Good morning, and welcome to CONSOL Energy's fourth quarter and full fiscal year 2022 earnings conference call. All participants will be in a listen-only mode. Should you need any assistance during the call, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note that this event is being recorded today. I would now like to turn the conference over to Nathan Tucker, Director of Finance and Investor Relations. Please go ahead, sir.
Thank you. Good morning, everyone. Welcome to CONSOL Energy's fourth quarter and full fiscal year 2022 earnings conference call. Any forward-looking statements or comments we make about future events are subject to risk, certain of which we have outlined in our press release and in our SEC filings and are considered forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. We do not undertake any obligations of updating any forward-looking statements for future events or otherwise. We will also be discussing certain non-GAAP financial measures which are defined and reconciled to comparable GAAP financial measures in our press release and furnished to the SEC on Form 8-K, which is also posted on our website. Additionally, we expect to file our 10-K for the year ended December 31st, 2022 with the SEC this Friday, February 10th.
You can find additional information regarding the company on our website, www.consolenergy.com, which also includes a supplemental slide deck that was posted this morning. On the call with me today are Jimmy Brock, our Chief Executive Officer, Mitesh Thakkar, our President and Chief Financial Officer, Dan Connell, our Senior Vice President of Strategy, and Bob Braithwaite, our Senior Vice President of Marketing and Sales. In his prepared remarks, Jimmy will provide a recap of our fourth quarter and full year 2022 achievements and a detailed discussion of our operations and sales. Mitesh will then provide an update on our balance sheet management, financial performance, and 2023 outlook. In his closing comments, Jimmy will lay out our key priorities for 2023. After the prepared remarks, there will be a Q&A session in which Dan and Bob will also participate. With that, let me turn it over to Jimmy.
Thank you, Nate. Good morning, everyone. Let me start by congratulating Mitesh on being named the new president of CONSOL Energy as part of our long-term succession planning. I have worked very closely with Mitesh since he joined us during the formation of CONSOL Coal Resources LP, an MLP we took public in 2015. Since then, he has been an integral part of our team. I've had the opportunity to observe him grow and take on more responsibility. In addition to his continued role as our chief financial officer, he will also oversee our marketing, business development, and environmental and sustainability efforts. I have the utmost confidence in his ability to take on an expanded role in the company. He's well suited for the task.
The board has asked, and I have accepted to extend my employment term by an additional year through December 2024 to ensure our long-term succession plan. Moving on to our financial and operating performance. CONSOL Energy finished 2022 as a record year in its history as an independent public company on multiple fronts, including one of the key metrics we measure ourselves against, free cash flow generation. As a result, we've advanced some of our key strategic initiatives during the year. First, our strong free cash flow generation allowed us to meaningfully accelerate progress toward our debt reduction goal, and we made debt payments of nearly $300 million in 2022.
Second, our free cash flow, in conjunction with our robust contract book, bolstered our ability to initiate an enhanced shareholder return program during 2022, even while we were still at work reducing our outstanding debt levels. We paid multiple dividends during 2022 and resumed share repurchases at the end of the year. Third, our strong free cash flow enhanced our ability to reinvest in our business. During the fourth quarter, we restarted the fifth longwall at the PAMC and shipped the first train of low-vol metallurgical coal from our Itmann Mining Complex. Let's now discuss our operational performance. On the safety front, our Bailey preparation plant and CONSOL Marine Terminal each had zero employee recordable incidents during the full year of 2022.
The PAMC finished the year with a total recordable incident rate of 1.72, which was approximately 63% below the national average for underground coal mines. Coal production at the Pennsylvania Mining Complex came in at 6.1 million tons in Q4 2022, an increase compared to 5.6 million tons in the prior year period. Production improved this quarter compared to Q4 2021 due to the restart of the fifth longwall in mid-December 2022 and the absence of geological challenges which we encountered in October 2021. From a productivity standpoint, measured as tons per employee hour, the PAMC ended the year on a strong note and improved by 16% in Q4 2022 compared to Q3 2022 as we moved past the geological challenges we faced in the third quarter.
The complex ended the year with production of 23.9 million tons. On the cost front, our PAMC average cash cost of coal sold per ton for Q4 2022 was $34.89 compared to $30.81 in Q4 2021. This was a reduction of nearly $5 per ton compared to Q3 2022 when we saw increased costs due to operational and geological challenges. The delta compared to the prior year period was due to ongoing development costs associated with the fifth longwall and continued inflationary pressures on supplies, maintenance, contract labor and power costs at our operations. This brings our full year 2022 average cash cost of coal sold to $34.56 per ton. The CONSOL Marine Terminal had a throughput volume of 3.6 million tons during Q4 2022.
Terminal revenues for the quarter came in at $20.9 million, with CMT operating cash costs of $6.4 million. For 2022, the terminal had a very strong operational performance, finishing the year with 13.7 million throughput tons. Terminal revenue for 2022 came in at $78.9 million, which was by far the highest level in CONSOL Marine Terminal history. CMT finished the year with Adjusted EBITDA of $52.3 million, marking its first year above $50 million and the fifth consecutive year above $40 million. Now let's discuss our Itmann project. After accomplishing several milestones in the second half of 2022, the ramp up to full run rate production at Itmann has been delayed due to multiple factors, including supply chain bottlenecks, equipment delivery delays, geological inconsistencies and staffing challenges.
We expect these issues to be transitory and we have recently made several changes that will help us achieve our goals. In the immediate term, the mine is focusing on fully staffing and optimizing 2 CM super-sections before focusing on the 3rd CM super-section. Moving further into 2023, we expect the ramp up to full run production to occur around mid-year. The Itmann preparation plant was commissioned in the 3rd quarter of 2022, having been purchased, disassembled, relocated and reconstruction on our site in just over a year's time. We shipped 9 trains of coal from the plant in Q4 2022 and sold slightly more than 200,000 tons of Itmann and third-party coal in aggregate during 2022. The Itmann product has been successfully marketed to both domestic and export customers.
As we ramp up production and achieve consistency from our operation, our focus will shift to securing new business with strategic partners. On the marketing front, the demand for our PMC product remained robust in the fourth quarter of 2022. We sold 6.2 million tons of PMC coal at an average realized coal revenue per ton sold of $75.92 in Q4 2022, compared to 5.6 million tons at $51.27 in the year ago period. The significant per ton increase was driven by the ongoing improvement in the coal markets over the past year due to persistent coal supply shortages leading to increased commodity pricing. Henry Hub natural gas spot prices averaged $5.55 per million BTU in Q4 2022, a 17% increase compared to the prior year period.
PJM West day ahead power prices finished the quarter at $68.73 per megawatt hour versus $54.39 in Q4 of 2021. Despite these quarter-over-quarter improvements, we have seen significant volatility in the energy markets beginning in late 2022 and continuing through the start of 2023. Natural gas spot prices were north of $6 per million BTU at the start of December, but retreated more than 40% by the end of the month. A very similar trend played out in the international API2 market, which retreated almost 30% throughout December of 2022. These markers each further declined by 20% and 29% respectively through the month of January 2023, as warmer than normal weather has gripped much of the U.S. and Europe, leading to increased gas storage levels and coal inventories.
Fundamentally, we believe that the supply of high-Btu coals is still constrained and the demand for our product remains strong for the foreseeable future. In fact, the International Energy Agency recently estimated that annual global coal demand eclipsed the 8 billion metric ton mark for the first time in 2022 and expects demand to remain around this level through 2025. In the shorter term, the majority of our sales books for 2023 is committed and we have a very solid contracted position for 2024. This gives us the ability to be patient as we work to fill out our sales books and maximize value for 2024 and beyond. Despite some of the recent volatility, our sales team opportunistically increased our forward sold position by more than 8 million tons through 2025.
We now have 23.9 million tons contracted for 2023 and 12.5 million tons contracted for 2024. With that, I will turn the call over to Mitesh to provide our financial update.
Thank you, Jimmy. Good morning, everyone. First, let me provide an update on our balance sheet management and capital allocation progress before discussing our financial results in 2023 outlook. We continued to make considerable progress on our stated financial priorities in the quarter. During Q4 2022, we generated $116 million of free cash flow, 70% of which was deployed towards continuing to reduce our gross debt levels. As such, we made total debt repayments of $292 million in 2022, and our gross debt level at year-end was $380 million. In fact, since CEIX went public, we have reduced our net debt by 86% or $647 million, which translates to more than $18 per share of equity value creation based on our current shares outstanding.
Since year-end, we reduced our gross debt by an additional $50 million by making discretionary payments in January 2023 of $25 million each towards our Term Loan B and second lien notes that were not included in our fourth quarter results. At the beginning of February, we submitted an additional redemption notice for $25 million of our second lien notes, which will be redeemed during 1Q 2023. These three paydowns, worth an aggregate of $75 million, will bring our gross debt level to approximately $300 million. We remain committed to the ongoing strengthening of our balance sheet and now expect to fully retire our Term Loan B and second lien notes this year. During 4Q 2022, we slightly increased our unrestricted cash balance, finishing the year with $273 million, which led to a significant liquidity position of $572 million.
On the shareholder return front, we are pleased to announce this morning that the board of directors elected to issue a dividend of $1.10 per share, which marks our third dividend since announcing our enhanced shareholder return program and the third consecutive quarter, increasing the per share amount. This payment will total roughly $39 million, or approximately 34% of our 4Q 2022 free cash flow, and will be made on February 28th to all shareholders of record as of February 17th. During the fourth quarter, we also restarted our share repurchase program after a hiatus of approximately three years as we worked to improve our balance sheet and infused capital on our organic growth projects.
With most of the capital spending complete on our Itmann project, the fifth longwall back up and running at the PAMC, significant reduction in our outstanding debt and a strong contracted position, the management team and board of directors believe that share buybacks provide another attractive avenue to create additional value for our shareholders. So far, we have opportunistically repurchased 124,000 shares of our common stock in December for $8 million at a weighted average price of $64.18 per share. We are also happy to announce this morning an increase to our enhanced shareholder return program, which will become effective immediately in 1Q 2023.
We now plan to return a range of approximately 35%-50% of quarterly free cash flows in the form of share repurchase and/or dividends, which are subject to the discretion of the board of directors. As mentioned previously, we also expect to continue to allocate a significant portion of our free cash flow toward additional debt reduction, with the goal of retiring our Term Loan B and second lien notes this year. Once this goal is achieved, we will consider further increasing the percentage of free cash flow allocated towards shareholder returns. Let me recap our fourth quarter and full year 2022 financial results. This morning, we reported a strong fourth quarter 2022 financial performance with net income of $193 million or $5.39 per diluted share.
By far our highest quarterly earnings per share level since becoming an independent public company in 2017. Additionally, we finished 4Q 2022 with Adjusted EBITDA of $240 million and generated $116 million of free cash flow. For the full year 2022, we reported net income of $467 million or $13.07 per diluted share, Adjusted EBITDA of $807 million, and incurred CapEx of $172 million. CEIX finished the year with free cash flow of $501 million, marking our highest annual free cash flow level in the last five years and the fifth consecutive year of positive free cash flow generation since becoming an independent public company. We finished 2022 with a net leverage ratio near zero. Now let me provide our outlook for 2023.
On the guidance front for the PAMC, we are expecting our 2023 sales volume to be improved by approximately 8% at the midpoint compared to our 2022 level due to the availability of our 5th longwall. As such, we are providing a 2023 PAMC coal sales volume range of 25-27 million tons. The upper boundary reflects our past ability to produce at a 27+ million ton pace with five operational longwalls at the complex, which includes mining at a high efficiency factor, effective coordination with our transportation partner, and potentially strong spot market demand. The lower boundary considers the potential for unforeseen supply chain or operational challenges. The lower end also reflects our ability to run to the market if there is unexpected weakness due to weather or unforeseen events.
The good news is that all our longwall mines are currently running well. We are 90%+ contracted at the midpoint of our guidance range. On the pricing front, we expect our average realized coal revenue per ton to be in the $78-$84 range. Relative to 2022 levels, this range reflect our strong contracted position and allows for upward or downward movement in API2 and PJM power prices, as well as the potential to further optimize our sales portfolio. Our guidance is based on 2023 PJM power price expectation of $49.58 per megawatt-hour at the midpoint. The sensitivity for every dollar per megawatt change in PJM power prices is approximately $0.10 per ton on our entire portfolio. For comparison, the average PJM power price in 2022 was approximately $73 per megawatt-hour.
Additionally, the midpoint of our guidance assumes an API2 benchmark price of $165 per metric ton. We expect our 2023 PAMC average cash cost of coal sold to be $34-$36 per ton. We are expecting our cash cost to be similar to 2022 on a per ton basis at the midpoint despite incremental volume, given the potential for ongoing inflationary pressures on certain goods and services. We begin to see some relief in cost pressures in the fourth quarter. Our supply chain and operations team constantly focus on identifying ways to minimize our cash spend. The bottom end of our cost guidance captures the potential for deflation in key commodities, including power prices, as well as fixed cost leverage at the higher end of the volume guidance.
The top end accounts for reduced tonnage on an improved commodity market, which would be a net benefit to our cash margins, but a headwind to our power and supply costs. At the Itmann Complex for the time being, we are limiting our guidance until we get the mine fully staffed and ramped up to full run rate production. We are currently providing a 2023 production guidance range of 400,000-600,000 tons from our Itmann Mine, which is dependent on the timing of the ramp up. Once the Itmann Mine achieves these milestones, we intend to provide more detailed Itmann Complex guidance similar to what we provide for the Pennsylvania mining complex. On the CapEx front, we are providing a range of $160 million-$185 million for 2023.
This range reflects some 2022 capital spending moving into 2023. Keep in mind that we started 2022 with a top-end CapEx expectation of nearly $200 million, but only spent $172 million in the year. As we highlighted throughout last year, supply chain bottlenecks have delayed equipment deliveries and extended lead times, which has pushed certain planned expenditures from 2022 into 2023. Throughout last year and during our budget planning cycle, we have been very diligent in adjusting our rebuild and lifecycle management timing to better align with these longer lead times. We also expect to further our greenhouse gas emissions reductions efforts and have approximately $10 million in the budget for this effort in 2023. With that, let me turn it back to Jimmy to touch on our key priorities for 2023.
Thank you, Mitesh. As we embark on 2023, we have a few key areas of focus that we believe will further strengthen our company. First, we are laser focused on ramping up the Itmann Mine to full run rate production by mid-year 2023. The Itmann Complex has now moved from the project team to our operations team. We have our key operations and management personnel dedicated to supporting the Itmann team and their staffing and ramp-up efforts. We are very thankful for the hard work and persistence from our Itmann team members. Now that they have switched to operations mode, we expect them to diligently work through the recent challenges and delays to ultimately deliver operational consistency. Second, our sales team remains opportunistic in its approach and remains focused on layering new business for 2023 and beyond, as well as continuing to optimize our contract book.
We believe that one of Consol's strategic advantages is our ability to lock in contract duration, which allows us to generate positive free cash flow in all parts of the cycle and provides us the ability to benefit from strong markets for years to come. Third, reducing the debt on our balance sheet remains a major focus. We expect to hit our initial goal of a $300 million gross debt level in Q1 of 2023, and then continue toward fully retiring our Term Loan B and second lien notes. We anticipate achieving these goals around mid-2023 as we simultaneously enhance shareholder returns, including dividends and share buybacks. This continued debt reduction sets the company up for long-term success and facilitates additional avenues for growth and diversification. Finally, we are committed to increasing our free cash flow allocation to shareholder returns as our debt levels decline.
As promised, we increased our shareholder return percentage due to our expectations of achieving our $300 million gross debt goal this quarter. Once our Term Loan B and second lien notes are retired, we expect to consider a further increase to our shareholder return allocation. We are very pleased with our results and execution in 2022, which was a record year for us in a lot of ways, and we remain even more excited about the future. I want to personally thank all our employees for their dedication and hard work, which drove these exceptional results safely and compliantly. I am extremely proud of this team and CONSOL Energy. With that, I will hand the call back over to Nate.
Thank you, Jimmy. We will now move to the Q&A session of our call. At this time, I'd like to ask our operator to please provide the instructions to our callers.
To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause just momentarily to assemble our roster. Our first question here will come from Lucas Pipes with B. Riley Securities. Please go ahead.
Thank you very much, operator, and good morning, everyone.
Good morning, Lucas.
Jimmy, I wanna turn to the and Mitesh. I wanna turn to the balance sheet for my first question. It sounds to me like you're looking at $190 million of gross debt as a kind of near-term target. A little bit more conservative from the $300 million gross debt target previously. What caused that? Is that the right interpretation, $190 million? Maybe did I miss anything? Thank you very much.
Yeah. Thank you, Lucas. I think from a gross debt perspective, the way we think about it is, we originally had a target of $300 million. We have today said we are gonna retire all our Term Loan B and second lien. If you look at the announcement that we made this morning about additional debt reduction for the month of January, we are sitting with about $39 million on Term Loan B and $74 million on the second lien. Combined, both of those is just over $100 million. I think when those two are retired, you're gonna be just north of $200 million, so you are in the ballpark.
Really what makes up those just over $200 million is about $103 million of our Baltimore bonds and $75 million of our PEDFA bonds. Both of them are tax-exempt securities, as you know. Then the equipment leases, which at the end of the quarter I would forecast is gonna be around $34 million.
That's helpful. Thank you. The thought here is just to be a little bit more conservative given kind of broader capital market conditions.
Yeah. The Term Loan B and second lien both have near-term maturities, as you know. When I say near term, second lien has a little bit further than the Term Loan B. Term Loan B is maturing next year. The idea is we want to get away from more interest rate sensitive debt, but also right now both of these securities at the end of Q1 are going to be under $50 million. They're not what you would call like necessarily appropriately sized. I mean, this will allow us to create some bandwidth if in future if we want to do something and raise some debt. If capital market conditions warrant, we can do just one ticket of something a little bit larger, if at all we want to do it. It's mostly cleanup stuff.
Okay. Thank you for that. Turning to the commercial side, could you share some details as to the price of the tons that were sold incrementally during the quarter for both 2023 and 2024? Specifically for 2024, you have 12 plus million tons contracted to date. Roughly what's the split between domestic and export and what would be the price on those 2024 commitments? Thank you very much.
Sure, Lucas. I'll take that. You know, we've increased our sold position, as you know, this morning by 2.1 million tons for 2023. Last quarter, if you recall, we said our pricing was in the upper $70s based on the power forwards of that date. If you go back and look, power was at around $68. API2 prices were around $200. Fast-forward to today, we said, you know, our midpoint of the guidance is based on $49.58 and $165 for API2. That basically would imply that our portfolio dropped about $5 quarter-on-quarter just based on power and API2. However, I can tell you that our pricing of the 23.9 is actually improved.
When you take a look at that and you model that, you'll notice that the pricing that we sold, the tons that we sold incrementally, the 2.1, are certainly north of $100 per ton. On your second question, on the 2024 volume of 12.5 million tons, about 2.5 million are linked to power. 3.2 are currently sold into the export market, and 6.6 are domestic and fixed price.
All right. Any sense on the average price for 2024? Did I miss that?
We're not providing guidance today for 2024. However, I would tell you that it's sitting, you know, between our 2022 and 2023 pricing right now.
All right. I appreciate the detail. Thank you, best of luck.
Thank you.
Thanks, Lucas.
Our next question will come from Nathan Martin with The Benchmark Group. Please go ahead.
Hey, good morning, guys. Thanks for taking my questions.
Morning.
Morning.
Bob, could I actually get a similar breakdown for 2023 tons that you just gave Lucas for 2024? In other words, you know, how many tons are fixed versus how many tons are open to fluctuations in index pricing, whether that's, you know, PJM West or API2?
Sure. We have, again, we have two and a half million in 2023 that's linked to power. We have $8.2 million, right now slotted for export or contracted, I should say, for export. Of that $8.2 million, we have about $5 million that are linked to API2 prices. Of that $5 million, incorporated in the contracts. The balance of $13.2 million is domestic and fixed price.
Very helpful, Bob. Appreciate that. I guess sticking with API2 for a second, what, you know, with the pullback we've seen, what do net backs look like at today's prices? Is that arb, you know, still open for you guys? Would also be helpful to get any kind of sensitivity there. I know you said you're assuming a $165 price in your pricing guidance for 2023. Then you also mentioned your long-term export contract with the collars for the year. Any color on where the net backs are relative to the floor and ceiling on those tons? Thanks.
Sure. I think we mentioned in the past that the coal that we sell into Europe, when you look at an API2 price, use somewhere around 65%-70% of that price, and that gets you back to an FOB mine price. That, again, takes into account discounts, quality adjustments, along with freight. When you're looking at a $140 API2 price, you're talking somewhere in that, you know, $90 range back to the mine. Again, that's really specific to coal that we're selling into Europe. As far as sensitivity is concerned, you know, I will tell you it's not linear because we do have different floors and ceilings across several contracts. A good estimate is for every dollar change in API2 prices, our overall portfolio change is approximately $0.10.
It has a very similar sensitivity to our power price as well. Again, that depends on, you know, loading months of vessels. Most of our contracts are priced based on the monthly average of the API2 price of the month of it loading. You know, as we do with our net back sensitivities, we'll continue to refine this as well every quarter.
That's very helpful, Bob. Appreciate that. You know, on the domestic side, we've also seen Northern Appalachia prices weaken as well, given the mild start to the winter season. You know, how are utilities from a stockpile perspective, you know, at this point that you guys can see? Is there any possibility of deferrals, you know, as we move forward through the year, or is it still a little early to think about that?
Yeah, I think it's early. Nate, you know, there certainly has been an increase in natural gas production since the end of last year. I really think the biggest issue here is really demand, right? I don't believe that there's that much of a supply response from the coal side right now. I personally believe that, you know, coal supply remains tight, and I expect that, you know, to continue as we head into summer. Right now, inventories across domestic customers are at comfortable levels. However, you know, that can change very quickly as we start seeing demand out of the US and Europe for that matter. I'll also tell you that, you know, many of our customers were sitting at less than 20 days of inventory heading into winter.
You know, as mentioned, this past month certainly afforded many to continue to build what I would call healthy levels. You know, we do have several customers that are still telling us that they likely will have some spot needs the back half of the year, so very positive there.
Yeah, and to Bobby's point, you know, most of these coal inventory builds that we've seen, they're certainly not due to oversupply. They are related more to demand, and we expect that. You know, second half of the year, we can't do anything with the weather or predict it. If that changes, you know, we have a typical summer like we've had, those inventory levels could become, you know, less than normal pretty quickly.
Appreciate that, guys. Any comments or thoughts on, you know, coal to gas switching that is occurring today, you know, with nat gas, you know, around $2.50 or so?
I mean, we're definitely seeing gas dispatch, a little bit more now than it has in the past, just based on this $2.50 range and where coal prices are. Again, I would tell you that as soon as demand picks up, I think you're gonna see more coal units come online.
Perfect. Just one final question, if I may. Any thoughts on cadence of shipments or even pricing as we move through the next four quarters? I think one of your peers noted that it was essentially sold out for the first half, expected pricing to improve in the second half, you know, as we see, hopefully the expectation for Europe to be back in the market to shore up supplies for next winter.
Yeah. I think you asked and nailed the question. We're not too concerned about the first half of the year. You know, we are pretty much committed and sold through that. Back half is where we have some open tons. Bobby can go into more detail there. We still feel really good about our ability to move coal into international markets and demand picking up second half of the year.
Again, I think Europe, there's a potential opportunity there for the second half of the year. you know, right now the gas that they have in storage today is Russian gas. Once that depletes, you know, they're gonna be relying fully on LNG. Also I think is important message is that, you know, our fifth longwall at Enlow Fork is our low sulfur longwall. We've been talking about it. It's the best quality. It's certainly opening up new markets for us, and also it gives us the ability to ship more into the crossover market. Based on where High-Vol B prices are today, you know that's the best market out there that's yielding, you know, triple digits back to the mine.
We'll continue to focus on those opportunities and obviously sell our coal, that take, you know, to places that yield the best realization back to us.
Great. I really appreciate the information, guys. Thanks for the time and best of luck in 2023.
Thanks, Nate.
If you have a question, please press star then one. Our next question here will come from Ryan Rahinsky with Blue Outlier Capital. Please go ahead.
Hi, good morning. Congrats on the quarter.
Hey, thanks.
I'm just trying to get some more color on the shareholder returns going forward. I'm really happy to see that you guys restarted buybacks this quarter. Any idea of the buybacks as a percentage of shareholder returns going forward? This quarter's shareholder returns are much more skewed towards dividends, and I'm just wondering if that can be expected going forward or whether dividends and buybacks will be more balanced.
Well, going forward, you know, as we said, we had that goal of $300 million gross debt. We saw this happening in Q1 is why we started our share repurchases in Q4. You know, we've purchased 124,000 shares or about $8 million. We expect to raise the return to shareholders 35%-50% as we continue to get rid of debt. If you look at it, we actually have paid down $647 million in debt since 2018. Sometimes we lose sight of that, but that's created equity value of $18 a share if you look at our 35 million shares outstanding. What we'll do is we're lucky enough to have great free cash flow generation.
If things hold, I think what you'll see us do is steadily increase that number, and we'll be able to do all three. If one provides a better return back to the shareholders, we could certainly pivot to that way. Currently, our plan is to stick with what Mitesh mentioned in his remarks. You know, we want to retire the Term Loan B as well as the second lien and continue to pay back, return to shareholders in forms of dividend or share backs. We really haven't thought too far about which way we lean on, do we go heavier on dividends or do we do all share buybacks? That'll be a board decision, and we'll have a discussion with them when the time comes.
The good news is we believe that we're gonna generate enough free cash flow to do all those things pretty quickly here in 2023.
Thank you. I appreciate the additional color.
Thank you.
Our next question will be a follow-up from Lucas Pipes with B. Riley Securities. Please go ahead.
Thank you very much for taking my follow-up question. I just wanted to try to get a little bit more color on the domestic market. How much buying of coal is going on today? Are utilities active today? Where would you place the domestic market for 2023 and 2024? Thank you very much.
Well, Lucas, you know, of the 8.3 million tons that we contracted forward through 2025, 5 million was to a domestic customer under a term deal through 2025. Again, I guess that just shows the fact that people are out there, buying term, but buying under term contracts. They are concerned about supply, going forward. We're also in discussions with another domestic customer of our term deal as well. When you look at the export side, I can't say much more, but, you know, we are in discussions with several end users in both Europe and Asia on term deals, and I'm hopeful, you know, by our next earnings call, we'll have a little bit more to report there.
The pricing is kind of in line with where markets are at the time we conclude those deals. I mean, we look at power and gas every time, at that present time we're concluding and basically coming up with what we feel is the right net back. I think the customers are doing the same. That continues to fluctuate. At $2.50 gas price, obviously the mine prices aren't as attractive as they were when they were $6, but there's still certainly profits being made, you know, in pretty much all cycles through the $2.50 through $7 gas price.
I really appreciate that color, Bob. You touched on it there. Obviously, like the domestic energy markets changed fairly dramatically since the beginning of December, more than a 50% drop. How much have attitudes changed? Is it too early to tell or is this having a real impact when you sit down with your utility customers?
I'd say it's too early to tell. I think you're gonna see a lot of utilities pretty much take a seat on the sidelines for the next couple of months, kinda see how this market evolves. As Jimmy mentioned, you know, inventory levels are, I would say, comfortable, but these can change very quickly. We saw that happen last year. Once we get into summer, if it is a game changer, I think you're gonna see a lot of utilities come to the market to try to secure their supply for the long term.
You know, I'd say give it two, three, four months, and by the time we have our next earnings call, we will have, I should say, more color, and be able to give some more commentary on that.
Lucas, I would add that, I think we have significant flexibility, as you know, of moving into domestic and export market depending on where the best arbitrage is, right? This is clearly visible in terms of the amount of exports that we are gonna do this year versus last year, despite having higher production numbers, right? I think we are gonna be market-driven and, you know, as markets change, we'll just adapt to it. Our terminal at Baltimore allows us that flexibility.
Very helpful. Thank you. Along this vein, do you have a target or rough target for 2024 split between domestic and exports?
Lucas, I would suggest to you we could see exports climb to 14 million tons or thereabouts in 2024. I mean, obviously we'll continue to watch the market and see where, you know, the best arbitrage is. I think 14 million tons is a possibility for 2024.
Thank you. back to the domestic market. Have you heard in the industry or have you experienced any requests from utilities to push out coal deliveries?
Nothing as of late. I still think it's too early. I mean, we're one month in. I'm not getting overly excited. Yeah, January didn't come in as expected. Again, look what happened last year. really the demand started hitting, you know, the Russo-Ukrainian War was at the end of February. We started seeing an uptick in the export business. Then domestically, they were burning, you know, many utilities were burning gas 'cause they didn't have coal in the summer months. That could potentially repeat itself and we're keeping a close eye on it. The good news for us is we're well contracted throughout the entire first half of this year. Most of our open position or almost all of it's in the second half.
If that does come to fruition, you know, we might move more into the domestic market. We'll just continue to watch and see what presents the best opportunity for us.
I really appreciate all the color. Thanks again and best of luck.
Thank you.
This concludes our question and answer session. I would like to turn the conference back over to Nathan Tucker for closing remarks.
Thanks, Joe. On behalf of CONSOL Energy, I'd like to thank everybody for their time and interest this morning. We look forward to speaking with you on our next earnings call. Thank you.
The conference has now concluded. Thank you very much for attending today's presentation. You may now disconnect your lines.