Form 10-Q

(In millions)

Natural Gas (1)

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JAQjCH0gLulYAcd1HZOmI9kggASgyyGpudGUehNgNAQqwcWmtRzz6Tx+BUkpDPyr OivAI78FEL92FsNlMo64Hw== 0001193125-08-166034.txt : 20080805 0001193125-08-166034.hdr.sgml : 20080805 20080805110856 ACCESSION NUMBER: 0001193125-08-166034 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20080630 FILED AS OF DATE: 20080805 DATE AS OF CHANGE: 20080805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CNX Gas CORP CENTRAL INDEX KEY: 0001335793 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 203170639 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-32723 FILM NUMBER: 08990127 BUSINESS ADDRESS: STREET 1: 5 PENN CENTER WEST STREET 2: SUITE 401 CITY: PITTSBURGH STATE: PA ZIP: 15276-0102 BUSINESS PHONE: 412-200-6700 MAIL ADDRESS: STREET 1: 5 PENN CENTER WEST STREET 2: SUITE 401 CITY: PITTSBURGH STATE: PA ZIP: 15276-0102 10-Q 1 d10q.htm FORM 10-Q Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 2008 or

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-32723

CNX GAS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

20-3170639

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

5 Penn Center West, Suite 401

Pittsburgh, PA 15276

(412) 200-6700

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Indicate 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 preceding 12 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 þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer ¨ Non-accelerated filer ¨ Smaller Reporting Company ¨

(Do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No þ

The number of shares of the registrant’s common stock outstanding as of July 18, 2008 is 150,940,111 shares.

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION


		Page

ITEM 1.	CONDENSED FINANCIAL STATEMENTS

	Consolidated Statements of Income for the three and six months ended June 30, 2008 and 2007	1

	Consolidated Balance Sheets at June 30, 2008 and December 31, 2007	2

	Consolidated Statement of Stockholders’ Equity for the six months ended June 30, 2008	4

	Consolidated Statements of Cash Flows for the six months ended June 30, 2008 and 2007	5

	Notes to Unaudited Consolidated Financial Statements	6

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	17

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	34

ITEM 4.	CONTROLS AND PROCEDURES	35

PART II OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	36

ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	36

ITEM 6.	EXHIBITS	37

PART I

FINANCIAL INFORMATION

ITEM 1.

CONDENSED FINANCIAL STATEMENTS

CNX GAS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share data)


	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2008			2007		2008			2007
Revenue and Other Income:
Outside Sales	$	179,372		$	112,296	$	306,012		$	210,393
Related Party Sales		1,547			2,410		5,448			4,601
Royalty Interest Gas Sales		22,515			14,484		39,019			26,666
Purchased Gas Sales		1,647			1,317		5,186			2,476
Other Income		728			3,161		10,757			4,871

Total Revenue and Other Income		205,809			133,668		366,422			249,007
Costs and Expenses:
Lifting Costs		17,960			8,763		29,467			17,029
Gathering and Compression Costs		20,082			16,842		35,392			31,310
Royalty Interest Gas Costs		21,913			12,528		38,002			23,193
Purchased Gas Costs		1,522			1,473		4,943			2,492
Other		458			1,350		807			1,995
General and Administrative		21,430			12,555		37,174			26,276
Depreciation, Depletion and Amortization		16,592			11,979		32,537			24,077
Interest Expense		1,683			1,246		3,155			2,465

Total Costs and Expenses		101,640			66,736		181,477			128,837

Earnings Before Income Taxes and Minority Interest		104,169			66,932		184,945			120,170
Minority Interest		(217	)		—		(358	)		—

Earnings Before Income Taxes		104,386			66,932		185,303			120,170
Income Taxes		40,131			25,444		71,127			45,686

Net Income	$	64,255		$	41,488	$	114,176		$	74,484

Earnings Per Share:
Basic	$	0.43		$	0.27	$	0.76		$	0.49

Dilutive	$	0.42		$	0.27	$	0.75		$	0.49

Weighted Average Number of Common Shares Outstanding:
Basic		150,937,820			150,870,810		150,930,655			150,867,834

Dilutive		151,438,737			151,145,174		151,381,574			151,107,413

The accompanying notes are an integral part of these consolidated financial statements.

CNX GAS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)


	(Unaudited) June 30, 2008		December 31, 2007
ASSETS
Current Assets:
Cash and Cash Equivalents	$	23,101	$	32,048
Accounts and Notes Receivable:
Trade		80,921		38,680
Related Parties		2,843		1,022
Other Receivables		3,289		1,406
Recoverable Income Taxes		—		972
Deferred Income Taxes		65,276		—
Derivatives		—		10,711
Other		1,423		3,148

Total Current Assets		176,853		87,987
Property, Plant and Equipment:
Property, Plant and Equipment		1,759,209		1,509,060
Less—Accumulated Depreciation, Depletion and Amortization		282,853		254,154

Total Property, Plant and Equipment—Net		1,476,356		1,254,906
Other Assets:
Investment in Affiliates		24,769		28,284
Other		4,539		9,526

Total Other Assets		29,308		37,810

TOTAL ASSETS	$	1,682,517	$	1,380,703

The accompanying notes are an integral part of these consolidated financial statements.

CNX GAS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)


	(Unaudited) June 30, 2008			December 31, 2007
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable	$	41,768		$	30,263
Accrued Royalties		22,274			12,896
Accrued Severance Taxes		5,140			2,620
Derivatives		164,100			—
Short-Term Notes Payable		27,000			—
Deferred Income Taxes		—			1,269
Accrued Income Taxes		2,591			—
Current Portion of Long-Term Debt		7,450			5,819
Other Current Liabilities		13,009			9,817

Total Current Liabilities		283,332			62,684
Long-Term Debt:
Long-Term Debt		16,955			5,799
Capital Lease Obligations		59,686			61,150

Total Long-Term Debt		76,641			66,949
Deferred Credits and Other Liabilities:
Derivatives		74,638			1,092
Deferred Income Taxes		212,916			188,415
Asset Retirement Obligations		6,740			3,981
Postretirement Benefits Other Than Pensions		2,856			2,700
Other		36,884			30,965

Total Deferred Credits and Other Liabilities		334,034			227,153
Minority Interest		6			680

Total Liabilities and Minority Interest		694,013			357,466
Stockholders’ Equity:
Common Stock, $.01 par value; 200,000,000 Shares Authorized, 150,940,111 Issued and Outstanding at June 30, 2008 and 150,915,198 Issued and Outstanding at December 31, 2007		1,509			1,509
Capital in Excess of Par Value		787,685			785,575
Retained Earnings		344,058			229,962
Accumulated Other Comprehensive Income (Loss)		(144,748	)		6,191

Total Stockholders’ Equity		988,504			1,023,237

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,682,517		$	1,380,703

The accompanying notes are an integral part of these consolidated financial statements.

CNX GAS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(Dollars in thousands)


	Common Stock		Capital in Excess of Par Value		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
Balance—December 31, 2007	$	1,509	$	785,575	$	229,962		$	6,191		$	1,023,237


(Unaudited)
Net Income		—		—		114,176			—			114,176
Gas Cash Flow Hedge (Net of ($96,703) tax)		—		—		—			(150,877	)		(150,877	)
Amortization of Prior Service Costs and Actuarial Losses (Net of ($27) tax)		—		—		—			(42	)		(42	)

Comprehensive Income (Loss)						114,176			(150,919	)		(36,743	)
Cumulative Effect of FAS 158 Measurement Adoption (Net of ($91) tax)		—		—		(80	)		(20	)		(100	)
Stock Options Exercised		—		278		—			—			278
Tax Benefit from Stock Based Compensation		—		178		—			—			178
Amortization of Stock Based Compensation Awards		—		1,654		—			—			1,654

Balance—June 30, 2008	$	1,509	$	787,685	$	344,058		$	(144,748	)	$	988,504

The accompanying notes are an integral part of these consolidated financial statements.

CNX GAS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)


	For the Six Months Ended June 30,
	2008			2007
Operating Activities:
Net Income	$	114,176		$	74,484
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation, Depletion and Amortization		32,537			24,077
Stock-based Compensation		1,654			1,584
Change in Minority Interest		(358	)		—
Deferred Income Taxes		53,988			28,275
Equity in Earnings of Affiliates		(116	)		(403	)
Changes in Operating Assets:
Accounts Receivable		(41,155	)		4,577
Related Party Receivable		(1,821	)		1,204
Other Current Assets		990			1,847
Changes in Other Assets		4,506			2,174
Changes in Operating Liabilities:
Accounts Payable		(1,951	)		(9,326	)
Income Taxes		3,563			6,722
Other Current Liabilities		15,002			2,893
Changes in Other Liabilities		6,070			1,824
Other		(306	)		672

Net Cash Provided by Operating Activities		186,779			140,604

Investing Activities:
Capital Expenditures		(199,806	)		(131,415	)
Acquisition of Knox Energy		(36,000	)		—
Acquisition of Mineral Rights		—			(60,488	)
Investment in Equity Affiliates		1,081			(786	)
Proceeds From Sales of Assets		450			40

Net Cash Used in Investing Activities		(234,275	)		(192,649	)

Financing Activities:
Capital Lease Payments		(1,360	)		(1,263	)
Proceeds from Variable Interest Entity Debt		12,453			5,973
Proceeds from Short-Term Borrowings		27,000			—
Exercise of Stock Options		278			164
Tax Benefit from Stock Based Compensation		178			26

Net Cash Provided by Financing Activities		38,549			4,900

Net Decrease in Cash and Cash Equivalents		(8,947	)		(47,145	)
Cash and Cash Equivalents at Beginning of Period		32,048			107,173

Cash and Cash Equivalents at End of Period	$	23,101		$	60,028

The accompanying notes are an integral part of these consolidated financial statements.

CNX GAS CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

Note 1—Basis of Presentation:

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2008 are not necessarily indicative of the results that may be expected for future periods.

The balance sheet at December 31, 2007 has been derived from the audited consolidated financial statements at that date but does not include all the notes required by generally accepted accounting principles for complete financial statements.

For further information, refer to the consolidated financial statements and related notes for the year ended December 31, 2007 included in CNX Gas’ Form 10-K.

Certain reclassifications of 2007 data have been made to conform to the three and six months ended June 30, 2008 classifications. The reclassifications include classifying equity in earnings of affiliates in other income which was previously reported in other costs and expenses.

Basic earnings per share are computed by dividing net income by the weighted average shares outstanding during the reporting period. Dilutive earnings per share are computed similarly to basic earnings per share except that the weighted average shares outstanding are increased to include additional shares from the effect of dilutive potential common shares outstanding during the period as calculated in accordance with Statement of Financial Accounting Standard No. 123R, “Share-Based Payment” (SFAS 123R). The number of additional shares is calculated by assuming that restricted stock units were converted and outstanding stock options were exercised and that the proceeds from such activity were used to acquire shares of common stock at the average market price during the reporting period. Options to purchase 2,000 shares and 477,306 shares of common stock were outstanding for the three month period ended June 30, 2008 and 2007, respectively, but were not included in the computation of dilutive earnings per share because the effect would be antidilutive. Options to purchase 6,425 shares and 480,065 shares of common stock were outstanding for the six month period ended June 30, 2008 and 2007, respectively, but were not included in the computation of dilutive earnings per share because the effect would be antidilutive. Additionally, 20,823 shares of outstanding restricted stock units for the six month period ending June 30, 2007 were not included in the computation of dilutive earnings per share because the effect would be antidilutive.

There were 1,525 options and 5,556 options exercised during the three months ended June 30, 2008 and 2007, respectively. The weighted average exercise price per share of the options exercised during the three months ended June 30, 2008 and 2007 was $17.93 and $16.00, respectively. There were 17,298 shares and 9,306 shares of options exercised during the six months ended June 30, 2008 and 2007, respectively. The weighted average exercise price per share of the options exercised during the six months ended June 30, 2008 and 2007 was $16.17 and $16.73, respectively.

The computations for basic and dilutive earnings per share from continuing operations are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2008		2007		2008		2007
Net Income	$	64,255	$	41,488	$	114,176	$	74,484

Average shares of common stock outstanding:
Basic		150,937,820		150,870,810		150,930,655		150,867,834
Effect of stock-based compensation		500,917		274,364		450,919		239,579

Dilutive		151,438,737		151,145,174		151,381,574		151,107,413

Earnings per share:
Basic	$	0.43	$	0.27	$	0.76	$	0.49

Dilutive	$	0.42	$	0.27	$	0.75	$	0.49

Note 2—Significant Acquisitions:

In June 2008, CNX Gas completed the acquisition of the remaining 50% interest in Knox Energy, LLC not already owned by CNX Gas for a cash payment of $36,000 which was principally allocated to property, plant, and equipment. Prior to the acquisition of the remaining interest, Knox Energy, LLC had been proportionately consolidated into CNX Gas’ financial statements. Knox Energy, LLC is a natural gas production company with operations in Tennessee. The pro forma results for this acquisition are not significant to CNX Gas’ financial results.

In June 2007, CNX Gas entered into a three-way transaction with Peabody Energy and majority shareholder CONSOL Energy Inc. (CONSOL or CONSOL Energy) to acquire certain oil and gas, coalbed methane and other gas interests. Pursuant to the transaction, CNX Gas acquired certain coal assets from CONSOL for $45,000 cash plus a future payment with an estimated present value of $6,770, which we approximate to be the fair value of the assets. CNX Gas then exchanged those assets plus $15,000 cash for Peabody’s oil and gas, coalbed methane, and other gas rights to approximately 985,000 acres, including 603,000 acres in the Illinois Basin, 2,000 acres in Central Appalachia, 151,000 acres in Northern Appalachia, 171,000 acres in the San Juan Basin, 47,000 acres in the Powder River Basin, and 11,000 acres in the Rockies. Also included were $488 of miscellaneous acquisition costs. Subsequent to June 30, 2007, $1,289 of additional acquisition costs were paid. This acreage has no proved gas reserves.

Note 3—Pension and Other Postretirement Benefits:

The components of net periodic benefit costs are as follows:


	Pension Benefits												Other Benefits
	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007			2008			2007			2008			2007
Services cost	$	81		$	65		$	161		$	130		$	33		$	31		$	66		$	62
Interest cost		10			3			20			6			46			35			92			70
Expected return on assets		(6	)		—			(12	)		1			—			—			—			—
Amortization of prior service costs credit		—			—			—			—			(43	)		(43	)		(86	)		(86	)
Amortization of (gain) loss		—			(6	)		—			(12	)		9			5			18			10

Benefit costs	$	85		$	62		$	169		$	125		$	45		$	28		$	90		$	56

CNX Gas adopted the measurement provisions of Statement of Financial Accounting Standards No. 158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” (SFAS 158), on January 1, 2008. As a result of this adoption, the Company recognized an increase of $85 and $79 in the liabilities for pension and other postretirement benefits, respectively. These increases were accounted for as a reduction in the January 1, 2008 balance of retained earnings.

For the three and six months ended June 30, 2008, there were $82 and $126 in contributions made pursuant to the pension plan. CNX Gas presently anticipates contributing a total of $600 to the pension trust in 2008.

As previously discussed in the notes to its audited consolidated financial statements for the year ended December 31, 2007, CNX Gas does not expect to contribute to the other postretirement benefits plan in 2008. We intend to pay benefit claims as they become due. For the three and six months ended June 30, 2008, $27 and $77 of post employment benefits have been paid.

Note 4—Income Taxes:

The following is a reconciliation, stated in dollars and as a percentage of pretax income, of the U.S. statutory federal income tax rate to CNX Gas’ effective tax rate:


	For the Six Months Ended June 30,
	2008					2007
	Amount			Percent		Amount			Percent
Statutory U.S. federal income tax rate	$	64,856		35.0	%	$	42,060		35.0	%
Net effect of state income taxes		7,323		4.0			4,733		3.9
Other		(1,052	)	(0.6	)		(1,107	)	(0.9	)

Income Tax Expense / Effective Rate	$	71,127		38.4	%	$	45,686		38.0	%

CNX Gas Corporation adopted the provisions of FASB Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes,” on January 1, 2007. As a result of the implementation of FIN 48, the Company recognized an increase of $53 in the liability for unrecognized tax benefits, which was accounted for as a reduction to the January 1, 2007 balance of retained earnings.

The total amounts of unrecognized tax benefits as of June 30, 2008 and June 30, 2007 were approximately $5,545 and $3,116, respectively. If these unrecognized tax benefits were recognized, there would be no affect on CNX Gas’ effective tax rate.

CNX Gas is included in the consolidated federal tax return of CONSOL Energy Inc. Income taxes for financial statement purposes are calculated as if CNX Gas files a tax return on a separate company basis. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2002. The Internal Revenue Service (IRS) is in the process of concluding its examination of CONSOL Energy’s U.S. 2004 and 2005 income tax returns. Within the next twelve months, CONSOL Energy expects to conclude this examination and remit payment of the resulting tax deficiencies, if any, to federal and state taxing authorities. The IRS, to date, has not proposed any significant changes relating to tax positions taken by CNX Gas as part of its inclusion in the consolidated tax returns filed by CONSOL Energy for the two-year period.

CNX Gas recognizes interest expense accrued related to unrecognized tax benefits as a component of interest expense. As of June 30, 2008 and June 30, 2007, the Company had accrued interest of approximately $339 and $131, respectively, for interest related to uncertain tax positions. The accrued liabilities for the six months ended June 30, 2008 and 2007 include $157 and $38, respectively, of interest expense recorded in the Company’s statements of operations related to unrecognized tax benefits.

CNX Gas recognizes penalties accrued related to unrecognized tax benefits in its income tax expense. As of June 30, 2008 and June 30, 2007, no penalties relating to the Company’s unrecognized tax benefits have been accrued.

Note 5—Property, Plant and Equipment:


	June 30, 2008			December 31, 2007
Leasehold Improvements	$	1,351		$	1,351
Proved Properties		198,998			125,118
Unproved Properties		75,249			81,078
Wells and Related Equipment		192,196			166,468
Intangible Drilling		620,921			531,098
Gathering Assets		660,239			596,171
Asset Retirement Obligations		3,288			1,035
Capitalized Internal Software		6,967			6,741

Total Property, Plant and Equipment		1,759,209			1,509,060
Amortization		(282,853	)		(254,154	)

Property, Plant and Equipment, net	$	1,476,356		$	1,254,906

Note 6—Short-Term Notes Payable:

In October 2005, CNX Gas entered into a five-year $200,000 unsecured credit agreement. The agreement contains a negative pledge provision, whereas CNX Gas assets cannot be used to secure other obligations. Fees and interest rate spreads are based on the percentage of facility utilization, measured quarterly. Covenants in the facility limit CNX Gas’ ability to dispose of assets, make investments, purchase or redeem CNX Gas stock, pay dividends and merge with another corporation. The facility includes a maximum leverage ratio covenant of not more than 3.00 to 1.00, measured quarterly. The leverage ratio was 0.24 to 1.00 at June 30, 2008. The facility also includes a minimum interest coverage ratio covenant of no less than 3.00 to 1.00, measured quarterly. This ratio was 72.65 to 1.00 at June 30, 2008. At June 30, 2008, the CNX Gas credit agreement had $27,000 of borrowings outstanding and $14,933 of letters of credit outstanding, leaving $158,067 of capacity available for borrowings and the issuance of letters of credit.

Note 7—Commitments and Contingent Liabilities:

CNX Gas is subject to various pending and threatened lawsuits and claims arising in the ordinary course of its business. Our current estimates related to these pending claims, individually and in the aggregate, are immaterial to the financial position, results of operations or cash flows of CNX Gas. However, it is reasonably possible that the ultimate liabilities in the future with respect to these lawsuits and claims may be material to the financial position, results of operations or cash flows of CNX Gas.

CNX Gas is a party to a case captioned GeoMet Operating Company, Inc. and Pocahontas Mining Limited Liability Company v. CNX Gas Company LLC in the Circuit Court for Buchanan County, Virginia (Case No. 337-06). CNX Gas has a coal seam gas lease with Pocahontas Mining in southwest Virginia and southern West Virginia. With the agreement of Pocahontas Mining, GeoMet constructed a pipeline on the property. CNX Gas sought a judicial determination that under the terms of the lease, CNX Gas has the exclusive right to construct and operate pipelines on the property. On May 23, 2007, the circuit court entered an order granting CNX Gas’ motion for summary judgment against GeoMet and Pocahontas Mining. The order provided that CNX Gas has exclusive rights to construct and operate pipelines on the property and prohibited GeoMet from owning, operating or maintaining its pipeline on the property. The court stayed the portion of its order that required GeoMet to remove its pipeline, pending GeoMet’s appeal of the decision to the Virginia Supreme Court. GeoMet

filed an emergency appeal to the Virginia Supreme Court, which on June 20, 2007, overturned the provision of the circuit court’s order requiring GeoMet to remove its pipeline, as well as the related stay and the conditions thereof. The remaining portions of the May 23, 2007 order have been certified for interlocutory appeal to the Virginia Supreme Court and the appeal is pending in the Virginia Supreme Court. Pocahontas Mining has amended its complaint to seek rescission or reformation of the lease. We cannot predict the ultimate outcome of this litigation; however, it is reasonably possible that payments in the future with respect to this lawsuit may be material to the financial position, results of operations or cash flows of CNX Gas.

On February 14, 2007, GeoMet, Inc. and certain of its affiliates filed a lawsuit against CNX Gas Company LLC and Island Creek Coal Company, a subsidiary of CONSOL Energy, in the Circuit Court for the County of Tazewell, Virginia (Case No. CL07000065-00). The lawsuit alleged that CNX Gas conspired with Island Creek and has violated the Virginia Antitrust Act and tortuously interfered with GeoMet’s contractual relations, prospective contracts and business expectancies. CNX Gas and Island Creek filed motions to dismiss all counts of the complaint. On December 19, 2007, the court granted CNX Gas’ and Island Creek’s motions to dismiss all counts, with leave for GeoMet to file an amended complaint. On March 31, 2008, GeoMet filed an amended complaint. The amended complaint is again against CNX Gas and Island Creek, but it added CONSOL Energy and Cardinal States Gathering Company as additional defendants. The amended complaint restates allegations that CNX Gas, Island Creek and now CONSOL Energy and Cardinal States Gathering Company violated the Virginia Antitrust Act and tortuously interfered with GeoMet’s contractual relations, prospective contracts and business expectancies. The amended complaint seeks injunctive relief, compensatory damages of $385,600 and treble damages. CNX Gas continues to believe this lawsuit to be without merit and intends to vigorously defend it. We cannot predict the ultimate outcome of this litigation; however, it is reasonably possible that the ultimate liabilities in the future with respect to these lawsuits and claims may be material to the financial position, results of operations, or cash flows of CNX Gas.

In April 2005, Buchanan County, Virginia (through its Board of Supervisors and Commissioner of Revenue) filed a “Motion for Judgment Pursuant to the Declaratory Judgment Act Virginia Code § 8.01-184” against CNX Gas Company LLC in the Circuit Court of the County of Buchanan (Case No. CL05000149-00) for the year 2002; the county has since filed and served two substantially similar cases for years 2003, 2004 and 2005. The complaint alleges that our calculation of the license tax on the basis of the wellhead value (sales price less post production costs) rather than the sales price is improper. For the period from 1999 through mid 2002, we paid the tax on the basis of the sales price, but we have filed a claim for a refund for these years. Since 2002, we have continued to pay Buchanan County taxes based on our method of calculating the taxes. However, we have been accruing an additional liability reflected in Other Liabilities on our balance sheet in an amount based on the difference between our calculation of the tax and Buchanan County’s calculation. We believe that we have calculated the tax correctly and in accordance with the applicable rules and regulations of Buchanan County and intend to vigorously defend our position. We cannot predict the ultimate outcome of this litigation; however, it is reasonably possible that the ultimate liabilities in the future with respect to these lawsuits and claims may be material to the cash flows of CNX Gas.

In 2004, Yukon Pocahontas Coal Company, Buchanan Coal Company and Sayers-Pocahontas Coal Company filed a complaint against Consolidation Coal Company (“CCC”), a subsidiary of CONSOL Energy in the Circuit Court of Buchanan County, Virginia, seeking damages and injunctive relief in connection with the deposit of untreated water from mining activities at CCC’s Buchanan Mine into nearby void spaces in the mine of one of CONSOL Energy’s other subsidiaries, Island Creek Coal Company (“ICCC”). CCC believes that it had, and continues to have, the right to store water in these void areas. On September 21, 2006, the plaintiffs filed an amended complaint in the Circuit Court of Buchanan County, Virginia (Case No. CL04-91) which, among other things, added CONSOL Energy, ICCC and CNX Gas Company LLC as additional defendants. The amended complaint alleges, among other things, that CNX Gas, as lessee and operator under certain coalbed methane gas leases from plaintiffs, had a duty to prevent CCC from depositing water into the mine voids and failed to do so. The proposed amended complaint seeks $150,000 in damages from the additional defendants, plus costs, interest and attorneys’ fees. CNX Gas denies that it has any liability in this matter and intends to vigorously defend this

action. We cannot predict the ultimate outcome of this litigation; however, it is reasonably possible that the ultimate liabilities in the future with respect to these lawsuits and claims may be material to the financial position, results of operations or cash flows of CNX Gas.

In 1999, CNX Gas was named in a suit brought by a group of royalty owners that lease gas development rights to CNX Gas in southwest Virginia. The suit alleged the underpayment of royalties to the group of royalty owners. The claim of underpayment of royalties related to the interpretation of permissible deductions from production revenues upon which royalties are calculated. The deductions at issue relate to post production expenses of gathering, compression and transportation. CNX Gas was ordered to pay, and subsequently paid, damages to the group of royalty owners that brought the suit. A final payment was subsequently made to the plaintiffs to adjust all royalties owed to the plaintiffs for subsequent periods, which effectively settled this case. CNX Gas recognized an estimated liability for other similarly situated plaintiffs who could bring similar claims. This amount is included in Other Liabilities on the balance sheet and is evaluated quarterly. CNX Gas believes that the final resolution of this matter will not have a material effect on our financial position, results of operations or cash flows.

In November 2005, we filed a complaint for declaratory judgment in the U.S. District Court for the Western District of Pennsylvania (C.A. No. 05-1574) against CDX Gas, LLC, seeking a judicial determination that we do not infringe any claim of any valid and enforceable CDX patent relating to certain vertical to horizontal CBM drilling methods. CDX filed an answer and counterclaim denying our allegations of invalidity and alleging that we infringe certain claims of their patents. On June 2, 2008, CNX Gas and CDX announced that they had settled this litigation. As part of the settlement, CNX Gas affirmed the validity and enforceability of the patents at issue in the litigation and CNX Gas licensed the CDX technology from CDX. The settlement did not require CNX Gas to pay CDX any cash consideration for CNX Gas' prior drilling activities. The pending litigation was dismissed with prejudice. The parties have agreed to enter into joint venture arrangements with respect to several properties.

At June 30, 2008, CNX Gas has provided the following financial guarantees and letters of credit to certain third parties. CNX Gas management believes that these guarantees will expire without being funded, and therefore the commitments will not have a material adverse effect on financial condition. The fair value of all liabilities associated with these guarantees has been properly recorded and reported in the financial statements.


	Total Amounts Committed		Less Than 1 Year		1-3 Years		3-5 Years		Beyond 5 years
Letters of Credit	$	14,933	$	152	$	14,781	$	—	$	—
Surety Bonds:
Environmental	$	1,375	$	1,375	$	—	$	—	$	—
Other		1,951		1,915		36		—		—

Total Surety Bonds	$	3,326	$	3,290	$	36	$	—	$	—
Other:
Guarantees	$	28,904	$	28,904	$	—	$	—	$	—

Total Commitments	$	47,163	$	33,346	$	14,817	$	—	$	—

Financial guarantees have primarily been provided to support various performance bonds related to land usage, pipeline usage and restorative issues. Other contingent liabilities have been extended to support insurance policies, legal matters and other items necessary in the normal course of business. CNX Gas has also provided financial guarantees for the purchase and delivery of gas to various counterparties.

As previously disclosed in the notes to our audited consolidated financial statements for the year ended December 31, 2007, CONSOL Energy has also provided certain parental guarantees related to activity associated with CNX Gas. CNX Gas anticipates that these parental guarantees will be transferred from CONSOL Energy to CNX Gas over time. CNX Gas management believes these parental guarantees will also expire without being funded, and therefore the commitments will not have a material adverse effect on financial condition.

Note 8—Comprehensive Income:

Total comprehensive income, net of tax, was as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
Net Income	$	64,255		$	41,488		$	114,176		$	74,484
Amortization of prior service costs and actuarial losses		(20	)		(25	)		(42	)		(53	)
Gas Cash Flow Hedge		(101,702	)		10,357			(150,877	)		(1,326	)

Total comprehensive (loss) income	$	(37,467	)	$	51,820		$	(36,743	)	$	73,105

Note 9—Fair Value of Financial Instruments:

Effective January 1, 2008, CNX Gas adopted Statement of Financial Accounting Standards 157, “Fair Value Measurements” (SFAS 157) and Statement of Financial Accounting Standards 159, “The Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115” (FAS 159). As a result of the adoption, CNX Gas elected not to measure any additional financial assets or liabilities at fair value, other than those which were recorded at fair value prior to the adoption.

The financial liabilities measured at fair value on a recurring basis are summarized below:


	Fair Value Measurements at June 30, 2008
Description	Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Gas Cash Flow Hedges	$	—	$	238,738	$	—

Statement of Financial Accounting Standards No. 107, “Disclosures About Fair Value of Financial Instruments” (SFAS 107) requires the disclosure of the estimated fair value of financial instruments including those financial instruments for which the SFAS 159 fair value option was not elected. The following methods and assumptions were used to estimate the fair value of those financial instruments:

Cash and cash equivalents: The carrying amount reported in the balance sheets for cash and cash equivalents approximates its fair value due to the short maturity of these instruments.

Short-term notes payable: The carrying amount reported in the balance sheets for short-term notes payable approximates its fair value due to the short-term maturity of these instruments.

Long-term debt: The fair values of long-term debt are estimated using discounted cash flow analyses, based on CNX Gas’ current incremental borrowing rates for similar types of borrowing arrangements.

The carrying amounts and fair values of financial instruments for which SFAS 159 was not elected are as follows:


	June 30, 2008						December 31, 2007
	Carrying Amounts			Fair Value			Carrying Amounts			Fair Value
Cash and cash equivalents	$	23,101		$	23,101		$	32,048		$	32,048
Short-term note payable	$	(27,000	)	$	(27,000	)	$	—		$	—
Long-term debt	$	(21,303	)	$	(17,633	)	$	(8,850	)	$	(7,951	)

Note 10—Variable Interest:

In prior years, CNX Gas entered into a business relationship with a contractor to perform CNX Gas’ well drilling requirements primarily in Northern Appalachia. CNX Gas is the primary customer of the contractor. In addition, CNX has guaranteed up to $7,000 of a loan agreement between the contractor and Huntington National Bank dated March 28, 2008. Under FASB Interpretation (FIN) No. 46R, “Consolidation of Variable Interest Entities-an Interpretation of ARB No. 51,” the contractor is a variable interest entity and CNX Gas is the primary beneficiary. Therefore, CNX Gas has consolidated the contractor into the Consolidated Financial Statements. At June 30, 2008, the contractor has a carrying value of property, plant & equipment of $19,754 and total assets of $24,196, with related debt of $21,303 and total liabilities of $22,049.

Note 11—Segment Information:

The principal activity of CNX Gas is to produce methane gas for sale primarily to gas wholesalers. In the current period, CNX Gas implemented a new internal segment reporting method to align segment results to how management assesses the operations. As a result, some charges that were previously reflected in Central Appalachia and Northern Appalachia segments have been reclassified to the Other segment. Also, some corporate charges that were previously reflected in the Central Appalachia and Northern Appalachia segment are now reported as Corporate items and reflected in the reconciliation between Segment Earnings (Loss) Before Income Tax to Total Earnings (Loss) Before Income Tax. CNX Gas has three reportable segments: Central Appalachia, Northern Appalachia and Other. Each of these reportable segments includes a number of operating segments (plays). For the three and six months ended June 30, 2008, the Central Appalachia segment includes the following plays: Virginia Operations, Cardinal States Gathering, Hokie, Knox Energy and Bluegrass. For the three and six months ended June 30, 2008 the Northern Appalachia segment includes the following plays: Mountaineer, Nittany and Panther. The Other segment includes other plays that fall outside the reported geographic areas and various other activities assigned to operations but not allocated to an individual play. Operating profit for each segment is based on sales less identifiable operating and non-operating expenses.

Reportable segment results for the three months ended June 30, 2008 are:


	Central Appalachia		Northern Appalachia			Other		Total Gas		Corporate			Consolidated
Sales—outside	$	149,593	$	29,669		$	110	$	179,372	$	—		$	179,372
Sales—related parties		1,541		6			—		1,547		—			1,547
Sales—royalty interest gas		23,565		(1,050	)		—		22,515		—			22,515
Sales—purchased gas		1,647		—			—		1,647		—			1,647
Other revenue		237		43			450		730		(2	)		728

Total Revenue and Other Income	$	176,583	$	28,668		$	560	$	205,811	$	(2	)	$	205,809

Earnings Before Income Taxes (A)	$	97,714	$	14,445		$	198	$	112,357	$	(7,971	)	$	104,386

Segment assets	$	1,153,157	$	341,228		$	74,965	$	1,569,350	$	113,167		$	1,682,517

Depreciation, depletion and amortization	$	14,211	$	2,370		$	11	$	16,592	$	—		$	16,592

Capital expenditures	$	84,579	$	63,258		$	1,417	$	149,254	$	—		$	149,254

(A)	Includes equity in earnings (loss) of unconsolidated affiliates of $90 for Central Appalachia.

Reportable segment results for the three months ended June 30, 2007 are:


	Central Appalachia		Northern Appalachia			Other			Total Gas		Corporate			Consolidated
Sales—outside	$	106,568	$	5,722		$	6		$	112,296	$	—		$	112,296
Sales—related parties		2,392		18			—			2,410		—			2,410
Sales—royalty interest gas		14,446		38			—			14,484		—			14,484
Sales—purchased gas		1,317		—			—			1,317		—			1,317
Other revenue		2,324		—			35			2,359		802			3,161

Total Revenue and Other Income	$	127,047	$	5,778		$	41		$	132,866	$	802		$	133,668

Earnings Before Income Taxes (B)	$	73,330	$	(2,843	)	$	(694	)	$	69,793	$	(2,861	)	$	66,932

Segment assets (C)	$	978,984	$	132,460		$	64,566		$	1,176,010	$	84,528		$	1,260,538

Depreciation, depletion and amortization	$	10,536	$	1,443		$	—		$	11,979	$	—		$	11,979

Capital expenditures	$	41,185	$	27,181		$	66,002		$	134,368	$	—		$	134,368

(B)	Includes equity in earnings (loss) of unconsolidated affiliates of $303 for Central Appalachia.

(C)	Includes investments in unconsolidated affiliates of $28,972 for Central Appalachia.

Reportable segment results for the six months ended June 30, 2008 are:


	Central Appalachia		Northern Appalachia			Other		Total Gas		Corporate			Consolidated
Sales—outside	$	260,725	$	45,128		$	159	$	306,012	$	—		$	306,012
Sales—related parties		5,428		20			—		5,448		—			5,448
Sales—royalty interest gas		39,832		(813	)		—		39,019		—			39,019
Sales—purchased gas		5,186		—			—		5,186		—			5,186
Other revenue		9,493		44			1,088		10,625		132			10,757

Total Revenue and Other Income	$	320,664	$	44,379		$	1,247	$	366,290	$	132		$	366,422

Earnings Before Income Taxes (D)	$	177,421	$	19,447		$	507	$	197,375	$	(12,072	)	$	185,303

Segment assets	$	1,153,157	$	341,228		$	74,965	$	1,569,350	$	113,167		$	1,682,517

Depreciation, depletion and amortization	$	27,759	$	4,767		$	11	$	32,537	$	—		$	32,537

Capital expenditures	$	120,459	$	111,962		$	3,385	$	235,806	$	—		$	235,806

(D)	Includes equity in earnings (loss) of unconsolidated affiliates of $223 for Central Appalachia.

Reportable segment results for the six months ended June 30, 2007 are:


	Central Appalachia		Northern Appalachia			Other			Total Gas		Corporate			Consolidated
Sales—outside	$	198,431	$	11,956		$	6		$	210,393	$	—		$	210,393
Sales—related parties		4,571		30			—			4,601		—			4,601
Sales—royalty interest gas		26,593		73			—			26,666		—			26,666
Sales—purchased gas		2,476		—			—			2,476		—			2,476
Other revenue		2,361		—			35			2,396		2,475			4,871

Total Revenue and Other Income	$	234,432	$	12,059		$	41		$	246,532	$	2,475		$	249,007

Earnings Before Income Taxes (E)	$	128,564	$	(3,462	)	$	(726	)	$	124,376	$	(4,206	)	$	120,170

Segment assets (F)	$	978,984	$	132,460		$	64,566		$	1,176,010	$	84,528		$	1,260,538

Depreciation, depletion and amortization	$	21,173	$	2,904		$	—		$	24,077	$	—		$	24,077

Capital expenditures	$	79,741	$	44,227		$	67,935		$	191,903	$	—		$	191,903

(E)	Includes equity in earnings (loss) of unconsolidated affiliates of $663 for Central Appalachia.

(F)	Includes investments in unconsolidated affiliates of $28,972 for Central Appalachia.

Reconciliation of Segment Information to Consolidated Amounts

Earnings Before Income Taxes:


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2008			2007			2008			2007
Segment earnings before income taxes for total reportable business segments	$	112,357		$	69,793		$	197,375		$	124,376
Equity in earnings (losses) of Buchanan Generation		(84	)		(163	)		(107	)		(259	)
Incentive Compensation		(2,500	)		(723	)		(3,503	)		(1,484	)
Compensation from restricted stock unit grants, stock option expense and performance share unit expense		(3,754	)		(1,790	)		(5,406	)		(3,067	)
Bank fees		(295	)		(237	)		(545	)		(479	)
Interest income (expense), net		(1,338	)		52			(2,511	)		1,083

Earnings before income taxes	$	104,386		$	66,932		$	185,303		$	120,170

Total Assets:


	June 30,
	2008		2007
Segment assets for total reportable business segments	$	1,569,350	$	1,176,010
Items excluded from segment assets:
Cash and other investments		23,122		60,028
Deferred Income Taxes		65,276		—
Investment in Buchanan Generation		24,769		24,500

Total Consolidated Assets	$	1,682,517	$	1,260,538

Note 12—Recent Accounting Pronouncements:

In May 2008, The Financial Accounting Standards Board (FASB) issued FASB Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” The new standard is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (GAAP) for nongovernmental entities. Statement 162 establishes that the GAAP hierarchy should be directed to entities because it is the entity (not its auditor) that is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP. Statement 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. We do not expect this guidance to have a significant impact on CNX Gas.

In March 2008, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB statement 133” (SFAS 161). The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, results of operations and cash flows. The new standard also improves transparency about how and why a company uses derivative instruments and how derivative instruments and related hedged items are accounted for under Statement of Financial Accounting Standards No. 133. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. CNX Gas management is currently assessing the new disclosure requirements required by SFAS 161.

In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 141(R), “Business Combinations” (SFAS 141R), and Statement of Financial Accounting Standards No. 160, “Accounting and Reporting of Noncontrolling Interest in Consolidated Financial Statements, an amendment of ARB No. 51” (SFAS 160). SFAS 141R and SFAS 160 will significantly change the accounting for and reporting of business combination transactions and noncontrolling (minority) interests in consolidated financial statements. SFAS 141R retains the fundamental requirements in Statement 141 “Business Combinations” while providing additional definitions, such as the definition of the acquirer in a purchase and improvements in the application of how the acquisition method is applied. SFAS 160 will change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests, and classified as a component of equity. These Statements become simultaneously effective January 1, 2009. Early adoption is not permitted. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this report. This Current Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. See “Forward Looking Statements.”

Unless the context otherwise requires, “we,” “us,” “our,” “the company” and “CNX Gas” mean CNX Gas Corporation and its consolidated subsidiaries.

Operations and Outlook

During the second quarter, CNX Gas employees worked another quarter without incurring a lost time incident. This raises the cumulative time worked by employees without a lost time incident to nearly 3.1 million hours, with the 3 million mark having been passed in May.

Gas production was 18.8 billion cubic feet (Bcf), or 206.5 million cubic feet (MMcf) per day, for the three months ended June 30, 2008. This was 26% higher than the 14.9 Bcf, or 163.6 MMcf per day, for the three months ended June 30, 2007.

Virginia CBM Operations achieved record production in the quarter. CNX Gas drilled 84 wells in its Virginia CBM Operations in the second quarter, excluding gob wells. For the first six months 158 wells were drilled. Virginia Operations also conducted an aggressive workover program to increase production from its existing wells. Additional gains came from bringing wells online more quickly after they had been drilled. CNX Gas expects to drill 300 wells in Virginia in 2008.

Mountaineer CBM Operations achieved record production in the quarter. CNX Gas drilled 29 wells during the quarter in this Northern Appalachia play. For the first six months, 52 wells were drilled. A gas processing facility at Greene Hill came online during the quarter, enabling the company to increase sales volumes. CNX Gas expects to drill 100 horizontal wells in Mountaineer in 2008.

Nittany CBM Operations achieved record production in the quarter. CNX Gas drilled 35 wells in the second quarter in this west-central Pennsylvania play and 46 wells in the first six months. CNX Gas acquired an additional 8,000 net acres in Nittany this quarter, raising the total position to 256,000 acres. CNX Gas expects to drill approximately 100 wells in Nittany in 2008.

CNX Gas expects to begin drilling exploration wells in its Illinois Basin CBM acreage in the second half of the year.

CNX Gas achieved additional exploration success in the Chattanooga Shale in Tennessee during the second quarter. CNX Gas drilled four follow-up wells to the initial exploration well, which as previously reported, achieved an open flow of 3.9 MMcf per day. This well is currently producing at 265 Mcf per day. One well was an offset to the initial well. The other three were exploration wells, as CNX Gas tested several areas across its acreage. Two of the exploration wells have been turned in line and are producing at 450-460 Mcf per day. The remaining two exploration wells are in various stages of clean up. CNX Gas plans to drill about a ten additional wells in the Chattanooga Shale this year, while the company formulates its plans for 2009 and beyond.

CNX Gas increased its Chattanooga Shale acreage position from 132,000 net acres to 235,000 net acres. This was accomplished primarily by buying out its 50% partner in Knox Energy, LLC and acquiring several additional leasehold acquisitions. CNX Gas now has a leading acreage position in the Chattanooga Shale. CNX Gas is the operator of all of its horizontal Chattanooga Shale wells.

During the second quarter, CNX Gas also began drilling in its Marcellus Shale acreage in southwestern Pennsylvania. The first Marcellus well was drilled to a depth of about 8,000 feet. Shale thickness is 80 feet. The well was drilled as a vertical well, at an estimated cost of $1.3 million. The well was stimulated with a single-stage water frac.

CNX Gas has chosen to drill its Marcellus Shale acreage directly beneath its Mountaineer CBM operations, where it already has a gas gathering system. CNX Gas is currently able to avoid processing costs by blending shale gas with its CBM production. The company is currently drilling two Marcellus Shale wells at nearby locations. The company acquired an additional 24,000 net acres of Marcellus Shale in southwestern Pa. and northern West Virginia so far this year, raising the total position to 185,000 acres.

CNX Gas has drilled one horizontal well in the Huron Shale in eastern Kentucky. CNX Gas has 198,000 net acres in the Huron Shale.

CNX Gas drilled an exploratory shallow oil well on its Illinois Basin conventional acreage. The well did not penetrate the New Albany Shale, but has produced over 1,000 bbls of oil from shallower formations. The company will be drilling offsets in the third quarter on this property, acquired last year from Peabody Energy.

CNX Gas has entered into precedent agreements with several interstate gas pipeline companies for the acquisition of approximately 114,000 dekatherms per day of firm transportation capacity at negotiated rates, to transport current and future forecasted production within the Appalachian Basin to market once agreed upon expansions are completed by the gas pipeline companies. We expect to enter into firm transportation contracts upon completion of the related expansion projects, which is expected to occur between December 1, 2008 and November 1, 2009.

CNX Gas has completed the independent verification process for several Chicago Climate Exchange (CCX) approved projects relating to the capture of coal mine methane. Approximately 8.4 million metric tons of emission offsets were verified and registered for trading on the CCX in the three months ended June 30, 2008. CCX is a rules-based Greenhouse Gas (GhG) allowance trading system. CCX emitting members make a voluntary but legally binding commitment to meet annual GhG emission reduction targets. Those emitting members who exceed their targets have surplus allowances to sell or bank; those who fall short of their targets comply by purchasing offsets which are called CCX Carbon Financial Instruments (CFI) contracts. As a CCX offset provider, CNX Gas is not bound to any emission reduction targets. An offset provider is an owner of an offset project that registers and sells offsets on its own behalf. Sales of these emission offsets will be reflected in income as they occur. To date, no offsets have been sold.

CONSOL Energy continues to beneficially own approximately 81.7% of our outstanding common stock, as such CNX Gas’ financial statements are consolidated into CONSOL Energy’s financial statements.

Results of Operations

Three Months Ended June 30, 2008 compared with Three Months Ended June 30, 2007

(Amounts reported in thousands)

Net Income

Net income changed primarily due to the following items:


	2008 Period			2007 Period		Dollar Variance			Percentage Change
Revenue and Other Income:
Outside Sales	$	179,372		$	112,296	$	67,076		59.7	%
Related Party Sales		1,547			2,410		(863	)	(35.8	)%
Royalty Interest Gas Sales		22,515			14,484		8,031		55.4	%
Purchased Gas Sales		1,647			1,317		330		25.1	%
Other Income		728			3,161		(2,433	)	(77.0	)%

Total Revenue and Other Income		205,809			133,668		72,141		54.0	%
Costs and Expenses:
Lifting Costs		17,960			8,763		9,197		105.0	%
Gathering and Compression Costs		20,082			16,842		3,240		19.2	%
Gas Royalty Interest Costs		21,913			12,528		9,385		74.9	%
Purchased Gas Costs		1,522			1,473		49		3.3	%
Other		458			1,350		(892	)	(66.1	)%
General and Administrative		21,430			12,555		8,875		70.7	%
Depreciation, Depletion and Amortization		16,592			11,979		4,613		38.5	%
Interest Expense		1,683			1,246		437		35.1	%

Total Costs and Expenses		101,640			66,736		34,904		52.3	%

Earnings Before Income Taxes and Minority Interest		104,169			66,932		37,237		55.6	%
Minority Interest		(217	)		—		(217	)	100.0	%

Earnings Before Income Taxes		104,386			66,932		37,454		56.0	%
Income Tax Expense		40,131			25,444		14,687		57.7	%

Net Income	$	64,255		$	41,488	$	22,767		54.9	%

Net income for the quarter was higher primarily due to higher average sales prices and higher production, offset, in part, by increased costs as discussed below.

Revenue and Other Income

Revenue and other income increased due to the following items:


	2008 Period		2007 Period		Dollar Variance			Percentage Change
Revenue and Other Income:
Outside Sales	$	179,372	$	112,296	$	67,076		59.7	%
Related Party Sales		1,547		2,410		(863	)	(35.8	)%
Royalty Interest Gas Sales		22,515		14,484		8,031		55.4	%
Purchased Gas Sales		1,647		1,317		330		25.1	%
Other Income		728		3,161		(2,433	)	(77.0	)%

Total Revenue and Other Income	$	205,809	$	133,668	$	72,141		54.0	%

Outside sales and related party sales, combined, increased due primarily to higher average sales prices received and higher volumes of gas sold.


	2008 Period		2007 Period		Variance		Percentage Change
Produced Gas Sales Volumes (in billion cubic feet)		18.8		14.8		4.0	27.0	%
Average Sales Price Per thousand cubic feet	$	9.63	$	7.74	$	1.89	24.4	%

The increase in average sales price is the result of CNX Gas realizing general market price increases in the period-to-period comparison. CNX Gas periodically enters into various gas swap transactions that qualify as financial cash flow hedges. These gas swap transactions exist parallel to the underlying physical transactions. These financial hedges represented approximately 11.7 Bcf of our produced gas sales volumes for the three months ended June 30, 2008 at an average price of $9.28 per Mcf. In the prior year, these financial hedges represented approximately 4.7 Bcf at an average price of $8.00 per Mcf. Sales volumes increased as a result of additional wells coming online from our on-going drilling program.


	2008 Period		2007 Period		Variance		Percentage Change
Gas Royalty Interest Sales Volumes (in billion cubic feet)		1.9		1.9		—	—
Average Sales Price Per thousand cubic feet	$	11.99	$	7.82	$	4.17	53.3	%

Included in royalty interest gas sales are the revenues related to the portion of production belonging to royalty interest owners sold by CNX Gas on their behalf. The increase in market prices, contractual differences among leases, and the mix of average and index prices used in calculating royalties contribute to the period-to-period change.


	2008 Period		2007 Period		Variance			Percentage Change
Purchased Sales Volumes (in billion cubic feet)		0.1		0.2		(0.1	)	(50.0	)%
Average Sales Price Per thousand cubic feet	$	12.36	$	7.26	$	5.10		70.2	%

Purchased gas sales volumes represent volumes of gas we sell at market prices that were purchased from third-party producers.

Other income consists of the following items:


	2008 Period		2007 Period		Dollar Variance			Percentage Change
Third-party gathering revenue	$	76	$	1,581	$	(1,505	)	(95.2	)%
Interest income		84		1,297		(1,213	)	(93.5	)%
Other miscellaneous		568		283		285		100.7	%

Total Other Income	$	728	$	3,161	$	(2,433	)	(77.0	)%

Third-party gathering revenue decreased $1,505 in the 2008 period due primarily to lower third party volumes being transported on CNX Gas gathering lines.

Interest income decreased $1,213 as a result of the lower average cash balances throughout the 2008 period compared to the 2007 period. Lower cash balances are the result of the June 2007 acquisition of Peabody’s oil and gas interests, as well as additional capital expenditures related to the expanded drilling program.

Other miscellaneous income increased $285 in the period-to-period comparison due to various transactions throughout both periods, none of which are individually significant.

Costs and Expenses

Costs and Expenses increased due to the following items:


	2008 Period		2007 Period		Dollar Variance			Percentage Change
Lifting Costs	$	17,960	$	8,763	$	9,197		105.0	%
Gathering and Compression Costs		20,082		16,842		3,240		19.2	%
Gas Royalty Interest Costs		21,913		12,528		9,385		74.9	%
Purchased Gas Costs		1,522		1,473		49		3.3	%
Other		458		1,350		(892	)	(66.1	)%
General and Administrative		21,430		12,555		8,875		70.7	%
Depreciation, Depletion and Amortization		16,592		11,979		4,613		38.5	%
Interest Expense		1,683		1,246		437		35.1	%

Total Costs and Expenses	$	101,640	$	66,736	$	34,904		52.3	%

Lifting costs have increased due to higher average unit costs and higher volumes of gas sold.


	2008 Period		2007 Period		Variance		Percentage Change
Produced Gas Sales Volumes (in billion cubic feet)		18.8		14.8		4.0	27.0	%
Average Lifting Costs Per thousand cubic feet	$	0.96	$	0.59	$	0.37	62.7	%

Average unit lifting costs increased in the 2008 period as a result of several factors. Well closing liabilities were adjusted in the 2007 period to reflect longer well lives than were previously estimated. This adjustment resulted in a reduction to expense. The adjustments to the well closing liabilities were insignificant in the 2008 period. Also, severance taxes, which are included in lifting costs, have increased due to the higher average sales prices. Service and maintenance costs per unit have also increased in the period-to-period comparison due to additional work on existing wells in order to increase future production. Water disposal costs have also increased due to additional volumes of water produced by CNX Gas wells.

The increase in gathering and compression was attributable to higher volumes produced during the 2008 period compared to the 2007 period, offset, in part, by lower average unit costs.


	2008 Period		2007 Period		Variance			Percentage Change
Produced Gas Sales Volumes (in billion cubic feet)		18.8		14.8		4.0		27.0	%
Average Gathering Costs Per thousand cubic feet	$	1.07	$	1.14	$	(0.07	)	(6.1	)%

The decrease in average gathering and compression unit costs was attributable to lower maintenance costs per unit and lower firm transportation costs per unit. Dollars spent for maintenance and firm transportation have remained consistent in the period-to-period comparison; therefore, additional volumes gathered and transported have lowered the related unit costs for these components. These improvements in unit costs were offset, in part, by higher compression expenses and higher fuel charges related to additional compressors being placed in service along the existing gathering systems in order to flow gas more efficiently.


	2008 Period		2007 Period		Variance		Percentage Change
Gas Royalty Interest Sales Volumes (in billion cubic feet)		1.9		1.9		—	—
Average Cost Per thousand cubic feet	$	11.67	$	6.76	$	4.91	72.6	%

Included in royalty interest gas costs are the expenses related to the portion of production belonging to royalty interest owners sold by CNX Gas on their behalf. The increase in market prices, contractual differences among leases, and the mix of average and index prices used in calculating royalties contribute to the year to date period-to-period change.


	2008 Period		2007 Period		Variance			Percentage Change
Purchased Sales Volumes (in billion cubic feet)		0.1		0.2		(0.1	)	(50.0	)%
Average Cost Per thousand cubic feet	$	10.62	$	6.58	$	4.04		61.4	%

Purchased gas sales volumes represent volumes of gas purchased from third-party producers that we sell. The higher average cost per Mcf is due to overall price increases and contractual differences among customers in the period-to-period comparison.

Other costs and expenses decreased due to the following items:


	2008 Period		2007 Period			Dollar Variance			Percentage Change
Exploration	$	458	$	1,533		$	(1,075	)	(70.1	)%
Imbalance		—		(183	)		183		(100.0	)%

Total Other Costs and Expenses	$	458	$	1,350		$	(892	)	(66.1	)%

Exploration costs decreased primarily as a result of expenses related to core hole drilling in the 2007 period which did not occur in the 2008 period. Decreased exploration costs were also the result of lower broker fees in the current year as compared to the prior year. Lower broker fee expenses in 2008 were the result of more land deals being completed successfully than in the 2007 period; therefore, these costs were capitalized versus expensed.

The pipeline imbalance is now included in either outside sales or purchased gas costs depending on our delivery position into the transmission pipelines. The prior year imbalance amount was insignificant, and therefore was not reclassified.

General and Administrative expenses increased due to the following items:


	2008 Period		2007 Period		Dollar Variance		Percentage Change
Professional services	$	5,251	$	3,082	$	2,169	70.4	%
Stock-based compensation		3,754		1,789		1,965	109.8	%
Short-term incentive compensation		2,500		723		1,777	245.8	%
Wages and salaries		4,256		3,127		1,129	36.1	%
Other miscellaneous		5,669		3,834		1,835	47.9	%

Total General and Administrative	$	21,430	$	12,555	$	8,875	70.7	%

Professional services have increased primarily due to fees related to completing registration of emission offset credits on the Chicago Climate Exchange. Professional services also increased due to various administrative projects which have occurred throughout both periods.

Stock-based compensation has increased primarily due to the performance share program additional costs. These additional costs are related to the increase in the market price of CNX Gas common stock in the 2008 period.

The incentive compensation program is designed to increase compensation to eligible employees when CNX Gas reaches predetermined targets for production, unit cost, and safety. Incentive compensation expense increased $1,777 in the period-to-period comparison due to improved performance relative to targets.

Employee wages and salaries have increased primarily due to the additional staffing added as a result of the on-going growth of the company.

The increase in other miscellaneous costs is related to various transactions which occurred in both periods, none of which were individually material.

Depreciation, depletion and amortization have increased due to the following items:


	2008 Period		2007 Period		Dollar Variance		Percentage Change
Production	$	11,479	$	7,214	$	4,265	59.1	%
Gathering		4,829		4,519		310	6.9	%
Other		284		246		38	15.4	%

Total Depreciation, Depletion and Amortization	$	16,592	$	11,979	$	4,613	38.5	%

The increase in production depreciation, depletion and amortization was primarily due to increased volumes produced combined with an increase in the units of production rates in the period-to-period comparison. These rates increased due to the higher proportion of capital assets placed in service versus the proportion of proved developed reserve additions. These rates are generally calculated using the net book value of assets at the end of the previous year divided by either proved or proved developed reserves.

Gathering depreciation, depletion and amortization is recorded using the straight-line method and increased due to additional assets placed in service after the 2007 period.

Other depreciation is related to various other corporate assets placed in service after the 2007 period, none of which are individually significant.

Interest expense increased due to the following items:


	2008 Period		2007 Period		Dollar Variance			Percentage Change
Variable interest entity	$	263	$	—	$	263		100.0	%
Deferred payment		83		—		83		100.0	%
Revolver		58		—		58		100.0	%
Unrecognized tax benefits		95		38		57		100.0	%
Capitalized lease		1,159		1,208		(49	)	(4.1	)%
Other		25		—		25		100.0	%

Total Interest Expense	$	1,683	$	1,246	$	437		35.1	%

Our variable interest entity incurred debt during the 2008 period which correspondingly increased the related interest expense.

The accretion of a deferred payment related to the June 2007 Peabody acreage acquisition caused interest expense to increase.

Interest expense increased in the period-to-period comparison due to outstanding principal on the revolving credit facility. There were no outstanding principal amounts on the facility in the 2007 period.

Interest on unrecognized tax benefits increased due primarily to a slight increase in the uncertain tax liability balance in the 2008 period.

Interest on capitalized leases decreased in the period-to-period comparison primarily related to lower outstanding principal due to scheduled payments.

Minority Interest

Minority interest relates to a variable interest entity in which CNX Gas holds no ownership interest.

Income Taxes


	2008 Period			2007 Period			Variance			Percentage Change
Earnings Before Income Taxes	$	104,386		$	66,932		$	37,454		56.0	%
Tax Expense	$	40,131		$	25,444		$	14,687		57.7	%
Effective Income Tax Rate		38.4	%		38.0	%		0.4	%

CNX Gas’ effective tax rate remained consistent in the period-to-period comparison.

Six Months Ended June 30, 2008 compared with Six Months Ended June 30, 2007

(Amounts reported in thousands)

Net Income

Net income changed primarily due to the following items:


	Year to Date 2008 Period			Year to Date 2007 Period		Dollar Variance			Percentage Change
Revenue and Other Income:
Outside Sales	$	306,012		$	210,393	$	95,619		45.4	%
Related Party Sales		5,448			4,601		847		18.4	%
Royalty Interest Gas Sales		39,019			26,666		12,353		46.3	%
Purchased Gas Sales		5,186			2,476		2,710		109.5	%
Other Income		10,757			4,871		5,886		120.8	%

Total Revenue and Other Income		366,422			249,007		117,415		47.2	%
Costs and Expenses:
Lifting Costs		29,467			17,029		12,438		73.0	%
Gathering and Compression Costs		35,392			31,310		4,082		13.0	%
Gas Royalty Interest Costs		38,002			23,193		14,809		63.9	%
Purchased Gas Costs		4,943			2,492		2,451		98.4	%
Other		807			1,995		(1,188	)	(59.5	)%
General and Administrative		37,174			26,276		10,898		41.5	%
Depreciation, Depletion and Amortization		32,537			24,077		8,460		35.1	%
Interest Expense		3,155			2,465		690		28.0	%

Total Costs and Expenses		181,477			128,837		52,640		40.9	%

Earnings Before Income Taxes and Minority Interest		184,945			120,170		64,775		53.9	%
Minority Interest		(358	)		—		(358	)	100.0	%

Earnings Before Minority Interest		185,303			120,170		65,133		54.2	%
Income Taxes		71,127			45,686		25,441		55.7	%

Net Income	$	114,176		$	74,484	$	39,692		53.3	%

Net income for the six months ended June 30, 2008 was higher than the six months ended June 30, 2007 primarily due to higher average sales prices and higher production volumes, offset, in part, by increased costs as discussed below.

Revenue and Other Income

Revenue and other income increased due to the following items:


	Year to Date 2008 Period		Year to Date 2007 Period		Dollar Variance		Percentage Change
Outside Sales	$	306,012	$	210,393	$	95,619	45.4	%
Related Party Sales		5,448		4,601		847	18.4	%
Royalty Interest Gas Sales		39,019		26,666		12,353	46.3	%
Purchased Gas Sales		5,186		2,476		2,710	109.5	%
Other Income		10,757		4,871		5,886	120.8	%

Total Revenue and Other Income	$	366,422	$	249,007	$	117,415	47.2	%

Outside sales and related party sales combined increased due primarily to higher average sales prices received and higher volumes of gas sold.


	Year to Date 2008 Period		Year to Date 2007 Period		Variance		Percentage Change
Produced Gas Sales Volumes (in billion cubic feet)		34.7		29.1		5.6	19.2	%
Average Sales Price Per thousand cubic feet	$	8.99	$	7.40	$	1.59	21.5	%

The increase in average sales price is the result of CNX Gas realizing general market price increases in the year to date period-to-period comparison. CNX Gas periodically enters into various gas swap transactions that qualify as financial cash flow hedges. These gas swap transactions exist parallel to the underlying physical transactions. These financial hedges represented approximately 17.8 Bcf of our produced gas sales volumes for the six months ended June 30, 2008 at an average price of $8.97 per Mcf. In the prior year, these financial hedges represented approximately 7.9 Bcf at an average price of $7.91 per Mcf. Sales volumes increased as a result of additional wells coming online from our on-going drilling program, offset, in part, by the deferral of active and sealed gob production related to the CONSOL Energy’s idling of the Buchanan Mine through mid-March 2008.


	Year to Date 2008 Period		Year to Date 2007 Period		Variance		Percentage Change
Gas Royalty Interest Sales Volumes (in billion cubic feet)		3.8		3.7		0.1	2.7	%
Average Sales Price Per thousand cubic feet	$	10.29	$	7.22	$	3.07	42.5	%


	Year to Date 2008 Period		Year to Date 2007 Period		Variance		Percentage Change
Purchased Sales Volumes (in billion cubic feet)		0.6		0.3		0.3	100.0	%
Average Sales Price Per thousand cubic feet	$	8.94	$	7.20	$	1.74	24.2	%

Purchased gas sales volumes represent volumes of gas we sell at market prices that were purchased from third-party producers, less our gathering fees.

Other income consists of the following items:


	Year to Date 2008 Period		Year to Date 2007 Period		Dollar Variance			Percentage Change
Insurance settlements	$	8,000	$	—	$	8,000		100.0	%
Timber income		768		80		688		860.0	%
Legal settlement		650		—		650		100.0	%
Third-party gathering revenue		159		1,617		(1,458	)	(90.2	)%
Interest income		242		2,734		(2,492	)	(91.1	)%
Other miscellaneous		938		440		498		113.2	%

Total other income	$	10,757	$	4,871	$	5,886		120.8	%

CNX Gas received $8,000 of proceeds from its insurance carrier as final settlement of the insurance claim related to the July 2007 Buchanan Mine event which idled the mine. The $8,000 represents business interruption coverage.

Timber income increased in the year to date 2008 period due primarily to a sale which occurred in February 2008. No assurance can be given that another sale will occur in the future.

A litigation settlement with a royalty holder in the year to date 2008 period resulted in $650 of income.

Third-party gathering revenue decreased $1,458 in the year to date 2008 period due primarily to lower third-party volumes being transported on CNX Gas gathering lines.

Interest income decreased $2,492 as a result of the lower average cash balance throughout the year to date 2008 period compared to the year to date 2007 period. Lower cash balances are the result of the June 2007 acquisition of Peabody’s oil and gas interests, as well as additional capital expenditures related to the expanded drilling program.

Other miscellaneous income increased $498 in the year to date period-to-period comparison due to various transactions throughout both periods, none of which are individually significant.

Costs and Expenses

Costs and expenses increased due to the following items:


	Year to Date 2008 Period		Year to Date 2007 Period		Dollar Variance			Percentage Change
Lifting Costs	$	29,467	$	17,029	$	12,438		73.0	%
Gathering and Compression Costs		35,392		31,310		4,082		13.0	%
Gas Royalty Interest Costs		38,002		23,193		14,809		63.9	%
Purchased Gas Costs		4,943		2,492		2,451		98.4	%
Other		807		1,995		(1,188	)	(59.5	)%
General and Administrative		37,174		26,276		10,898		41.5	%
Depreciation, Depletion and Amortization		32,537		24,077		8,460		35.1	%
Interest Expense		3,155		2,465		690		28.0	%

Total Costs and Expenses	$	181,477	$	128,837	$	52,640		40.9	%

Lifting costs increased due to higher unit costs and higher volumes sold.


	Year to Date 2008 Period		Year to Date 2007 Period		Variance		Percentage Change
Produced Gas Sales Volumes (in billion cubic feet)		34.7		29.1		5.6	19.2	%
Average Lifting Costs Per thousand cubic feet	$	0.85	$	0.59	$	0.26	44.1	%

Average lifting costs per unit sold increased in the current year as a result of higher well closing costs, higher severance taxes and higher well service costs. Well closing liabilities were adjusted in the year to date 2007 period to reflect longer well lives than were previously estimated. This adjustment resulted in a reduction to expense. The adjustments to well closing liabilities were insignificant in the 2008 period. Higher severance taxes are attributable to the higher average sale prices for gas. Service and maintenance costs per unit have also increased in the year to date period-to-period comparison due to additional work on existing wells in order to increase future production. Water disposal costs have also increased due to additional volumes of water produced by CNX Gas wells.

The increase in gathering and compression was attributable to higher volumes produced during the year to date 2008 period compared to the year to date 2007 period, offset, in part, by lower average unit costs.


	Year to Date 2008 Period		Year to Date 2007 Period		Variance			Percentage Change
Produced Gas Sales Volumes (in billion cubic feet)		34.7		29.1		5.6		19.2	%
Average Gathering Costs Per thousand cubic feet	$	1.02	$	1.08	$	(0.06	)	(5.6	)%

The decrease in average gathering and transportation unit costs was attributable to lower maintenance expense per unit, lower power charges per unit and lower firm transportation charges per unit, offset in part by higher compression and fuel expense per unit. Dollars spent for maintenance, power and firm transportation have remained consistent in the year to date period-to-period comparison; therefore, additional volumes gathered and transported have lowered the related unit costs for these components. These improvements in unit costs were offset, in part, by higher compression expenses per unit and higher fuel charges per unit related to additional compressors being placed in service along the existing gathering systems in order to flow gas more efficiently.


	Year to Date 2008 Period		Year to Date 2007 Period		Variance		Percentage Change
Gas Royalty Interest Sales Volumes (in billion cubic feet)		3.8		3.7		0.1	2.7	%
Average Costs Per thousand cubic feet	$	10.03	$	6.28	$	3.75	59.7	%

Included in royalty interest gas costs are the expenses related to the portion of production belonging to royalty interest owners sold by CNX Gas on their behalf. The increase in volumes and price relates to the volatility and contractual differences among leases, the mix of average and index prices used in calculating royalties, and the actualization of advanced royalty payments.


	Year to Date 2008 Period		Year to Date 2007 Period		Variance		Percentage Change
Purchased Sales Volumes (in billion cubic feet)		0.6		0.4		0.2	50.0	%
Average Costs Per thousand cubic feet	$	8.52	$	6.45	$	2.07	32.1	%

Purchased gas sales volumes represent volumes of gas purchased from third-party producers, less our gathering fees, that we sell at market prices. The higher average cost per Mcf is due to overall price increases and contractual differences among customers in the year to date period-to-period comparison.

Other cost and expenses represent costs related to CNX Gas explorations program.


	Year to Date 2008 Period		Year to Date 2007 Period		Dollar Variance			Percentage Change
Exploration	$	807	$	1,995	$	(1,188	)	(59.5	)%

Exploration costs decreased primarily as a result of expenses related to core hole drilling in the year to date 2007 period which did not occur in the year to date 2008 period. Decreased exploration costs were also the result of lower broker fees in the current year as compared to the prior year. Lower broker fee expenses in the year to date 2008 period were the result of more land deals being completed successfully than in the prior year to date period; therefore, additional costs were capitalized versus expensed.

General and Administrative expenses increased due to the following items:


	Year to Date 2008 Period		Year to Date 2007 Period		Dollar Variance		Percentage Change
Professional services	$	9,671	$	7,923	$	1,748	22.1	%
Stock-based compensation		5,405		3,067		2,338	76.2	%
Short-term incentive compensation		3,503		1,484		2,019	136.1	%
Wages and salaries		7,616		5,938		1,678	28.3	%
Other		10,979		7,864		3,115	39.6	%

Total General and Administrative	$	37,174	$	26,276	$	10,898	41.5	%

The incentive compensation program is designed to increase compensation to eligible employees when CNX Gas reaches predetermined targets for production, unit cost, and safety. Incentive compensation expense increased $2,019, when compared to the prior year, due to improved performance relative to the targets.

Employee wages and salaries have increased due to the additional staffing added as a result of the on-going growth of the company.

The increase in other costs is related to various transactions that occurred throughout both periods, none of which were individually material.

Depreciation, depletion and amortization have increased due to the following items:


	Year to Date 2008 Period		Year to Date 2007 Period		Dollar Variance		Percentage Change
Production	$	22,312	$	14,562	$	7,750	53.2	%
Gathering		9,658		9,049		609	6.7	%
Other		567		466		101	21.7	%

Total Depreciation, Depletion and Amortization	$	32,537	$	24,077	$	8,460	35.1	%

The increase in production related depreciation, depletion and amortization was primarily due to higher volumes combined with an increase in the units of production rates in the year to date period-to-period comparison. These rates increased due to the higher proportion of capital assets placed in service versus the proportion of proved developed reserve additions. These rates are generally calculated using the net book value of assets at the end of the previous year divided by either proved or proved developed reserves.

Gathering depreciation, depletion and amortization is recorded using the straight-line method and increased due to additional assets placed in service after the year to date 2007 period.

Other depreciation is related to various other corporate assets placed in service after the year to date 2007 period, none of which are individually significant.

Interest expense increased due to the following items:


	Year to Date 2008 Period		Year to Date 2007 Period		Dollar Variance			Percentage Change
Variable interest entity	$	405	$	—	$	405		100.0	%
Deferred payment		166		—		166		100.0	%
Unrecognized tax benefits		156		38		118		310.5	%
Revolver		58		—		58		100.0	%
Capitalized lease		2,331		2,427		(96	)	(4.0	)%
Other		39		—		39		100.0	%

Total Interest Expense	$	3,155	$	2,465	$	690		28.0	%

Our variable interest entity incurred debt during the year to date 2008 period which correspondingly increased the related interest expense.

The accretion of a deferred payment related to the June 2007 Peabody acreage acquisition caused interest expense to increase.

Interest on unrecognized tax benefits increased due primarily to a slight increase in the uncertain tax liability balance in the year-to-date 2008 period.

Interest expense increased in the year to date period-to-period comparison due to outstanding principal on the revolving credit facility. There were no outstanding principal amounts on the facility in the year to date 2007 period.

Interest on capitalized leases decreased in the year-to-date period-to-period comparison primarily related to lower outstanding principal. Lower outstanding principal is due to scheduled payments.

Minority Interest

Minority interest relates to a variable interest entity in which CNX Gas holds no ownership interest.

Income Taxes


	Year to Date 2008 Period			Year to Date 2007 Period			Variance			Percentage Change
Earnings Before Income Taxes	$	185,303		$	120,170		$	65,133		54.2	%
Tax Expense	$	71,127		$	45,686		$	25,441		55.7	%
Effective Income Tax Rate		38.4	%		38.0	%		0.4	%

CNX Gas’ effective tax rate remained consistent in the year-to-date period-to-period comparison.

Liquidity and Capital Resources

CNX Gas has satisfied its working capital requirements and funded its capital expenditures with cash from operations and its $200,000 credit facility. Our credit agreement provides for a revolving credit facility with an initial aggregate outstanding principal amount of up to $200,000 (with the ability to request an increase in the aggregate outstanding principal amount up to $300,000), including borrowings and letters of credit. We may use borrowings under the credit agreement for general corporate purposes, including transaction fees, letters of credit, acquisitions, capital expenditures and working capital. Our obligations under our credit agreement are not secured by a lien on our assets, however it does contain a negative pledge provision providing that our assets cannot be used to secure any other obligation. Fees and interest rate spreads are based on the percentage of facility utilization, measured quarterly. The facility includes a minimum interest coverage ratio of no less than 3.00 to 1.00, measured quarterly. The interest coverage ratio was 72.65 to 1.00 at June 30, 2008. The facility also includes a maximum leverage ratio of no more than 3.00 to 1.00, measured quarterly. The leverage ratio was 0.24 to 1.00 at June 30, 2008. Affirmative and negative covenants in the facility limit our ability to dispose of assets, make investments, purchase or redeem CNX Gas stock, pay dividends and merge with another corporation. At June 30, 2008, the facility had $27,000 of borrowings outstanding and $14,933 of letters of credit outstanding, leaving $158,067 of unused capacity.

As a result of our status as a majority-owned subsidiary of CONSOL Energy and having entered into a credit agreement with third-party commercial lenders, CNX Gas and its subsidiaries are guarantors of CONSOL Energy’s 7.875% notes due March 1, 2012 in the principal amount of approximately $250,000. This agreement requires all subsidiaries of CONSOL Energy that incur third-party debt to also guarantee the 7.875% notes. In addition, if CNX Gas were to grant liens to a lender as part of a future borrowing, the indenture governing the 7.875% notes requires CNX Gas to ratably secure the notes.

We believe that cash generated from operations and borrowings under our credit facility will be sufficient to meet our working capital requirements, anticipated capital expenditures (other than major acquisitions), and to provide required financial resources. Nevertheless, our ability to satisfy our working capital requirements or fund planned capital expenditures will depend upon our future operating performance, which will be affected by prevailing economic conditions in the gas industry and other financial and business factors, some of which are beyond our control.

In order to manage the market risk exposure of volatile natural gas prices in the future, CNX Gas enters into various physical gas supply transactions with both gas marketers and end users for terms varying in length. CNX Gas has also entered into various gas swap transactions that qualify as financial cash flow hedges, which exist parallel to the underlying physical transactions. The fair value of these contracts was a liability of $238,738 at June 30, 2008. The ineffective portion of these contracts was insignificant to earnings in the six months ended June 30, 2008.

CNX Gas frequently evaluates potential acquisitions. CNX Gas has funded acquisitions primarily with cash generated from operations and proceeds from our revolving credit facility. There can be no assurance that capital resources, including debt financing, will be available to CNX Gas on terms which we find acceptable, or at all.

Cash Flows (in thousands)


	Year to Date 2008			Year to Date 2007			Change
Cash provided by operating activities	$	186,779		$	140,604		$	46,175
Cash used in investing activities	$	(234,275	)	$	(192,649	)	$	(41,626	)
Cash provided by financing activities	$	38,549		$	4,900		$	33,649

Cash provided by operating activities increased primarily due to increased production and higher realized prices. These increases are partially offset by increased operating costs and various other working capital requirements.

Cash used in investing activities increased primarily due to the $36,000 cash paid to acquire the remaining 50% interest in Knox Energy, LLC on June 24, 2008. The remaining increase in investing activities is due to higher capital expenditures which are the result of our expanded drilling program.

Cash provided by financing activities increased primarily due to the $27,000 of proceeds received from the revolving credit facility in the 2008 period. There was no activity under the facility in the 2007 period. The increase was also due to the $12,453 of debt proceeds by our variable interest entity. There were $5,973 of debt proceeds by our variable interest entity in the 2007 period.

Our projected capital expenditures for the year ended December 31, 2008 have increased from $470,000 to $552,000 to reflect recent land acquisitions.

Contractual Commitments

The following is a summary of our significant contractual obligations at June 30, 2008.


	Total		Within 1 Year		1–3 Years		3–5 Years		More than 5 Years
Short-Term Note Payable	$	27,000	$	27,000	$	—	$	—	$	—
Long-Term Debt Obligations		21,303		4,349		9,649		7,305		—
Interest on Capital Lease Obligations		36,173		4,894		8,345		7,330		15,604
Capital Lease Obligations		62,788		3,102		6,416		7,430		45,840
Operating Lease Obligations		6,956		1,901		2,767		1,587		701
Gas Firm Transportation Obligations		49,457		8,200		15,181		11,024		15,052
Other Long-Term Liabilities (a)		24,661		137		300		440		23,784

Total Contractual Obligations (b)	$	228,338	$	49,583	$	42,658	$	35,116	$	100,981

(a)

This item includes asset retirement obligations, pension, postretirement benefits other than pension and legal contingencies, which are reflected on the balance sheet for the potential settlement of the items referenced in Note 7 to the Consolidated Financial Statements. Due to the uncertainty surrounding these settlements, it is difficult to predict if and when a payout may take place.

(b)	The significant obligation table does not include obligations to taxing authorities related to the uncertainty surrounding the ultimate settlement of amounts and timing of these obligations.

Stockholders’ Equity

CNX Gas had stockholders’ equity of $988,504 at June 30, 2008 and $1,023,237 at December 31, 2007. The decrease was primarily attributable to other comprehensive losses related to cash flow hedges, offset, in part, by net income.

Off-Balance Sheet Transactions

CNX Gas does not maintain any off-balance sheet transactions, arrangements, obligations or other relationships with unconsolidated entities or others that are likely to have a material current or future effect on our condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources which are not disclosed in the notes to the consolidated financial statements.

Recent Accounting:

preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (GAAP) for nongovernmental entities. Statement 162 establishes that the GAAP hierarchy should be directed to entities because it is the entity (not its auditor) that is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP. Statement 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. We do not expect this guidance to have a significant impact on CNX Gas.

In March 2008, The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB statement 133” (SFAS 161). The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, results of operations and cash flows. The new standard also improves transparency about how and why a company uses derivative instruments and how derivative instruments and related hedged items are accounted for under Statement of Financial Accounting Standards No. 133. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. CNX Gas management is currently assessing the new disclosure requirements required by SFAS 161.

Forward-looking Statements

We are including the following cautionary statement in this Quarterly Report on Form 10-Q to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf, of us. With the exception of historical matters, the matters discussed in this Quarterly Report on Form 10-Q are forward-looking statements (as defined in Section 21E of the Exchange Act) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending. When we use the words “believe,” “intend,” “expect,” “may,” “should,” “anticipate,” “could,” “estimate,” “plan,” “predict,” “project,” 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 Quarterly Report on Form 10-Q speak only as of the date of this Quarterly Report on Form 10-Q; we disclaim any obligation to update these statements unless required by securities law, and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following:

•

our business strategy;

•

our financial position, cash flow, and liquidity;

•

declines in the prices we receive for our gas affecting our operating results and cash flow;

•

uncertainties in estimating our gas reserves and replacing our gas reserves;

•

uncertainties in exploring for and producing gas;

•

our inability to obtain additional financing necessary in order to fund our operations, capital expenditures and to meet our other obligations;

•

disruptions to, capacity constraints in or other limitations on the pipeline systems which deliver our gas;

•

the availability of personnel and equipment, including our inability to retain and attract key personnel;

•

increased costs;

•

the effects of government regulation and permitting and other legal requirements;

•

legal uncertainties relating to the ownership of the coalbed methane estate, and costs associated with perfecting title for gas rights in some of our properties;

•

litigation concerning real property rights, intellectual property rights, royalty calculations and other matters;

•

our relationships and arrangements with CONSOL Energy; and

•

other factors discussed under “Risk Factors” in the 10-K for the year ended December 31, 2007.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In addition to the risks inherent in our operations, CNX Gas is exposed to financial, market, political and economic risks. The following discussion provides additional detail regarding CNX Gas’ exposure to the risks of changing natural gas prices.

CNX Gas uses fixed-price contracts and derivative commodity instruments that qualify as cash-flow hedges under Statement of Financial Accounting Standards No. 133, as amended, to minimize exposure to market price volatility in the sale of natural gas. Our risk management policy strictly prohibits the use of derivatives for speculative purposes.

CNX Gas has established risk management policies and procedures to strengthen the internal control environment of the marketing of commodities produced from our asset base. All of the derivative instruments are held for purposes other than trading. They are used primarily to reduce uncertainty and volatility and cover underlying exposures. CNX Gas’ market risk strategy incorporates fundamental risk management tools to assess market price risk and establish a framework in which management can maintain a portfolio of transactions within pre-defined risk parameters.

CNX Gas believes that the use of derivative instruments, along with the risk assessment procedures and internal controls, mitigates CNX’s exposure to material risk. However, the use of derivative instruments without other risk assessment procedures could materially affect CNX Gas’ results of operations depending on interest rates or market prices. Nevertheless, we believe that use of these instruments will not have a material adverse effect on our financial position or liquidity.

For a summary of accounting policies related to derivative instruments, see Note 1 of the notes to the consolidated annual financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2007.

Sensitivity analyses of the incremental effects on future pre-tax income of a hypothetical 10% and 25% increase in natural gas prices for open derivative instruments as of June 30, 2008 are provided in the following table:

Incremental decrease in pre-tax income assuming a Hypothetical price increase of:

(1)

CNX Gas remains at risk for possible changes in the market value of these derivative instruments; however, such risk should be offset by price changes in the underlying hedged item. CNX Gas entered into derivative instruments to convert the market prices related to portions of the 2008 through 2010 anticipated sales of natural gas to fixed prices. The sensitivity analyses reflect an inverse relationship between increases in commodity prices and a benefit to earnings. As of June 30, 2008, the fair value of these contracts was a net loss of $145,773 (net of $92,965 deferred tax). We continually evaluate the portfolio of derivative commodity instruments and adjust the strategy to anticipated market conditions and risks accordingly.

Hedging Volumes

As of July 08, 2008, our hedged volumes for the periods indicated are as follows:


	Three Months Ended March 31		Three Months Ended June 30		Three Months Ended September 30		Three Months Ended December 31		Total Year
2008 Fixed Price Volumnes
Hedged Mcf		6,097,938		11,737,113		12,804,124		12,804,124		43,443,299
Weighted Average Hedge Price/Mcf	$	8.39	$	9.28	$	9.44	$	9.44	$	9.25

2009 Fixed Price Volumnes
Hedged Mcf		10,670,103		10,631,443		10,670,103		9,884,021		41,855,670
Weighted Average Hedge Price/Mcf	$	9.85	$	9.73	$	9.74	$	9.64	$	9.74

2010 Fixed Price Volumnes
Hedged Mcf		9,278,351		7,974,227		2,716,495		—		19,969,072
Weighted Average Hedge Price/Mcf	$	9.70	$	9.54	$	10.36		—	$	9.73

CNX Gas is exposed to credit risk in the event of nonperformance by counterparties. The creditworthiness of counterparties is subject to continuing review.

CNX interest expense is sensitive to changes in the general level of interest rates in the United States. At June 30, 2008, CNX Gas had $84,091 aggregate principal amount of debt outstanding under fixed-rate instruments and $27,000 aggregate principal amount of debt outstanding under variable-rate instruments. CNX Gas’ primary exposure to market risk is for changes in interest rates related to the revolving credit facility, under which there were $27,000 of borrowings outstanding at June 30, 2008. CNX Gas’ revolving credit facility bore interest at a weighted average rate of 4.1% per annum during the six months ended June 30, 2008. Due to the level of borrowings against this facility in the six months ended June 30, 2008, a 100 basis-point increase in the average rate for CNX Gas’ revolving credit facility would not have significantly decreased net income for the period.

All CNX Gas transactions are denominated in U.S. dollars, and, as a result, we do not have any exposure to currency exchange-rate risks.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. CNX Gas, under the supervision and with the participation of its management, including the Company’s principal executive officer and principal financial officer, evaluated the effectiveness of its “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our principal executive officer and principal financial officer have concluded that CNX Gas’ disclosure controls and procedures are effective as of June 30, 2008 to ensure that information required to be disclosed by CNX Gas in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls Over Financial Reporting. There were no changes that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

The first through seventh paragraphs of Note 7— Commitments and Contingent Liabilities in the notes to the Consolidated Financial Statements included in Part I of this Form 10-Q are incorporated herein by reference.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Annual Meeting (the “Meeting”) of Shareholders of CNX Gas Corporation (the “Company”) was held on April 21, 2008. As of March 14, 2008, the Record Date for the meeting, there were outstanding 150,930,971 voting shares of Common Stock of the Company. There were present, in person or by proxy, at the Meeting, shareholders of record of 148,282,678 shares of Common Stock of the Company entitled to exercise 98.25% of the voting power of the Company in respect of any of the purposes for which the Meeting was called. The shares so represented constituted a quorum of shareholders for purposes of holding a valid Meeting. At the Meeting, the following actions were taken:

a. Election of Directors

The following persons were elected Directors of the Company, each having received the number of votes set opposite his respective name:


Nominee	Votes For	Votes Withheld	% Votes For
Philip W. Baxter	148,084,896	197,782	99.87	%
James E. Altmeyer, Sr.	148,032,128	250,550	99.83	%
Nicholas J. DeIuliis	148,044,372	238,306	99.84	%
Raj K. Gupta	148,085,626	197,052	99.87	%
J. Brett Harvey	136,978,080	11,304,598	92.38	%
William J. Lyons	137,016,455	11,266,223	92.40	%
John R. Pipski	148,085,126	197,552	99.87	%
Joseph T. Williams	148,085,626	197,052	99.87	%

b. Ratification of Ernst & Young LLP, as independent auditors

The ratification of the selection of Ernst & Young LLP as independent auditors for 2008 was approved, having received 148,253,740 votes in favor of approval, or 99.98% of the votes cast, and 10,781 votes against approval, or 0.01% of the votes cast. There were 18,155 abstentions and 2 broker non-votes on this matter.

ITEM 6.

EXHIBITS


10.1		Separation Agreement and General Release dated as of April 30, 2008 between Mark D. Gibbons and CNX Gas Corporation.*

10.2		Amendment No. 1 to the Master Cooperation and Safety Agreement dated as of May 30, 2008, between CONSOL Energy Inc. and certain of its subsidiaries, on the one hand, and CNX Gas Corporation and certain of its subsidiaries, on the other hand. (1)

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

100		Form 10-Q for the quarterly period ended June 30, 2008 furnished in XBRL.

(1)	Incorporated by reference from the Current Report on Form 8-K filed by CNX Gas Corporation on June 2, 2008 wherein it was included as Exhibit 10.1.

*	Management compensatory contract or arrangement.

In accordance with SEC Release 33-8238, Exhibits 32.1, 32.2 and 100 are being furnished and not filed.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned there unto duly authorized.

Dated: August 5, 2008


CNX Gas Corporation

By:		/s/ NICHOLAS J. DEIULIIS
		Nicholas J. DeIuliis
		President and Chief Executive Officer
		(Duly Authorized Officer and Principal Executive Officer)

By:		/s/ WILLIAM J. LYONS
		William J. Lyons
		Chief Financial Officer
		(Duly Authorized Officer and Principal Financial Officer)

Exhibit Index


10.1		Separation Agreement and General Release dated as of April 30, 2008 between Mark D. Gibbons and CNX Gas Corporation.*

10.2		Amendment No. 1 to the Master Cooperation and Safety Agreement dated as of May 30, 2008, between CONSOL Energy Inc. and certain of its subsidiaries, on the one hand, and CNX Gas Corporation and certain of its subsidiaries, on the other hand. (1)

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

100		Form 10-Q for the quarterly period ended June 30, 2008 furnished in XBRL.

(1)	Incorporated by reference from the Current Report on Form 8-K filed by CNX Gas Corporation on June 2, 2008 wherein it was included as Exhibit 10.1.

*	Management compensatory contract or arrangement.

In accordance with SEC Release 33-8238, Exhibits 32.1, 32.2 and 100 are being furnished and not filed.

EX-10.1 2 dex101.htm SEPARATION AGREEMENT & GENERAL RELEASE BETWEEN MARK D. GIBBONS AND CNX GAS CORP Separation Agreement & General Release between Mark D. Gibbons and CNX Gas Corp

Exhibit 10.1

EXECUTION COPY

SEPARATION AGREEMENT AND GENERAL RELEASE

This Separation Agreement and General Release (“Agreement”) is made as of April 30, 2008 between Mark D. Gibbons (“Employee”) and CNX Gas Corporation, a Delaware corporation (together with its subsidiaries, the “Company”).

WHEREAS, Employee’s employment with the Company terminated effective February 19, 2008; and

WHEREAS, Company desires to pay Employee an additional payment at the time of his separation and to set forth certain other terms relating to his Separation, all as more fully set forth in this Agreement;

NOW, THEREFORE, in consideration of the mutual undertakings set forth below, the receipt, adequacy and legal sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, this Agreement will govern Employee’s Separation from employment with the Company.

1. Separation. Employee terminated his employment as an employee of the Company effective at the close of business on February 19, 2008 (the “Separation Date”). As a result of such Separation, Employee’s status as an employee, officer, director and/or committee member of (a) the Affiliated Companies (meaning the Company and CONSOL Energy Inc. (“CONSOL”) and any current direct or indirect subsidiary or affiliate of the Company or CONSOL and any company in which the Company or CONSOL or any such subsidiary or affiliate is a shareholder or investor), and (b) any company or entity which Employee serves as an officer, director, trustee, member or in any other capacity at the request of an Affiliated Company shall terminate as of the Separation Date. Employee covenants and agrees that he will execute any documents necessary to formally effect the termination of his status in such positions.

2. Payments to Employee. The Company, on its behalf and on behalf of the Released Parties (as defined below), agrees to provide to Employee, and Employee has expressly agreed to accept, the following, in full settlement, release and discharge of all possible claims, as further delineated in Section 3 below, and as consideration for the other covenants and agreements of Employee set forth in this Agreement:

a. The Employee will receive, if he has not already received it, his current base salary through the Separation Date, in accordance with the Company’s regular payroll practices.

b. Within fourteen (14) days after the expiration of any period during which Employee may legally revoke this Agreement, Employee shall receive a lump sum payment in an amount equal to $187,500, less applicable withholdings. The payment set forth in this subsection (b) shall be made by check to Employee.

d. Employee shall be entitled to payment for unused vacation in accordance with the Company’s policies for such payments.

e. Employee hereby agrees that certain of the above payments and benefits made and provided to Employee hereunder exceed anything to which Employee is otherwise entitled to receive from the Company or CONSOL.

3. Release. (a) In consideration for the payments and benefits provided to Employee under this Agreement, and for other good and valuable consideration, the receipt, adequacy and legal sufficiency of which are hereby acknowledged, Employee, on behalf of himself and his dependents, heirs, administrators, representatives, trustees, beneficiaries, executors, successors, assigns, hereby unconditionally releases and forever discharges the Affiliated Companies and their respective agents, servants, officers, directors, shareholders, employees, parents, attorneys, subsidiaries, divisions, affiliates, predecessors, successors and assigns, all their respective employee benefit plans and their administrators, trustees and other fiduciaries (severally and collectively called the “Company Released Parties”) from any and all manner of injuries, causes of actions, claims, including, without limitation, claims for back pay, front pay or reinstatement, and demands of any kind whatsoever, in law or in equity, and from all debts, counterclaims, cross-claims, rights, disputes, controversies, judgments, agreements, contracts, promises, representations, misrepresentations, allegations, obligations, duties, suits, expenses, assessments, penalties, charges, interest, losses, costs, damages, compensatory damages, consequential damages, punitive damages, sanctions, and liabilities whatsoever, in law or in equity, whether known or unknown, asserted or unasserted, claimed or unclaimed, foreseen or unforeseen, suspected or unsuspected, discovered or undiscovered, accrued or unaccrued, anticipated or unanticipated, contingent or fixed, or any that Employee or any person or entity acting for Employee now has or hereafter may have against any of the Company Released Parties for any acts, circumstances, conduct, commissions, omissions, failure to act, practices or events up to and including the effective date of this Agreement. This general release includes, without limitation, all claims or causes of action based upon torts (including, for example, negligence, fraud, defamation, libel, slander, tortuous interference and/or wrongful discharge); express and implied contracts (including, for example, prior agreements between Employee and the Company); any claims for attorneys’ fees; any claims arising out of or relating to Employee’s employment or termination of employment with the Company; and any claims arising from any alleged violation by any of the Company Released Parties of any federal, state or local statutes, ordinances, rules, Executive Orders or regulations, including, without limitation, any of the following, as amended: Title VII of the Civil Rights Act of 1964, the Rehabilitation Act of 1973, the Americans with Disabilities Act, the Employee Separation Income Security Act of 1974, the Pennsylvania Human Relations Act, the Pittsburgh Human Relations Ordinance, the Civil Rights Act of 1991, the Older Workers Benefit Protection Act and the Age Discrimination in Employment Act, and every other federal, state, local or court-created source of legal rights and obligations which may be waived and/or released such as whistleblower claims. This general release provided for in this sub-section (a) (which is referred to as the “Release”) shall not apply to any claims of Employee arising under this Agreement.

This Release is intended to be a general release, and excludes only those claims under any statute or common law that Employee is legally barred from releasing. Employee is advised to seek independent legal counsel if Employee seeks clarification on the scope of this Release.

Nothing herein is intended to or shall preclude Employee from filing a charge with any appropriate federal, state, or local government agency and/or cooperating with said agency in its investigation. Employee, however, explicitly waives any right to file a personal lawsuit or receive monetary damages that the agency may recover against Company Released Parties, without regard as to who brought any such complaint or charge.

Employee acknowledges that he has been given the opportunity to consider this Agreement for at least twenty-one (21) days, which is a reasonable period of time, and that he is hereby advised to consult with an attorney in relation thereto prior to executing this Agreement. Employee understands that he may revoke this Agreement at any time prior to the close of business on the seventh (7th) day following the date that he signs this Agreement and deliver it to the Company. Any revocation within this period must be submitted, in writing to Kurt Salvatori, the Company’s Director of Human Resources, and state, “I hereby revoke my acceptance of my Agreement”. If Employee does not revoke the Agreement, it shall, after the expiration of this 7-day period, become irrevocable.

Employee represents and agrees by signing below that Employee has not been denied any leave or benefit requested, has received the appropriate pay for all hours worked for Company and has no known workplace injuries or occupational diseases. Other than the consideration set forth in this Agreement, Employee further affirms that Employee has been paid and/or has received all leave (paid or unpaid), compensation, wages, bonuses and/or commissions to which Employee may be entitled and that no other leave (paid or unpaid), compensation, wages, bonuses and/or commissions are due to Employee, except as provided in this Agreement.

(b) In consideration for the waiver of rights and the covenants and agreements made by Employee under this Agreement, and for other good and valuable consideration, the receipt, adequacy and legal sufficiency of which are hereby acknowledged, the Company, on behalf of itself and its affiliates, successors, hereby unconditionally releases and forever discharges Employee, his dependents, heirs, administrators, representatives, trustees, beneficiaries executors, successors and assigns (collectively, the “Employee Released Parties”) from any and all manner of injuries, causes of actions, claims, including, without limitation, claims and demands of any kind whatsoever, in law or in equity, and from all debts, counterclaims, cross-claims, rights, disputes, controversies, judgments, agreements, contracts, promises, representations, misrepresentations, allegations, obligations, duties, suits, expenses, assessments, penalties, charges, interest, losses, costs, damages, compensatory damages, consequential damages, punitive damages, sanctions, and liabilities whatsoever, in law or in equity, whether known or unknown, asserted or unasserted, claimed or unclaimed, foreseen or unforeseen, suspected or unsuspected, discovered or undiscovered, accrued or unaccrued, anticipated or unanticipated, contingent or fixed, or any that the Company or any person or entity acting for the Company now has or hereafter may have against any of the Employee Released Parties for any acts, circumstances, conduct, commissions, omissions, failure to act, practices or events up to and including the effective date of this Agreement. This general release includes, without limitation, all claims or causes of action based upon torts (including, for example, negligence, fraud, defamation, libel, slander, tortuous interference and/or wrongful discharge); express and implied contracts (including, for example, prior agreements between Employee and the

Company); any claims for attorneys’ fees; any claims arising out of or relating to Employee’s employment or termination of employment with the Company; and any claims arising from any alleged violation by any of the Employee Released Parties of any federal, state or local statutes, ordinances, rules, Executive Orders or regulations. This general release provided for in this sub-section (b) shall not apply to: (i) any claims of the Company arising under this Agreement, (ii) any criminal acts committed by Employee relating to his work for the Company prior to the Separation Date, (iii) any acts of willful misconduct by Employee relating to his work for the Company prior to the Separation Date, and (iv) acts of fraud perpetrated by Employee against the Company prior to the Separation Date.

4. 2007 Short-Term Incentive Plan Payout. Employee shall not receive a short-term incentive payout award for 2007 under the Company’s 2007 Short-Term Incentive Compensation program.

5. Termination of Awards under the Long-Term Incentive Program. Employee acknowledges and agrees that upon the Separation Date, he forfeited any and all rights, including the performance share units that were granted to him and any right to payment, under the Company’s Long-Term Incentive Compensation Programs for the performance period from October 11, 2006 to December 31, 2009 and for the performance period from January 1, 2008 to December 31, 2010 (the “LTIC Programs”); provided, that the obligations of Employee with respect to confidentiality under that program shall continue in accordance with their terms; provided, further, that the obligations of Employee with respect to non-competition under that program shall terminate and be of no further force or effect.

6. Termination of Change in Control Agreement. Employee and the Company agree that the Change in Control Agreement between the Company and Employee is hereby fully and forever terminated and of no further force or effect, and Employee and the Company shall have no further obligations under that Change in Control Agreement.

7. Medical Benefits. Employee’s rights with respect to continuing medical, hospitalization and other health insurance benefits after the Separation Date shall be governed by the Consolidated Omnibus Budget Reconciliation Act, as amended (COBRA).

8. Non-Interference; Non-Solicitation of Employees. In consideration for the payments and benefits provided to Employee under this Agreement, and for other good and valuable consideration, the receipt, adequacy and legal sufficiency of which are hereby acknowledged, in addition to the covenants, promises and agreements of Employee contained in the LTIC Programs and any award agreements thereunder, and in order to protect the business of the Affiliated Companies, for a period of two (2) year immediately following the date of this Agreement Date, unless Employee has received prior written consent of the Company, Employee will not: (a) interfere with or attempt to disrupt the relationship, contractual or otherwise, between an Affiliated Company and any customer, supplier or employee of the Company; and (b) induce or attempt to induce any Company employee to terminate employment with the Company, hire or participate in the hiring of any Company employee, or interfere with or attempt to disrupt the relationship, contractual or otherwise, between the Company and any Company employee. For purposes of this paragraph, a Company employee means any person employed by an Affiliated Company during Employee’s employment by the Company, during

the restricted period set forth above or at any time within six (6) months of the date of any action of Employee that violates this paragraph. The foregoing shall not prohibit the Employee or any entity with which the Employee may be affiliated from hiring a former employee of the Company; provided, that such hiring results exclusively from such former employee’s affirmative response to a general recruitment.

9. Waiver of Other Compensation. Except for the compensation, benefits and rights provided in this Agreement, Employee waives any compensation, benefits or rights that may have accrued in his capacity as an employee, contractually or otherwise, including, without limit, any right to any salary, contributions, fees or benefits, including any severance benefits, or any right to continued participation in any compensation plans, programs or arrangements of any of the Affiliated Companies.

10. Tax Withholding. The Company may withhold from any payments made under this Agreement all federal, state or other taxes required by any law or governmental regulation or ruling. Employee is solely responsible for all tax liabilities and other consequences with respect to any taxes which may be owed by him beyond the deductions made by the Company from amounts payable under this Agreement. Employee agrees that the Company has no such responsibility, and Employee will indemnify and hold the Company harmless from any such tax liabilities or other consequences, with no requirement to pay any further sum to him for any reason, including, without limitation, unanticipated tax liabilities or other consequences.

11. Confidentiality. Except to the extent disclosure is required by law, Employee agrees to keep the terms of this Agreement strictly confidential, meaning that Employee shall not, unless compelled by law or judicial process to do so, disclose or discuss, directly or indirectly, its terms with anyone other than his attorney and financial advisors, provided that they, as a condition of receiving such information, also agree to keep such terms confidential.

12. Authority/Non-Disparagement/Return of Materials/Cooperation/. Employee and the Company hereby agree to the following:

a. Employee acknowledges that effective as of the Separation Date, he is not authorized to speak for or otherwise obligate the Company without the express written approval of the Company’s President and Chief Executive Officer or its General Counsel.

b. Except as otherwise required by law, Employee will not make, publish or disseminate any derogatory statements or comments (including, without limitation, to an Affiliated Company’s customers, prospective customers, employees and vendors), whether orally or in writing, about any of the Affiliated Companies or their business, officers, directors, shareholders or employees, or take any action which a reasonable person would expect, directly or indirectly, to impair the goodwill, business reputation or good name of any of them; and the officers and directors of the Company will not make, publish or disseminate any derogatory statements or comments, whether orally or in writing, about Employee, or take any action which a reasonable person would expect, directly or indirectly, to impair his goodwill, business reputation or good name.

c. Promptly following the Separation Date, Employee will deliver to the Company (and each Affiliated Company where applicable) (i) the originals and all copies of documents, records, notebooks, notes, memoranda, correspondence, computer disks and computer tapes, and inventions (collectively, the “Company Materials”) then in Employee’s possession or under Employee’s control, whether prepared by Employee or by others; and (ii) any Company and Affiliated Company equipment in his possession, including any computer equipment such as a lap top computer.

d. Employee agrees to cooperate with any Affiliated Company in any actual or threatened litigation or other proceedings, including, without limit, testifying on any Affiliated Company’s behalf at depositions, before administrative or regulatory bodies or in court or arbitration or similar proceedings. Company agrees to compensate Employee for time incurred in support of threatened litigation or other proceedings at a reasonable hourly rate to be agreed upon by Company and Employee.

13. Breach of Agreement. Employee agrees to strictly abide by the terms of this Agreement. In the event Employee fails to comply with the terms of this Agreement, the Company shall be entitled to withhold all payments due to Employee hereunder that have not otherwise been paid to Employee and to seek reimbursement of amounts paid.

14. Remedies. In the event that either party breaches or otherwise fails to observe any covenant, agreement or duty herein described, as determined by an arbitrator, a court or any other body of competent jurisdiction, the other party shall be entitled to any remedy set forth herein, as well as any other remedy available at law or in equity.

15. [Intentionally omitted.]

16. Consultation with Counsel. Employee acknowledges that he has carefully read and fully understands all the provisions and effects of this Agreement after having had the opportunity to consult and thoroughly discuss all its aspects with an attorney of his own choice; that he is voluntarily entering into this Agreement; and that neither the Company (or any Affiliated Company) nor its (or their) agents or attorneys made any representation or promise concerning the terms or effects of this Agreement other than those contained herein.

17. Modification. If any arbitrator, court, or other authority determines that any term, condition, clause, or other provision of this Agreement is void or invalid, he, she or it will have discretion to modify such term, condition, clause, or other provision of this Agreement to make it valid, or, alternatively, if he, she or it declines to make such a modification and leaves it invalid, the remaining portions of this Agreement will remain in full force and effect.

18. Governing Law; Venue. Except as preempted by federal law, this Agreement will be subject to interpretation and application consistent with the law of the Commonwealth of Pennsylvania, without regard to its conflict of laws principles. Company and Employee agree that any action brought to enforce the provisions of this Agreement may be brought in any State or Federal Court located in Allegheny County, Pennsylvania and each party waives any objection they may have to lack of jurisdiction or venue with respect to such action.

19. Entire Agreement. This Agreement (together with the other plans and programs referenced herein) represents the entire agreement of the parties with respect to the subject matter contained herein, and any amendments shall be ineffective unless they are written and signed by all parties and/or their duly authorized representatives.

20. Successors and Assigns. This Agreement is binding on the Company’s successors and assigns, including any change in control of the Company.

21. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same agreement.

EMPLOYEE HAS BEEN ADVISED THAT EMPLOYEE HAS AT LEAST TWENTY-ONE (21) CALENDAR DAYS TO CONSIDER THIS AGREEMENT, AND SEVEN (7) CALENDAR DAYS TO REVOKE AFTER EXECUTION. EMPLOYEE IS HEREBY ADVISED IN WRITING TO CONSULT WITH AN ATTORNEY OF EMPLOYEE’S CHOICE PRIOR TO EXECUTION OF THIS AGREEMENT.

EMPLOYEE AGREES THAT ANY MODIFICATIONS, MATERIAL OR OTHERWISE, MADE TO THIS AGREEMENT DO NOT RESTART OR AFFECT IN ANY MANNER THE ORIGINAL TWENTY-ONE (21) CALENDAR DAY CONSIDERATION PERIOD.

HAVING ELECTED TO EXECUTE THIS AGREEMENT, TO FULFILL THE PROMISES SET FORTH HEREIN, AND TO RECEIVE THEREBY THE BENEFITS SET FORTH IN SECTION 2 ABOVE, EMPLOYEE FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTERS INTO THIS AGREEMENT INTENDING TO WAIVE, SETTLE AND RELEASE ALL RELEASABLE CLAIMS EMPLOYEE HAS OR MIGHT HAVE AGAINST EMPLOYER.

[remainder of page intentionally left blank]

This SEPARATION AGREEMENT AND RELEASE is made effective the date first above written.


	EMPLOYEE

/s/ Stephen W. Johnson	/s/ Mark D. Gibbons
Witness	Mark D. Gibbons

Attest:	CNX GAS CORPORATION

/s/ Stephen W. Johnson	By:	/s/ Nicholas J. DeIuliis
	Name:	Nicholas J. DeIuliis
	Title:	President and Chief Executive Officer

EX-31.1 3 dex311.htm SECTION 302 CEO CERTIFICATION Section 302 CEO Certification

Exhibit 31.1

CERTIFICATIONS

I, Nicholas J. DeIuliis, certify that:

(1)	I have reviewed this Quarterly Report on Form 10-Q of CNX Gas Corporation;

(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 the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial 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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange 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:

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 within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5)	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2008

/s/ Nicholas J. DeIuliis

Nicholas J. DeIuliis

President, Chief Executive Officer

EX-31.2 4 dex312.htm SECTION 302 CFO CERTIFICATION Section 302 CFO Certification

Exhibit 31.2

CERTIFICATIONS

I, William J. Lyons, certify that:

(1)	I have reviewed this Quarterly Report on Form 10-Q of CNX Gas Corporation;

(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 the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4)

(5)	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2008

/s/ William J. Lyons

William J. Lyons

Chief Financial Officer

EX-32.1 5 dex321.htm SECTION 906 CEO CERTIFICATION Section 906 CEO Certification

Exhibit 32.1

CERTIFICATIONS

In connection with the Quarterly Report of CNX Gas Corporation (the “Registrant”) on Form 10-Q for the period ending June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Nicholas J. DeIuliis, President and Chief Executive Officer (principal executive officer) of the Registrant, certify that to my knowledge, based upon a review of the Report:

(i)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(ii)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: August 5, 2008

/s/ Nicholas J. DeIuliis

Nicholas J. DeIuliis

President, Chief Executive Officer

EX-32.2 6 dex322.htm SECTION 906 CFO CERTIFICATION Section 906 CFO Certification

Exhibit 32.2

CERTIFICATIONS

In connection with the Quarterly Report of CNX Gas Corporation (the “Registrant”) on Form 10-Q for the period ending June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William J. Lyons, Chief Financial Officer (principal financial officer) of the Registrant, certify that to my knowledge, based upon a review of the Report:

(i)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(ii)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: August 5, 2008

/s/ William J. Lyons

William J. Lyons

Chief Financial Officer and Director

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Generally, only investments with original maturities of three months or less qualify under the definition. Cash and Cash Equivalents at Beginning of Period Cash and cash equivalents at the end of the year. Cash equivalents are short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under the definition. Cash and Cash Equivalents at End of Period Cash dividend declared and/or paid by an entity to common shareholders - retained earnings appropriated. Cash Dividend - Common Stock - Retained Earnings Appropriated Cash dividend declared and/or paid by an entity to common shareholders - retained earnings unappropriated. Cash Dividend - Common Stock - Retained Earnings Unappropriated Cash dividend declared and/or paid by an entity to preferred shareholders. Cash Dividend - Preferred Stock The tax effect of the change in cumulative amount of all the Comprehensive Income accounts. Increase/(Decrease) in Accumulated Comprehensive Income, Tax Effect The tax effect of the change the accumulated net losses recognized as an additional pension liability not yet recognized as a net periodic pension cost. Increase/(Decrease) in Additional Minimum Pension Liability, Tax Effect The change in other comprehensive income, net of tax effects, due to the consolidation of an entity into the company. Increase/(Decrease) in Adjustment to Accumulated Other Comprehensive Income Due To Consolidation The change the comprehensive income - other accumulated net losses recognized as an additional pension liability not yet recognized as a net periodic pension cost, net of tax effects. Increase/(Decrease) in Comprehensive Income, Net of Tax Effect - Accumulated Other The change the comprehensive income - other accumulated net losses recognized as an additional pension liability not yet recognized as a net periodic pension cost, net of tax effects. Increase/(Decrease) in Comprehensive Income, Net of Tax Effect - Accumulated Other The change the comprehensive income accumulated net losses recognized as an additional pension liability not yet recognized as a net periodic pension cost tax effect. Increase/(Decrease) in Comprehensive Income Additional Minimum Pension Liability Tax Effect The change in tax effect of the comprehensive income adjustment for converting foreign investments into the company's own currency on a particular day. The difference between the investment value in the foreign currency and the investment value in company's own currency at a particular point in time. Increase/(Decrease) in Comprehensive Income Cumulative Translation Adjustment Tax Effect The change in tax effect of comprehensive income accumulated gains and losses from hedges that meet hedge criteria are generally recognized in current income when gains and losses on the hedged item are reported in current income. Increase/(Decrease) in Comprehensive Income Deferred Hedging Gain/(Loss) Tax Effect Net Income - Retained Earnings. Increase/(Decrease) in Comprehensive Income, Net of Tax Effect - Retained Earnings The change in cumulative amount of all the Comprehensive Income accounts not otherwise defined, net of tax effects. Increase/(Decrease) in Comprehensive Income, Net of Tax Effect The change in tax effect in comprehensive income accumulated unrealized holding gains and losses on securities available-for-sale, or that result from the transfer of a debt security being transferred from 'hold-to-maturity' category to 'avail-for-sale'. Increase/(Decrease) in Comprehensive Income Unrealized Gain/(Loss) on Marketable Securities, Net of Reclassifications Tax Effect Tax effect of the change in accumulated balance sheet adjustment for converting foreign investments into the company's own currency on a particular day. The difference between the investment value in the foreign currency and the investment value in the company's own currency at a particular point in time. Also used for investments in subsidiaries which are of a different currency. Increase/(Decrease) in Cumulative Translation Adjustment, Tax Effect Tax effect of the change in accumulated gains and losses from hedges that meet hedge criteria are generally recognized in current income when gains and losses on the hedged item are reported in current income. Increase/(Decrease) in Deferred Hedging Gain/(Loss), Tax Effect Amount recognized as a component of other comprehensive income, related to the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit cost of the period pursuant to Statements 87 and 106. Additionally, amounts recognized corresponding to adjustments in other comprehensive income when the gains or losses, prior service costs or credits, and transition assets or obligations remaining from the initial application of Statements 87 and 106 are subsequently recognized as components of net periodic benefit cost pursuant to the recognition and amortization provisions of Statements 87, 88, and 106. Increase/(Decrease) in Funded Status of Pension and Other Benefit Liability The change in cumulative amount of all the Other Comprehensive Income accounts not otherwise defined, net of tax effects. Increase/(Decrease) in Other Accumulated Comprehensive Income, Net of Tax Effect Tax effect of the change in cumulative amount of all the Other Comprehensive Income accounts not otherwise defined. Increase/(Decrease) in Other Accumulated Comprehensive Income, Tax Effect The change in cumulative amount of all the Other Comprehensive Income accounts not otherwise defined, net of tax effects. Increase/(Decrease) in Other Comprehensive Income, Net of Tax Effect Tax effect of the change in cumulative amount of all the Other Comprehensive Income accounts not otherwise defined. Increase/(Decrease) in Other Comprehensive Income, Tax Effect The change in accumulated realized holding gains and losses on securities available-for-sale, or that result from the transfer of a debt security being transferred from 'hold-to-maturity' category to 'avail-for-sale'. Increases or decreases in the fair value of securities available-for-sale that occur after such securities have been written down as impaired. Net of tax effect. Increase/(Decrease) in Realized Gain/(Loss) on Marketable Securities, Net of Reclassifications, Net of Tax Effect The net change in the cumulative amount for comprehensive income other than net income (loss) during an accounting period; including net changes in foreign currency translation adjustment, in unrealized holding gains (losses) on securities adjusted for any reclassified realized gains (losses), and in minimum pension liability. Increase/(Decrease) in Other Accumulated Comprehensive Income The net change in the total additional paid-in capital during an accounting period; may resulted from stock issuance/retirement, treasury stock transaction, exercise of stock options, etc. Increase/(Decrease) in Additional Paid in Capital The net change in the aggregate value (including both legal value and additional paid-in value) of common stocks during an accounting period; may be resulted from new issuance, retirement, exercise of stock options, etc. Increase/(Decrease) in Common Stock The net change in the aggregate share number of common stocks during an accounting period; may be resulted from new issuance, retirement, exercise of stock options, etc. Increase/(Decrease) in Common Stock - Shares The net change in the aggregate value (including both legal value and additional paid-in value) of common stocks during an accounting period; may be resulted from new issuance, retirement, exercise of stock options, etc. Increase/(Decrease) in Common Stock and Additional Paid in Capital The net change in the aggregate legal value (par value, stated value or issuance value in case of non-par non-stated-value stock) of common stocks during an accounting period; may be resulted from new issuance, retirement, exercise of stock options, etc. Increase/(Decrease) in Common Stock - Value (Excluding Additional Paid in Capital) The net change in the aggregate value (including both legal value and additional paid-in value) of preferred stocks during an accounting period; may be resulted from new issuance, repurchase, conversion of convertible preferred stocks, etc. Increase/(Decrease) in Convertible Preferred Stock The net change in the aggregate share number of preferred stocks during an accounting period; may be resulted from new issuance, repurchase, conversion of convertible preferred stocks, etc. Increase/(Decrease) in Convertible Preferred Stock - Shares The net change in the aggregate legal value of preferred stocks during an accounting period; may be resulted from new issuance, repurchase, conversion of convertible preferred stocks, etc. Increase/(Decrease) in Convertible Preferred Stock - Value (Excluding Additional Paid in Capital) The net change in deferred stock based compensation during an accounting period. Increase/(Decrease) in Deferred Stock Based Compensation Increase/(Decrease) in Employee Stock Ownership Plan Increase/(Decrease) in Employee Stock Ownership Plan Increase/(Decrease) in Executives Directors Benefits Trust Increase/(Decrease) in Executives Directors Benefits Trust Net change in the members Members equity - Increase/(Decrease) Increase/(Decrease) in Other Changes Stockholders Equity Increase/(Decrease) in Other Changes Stockholders Equity The net change in parent company net investment during an accounting period, may be resulted from net changes in contributed capital, retained earnings and accumulated other comprehensive income Increase/(Decrease) in Total Parent Company Net Investment The net change in the aggregate value (including both legal value and additional paid-in value) of preferred stocks during an accounting period; may be resulted from new issuance, repurchase, conversion of convertible preferred stocks, etc. Increase/(Decrease) in Preferred Stock The net change in the aggregate share number of preferred stock Class A during an accounting period; may be resulted from new issuance, repurchase, conversion of convertible preferred stocks, etc. Increase/(Decrease) in Preferred Stock Class A - Shares The net change in the aggregate legal value of preferred stock Class A during an accounting period; may be resulted from new issuance, repurchase, conversion of convertible preferred stocks, etc. Increase/(Decrease) in Preferred Stock Class A - Value The net change in the aggregate share number of preferred stock Class B during an accounting period; may be resulted from new issuance, repurchase, conversion of convertible preferred stocks, etc. Increase/(Decrease) in Preferred Stock Class B - Shares The net change in the aggregate legal value of preferred stock Class B during an accounting period; may be resulted from new issuance, repurchase, conversion of convertible preferred stocks, etc. Increase/(Decrease) in Preferred Stock Class B - Value The net change in the aggregate share number of preferred stocks during an accounting period; may be resulted from new issuance, repurchase, conversion of convertible preferred stocks, etc. Increase/(Decrease) in Preferred Stock - Shares The net change in the aggregate legal value of preferred stocks during an accounting period; may be resulted from new issuance, repurchase, conversion of convertible preferred stocks, etc. Increase/(Decrease) in Preferred Stock - Value (Excluding Additional Paid in Capital) The net change in the aggregate value (including both legal value and additional paid-in value) of redeemable convertible preferred stock warrant during an accounting period; may be resulted from new issuance, repurchase, conversion of convertible preferred stocks, etc. Increase/(Decrease) in Redeemable Convertible Preferred Stock Warrant The net change in the aggregate legal value of redeemable convertible preferred stock warrant during an accounting period; may be resulted from new issuance, repurchase, conversion of convertible preferred stocks, etc. Increase/(Decrease) in Redeemable Convertible Preferred Stock Warrant - Value (Excluding Additional Paid in Capital) The net change in Retained Earnings (the reporting entity's cumulative earnings net of dividends and other adjustments) during an accounting period; may be resulted from periodic net income (loss), dividends distribution, treasury stock transaction, error corrections, etc. Increase/(Decrease) in Retained Earnings The net change in stockowner's equity during an accounting period, may be resulted from net changes in contributed capital, retained earnings and accumulated other comprehensive income Increase/(Decrease) in Total Stockholders' Equity The net change in treasury stocks during an accounting period, include net changes in both value and shares, may be resulted from reacquisition, resale and/or retirement Increase/(Decrease) in Treasury Stock The net change in the aggregate share number of treasury stocks (common shares repurchased by the reporting entity) during an accounting period resulted from treasury stock reacquisition, resale, and/or retirement Increase/(Decrease) in Treasury Stock - Shares The net change in the aggregate value of treasury stocks (common shares repurchased by the reporting entity) during an accounting period resulted from treasury stock reacquisition, resale, and/or retirement Increase/(Decrease) in Treasury Stock - Value Increase/(Decrease) in Unearned Compensation Increase/(Decrease) in Unearned Compensation Tax effect of the change in accumulated unrealized holding gains and losses on securities available-for-sale, or that result from the transfer of a debt security being transferred from 'hold-to-maturity' category to 'avail-for-sale'. Increase/(Decrease) in Unrealized Gain/(Loss) on Marketable Securities, Net of Reclassifications, Tax Effect Charge related to affiliate equity award conversion Charge related to affiliate equity award conversion Net change in the total number of Class A common stock held by subsidiary during an accounting period; such change may arise from new issuance, retirement, stock split, distribution of stock dividends, exercise of stock options, etc. Class A Common Stock Held By Subsidiary - Shares - Increase/(Decrease) Net change in the total number of Class A common stock held by subsidiary during an accounting period; such change may arise from new issuance, retirement, stock split, distribution of stock dividends, exercise of stock options, etc. Class A Common Stock Held By Subsidiary - Shares - Increase/(Decrease) Net changes in the aggregate legal value (par value, stated value or issuance value in case of non-par non-stated-value stock) for all Class A common stock held by subsidiary during an accounting period due to new issuance, retirement, stock split, stock dividends,etc. Class A Common Stock Held By Subsidiary - Value (Excluding Additional Paid in Capital) - All Classes - Increase/(Decrease) Net changes in the aggregate legal value (par value, stated value or issuance value in case of non-par non-stated-value stock) for all Class A common stock held by subsidiary during an accounting period due to new issuance, retirement, stock split, stock dividends,etc. Class A Common Stock Held By Subsidiary - Value (Excluding Additional Paid in Capital) - All Classes - Increase/(Decrease) Number of shares of Class A common stock held by subsidiary that has been purchased by an entity. Class A Common Stock Shares Purchase By Subsidiary Total value of Class A common stock held by subsidiary that has been purchased by an entity. Class A Common Stock Purchased By Subsidiary Delivery of Class A common stock shares for settlement of vested RSUs - Value Delivery of Class A common stock shares for settlement of vested RSUs - Value Delivery of Class A common stock for settlement of vested RSUs - Number of Shares Delivery of Class A common stock for settlement of vested RSUs - Number of Shares Class A Common Stock Held By Subsidiary - Value Class A Common Stock Held By Subsidiary - Value Total number of Class A common stock held by subsidiary outstanding at the beginning of accounting period. Class A Common Stock Held By Subsidiary - Shares Outstanding - All Classes - Beginning Balance Total number of Class A common stock held by subsidiary outstanding at the end of accounting period. Class A Common Stock Held By Subsidiary - Shares Outstanding - All Classes Aggregate Class A common stock held by subsidiary beginning balance as restated. Class A Common Stock Held By Subsidiary - Shares - Beginning Balance - As Restated Aggregate legal value (par value, stated value or issuance value in case of non-par or non-stated-value stock) for all Class A common stock held by subsidiary from the reporting entity at the beginning of accounting period. Class A Common Stock Held By Subsidiary - Value (Excluding Additional Paid in Capital) - All Classes - Beginning Balance Aggregate Class A common stock held by subsidiary value beginning balance as restated. Class A Common Stock Held By Subsidiary - Value - Beginning Balance - As Restated Aggregate legal value (par value, stated value or issuance value in case of non-par or non-stated-value stock) for all Class A common stock held by subsidiary from the reporting entity at the financial statement date. Class A Common Stock Held By Subsidiary - Value (Excluding Additional Paid in Capital) - All Classes - Ending Balance Class A Common Stock Held By Subsidiary - Shares Class A Common Stock Held By Subsidiary - Shares Net change in the total value for Class A common stocks issued during an accounting period (i.e. include both legal value and additional paid-in capital) Class A Common Stock Issued Net change in the paid-in capital in excess of par/stated value related to Class A common stocks issued during an accounting period Class A Common Stock Issued - Additional Paid in Capital Total number of Class A common shares issued during an accounting period Class A Common Stock Issued - Shares Net changes in legal value (par value, stated value or issuance value in case of non-par non-stated-value stock) for Class A common stocks issued during an accounting period Class A Common Stock Issued - Value (Excluding Additional Paid in Capital) Delivery of Class A common stock shares for settlement of vested RSUs Delivery of Class A common stock shares for settlement of vested RSUs Delivery of Class A common stock shares for settlement of vested RSUs - Additional Paid in Capital Delivery of Class A common stock shares for settlement of vested RSUs - Additional Paid in Capital Class A Net Income - Retained Earnings Class A Net Income - Retained Earnings Net change in the total value for Class B common stocks issued during an accounting period (i.e. include both legal value and additional paid-in capital) Class B Common Stock Issued Net change in the paid-in capital in excess of par/stated value related to Class B common stocks issued during an accounting period Class B Common Stock Issued - Additional Paid in Capital Total number of Class B common shares issued during an accounting period Class B Common Stock Issued - Shares Net changes in legal value (par value, stated value or issuance value in case of non-par non-stated-value stock) for Class B common stocks issued during an accounting period Class B Common Stock Issued - Value (Excluding Additional Paid in Capital) Common Dividends Paid - Stock Common Dividends Paid - Stock Value beyond par of common membership interests that has been repurchased by an entity. Common Membership Interest Repurchased - Additional Paid in Capital Allocation of income tax benefit from parent - Common Stock Allocation of income tax benefit from parent - Common Stock Capital contribution from parent - Common Stock Capital contribution from parent - Common Stock Common stock held in restricted stock units trust. Common Stock Held in RSU Trust Common stock held in restricted stock units trust. Common Stock Held in RSU Trust Aggregate value for all common stock held in restricted stock units trust from the reporting entity at the beginning of accounting period. Common Stock Held in RSU Trust - Beginning Balance Aggregate value for all common stock held in restricted stock units trust from the reporting entity at the ending of accounting period. Common Stock Held in RSU Trust - Ending Balance Net changes in the aggregate value of common stock issuable. Common Stock Issuable Net changes in the aggregate value of common stock issuable. Common Stock Issuable Aggregate value for all common stock issuable from the reporting entity at the beginning of accounting period. Common Stock Issuable - Beginning Balance Aggregate value for all common stock issuable from the reporting entity at the end of accounting period. Common Stock Issuable - Ending Balance Net change in the total value for common stocks issued during an accounting period (i.e. include both legal value and additional paid-in capital) Common Stock Issued Net change in the total value for common stocks issued during an accounting period (i.e. include both legal value and additional paid-in capital) Common Stock Issued Common Stock Shares - Common stock issued for accelerated interest related to convertible debentures Common Stock Shares - Common stock issued for accelerated interest related to convertible debentures Common Stock Shares - Common stock issued for accelerated interest related to convertible debentures Common Stock Shares - Common stock issued for accelerated interest related to convertible debentures Common Stock Amount - Common stock issued for accelerated interest related to convertible debentures Common Stock Amount - Common stock issued for accelerated interest related to convertible debentures Tota; Amount - Common stock issued for accelerated interest related to convertible debentures Total Common stock issued for accelerated interest related to convertible debentures Net change in the paid-in capital in excess of par/stated value related to common stocks issued during an accounting period Common Stock Issued - Additional Paid in Capital Net change in the paid-in capital in excess of par/stated value related to common stocks issued during an accounting period Common Stock Issued - Additional Paid in Capital Effects on deferred stock based compensation of common stocks issued during an accounting period (e.g. distribution of stock dividends) Common Stock Issued - Deferred Stock Based Compensation Value of common stock issued as a result of dividend reinvestment and employee stock purchase plan recorded above par value. Common Stock Issued - Dividend Reinvestment and Employee Stock Purchase Plan Number of shares issued during the period as a result of an employee stock purchase plan and dividend reinvestment plan (DRIP). A dividend reinvestment plan allows the shareholders to reinvest dividends paid to them by the entity on new issues of stock by the entity. Common Stock Issued During Period, Shares, Dividend reinvestment and Employee Stock Purchase Plan Number of shares issued during the period related to employee savings and incentive plans. Common Stock Issued During Period, Shares, Employee Savings and Incentive Plans Number of shares issued during the period related to employee savings and incentive plans. Common Stock Issued During Period, Shares, Employee Savings and Incentive Plans Value of common stock issued as a result of employee savings and incentive plans recorded above par value. Common Stock Issued - Employee Savings and Incentive Plans Value of common stock issued as a result of employee savings and incentive plans recorded above par value. Common Stock Issued - Employee Savings and Incentive Plans Issuance of employee stock that is tied to a contingency that must be met in order to keep the full value of the award. Common Stock Issued - Employees' Restricted Shares Value of Employee Restricted Shares of common stock recorded above par value. Common Stock Issued - Employees' Restricted Shares - Additional Paid in Capital The effects on Retained Earnings for employees' restricted common shares issued Common Stock Issued - Employees' Restricted Shares - Retained Earnings Number of treasury shares of Employee Restricted Shares issued. Common Stock Issued - Employees' Restricted Shares - Treasury Shares The effects on Treasury Stock for employees' restricted common shares issued Common Stock Issued - Employees' Restricted Shares - Treasury Stock Issuance of employee stock that is tied to a contingency that must be met in order to keep the full value of the award. Common Stock Issued - Employees' Restricted Shares Total value of employee stock purchase plan. Total Employee Stock Option Plan Employee Stock Option Plan - Additional Paid in Capital Employee Stock Option Plan - Additional Paid in Capital Effect on Retained Earnings of stock issued as a result of employee stock plans. Common Stock Issued - Employee Stock Option Plan - Retained Earnings Total value of common stock issued by an entity as a result of employee stock purchase plan. Common Stock Issued - Employee Stock Purchase Plan Value of common stock issued as a result of employee stock purchase plan recorded above par value. Common Stock Issued - Employee Stock Purchase Plan - Additional Paid in Capital Value of common stock issued as a result of employee stock purchase plan. Common Stock Issued - Employee Stock Purchase Plan Effect on Retained Earnings of stock issued as a result of employee stock purchase plans. Common Stock Issued - Employee Stock Purchase Plan - Retained Earnings Common Stock Shares - Common stock issued for cash Common Stock Shares - Common stock issued for cash Common Stock Shares - Common stock issued for cash Common Stock Shares - Common stock issued for cash Common Stock Amount - Common stock issued for cash Common Stock Amount - Common stock issued for cash Total value of common stock issued for cash. Common Stock Issued - For cash Common Stock Shares - Common stock issued for payment of interest Common Stock Shares - Common stock issued for payment of interest Common Stock Shares - Common stock issued for payment of interest - Additional Paid in Capital Common Stock Shares - Common stock issued for payment of interest - Additional Paid in Capital Common Stock Amount - Common stock issued for payment of interest Common Stock Amount - Common stock issued for payment of interest Total value of common stock issued by an entity in an initial public offering. Common Stock Issued - Initial Public Offering Value of common stock issued in an initial public offering recorded above par value. Common Stock Issued - Initial Public Offering - Additional Paid in Capital Common Stock Issuance in Connection With Initial Public Offering - Deferred Stock Based Compensation Common Stock Issuance in Connection With Initial Public Offering - Deferred Stock Based Compensation Number of shares of common stock issued in an initial public offering. Common Stock Issued - Initial Public Offering - Shares Value of common stock issued in an initial public offering recorded at par value. Common Stock Issued - Initial Public Offering - Value (Excluding Additional Paid in Capital) EX-100.PRE 11 cxg-20080630_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE -----END PRIVACY-ENHANCED MESSAGE-----