VARIABLE INTEREST ENTITIES:

The Company determined CNXM, of which the company owns approximately 34% of, to be a variable interest entity. Upon completion of the Midstream acquisition (see Note 6) through the Company's ownership and control of CNXM's general partner (CNX Midstream GP LLC), the Company has the power to direct the activities that most significantly impact CNXM's economic performance. In addition, through its limited partner interest and incentive distribution rights, or IDRs in CNXM, the Company has the obligation to absorb the losses of CNXM and the right to receive benefits in accordance with such interests. As the Company has a controlling financial interest and is the primary beneficiary of CNXM, the Company consolidates CNXM commencing on January 3, 2018.

The risks associated with the operations of CNXM are discussed in its Annual Reports on Form 10-K for the year ended December 31, 2017.

The following table presents amounts included in the Company's Consolidated Balance Sheet that were for the use or obligation of CNXM as of March 31, 2018:



	March 31, 2018
Assets:
Cash	$	1,966
Receivables - Related Party	13,411
Receivables - Third Party	9,645
Other Current Assets	3,242
Property, Plant and Equipment, net	899,558
Other Assets	4,294
Liabilities:
Accounts Payable	$	23,363
Accounts Payable - Related Party	3,056
Revolving Credit Facility	20,000
Long-Term Debt	392,647

The following table summarizes CNXM's Consolidated Statements of Operations and Cash Flows for the three months ended March 31, 2018, inclusive of affiliate amounts:



	For the Three Months Ended
	March 31, 2018
Revenue
Gathering Revenue - Related Party	$	37,730
Gathering Revenue - Third Party	26,139
Total Revenue	63,869
Expenses
Operating Expense - Related Party	4,435
Operating Expense - Third Party	8,468
General and Administrative Expense - Related Party	3,612
General and Administrative Expense - Third Party	2,549
Loss on Asset Sales	2,755
Depreciation Expense	5,856
Interest Expense	2,489
Total Expense	30,164
Net Income	$	33,705

Net Cash Provided by Operating Activities	$	41,867
Net Cash Used in Investing Activities	$	(10,156	)
Net Cash Used in Financing Activities	$	(32,939	)

In March 2018, CNXM closed its previously announced acquisition of CNX's remaining 95% interest in the gathering system and related assets commonly referred to as the Shirley-Penns System, in exchange for cash consideration in the amount of $265,000. CNXM funded the cash consideration with proceeds from the issuance of 6.5% senior notes due 2026 (See Note 11 - Long-Term Debt).

Prior to the acquisition of Noble's interest on January 3, 2018, CNX accounted for its interests in CNX Gathering and CNXM as an equity-method investment.

The following is a summary of the Company's Investment in Affiliates balances included within the Consolidated Balance Sheets associated with CNX Gathering and CNXM, respectively:



	CNX Gathering			CNXM			Total
Balance at December 31, 2016	$	151,075		$	18,133		$	169,208
Equity in Earnings	9,823			38,523			48,346
Distributions	(17,254		)	(24,929		)	(42,183		)
Asset Transfer	(2,527		)	2,527			—
Balance at December 31, 2017	$	141,117		$	34,254		$	175,371

The following transactions were included in Other Operating Income and Transportation, Gathering and Compression within the Consolidated Statements of Income:



	For the Three Months Ended
	March 31, 2017
Other Operating Income:
Equity in Earnings of Affiliates - CNX Gathering	$	1,866
Equity in Earnings of Affiliates - CNXM	$	10,072

Transportation, Gathering and Compression:
Gathering Services - CNX Gathering	$	253
Gathering Services - CNXM	$	34,054

At December 31, 2017, CNX had a net payable of $9,982, due to both CNX Gathering and CNXM primarily for accrued but unpaid gathering services.