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ITEM 1.	CONDENSED FINANCIAL STATEMENTS

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(D)	Included in the Coal segment are sales of $127,734 and $84,602 to Xcoal Energy & Resources and Duke Energy, which comprises over 10% of sales.

(E)	Includes equity in earnings of unconsolidated affiliates of $1,031, $10,762 and $76 for E&P, Coal and All Other, respectively.

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(G)	Included in the Coal segment are sales of $189,921 and $188,491 to Duke Energy and Xcoal Energy & Resources, respectively, which comprises over 10% of sales.

(H)	Includes equity in earnings of unconsolidated affiliates of $12,810, $9,793 and $(1,091) for E&P, Coal and All Other, respectively.

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(J)	Included in the Coal segment are sales of $285,338 and $160,932 to Xcoal Energy & Resources and Duke Energy, respectively, which comprises over 10% of sales.

(K)	Includes equity in earnings of unconsolidated affiliates of $4,212, $12,294 and $160 for E&P, Coal and All Other, respectively.

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

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•	The improvement in the unit costs is primarily due to the increase in volumes in the period-to-period comparison and the shift to lower cost Marcellus production. Marcellus production made up 46% of gas sales volume for the three months ended June 30, 2014 compared to 27% in the three months ended June 30, 2013

•	Lifting costs per unit decreased in the period-to-period comparison due to the increase in sales volumes. The decrease was offset, in part, by an increase in total dollars relating to higher salt water disposal, and well site maintenance costs.

•	Gathering expense per unit also decreased in the period-to-period comparison due to the increase in sales volumes. The decrease in unit costs was partially offset by an increase in total dollars related to an increase in firm transportation costs and increased processing fees associated with natural gas liquids.

•	Depreciation, depletion and amortization increased as the portion of production from higher investment cost segments continued to grow.

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•	Earnings from our equity affiliates increased $6 million primarily due to an increase in earnings from CONE Gathering LLC. See Note 17 - Related Parties of the Notes to the Unaudited Consolidated Financial Statements of this Form 10-Q for additional information.

•	Interest income decreased $4 million due to the scheduled collection of the final installment in 2013 on the notes receivable from the 2011 Noble joint venture transaction.

•	The remaining $1 million decrease relates to various transactions that occurred throughout both periods, none of which were individually material.

•	CONSOL Energy, working in collaboration with Noble Energy, conceded title defects on acreage which had a book value of $2 million for the three months ended June 30, 2013.

•	Lease expiration costs relate to locations where CONSOL Energy allowed the primary lease term to expire because of unfavorable drilling economics. The $2 million decrease is due to various transactions that occurred throughout both periods, none of which were individually material.

•	Land Rentals decreased $1 million in the period-to-period comparison due to various transactions that occurred throughout both periods, none of which were individually material.

•	Other expenses decreased $1 million due to various transactions that occurred throughout both periods, none of which were individually material.

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•	Stock-based compensation decreased $1 million due to various transactions that occurred throughout both periods, none of which were individually material.

•	The short-term incentive compensation program is designed to increase compensation to eligible employees when CNX Gas reaches predetermined targets for, among other things, safety, production and unit costs. Short-term incentive compensation expense remained consistent in the period-to-period comparison.

•	Bank fees remained consistent in the period-to-period comparison.

•	Unutilized firm transportation costs and processing fees represent pipeline transportation capacity the E&P segment has obtained to enable gas production to flow uninterrupted as sales volumes increase, as well as additional processing capacity for NGLs. The $1 million increase is primarily due to increased firm transportation capacity which has not been utilized by active operations.

•	Other corporate related expenses decreased $2 million due to various transactions that occurred throughout both periods, none of which were individually material.

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•	For the three months ended June 30, 2014, $30 million of income was related to a coal customer contract buyout. The discontinued contract was a long term contract that created pricing risks for both parties. The parties agreed to an amicable settlement and anticipate a continued relationship in the future. No such transactions were entered into in the three months ended June 30, 2013.

•	Rental income increased $10 million due to equipment subleased to a third-party. These arrangements began in December 2013.

•	Royalty income decreased $1 million due to various transactions that occurred throughout both periods, none of which were individually material.

•	Equity in earnings of affiliates decreased $4 million due to various transactions completed by our equity partners, none of which were individually material.

•	Gain on sale of assets decreased $25 million primarily due to the sale of Potomac coal reserves in the three months ended June 30, 2013. No such transactions were entered into in the three months ended June 30, 2014.

•	Other increased $1 million due to various items, none of which were individually significant.

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Closed and idle mine costs decreased approximately $16 million for the three months ended June 30, 2014 compared to the three months ended June 30, 2013. This was due to a $14 million decrease in asset retirement obligations, primarily at the Fola Mining Complex. The remaining $2 million decrease was due to various changes in the operational status of other mines, between idled and operating, throughout both periods, none of which were individually material.

•	Purchased coal costs decreased $5 million due to lower volumes of coal that needed to be purchased to fulfill various contracts.

•	General and Administrative Expense related to the other coal segment remained consistent in the period-to-period comparison. Refer to the discussion of total general and administrative costs contained in the section entitled "Net Loss Attributable to CONSOL Energy Shareholders" of this quarterly report for detailed cost explanations.

•	Stock-based and Incentive Compensation remained consistent in the period-to-period comparison.

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Freight expense is based on weight of coal shipped, negotiated freight rates and method of transportation (i.e. rail, barge, truck, etc.) used by the customers to which CONSOL Energy contractually provides transportation services. Freight revenue is the amount billed to customers for transportation costs incurred. Freight expense is offset by freight revenue and remained consistent in the period-to-period comparison.

•	Depreciation, Depletion, and Amortization remained consistent in the period-to-period comparison.

•	Lease rental expense increased $7 million primarily due to equipment leases that are subleased to a third-party. The third-party subleases began in December 2013.

•	Other expenses related to the Other Coal segment increased $2 million due to various transactions that occurred throughout both periods, none of which were individually material.

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•	Loss on Debt Extinguishment of $74 million was recognized in the three months ended June 30, 2014 related to the early extinguishment of debt due to the purchase of all the 8.00% senior notes that were due 2017 at an average premium of 1.04%. No such transactions occurred in the prior period.

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Pension settlement expense is required when the lump sum distributions made for a given plan year exceeds the total of the service and interest costs for that same plan year. Settlement accounting was triggered in both periods. See Note 4 - Pension and Other Post-Employment Benefit Plans and Note 5 - Coal Workers' Pneumoconiosis (CWP) and Workers' Compensation Net Periodic Benefit Costs in the Notes to the Unaudited Consolidated Financial Statements of this Form 10-Q for additional detail of the total Company expense increase.

•	Interest expense increased $9 million due to a decrease in capitalized interest in the current period. The decrease in capitalized interest relates to the completion of several capital projects at the Bailey Complex.

•	Revolver modification fees related to a $3 million non-cash charge associated with entering into a new senior secured credit facility. The charge was related to the acceleration of previously deferred financing fees.

•	Bank fees remained consistent in the period-to-period comparison.

•	Other corporate items increased $2 million due to various transactions that occurred throughout both periods, none of which were individually material.

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•	The improvement in the unit costs is primarily due to the 28.9% increase in volumes in the period-to-period comparison and the shift to lower cost Marcellus production. Marcellus production made up 44% of gas sales volume for the six months ended June 30, 2014 compared to 27% in the six months ended June 30, 2013.

•	Lifting costs per unit decreased in the period-to-period comparison due to the increase in sales volumes. The decrease was offset, in part, by an increase in total dollars relating to higher salt water disposal, well site maintenance costs, and costs related to wells operated by our joint-venture partners.

•	Gathering expense per unit also decreased in the period-to-period comparison due to the increase in sales volumes. The decrease in unit costs was partially offset by an increase in total dollars related to an increase in firm transportation costs and increased processing fees associated with NGLs.

•	Ad valorem, severance, and other taxes increased in the period-to-period comparison due to the higher average gas sales price, without the impact of hedging, which is the primary basis for severance tax. The increase is also related to the increase in volumes sold and the mix of volumes by state.

•	Depreciation, depletion and amortization increased as the portion of production from higher investment cost segments continued to grow.

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•	Other income increased $16 million primarily due to an increase in revenue related to certain gathering arrangements.

•	Earnings from our equity affiliates increased $9 million primarily due to an increase in earnings from CONE Gathering LLC. See Note 17 - Related Parties of the Notes to the Unaudited Consolidated Financial Statements of this Form 10-Q for additional information.

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•	Interest income decreased $8 million due to the scheduled collection of the final installment in 2013 on the notes receivable from the 2011 Noble joint venture transaction.

•	The remaining $2 million increase relates to various transactions that occurred throughout both periods, none of which were individually material.

•	CONSOL Energy, working in collaboration with Noble Energy, conceded title defects on acreage which had a book value of $9 million for the six months ended June 30, 2013.

•	Lease expiration costs relate to locations where CONSOL Energy allowed the primary lease term to expire because of unfavorable drilling economics. The $1 million decrease is due to various transactions that occurred throughout both periods, none of which were individually material.

•	Land Rentals decreased $1 million in the period-to-period comparison due to various transactions that occurred throughout both periods, none of which were individually material.

•	Other expenses decreased $3 million due to various transactions that occurred throughout both periods, none of which were individually material.

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•	Unutilized firm transportation and processing fees represent pipeline transportation capacity the E&P segment has obtained to enable gas production to flow uninterrupted as sales volumes increase, as well as additional processing capacity for NGLs. The $5 million increase is primarily due to increased firm transportation capacity which has not been utilized by active operations.

•	The short term incentive compensation program is designed to increase compensation to eligible employees when CNX Gas reaches predetermined targets for, among other things, safety, production and unit costs. Short term incentive compensation expense was higher for the 2014 period compared to the 2013 period due to higher projected payouts.

•	Bank fees increased $1 million due to various items that occurred throughout both periods, none of which were individually material.

•	Stock-based compensation decreased $4 million in the period-to-period comparison primarily due to a reduction in the non-cash amortization expense and less accelerated expense for retiree eligible employees under our current plans.

•	Other corporate related expenses decreased $3 million due to various transactions that occurred throughout both periods, none of which were individually material.

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•	For the six months ended June 30, 2014, $30 million of income was related to a coal customer contract buyout. The discontinued contract was a long term contract that created pricing risks for both parties. The parties agreed to an amicable settlement and anticipate a continued relationship in the future. No such transactions were entered into in the six months ended June 30, 2013.

•	Rental income increased $23 million due to equipment subleased to a third-party. These arrangements began in December 2013.

•	Royalty income increased $1 million due to various transactions that occurred throughout both periods, none of which were individually material.

•	Equity in earnings of affiliates decreased $3 million due to various transactions completed by our equity partners, none of which were individually material.

•	Business interruption proceeds of $3 million were received in the prior year-to-date period related to the 2012 Bailey Belt Conveyor accident.

•	Gain on sale of assets decreased $26 million primarily due to the sale of Potomac coal reserves in the six months ended June 30, 2013. No such transactions were entered into in the six months ended June 30, 2014.

•	Other income increased $1 million due to various transactions that occurred throughout both periods, none of which were individually material.

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Closed and idle mine costs decreased approximately $20 million for the six months ended June 30, 2014 compared to the six months ended June 30, 2013. This was due to a $14 million decrease in the asset retirement obligation, primarily at the Fola Mining Complex. The remaining $6 million decrease was due to various changes in the operational status of other mines, between idled and operating throughout both periods, none of which were individually material.

•	Purchased coal costs decreased $10 million due to lower volumes of coal that needed to be purchased to fulfill various contracts.

•	General and Administrative Expense related to the other coal segment increased by $4 million primarily due to various transactions, none of which were individually material. Refer to the discussion of total general and administrative costs contained in the section entitled "Net Income (Loss) Attributable to CONSOL Energy Shareholders" of this quarterly report for detailed cost explanations.

•	Stock-based and Incentive Compensation decreased $1 million due to projected payout in both plans.

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Freight expense is based on weight of coal shipped, negotiated freight rates and method of transportation (i.e. rail, barge, truck, etc.) used by the customers to which CONSOL Energy contractually provides transportation services. Freight revenue is the amount billed to customers for transportation costs incurred. Freight expense is offset by freight revenue. The decrease in freight expense was due to lower shipments under contracts which CONSOL Energy contractually provides transportation services.

•	Lease rental expense increased $16 million primarily due to equipment leases that are subleased to a third-party. The third-party subleases began in December 2013.

•	Depreciation, Depletion, and Amortization increased $1 million primarily due to various transactions that occurred throughout both periods, none of which were individually material.

•	Other expenses related to the Other Coal segment increased $11 million due to various transactions that occurred throughout both periods, none of which were individually material.

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•	Loss on Debt Extinguishment of $74 million was recognized in the six months ended June 30, 2014 related to the early extinguishment of debt due to the purchase of all the 8.00% senior notes that were due 2017 at an average 1.04% premium. No such transactions occurred in the prior period.

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Interest expense increased $7 million primarily due to less capitalized interest associated with the completion of the Bailey Mine, Enlow Fork Mine, and the Harvey Mine capital projects. The increase was offset, in part, by the IRS audit resolution causing a reduction to anticipated interest (See Note 6 - Income Taxes of the Notes to the Condensed Consolidated Financial Statements of this Form 10-Q), and lower bond and revolving credit facility interest.

•	Revolver modification fees resulted in a $3 million acceleration of previously deferred financing fees.

•	Bank fees increased $1 million primarily due to various transactions that occurred throughout both periods, none of which were individually material.

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Pension settlement expense is required when the lump sum distributions made for a given plan year exceeds the total of the service and interest costs for that same plan year. Settlement accounting was triggered in both periods. See Note 4 - Pension and Other Post-Employment Benefit Plans and Note 5 - Coal Workers' Pneumoconiosis (CWP) and Workers' Compensation Net Periodic Benefit Costs in the Notes to the Unaudited Consolidated Financial Statements of this Form 10-Q for additional detail of the total Company expense increase.

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The CNX shareholder settlement was the result of an agreement for resolution of the class actions brought by shareholders of CNX Gas challenging the tender offer by CONSOL Energy to acquire all of the share of CNX Gas common stock that CONSOL Energy did not already own for $38.25 per share in May 2010. The total settlement provided for payment to the plaintiffs of $43 million, of which the Company's portion was $20 million.

•	Other corporate items decreased $6 million primarily due to various transactions that occurred throughout both periods, none of which were individually material.

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•	Net income increased $106 million in the period-to-period comparison.

•	Adjustments to reconcile net income to cash flow provided by operating activities increased $74 million due to the loss on extinguishment of debt, and additional depreciation, depletion and amortization of $46 million.

•	Income tax refunds of $72 million, net of payments, in the six months ended June 30, 2014 compared to $44 million of payments in the six months ended June 30, 2013.

•	These increases were offset, in part, by changes in discontinued operations.

•	Other changes in operating assets, operating liabilities, other assets and other liabilities which occurred throughout both periods also contributed to the increase in operating cash flows.

•	Capital expenditures from continuing operations increased $112 million in the period-to-period comparison due to:

◦	Gas segment capital expenditures increased $175 million. The increase was comprised of increased drilling activity in the Marcellus and Utica plays and various other individually insignificant projects;

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Coal segment capital expenditures decreased $38 million. The decrease was comprised of $18 million related to the Enlow Fork Overland Belt Project, which was completed in February 2014 and an $80 million decrease in various other projects none of which were individually material. The decrease was partially offset by an increase of $60 million for the acquisition of the Harvey Mine longwall shields;

◦	Other capital expenditures decreased $25 million due to a decrease in capitalized interest of $12 million related to the completion of the Harvey Mine Capital project and $13 million related to various other miscellaneous transactions that occurred throughout both periods, none of which were individually material.

•	Proceeds from the sale of assets, continuing operations, increased $25 million in the period-to-period comparison due to:

◦	$75 million received in March 2014 related to the Harvey Mine shield sale-leaseback;

◦	$46 million received in January 2014 as a reimbursement from Noble Energy for 50% of the Dominion Resources lease acquisition;

◦	$25 million received in June 2013 related to the sale of Potomac Coal reserves;

◦	$71 million received in January 2013 related to the Bailey Mine longwall shield sale-leaseback;

•	Net investments in equity affiliates increased $22 million due to $21 million in additional capital contributions to CONE in 2014 and $1 million in various miscellaneous transactions that occurred throughout both periods, none of which were individually material.

•	Restricted cash decreased $69 million due to the release of the cash restrictions including $48 million associated with the Ram River & Scurry Canadian asset proceeds and $21 million associated with the Ryerson Dam Settlement.

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•	Discontinued Operations decreased $82 million due to no activity occurring in 2014 and proceeds for two long wall shield sale leasebacks in 2013.

•	In the six months ended June 30, 2014, CONSOL Energy repaid $3 million of miscellaneous borrowings. In the six months ended June 30, 2013, CONSOL Energy repaid $30 million of miscellaneous borrowings.

•	In the six months ended June 30, 2014, CONSOL Energy paid $12 million related to transaction fees in the refinancing of the revolving credit facilities. As compared to $173 million of short term borrowings received under the revolving credit facilities in the six months ended June 30, 2013.

•	In six months ended June 30, 2014, CONSOL Energy received $13 million due to the issuance of common stock as compared to $2 million received by the issuance of common stock in 2013.

•	In 2013, CONSOL Energy received $3 million of borrowings under its Securitization Facility, there was no activity in 2014.

•	In the six months ended June 30, 2014, CONSOL Energy had net proceeds from long-term borrowings of $16 million. See Note 11 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Staments of this Form 10-Q for additional details.

•	The remaining change is due to various other transactions that occurred throughout both periods, none of which were individually material.

(a)	Long-Term Liabilities - Employee Related include other post-employment benefits, work-related injuries and illnesses. Estimated salaried retirement contributions required to meet minimum funding standards under ERISA are excluded from the payout table due to the uncertainty regarding amounts to be contributed. Estimated 2014 contributions are expected to be approximately $9 million.

(b)	Other long-term liabilities include mine reclamation and closure and other long-term liability costs.

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

•	An aggregate principal amount of $1.25 billion of 8.25% senior unsecured notes due in April 2020. Interest on the notes is payable April 1 and October 1 of each year. Payment of the principal and interest on the notes are guaranteed by most of CONSOL Energy’s subsidiaries.

•	An aggregate principal amount of $250 million of 6.375% senior unsecured notes due in March 2021. Interest on the notes is payable March 1 and September 1 of each year. Payment of the principal and interest on the notes are guaranteed by most of CONSOL Energy’s subsidiaries.

•	An aggregate principal amount of $1.6 billion of 5.875% notes due in April 2022. Interest on the notes is payable April 15 and October 15 of each year. Payment of the principal and interest on the notes are guaranteed by most of CONSOL Energy's subsidiaries.

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•	An aggregate principal amount of $103 million of industrial revenue bonds which were issued to finance the Baltimore port facility and bear interest at 5.75% per annum and mature in September 2025. Interest on the industrial revenue bonds is payable March 1 and September 1 of each year.

•	Advance royalty commitments of $11 million with an average interest rate of 7.93% per annum.

•	An aggregate principal amount of $4 million on other various rate notes maturing through June 2031.

•	An aggregate principal amount of $53 million of capital leases with a weighted average interest rate of 6.35% per annum.

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•	deterioration in global economic conditions in any of the industries in which our customers operate, or sustained uncertainty in financial markets cause conditions we cannot predict;

•	an extended decline in demand for or prices we receive for our natural gas and coal affecting our operating results and cash flows;

•	our customers extending existing contracts or entering into new long-term contracts for coal;

•	our reliance on major customers;

•	our inability to collect payments from customers if their creditworthiness declines;

•	the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our natural gas and coal to market;

•	a loss of our competitive position because of the competitive nature of the natural gas and coal industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability;

•	coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions;

•	the impact of potential, as well as any adopted regulations relating to greenhouse gas emissions on the demand for natural gas and coal;

•	foreign currency fluctuations could adversely affect the competitiveness of our coal abroad;

•	the risks inherent in natural gas and coal operations being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results;

•	decreases in the availability of, or increases in, the price of commodities or capital equipment used in our mining operations;

•	decreases in the availability of, an increase in the prices charged by third party contractors or, failure of third party contractors to provide quality services to us in a timely manner could impact our profitability;

•	obtaining and renewing governmental permits and approvals for our natural gas and coal operations;

•	the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas and coal operations;

•	our ability to find adequate water sources for our use in gas drilling, or our ability to dispose of water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules;

•	the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down a natural gas well or a mine;

•	the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current gas and coal operations;

•	the effects of mine closing, reclamation, gas well closing and certain other liabilities;

•	uncertainties in estimating our economically recoverable gas and coal reserves;

•	defects may exist in our chain of title and we may incur additional costs associated with perfecting title for gas or coal rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves;

•	the impacts of various asbestos litigation claims;

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•	the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934;

•	increased exposure to employee-related long-term liabilities;

•	lump sum payments made to retiring salaried employees pursuant to our defined benefit pension plan exceeding total service and interest cost in a plan year;

•	acquisitions that we recently have completed or may make in the future including the accuracy of our assessment of the acquired businesses and their risks, achieving any anticipated synergies, integrating the acquisitions and unanticipated changes that could affect assumptions we may have made and divestitures we anticipate may not occur or produce anticipated proceeds;

•	the terms of our existing joint ventures restrict our flexibility, actions taken by the other party in our gas joint ventures may impact our financial position and various circumstances could cause us not to realize the benefits we anticipate receiving from these joint ventures;

•	risks associated with our debt;

•	replacing our natural gas reserves, which if not replaced, will cause our gas reserves and gas production to decline;

•	our hedging activities may prevent us from benefiting from price increases and may expose us to other risks;

•	changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate;

•	failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition;

•	failure by Murray Energy to satisfy liabilities it acquired from us, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; and

•	other factors discussed in this 2013 Form 10-K under “Risk Factors,” as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.

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ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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ITEM 4.	CONTROLS AND PROCEDURES

ITEM 1.	LEGAL PROCEEDINGS

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ITEM 6.	EXHIBITS

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