth in the facilities. The total net leverage ratio was 2.37 to 1.00 at December 31, 2017. The cumulative credit starts with$50 million and builds with excess cash flow commencing in 2018. The calculation of the total net leverage ratio excludes the Partnership. The creditfacilities do not permit dividend payments in the event of default. The indenture to the senior secured second lien notes limits dividends when theCompany's total net leverage ratio exceeds 2.00 to 1.00 and subject to an amount not to exceed an annual rate of 4.0% of the quoted public market value pershare of such common stock at the time of the declaration. The indenture does not permit dividend payments in the event of default.In connection with the separation and distribution, the Partnership entered into an intercompany loan arrangement with the Company with an initialoutstanding balance of $201 million. The Partnership used the initial loan to repay outstanding borrowings under the prior revolving credit facility, whichwas then terminated. The new intercompany loan arrangement similarly limits the Partnership's ability to pay distributions to its unitholders (including theCompany) when the Partnership's net leverage ratio exceeds 3.25 to 1.00 or the Partnership's first lien gross leverage ratio exceeds 2.75 to 1.00.On January 25, 2018, the Board of Directors of CCR's general partner declared a cash distribution to the Partnership’s unitholders for the quarter endedDecember 31, 2017 of $0.5125 per common and subordinated unit. The cash distribution will be made on February 15, 2018 to the unit holders of record atthe close of business on February 8, 2018.72Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Off-Balance Sheet TransactionsCONSOL Energy does not maintain off-balance sheet transactions, arrangements, obligations or other relationships with unconsolidated entities orothers that are reasonably likely to have a material current or future effect on CONSOL Energy’s financial condition, changes in financial condition, revenuesor expenses, results of operations, liquidity, capital expenditures or capital resources which are not disclosed in the Notes to the Audited ConsolidatedFinancial Statements. CONSOL Energy participates in the United Mine Workers of America (the “UMWA”) Combined Benefit Fund and the UMWA 1992Benefit Plan which generally accepted accounting principles recognize on a pay-as-you-go basis. These benefit arrangements may result in additionalliabilities that are not recognized on the Consolidated Balance Sheet at December 31, 2017. The various multi-employer benefit plans are discussed in Note15—Other Employee Benefit Plans in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K. CONSOL Energy also uses acombination of surety bonds, corporate guarantees and letters of credit to secure its financial obligations for employee-related, environmental, performanceand various other items which are not reflected on the Consolidated Balance Sheet at December 31, 2017. Management believes these items will expirewithout being funded. See Note 20—Commitments and Contingent Liabilities in the Notes to the Audited Consolidated Financial Statements included inItem 8 of this Form 10-K for additional details of the various financial guarantees that have been issued by CONSOL Energy.Recent Accounting PronouncementsIn May 2017, the Financial Accounting Standards Board (“FASB”) issued Update 2017-09 - Compensation - Stock Compensation (Topic 718): Scopeof Modification Accounting, which reduces diversity in practice and cost and complexity when applying the guidance in this Topic to a change to the termsor conditions of a share-based payment award. The amendments in this Update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments in the Update are effective for fiscal years beginningafter December 15, 2017, including interim periods within those fiscal years, and should be applied prospectively to an award modified on or after theadoption date. Early adoption is permitted. This guidance has been adopted and there was no material impact on the Company's financial statements.In March 2017, the FASB issued Update 2017-07 - Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net PeriodicPension Cost and Net Periodic Postretirement Benefit Cost, which improves the presentation of net periodic pension cost and net periodic postretirementbenefit cost. The amendments in the Update require that an employer report the service cost component in the same line item as other compensation costsarising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented separatelyfrom the service cost component and outside a subtotal of income from operations, if one is presented. Because the Company does not present an incomefrom operations subtotal, that requirement is not applicable. For public entities, the amendments in this Update are effective for fiscal years beginning afterDecember 15, 2017, including interim periods within those fiscal years. Early adoption is permitted as of the beginning of a fiscal year for which financialstatements have not been issued. This guidance has been adopted and there was no material impact on the Company's financial statements. In August 2016, the FASB issued Update 2016-15 - Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments relate to debt prepayment ordebt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation tothe effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insuranceclaims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees, and beneficial interestsin securitization transactions. The Update also states that, in the absence of specific guidance for cash receipts and payments that have aspects of more thanone class of cash flows, an entity should classify each separately identifiable source or use within the cash receipts and payments on the basis of their naturein financing, investing, or operating activities. In situations in which cash receipts or payments cannot be separated by source or use, the appropriateclassification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. The amendments in the Update willbe applied using a retrospective transition method to each period presented and, for public entities, are effective for fiscal years beginning after December 15,2017 and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. This guidance has been adopted andthere was no material impact on the Company's financial statements.In May 2014, the FASB issued Update 2014-09 - Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognitionrequirements in Topic 605 - Revenue Recognition and most industry-specific guidance throughout the Industry Topics of the Codification. The objective ofthe amendments in this Update is to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and InternationalFinancial Reporting Standards (IFRS). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goodsor services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services andshould73Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.disclose sufficient information, both qualitative and quantitative, to enable users of financial statements to understand the nature, amount, timing, anduncertainty of revenue and cash flows arising from contracts with customers. The following updates to Topic 606 were made during 2016:•In March 2016, the FASB updated Topic 606 by issuing ASU 2016-08 “Principal versus Agent Considerations (Reporting Revenue Gross versusNet),” which clarifies how an entity determines whether it is a principal or an agent for goods or services promised to a customer as well as the natureof the goods or services promised to their customers.•In April 2016, the FASB issued Update 2016-10 - Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations andLicensing, which seeks to address implementation issues in the areas of identifying performance obligations and licensing.•In May 2016, the FASB issued Update 2016-12 - Revenue from Contracts with Customers (Topic 606): Narrow Scope Improvements and PracticalExpedients, which seeks to address implementation issues in the areas of collectability, presentation of sales taxes, noncash consideration, andcompleted contracts and contract modifications at transition.•In December 2016, the FASB issued Update 2016-20 - Technical Corrections and Improvements to Topic 606, Revenue from Contracts withCustomers, which includes amendments related to loan guarantee fees, contract costs, provisions for losses on construction and production-typecontracts, scope, disclosures, contract modification, contract asset versus receivable, refund liability and advertising costs.The new standards are effective for annual reporting periods beginning after December 15, 2017, with the option to adopt as early as annual reportingperiods beginning after December 15, 2016. Management has evaluated all contracts with particular attention to the impact from contracts that containfavorable electric power price related adjustments and contracts that span multiple years that have annual fixed pricing. We will adopt the new standard in2018 using the modified retrospective approach on all contracts which were not completed as of the date of initial application and there was no materialimpact on the Company's financial statements. Further, we expect the impact of the adoption of the new standard to be immaterial to our net income on anongoing basis, as the majority of our revenue will still be recognized when the product is shipped from our loading facility. The following factors outlinemanagement's position:•Most of our long-term contracts are for a stated range of coal at a stated rate per year, with any material price change from year-to-year being market-driven or inflationary, where no additional value is exchanged.•Contracts which contain favorable electric power price related adjustments also represent market-driven price adjustments wherein there is noadditional value being exchanged.•Pricing on contracts which are variable based on contractual quality-related adjustments are industry standard practices, could be favorable orunfavorable to the Company, are indeterminable, and represent an immaterial portion of our overall revenue stream.•While we do expect to experience costs of obtaining contracts with amortization periods greater than one year, those costs would be immaterial toour net income.In February 2016, the FASB issued Update 2016-02 - Leases (Topic 842), which increases transparency and comparability among organizations byrecognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Update 2016-02 does retain adistinction between finance leases and operating leases, which is substantially similar to the classification criteria for distinguishing between capital leasesand operating leases in the previous lease guidance. Retaining this distinction allows the recognition, measurement and presentation of expenses and cashflows arising from a lease to not significantly change from previous GAAP. For leases with a term of 12 months or less, a lessee is permitted to make anaccounting policy election by class of underlying asset not to recognize lease assets and lease liabilities, but to recognize lease expense on a straight-linebasis over the lease term. For both financing and operating leases, the right-to-use asset and lease liability will be initially measured at the present value ofthe lease payments in the statement of financial position. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP.For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods withinthose fiscal years. Early application is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliestperiod presented using a modified retrospective approach. Management is currently evaluating the impact this guidance may have on the Company’sfinancial statements.74Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKIn addition to the risks inherent in operations, CONSOL Energy is exposed to financial, market, political and economic risks. The following discussionprovides additional detail regarding the Company's exposure to the risks related to changes in commodity prices, interest rates and foreign exchange rates.Commodity Price RiskCONSOL Energy is exposed to market price risk in the normal course of selling coal. CONSOL Energy sells coal in the spot market and under bothshort-term and multi-year contracts that may contain base prices subject to pre-established price adjustments that reflect (i) variances in the qualitycharacteristics of coal delivered to the customer beyond threshold quality characteristics specified in the applicable sales contract, (ii) the actual calorificvalue of coal delivered to the customer, and/or (iii) changes in electric power prices in the markets in which the Company's customers operate, as adjusted forany factors set forth in the applicable contract.CONSOL Energy has established risk management policies and procedures to strengthen the internal control environment of the marketing ofcommodities produced from its asset base. CONSOL Energy's market risk strategy incorporates fundamental risk management tools to assess market price riskand establish a framework in which management can maintain a portfolio of transactions within pre-defined risk parameters.Interest Rate RiskCONSOL Energy's interest expense is sensitive to changes in the general level of interest rates in the United States. At December 31, 2017, CONSOLEnergy had $408 million aggregate principal amount of debt outstanding under fixed-rate instruments, including unamortized debt issuance costs of $9million, and $480 million of debt outstanding under variable-rate instruments, including unamortized debt issuance costs of $12 million. CONSOL Energy'sprimary exposure to market risk for changes in interest rates relates to the Company's senior secured credit facilities, under which there were $492 million ofborrowings at December 31, 2017. A hypothetical 100 basis-point increase in the average rate for CONSOL Energy's senior secured credit facilities woulddecrease pre-tax future earnings by $5 million.Foreign Exchange Rate RiskAll of CONSOL Energy’s transactions are denominated in U.S. dollars, and, as a result, the Company does not have material exposure to currencyexchange-rate risks. However, because coal is sold internationally in U.S. dollars, general economic conditions in foreign markets and changes in foreigncurrency exchange rates may provide the Company's foreign competitors with a competitive advantage. If CONSOL Energy's competitors' currencies declineagainst the U.S. dollar or against the Company's foreign customers' local currencies, those competitors may be able to offer lower prices for coal to theCompany's customers. Furthermore, if the currencies of CONSOL Energy's overseas customers were to significantly decline in value in comparison to the U.S.dollar, those customers may seek decreased prices for the coal the Company sells to them. Consequently, currency fluctuations could adversely affect thecompetitiveness of CONSOL Energy's coal in international markets.75Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAINDEX TO CONSOLIDATED FINANCIAL STATEMENTS PageReport of Independent Registered Public Accounting Firm77Consolidated Statements of Income for the Years Ended December 31, 2017, 2016 and 201578Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2017, 2016 and 201579Consolidated Balance Sheets at December 31, 2017 and 201680Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2017, 2016 and 201582Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016, 201583Notes to the Audited Consolidated Financial Statements8476Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Report of Independent Registered Public Accounting FirmTo the Stockholders and the Board of Directors of CONSOL Energy Inc. and SubsidiariesOpinion on the financial statementsWe have audited the accompanying consolidated balance sheets of CONSOL Energy Inc. and Subsidiaries (the Company) as of December 31, 2017 and 2016,the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period endedDecember 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in allmaterial respects, the consolidated financial position of the Company as of December 31, 2017 and 2016, and the consolidated results of its operations andits cash flows for each of the three years in the period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.Basis for opinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financialstatements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Companyin accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing proceduresto assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also includedevaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financialstatements. We believe that our audits provide a reasonable basis for our opinion./s/ Ernst & Young LLPWe have served as the Company's auditor since 2017.Pittsburgh, PennsylvaniaFebruary 16, 201877Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.CONSOL ENERGY INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(Dollars in thousands, except per share data)For the Years Ended December 31, 2017 2016 2015Revenue and Other Income: Coal Revenue$1,187,654 $1,065,582 $1,289,036Terminal Revenue60,066 31,464 30,967Freight Revenue73,692 46,468 20,499Miscellaneous Other Income (Note 3)73,279 82,120 68,193Gain on Sale of Assets17,212 5,228 13,025Total Revenue and Other Income1,411,903 1,230,862 1,421,720Costs and Expenses: Operating and Other Costs886,709 877,177 699,594Depreciation, Depletion and Amortization172,002 178,122 195,337Freight Expense73,692 46,468 20,499Selling, General and Administrative Costs83,605 50,027 55,720Interest Expense26,098 14,053 7,544Total Costs and Expenses1,242,106 1,165,847 978,694Earnings Before Income Tax169,797 65,015 443,026Income Tax Expense (Note 5)87,228 14,565 125,605Net Income82,569 50,450 317,421Less: Net Income Attributable to Noncontrolling Interest14,940 8,954 10,410Net Income Attributable to CONSOL Energy Shareholders$67,629 $41,496 $307,011 Earnings per Share: Total Basic Earnings per Share$2.42 $1.48 $10.98Total Dilutive Earnings per Share$2.40 $1.48 $10.98The accompanying notes are an integral part of these financial statements.78Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.CONSOL ENERGY INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(Dollars in thousands) For the Years Ended December 31, 2017 2016 2015Net Income$82,569 $50,450 $317,421Other Comprehensive Income (Loss): Amortization of Prior Service Credits (net of tax: $1,076, $186, and $7,943)(1,832) (316) (13,524)Curtailment Gain (net of tax: $0, $0, $3,788)— — (6,451)Recognized Net Actuarial Loss (net of tax: $(9,039), $(8,524), $(43,732))15,391 14,515 74,463Settlement Loss (net of tax: $(2,312), $(8,213), $(7,050))7,841 13,983 12,003OPEB Plan Amendments (net of tax: $0, $10,420, $116,712)— (28,164) (198,727)Other Comprehensive Gain (Loss) before Reclassifications (net of tax:$(26,360), $24,232, $(25,916))73,519 (31,427) 42,794Other Comprehensive Income (Loss)94,919 (31,409) (89,442) Comprehensive Income$177,488 $19,041 $227,979 Less: Comprehensive Income Attributable to Noncontrolling Interests14,896 9,216 10,410 Comprehensive Income Attributable to CONSOL Energy Inc. Shareholders$162,592 $9,825 $217,569The accompanying notes are an integral part of these financial statements.79Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.CONSOL ENERGY INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Dollars in thousands) December 31, 2017 December 31, 2016ASSETS Current Assets: Cash and Cash Equivalents$153,979 $13,311Accounts and Notes Receivable: Trade131,545 95,707Other Receivables36,552 23,320Other Receivables - Related Party— 34Inventories (Note 7)53,420 50,161Prepaid Expenses23,744 17,601Total Current Assets399,240 200,134Property, Plant and Equipment (Note 8): Property, Plant and Equipment4,676,353 4,593,395Less—Accumulated Depreciation, Depletion and Amortization2,554,056 2,413,125Total Property, Plant and Equipment—Net2,122,297 2,180,270Other Assets: Deferred Income Taxes (Note 5)75,065 184,579Other110,497 122,451Total Other Assets185,562 307,030TOTAL ASSETS$2,707,099 $2,687,434The accompanying notes are an integral part of these financial statements.80Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.CONSOL ENERGY INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Dollars in thousands) December 31, 2017 December 31, 2016LIABILITIES AND EQUITY Current Liabilities: Accounts Payable$109,100 $82,897Current Portion of Long-Term Debt (Note 11 and Note 12)22,482 4,076Other Accrued Liabilities (Note 10)290,627 292,121Total Current Liabilities422,209 379,094Long-Term Debt: Long-Term Debt (Note 11)856,650 301,827Capital Lease Obligations (Note 12)8,639 11,812Total Long-Term Debt865,289 313,639Deferred Credits and Other Liabilities: Postretirement Benefits Other Than Pensions (Note 13)554,099 659,474Pneumoconiosis Benefits (Note 14)149,868 108,073Asset Retirement Obligations (Note 6)228,343 246,279Workers’ Compensation (Note 14)66,648 65,932Salary Retirement (Note 13)52,960 99,872Other24,042 14,947Total Deferred Credits and Other Liabilities1,075,960 1,194,577TOTAL LIABILITIES2,363,458 1,887,310Stockholders’ Equity: Common Stock, $0.01 Par Value; 62,500,000 Shares Authorized, 27,973,281 Issued and Outstanding atDecember 31, 2017280 —Capital in Excess of Par Value552,793 —Retained (Deficit) Earnings(43,713) —Parent Net Investment— 1,057,694Accumulated Other Comprehensive Loss(305,100) (400,063)Total CONSOL Energy Inc. Stockholders’ Equity204,260 657,631 Noncontrolling Interest139,381 142,493TOTAL EQUITY343,641 800,124TOTAL LIABILITIES AND EQUITY$2,707,099 $2,687,434The accompanying notes are an integral part of these financial statements.81Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.CONSOL ENERGY INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY(Dollars in thousands) CommonStock Capital inExcessof ParValue RetainedEarnings(Deficit) Parent NetInvestment AccumulatedOtherComprehensiveIncome(Loss) CommonStock inTreasury TotalCONSOLEnergy Inc.Stockholders’Equity Non-ControllingInterest TotalEquityDecember 31, 2014$— $— $— $1,525,142 $(278,950) $— $1,246,192 $— $5,006,289Net Income— — — 307,011 — — 307,011 10,410 317,421Actuarially Determined Long-TermLiability Adjustments (Net of($51,745) Tax)— — — — (89,442) — (89,442) — (89,442)Comprehensive (Loss) Income— — — 307,011 (89,442) — 217,569 10,410 227,979Distributions to NoncontrollingInterest— — — — — — — (5,060) (5,060)Proceeds from Sale of MLP Interest— — — — — — — 148,399 148,399Net Parent Distributions— — — (555,671) — — (555,671) — (555,671)December 31, 2015— — — 1,276,482 (368,392) — 908,090 153,749 1,061,839Net Income— — — 41,496 — — 41,496 8,954 50,450Actuarially Determined Long-TermLiability Adjustments (Net of$18,101 Tax)— — — — (31,671) — (31,671) 262 (31,409)Comprehensive (Loss) Income— — — 41,496 (31,671) — 9,825 9,216 19,041Amortization of Unit-BasedCompensation Awards— — — — — — — 1,185 1,185Distributions to NoncontrollingInterest— — — — — — — (21,657) (21,657)Net Parent Distributions— — — (260,284) — — (260,284) — (260,284)December 31, 2016— — — 1,057,694 (400,063) — 657,631 142,493 800,124Net Income— — (43,713) 111,342 — — 67,629 14,940 82,569Actuarially Determined Long-TermLiability Adjustments (Net of$30,323 Tax)— — — — 94,963 — 94,963 (44) 94,919Comprehensive (Loss) Income— — (43,713) 111,342 94,963 — 162,592 14,896 177,488Net Parent Distributions— — — (207,008) — — (207,008) — (207,008)Spin Distribution to CNX Resources— — — (425,000) — (425,000) — (425,000)Separation Adjustments— 537,028 — (537,028) — — — — —Issuance of Common Stock280 (280) — — — — — — —Amortization of Stock-BasedCompensation Awards— 16,212 — — — — 16,212 5,873 22,085Units/Shares Withheld for Taxes— (167) — — — — (167) (1,989) (2,156)Distributions to NoncontrollingInterest— — — — — — — (21,892) (21,892)December 31, 2017$280 $552,793 $(43,713) $— $(305,100) $— $204,260 $139,381 $343,641The accompanying notes are an integral part of these financial statements.82Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.CONSOL ENERGY INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Dollars in thousands) For the Years Ended December 31, 2017 2016 2015Cash Flows from Operating Activities: Net Income$82,569 $50,450 $317,421Adjustments to Reconcile Net Income to Net Cash Provided By Continuing Operating Activities: Depreciation, Depletion and Amortization172,002 178,122 195,337Stock/Unit-Based Compensation22,085 12,895 8,406Gain on Sale of Assets(17,212) (5,228) (13,025)Deferred Income Taxes16,610 91,525 72,616Changes in Operating Assets: Accounts and Notes Receivable(44,417) (17,608) 63,764Inventories(3,259) 3,352 4,951Prepaid Expenses(2,877) 7,503 (485)Changes in Other Assets6,050 (10,652) (60,346)Changes in Operating Liabilities: Accounts Payable7,043 (4,152) (575)Other Operating Liabilities46,421 24,913 (57,973)Changes in Other Liabilities(40,765) (10,609) (266,700)Other3,860 8,596 28,302Net Cash Provided by Operating Activities248,110 329,107 291,693Cash Flows from Investing Activities: Capital Expenditures(81,413) (53,600) (143,053)Proceeds from Sales of Assets24,582 7,842 12,779Net Cash Used in Investing Activities(56,831) (45,758) (130,274)Cash Flows from Financing Activities: (Payments on) Proceeds from Miscellaneous Borrowings(3,904) 431 (5,829)Proceeds from PNC Term Loan A100,000 — —Proceeds from PNC Term Loan B392,147 — —Proceeds from Second Lien Notes300,000 — —Net (Payments on) Proceeds from Revolver - MLP(201,000) 16,000 185,000Distributions to Noncontrolling Interest(21,892) (21,657) (5,060)Proceeds from Sale of MLP Interest— — 148,359Units/Shares Withheld for Taxes(2,156) — —Spin Distribution to CNX Resources(425,000) — —Other Parent Net Distributions(156,502) (270,969) (461,051)Debt Issuance and Financing Fees(32,304) (482) (16,336)Net Cash Used in Financing Activities(50,611) (276,677) (154,917)Net Increase in Cash and Cash Equivalents140,668 6,672 6,502Cash and Cash Equivalents at Beginning of Period13,311 6,639 137Cash and Cash Equivalents at End of Period$153,979 $13,311 $6,639Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The accompanying notes are an integral part of these financial statements.83Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.CONSOL ENERGY INC. AND SUBSIDIARIESNOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except per share data)NOTE 1—SIGNIFICANT ACCOUNTING POLICIES:Unless otherwise indicated or except where the context otherwise requires, references to “we,” “our,” “us,” “our Company,” “the Company” and“CONSOL Energy” refer to CONSOL Energy Inc. and its subsidiaries on or after November 28, 2017 and to CONSOL Mining Corporation and its subsidiariesprior to November 28, 2017, except to the extent of any discussion of the financial condition, results of operations, cash flows, and other business activitiesof the Company on or prior to November 28, 2017 that relate specifically to the Coal Business, in which case such references shall be to the Predecessor.A summary of the significant accounting policies of CONSOL Energy Inc. and subsidiaries (“CONSOL Energy” or “the Company”) is presented below.These, together with the other notes that follow, are an integral part of the Consolidated Financial Statements.Basis of ConsolidationThe Consolidated Financial Statements include the accounts of CONSOL Energy Inc., and its wholly owned and majority-owned and/or controlledsubsidiaries. The portion of these entities that is not owned by the Company is presented as non-controlling interest. All significant intercompanytransactions and accounts have been eliminated in consolidation.Prior to the separation and distribution, CONSOL Energy did not operate as a separate, standalone entity. The Company's operations were included inParentCo's financial results. Accordingly, for all periods prior to the separation and distribution, the accompanying Consolidated Financial Statements wereprepared from ParentCo's historical accounting records and were presented on a standalone basis as if the Company's operations had been conductedindependently from ParentCo. Such Consolidated Financial Statements include the historical operations that were considered to comprise the Company'sbusinesses, as well as certain assets and liabilities that were historically held at ParentCo's corporate level but were specifically identifiable or otherwiseattributable to the Company. ParentCo's net investment in these operations is reflected as Parent Net Investment in the accompanying Consolidated FinancialStatements. All significant intercompany transactions between ParentCo and the Company were included within Parent Net Investment in the accompanyingConsolidated Financial Statements.Use of EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requiresmanagement to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as various disclosures.Actual results could differ from those estimates. The most significant estimates included in the preparation of the consolidated financial statements are relatedto other postretirement benefits, coal workers' pneumoconiosis, workers' compensation, salary retirement benefits, stock-based compensation, asset retirementobligations, deferred income tax assets and liabilities, contingencies and the values of coal properties.Cash and Cash EquivalentsCash and cash equivalents include cash on hand and on deposit at banking institutions as well as all highly liquid short-term securities with originalmaturities of three months or less.Trade Accounts ReceivableTrade accounts receivable are recorded at the invoiced amount and do not bear interest. CONSOL Energy reserves for specific accounts receivable whenit is probable that all or a part of an outstanding balance will not be collected, such as customer bankruptcies. Collectability is determined based on terms ofsale, credit status of customers and various other circumstances. CONSOL Energy regularly reviews collectability and establishes or adjusts the allowance asnecessary using the specific identification method. Account balances are charged off against the allowance after all means of collection have been exhaustedand the potential for recovery is considered remote. Reserves for uncollectable amounts were not material in the periods presented. In addition, there were nomaterial financing receivables with a contractual maturity greater than one year at December 31, 2017 or 2016.84Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.InventoriesInventories are stated at the lower of cost or net realizable value. The cost of coal inventories is determined by the first-in, first-out (FIFO) method. Coalinventory costs include labor, supplies, equipment costs, operating overhead, depreciation, depletion, amortization, and other related costs. The cost ofsupplies inventory is determined by the average cost method and includes operating and maintenance supplies to be used in the Company's coal operations.Property, Plant and EquipmentProperty, plant and equipment is recorded at cost upon acquisition. Expenditures which extend the useful lives of existing plant and equipment arecapitalized. Interest costs applicable to major asset additions are capitalized during the construction period. Costs of additional mine facilities required tomaintain production after a mine reaches the production stage, generally referred to as “receding face costs,” are expensed as incurred; however, the costs ofadditional airshafts and new portals are capitalized. Planned major maintenance costs which do not extend the useful lives of existing plant and equipmentare expensed as incurred.Coal exploration costs are expensed as incurred. Coal exploration costs include those incurred to ascertain existence, location, extent or quality of oreor minerals before beginning the development stage of the mine.Costs of developing new underground mines and certain underground expansion projects are capitalized. Underground development costs, which arecosts incurred to make the mineral physically accessible, include costs to prepare property for shafts, driving main entries for ventilation, haulage, personnel,construction of airshafts, roof protection and other facilities.Airshafts and capitalized mine development associated with a coal reserve are amortized on a units-of production basis as the coal is produced so thateach ton of coal is assigned a portion of the unamortized costs. We employ this method to match costs with the related revenues realized in a particularperiod. Rates are updated when revisions to coal reserve estimates are made. Coal reserve estimates are reviewed when information becomes available thatindicates a reserve change is needed, or at a minimum once a year. Any material effect from changes in estimates is disclosed in the period the change occurs.Amortization of development cost begins when the development phase is complete and the production phase begins. At an underground mine, the end of thedevelopment phase and the beginning of the production phase takes place when construction of the mine for economic extraction is substantially complete.Coal extracted during the development phase is incidental to the mine’s production capacity and is not considered to shift the mine into the productionphase.Coal reserves are either owned in fee or controlled by lease. The duration of the leases vary; however, the lease terms generally are extendedautomatically to the exhaustion of economically recoverable reserves, as long as active mining continues. Coal interests held by lease provide the samerights as fee ownership for mineral extraction and are legally considered real property interests. Depletion of leased coal interests is computed using the units-of-productions method over proven and probable coal reserves. The Company also makes advance payments (advanced mining royalties) to lessors undercertain lease agreements that are recoupable against future production, and it makes payments that are generally based upon a specified rate per ton or apercentage of gross realization from the sale of the coal. The Company evaluates its properties periodically for impairment issues or whenever events orcircumstances indicate that the carrying amount may not be recoverable.Costs to obtain coal lands are capitalized based on the cost at acquisition and are amortized using the units-of-production method over all estimatedproven and probable reserve tons assigned and accessible to the mine. Proven and probable coal reserves are calculated on a clean coal ton equivalent, whichexcludes non-recoverable coal reserves and anticipated central preparation plant processing refuse. Rates are updated when revisions to coal reserve estimatesare made. Coal reserve estimates are reviewed when events and circumstances indicate a reserve change is needed, or at a minimum once a year. Amortizationof coal interests begins when the coal reserve is produced. At an underground mine, a ton is considered produced once it reaches the surface area of the mine.Any material effect from changes in estimates is disclosed in the period the change occurs.Advance mining royalties are advance payments made to lessors under terms of mineral lease agreements that are recoupable against future productionusing the units-of-production method. Depletion of leased coal interests is computed using the units-of-production method over proven and probable coalreserves. Advance mining royalties and leased coal interests are evaluated periodically, or at a minimum once a year, for impairment issues or wheneverevents or changes in circumstances indicate that the carrying amount may not be recoverable. Any revisions are accounted for prospectively as changes inaccounting estimates.When properties are retired or otherwise disposed, the related cost and accumulated depreciation are removed from the respective accounts and anyprofit or loss on disposition is recognized in Gain (Loss) on Sale of Assets in the Consolidated Statements of Income.85Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Depreciation of plant and equipment is calculated on the straight-line method over their estimated useful lives or lease terms generally as follows: YearsBuildings and improvements10 to 45Machinery and equipment3 to 25Leasehold improvementsLife of LeaseCosts for purchased and internally developed software are expensed until it has been determined that the software will result in probable futureeconomic benefits and management has committed to funding the project. Thereafter, all direct costs of materials and services incurred in developing orobtaining software, including certain payroll and benefit costs of employees associated with the project, are capitalized and amortized using the straight-linemethod over the estimated useful life which does not exceed seven years.Capitalization of InterestInterest costs associated with the development of significant properties and projects are capitalized until the project is substantially complete and readyfor its intended use. A weighted average cost of borrowing rate is used. For the years ended December 31, 2017, 2016, and 2015, capitalized interest totaled$1,444, $1,372 and $2,488, respectively.Impairment of Long-lived AssetsImpairment of long-lived assets is recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated bythose assets are less than the assets' carrying value. The carrying value of the assets is then reduced to its estimated fair value which is usually measured basedon an estimate of future discounted cash flows. CONSOL Energy did not record any impairments for the years ended December 31, 2017, 2016, or 2015.Income TaxesDeferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been recognized in CONSOL Energy'sfinancial statements or tax returns. The provision for income taxes represents income taxes paid or payable for the current year and the change in deferredtaxes, excluding the effects of acquisitions during the year. Deferred taxes result from differences between the financial and tax bases of CONSOL Energy'sassets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferredtax assets when it is more likely than not that a deferred tax benefit will not be realized.CONSOL Energy evaluates all tax positions taken on the state and federal tax filings to determine if the position is more likely than not to be sustainedupon examination. For positions that do not meet the more likely than not to be sustained criteria, the Company determines, on a cumulative probabilitybasis, the largest amount of benefit that is more likely than not to be realized upon ultimate settlement. A previously recognized tax position is reversed whenit is subsequently determined that a tax position no longer meets the more likely than not threshold to be sustained. The evaluation of the sustainability of atax position and the probable amount that is more likely than not is based on judgment, historical experience and on various other assumptions that theCompany believes are reasonable under the circumstances. The results of these estimates, that are not readily apparent from other sources, form the basis forrecognizing an uncertain tax position liability. Actual results could differ from those estimates upon subsequent resolution of identified matters.Parent Net InvestmentParent Net Investment is primarily comprised of the Predecessor’s undivided interest in (i) ParentCo's initial investment in CONSOL Energy (and anysubsequent adjustments thereto); (ii) the accumulated net earnings; (iii) net transfers to or from the Predecessor, including those related to cash managementfunctions that were performed by the Predecessor; (iv) non-cash changes in financing arrangements, including the conversion of certain related partyliabilities into Parent Net Investment and stock-based compensation; and (v) corporate cost allocations.86Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Postretirement Benefits Other Than PensionsPostretirement benefit obligations established by the Coal Industry Retiree Health Benefit Act of 1992 (the Coal Act) are treated as a multi-employerplan which requires expense to be recorded for the associated obligations as payments are made. Postretirement benefits other than pensions, except for thoseestablished pursuant to the Coal Act, are accounted for in accordance with the Retirement Benefits Compensation and Non-retirement PostemploymentBenefits Compensation Topics of the FASB Accounting Standards Codification, which requires employers to accrue the cost of such retirement benefits forthe employees' active service periods. Such liabilities are determined on an actuarial basis and CONSOL Energy administers these liabilities through acombination of self-insured and fully insured agreements. Differences between actual and expected results or changes in the value of obligations arerecognized through Other Comprehensive Income.Pneumoconiosis Benefits and Workers' CompensationCONSOL Energy is required by federal and state statutes to provide benefits to certain current and former totally disabled employees or theirdependents for awards related to coal workers' pneumoconiosis. CONSOL Energy is also required by various state statutes to provide workers' compensationbenefits for employees who sustain employment-related physical injuries or some types of occupational disease. Workers' compensation benefits includecompensation for their disability, medical costs, and on some occasions, the cost of rehabilitation. CONSOL Energy is primarily self-insured for thesebenefits. Provisions for estimated benefits are determined on an actuarial basis.Asset Retirement CostsMine closing costs and costs associated with dismantling and removing de-gasification facilities are accrued using the accounting treatment prescribedby the Asset Retirement and Environmental Obligations Topic of the FASB Accounting Standards Codification. This topic requires the fair value of an assetretirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The present value of the estimatedasset retirement costs is capitalized as part of the carrying amount of the long-lived asset. Generally, the capitalized asset retirement cost is depreciated on aunits-of-production basis. Accretion of the asset retirement obligation is recognized over time and generally will escalate over the life of the producing asset,typically as production declines. Accretion is included in Operating and Other Costs on the Consolidated Statements of Income. Asset retirement obligationsprimarily relate to the closure of mines, which includes treatment of water and the reclamation of land upon exhaustion of coal reserves. Accrued mineclosing costs, perpetual care costs, reclamation and costs associated with dismantling and removing de-gasification facilities are regularly reviewed bymanagement and are revised for changes in future estimated costs and regulatory requirements.SubsidenceSubsidence occurs when there is sinking or shifting of the ground surface due to the removal of underlying coal. Areas affected may include, althoughare not limited to, streams, property, roads, pipelines and other land and surface structures. Total estimated subsidence claims are recognized in the periodwhen the related coal has been extracted and are included in Operating and Other Costs on the Consolidated Statements of Income and Other AccruedLiabilities on the Consolidated Balance Sheets. On occasion, CONSOL Energy prepays the estimated damages prior to undermining the property, in returnfor a release of liability. Prepayments are included as assets and either recognized as Prepaid Expenses or in Other Assets on the Consolidated Balance Sheetsif the payment is made less than or greater than one year, respectively, prior to undermining the property.Retirement PlansCONSOL Energy has non-contributory defined benefit retirement plans. Effective December 31, 2015, CONSOL's qualified defined benefit retirementplan was frozen. The benefits for these plans are based primarily on years of service and employees' pay. These plans are accounted for using the guidanceoutlined in the Compensation - Retirement Benefits Topic of the FASB Accounting Standards Codification. The cost of these retiree benefits are recognizedover the employees' service periods. CONSOL Energy uses actuarial methods and assumptions in the valuation of defined benefit obligations and thedetermination of expense. Differences between actual and expected results or changes in the value of obligations and plan assets are recognized throughOther Comprehensive Income.Stock-Based CompensationEligible CONSOL Energy employees have historically participated in equity-based compensation plans. CONSOL Energy recognizes compensationexpense for all stock-based compensation awards based on the grant date fair value estimated in accordance with the provisions of the Stock CompensationTopic of the FASB Accounting Standards Codification. CONSOL87Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Energy recognizes these compensation costs on a straight-line basis over the requisite service period of the award, which is generally the award's vesting term.The compensation expense recorded by CONSOL Energy, in all periods presented, includes the expense associated with employees historically attributableto CONSOL Energy operations as well as the operations of its predecessor.Under the CCR 2015 Long-Term Incentive Plan (the LTIP), the General Partner issued long-term equity based awards intended to compensate therecipients thereof based on the performance of CCR’s common units and the recipients' continued service during the vesting period, as well as to align CCR’slong-term interests with those of the unitholders. The LTIP limits the number of units that may be delivered pursuant to vested awards to 2,300,000 commonunits, subject to proportionate adjustment in the event of unit splits and similar events. Common units subject to awards that are canceled, forfeited, withheldto satisfy exercise prices or tax withholding obligations or otherwise terminated without delivery of the common units will be available for delivery pursuantto other awards.The General Partner has also granted equity-based phantom units that vest over a period of a director’s continued service. The phantom units will bepaid in common units or an amount of cash equal to the fair market value of a unit based on the vesting date. The awards may accelerate upon a change incontrol of CCR. Compensation expense is recognized on a straight-line basis over the requisite service period, which is generally the vesting term.Revenue RecognitionRevenues are recognized when title passes to the customers and the price is fixed and determinable. For domestic coal sales, this generally occurs whencoal is loaded at the mine or at offsite storage locations. For export coal sales, this generally occurs when coal is loaded onto marine vessels at terminallocations. Coal contract price per ton is fixed and determinable prior to the passage of coal title. Except for normal quality adjustments and positive electricpower price related adjustments, none of the Company’s coal sales contracts allow for retroactive adjustments to pricing after title to the coal has passed.These adjustments were not material for any of the periods presented. Revenues for coal sold that relate to production under royalty contracts are recorded ona gross basis.Freight Revenue and ExpenseShipping and handling costs invoiced to coal customers and paid to third-party carriers are recorded as Freight Revenue and Freight Expense,respectively.ContingenciesFrom time to time, CONSOL Energy, or its subsidiaries, is subject to various lawsuits and claims with respect to such matters as personal injury,wrongful death, damage to property, exposure to hazardous substances, governmental regulations (including environmental remediation), employment andcontract disputes, and other claims and actions, arising out of the normal course of business. Liabilities are recorded when it is probable that obligations havebeen incurred and the amounts can be reasonably estimated. Estimates are developed through consultation with legal counsel involved in the defense ofthese matters and are based upon the nature of the lawsuit, progress of the case in court, view of legal counsel, prior experience in similar matters andmanagement's intended response. Environmental liabilities are not discounted or reduced by possible recoveries from third-parties. Legal fees associated withdefending these various lawsuits and claims are expensed when incurred.Earnings per ShareBasic earnings per share are computed by dividing net income attributable to CONSOL Energy Shareholders by the weighted average sharesoutstanding during the reporting period. Dilutive earnings per share are computed similarly to basic earnings per share, except that the weighted averageshares outstanding are increased to include additional shares from restricted stock units and performance share units, if dilutive. The number of additionalshares is calculated by assuming that outstanding restricted stock units and performance share units were released, and that the proceeds from such activitieswere used to acquire shares of common stock at the average market price during the reporting period.88Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The table below sets forth the share-based awards that have been excluded from the computation of the diluted earnings per share because their effectwould be anti-dilutive: For the Years Ended December 31, 2017 2016 2015Anti-Dilutive Restricted Stock Units1,469 — — 1,469 — —The computations for basic and dilutive earnings per share are as follows: For the Years EndedAmounts in thousands, except per share dataDecember 31, 2017 2016 2015Numerator: Net Income$82,569 $50,450 $317,421Less: Net Income Attributable to Noncontrolling Interest14,940 8,954 10,410Net Income Attributable to CONSOL Energy Shareholders$67,629 $41,496 $307,011 Denominator: Weighted-average shares of common stock outstanding27,968 27,968 27,968Effect of dilutive shares206 — —Weighted-average diluted shares of common stock outstanding28,174 27,968 27,968 Earnings Per Share: Basic$2.42 $1.48 $10.98Dilutive$2.40 $1.48 $10.98In 2016 and 2015, the Earnings Per Share included on the accompanying Consolidated Statements of Income was calculated based on the 27,968 sharesof CONSOL Energy common stock distributed in conjunction with the completion of the separation and is considered pro forma in nature. Prior to November28, 2017, CONSOL Energy did not have any issued or outstanding common stock.Shares of common stock outstanding were as follows:Amounts in thousands2017 2016 2015Balance, Beginning of Year— — —Issuance Related to Separation and Distribution (1)27,968 — —Issuance Related to Stock-Based Compensation (2)5 — —Balance, End of Year27,973 — —(1)See Note 2 - Separation from CNX Resources Corporation for additional information.(2)See Note 16 - Stock-Based Compensation for additional information.Recent Accounting PronouncementsIn May 2017, the FASB issued Update 2017-09 - Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting, which reducesdiversity in practice and cost and complexity when applying the guidance in this Topic to a change to the terms or conditions of a share-based paymentaward. The amendments in this Update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity toapply modification accounting in Topic 718. The amendments in the Update are effective for fiscal years beginning after December 15, 2017, includinginterim periods within those fiscal years, and should be applied prospectively to an award modified on or after the adoption date. Early adoption is permitted.This guidance has been adopted and there was no material impact on the Company's financial statements.89Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.In March 2017, the FASB issued Update 2017-07 - Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net PeriodicPension Cost and Net Periodic Postretirement Benefit Cost, which improves the presentation of net periodic pension cost and net periodic postretirementbenefit cost. The amendments in the Update require that an employer report the service cost component in the same line item as other compensation costsarising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented separatelyfrom the service cost component and outside a subtotal of income from operations, if one is presented. Because the Company does not present an incomefrom operations subtotal, that requirement is not applicable. For public entities, the amendments in this Update are effective for fiscal years beginning afterDecember 15, 2017, including interim periods within those fiscal years. Early adoption is permitted as of the beginning of a fiscal year for which financialstatements have not been issued. This guidance has been adopted and there was no material impact on the Company's financial statements. In August 2016, the FASB issued Update 2016-15 - Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments relate to debt prepayment ordebt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation tothe effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insuranceclaims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees, and beneficial interestsin securitization transactions. The Update also states that, in the absence of specific guidance for cash receipts and payments that have aspects of more thanone class of cash flows, an entity should classify each separately identifiable source or use within the cash receipts and payments on the basis of their naturein financing, investing, or operating activities. In situations in which cash receipts or payments cannot be separated by source or use, the appropriateclassification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. The amendments in the Update willbe applied using a retrospective transition method to each period presented and, for public entities, are effective for fiscal years beginning after December 15,2017 and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. This guidance has been adopted andthere was no material impact on the Company's financial statements.In May 2014, the FASB issued Update 2014-09 - Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognitionrequirements in Topic 605 - Revenue Recognition and most industry-specific guidance throughout the Industry Topics of the Codification. The objective ofthe amendments in this Update is to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and InternationalFinancial Reporting Standards (IFRS). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goodsor services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services andshould disclose sufficient information, both qualitative and quantitative, to enable users of financial statements to understand the nature, amount, timing, anduncertainty of revenue and cash flows arising from contracts with customers. The following updates to Topic 606 were made during 2016:•In March 2016, the FASB updated Topic 606 by issuing ASU 2016-08 “Principal versus Agent Considerations (Reporting Revenue Gross versusNet),” which clarifies how an entity determines whether it is a principal or an agent for goods or services promised to a customer as well as the natureof the goods or services promised to their customers.•In April 2016, the FASB issued Update 2016-10 - Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations andLicensing, which seeks to address implementation issues in the areas of identifying performance obligations and licensing.•In May 2016, the FASB issued Update 2016-12 - Revenue from Contracts with Customers (Topic 606): Narrow Scope Improvements and PracticalExpedients, which seeks to address implementation issues in the areas of collectability, presentation of sales taxes, noncash consideration, andcompleted contracts and contract modifications at transition.•In December 2016, the FASB issued Update 2016-20 - Technical Corrections and Improvements to Topic 606, Revenue from Contracts withCustomers, which includes amendments related to loan guarantee fees, contract costs, provisions for losses on construction and production-typecontracts, scope, disclosures, contract modification, contract asset versus receivable, refund liability and advertising costs.The new standards are effective for annual reporting periods beginning after December 15, 2017, with the option to adopt as early as annual reportingperiods beginning after December 15, 2016. Management has evaluated all contracts with particular attention to the impact from contracts that containfavorable electric power price related adjustments and contracts that span multiple years that have annual fixed pricing. We adopted the new standard in2018 using the modified retrospective approach on all contracts which were not completed as of the date of initial application and there was no materialimpact on the Company's financial statements. Further, we expect the impact of the adoption of the new standard to be immaterial to our net income on anongoing basis, as the majority of our revenue will still be recognized when the product is shipped from our loading facility. The following factors outlinemanagement's position:90Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.•Most of our long-term contracts are for a stated range of coal at a stated rate per year, with any material price change from year-to-year being market-driven or inflationary, where no additional value is exchanged.•Contracts which contain favorable electric power price related adjustments also represent market-driven price adjustments wherein there is noadditional value being exchanged.•Pricing on contracts which are variable based on contractual quality-related adjustments are industry standard practices, could be favorable orunfavorable to the Company, are indeterminable, and represent an immaterial portion of our overall revenue stream.•While we do expect to experience costs of obtaining contracts with amortization periods greater than one year, those costs would be immaterial toour net income.In February 2016, the FASB issued Update 2016-02 - Leases (Topic 842), which increases transparency and comparability among organizations byrecognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Update 2016-02 does retain adistinction between finance leases and operating leases, which is substantially similar to the classification criteria for distinguishing between capital leasesand operating leases in the previous lease guidance. Retaining this distinction allows the recognition, measurement and presentation of expenses and cashflows arising from a lease to not significantly change from previous GAAP. For leases with a term of 12 months or less, a lessee is permitted to make anaccounting policy election by class of underlying asset not to recognize lease assets and lease liabilities, but to recognize lease expense on a straight-linebasis over the lease term. For both financing and operating leases, the right-to-use asset and lease liability will be initially measured at the present value ofthe lease payments in the statement of financial position. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP.For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods withinthose fiscal years. Early application is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliestperiod presented using a modified retrospective approach. Management is currently evaluating the impact this guidance may have on the Company’sfinancial statements.Subsequent EventsThe Company has evaluated all subsequent events through the date the financial statements were issued. No material recognized or non-recognizablesubsequent events were identified.NOTE 2—SEPARATION FROM CNX RESOURCES CORPORATION:In December 2016, CNX announced its intent to separate into two independent, publicly-traded companies - an independently traded coal companyand an independently traded oil and natural gas exploration and production company focused on Appalachian area natural gas and liquids activities,including production, gathering, processing and acquisition of natural gas properties in the Appalachian Basin.In anticipation of the separation, CONSOL Energy was originally formed as CONSOL Mining Corporation in Delaware on June 21, 2017 to hold all ofParentCo’s Coal Business, including its interest in the Pennsylvania Mining Complex, and certain related coal assets, including ParentCo’s ownershipinterest in CNX Coal Resources LP, which owns a 25% undivided interest stake in PAMC, the CONSOL Marine Terminal and undeveloped coal reserves(Greenfield Reserves) located in the Northern Appalachian, Central Appalachian and Illinois basins and certain related coal assets and liabilities (the CoalBusiness). The Registration Statement on Form 10 (as amended) filed by the Company with the SEC describes the Company and the assets and liabilities thatcomprise the Coal Business that it now owns after completion of the separation and distribution. The Form 10 was declared effective by the SEC onNovember 3, 2017.The separation occurred on November 28, 2017, through the pro rata distribution by ParentCo of all of the outstanding common stock of CONSOLMining Corporation to ParentCo’s shareholders. Following the separation and distribution, ParentCo continues to own the Gas Business. In connection withthe separation, CONSOL Mining Corporation changed its name to CONSOL Energy Inc. and ParentCo changed its name to CNX Resources Corporation. Inaddition, CNX Coal Resources LP changed its name to CONSOL Coal Resources LP and its ticker to CCR.The separation was subject to a number of conditions, including, but not limited to: final approval by ParentCo’s Board of Directors; the continuingvalidity of the private letter ruling from the Internal Revenue Service regarding certain U.S. federal income tax matters relating to the transaction; receipt ofan opinion of legal counsel regarding the qualification of the distribution, together with certain related transactions, as a transaction that is generally tax-freefor U.S. federal income tax purposes; and the SEC declaring effective a Registration Statement on Form 10, as amended. The registration statement on Form10 was declared effective on November 3, 2017.91Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.In connection with the separation and distribution, CONSOL Mining Corporation and ParentCo entered into a separation and distribution agreement onNovember 28, 2017 that identified the assets of the Coal Business that were transferred to CONSOL Mining Corporation, the liabilities that were assumed andthe contracts that were transferred to each of CONSOL Mining Corporation and ParentCo as part of the separation into two companies. The agreement alsoimplemented the legal and structural separation between the two companies. ParentCo and the Company also entered into additional ancillary agreementsthat govern the relationship between the two companies after the completion of the separation and distribution, and allocate between GasCo and theCompany various assets, liabilities and obligations, including, among other things, employee benefits, environmental liabilities, intellectual property, andtax-related assets and liabilities. These additional agreements included a tax matters agreement, employee matters agreement, transition services agreementand certain agreements related to intellectual property.NOTE 3—MISCELLANEOUS OTHER INCOME: For the Years Ended December 31, 2017 2016 2015Royalty Income - Non-Operated Coal $28,089 $19,739 $15,356Rental Income 14,114 34,789 36,908Purchased Coal Sales 13,161 5,757 1,596Coal Contract Buyout 9,912 6,288 —Interest Income 2,619 1,166 410Right of Way Issuance 2,436 11,281 10,827Other 2,948 3,100 3,096 Miscellaneous Other Income $73,279$82,120$68,193NOTE 4— STOCK REPURCHASE:In December 2017, CONSOL Energy’s Board of Directors approved a program to repurchase, from time to time, the Company's outstanding shares ofcommon stock or its 11.00% Senior Secured Second Lien Notes due 2025, in an aggregate amount of up to $50,000 through the period ending June 30, 2019.Under the terms of the program, CONSOL Energy is permitted to make repurchases in the open market, in privately negotiated transactions, acceleratedrepurchase programs or in structured share repurchase programs. Any repurchases of common stock or notes are to be funded from available cash on hand orshort-term borrowings. The program does not obligate CONSOL Energy to acquire any particular amount of its common stock or notes, and can be modifiedor suspended at any time at the Company’s discretion. The program is conducted in compliance with applicable legal requirements and within the limitsimposed by any credit agreement, receivables purchase agreement or indenture and is subject to market conditions and other factors. No shares or notes wererepurchased under this program during the year ended December 31, 2017.92Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.NOTE 5—INCOME TAXES:The components of income tax expense (benefit) were as follows: For The Years Ended December 31, 2017 2016 2015Current: U.S. Federal$65,856 $(76,447) $49,435U.S. State2,732 (1,924) 2,591Non-U.S.2,030 1,411 963 70,618 (76,960) 52,989Deferred: U.S. Federal17,397 89,268 66,187U.S. State(787) 2,257 6,429 16,610 91,525 72,616 Total Income Tax Expense$87,228 $14,565 $125,605A reconciliation of income tax expense (benefit) and the amount computed by applying the statutory federal income tax rate of 35% to income fromoperations before income tax is: For the Years Ended December 31, 2017 2016 2015 Amount Percent Amount Percent Amount PercentStatutory U.S. federal income tax rate$59,429 35.0 % $22,755 35.0 % $155,059 35.0 %State income taxes, net of federal tax benefit1,264 0.7 997 1.5 6,767 1.5Excess tax depletion(24,216) (14.3) (21,856) (33.6) (27,720) (6.3)Effect of domestic production activities(6,493) (3.8) 1,621 2.5 (4,933) (1.1)Effect of change in U.S. tax law58,558 34.5 — — — —IRS and state tax examination settlements— — 13,958 21.5 — —Effect of valuation allowance1,379 0.8 — — — —Other(2,693) (1.6) (2,910) (4.5) (3,568) (0.8)Income Tax Expense / Effective Rate$87,228 51.3 % $14,565 22.4 % $125,605 28.3 %93Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Significant components of deferred tax assets and liabilities were as follows: December 31, 2017 2016Deferred Tax Asset: Postretirement benefits other than pensions$131,354 $255,507Asset retirement obligations51,415 99,467Pneumoconiosis benefits36,160 43,371Workers' compensation16,778 28,530Mine subsidence15,322 39,251Salary retirement12,465 37,498State bonus, net of Federal4,473 3,175Long-term disability3,375 6,358Other7,924 8,042Total Deferred Tax Asset279,266 521,199Valuation Allowance(1,379) —Net Deferred Tax Asset277,887 521,199 Deferred Tax Liability: Property, plant and equipment(174,806) (256,947)Equity Partnerships(17,991) (67,498)Advance mining royalties(10,025) (12,175)Total Deferred Tax Liability(202,822) (336,620) Net Deferred Tax Asset$75,065 $184,579A gross state net operating loss carryforward of $4,584 was generated during the current year, resulting in a deferred tax asset of $81. This NOL isprincipally related to Pennsylvania and Maryland, and will expire in 2037.As required by U.S. GAAP, a valuation allowance is required when it is more likely than not that all or a portion of a deferred tax asset will not berealized. Management must review all available evidence, both positive and negative, in determining the need for a valuation allowance. For the years endedDecember 31, 2017 and 2016, positive evidence considered included pretax cumulative income over the past three years, reversals of financial to taxtemporary differences, and the implementation of and/or ability to employ various tax planning strategies. Negative evidence included the tax loss generatedin the current year and the ability to fully utilize certain tax assets as a result of enactment of Public Law 115-97, commonly known as the Tax Cuts and JobsAct. Management assessed both the federal and deferred state tax attributes for all subsidiaries during the period. After considering all available evidence,both positive and negative, management determined that a valuation allowance of $1,379 is necessary.On December 22, 2017, the President of the United States signed Public Law 115-97 “An Act to Provide for Reconciliation Pursuant to Titles II and V ofthe Concurrent Resolution on the Budget for Fiscal Year 2018,” commonly referred to as the Tax Cuts and Jobs Act (“Tax Bill”). Under U.S. GAAP, theeffects of new legislation are recognized upon enactment, which, for federal legislation, is the date the President signs a bill into law. Accordingly,recognition of the tax effects of the Tax Bill is required in the interim and annual periods that include December 22, 2017. The SEC also released StaffAccounting Bulletin 118 on December 22, 2017. This bulletin clarifies certain aspects of ASC 740 and provides a three-step process for applying ASC 740.First, a company must reflect in its financial statements the income tax effects of the Tax Bill on items for which the company can make a completeassessment. Next, a measurement period not to exceed one year is provided for a company to report provisional amounts of the income tax effects of the TaxBill for items for which the company’s assessment is incomplete, but for which it can make a reasonable estimate. A company may adjust provisional amountsas it obtains additional information in subsequent reporting periods. Finally, for items for which a company cannot make a reasonable estimate, a company isnot required to report provisional amounts and will continue to apply ASC 740 based on tax law existing immediately before December 22, 2017. Acompany is required to report provisional amounts for these items in the first reporting period in which the company is able to make a reasonable estimate ofthe income tax effects of the Tax Bill.The Company has evaluated the impact of the Tax Bill and has recorded the following provisional impacts in its financial statements. The net deferredtax asset on CONSOL Energy's balance sheet has been reduced by approximately $58,558 to a balance of $76,444 before the valuation allowance adjustmentas a result of the federal corporate income tax rate being reduced from 35%94Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.to 21% for all periods after December 31, 2017. The Tax Cuts and Jobs Act is a comprehensive tax reform bill containing a number of provisions that eithercurrently or in the future could impact the Company. Examples include the ability to fully expense certain depreciable property, and the limitation on thedeductibility of business interest expense. As a result, the Company continues to evaluate all applicable provisions of the Tax Bill during the measurementperiod.The Company utilizes the “more likely than not” standard in recognizing a tax benefit in its financial statements. For the years ended December 31,2017 and 2016, the Company did not have any unrecognized tax benefits. If accrual for interest or penalties is required, it is the Company’s policy to includethese as a component of income tax expense.The Company is subject to taxation in the United States, as well as various states and Canada, as well as various provinces. Under the provisions of thetax matters agreement signed on November 28, 2017 by and between CONSOL Energy Inc. (Parent) and CONSOL Mining Corporation (Company), certainsubsidiaries of the Company are subject to examination for tax years for the period January 1, 2015 through December 31, 2017 for certain state and foreignreturns. Further, the Company is subject to examination for the period November 28, 2017 through December 31, 2017 for federal and certain state returns.NOTE 6—ASSET RETIREMENT OBLIGATIONS:CONSOL Energy accrues for mine closing costs, perpetual water care costs, and costs associated with the plugging of degasification wells using theaccounting treatment prescribed by the Asset Retirement and Environmental Obligations Topic of the FASB Accounting Standards Codification. CONSOLEnergy recognizes capitalized asset retirement costs by increasing the carrying amount of related long-lived assets.The reconciliation of changes in the asset retirement obligations at December 31, 2017 and 2016 is as follows: As of December 31, 2017 2016Balance at beginning of period $272,538 $288,977Accretion expense 18,922 20,111Payments (10,467) (11,637)Revisions in estimated cash flows (20,529) (25,427)Other (1,641) 514Balance at end of period $258,823 $272,538NOTE 7—INVENTORIES:Inventory components consist of the following: December 31, 2017 2016Coal$11,411 $7,800Supplies42,009 42,361Total Inventories$53,420 $50,161 NOTE 8—PROPERTY, PLANT AND EQUIPMENT:Property, plant and equipment consists of the following at December 31: December 31, 2017 2016Plant and Equipment$2,757,062 $2,680,453Coal Properties and Surface Lands857,031 861,048Airshafts392,266 381,755Mine Development344,139 344,139Advance Mining Royalties325,855 326,000Total Property, Plant and Equipment4,676,353 4,593,395Less Accumulated Depreciation, Depletion and Amortization2,554,056 2,413,125Total Property, Plant and Equipment, Net$2,122,297 $2,180,27095Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Coal reserves are controlled either through fee ownership or by lease. The duration of the leases vary; however, the lease terms are generally extendedautomatically to the exhaustion of economically recoverable reserves, as long as active mining continues. Coal interests held by lease provide the samerights as fee ownership for mineral extraction and are legally considered real property interests.As of December 31, 2017 and 2016, property, plant and equipment includes gross assets under capital lease of $3,559 and $3,547, respectively.Accumulated amortization for capital leases was $2,839 and $2,399 at December 31, 2017 and 2016, respectively. Amortization expense for assets undercapital leases approximated $424 and $491 for the years ended December 31, 2017 and 2016, respectively, and is included in Depreciation, Depletion andAmortization in the accompanying Consolidated Statements of Income. See Note 12–Leases for further discussion of capital leases.NOTE 9—ACCOUNTS RECEIVABLE SECURITIZATION:CONSOL Energy and certain of its U.S. subsidiaries were party to a trade accounts receivable facility with financial institutions for the sale on acontinuous basis of eligible trade accounts receivable.Pursuant to the securitization facility, CONSOL Thermal Holdings LLC will sell current and future trade receivables to CONSOL Pennsylvania CoalCompany LLC. CONSOL Marine Terminals LLC and CONSOL Pennsylvania Coal Company LLC (the “originators”) will sell and/or contribute current andfuture trade receivables (including receivables sold to CONSOL Pennsylvania Coal Company LLC by CONSOL Thermal Holdings LLC) to CONSOLFunding LLC (the “SPV”). The SPV will, in turn, pledge its interests in the receivables to PNC Bank, which will either make loans or issue letters of credit onbehalf of the SPV. The maximum amount of advances and letters of credit outstanding under the securitization facility may not exceed $100 million.Loans under the securitization facility will accrue interest at a reserve-adjusted LIBOR market index rate equal to the one-month Eurodollar rate. Loansand letters of credit under the securitization facility will also accrue a program fee and a letter of credit participation fee, respectively, equal to 4.00% perannum. In addition, the SPV paid certain structuring fees to PNC Capital Markets LLC and will pay other customary fees to the lenders, including a fee onunused commitments equal to 0.60% per annum.At December 31, 2017, the Company's eligible accounts receivable yielded $60,582 of borrowing capacity. At December 31, 2017, the facility had nooutstanding borrowings and $60,685 of letters of credit outstanding, leaving no unused capacity. Costs associated with the receivables facility totaled $171thousand for the year ended December 31, 2017. These costs have been recorded as financing fees which are included in Operating and Other Costs in theConsolidated Statements of Income. The Company has not derecognized any receivables due to its continued involvement in the collections efforts.NOTE 10—OTHER ACCRUED LIABILITIES: December 31, 2017 2016Subsidence liability $88,027 $104,437Longwall equipment buyout 22,631 —Accrued payroll and benefits 14,689 17,326Accrued interest 10,039 2,239Equipment lease rental 9,865 15,286Litigation 8,197 12,532Accrued other taxes 7,510 12,732Deferred revenue 6,807 10,520Short-term incentive compensation 4,729 6,073Other 23,900 19,747Current portion of long-term liabilities: Postretirement benefits other than pensions 37,464 40,611Asset retirement obligations 30,480 26,259Workers' compensation 13,317 13,596Pneumoconiosis benefits 12,972 10,763Total Other Accrued Liabilities $290,627 $292,12196Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.NOTE 11—DEBT: December 31, 2017 2016Debt: Term Loan B due in November 2022 (Principal of $400,000 less Unamortized Discount of $7,853, 7.47%Weighted Average Interest Rate)$392,147 $—11.00% Senior Secured Second Lien Notes due 2025300,000 —MEDCO Revenue Bonds in Series due September 2025 at 5.75%102,865 102,865Term Loan A due in November 2021 (5.92% Weighted Average Interest Rate)100,000 —Advance Royalty Commitments (9.42% and 7.73% Weighted Average Interest Rate, respectively)2,085 2,678Revolving Credit Facility - CONSOL Coal Resources LP— 201,000Less: Unamortized Debt Issuance Costs21,129 4,343 875,968 302,200Less: Amounts Due in One Year*19,318 373Long-Term Debt$856,650 $301,827*Excludes current portion of Capital Lease Obligations of $3,164 and $3,703 at December 31, 2017 and 2016, respectively.Annual undiscounted maturities on long-term debt during the next five years and thereafter are as follows:Year ended December 31,Amount2018$19,318201919,291202029,265202149,2422022384,169Thereafter403,665 Total Long-Term Debt Maturities$904,950In November 2017, CONSOL Energy entered into a revolving credit facility with commitments up to $300 million (the “Revolving Credit Facility”), aTerm Loan A Facility of up to $100 million (the “TLA Facility”) and a Term Loan B Facility of up to $400 million (the “TLB Facility”, and together with theRevolving Credit Facility and the TLA Facility, the “Senior Secured Credit Facilities”). Borrowings under the Company's Senior Secured Credit Facilitiesbear interest at a floating rate which can be, at the Company's option, either (i) LIBOR plus an applicable margin or (ii) an alternate base rate plus anapplicable margin. The applicable margin for the Revolving Credit Facility and TLA Facility depends on the total net leverage ratio, whereas the applicablemargin for the TLB Facility is fixed. The Revolving Credit and TLA Facilities mature on November 28, 2021. The TLB Facility matures on November 28,2022. Obligations under the Senior Secured Credit Facilities are guaranteed by (i) all owners of the 75% undivided economic interest in the PAMC held bythe Company, (ii) any other members of the Company’s group that own any portion of the collateral securing the Revolving Credit Facility, and (iii) subjectto certain customary exceptions and agreed materiality thresholds, all other existing or future direct or indirect wholly owned restricted subsidiaries of theCompany (excluding the Partnership and its wholly-owned subsidiaries).The Revolving Credit Facility and TLA Facility also include financial covenants, including (i) a maximum first lien gross leverage ratio, (ii) amaximum total net leverage ratio, and (iii) a minimum fixed charge coverage ratio. CONSOL Energy must maintain a maximum first lien gross leverage ratiocovenant of no more than 2.25 to 1.00, measured quarterly, stepping down to 2.00 to 1.00 in March 2019 and 1.75 to 1.00 in March 2020. The maximum firstlien gross leverage ratio is calculated as the ratio of Consolidated First Lien Debt to Consolidated EBITDA, excluding the Partnership. The maximum firstlien gross leverage ratio was 1.58 to 1.00 at December 31, 2017. CONSOL Energy must maintain a maximum total net leverage ratio covenant of no morethan 3.25 to 1.00, measured quarterly, stepping down to 3.00 to 1.00 in March 2019 and 2.75 to 1.00 in March 2020. The maximum total net leverage ratio iscalculated as the ratio of Consolidated Indebtedness, minus Cash on Hand, to Consolidated EBITDA, excluding the Partnership. The maximum total netleverage ratio was 2.37 to 1.00 at December 31, 2017. Consolidated EBITDA, as used in the covenant calculation, excludes non-cash compensationexpenses, non-recurring transaction expenses, extraordinary97Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.gains and losses, gains and losses on discontinued operations, non-cash charges related to legacy employee liabilities and gains and losses on debtextinguishment, and includes cash distributions received from the Partnership and subtracts cash payments related to legacy employee liabilities. Thefacilities also include a minimum fixed charge coverage covenant of no less than 1.00 to 1.00, measured quarterly, stepping up to 1.05 to 1.00 in March 2020and 1.10 to 1.00 in March 2021. The minimum fixed charge coverage ratio is calculated as the ratio of Consolidated EBITDA to Consolidated Fixed Charges,excluding the Partnership. Consolidated Fixed Charges, as used in the covenant calculation, includes cash interest payments, cash payments for incometaxes, scheduled debt repayments, dividends paid, and Maintenance Capital Expenditures. Compliance with the minimum fixed charge coverage ratio is notrequired until the quarter ending March 31, 2018.At December 31, 2017, the Revolving Credit Facility had no borrowings outstanding and $27,426 of letters of credit outstanding, leaving $272,574 ofunused capacity. From time to time, CONSOL Energy is required to post financial assurances to satisfy contractual and other requirements generated in thenormal course of business. Some of these assurances are posted to comply with federal, state or other government agencies' statutes and regulations. CONSOLEnergy sometimes uses letters of credit to satisfy these requirements and these letters of credit reduce the Company's borrowing facility capacity.In November 2017, CONSOL Energy issued $300 million in aggregate principal amount of 11.00% Senior Secured Second Lien Notes due 2025 (the“Second Lien Notes”) pursuant to an indenture (the “Indenture”) dated as of November 13, 2017, by and between the Company and UMB Bank, N.A., anational banking association, as trustee and collateral trustee (the “Trustee”). On November 28, 2017, certain subsidiaries of the Company executed asupplement to the Indenture and became party to the Indenture as a guarantor (the “Guarantors”). The Second Lien Notes are secured by second priority lienson substantially all of the assets of the Company and the Guarantors that are pledged and on a first-priority basis as collateral securing the Company’sobligations under the Senior Secured Credit Facilities (described above), subject to certain exceptions under the Indenture.NOTE 12—LEASES:CONSOL Energy uses various leased facilities and equipment in its operations. Future minimum lease payments under capital and operating leases,together with the present value of the net minimum capital lease payments, at December 31, 2017 are as follows: Capital Operating Leases LeasesYear Ended December 31, 2018 $3,773 $73,2232019 3,641 31,3862020 3,471 22,2602021 2,253 21,4732022 — 11,680Thereafter — 21,796Total minimum lease payments $13,138 $181,818Less amount representing interest (3.00% – 6.00%) 1,335 Present value of minimum lease payments 11,803 Less amount due in one year 3,164 Total Long-Term Capital Lease Obligation $8,639 Rental expense under operating leases was $77,879, $87,903, and $83,423 for the years ended December 31, 2017, 2016 and 2015, respectively.At December 31, 2017, certain of the above capital leases for mining equipment are subleased to a third-party. The following represents the minimumpayments including interest for those capital subleases:20182019202020212022ThereafterTotal$3,699 $3,699 $3,699 $2,157 $— $— $13,25498Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.At December 31, 2017, certain of the above operating leases for mining equipment are subleased to third-parties. The following represents the minimumrental payments for those operating subleases:20182019202020212022ThereafterTotal$295 $— $— $— $— $— $295CONSOL Energy leases certain owned mining equipment to a third-party under operating leases. The owned equipment included in gross property,plant and equipment was $16,672, with $13,337 accumulated depreciation at December 31, 2017 and $26,005, with $15,603 accumulated depreciation atDecember 31, 2016.At December 31, 2017, scheduled minimum rental payments for operating leases related to this equipment were as follows: 2018 2019 2020 2021 2022 Thereafter Total$2,992 $1,701 $627 $— $— $— $5,320NOTE 13—PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS:PensionCONSOL Energy has non-contributory defined benefit retirement plans. Effective December 31, 2015, CONSOL Energy's qualified defined benefitretirement plan was frozen. The benefits for these plans are based primarily on years of service and employees' pay. CONSOL Energy's qualified pension planallows for lump-sum distributions of benefits earned up until December 31, 2005, at the employees' election. Pursuant to a separation and distributionagreement entered into by and between CONSOL Energy Inc. (now known as CNX Resources Corporation (“CNX”)) and CONSOL Mining Corporation (nowknown as CONSOL Energy Inc. (“CEIX”)) dated November 28, 2017, and related ancillary agreements (the “Transaction Agreements”), the sponsorship of thequalified pension plan was transferred to CEIX.On August 31, 2015, the qualified pension plan was remeasured to reflect an announced plan amendment that reduced accruals of pension benefits as ofJanuary 1, 2016. The plan amendment called for a hard freeze of the qualified defined benefit pension plan on January 1, 2016 for all remaining participantsin the plan. The modifications to the pension plan resulted in a $26,352 reduction in the pension liability. The amendment resulted in a remeasurement of thequalified pension plan at August 31, 2015, which increased the pension liability by $17,793.In the third quarter of 2015, CONSOL Energy remeasured its pension plan as a result of the previously discussed plan amendment. In conjunction withthis remeasurement, the method used to estimate the service and interest components of net periodic benefit cost for pension was changed. This change wasalso made to other postretirement benefits in the fourth quarter during the annual remeasurement of that plan. This change, compared to the previous method,resulted in a decrease in the service and interest components for pension cost in the third quarter. Historically, these service and interest cost componentshave been estimated utilizing a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation at the beginning ofthe period. CONSOL Energy elected to utilize a full yield curve approach in the estimation of these components by applying the specific spot rates along theyield curve used in the determination of the benefit obligation to the relevant projected cash flows. This change was made to provide a more precisemeasurement of service and interest costs by improving the correlation between projected benefit cash flows to the corresponding spot yield curve rates. Thischange was immaterial to CONSOL Energy's financial statements. CONSOL Energy accounted for this change as a change in accounting estimate that isinseparable from a change in accounting principle and, accordingly, accounted for it prospectively.According to the Defined Benefit Plans Topic of the FASB Accounting Standards Codification, if the lump sum distributions made during a plan year,which for CONSOL Energy is January 1 to December 31, exceed the total of the projected service cost and interest cost for the plan year, settlementaccounting is required. Lump sum payments exceeded this threshold during the years ended December 31, 2017, 2016, and 2015. Accordingly, CONSOLEnergy recognized settlement expense of $10,153, $22,196, and $19,053 for the years ended December 31, 2017, 2016 and 2015 respectively, in Operatingand Other Costs in the Consolidated Statements of Income.Other Postretirement Benefit PlansCertain subsidiaries of CONSOL Energy provide medical and prescription drug benefits to retired employees covered by the Coal Industry RetireeHealth Benefit Act of 1992 (the Coal Act). Represented hourly employees are eligible to participate based upon the terms of the National Bituminous CoalWage Agreement of 2011.99Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.On May 31, 2015, the Salaried OPEB and P&M OPEB plans were remeasured to reflect another plan amendment which eliminated Salaried and P&MOPEB benefits at December 31, 2015. The amendment to the OPEB plans resulted in a $43,598 reduction in the OPEB liability. The amendment also resultedin a remeasurement of the OPEB plan at May 31, 2015, which decreased the liability by $1,070. CONSOL Energy recognized income of $235,541 related toamortization of prior service credits, coupled with recognition of actuarial losses in Operating and Other Costs in the Consolidated Statements of Income forthe year ended December 31, 2015 as a result of the changes made to the Salaried and P&M OPEB plans.The Company implemented cost containment changes related to pharmacy benefits on January 1, 2017 and increased member responsibility whenusing out-of-network providers and facilities effective March 27, 2017. These plan design changes resulted in a $28,164 reduction in the OPEB liabilityduring the year ended December 31, 2016.The reconciliation of changes in the benefit obligation, plan assets and funded status of these plans at December 31, 2017 and 2016 is as follows: Pension Benefits Other Postretirement Benefits at December 31, at December 31, 2017 2016 2017 2016Change in benefit obligation: Benefit obligation at beginning of period $735,177 $751,617 $700,085 $671,755Service cost 2,948 1,533 — —Interest cost 25,265 25,048 23,945 24,241Actuarial loss (gain) 35,281 46,885 (101,379) 77,640Plan amendments — — — (28,164)Plan settlements (29,142) (54,197) — —Benefits and other payments (35,539) (35,709) (31,088) (45,387)Benefit obligation at end of period $733,990 $735,177 $591,563 $700,085 Change in plan assets: Fair value of plan assets at beginning of period $632,434 $669,039 $— $—Actual return on plan assets 110,311 50,575 — —Company contributions 1,181 2,726 31,088 45,387Benefits and other payments (35,539) (35,709) (31,088) (45,387)Plan settlements (29,142) (54,197) — —Fair value of plan assets at end of period $679,245 $632,434 $— $— Funded status: Current liabilities $(1,785) $(2,871) $(37,464) $(40,611)Noncurrent liabilities (52,960) (99,872) (554,099) (659,474)Net obligation recognized $(54,745) $(102,743) $(591,563) $(700,085) Amounts recognized in accumulated other comprehensiveincome consist of: Net actuarial loss $243,456 $295,152 $301,901 $426,392Prior service credit (869) (1,372) (25,759) (28,164)Net amount recognized (before tax effect) $242,587 $293,780 $276,142 $398,228100Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The components of net periodic benefit cost are as follows: Pension Benefits Other Postretirement Benefits For the Years Ended December 31, For the Years Ended December 31, 2017 2016 2015 2017 2016 2015Components of net periodic benefit cost: Service cost$2,948 $1,533 $8,256 $— $— $—Interest cost25,265 25,048 31,655 23,945 24,241 27,238Expected return on plan assets(42,383) (46,674) (51,528) — — —Amortization of prior service credits(502) (502) (579) (2,405) — (336,327)Recognized net actuarial loss8,896 9,163 20,870 23,112 19,168 102,875Curtailment loss— — 5 — — —Settlement loss (gain)10,153 22,196 19,053 — — (8,932)Net periodic benefit cost (credit)$4,377 $10,764 $27,732 $44,652 $43,409 $(215,146)Amounts included in accumulated other comprehensive loss which are expected to be recognized in 2018 net periodic benefit costs: Other Pension Postretirement Benefits BenefitsPrior service credit recognition $(502) $(2,405)Actuarial loss recognition $8,715 $16,205CONSOL Energy utilizes a corridor approach to amortize actuarial gains and losses that have been accumulated under the Pension Plan. Cumulativegains and losses that are in excess of 10% of the greater of either the projected benefit obligation (PBO) or the market-related value of plan assets areamortized over the expected remaining future lifetime of all plan participants for the Pension Plan.CONSOL Energy also utilizes a corridor approach to amortize actuarial gains and losses that have been accumulated under the OPEB Plan. Cumulativegains and losses that are in excess of 10% of the greater of either the accumulated postretirement benefit obligation (APBO) or the market-related value ofplan assets are amortized over the average future remaining lifetime of the current inactive population for the OPEB plan.The following table provides information related to pension plans with an accumulated benefit obligation in excess of plan assets: As of December 31, 2017 2016Projected benefit obligation $733,990 $735,177Accumulated benefit obligation $733,949 $733,542Fair value of plan assets $679,245 $632,434101Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Assumptions:The weighted-average assumptions used to determine benefit obligations are as follows: Pension Benefits Other Postretirement Benefits at December 31, at December 31, 2017 2016 2017 2016Discount rate 3.65% 4.31% 3.65% 4.22%Rate of compensation increase 3.73% 3.90% — —The discount rates are determined using a Company-specific yield curve model (above-mean) developed with the assistance of an external actuary. TheCompany-specific yield curve models (above-mean) use a subset of the expanded bond universe to determine the Company-specific discount rate. Bondsused in the yield curve are rated AA by Moody's or Standard & Poor's as of the measurement date. The yield curve models parallel the plans' projected cashflows, and the underlying cash flows of the bonds included in the models exceed the cash flows needed to satisfy the Company's plans.The weighted-average assumptions used to determine net periodic benefit costs are as follows: Pension Benefits Other Postretirement Benefits For the Years Ended For the Years Ended December 31, December 31, 2017 2016 2015 2017 2016 2015Discount rate 4.27% 4.52% 4.07% 4.22% 4.50% 4.03%Expected long-term return on plan assets 6.90% 7.25% 7.75% — — —Rate of compensation increase 3.90% 3.80% 3.80% — — —The long-term rate of return is the sum of the portion of total assets in each asset class held multiplied by the expected return for that class, adjusted forexpected expenses to be paid from the assets. The expected return for each class is determined using the plan asset allocation at the measurement date and adistribution of compound average returns over a twenty year time horizon. The model uses asset class returns, variances and correlation assumptions toproduce the expected return for each portfolio. The return assumptions used forward-looking gross returns influenced by the current Treasury yield curve.These returns recognize current bond yields, corporate bond spreads and equity risk premiums based on current market conditions.The assumed health care cost trend rates are as follows: At December 31, 2017 2016Health care cost trend rate for next year 6.06% 6.31%Rate to which the cost trend is assumed to decline (ultimate trend rate) 4.50% 4.50%Year that the rate reaches ultimate trend rate 2038 2038Assumed health care cost trend rates have a significant effect on the amounts reported for the medical plans. A one-percentage point change in assumedhealth care cost trend rates would have the following effects: 1 Percentage 1 Percentage Point Increase Point DecreaseEffect on total of service and interest cost components $3,536 $(2,962)Effect on accumulated postretirement benefit obligation $71,922 $(60,924)102Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Plan Assets:The Company’s overall investment strategy is to meet current and future benefit payment needs through diversification across asset classes, fundstrategies and fund managers to achieve an optimal balance between risk and return and between income and growth of assets through capital appreciation.Consistent with the objectives of the Pension Trust and in consideration of the Trust’s current funded status and the current level of market interest rates, theRetirement Board, as appointed by the CONSOL Energy Board of Directors (the “Retirement Board”) has approved an asset allocation strategy that willchange over time in response to future improvements in the Trust’s funded status and/or changes in market interest rates. Such changes in asset allocationstrategy are intended to allocate additional assets to the fixed income asset class should the Trust’s funded status improve. In this framework, the currenttarget allocation for plan assets is 26% U.S. equity securities, 16.5% non-U.S. equity securities, 7.5% global equity securities and 50% fixed income. Both theequity and fixed income portfolios are comprised of both active and passive investment strategies. The Trust is primarily invested in Mercer CommonCollective Trusts. Equity securities consist of investments in large and mid/small cap companies; non-U.S. equities are derived from both developed andemerging markets. Fixed income securities consist of U.S. as well as international instruments, including emerging markets. The core domestic fixed incomeportfolios invest in government, corporate, asset-backed securities and mortgage-backed obligations. The average quality of the fixed income portfolio mustbe rated at least “investment grade” by nationally recognized rating agencies. Within the fixed income asset class, investments are invested primarily acrossvarious strategies such that the overall profile strongly correlates with the interest rate sensitivity of the Trust’s liabilities in order to reduce the volatilityresulting from the risk of changes in interest rates and the impact of such changes on the Trust’s overall financial status. Derivatives, interest rate swaps,options and futures are permitted investments for the purpose of reducing risk and to extend the duration of the overall fixed income portfolio; however, theymay not be used for speculative purposes. All or a portion of the assets may be invested in mutual funds or other commingled vehicles so long as the pooledinvestment funds have an adequate asset base relative to their asset class; are invested in a diversified manner; and have management and/or oversight by anInvestment Advisor registered with the SEC. The Retirement Board reviews the investment program on an ongoing basis including asset performance, currenttrends and developments in capital markets, changes in Trust liabilities and ongoing appropriateness of the overall investment policy.The fair values of plan assets at December 31, 2017 and 2016 by asset category are as follows: Fair Value Measurements at December 31, 2017 Fair Value Measurements at December 31, 2016 Quoted Quoted Prices in Prices in Active Active Markets for Significant Significant Markets for Significant Significant Identical Observable Unobservable Identical Observable Unobservable Assets Inputs Inputs Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) Total (Level 1) (Level 2) (Level 3)Asset Category Cash/Accrued Income $5,202 $5,202 $— $— $639 $639 $— $—US Equities (a) 12 12 — — 11 11 — —Mercer Common Collective Trusts (b) 674,031 — — — 631,784 — — —Total $679,245 $5,214 $— $— $632,434 $650 $— $—__________(a)This category includes investments in US common stocks and corporate debt.(b)Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classifiedin the fair value hierarchy but are included in the total.There are no investments in CONSOL Energy stock held by these plans at December 31, 2017 or 2016.There are no assets in the other postretirement benefit plans at December 31, 2017 or 2016.Cash Flows:If necessary, CONSOL Energy intends to contribute to the pension trust using prudent funding methods. However, the Company does not expect tocontribute to the pension plan trust in 2018. Pension benefit payments are primarily funded from the Pension Trust. CONSOL Energy expects to pay benefitsof $1,785 from the non-qualified pension plan in 2018. CONSOL Energy does not expect to contribute to the other postemployment plan in 2018 andintends to pay benefit claims as they are due.103Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The following benefit payments, reflecting expected future service, are expected to be paid: Other Pension Postretirement Benefits Benefits2018 $44,778 $37,4642019 $44,035 $37,1632020 $43,117 $37,0712021 $42,124 $36,8622022 $42,644 $36,228Year 2023-2027 $206,682 $172,756NOTE 14—COAL WORKERS’ PNEUMOCONIOSIS AND WORKERS’ COMPENSATION:Under the Federal Coal Mine Health and Safety Act of 1969, as amended, CONSOL Energy is responsible for medical and disability benefits toemployees and their dependents resulting from occurrences of coal workers' pneumoconiosis disease. CONSOL Energy is also responsible under various statestatutes for pneumoconiosis benefits. CONSOL Energy primarily provides for these claims through a self-insurance program. The calculation of the actuarialpresent value of the estimated pneumoconiosis obligation is based on an annual actuarial study by independent actuaries and uses assumptions regardingdisability incidence, medical costs, indemnity levels, mortality, death benefits, dependents and interest rates which are derived from actual companyexperience and outside sources. Actuarial gains or losses can result from differences in incident rates and severity of claims filed as compared to originalassumptions. Recent legislative changes have not been favorable for CWP. Based upon the law change that contained a 15-year presumption and permittedthat chronic obstructive pulmonary disease (COPD) is a symptom of coal workers’ pneumoconiosis, there has been a surge in entitled claims for CONSOL,both from new applicants and previously denied applicants over the past years. This surge in the past year approximated the industry-wide historicalentitlement emergence pattern. As a result, the Company has adjusted its expectations regarding future claim emergence, resulting in a $41,700 increase inthe CWP liability. Former miners and their family members asserting claims for pneumoconiosis benefits have generally been more successful asserting such claims inrecent years as a result of the presumption within the PPACA that a coal miner with fifteen or more years of underground coal mining experience (or theequivalent) who develops a respiratory condition and meets the requirements for total disability under the Federal Act is presumed to be disabled due to coaldust exposure, thereby shifting the burden of proof from the employee to the employer/insurer to establish that this disability is not due to coal dust.CONSOL Energy must also compensate individuals who sustain employment-related physical injuries or some types of occupational diseases and, onsome occasions, for costs of their rehabilitation. Workers' compensation laws will also compensate survivors of workers who suffer employment-relateddeaths. Workers' compensation laws are administered by state agencies, and each state has its own set of rules and regulations regarding compensation that isowed to an employee that is injured in the course of employment. CONSOL Energy primarily provides for these claims through a self-insurance program.CONSOL Energy recognizes an actuarial present value of the estimated workers' compensation obligation calculated by independent actuaries. Thecalculation is based on claims filed and an estimate of claims incurred but not yet reported as well as various assumptions, including discount rate, futurehealthcare trend rate, benefit duration and recurrence of injuries. Actuarial gains or losses associated with workers' compensation have resulted from discountrate changes and differences in claims experience and incident rates as compared to prior assumptions.104Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. CWP Workers' Compensation at December 31, at December 31, 2017 2016 2017 2016Change in benefit obligation: Benefit obligation at beginning of period $118,836 $121,285 $78,099 $81,502State administrative fees and insurance bond premiums — — 3,198 3,199Service cost 5,122 4,327 5,734 7,466Interest cost 4,050 4,283 2,321 2,499Actuarial loss 47,939 439 3,553 121Benefits paid (13,107) (10,191) (14,377) (16,688)Curtailment gain — (1,307) — —Benefit obligation at end of period $162,840 $118,836 $78,528 $78,099 Current assets $— $— $1,437 $1,429Current liabilities (12,972) (10,763) (13,317) (13,596)Noncurrent liabilities (149,868) (108,073) (66,648) (65,932)Net obligation recognized $(162,840) $(118,836) $(78,528) $(78,099) Amounts recognized in accumulated other comprehensiveincome consist of: Net actuarial gain $(7,144) $(62,714) $(8,505) $(12,656)Net amount recognized (before tax effect) $(7,144) $(62,714) $(8,505) $(12,656)The components of the net periodic cost are as follows: CWP Workers’ Compensation For the Years Ended For the Years Ended December 31, December 31, 2017 2016 2015 2017 2016 2015Service cost$5,122 $4,327 $6,194 $5,734 $7,466 $9,201Interest cost4,050 4,283 5,116 2,321 2,499 3,131Recognized net actuarial gain(7,631) (4,948) (5,576) (598) (395) (30)State administrative fees and insurance bondpremiums— — — 3,198 3,199 3,510Curtailment gain— (1,307) — — — —Net periodic cost$1,541 $2,355 $5,734 $10,655 $12,769 $15,812The following are amounts included in accumulated other comprehensive income that are expected to be recognized in 2018 net periodic benefit costs: Workers' CWP Compensation Benefits BenefitsActuarial gain recognition $(854) $(79)CONSOL Energy utilizes a corridor approach to amortize actuarial gains and losses that have been accumulated under the Workers’ Compensation andCWP plans. Cumulative gains and losses that are in excess of 10% of the greater of either the estimated liability or the market-related value of plan assets areamortized over the expected average remaining future service of the current active membership of the Workers’ Compensation and CWP plans.105Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Assumptions:The weighted-average discount rates used to determine benefit obligations and net periodic cost are as follows: CWP Workers' Compensation For the Years Ended For the Years Ended December 31, December 31, 2017 2016 2015 2017 2016 2015Benefit obligations 3.75% 4.40% 4.60% 3.57% 4.05% 4.26%Net periodic cost 4.40% 4.60% 4.21% 4.05% 4.26% 3.84% Discount rates are determined using a Company-specific yield curve model (above-mean) developed with the assistance of an external actuary. TheCompany-specific yield curve models (above-mean) use a subset of the expanded bond universe to determine the Company-specific discount rate. Bondsused in the yield curve are rated AA by Moody's or Standard & Poor's as of the measurement date. The yield curve models parallel the plans' projected cashflows, and the underlying cash flows of the bonds included in the models exceed the cash flows needed to satisfy the Company's plans.Cash Flows:CONSOL Energy does not intend to make contributions to the CWP or Workers' Compensation plans in 2018, but it intends to pay benefit claims asthey become due.The following benefit payments, which reflect expected future claims as appropriate, are expected to be paid: Workers' Compensation CWP Total Actuarial Other Benefits Benefits Benefits Benefits2018 $12,972 $14,390 $11,880 $2,5102019 $10,065 $14,120 $11,547 $2,5732020 $8,841 $14,110 $11,473 $2,6372021 $8,203 $14,035 $11,332 $2,7032022 $8,024 $14,146 $11,375 $2,771Year 2023-2027 $42,525 $53,187 $38,259 $14,928106Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.NOTE 15—OTHER EMPLOYEE BENEFIT PLANS:UMWA Benefit TrustsThe Coal Act created two multi-employer benefit plans: (1) the United Mine Workers of America Combined Benefit Fund (the “Combined Fund”) intowhich the former UMWA Benefit Trusts were merged, and (2) the United Mine Workers of America 1992 Benefit Plan (the “1992 Benefit Plan”). CONSOLEnergy accounts for required contributions to these multi-employer trusts as expense when incurred. The Combined Fund provides medical and death benefits for all beneficiaries of the former UMWA Benefit Trusts who were actually receiving benefitsas of July 20, 1992. The 1992 Benefit Plan provides medical and death benefits to orphan UMWA-represented members eligible for retirement on February 1,1993, and for those who retired between July 20, 1992 and September 30, 1994. The Coal Act provides for the assignment of beneficiaries to formeremployers and the allocation of unassigned beneficiaries (referred to as orphans) to companies using a formula set forth in the Coal Act. The Coal Actrequires that responsibility for funding the benefits to be paid to beneficiaries be assigned to their former signatory employers or related companies. This costis recognized when contributions are assessed. CONSOL Energy's total contributions under the Coal Act were $7,647, $8,455 and $9,239 for the years endedDecember 31, 2017, 2016 and 2015, respectively. Based on available information at December 31, 2017, CONSOL Energy's obligation for the CombinedFund and 1992 Benefit Plans is estimated to be approximately $82,501.Pursuant to the provisions of the Tax Relief and Healthcare Act of 2006 (the “2006 Act”) and the 1992 Benefit Plan, CONSOL Energy is required toprovide security in an amount based on the annual cost of providing health care benefits for all individuals receiving benefits from the 1992 Benefit Planwho are attributable to CONSOL Energy, plus all individuals receiving benefits from an individual employer plan maintained by CONSOL Energy who areentitled to receive such benefits. In accordance with the terms of the 2006 Act and the 1992 Benefit Plan, CONSOL Energy must secure its obligations byposting letters of credit, which were $20,983, $19,170 and $21,473 at December 31, 2017, 2016 and 2015, respectively. The 2017, 2016 and 2015 securityamounts were based on the annual cost of providing health care benefits and included a reduction in the number of eligible employees.Investment PlanCONSOL Energy has an investment plan available to most non-represented employees. Eligible employees of Consol Pennsylvania Coal Companybegan participation in the Consol Pennsylvania Coal Company Investment Plan (the “CPCC 401(k) plan”) on September 1, 2017, which was the inceptiondate of the CPCC 401(k) plan. Remaining eligible employees of CONSOL Energy began participation in the CPCC 401(k) plan on November 1, 2017. Priorto participating in the CPCC 401(k) plan, eligible employees of CONSOL Energy participated in CONSOL Energy’s, now known as CNX ResourcesCorporation, 401(k) plan. Both the CNX and the CPCC 401(k) plans include Company matching of 6% of eligible compensation contributed by eligibleemployees of CONSOL Energy. In conjunction with the qualified pension plan changes in 2015, the Company contributed an additional 3% of eligiblecompensation into the 401(k) plan accounts for employees hired or rehired on or after October 1, 2014 or who were under age 40 or had less than 10 years ofservice with the Company as of September 30, 2014. This additional contribution was eliminated on January 1, 2016. The Company may also makediscretionary contributions to the Plan ranging from 1% to 6% (1% to 4% prior to January 1, 2016) of eligible compensation for eligible employees (asdefined by the Plan). There were no such discretionary contributions made by the Company for the years ended December 31, 2017 and 2015. Discretionarycontributions made by the Company were $9,499 for the year ended December 31, 2016. Total payments and costs were $9,888, $17,687 and $13,729 for theyears ended December 31, 2017, 2016 and 2015, respectively.Long-Term DisabilityCONSOL Energy has a Long-Term Disability Plan available to all eligible full-time salaried employees. The benefits for this plan are based on apercentage of monthly earnings, offset by all other income benefits available to the disabled. For the Years Ended December 31, 2017 2016 2015Benefit cost $2,058 $1,936 $2,383Discount rate assumption used to determine net periodic benefit costs 3.43% 3.71% 3.18%Liabilities incurred under the Long-Term Disability Plan are included in Other Accrued Liabilities and Deferred Credits and Other Liabilities–Other inthe Consolidated Balance Sheets and amounted to a combined total of $15,315 and $17,421 at December 31, 2017 and 2016, respectively.107Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.NOTE 16—STOCK-BASED COMPENSATION:CONSOL Energy adopted the CONSOL Energy Inc. Omnibus Performance Incentive Plan (Performance Incentive Plan) on October 30, 2017. ThePerformance Incentive Plan provides for grants of stock-based awards to non-employee directors and employees, including any officer or employee-directorof the Company, who is not a member of the Compensation Committee. These awards are intended to compensate the recipients thereof based on theperformance of the Company's stock and the recipients' continued services during the vesting period, as well as align the recipients' long-term interests withthose of the Company's shareholders. CONSOL Energy is responsible for the cost of awards granted under the Performance Incentive Plan, and alldeterminations with respect to awards to be made under the Performance Incentive Plan will be made by the board of directors or a committee as delegated bythe board of directors.The Performance Incentive Plan limits the number of units that may be delivered pursuant to vested awards to 2,600,000 shares, subject toproportionate adjustment in the event of stock splits, stock dividends, recapitalizations, and other similar transactions or events. Shares subject to awards thatare canceled, forfeited, withheld to satisfy exercise prices or tax withholding obligations or otherwise terminate without delivery will be available fordelivery pursuant to other awards.Due to the separation of ParentCo and CONSOL Energy as described in Note 2 - Separation from CNX Resources Corporation, the terms of theagreement between the companies provide for the automatic adjustment and conversion of awards originally granted under ParentCo's equity incentive planinto awards of the Performance Incentive Plan, effective as of November 28, 2017. By calculating a conversion ratio based on the share price immediatelyprior to the separation for both ParentCo and CONSOL Energy, the intrinsic value of the outstanding awards immediately following the separation remainsthe same as the intrinsic value immediately prior to the separation. At the date of conversion, employees of CONSOL Energy who were grades 14 or lowervested immediately in any non-vested restricted stock units, whereas employees above grade 14 converted their shares at the separation date. All performanceshare units of ParentCo owned by CONSOL Energy employees converted on the date of the separation. For every unvested share of ParentCo's award to beconverted, a CONSOL Energy employee received 0.7189 shares of an unvested award in the Performance Incentive Plan. The fair value of each award wasadjusted to preserve the intrinsic value of the award. Any unvested option award of ParentCo owned by a CONSOL Energy employee remained an optionaward of ParentCo's stock and CONSOL Energy recognized stock-based compensation expense for the remaining unamortized period of the award. For theyear ended December 31, 2017, $1,436 relates to the immediate expense of the unamortized portion of ParentCo granted options for CONSOL Energyemployees.While the board of directors may amend certain provisions of these awards, subject to limitations imposed by applicable law or the PerformanceIncentive Plan, these converted awards shall be governed by the provisions of the original award agreement applicable to the award.For only those shares expected to vest, CONSOL Energy recognizes stock-based compensation costs on a straight-line basis over the requisite serviceperiod of the award as specified in the award agreement, which is generally the vesting term. The vesting of all awards will accelerate in the event of deathand disability and may accelerate upon a change in control of CONSOL Energy. The total stock-based compensation expense recognized during the yearsended December 31, 2017, 2016 and 2015 was $16,212, $10,986 and $9,205, respectively. This includes expense specifically related to the PerformanceIncentive Plan and also expense charged by ParentCo prior to the separation. The related deferred tax benefit relating to converted shares and new grantstotaled $1,439, $607 and $609 for the years ended December 31, 2017, 2016 and 2015, respectively.As of December 31, 2017, CONSOL Energy has $9,904 of unrecognized compensation cost related to all nonvested stock-based compensation awards,which is expected to be recognized over a weighted-average period of 2.85 years. When restricted stock and performance share unit awards become vested,the issuances are made from CONSOL Energy's common stock shares.In March 2016, the FASB issued an Accounting Standards Update on stock compensation that was intended to simplify and improve the accountingand statement of cash flow presentation for income taxes at settlement, forfeitures, and net settlements for withholding tax. The guidance is effective forpublic entities for fiscal years beginning after December 31, 2016. In accordance with this Update, $384 of additional income tax expense was recognized inthe Consolidated Statements of Income for the year ended December 31, 2017. Also in accordance with this Update, the value of shares withheld foremployee tax withholding purposes of $2,156 for the year ended December 31, 2017 was reclassified between Net Cash Provided by Operating Activities andNet Cash Used in Financing Activities on the Consolidated Statements of Cash Flows. As permitted by this Update, the Company has elected to account forforfeitures of stock-based compensation as they occur. The cumulative effect of the policy election to recognize forfeitures as they occur was nominal.Restricted Stock UnitsCONSOL Energy grants certain employees and directors restricted stock units, which entitle the holder to shares of common stock as the award vests.Compensation expense is recognized on a straight-line basis over the requisite service period of the award. The total fair value of restricted stock units vestedduring the year ended December 31, 2017 was $534. The following108Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.table represents the nonvested restricted stock units and their corresponding fair value (based upon the closing share price) at the date of grant: Number of Weighted Average Shares Grant Date Fair ValueNonvested at December 31, 2016 — $—Granted 165,967 $29.82Converted from CNX Separation 136,790 $29.52Vested (11,063) $48.23Forfeited (5,903) $24.68Nonvested at December 31, 2017 285,791 $29.07Performance Share UnitsCONSOL Energy grants certain employees performance share unit awards, which entitle the holder to shares of common stock subject to theachievement of certain market and performance goals. Compensation expense is recognized over the service period of awards and adjusted for the probabilityof achievement of performance-based goals. No performance share units vested during the year ended December 31, 2017. The following table represents thenonvested performance share units and their corresponding fair value (based upon the closing share price and/or Monte Carlo simulation) on the date ofgrant: Number of Weighted Average Shares Grant Date Fair ValueNonvested at December 31, 2016 — $—Granted — $—Converted from CNX Separation 273,100 $35.18Vested — $—Forfeited (8,590) $25.27Nonvested at December 31, 2017 264,510 $35.50NOTE 17—SUPPLEMENTAL CASH FLOW INFORMATION:The following are non-cash transactions that impact the investing and financing activities of CONSOL Energy.CONSOL Energy obtains capital lease arrangements for company-used vehicles. CONSOL Energy did not enter into any non-cash capital leasearrangements during the year ended December 31, 2017. For the years ended December 31, 2016 and 2015, CONSOL Energy entered into non-cash capitallease arrangements of $55 and $732, respectively.As of December 31, 2017, 2016 and 2015, CONSOL Energy purchased goods and services related to capital projects in the amount of $27,358, $2,355and $11,962, respectively, which are included in accounts payable and other accrued liabilities on the Consolidated Balance Sheets.As part of the separation and distribution, certain assets and liabilities were contributed to the Company. As a result, the liabilities assumed by theCompany were $17,613 and the assets contributed were $32,893.The following table shows cash paid for interest and income taxes for the periods indicated. For the Years Ended December 31, 2017 2016 2015Cash Paid For: Interest (net of amounts capitalized) $18,151 $14,053 $7,544Income taxes * $— $— $—* The Company's operations were historically included in the income tax filings of ParentCo. All tax payments prior to the separation and distributionwere made by ParentCo. The Company has made no income tax payments from the date of the separation and distribution through December 31, 2017.109Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.NOTE 18—CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS:CONSOL Energy primarily markets its thermal coal principally to electric utilities in the eastern United States. Substantially all revenues weregenerated from sales based in the United States for the years ended December 31, 2017, 2016 and 2015. Less than 1% of the Company's revenues weregenerated from sales based in Canada for the years ended December 31, 2016 and 2015. The Company has contractual relationships with certain UnitedStates-based coal exporters who distribute coal to international markets. For the years ended December 31, 2017, 2016 and 2015, approximately 31%, 16%,and 19%, respectively, of the Company's coal revenues were derived from these United States-based exporters, in which the Company's coal was intended tobe shipped to Asia, Europe, South America, and Africa.Concentration of credit risk is summarized below: December 31, 2017 2016Thermal coal utilities $69,550 $62,525Coal brokers and distributors 56,146 28,955Other 5,849 4,227Total Accounts Receivable Trade $131,545 $95,707For the year ended December 31, 2017, coal sales to the following customers individually exceeded 10% of the Company's revenues: Duke Energy andXCoal.For the year ended December 31, 2016, coal sales to the following customers individually exceeded 10% of the Company's revenues: Duke Energy andGenOn Energy Management.For the year ended December 31, 2015, coal sales to the following customers individually exceeded 10% of the Company's revenues: Duke Energy,GenOn Energy Management and XCoal.NOTE 19—FAIR VALUE OF FINANCIAL INSTRUMENTS:CONSOL Energy determines the fair value of assets and liabilities based on the exchange price that would be received for an asset or paid to transfer aliability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The fairvalues are based on assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and the risks inherentin valuation techniques and the inputs to valuations. The fair value hierarchy is based on whether the inputs to valuation techniques are observable orunobservable. Observable inputs reflect market data obtained from independent sources (including LIBOR-based discount rates), while unobservable inputsreflect the Company's own assumptions of what market participants would use.The fair value hierarchy includes three levels of inputs that may be used to measure fair value as described below:Level One - Quoted prices for identical instruments in active markets.Level Two - The fair value of the assets and liabilities included in Level 2 are based on standard industry income approach models that use significantobservable inputs, including LIBOR-based discount rates.Level Three - Unobservable inputs significant to the fair value measurement supported by little or no market activity. The significant unobservableinputs used in the fair value measurement of the Company's third party guarantees are the credit risk of the third party and the third party surety bond markets.A significant increase or decrease in these values, in isolation, would have a directionally similar effect resulting in higher or lower fair value measurement ofthe Company's Level 3 guarantees.In those cases when the inputs used to measure fair value meet the definition of more than one level of the fair value hierarchy, the lowest level inputthat is significant to the fair value measurement in its totality determines the applicable level in the fair value hierarchy.The financial instruments measured at fair value on a recurring basis are summarized below: Fair Value Measurements at December 31, 2017 Fair Value Measurements at December 31, 2016DescriptionLevel 1 Level 2 Level 3 Level 1 Level 2 Level 3Murray Energy Guarantees$— $— $(1,040) $— $— $—110Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The following methods and assumptions were used to estimate the fair value for which the fair value option was not elected:Cash and cash equivalents: The carrying amount reported in the balance sheets for cash and cash equivalents approximates its fair value due to theshort-term maturity of these instruments.Long-term debt: The fair value of long-term debt is measured using unadjusted quoted market prices or estimated using discounted cash flow analyses.The discounted cash flow analyses are based on current market rates for instruments with similar cash flows.The carrying amounts and fair values of financial instruments for which the fair value option was not elected are as follows: December 31, 2017 December 31, 2016 CarryingAmount FairValue CarryingAmount FairValueCash and Cash Equivalents$153,979 $153,979 $13,311 $13,311Long-Term Debt$897,097 $931,768 $306,543 $307,443Cash and cash equivalents represent highly-liquid instruments and constitute Level 1 fair value measurements. Certain of the Company’s debt is actively traded on apublic market and, as a result, constitute Level 1 fair value measurements. The portion of the Company’s debt obligations that are not actively traded are valuedthrough reference to the applicable underlying benchmark rate and, as a result, constitute Level 2 fair value measurements.NOTE 20—COMMITMENTS AND CONTINGENT LIABILITIES:The Company and ParentCo entered into a separation and distribution agreement on November 28, 2017 that implemented the legal and structuralseparation of the Company from ParentCo. The separation and distribution agreement also identified the assets of the Coal Business that were transferred tothe Company and the liabilities and contracts related to the Coal Business that were assumed by the Company as part of the separation and distribution, andprovides post-closing indemnification obligations and procedures between the Company and ParentCo relating to the liabilities of the Coal Business that theCompany assumed.The Company (as the owner of the Coal Business following the separation and distribution) is subject to various lawsuits and claims with respect tosuch matters as personal injury, wrongful death, damage to property, exposure to hazardous substances, governmental regulations including environmentalremediation, employment and contract disputes and other claims and actions arising out of the normal course of business. The Company accrues theestimated loss for these lawsuits and claims when the loss is probable and reasonably estimable. The Company's estimated accruals as of December 31, 2017related to these pending claims, individually and in the aggregate, are immaterial to the financial position, results of operations or cash flows of the Companyas of December 31, 2017. It is possible that the aggregate loss in the future with respect to these lawsuits and claims could ultimately be material to theCompany's financial position, results of operations or cash flows; however, such amounts cannot be reasonably estimated. The amount claimed against theCompany as of December 31, 2017 is disclosed below when an amount is expressly stated in the lawsuit or claim, which is not often the case.Fitzwater Litigation: Three nonunion retired coal miners have sued Fola Coal Company LLC, Consolidation Coal Company (“CCC”) and CONSOL ofKentucky Inc. (“COK”) (as well as ParentCo) in West Virginia Federal Court alleging ERISA violations in the termination of retiree health care benefits. ThePlaintiffs contend they relied to their detriment on oral statements and promises of “lifetime health benefits” allegedly made by various members ofmanagement during Plaintiffs’ employment and that they were allegedly denied access to Summary Plan Documents that clearly reserved the right to modifyor terminate the Retiree Health and Welfare Plan subject to Plaintiffs' claims. Pursuant to Plaintiffs' amended complaint filed on April 24, 2017, Plaintiffsrequest that retiree health benefits be reinstated and seek to represent a class of all nonunion retirees who were associated with AMVEST and COK areas ofoperation. The Company believes it has a meritorious defense and intends to vigorously defend this suit.Casey Litigation: A class action lawsuit was filed on August 23, 2017 on behalf of two nonunion retired coal miners against CCC, COK, CONSOLBuchanan Mining Co., LLC and Kurt Salvatori in West Virginia Federal Court alleging ERISA violations in the termination of retiree health care benefits.Filed by the same lawyers who filed the Fitzwater litigation, and raising nearly identical claims, the Plaintiffs contend they relied to their detriment on oralpromises of “lifetime health benefits” allegedly made by various members of management during Plaintiffs’ employment and that they were not providedwith copies of Summary Plan Documents clearly reserving to the Company the right to modify or terminate the Retiree Health and Welfare Plan. Plaintiffsrequest that retiree health benefits be reinstated for them and their dependents and seek to represent a class of all nonunion retirees of any ParentCosubsidiary that operated or employed individuals in McDowell or Mercer Counties, West Virginia, or Buchanan or Tazewell Counties, Virginia whose retireewelfare benefits were terminated. On December 1, 2017, the trial court judge in Fitzwater signed an order to consolidate Fitzwater with Casey.111Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Other Matters: Various Company subsidiaries are defendants in certain other legal proceedings arising out of the conduct of the Coal Business prior tothe separation and distribution, and the Company is also a defendant in other legal proceedings following the separation and distribution. In the opinion ofmanagement, based upon an investigation of these matters and discussion with legal counsel, the ultimate outcome of such other legal proceedings,individually and in the aggregate, is not expected to have a material adverse effect on the Company’s financial position, results of operations or liquidity.As part of the separation and distribution, the Company assumed various financial obligations relating to the Coal Business or agreed to reimburseParentCo for certain financial guarantees relating to the Coal Business that ParentCo retained following the separation and distribution. Employee-relatedfinancial guarantees have primarily been provided to support the United Mine Workers’ of America’s 1992 Benefit Plan and various state workers’compensation self-insurance programs. Environmental financial guarantees have primarily been provided to support various performance bonds related toreclamation and other environmental issues. Coal and other financial guarantees have primarily been provided to support various sales contracts. Otherguarantees have been extended to support insurance policies, legal matters, full and timely payments of mining equipment leases, and various other itemsnecessary in the normal course of business. The following is a summary, as of December 31, 2017, of the financial guarantees, unconditional purchase obligations and letters of credit to certainthird parties. These amounts represent the maximum potential of total future payments that the Company could be required to make under these instruments,or under the separation and distribution agreement to the extent retained by ParentCo on behalf of the Coal Business. These amounts have not been reducedfor potential recoveries under recourse or collateralization provisions. Generally, recoveries under reclamation bonds would be limited to the extent of thework performed at the time of the default. No amounts related to these financial guarantees and letters of credit are recorded as liabilities in the financialstatements. The Company's management believes that these guarantees will expire without being funded, and therefore, the commitments will not have amaterial adverse effect on the Company's financial condition. Amount of Commitment Expiration Per Period TotalAmountsCommitted Less Than1 Year 1-3 Years 3-5 Years Beyond5 YearsLetters of Credit: Employee-Related$77,266 $60,364 $16,902 $— $—Environmental998 600 398 — —Other9,847 9,147 700 — —Total Letters of Credit88,111 70,111 18,000 — —Surety Bonds: Employee-Related108,948 108,948 — — —Environmental453,035 453,035 — — —Other4,717 4,716 — 1 —Total Surety Bonds566,700 566,699 — 1 —Guarantees: Other33,302 9,216 15,413 7,893 780Total Guarantees33,302 9,216 15,413 7,893 780Total Commitments$688,113 $646,026 $33,413 $7,894 $780Included in the above table are commitments and guarantees entered into in conjunction with the sale of Consolidation Coal Company and certain ofits subsidiaries, which contain all five of its longwall coal mines in West Virginia and its river operations, to a subsidiary of Murray Energy Corporation. Aspart of the separation and distribution, ParentCo agreed to indemnify the Company and the Company agreed to indemnify ParentCo in each case with respectto guarantees of certain equipment lease obligations that were assumed by Murray Energy. In the event that Murray Energy would default on the obligationsdefined in the agreements, the Company would be required to perform under the guarantees. If the Company would be required to perform, the stock purchaseagreement provides various recourse actions. At December 31, 2017, the fair value of these guarantees was $1,040 and is included in Other AccruedLiabilities on the Consolidated Balance Sheet. The fair value of certain of the guarantees was determined using the Company’s risk-adjusted interestrate. Significant increases or decreases in the risk-adjusted interest rates may result in a significantly higher or lower fair value measurement. No otheramounts related to financial guarantees and letters of credit are recorded as liabilities in the financial statements. Significant judgment is required indetermining the fair value of these guarantees. The guarantees of the leases are classified within Level 3 of the fair value hierarchy.112Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The Company regularly evaluates the likelihood of default for all guarantees based on an expected loss analysis and records the fair value, if any, of itsguarantees as an obligation in the consolidated financial statements. NOTE 21—SEGMENT INFORMATION:CONSOL Energy Inc. consists of one reportable segment: Pennsylvania Mining Complex. The principal activities of PAMC are mining, preparationand marketing of thermal coal, sold primarily to power generators. It also includes selling, general and administrative activities, as well as various otheractivities assigned to PAMC.CONSOL Energy Inc.’s Other segment includes revenue and expenses from various corporate and diversified business activities that are not allocated toPAMC. The diversified business activities include coal terminal operations, closed and idle mine activities, selling, general and administrative activities, aswell as various other non-operated activities, none of which are individually significant to the Company.Industry segment results for the year ended December 31, 2017 are: PAMC Other AdjustmentsandEliminations Consolidated Coal Revenue$1,187,654 $— $— $1,187,654(A)Terminal Revenue— 60,066 — 60,066 Freight Revenue73,692 — — 73,692 Total Revenue and Freight$1,261,346 $60,066 $— $1,321,412 Earnings (Loss) Before Income Tax$189,162 $(19,365) $— $169,797 Segment Assets$1,971,268 $735,831 $— $2,707,099 Depreciation, Depletion and Amortization$166,628 $5,374 $— $172,002 Capital Expenditures$77,981 $3,432 $— $81,413 (A)Included in the PAMC segment are sales of $222,354 to Duke Energy and sales of $145,248 to Xcoal, each comprising over 10% of sales.Industry segment results for the year ended December 31, 2016 are: PAMC Other AdjustmentsandEliminations Consolidated Coal Revenue$1,065,582 $— $— $1,065,582(B)Terminal Revenue— 31,464 — 31,464 Freight Revenue46,468 — — 46,468 Total Revenue and Freight$1,112,050 $31,464 $— $1,143,514 Earnings (Loss) Before Income Tax$130,708 $(65,693) $— $65,015 Segment Assets$1,982,206 $705,228 $— $2,687,434 Depreciation, Depletion and Amortization$168,195 $9,927 $— $178,122 Capital Expenditures$50,809 $2,791 $— $53,600 (B) Included in the PAMC segment are sales of $160,818 to Duke Energy and sales of $116,849 to GenOn Energy Management, LLC, each comprisingover 10% of sales.113Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Industry segment results for the year ended December 31, 2015 are: PAMC Other AdjustmentsandEliminations Consolidated Coal Revenue$1,289,036 $— $— $1,289,036(C)Terminal Revenue— 30,967 — 30,967 Freight Revenue20,499 — — 20,499 Total Revenue and Freight$1,309,535 $30,967 $— $1,340,502 Earnings Before Income Tax$404,994 $38,032 $— $443,026 Segment Assets$2,076,301 $791,432 $— $2,867,733 Depreciation, Depletion and Amortization$176,864 $18,473 $— $195,337 Capital Expenditures$136,291 $6,762 $— $143,053 (C) Included in the PAMC segment are sales of $242,020 to Duke Energy, sales of $157,174 to GenOn Energy Management, LLC, and sales of $150,199to Xcoal, each comprising over 10% of sales.Reconciliation of Segment Information to Consolidated Amounts:Revenue and Other Income: For the Years Ended December 31, 2017 2016 2015Total Segment Revenue and Freight from External Customers $1,321,412 $1,143,514 $1,340,502Other Income not Allocated to Segments (Note 3) 73,279 82,120 68,193Gain on Sale of Assets 17,212 5,228 13,025Total Consolidated Revenue and Other Income $1,411,903 $1,230,862 $1,421,720Total Assets: December 31, 2017 2016Segment assets for total reportable business segments $1,971,268 $1,982,206Segment assets for all other business segments 508,334 520,586Items excluded from segment assets: Cash and other investments 152,432 63Deferred tax assets 75,065 184,579Total Consolidated Assets $2,707,099 $2,687,434Enterprise-Wide Disclosures:For the years ended December 31, 2017, 2016 and 2015, CONSOL Energy revenue was predominantly attributable to the United States of America. Less thanone percent was attributable to Canada for the years ended December 31, 2016 and 2015.CONSOL Energy's Property, Plant and Equipment by geographical location: December 31, 2017 2016 2015United States $2,111,273 $2,169,246 $2,314,157Canada 11,024 11,024 11,024Total Property, Plant and Equipment, net $2,122,297 $2,180,270 $2,325,181114Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.NOTE 22—GUARANTOR SUBSIDIARIES FINANCIAL INFORMATION:The payment obligations under the $400,000, Term Loan B due in November 2022, less the $8 million of unamortized bond discount, the $300,000,11.000% per annum senior notes due November 2025, and the $100,000, Term Loan A due in November 2021 issued by CONSOL Energy are jointly andseverally, and also fully and unconditionally, guaranteed by certain subsidiaries of CONSOL Energy. In accordance with positions established by the SEC,the following financial information sets forth separate financial information with respect to the parent, guarantor subsidiaries, CCR, a non-guarantorsubsidiary, and the remaining non-guarantor subsidiaries. The principal elimination entries include investments in subsidiaries and certain intercompanybalances and transactions. CONSOL Energy, the parent, and a guarantor subsidiary manage several assets and liabilities of all other wholly ownedsubsidiaries. These include, for example, deferred tax assets, cash and other post-employment liabilities. These assets and liabilities are reflected as parentcompany or guarantor company amounts for purposes of this presentation.115Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Income Statement for the Year Ended December 31, 2017: ParentIssuer Guarantor CCR Non-Guarantor Non-Guarantor Elimination ConsolidatedRevenues and Other Income: Coal Revenue— 890,741 296,913 — — 1,187,654Terminal Revenue— 60,066 — — — 60,066Freight Revenue— 55,269 18,423 — — 73,692Miscellaneous Other Income238,818 67,230 6,049 — (238,818) 73,279Gain on Sale of Assets— 15,813 1,399 — — 17,212Total Revenue and Other Income238,818 1,089,119 322,784 — (238,818) 1,411,903Costs and Expenses: Operating and Other Costs— 691,451 194,986 272 — 886,709Depreciation, Depletion and Amortization— 130,565 41,437 — — 172,002Freight Expense— 55,269 18,423 — — 73,692Selling, General and Administrative Costs— 67,908 15,697 — — 83,605Loss on Debt Extinguishment— — 2,468 — (2,468) —Interest Expense10,064 355,059 9,309 1,723 (350,057) 26,098Total Costs And Expenses10,064 1,300,252 282,320 1,995 (352,525) 1,242,106Earnings Before Income Tax228,754 (211,133) 40,464 (1,995) 113,707 169,797Income Tax (Benefit) Expense161,125 (73,897) — — — 87,228Net (Loss) Income67,629 (137,236) 40,464 (1,995) 113,707 82,569Less: Net Income Attributable to Noncontrolling Interest— — — — 14,940 14,940Net (Loss) Income Attributable to CONSOL EnergyShareholders$67,629 $(137,236) $40,464 $(1,995) $98,767 $67,629116Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Balance Sheet at December 31, 2017: ParentIssuer Guarantor CCR Non-Guarantor Non-Guarantor Elimination ConsolidatedAssets: Current Assets: Cash and Cash Equivalents$152,235 $105 $1,533 $106 $— $153,979Accounts and Notes Receivable: Trade— — — 131,545 — 131,545Other Receivables17,702 16,880 1,970 — — 36,552Inventories— 41,117 12,303 — — 53,420Prepaid Expenses5,745 13,568 4,428 3 — 23,744Total Current Assets175,682 71,670 20,234 131,654 — 399,240Property, Plant and Equipment: Property, Plant and Equipment— 3,765,885 910,468 — — 4,676,353Less-Accumulated Depreciation, Depletion andAmortization— 2,070,646 483,410 — — 2,554,056Total Property, Plant and Equipment-Net— 1,695,239 427,058 — — 2,122,297Other Assets: Deferred Income Taxes75,065 — — — — 75,065Affiliated Credit Facility165,110 — — — (165,110) —Investment in Affiliates645,157 — — — (645,157) —Other44,177 50,846 15,474 — — 110,497Total Other Assets929,509 50,846 15,474 — (810,267) 185,562Total Assets$1,105,191 $1,817,755 $462,766 $131,654 $(810,267) $2,707,099Liabilities and Equity: Current Liabilities: Accounts Payable$20,014 $66,271 $22,789 $8 $18 $109,100Accounts Payable (Recoverable)-Related Parties(2,291) 36,221 — 129,139 (163,069) —Current Portion of Long-Term Debt— 22,405 77 — — 22,482Other Accrued Liabilities101,994 149,425 44,102 (20) (4,874) 290,627Total Current Liabilities119,717 274,322 66,968 129,127 (167,925) 422,209Long-Term Debt:728,254 135,390 165,183 1,572 (165,110) 865,289Deferred Credits and Other Liabilities: Postretirement Benefits Other Than Pensions— 554,099 — — — 554,099Pneumoconiosis Benefits— 146,035 3,833 — — 149,868Asset Retirement Obligations— 218,728 9,615 — — 228,343Workers’ Compensation— 63,244 3,404 — — 66,648Salary Retirement52,960 — — — — 52,960Other— 23,435 607 — — 24,042Total Deferred Credits and Other Liabilities52,960 1,005,541 17,459 — — 1,075,960Total CONSOL Energy Inc. Stockholders’ Equity204,260 402,502 213,156 955 (616,613) 204,260Noncontrolling Interest— — — — 139,381 139,381Total Liabilities and Equity$1,105,191 $1,817,755 $462,766 $131,654 $(810,267) $2,707,099117Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Condensed Statement of Cash Flows for the Year Ended December 31, 2017: Parent Issuer Guarantor CCR Non-Guarantor Non-Guarantor Elimination ConsolidatedNet Cash Provided by (Used in) Operating Activities$(17,032) $192,423 $72,644 $75 $— $248,110Cash Flows from Investing Activities: Capital Expenditures$— $(61,917) $(19,496) $— $— $(81,413)Proceeds From Sales of Assets— 23,082 1,500 — — 24,582Net Cash (Used in) Provided by Investing Activities$— $(38,835) $(17,996) $— $— $(56,831)Cash Flows from Financing Activities: (Payments on) Proceeds from Miscellaneous Borrowings(3,503) (305) (96) — — (3,904)Affiliated Credit Facility— — 196,583 — (196,583) —Proceeds from PNC Term Loan A100,000 — — — — 100,000Proceeds from PNC Term Loan B392,147 — — — — 392,147Proceeds from Second Lien Notes300,000 — — — — 300,000Net (Payments on) Proceeds from Revolver - MLP— — (201,000) — — (201,000)Distributions to Noncontrolling Interest— — (56,400) — 34,508 (21,892)Units/Shares Withheld for Taxes— (171) (1,985) — — (2,156)Intercompany Contributions/(Distributions)(5,573) (156,502) 162,075 —Change in Parent Net Investment(156,502) — — — — (156,502)Spin Distribution to CNX Resources(425,000) — — — — (425,000)Debt Issuance and Financing Fees(32,304) — — — — (32,304)Net Cash (Used in) Provided by Financing Activities$169,265 $(156,978) $(62,898) $— $— $(50,611)Statement of Comprehensive Income for the Year Ended December 31, 2017: Parent Issuer Guarantor CCR Non-Guarantor Non-Guarantor Elimination ConsolidatedNet (Loss) Income$67,629 $(137,236) $40,464 $(1,995) $113,707 $82,569Other Comprehensive (Loss) Income: Amortization of Prior Service Credits— — — — — —Settlement Loss— — — — — — Net Actuarial Loss (Gain)94,919 — 1,366 — (1,366) 94,919Other Comprehensive (Loss) Income:94,919 — 1,366 — (1,366) 94,919Comprehensive (Loss) Income162,548 (137,236) 41,830 (1,995) 112,341 177,488 Less: Comprehensive Income Attributable to NoncontrollingInterest— — — — 14,896 14,896Comprehensive (Loss) Income Attributable to CONSOL EnergyInc. Shareholders$162,548 $(137,236) $41,830 $(1,995) $97,445 $162,592118Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Income Statement for the Year Ended December 31, 2016: ParentIssuer Guarantor CCR Non-Guarantor Non-Guarantor Elimination ConsolidatedRevenues and Other Income: Coal Revenue— 799,187 266,395 — — 1,065,582Terminal Revenue— 31,464 — — — 31,464Freight Revenue— 34,865 11,603 — — 46,468Miscellaneous Other Income50,425 78,992 3,128 — (50,425) 82,120Gain on Sale of Assets— 5,237 (9) — — 5,228Total Revenue and Other Income50,425 949,745 281,117 — (50,425) 1,230,862Costs and Expenses: Operating and Other Costs— 694,073 183,001 103 — 877,177Depreciation, Depletion and Amortization— 136,128 41,994 — — 178,122Freight Expense— 34,865 11,603 — — 46,468Selling, General and Administrative Costs— 40,078 9,949 — — 50,027Interest Expense190 5,144 8,719 — — 14,053Total Costs And Expenses190 910,288 255,266 103 — 1,165,847Earnings Before Income Tax50,235 39,457 25,851 (103) (50,425) 65,015Income Tax (Benefit) Expense8,739 5,826 — — — 14,565Net (Loss) Income41,496 33,631 25,851 (103) (50,425) 50,450Less: Net Income Attributable to Noncontrolling Interest— — — — 8,954 8,954Net (Loss) Income Attributable to CONSOL EnergyShareholders$41,496 $33,631 $25,851 $(103) $(59,379) $41,496119Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Balance Sheet at December 31, 2016: ParentIssuer Guarantor CCR Non-Guarantor Non-Guarantor Elimination ConsolidatedAssets: Current Assets: Cash and Cash Equivalents$2 $3,493 $9,785 $31 $— $13,311Accounts and Notes Receivable: Trade— — — 95,707 — 95,707Other Receivables3,654 19,151 515 — — 23,320Other Receivables - Related Party— — — 34 — 34Inventories— 38,670 11,491 — — 50,161Prepaid Expenses2,882 11,204 3,512 3 — 17,601Total Current Assets6,538 72,518 25,303 95,775 — 200,134Property, Plant and Equipment: Property, Plant and Equipment— 3,716,705 876,690 — — 4,593,395Less-Accumulated Depreciation, Depletion and Amortization— 1,970,947 442,178 — — 2,413,125Total Property, Plant and Equipment-Net— 1,745,758 434,512 — — 2,180,270Other Assets: Deferred Income Taxes184,579 — — — — 184,579Investment in Affiliates654,144 — — — (654,144) —Other34,482 66,906 21,063 — — 122,451Total Other Assets873,205 66,906 21,063 — (654,144) 307,030Total Assets$879,743 $1,885,182 $480,878 $95,775 $(654,144) $2,687,434Liabilities and Equity: Current Liabilities: Accounts Payable$4,411 $59,624 $20,463 $7 $(1,608) $82,897Accounts Payable (Recoverable)-Related Parties— (72,289) (23,418) 95,707 — —Current Portion of Long-Term Debt3,347 641 88 — — 4,076Other Accrued Liabilities102,878 145,072 44,230 — (59) 292,121Total Current Liabilities110,636 133,048 41,363 95,714 (1,667) 379,094Long-Term Debt: Long-Term Debt11,604 104,046 197,989 — — 313,639Total Long-Term Debt11,604 104,046 197,989 — — 313,639Deferred Credits and Other Liabilities: Postretirement Benefits Other Than Pensions— 659,474 — — — 659,474Pneumoconiosis Benefits— 106,016 2,057 — — 108,073Asset Retirement Obligations— 236,933 9,346 — — 246,279Workers’ Compensation— 62,842 3,090 — — 65,932Salary Retirement99,872 — — — — 99,872Other— 14,484 463 — — 14,947Total Deferred Credits and Other Liabilities99,872 1,079,749 14,956 — — 1,194,577Total CONSOL Energy Inc. Stockholders’ Equity657,631 568,339 226,570 61 (794,970) 657,631Noncontrolling Interest— — — — 142,493 142,493Total Liabilities and Equity$879,743 $1,885,182 $480,878 $95,775 $(654,144) $2,687,434120Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Condensed Statement of Cash Flows for the Year Ended December 31, 2016: Parent Issuer Guarantor CCR Non-Guarantor Non-Guarantor Elimination ConsolidatedNet Cash (Used in) Provided by Operating Activities$253 $255,756 $73,098 $— $— $329,107Cash Flows from Investing Activities: Capital Expenditures$— $(40,896) $(12,704) $— $— $(53,600)Proceeds From Sales of Assets— 7,819 23 — — 7,842Net Cash Used in Investing Activities$— $(33,077) $(12,681) $— $— $(45,758)Cash Flows from Financing Activities: (Payments on) Proceeds from Miscellaneous Borrowings231 279 (79) — — 431Net (Payments on) Proceeds from Revolver - MLP— — 16,000 — — 16,000Distributions to Noncontrolling Interest— (21,657) (42,634) — 42,634 (21,657)Intercompany Contributions (Distributions)270,969 (270,969) — — — —Change in Parent Net Investment(270,969) — — — — (270,969)Debt Issuance and Financing Fees(482) — — — — (482)Net Cash Provided by (Used in) Financing Activities$(251) $(292,347) $(26,713) $— $42,634 $(276,677)Statement of Comprehensive Income for the Year Ended December 31, 2016: Parent Issuer Guarantor CCR Non-Guarantor Non-Guarantor Elimination ConsolidatedNet (Loss) Income$41,496 $33,631 $25,851 $(103) $(50,425) $50,450Other Comprehensive (Loss) Income: Net Actuarial Loss (Gain)(31,409) — 818 — (818) (31,409)Other Comprehensive (Loss) Income:(31,409) — 818 — (818) (31,409)Comprehensive (Loss) Income10,087 33,631 26,669 (103) (51,243) 19,041 Less: Comprehensive Income Attributable to NoncontrollingInterest— — — — 9,216 9,216Comprehensive (Loss) Income Attributable to CONSOL EnergyInc. Shareholders$10,087 $33,631 $26,669 $(103) $(60,459) $9,825121Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Income Statement for the Year Ended December 31, 2015: ParentIssuer Guarantor CCR Non-Guarantors Non-Guarantor Elimination ConsolidatedRevenues and Other Income: Coal Revenue— 966,775 322,261 — — 1,289,036Terminal Revenue(11) 30,978 — — — 30,967Freight Revenue— 16,690 3,809 — — 20,499Miscellaneous Other Income371,266 62,484 941 4,768 (371,266) 68,193Gain (Loss) on Sale of Assets— 13,025 — — — 13,025Total Revenue and Other Income371,255 1,089,952 327,011 4,768 (371,266) 1,421,720Costs and Expenses: Operating and Other Costs— 505,057 193,961 576 — 699,594Depreciation, Depletion and Amortization— 151,201 44,136 — — 195,337Freight Expense— 16,690 3,809 — — 20,499Selling, General and Administrative Costs— 44,789 10,931 — — 55,720Interest Expense(1,071) (1,021) 9,636 — — 7,544Total Costs And Expenses(1,071) 716,716 262,473 576 — 978,694Earnings (Loss) Before Income Tax372,326 373,236 64,538 4,192 (371,266) 443,026Income Tax (Benefit) Expense65,315 60,290 — — 125,605Less: Net Income Attributable to Noncontrolling Interest— — — — 10,410 10,410Net Income (Loss) Attributable to CONSOL EnergyShareholders$307,011 $312,946 $64,538 $4,192 $(381,676) $307,011Condensed Statement of Cash Flows for the Year Ended December 31, 2015: Parent Issuer Guarantor CCR Non-Guarantors Non-Guarantor Elimination ConsolidatedNet Cash (Used in) Provided by Operating Activities$12,608 $202,177 $76,908 $— $— $291,693Cash Flows from Investing Activities: Capital Expenditures$— $(108,980) $(34,073) $— $— $(143,053)Proceeds From Sales of Assets— 12,708 71 — — 12,779Net Cash Provided by (Used in) Investing Activities$— $(96,272) $(34,002) $— $— $(130,274)Cash Flows from Financing Activities: (Payments on) Proceeds from Miscellaneous Borrowings(600) (5,176) (53) — — (5,829)Proceeds from Related Party Long-Term Notes— (6,039) 6,039 — — —Net (Payments on) Proceeds from Revolver - MLP— — 185,000 — — 185,000Distributions to Noncontrolling Interest— (5,060) (11,353) — 11,353 (5,060)Proceeds from Sale of MLP Interest— — 148,359 — — 148,359Intercompany Contributions (Distributions)461,051 (461,051) — — — —Distribution of Proceeds— 342,711 (342,711) — — —Change in Parent Net Investment(461,051) 17,328 (17,328) — — (461,051)Debt Issuance and Financing Fees(12,007) — (4,329) — — (16,336)Net Cash (Used in) Provided by Financing Activities$(12,607) $(117,287) $(36,376) $— $11,353 $(154,917)122Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Statement of Comprehensive Income for the Year Ended December 31, 2015: Parent Issuer Guarantor CCR Non-Guarantors Non-Guarantor Elimination ConsolidatedNet Income (Loss)$307,011 $312,946 $64,538 $4,192 $(371,266) $317,421Other Comprehensive Income (Loss): Net Actuarial Loss (Gain)(89,442) — (1,840) — 1,840 (89,442)Other Comprehensive Income (Loss):(89,442) — (1,840) — 1,840 (89,442)Comprehensive Income (Loss)217,569 312,946 62,698 4,192 (369,426) 227,979Less: Comprehensive Income Attributable to NoncontrollingInterest— — — — 10,410 10,410Comprehensive Income (Loss) Attributable to CONSOL EnergyInc. Shareholders$217,569 $312,946 $62,698 $4,192 $(379,836) $217,569NOTE 23—RELATED PARTY TRANSACTIONSCNX Resources Corporation TransactionsSeparation from CNX Resources Corporation (ParentCo)On November 28, 2017, in connection with the separation and distribution, the Company and/or certain of its subsidiaries entered into severalagreements with CNX Resources Corporation and/or the Partnership and/or certain of its subsidiaries that govern the relationship of the various partiesfollowing the separation, including the following:•Separation and Distribution Agreement (“SDA”);•Transition Services Agreement (“TSA”);•Tax Matters Agreement (“TMA”);•Employee Matters Agreement (“EMA”);•Intellectual Property Matters Agreement (“IPMA”);•CNX Resources Corporation to CONSOL Energy Inc. Trademark License Agreement (“TLA 1”);•CONSOL Energy Inc. to CNX Resources Corporation Trademark License Agreement (“TLA 2”);•First Amendment to the First Amended and Restated Omnibus Agreement (“Omnibus Amendment”);•First Amendment to Contract Agency Agreement by and among CONSOL Energy Sales Company, CONSOL Thermal Holdings LLC (formerlyknown as CNX Thermal Holdings LLC) and the other parties thereto (“Contract Agency Amendment”);•First Amendment to Water Supply and Services Agreement by and between CNX Water Assets LLC and CONSOL Thermal Holdings LLC (formerlyknown as CNX Thermal Holdings LLC) (“Water Supply Amendment”);•Second Amendment to Pennsylvania Mine Complex Operating Agreement by and among CONSOL Pennsylvania Coal Company LLC, ConrheinCoal Company, CONSOL Thermal Holdings LLC (formerly known as CNX Thermal Holdings LLC) and CONSOL Coal Resources LP (formerlyknown as CNX Coal Resources LP) (the “Operating Agreement Amendment”);•Affiliated Company Credit Agreement, dated November 28, 2017, by and among CONSOL Coal Resources LP, certain of its affiliates party thereto,CONSOL Energy Inc. and PNC Bank, National Association (the “Affiliated Company Credit Agreement”); and•Second Amendment and Restatement of Master Cooperation and Safety Agreement, dated October 20, 2017, by and between CONSOL Energy Inc.,CNX Gas Company LLC. and certain other parties thereto (the “MCSA”).Summaries of the material terms of the SDA, TSA, TMA, EMA, Omnibus Amendment, Contract Agency Amendment, Water Supply Amendment andMCSA may be found under the section entitled “Certain Relationships and Related Party Transactions” in that certain Information Statement of theCompany, dated November 3, 2017 (the “Information Statement”), and the summaries of the material terms of the IPMA, TLA1, TLA2, the OperatingAgreement Amendment and the Affiliated Company Credit Agreement may be found under Item 1.01 Entry into a Material Definitive Agreement to Form 8-Kfiled December 4, 2017.Refer to Note 2 - Separation from CNX Resources Corporation for further information on the separation from ParentCo. Also refer to Note 16 - Stock-Based Compensation for information regarding the conversion of share-based awards from ParentCo to the Company as of the date of the separation anddistribution.123Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Cash Management and TreasuryFor periods prior to the separation and distribution, the Company participated in ParentCo's centralized treasury and cash management processes.Transactions occurring in periods prior to the separation and distribution were considered to be effectively settled for cash at the time the transactions wererecorded. These transactions and net cash transfers to and from ParentCo's centralized cash management system are reflected as a component of ParentCo's netinvestment on the Consolidated Balance Sheets and as a financing activity within the accompanying Consolidated Statements of Cash Flows. In theConsolidated Statements of Stockholders' Equity, ParentCo's net investment on the Consolidated Balance Sheets represents the cumulative net investment byParentCo in the Company, including net income through the completion of the separation and distribution and net cash transfers to and from ParentCo.All significant transactions between the Company and CNX Resources Corporation have been included in the consolidated financial statements.Transition Services AgreementsThe Company also entered into a TSA and certain other agreements in connection with the SDA with ParentCo to cover certain continued corporateservices provided by the Company and ParentCo to each other following the completion of the separation and distribution. In connection with the separationand distribution, the Company began to set up its own corporate functions, and pursuant to the TSA, ParentCo provided various corporate support services,including certain accounting, human resources, information technology, office and building, risk, security, tax and treasury, building security and taxservices, as well as certain regulatory compliance services required during the period in which the Company remained a majority-owned subsidiary ofParentCo. Additional services may be identified from time to time and also be provided under the TSA. The charges associated with these services were notmaterial during the year ended December 31, 2017, and are consistent with expenses that ParentCo has historically allocated or incurred with respect to suchservices.CNX Resources Receivables and PayablesAt December 31, 2017, the Company had a payable to CNX Resources Corporation of $12,540 recorded in other current liabilities on the ConsolidatedBalance Sheets. The Company also had a receivable from CNX Resources Corporation of $15,415, of which $4,500 was recorded in current assets and$10,915 was included in other assets on the Consolidated Balance Sheets at December 31, 2017. These items relate to the reimbursement of the one-timetransaction costs as well as other reimbursements per the terms of the SDA.The one-time transaction costs related to the separation and distribution were approximately $40,545 for the year ended December 31, 2017. Per theSDA, these costs will be split equally by the two companies. These costs consisted of consulting and professional fees associated with preparing for andexecuting the separation and distribution, as well as various other items.Corporate AllocationsPrior to the completion of the separation and distribution, the Company utilized centralized functions of ParentCo to support its operations, and inreturn, ParentCo allocated certain of its expenses to the Company. Such expenses represent costs related, but not limited, to treasury, legal, accounting,insurance, information technology, payroll administration, human resources, incentive plans and other services. These costs, together with an allocation ofParentCo overhead costs, are included within the Selling, General and Administrative Costs caption of the Consolidated Statements of Income. Where it waspossible to specifically attribute such expenses to activities of the Company, amounts have been charged or credited directly to the Company withoutallocation or apportionment. Allocation of all other such expenses was based on a reasonable reflection of the utilization of service provided or benefitsreceived by the Company during the periods presented on a consistent basis, such as a percentage of total revenue and a percentage of total projected capitalexpenditures. The Company's management supports the methods used in allocating expenses and believes these methods to be reasonable estimates.CONSOL Coal Resources LPIn July 2015, CONSOL Coal Resources LP closed its initial public offering of 5,000,000 common units representing limited partnership interests at aprice to the public of $15.00 per unit. Additionally, Greenlight Capital entered into a common unit purchase agreement with CCR pursuant to whichGreenlight Capital agreed to purchase, and CCR agreed to sell, 5,000,000 common units at a price per unit equal to $15.00, which equates to $75,000 in netproceeds. CCR's general partner is CONSOL Coal Resources GP LLC. The underwriters of the IPO filing exercised an over-allotment option of 561,067common units to the public at $15.00 per unit.124Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.In connection with its IPO, CCR entered into a $400,000 senior secured revolving credit facility with certain lenders and PNC Bank, NationalAssociation (PNC), as administrative agent. Obligations under the revolving credit facility are guaranteed by CCR's subsidiaries (the guarantor subsidiaries)and are secured by substantially all of CCR's and CCR's subsidiaries' assets pursuant to a security agreement and various mortgages. Under the new revolvingcredit facility, CCR made an initial draw of $200,000, and after origination fees of $3,000, the net proceeds were $197,000.The total net proceeds related to these transactions that were distributed to ParentCo were $342,711.In September 2016, CCR and its wholly owned subsidiary, CONSOL Thermal, entered into a Contribution Agreement with ParentCo, CONSOLPennsylvania Coal Company LLC and Conrhein Coal Company (the Contributing Parties) under which CONSOL Thermal acquired an additional 5%undivided interest in and to the Pennsylvania Mining Complex, in exchange for (i) cash consideration in the amount of $21,500 and (ii) CCR's issuance of3,956,496 Class A Preferred Units representing limited partnership interests in CCR at an issue price of $17.01 per Class A Preferred Unit (the “Class APreferred Unit Issue Price”), or an aggregate $67,300 in equity consideration. The Class A Preferred Unit Issue Price was calculated as the volume-weightedaverage trading price of CCR's common units (the “Common Units”) over the trailing 15-day trading period ending on September 29, 2016 (or $14.79 perunit), plus a 15% premium.In October 2017, ParentCo elected to have the 3,956,496 Class A Preferred Units, representing its limited partnership interest in CCR, converted into anequal number of Common Units under the terms of the Second Amended and Restated Agreement of Limited Partnership of CCR.In connection with the PAMC acquisition, in September 2016, CCR's General Partner and CCR entered into the First Amended and Restated OmnibusAgreement (the “Amended Omnibus Agreement”) with ParentCo and certain of its subsidiaries. Under the Amended Omnibus Agreement, ParentCoindemnified CCR for certain liabilities. The Amended Omnibus Agreement also amended CCR's obligations to ParentCo with respect to the payment of anannual administrative support fee and reimbursement for the provisions of certain management and operating services provided, in each case to reflectstructural changes in how those services are provided to CCR by ParentCo. The Company assumed this agreement as part of the separation and distribution.On November 28, 2017, the Company also entered into an Affiliated Company Credit Agreement with the Partnership and certain of its subsidiaries (thePartnership Credit Parties) under which the Company provides as lender a revolving credit facility in an aggregate principal amount of up to $275 million tothe Partnership Credit Parties. In connection with the completion of the separation, the Partnership drew an initial $201 million, the net proceeds of whichwere used to repay the Old Partnership Revolver and to provide working capital for the Partnership following the separation and for other general corporatepurposes.The Affiliated Company Credit Agreement matures on February 27, 2023. Interest is charged at a flat rate of 4.25% calculated based on the averagedaily balance, subject to the Partnership's net leverage ratio. For the year ended December 31, 2017, $746 of interest expense is included in the ConsolidatedStatement of Income. The collateral obligations under the Affiliated Company Credit Agreement generally mirror the Old Partnership Revolver, as does thelist of entities that will act as guarantors thereunder. The Affiliated Company Credit Agreement is subject to financial covenants relating to a maximum firstlien gross leverage ratio and a maximum total net leverage ratio, which will be calculated on a consolidated basis for the Partnership and its restrictedsubsidiaries at the end of each fiscal quarter. The Partnership was in compliance with each of these financial covenants at December 31, 2017. The AffiliatedCompany Credit Agreement also contains a number of customary affirmative covenants and negative covenants, including limitations on the ability of thePartnership to incur additional indebtedness, grant liens, and make investments, acquisitions, dispositions, restricted payments, and prepayments of juniorindebtedness (subject to certain limited exceptions).Charges for services from the Company include the following: For the Years Ended December 31, 2017 2016 2014Operating and Other Costs$3,503 $4,251 $6,793Selling, General and Administrative Costs3,109 3,826 8,926Total Services from CONSOL Energy$6,612 $8,077 $15,719At December 31, 2017 and December 31, 2016, CCR had a net payable to the Company in the amount of $3,071 and $1,666, respectively. This payableincludes reimbursements for business expenses, executive fees, stock-based compensation and other items under the omnibus agreement.125Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Supplemental Coal Data (unaudited) Millions of Tons For the Year Ended December 31, 2017 2016 2015 2014 2013Proven and probable coal reserves at beginning of period 2,361 3,047 3,238 3,032 4,229Purchased reserves — — 24 — 1Reserves sold in place (16) (601) (43) (233) (1,199)Production (26) (26) (29) (32) (55)Revisions and other changes (21) (59) (143) 471 56Consolidated proven and probable coal reserves at end of period* (1) 2,298 2,361 3,047 3,238 3,032______________* Proven and probable coal reserves are the equivalent of “demonstrated reserves” under the coal resource classification system of the U.S. GeologicalSurvey. Generally, these reserves would be commercially mineable at year-end prices and cost levels, using current technology and mining practices.(1) 143.3 million tons of the Northern Appalachia product are controlled by CCC, a former subsidiary of ParentCo that was sold in December 2013. As of thisfiling, these tons are still controlled by CCC but are shown in CONSOL Energy's reserves due to a binding agreement that these tons will be released toCONSOL Energy upon the assignment of the underlying lease to CONSOL Energy.CONSOL Energy's coal reserves are located in nearly every major coal-producing region in North America. Our estimate of proven and probable coalreserves has been determined by CONSOL Energy. At December 31, 2017, 227 million tons were assigned to mines either in production or temporarily idled.The proven and probable coal reserves at December 31, 2017 include 2,211 million tons of thermal coal reserves, of which approximately 2 percent has asulfur content equivalent to less than 1.2 pounds sulfur dioxide per million British thermal unit (Btu), 8 percent has a sulfur content equivalent to between1.2 and 2.5 pounds sulfur dioxide per million Btu, and 90 percent has a sulfur content equivalent to greater than 2.5 pounds sulfur dioxide per million Btu.The reserves also include 87 million tons of metallurgical coal in consolidated reserves, of which approximately 24 percent has a sulfur content equivalent toless than 1.2 pounds sulfur dioxide per million Btu and 76 percent has a sulfur content equivalent to between 1.2 and 2.5 pounds sulfur dioxide per millionBtu.126Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Supplemental Quarterly Information (unaudited):(Dollars in thousands, except per share data) Three Months Ended March 31, June 30, September 30, December 31, 2017 2017 2017 2017Revenue and Other Income: Coal Revenue $316,448 $303,707 $279,245 $288,254Terminal Revenue 12,886 14,855 15,065 17,260Freight Revenue 12,282 17,762 21,803 21,845Miscellaneous Other Income 22,650 10,145 19,713 20,771Gain (Loss) on Sale of Assets 7,955 5,582 (513) 4,188 Total Revenue and Other Income 372,221 352,051 335,313 352,318Costs and Expenses: Operating and Other Costs 229,994 222,882 229,527 204,306Depreciation, Depletion and Amortization 52,993 25,268 46,653 47,088Freight Expense 12,282 17,762 21,803 21,845Selling, General and Administrative Costs 17,079 20,338 21,180 25,008Interest Expense 4,022 3,944 3,862 14,270 Total Costs and Expenses 316,370 290,194 323,025 312,517Earnings Before Income Tax 55,851 61,857 12,288 39,801Income Tax Expense 9,406 9,611 3,770 64,441Net Income (Loss) 46,445 52,246 8,518 (24,640)Less: Net Income Attributable to Noncontrolling Interest 5,464 4,313 790 4,373Net Income (Loss) Attributable to CONSOL Energy Shareholders $40,981 $47,933 $7,728 $(29,013)Earnings (Loss) Per Share (a) Basic $1.47 $1.71 $0.28 $(1.04)Dilutive $— $— $— $(1.04)(a) Earnings per share shown above was calculated based on the 27,968 shares of CONSOL Energy common stock distributed in conjunction with theseparation and distribution, and is considered pro forma in nature. Prior to November 28, 2017, CONSOL Energy did not have any issued or outstandingcommon stock.127Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Three Months Ended March 31, June 30, September 30, December 31, 2016 2016 2016 2016Revenue and Other Income: Coal Revenue $226,164 $250,562 $267,685 $321,171Terminal Revenue 7,709 8,058 4,549 11,148Freight Revenue 13,110 11,447 9,392 12,519Miscellaneous Other Income 15,506 20,627 13,569 32,418(Loss) Gain on Sale of Assets (28) 3,933 194 1,129 Total Revenue and Other Income 262,461 294,627 295,389 378,385Costs and Expenses: Operating and Other Costs 181,189 226,257 215,824 253,907Depreciation, Depletion and Amortization 48,662 29,314 49,850 50,296Freight Expense 13,110 11,447 9,392 12,519Selling, General and Administrative Costs 7,560 10,460 12,157 19,850Interest Expense 3,140 3,357 3,481 4,075 Total Costs and Expenses 253,661 280,835 290,704 340,647Earnings Before Income Tax 8,800 13,792 4,685 37,738Income Tax (Benefit) Expense (84) (109) (66) 14,824Net Income 8,884 13,901 4,751 22,914Less: Net Income Attributable to Noncontrolling Interest 1,114 1,179 2,248 4,413Net Income Attributable to CONSOL Energy Shareholders $7,770 $12,722 $2,503 $18,501Earnings Per Share (a) Basic $0.28 $0.45 $0.09 $0.66Dilutive $— $— $— $0.66(a) Earnings per share shown above was calculated based on the 27,968 shares of CONSOL Energy common stock distributed in conjunction with theseparation and distribution, and is considered pro forma in nature. Prior to November 28, 2017, CONSOL Energy did not have any issued or outstandingcommon stock.ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURESNone.ITEM 9A.CONTROLS AND PROCEDURESDisclosure controls and procedures. CONSOL Energy, under the supervision and with the participation of its management, including CONSOLEnergy’s principal executive officer and principal financial officer, evaluated the effectiveness of the Company’s “disclosure controls and procedures,” assuch term is defined in Rule 13a-15(e) under the Exchange Act, as of the end of the period covered by this Annual Report on Form 10-K. Based on thatevaluation, CONSOL Energy’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls andprocedures are effective as of December 31, 2017 to ensure that information required to be disclosed by CONSOL Energy in reports that it files or submitsunder the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and includes controls andprocedures designed to ensure that information required to be disclosed by CONSOL Energy in such reports is accumulated and communicated to CONSOLEnergy’s management, including CONSOL Energy’s principal executive officer and principal financial officer, as appropriate, to allow timely decisionsregarding required disclosure.Management's Annual Report on Internal Control Over Financial Reporting. CONSOL Energy's management is responsible for establishing andmaintaining adequate internal control over financial reporting. CONSOL Energy's internal control128Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles.CONSOL Energy's internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, inreasonable detail, accurately and fairly reflect transactions and dispositions of assets; (2) provide reasonable assurances that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures arebeing made only in accordance with authorizations of management and the directors of CONSOL Energy; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition, use or disposition of CONSOL Energy's assets that could have a material effect on our financialstatements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Accordingly, even effectivecontrols can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.Management assessed the effectiveness of CONSOL Energy's internal control over financial reporting as of December 31, 2017. In making thisassessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (COSO) inInternal Control-Integrated Framework. Based on our assessment and those criteria, management has concluded that CONSOL Energy maintained effectiveinternal control over financial reporting as of December 31, 2017.An attestation report from our accounting firm on our internal control over financial reporting is not included in this Annual Report because anattestation report is only required under the regulations of the SEC for accelerated filers and large accelerated filers.Changes in internal controls over financial reporting. There were no changes in the Company's internal controls over financial reporting that occurredduring the fourth quarter of the fiscal year covered by this Annual Report on Form 10-K that have materially affected, or are reasonably likely to materiallyaffect, the Company’s internal control over financial reporting.129Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ITEM 9B.OTHER INFORMATIONNew Employee Agreements and Related MattersNew CIC/Severance Agreements adopted in 2018. In connection with a review of the Company’s plans and programs, conducted post separation, theCompany’s Compensation Committee approved new severance and double trigger change in control agreements covering each of our named executiveofficers (other than the chief executive officer), which became effective February 15, 2018. These agreements generally supersede the terms and conditionsthat were established by the agreements in place during 2017 that were adopted by CNX. While the new agreements include features similar to theagreements in place during 2017, the new agreements also provide for non-change in control severance exclusively upon a termination of employmentabsent “cause.” The amount of severance due is a 1x multiple of base salary payable in a single lump sum. In the case of a change in control scenario, thenamed executive officer is only entitled to severance if, following, or in connection with, a change in control the named executive officer’s employment isterminated by the Company absent “cause” or if the named executive officer resigns due to constructive termination within a finite period (either ninety daysprior to a change in control or within two years thereafter) also payable in a single lump sum. Severance payable in a change in control is equal to a multiple(ranging from two-times to two and one-half times) of base salary plus a multiple (ranging from two times to two and one-half times) of incentive pay andprovides certain other benefits, including but not limited to continued health care coverage, a supplemental 401(k) contribution, a pension enhancement andoutplacement assistance.The purpose of these agreements is to ensure that the Company (a) offers a compensation package that is competitive with that offered by other companieswith whom the Company competes for talent (b) retains and relies upon the undivided focus of our senior executives immediately prior to, during andfollowing a change in control, and (c) diminishes the inevitable distraction of our named executive officers by virtue of personal uncertainties and riskscreated by the potential job loss following a change in control. These agreements also include “double trigger” change in control provisions, posttermination restrictive covenants relating to confidentiality, non-competition and non-solicitation and relating to equity vesting and require the namedexecutive officer to sign an appropriate release of claims. The new agreements do not include any gross up feature arising from the excise tax payable on anexcess parachute payment.CEO Employment Agreement. The Company’s Compensation Committee also approved an employment agreement for our Chief Executive Officer andPresident, which became effective on February 15, 2018 and provides for a three-year initial term of employment automatically renewed for additional one-year periods unless either party provides advance written notice within sixty days of the end of the term. The agreement also provides for “double trigger”change in control severance equal to a three times multiple of our Chief Executive Officer’s base salary plus a three times multiple of his incentivecompensation, but only in the event of the executive’s involuntary termination of employment (including resignation following constructive termination)absent “cause.” In addition, the agreement provides for non-change of control cash severance payable in lump sum form to our Chief Executive Officer andPresident equal to two times his base salary only and payable exclusively in the event of an involuntary termination of employment absent cause. Theagreement includes customary restrictive covenants during employment and post termination relating to confidentiality, non-competition and non-solicitation and requires the executive to sign an appropriate release of claims. This agreement supersedes any agreement previously in place during 2017 (orearlier) that was adopted by CNX and assigned to the Company.Base Salary Increases. In January of 2018, the Company’s Compensation Committee increased the base salaries of Messrs. Brock and Salvatori and Ms.Wiegand to reflect their increased roles and responsibilities and to ensure that these executives are compensated competitively in line with the Company’speer group and general industry compensation survey data. Effective as of February 16, 2018, Mr. Brock’s 2018 base salary is $650,000, Mr. Salvatori's basesalary is $270,000 and Ms. Wiegand’s 2018 base salary is $300,000.Annual MeetingThe Company it intends to hold its first annual meeting of stockholders on May 9, 2018 (the “2018 Annual Meeting”), at a time and location to bedetermined and specified in the Company’s proxy statement. The record date for determination of stockholders to be entitled to vote at the 2018 AnnualMeeting, and any adjournment thereof, will be the close of business on March 12, 2018.Stockholders of the Company who wish to have a proposal considered for inclusion in the Company’s proxy materials for the 2018 Annual Meeting (the“Proxy Materials”) pursuant to Rule 14a-8 under the Exchange Act, must ensure that such proposal is received by our Secretary at 1000 CONSOL EnergyDrive, Suite 100, Canonsburg, PA 15317 no later than the close of business on February 26, 2018, which the Company has determined to be a reasonabletime before it expects to begin to print and send the130Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Proxy Materials. Any such proposal must also meet the requirements set forth in the rules and regulations of the SEC in order to be eligible for inclusion inthe Proxy Materials.In addition, in accordance with advance notice requirements contained in the Company’s amended and restated bylaws, for director nominations or otherbusiness to be brought before the 2018 Annual Meeting by a stockholder outside of Rule 14a-8 of the Exchange Act, written notice must also be delivered nolater than the close of business on February 26, 2018, to CONSOL Energy Inc., Attn: Secretary, 1000 CONSOL Energy Drive, Suite 100, Canonsburg, PA15317. These stockholder notices must comply with the requirements of the Company’s amended and restated bylaws and will not be effective otherwise.PART IIIITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe information required by this Item is incorporated by reference from the information under the captions “PROPOSAL NO. 1 - ELECTION OFDIRECTORS,” “EXECUTIVE OFFICERS,” “SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE” and “BOARD OF DIRECTORSAND COMPENSATION INFORMATION” in the Proxy Statement.CONSOL Energy has a written Code of Business Conduct and Ethics that applies to CONSOL Energy's Chief Executive Officer (Principal ExecutiveOfficer), Chief Financial Officer (Principal Financial Officer), Chief Accounting Officer (Principal Accounting Officer) and others. The Code of BusinessConduct and Ethics is available on CONSOL Energy's website at www.consolenergy.com. Any amendments to, or waivers from, a provision of our Code ofBusiness Conduct and Ethics that applies to our principal executive officer, principal financial and principal accounting officer and that relates to anyelement of the code of ethics enumerated in paragraph (b) of Item 406 of Regulation S-K shall be disclosed by posting such information on our website atwww.consolenergy.com.ITEM 11.EXECUTIVE COMPENSATIONThe information required by this Item is incorporated by reference from the information under the captions “BOARD OF DIRECTORS ANDCOMPENSATION INFORMATION” and “EXECUTIVE COMPENSATION INFORMATION” in the Proxy Statement.ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERSThe information required by this Item is incorporated by reference from the information under the captions “BENEFICIAL OWNERSHIP OFSECURITIES” and “SECURITIES AUTHORIZED FOR ISSUANCE UNDER THE CONSOL ENERGY INC. EQUITY COMPENSATION PLAN” in the ProxyStatement.ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCEThe information requested by this Item is incorporated by reference from the information under the caption “Related Party Policy and Procedures andRelated Party Transactions,” “PROPOSAL NO. 1 - ELECTION OF DIRECTORS”, and “Determination of Director Independence” in the Proxy Statement.ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICESThe information required by this Item is incorporated by reference from the information under the caption “INDEPENDENT REGISTERED PUBLICACCOUNTING FIRM” in the Proxy Statement.131Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.PART IVITEM 15.EXHIBIT INDEXIn reviewing any agreements incorporated by reference in this Form 10-K or filed with this 10-K, please remember that such agreements are included toprovide information regarding their terms. They are not intended to be a source of financial, business or operational information about the Company or any ofits subsidiaries or affiliates. The representations, warranties and covenants contained in these agreements are made solely for purposes of the agreements andare made as of specific dates; are solely for the benefit of the parties; may be subject to qualifications and limitations agreed upon by the parties inconnection with negotiating the terms of the agreements, including being made for the purpose of allocating contractual risk between the parties instead ofestablishing matters as facts; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investorsor security holders. Investors and security holders should not rely on the representations, warranties and covenants or any description thereof ascharacterizations of the actual state of facts or condition of the Company or any of its subsidiaries or affiliates or, in connection with acquisition agreements,of the assets to be acquired. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the dateof the agreements. Accordingly, these representations and warranties alone may not describe the actual state of affairs as of the date they were made or atanother time.ExhibitsDescriptionMethod of Filing2.1Separation and Distribution Agreement, dated as of November 28, 2017, by and betweenthe Company and CNXFiled as Exhibit 2.1 to Form 8-K (File No. 001-38147) filed on December 4, 20172.2Tax Matters Agreement, dated as of November 28, 2017, by and between the Companyand CNXFiled as Exhibit 2.2 to Form 8-K (File No. 001-38147) filed on December 4, 20172.3Employee Matters Agreement, dated as of November 28, 2017, by and between theCompany and CNXFiled as Exhibit 2.3 to Form 8-K (File No. 001-38147) filed on December 4, 20172.4Intellectual Property Matters Agreement, dated as of November 28, 2017, by and betweenthe Company and CNXFiled as Exhibit 2.4 to Form 8-K (File No. 001-38147) filed on December 4, 20173.1Amended and Restated Certificate of Incorporation of the CompanyFiled as Exhibit 3.1 to Form 8-K (File No. 001-38147) filed on December 4, 20173.2Amended and Restated Bylaws of the CompanyFiled as Exhibit 3.2 to Form 8-K (File No. 001-38147) filed on December 4, 20174.1Indenture dated as of November 13, 2017 by and between CONSOL Energy Inc. (formerlyknown as CONSOL Mining Corporation) and UMB Bank, N.A., as Trustee and CollateralTrustee (including form of supplemental indenture on subsidiary guarantors).Filed as Exhibit 4.1 to Form 8-K (File No. 001-38147) filed on November 15, 201710.1Transition Services Agreement, dated as of November 28, 2017, by and between theCompany and CNXFiled as Exhibit 10.1 to Form 8-K (File No. 001-38147) filed on December 4, 201710.2CNX Resources Corporation to CONSOL Energy Inc. Trademark License Agreement datedas of November 28, 2017, by and between the Company and CNXFiled as Exhibit 10.2 to Form 8-K (File No. 001-38147) filed on December 4, 201710.3CONSOL Energy Inc. to CNX Resources Corporation Trademark License Agreement,dated as of November 28, 2017, by and between the Company and CNXFiled as Exhibit 10.3 to Form 8-K (File No. 001-38147) filed on December 4, 201710.4First Amendment to the First Amended and Restated Omnibus Agreement, dated as ofNovember 28, 2017, by and among the Company, CNX, CONSOL Coal Resources GPLLC, the Partnership and the other parties listed on Exhibit A attached theretoFiled as Exhibit 10.4 to Form 8-K (File No. 001-38147) filed on December 4, 201710.5First Amendment to Contract Agency Agreement, dated as of November 28, 2017, by andamong CONSOL Energy Sales Company, CONSOL Thermal Holdings LLC (formerlyknown as CNX Thermal Holdings LLC) and the other parties theretoFiled as Exhibit 10.5 to Form 8-K (File No. 001-38147) filed on December 4, 2017132Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.10.6First Amendment to Water Supply and Services Agreement, dated as of November 28,2017 by and between CNX Water Assets LLC and CONSOL Thermal Holdings LLC(formerly known as CNX Thermal Holdings LLC)Filed as Exhibit 10.6 to Form 8-K (File No. 001-38147) filed on December 4, 201710.7Second Amendment to the Pennsylvania Mine Complex Operating Agreement, dated as ofNovember 28, 2017, by and among CONSOL Pennsylvania Coal Company LLC,Conrhein Coal Company, CONSOL Thermal Holdings LLC and CONSOL Coal ResourcesLPFiled as Exhibit 10.7 to Form 8-K (File No. 001-38147) filed on December 4, 201710.8Credit Agreement, dated as of November 28, 2017, by and among the Company, thevarious financial institutions from time to time party thereto, PNC Bank, N.A., asadministrative agent for the Revolving Lenders and Term A Lenders, Citibank, N.A., asadministrative agent for the Term B Lenders and PNC Bank, N.A., as collateral agent forthe Lenders and the other Secured Parties referred to thereinFiled as Exhibit 10.8 to Form 8-K (File No. 001-38147) filed on December 4, 201710.9Affiliated Company Credit Agreement, dated as of November 28, 2017, by and amongCONSOL Coal Resources LP, certain of its affiliates party thereto, CONSOL Energy Inc.and PNC Bank, N.A.Filed as Exhibit 10.9 to Form 8-K (File No. 001-38147) filed on December 4, 201710.10CONSOL Energy Inc. Omnibus Performance Incentive PlanFiled as Exhibit 4.3 to Form S-8 (File No. 333-221727) filed on November 22, 201710.11Purchase and Sale Agreement, dated as of November 30, 2017, by and among CONSOLMarine Terminals LLC, CONSOL Pennsylvania Coal Company LLC and CONSOLFunding LLCFiled as Exhibit 10.11 to Form 8-K (File No. 001-38147) filed on December 4, 201710.12Sub-Originator Sale Agreement, dated as of November 30, 2017, by and between CONSOLThermal Holdings LLC and CONSOL Pennsylvania Coal Company LLCFiled as Exhibit 10.12 to Form 8-K (File No. 001-38147) filed on December 4, 201710.13Receivables Financing Agreement, dated as of November 30, 2017, by and amongCONSOL Funding LLC, CONSOL Pennsylvania Coal Company LLC, PNC Bank, N.A.,PNC Capital Markets, LLC and certain lenders from time to time party theretoFiled as Exhibit 10.13 to Form 8-K (File No. 001-38147) filed on December 4, 201710.14Second Amendment and Restatement of Master Cooperation and Safety Agreement by andamong CONSOL Energy Inc., CNX Gas Company LLC, CNX Resources Holdings LLCand certain other parties theretoFiled as Exhibit 10.5 to Form 10-12B/A (File No.001-38147) filed on October 27, 201721Subsidiaries of CONSOL Energy Inc.Filed herewith23.1Consent of Ernst & Young LLPFiled herewith31.1Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of2002Filed herewith31.2Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Actof 2002Filed herewith32.1Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of 2002Filed herewith32.2Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of 2002Filed herewith95Mine Safety and Health Administration Safety DataFiled herewith101Interactive Data File (Form 10-K for the year ended December 31, 2017 furnished inXBRL)Filed herewithSupplemental InformationNo annual report or proxy material has been sent to shareholders of CONSOL Energy at the time of filing of this Form 10-K. An annual report will besent to shareholders and to the commission subsequent to the filing of this Form 10-K.In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.133Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized, as of the 16th day of February, 2018. CONSOL ENERGY INC. By: /s/ JAMES A. BROCK James A. Brock Director, Chief Executive Officer and President (Duly Authorized Officer and Principal Executive Officer) By: /s/ DAVID M. KHANI David M. Khani Chief Financial Officer and Executive Vice President (Duly Authorized Officer and Principal Financial Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed as of the 16th day of February, 2018, by the followingpersons on behalf of the registrant in the capacities indicated:Signature Title /s/ JAMES A. BROCK Director, Chief Executive Officer and PresidentJames A. Brock (Duly Authorized Officer and Principal Executive Officer) /s/ DAVID M. KHANI Chief Financial Officer and Executive Vice PresidentDavid M. Khani (Duly Authorized Officer and Principal Financial Officer) /s/ JOHN M. ROTHKA Chief Accounting OfficerJohn M. Rothka (Duly Authorized Officer and Principal Accounting Officer) /s/ WILLIAM P. POWELL Director and Chairman of the BoardWilliam P. Powell /s/ ALVIN R. CARPENTER DirectorAlvin R. Carpenter /s/ JOHN T. MILLS DirectorJohn T. Mills /s/ JOSEPH P. PLATT DirectorJoseph P. Platt /s/ EDWIN S. ROBERSON DirectorEdwin S. Roberson 134Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 21CONSOL Energy Inc.SUBSIDIARIESAs of February 16, 2018(In alphabetical order)AMVEST LLC (a Virginia limited liability company) CONSOL of Canada LLC (a Delaware limited liability company)AMVEST Gas Resources, LLC (a Virginia limited liability CONSOL of Kentucky LLC (a Delaware limited liability company)company) Consol Pennsylvania Coal Company LLC (formerly CONSOLAMVEST West Virginia Coal, L.L.C. (a West Virginia limited Pennsylvania Coal Company) (a Delaware limited liabilityliability company) company)Braxton-Clay Land & Mineral, LLC (a West Virginia limited) Fola Coal Company, L.L.C. d/b/a Powellton Coal Company (a Westliability company) Virginia limited liability company)CNX Coal Finance Corp. (a Delaware corporation) Helvetia Coal Company LLC (a Pennsylvania limited liabilityCONSOL Coal Resources GP LLC (a Delaware limited liability company)company) Island Creek Coal Company LLC (a Delaware limited liabilityCONSOL Coal Resources LP (a Delaware limited partnership) company)CONSOL Marine Terminals LLC (a Delaware limited liability Laurel Run Mining Company LLC (a Virginia limited liabilitycompany) company)CNX Operating LLC (a Delaware limited liability company) Leatherwood, LLC (a Pennsylvania limited liability company)CNX RCPC LLC (a Delaware limited liability company) Little Eagle Coal Company, L.L.C. (a West Virginia limited liabilityCONSOL Thermal Holdings LLC (a Delaware limited liability company)company) MTB LLC (a Delaware limited liability company)Conrhein Coal Company (a Pennsylvania general partnership) Nicholas-Clay Land & Mineral, LLC (a Virginia limited liabilityCONSOL Amonate Facility LLC (a Delaware limited liability company)company) R&PCC LLC (a Pennsylvania limited liability company)CONSOL Amonate Mining Company LLC (a Delaware limited TECPART LLC (a Delaware limited liability company)liability company) Terry Eagle Coal Company, L.L.C. (a West Virginia limited liabilityCONSOL Energy Canada Ltd. (a Canadian corporation) company)CONSOL Energy Sales Company LLC (formerly CONSOL Sales Terry Eagle Limited Partnership (a West Virginia limitedCompany) (a Delaware limited liability company) partnership)CONSOL Financial Inc. (a Delaware corporation) Vaughan Railroad Company LLC (a West Virginia limited liability)CONSOL Mining Company LLC (a Delaware limited liability company)company) Windsor Coal Company LLC (a West Virginia limited liabilityCONSOL Mining Holding Company LLC (a Delaware limited company)liability company) Wolfpen Knob Development Company LLC (a Virginia limited liability company)Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 23.1Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333-221727) pertaining to the Omnibus PerformanceIncentive Plan of CONSOL Energy Inc. and Subsidiaries of our report dated February 16, 2018, with respect to the consolidated financial statements ofCONSOL Energy Inc. and Subsidiaries included in this Annual Report (Form 10-K) for the year ended December 31, 2017. /s/ Ernst & Young, LLPPittsburgh, PennsylvaniaFebruary 16, 2018Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 31.1CERTIFICATIONSI, James A. Brock, certify that:1.I have reviewed this annual report on Form 10-K of CONSOL Energy Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant's internal control over financial reporting; and5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting. Date:February 16, 2018 /s/ James A. Brock James A. Brock Chief Executive Officer (Principal Executive Officer) Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 31.2CERTIFICATIONS I, David M. Khani, certify that:1.I have reviewed this annual report on Form 10-K of CONSOL Energy Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant's internal control over financial reporting; and5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information;(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting. Date:February 16, 2018 /s/ David M. Khani David M. Khani Chief Financial Officer (Principal Financial Officer) Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 32.1CERTIFICATIONPursuant to Section 906 of the Sarbanes-Oxley Act of 2002,18 U.S.C. Section 1350I, James A. Brock, Chief Executive Officer (principal executive officer) of CONSOL Energy Inc. (the “Registrant”), certify that to my knowledge, basedupon a review of the Annual Report on Form 10-K for the period ended December 31, 2017, of the Registrant (the “Report”): (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theRegistrant. Date:February 16, 2018 /s/ James A. Brock James A. Brock Chief Executive Officer (Principal Executive Officer) Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 32.2CERTIFICATIONPursuant to Section 906 of the Sarbanes-Oxley Act of 2002,18 U.S.C. Section 1350I, David M. Khani, Chief Financial Officer (principal financial officer) of CONSOL Energy Inc. (the “Registrant”), certify that to my knowledge, basedupon a review of the Annual Report on Form 10-K for the period ended December 31, 2017, of the Registrant (the “Report”): (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theRegistrant.Date:February 16, 2018 /s/ David M. Khani David M. Khani Chief Financial Officer (Principal Financial Officer) Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 95Mine Safety and Health Administration Safety DataWe believe that CONSOL Energy is one of the safest mining companies in the world. The Company has in place health and safety programs that includeextensive employee training, accident prevention, workplace inspection, emergency response, accident investigation, regulatory compliance and programauditing. The objectives of our health and safety programs are to eliminate workplace incidents, comply with all mining-related regulations and providesupport for both regulators and the industry to improve mine safety.The operation of our mines is subject to regulation by the federal Mine Safety and Health Administration (MSHA) under the Federal Mine Safety and HealthAct of 1977 (Mine Act). MSHA inspects our mines on a regular basis and issues various citations, orders and violations when it believes a violation hasoccurred under the Mine Act. We present information below regarding certain mining safety and health violations, orders and citations, issued by MSHA andrelated assessments and legal actions and mine-related fatalities with respect to our coal mining operations. In evaluating this information, considerationshould be given to factors such as: (i) the number of violations, orders and citations will vary depending on the size of the coal mine, (ii) the number ofviolations, orders and citations issued will vary from inspector to inspector and mine to mine, and (iii) violations, orders and citations can be contested andappealed, and in that process, are often reduced in severity and amount, and are sometimes dismissed.The table below sets forth, for the year ended December 31, 2017, for each coal mine of CONSOL Energy and its subsidiaries that has an outstanding MSHAcitation, order or violation, the total number of: (i) violations of mandatory health or safety standards that could significantly and substantially contribute tothe cause and effect of a coal or other mine safety or health hazard under section 104 of the Mine Act for which the operator received a citation from MSHA;(ii) orders issued under section 104(b) of the Mine Act; (iii) citations and orders for unwarrantable failure of the mine operator to comply with mandatoryhealth or safety standards under section 104(d) of the Mine Act; (iv) flagrant violations under section 110(b)(2) of the Mine Act; (v) imminent danger ordersissued under section 107(a) of the Mine Act; (vi) proposed assessments from MHSA (regardless of whether CONSOL Energy has challenged or appealed theassessment); (vii) mining-related fatalities; (viii) notices from MSHA of a pattern of violations of mandatory health or safety standards that are of such natureas could have significantly and substantially contributed to the cause and effect of coal or other mine health or safety hazards under section 104(e) of theMine Act; (ix) notices from MSHA regarding the potential to have a pattern of violations as referenced in (viii) above; and (x) pending legal actions beforethe Federal Mine Safety and Health Review Commission (as of December 31, 2017) involving such coal or other mine, as well as the aggregate number oflegal actions instituted and the aggregate number of legal actions resolved during the reporting period.1Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Received Notice Received of Legal Total Dollar Total Notice of Potential Actions Section Value of Number Patternof to have Pending Legal Legal Section 104(d) MSHA of Violations Pattern as of Actions ActionsMine or Operating 104 Section Citations Section Section Assessments Mining Under Under Last Initiated ResolvedName/MSHA S&S 104(b) and 110(b)(2) 107(a) Proposed (in Related Section Section Day of During DuringIdentification Number Citations Orders Orders Violations Orders dollars) Fatalities 104(e) 104(e) Period(1) Period PeriodActiveOperations Bailey 36-07230 85 — — — — $136,216 — No No 28 11 7Enlow Fork 36-07416 92 — 2 — — 244,656 — No No 21 12 12Harvey 36-10045 43 — 2 — — 86,381 — No No 19 11 5 220 — 4 — — $467,253 — 68 34 24(1) See table below for additional detail regarding Legal Actions Pending as of December 31, 2017. With respect to Contests of Proposed Penalties, we haveincluded the number of dockets (as opposed to citations) when counting the number of Legal Actions Pending as of December 31, 2017.2Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Mine or Operating Name/MSHA IdentificationNumber Contests ofCitations,Orders(as of12.31.17)(a) Contests of Proposed Penalties(as of 12.31.17)(b) ComplaintsforCompensation(as of12.31.17)(c) Complaints ofDischarge,Discriminationor Interference(as of12.31.17)(d) ApplicationsforTemporaryRelief(as of12.31.17)(e) Appeals ofJudges'Decisions orOrder(as of12.31.17)(f) Dockets Citations Active Operations Bailey 36-07230 — 28 133 — — — —Enlow Fork 36-07416 — 21 235 — — — —Harvey 36-10045 — 19 86 — — — — — 68 454 — — — —(a) Represents (if any) contests of citations and orders, which typically are filed prior to an operator's receipt of a proposed penalty assessment from MSHA or relate to orders forwhich penalties are not assessed (such as imminent danger orders under Section 107 of the Mine Act). This category includes: (i) contests of citations or orders issued under section104 of the Mine Act, (ii) contests of imminent danger withdrawal orders under section 107 of the Mine Act, and (iii) Emergency response plan dispute proceedings (as requiredunder the Mine Improvement and New Emergency Response Act of 2006, Pub. L. No. 109-236, 120 Stat. 493).(b) Represents (if any) contests of proposed penalties, which are administrative proceedings before the Federal Mine Safety and Health Review Commission (“FMSHRC”)challenging a civil penalty that MSHA has proposed for the violation contained in a citation or order. This column includes one action involving civil penalties against agents of theoperator that has been contested and two appeals of a decision or order.(c) Represents (if any) complaints for compensation, which are cases under section 111 of the Mine Act that may be filed with the FMSHRC by miners idled by a closure orderissued by MSHA who are entitled to compensation.(d) Represents (if any) complaints of discharge, discrimination or interference under section 105 of the Mine Act, which cover: (i) discrimination proceedings involving a miner'sallegation that he or she has suffered adverse employment action because he or she engaged in activity protected under the Mine Act, such as making a safety complaint, and (ii)temporary reinstatement proceedings involving cases in which a miner has filed a complaint with MSHA stating that he or she has suffered such discrimination and has lost his orher position. Complaints of Discharge, Discrimination, or Interference are also included in Contests of Proposed Penalties, column (b).(e) Represents (if any) applications for temporary relief, which are applications under section 105(b)(2) of the Mine Act for temporary relief from any modification or termination ofany order or from any order issued under section 104 of the Mine Act (other than citations issued under section 104(a) or (f) of the Mine Act).(f) Represents (if any) appeals of judges' decisions or orders to the FMSHRC, including petitions for discretionary review and review by the FMSHRC on its own motion.3Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Source: CONSOL Energy Inc., 10-K, February 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.

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