Commentary on this conference call may contain forward-looking statements within the meaning of the federal securities laws. National Fuel Gas Company (the “Company”) is providing this cautionary statement 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, the Company.

Forward-looking statements include, without limitation, statements regarding future prospects, plans, objectives, goals, projections, estimates of oil and gas quantities, strategies, future events or performance and underlying assumptions, capital structure, anticipated capital expenditures, completion of construction projects, projections for pension and other post-retirement benefit obligations, impacts of the adoption of new accounting rules, and possible outcomes of litigation or regulatory proceedings, as well as statements that are identified by the use of the words "anticipates," "estimates," "expects," "forecasts," "intends," "plans," "predicts," "projects," "believes," "seeks," "will," "may" and similar expressions. All forward-looking statements, whether written or oral and whether made by or on behalf of the Company, are expressly qualified by these cautionary statements. Forward-looking statements involve risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements.

The Company's expectations, beliefs and projections are expressed in good faith and are believed by the Company to have a reasonable basis, but there can be no assurance that management's expectations, beliefs or projections will result or be achieved or accomplished.

In addition to other factors, the following are important factors that, in the view of the Company, could cause actual results to differ materially from those discussed in the forward-looking statements:

  1. Delays or changes in costs or plans with respect to Company projects or related projects of other companies, including difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators;
  2. Governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, target rates of return, rate design and retained natural gas), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal;
  3. Changes in laws, regulations or judicial interpretations to which the Company is subject, including those involving derivatives, taxes, safety, employment, climate change, other environmental matters, real property, and exploration and production activities such as hydraulic fracturing;
  4. Financial and economic conditions, including the availability of credit, and occurrences affecting the Company’s ability to obtain financing on acceptable terms for working capital, capital expenditures and other investments, including any downgrades in the Company’s credit ratings and changes in interest rates and other capital market conditions;
  5. Changes in the price of natural gas or oil;
  6. Impairments under the SEC’s full cost ceiling test for natural gas and oil reserves;
  7. Factors affecting the Company’s ability to successfully identify, drill for and produce economically viable natural gas and oil reserves, including among others geology, lease availability, title disputes, weather conditions, shortages, delays or unavailability of equipment and services required in drilling operations, insufficient gathering, processing and transportation capacity, the need to obtain governmental approvals and permits, and compliance with environmental laws and regulations;
  8. Increasing health care costs and the resulting effect on health insurance premiums and on the obligation to provide other post-retirement benefits;
  9. Changes in price differentials between similar quantities of natural gas or oil at different geographic locations, and the effect of such changes on commodity production, revenues and demand for pipeline transportation capacity to or from such locations;
  10. Other changes in price differentials between similar quantities of natural gas or oil having different quality, heating value, hydrocarbon mix or delivery date;
  11. The cost and effects of legal and administrative claims against the Company or activist shareholder campaigns to effect changes at the Company;
  12. Uncertainty of oil and gas reserve estimates;
  13. Significant differences between the Company’s projected and actual production levels for natural gas or oil;
  14. Changes in demographic patterns and weather conditions;
  15. Changes in the availability, price or accounting treatment of derivative financial instruments;
  16. Changes in laws, actuarial assumptions, the interest rate environment and the return on plan/trust assets related to the Company’s pension and other post-retirement benefits, which can affect future funding obligations and costs and plan liabilities;
  17. Changes in economic conditions, including global, national or regional recessions, and their effect on the demand for, and customers’ ability to pay for, the Company’s products and services;
  18. The creditworthiness or performance of the Company’s key suppliers, customers and counterparties;
  19. The impact of potential information technology, cybersecurity or data security breaches;
  20. Economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities or acts of war;
  21. Significant differences between the Company’s projected and actual capital expenditures and operating expenses; or Increasing costs of insurance, changes in coverage and the ability to obtain insurance.

Any forward-looking statements contained in this conference call speak only as of the date of this call. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date of this conference call. Investors are urged to consider closely the disclosure in our Form 10-K and Forms 10-Q, available at www.investor.nationalfuelgas.com. You can also obtain these forms on the SEC’s website at www.sec.gov.

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press-release-details
Press release details

National Fuel Reports Third Quarter Earnings and Provides Initial Guidance for Fiscal 2019

08/02/2018

WILLIAMSVILLE, N.Y., Aug. 02, 2018 (GLOBE NEWSWIRE) -- National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated results for the third quarter of its 2018 fiscal year and for the nine months ended June 30, 2018. The Company also provided preliminary earnings and operational guidance for fiscal 2019.

FISCAL 2018 THIRD QUARTER SUMMARY

•      GAAP earnings of $63.0 million, or $0.73 per share, compared to $59.7 million, or $0.69 per share, in the prior year
•      Consolidated Adjusted EBITDA of $168.6 million (non-GAAP reconciliation on page 23)
•      Pipeline & Storage segment operating income of $35.5 million, up 6% on higher operating revenues
•      Net natural gas and oil production of 44.6 Bcfe, up 4% from the prior year
•      Average natural gas prices, after the impact of hedging, of $2.43 per Mcf, down $0.51 per Mcf from the prior year
•      Average oil prices, after the impact of hedging, of $58.74 per Bbl, up $5.72 per Bbl from the prior year
•      Reduction in federal tax rate from the 2017 Tax Reform Act resulted in a net earnings benefit of $11.2 million, or $0.14 per share for the quarter, helping to offset the expected decline in realized natural gas prices

GUIDANCE UPDATE

•      Raising and tightening FY18 earnings guidance to $3.30 to $3.40 per share (see non-GAAP discussion on page 5)
•      Initiating FY19 earnings guidance at $3.30 to $3.60 per share, at the midpoint a $0.10 per share increase over FY18
•      FY19 production of 210 to 230 Bcfe, a 24 percent increase over estimated FY18 production
•      Firm contracts in place for more than 85% of FY19 Appalachian natural gas production at attractive pricing
•      FY19 capital expenditures are expected to be in the range of $745 million to $845 million
•      At midpoint of expected guidance ranges, substantially all of FY19 capital expenditures are expected to be funded by internally generated cash flows

                 
    Three Months Ended   Nine Months Ended
    June 30,   June 30,
(in thousands except per share amounts)   2018   2017   2018   2017
Reported GAAP Earnings   $ 63,025     $ 59,714     $ 353,527     $ 237,906  
Items impacting comparability                
Remeasurement of deferred income taxes
under 2017 Tax Reform
          (107,000 )    
Adjusted Operating Results   $ 63,025     $ 59,714     $ 246,527     $ 237,906  
                 
Reported GAAP Earnings per share   $ 0.73     $ 0.69     $ 4.09     $ 2.77  
Items impacting comparability                
Remeasurement of deferred income taxes
under 2017 Tax Reform
          (1.24 )    
Adjusted Operating Results per share   $ 0.73     $ 0.69     $ 2.85     $ 2.77  
                                 

MANAGEMENT COMMENTS

Ronald J. Tanski, President and Chief Executive Officer of National Fuel Gas Company, stated: “We had an excellent fiscal third quarter with each of our business segments achieving solid financial results.  Typically a quarter where we expect lower earnings due to the impact of seasonality on our Utility segment, consolidated results surpassed our forecast on better than projected commodity pricing realized on Seneca’s production, higher Pipeline & Storage revenues, and lower operating expenses across the system.

“Operationally, we continue to execute on our long-term strategic plans to grow our upstream and midstream businesses in tandem and pull forward the value of our integrated asset position in Appalachia. Seneca added a third drilling rig in May to focus more development in the Utica shale where results continue to impress.  As we look forward into fiscal 2019, our Gathering segment will benefit from Seneca’s increase in production, a majority of which is contracted to be sold at attractive pricing.  Coupled with the stability of our utility and pipeline businesses, we expect to continue to generate a predictable and growing base of earnings and cash flows that will add value for our shareholders and position us to achieve our long-term plans for organic growth across our integrated businesses.”

DISCUSSION OF RESULTS BY SEGMENT

The following discussion of the earnings of each operating segment is summarized in a tabular form on pages 8 through 11 of this report.  It may be helpful to refer to those tables while reviewing this discussion.  Note that management defines Adjusted EBITDA as reported GAAP earnings before the following items: interest expense, income taxes, depreciation, depletion and amortization, interest and other income, impairments, and other items reflected in operating income that impact comparability.

Upstream Business

Exploration and Production Segment

The Exploration and Production segment operations are carried out by Seneca Resources Company, LLC ("Seneca").  Seneca explores for, develops and produces natural gas and oil reserves, primarily in Pennsylvania and California.

       
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
(in thousands except per share amounts) 2018   2017   Variance   2018   2017   Variance
Net Income $ 27,817     $ 30,123     $ (2,306 )   $ 161,052     $ 98,972     $ 62,080  
Net Income Per Share (Diluted) $ 0.32     $ 0.35     $ (0.03 )   $ 1.86     $ 1.15     $ 0.71  
Adjusted EBITDA $ 76,935     $ 89,229     $ (12,294 )   $ 235,199     $ 285,675     $ (50,476 )
                                               

The Exploration and Production segment’s third quarter earnings declined $2.3 million, as the positive impacts of higher natural gas production, better realized crude oil prices, lower lease operating and transportation (“LOE”) expenses, and a lower effective income tax rate were negatively impacted by lower realized natural gas prices and higher depreciation, depletion and amortization (“DD&A”) expense.

Seneca’s third quarter net production was 44.6 billion cubic feet equivalent (“Bcfe”), an increase of 1.9 Bcfe from the prior year.  Natural gas production increased 2.3 billion cubic feet (“Bcf”), or 6 percent, due primarily to production from new Marcellus and Utica wells completed and connected to sales in the WDA-Clermont and EDA-Lycoming development areas after adding a second drilling rig in Appalachia in the third quarter of 2017.  Seneca's average realized natural gas price, after the impact of hedging and transportation costs, was $2.43 per thousand cubic feet ("Mcf"), a decrease of $0.51 per Mcf from the prior year.  The decline in Seneca’s average realized natural gas price is primarily attributable to the expiration of physical firm sales and financial hedge contracts over the past 12 months that had favorable pricing relative to firm sales and hedges settled in the current quarter.

Seneca’s oil production decreased 69 thousand barrels ("Mbbl") versus the prior year due largely to the expected reduction in California production after the sale of Seneca’s Sespe properties, which closed on May 1, 2018.  Seneca's average realized oil price, after the impact of hedging, was $58.74 per barrel ("Bbl"), an increase of $5.72 per Bbl.  The improvement in oil price realizations was due primarily to higher market prices for West Texas Intermediate (WTI) crude oil during the quarter and stronger price differentials relative to WTI at local sales points in California.

LOE expense for the quarter decreased $3.0 million due to lower operating costs in California following the sale of Seneca’s Sespe properties and lower workover costs combined with a reduction in costs to operate compression facilities in Tioga County, Pennsylvania, which were acquired by the Gathering segment from Seneca in the second quarter of 2018.  These decreases were partially offset by higher gathering expenses in Appalachia due to the increase in natural gas production.   On a per unit of production basis, LOE expense was $0.84 per thousand cubic feet equivalent (“Mcfe”), a decrease of $0.11 per Mcfe from the prior year.

DD&A expense increased $3.8 million due to the increase in production and a higher per unit depletion rate.  The depletion rate for the quarter increased by $0.06 per Mcfe to $0.70 per Mcfe due mainly to a higher depletable fixed asset balance at June 30, 2018, as Seneca has increased development activity in Appalachia over the past year.

The decrease in the segment’s effective tax rate was mostly due to the 2017 Tax Reform Act, which reduced the Company’s federal statutory corporate tax rate in fiscal 2018 and benefited Seneca’s third quarter earnings by $6.2 million, or $0.07 per share.

See page 20 for additional comparative information on the Exploration & Production segment’s production, realized pricing and per unit operating costs.

Midstream Businesses

Pipeline and Storage Segment

The Pipeline and Storage segment’s operations are carried out by National Fuel Gas Supply Corporation (“Supply Corporation”) and Empire Pipeline, Inc. (“Empire”).  The Pipeline and Storage segment provides natural gas transportation and storage services to affiliated and non-affiliated companies through an integrated system of pipelines and underground natural gas storage fields in western New York and Pennsylvania.

       
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
(in thousands except per share amounts) 2018   2017   Variance   2018   2017   Variance
Net Income $ 20,723     $ 16,031     $ 4,692     $ 81,909     $ 54,656     $ 27,253  
Net Income Per Share (Diluted) $ 0.24     $ 0.19     $ 0.05     $ 0.95     $ 0.64     $ 0.31  
Adjusted EBITDA $ 46,428     $ 44,163     $ 2,265     $ 147,342     $ 141,279     $ 6,063  
                                               

The Pipeline and Storage segment’s third quarter earnings increased $4.7 million due primarily to higher operating revenues, lower interest expense, and a lower effective income tax rate.  Operating revenues increased $2.2 million, or 3 percent, versus the prior year due to new demand charges for transportation service from Supply Corporation’s Line D Expansion project, which was placed in service on November 1, 2017, an increase in storage revenues resulting from Supply Corporation’s acquisition of the remaining interest in a jointly owned storage field during the quarter, additional revenues from short-term transportation contracts, and surcharge revenues relating to Supply Corporation’s greenhouse gas and pipeline safety system enhancements that also went into effect in November 2017.

The $0.8 million decrease in interest expense was primarily due to a lower weighted average interest rate on long-term debt.  The interest rate decreased following the Company’s issuance of 3.95 percent notes to repay 6.5 percent notes in October 2017.  The decrease in the effective income tax rate was due primarily to the 2017 Tax Reform Act, which reduced the Company’s federal statutory corporate tax rate and benefited the segment’s earnings by $3.0 million, or $0.04 per share.

Gathering Segment

The Gathering segment’s operations are carried out by National Fuel Gas Midstream Company, LLC’s subsidiary limited liability companies. The Gathering segment constructs, owns and operates natural gas gathering pipelines and compression facilities in the Appalachian region which currently delivers Seneca’s gross Appalachian production to the interstate pipeline system.

       
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
(in thousands except per share amounts) 2018   2017   Variance   2018   2017   Variance
Net Income $ 11,566     $ 10,107     $ 1,459     $ 68,736     $ 31,373     $ 37,363  
Net Income Per Share (Diluted) $ 0.13     $ 0.12     $ 0.01     $ 0.80     $ 0.37     $ 0.43  
Adjusted EBITDA $ 23,008     $ 23,901     $ (893 )   $ 67,877     $ 73,174     $ (5,297 )
                                               

The $1.5 million increase in the Gathering segment’s third quarter earnings was due mainly to higher revenues and a lower effective income tax rate, offset partially by an increase in operation and maintenance ("O&M") expense.  Operating revenues increased $1.0 million, or 4 percent, versus the prior year due primarily to a 2.6 Bcf increase in throughput from Seneca’s Appalachian natural gas production.

The $1.9 million increase in O&M expense was due largely to the operation of new compression facilities along the Covington gathering system that were acquired from affiliate Seneca in March 2018, an increase in facilities and maintenance activity at the Clermont gathering system,  and a non-recurring loss recognized on the sale of pipe materials.  The decrease in the effective income tax rate was due primarily to the 2017 Tax Reform Act, which reduced the Company’s federal statutory corporate tax rate and benefited the segment’s earnings by $2.4 million, or $0.03 per share.

Downstream Businesses

Utility Segment

The Utility segment operations are carried out by National Fuel Gas Distribution Corporation (“Distribution”), which sells or transports natural gas to customers located in western New York and northwestern Pennsylvania.

       
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
(in thousands except per share amounts) 2018   2017   Variance   2018   2017   Variance
Net Income $ 3,930     $ 4,348     $ (418 )   $ 58,283     $ 51,103     $ 7,180  
Net Income Per Share (Diluted) $ 0.05     $ 0.05     $     $ 0.67     $ 0.59     $ 0.08  
Adjusted EBITDA $ 24,366     $ 25,322     $ (956 )   $ 137,364     $ 139,232     $ (1,868 )
                                               

The Utility segment’s third quarter earnings decreased $0.4 million as the positive impact of colder weather was more than offset by higher O&M expense and the impact of tax reform.  Weather in Distribution’s Pennsylvania service territory was 17 percent colder than last year, resulting in higher residential and transportation customer throughput and revenues.  The impact of weather variations on earnings in Distribution’s New York service territory is largely mitigated by that jurisdiction’s weather normalization clause.  O&M expense increased $1.3 million due mainly to higher personnel costs, primarily pension costs. The net impact of the 2017 Tax Reform Act, including a $0.5 million customer refund provision ($0.4 million after-tax) that reduced the segment’s operating revenues, lowered third quarter earnings by $0.3 million.

Energy Marketing Segment

The Energy Marketing segment's operations are carried out by National Fuel Resources, Inc. (“NFR”).  NFR markets natural gas to industrial, wholesale, commercial, public authority, and residential customers primarily in western and central New York and northwestern Pennsylvania, offering competitively priced natural gas to its customers.

       
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
(in thousands except per share amounts) 2018   2017   Variance   2018   2017   Variance
Net Income / (Loss) $ (190 )   $ (564 )   $ 374     $ 1,434     $ 2,122     $ (688 )
Net Income / (Loss) Per Share (Diluted) $     $ (0.01 )   $ 0.01     $ 0.02     $ 0.02     $  
Adjusted EBITDA $ (419 )   $ (1,017 )   $ 598     $ 2,187     $ 3,213     $ (1,026 )
                                               

The Energy Marketing segment’s third quarter earnings increased $0.4 million due largely to higher margins (operating revenues less purchased gas expenses).  NFR’s customer margins were positively impacted by weaker natural gas prices at local purchase points relative to NYMEX-based customer sales contracts and higher volumes due to colder weather.

Corporate and All Other

For the third quarter of fiscal 2018, the Corporate and All Other category had a net loss of $0.8 million compared to a net loss of $0.3 million in the prior year.  The increase in the net loss was primarily attributable to higher income tax expense offset partially by an increase in sales generated by the Company’s timber operations.

GUIDANCE

The Company is raising and tightening its earnings guidance for fiscal 2018 to a range of $3.30 to $3.40 per share to reflect the impact of actual results for the nine months ended June 30, 2018, and updates to key forecast assumptions, including revisions to the expected consolidated effective tax rate and the Exploration and Production segment’s forecasted production, oil pricing, and operating expense assumptions, as outlined in the table below.

  The revised fiscal 2018 earnings guidance does not include the impact of the remeasurement of deferred income taxes resulting from the 2017 Tax Reform Act, which reduced the Company’s consolidated income tax expense and benefited earnings for the nine months ended June 30, 2018, by $107.0 million, or $1.24 per share.  While the Company expects to record additional adjustments to its deferred income taxes as a result of the 2017 Tax Reform Act during the last three months of fiscal 2018, the amounts of these and other potential adjustments are not reasonably determinable at this time.  The final determination of the impact of the income tax effects of certain items will require additional analysis and further interpretation of the 2017 Tax Reform Act from yet to be issued U.S. Treasury regulations, state income tax guidance, federal and state regulatory guidance, and possible technical corrections.  Some or all of these factors may be significant.  Because the amounts of final adjustments are not reasonably determinable at this time, the Company is unable to provide earnings guidance other than on a non-GAAP basis that excludes the impact of the remeasurement of deferred income taxes and other potential adjustments.

The Company is also initiating preliminary guidance for fiscal 2019.  National Fuel is projecting that its fiscal 2019 earnings will be within a range of $3.30 to $3.60 per share, or $3.45 per share at the midpoint of the range.  The $0.10 per share increase from the fiscal 2018 earnings guidance midpoint is being driven primarily by an increase in Seneca’s forecasted natural gas production and the associated impact on Gathering segment revenues, offset partially by lower expected natural gas price realizations after hedging and lower Pipeline & Storage segment revenues.

Seneca’s fiscal 2019 net production is expected to be in the range of 210 to 230 Bcfe, an increase of 24 percent from fiscal 2018 at the midpoint of the respective ranges.  Seneca added a third drilling rig in Appalachia this past May, which is the main driver of the expected 42.5 Bcf increase year over year.  The midpoint of the production range does not assume any price related curtailments. The increase in Seneca’s production is also expected to generate higher throughput and revenues for the Company’s Gathering segment. At the midpoint of the range, Gathering revenues are forecasted to increase by approximately $25 million, or 23 percent, to $135 million for fiscal 2019.

Seneca has approximately 176 Bcf, or more than 85 percent of its fiscal 2019 projected Appalachian natural gas production sold under physical firm contracts with third parties, leaving a modest amount of production exposed to local spot prices for the year.  Seneca's net-back pricing on approximately 140 Bcf of the 176 Bcf of production sold firm is currently locked-in using a combination of financial hedges and fixed-price contracts that achieve a certain weighted average realized price of $2.44 per Mcf for the year.  Assuming NYMEX natural gas pricing of $2.75 per MMBtu and including the impact of local spot pricing and firm transportation costs, Seneca expects its fiscal 2019 net realized gas price after hedging to be approximately $2.35 per Mcf, which is a decrease of $0.15 per Mcf from Seneca’s expected realized pricing after hedging of $2.50 per Mcf for fiscal 2018.

Seneca’s oil operations in California are expected to produce approximately 17 Bcfe in fiscal 2019, relatively flat versus fiscal 2018 excluding production from the California Sespe properties sold in May 2018.  Seneca is approximately 72 percent hedged on an expected 2.5 million Bbls of oil production in fiscal 2019 at an average hedge price of $57.57 per Bbl.

The Company expects Pipeline & Storage segment revenues to decrease from approximately $295 million in fiscal 2018 to $285 million in fiscal 2019. The $10 million reduction reflects the anticipated roll-off of a significant counter-flow, legacy contract on the Company’s Empire Pipeline system in December 2018 (as discussed on the Company’s first quarter 2018 earnings teleconference).  In response, Empire Pipeline filed a rate case in June 2018 with the Federal Energy Regulatory Commission (“FERC”).  The requested increase in transportation rates, which is expected to partially offset the loss of the contract revenues, is anticipated to be effective January 1, 2019, subject to refund.

Consolidated capital expenditures in fiscal 2019 are expected to be in a range of $745 million to $845 million, a $180 million increase from the midpoint of the Company’s fiscal 2018 capital expenditure guidance.  The primary drivers of the increase are Seneca’s development activity in Appalachia, where the Company plans to operate three drilling rigs for the entirety of the fiscal year, coupled with the impact of the completion of the 75 well Marcellus shale joint development agreement (“JDA”) earlier in fiscal 2018.  Seneca’s JDA partner contributed $17 million in initial conveyance proceeds and an additional $25 million for its 80 percent working interest to complete the final 12 JDA wells, which offset Seneca’s fiscal 2018 total capital expenditures and is reflected in the fiscal 2018 guidance range of $350 million to $370 million.  Pipeline & Storage segment capital expenditures are expected to increase by $50 million at the midpoint of the range due to higher spending on expansion projects and system modernization.  At the midpoint of the fiscal 2019 guidance ranges, substantially all of the Company's capital expenditures are expected to be funded by internally generated cash flows.

Additional details on the Company's forecast assumptions and business segment guidance for fiscal 2019 are outlined in the table below.

           
      Updated FY 2018 Guidance   Preliminary FY 2019 Guidance
Consolidated Earnings per Share (1)     $3.30 to $3.40   $3.30 to $3.60
Consolidated Effective Tax Rate (1)     ~25%   ~25%
           
Capital Expenditures (Millions)          
  Exploration and Production (2)     $350 - $370   $460 - $500
  Pipeline and Storage     $100 - $120   $140 - $180
  Gathering     $55 - $65   $55 - $65
  Utility     $80 - $90   $90 - $100
  Consolidated Capital Expenditures     $585 - $645   $745 - $845
           
Exploration & Production Segment Guidance          
           
  Commodity Price Assumptions          
  NYMEX natural gas price     $2.75 /MMBtu   $2.75 /MMBtu 
  Appalachian basin spot price (winter | summer)     $2.00 /MMBtu   $2.40 /MMBtu | $2.00 /MMBtu 
  NYMEX (WTI) crude oil price     $65.00 /Bbl   $65.00 /Bbl 
  California oil price (% of WTI)     100%   100% 
           
  Production (Bcfe)          
  East Division - Appalachia     157 to 162   193 to 213 
  West Division - California     ~ 18   ~ 17 
  Total Production     175 to 180   210 to 230 
           
  E&P Operating Costs ($/Mcfe)          
  LOE     $0.90 - $0.95   $0.85 - $0.90 
  G&A     $0.30 - $0.35   $0.25 - $0.35 
  DD&A     ~ $0.70   $0.70 - $0.75 
           
Other Business Segment Guidance (Millions)          
  Gathering Segment Revenues     ~$110   $130 - $140 
  Pipeline and Storage Segment Revenues     ~$295   ~$285 
           


(1)   FY18 excludes earnings impact of the remeasurement of deferred income taxes resulting from the 2017 Tax Reform Act.
(2)   FY18 net of proceeds received from joint development partner for working interest in joint development wells.

EARNINGS TELECONFERENCE

The Company will host a conference call on Friday, August 3, 2018, at 11 a.m. Eastern Time to discuss this announcement.  There are two ways to access this call.  For those with Internet access, visit the NFG Investor Relations News & Events page at National Fuel’s website at investor.nationalfuelgas.com.  For those without Internet access, audio access is also provided by dialing (toll-free) 833-287-0795, using conference ID number “1984229.”  For those unable to listen to the live conference call, an audio replay will be available approximately two hours following the teleconference at the same website link and by phone at (toll-free) 800-585-8367 using conference ID number “1984229.”  Both the webcast and a telephonic replay will be available until the close of business on Friday, August 10, 2018.

National Fuel is an integrated energy company reporting financial results for five operating segments: Exploration and Production, Pipeline and Storage, Gathering, Utility, and Energy Marketing.  Additional information about National Fuel is available at www.nationalfuelgas.com.

     
     
Analyst Contact: Kenneth E. Webster 716-857-7067
Media Contact: Karen L. Merkel 716-857-7654
     

 

Certain statements contained herein, including statements identified by the use of the words “anticipates,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “predicts,” “projects,” “believes,” “seeks,” “will,” “may” and similar expressions, and statements which are other than statements of historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Company’s expectations, beliefs and projections contained herein are expressed in good faith and are believed to have a reasonable basis, but there can be no assurance that such expectations, beliefs or projections will result or be achieved or accomplished. In addition to other factors, the following are important factors that could cause actual results to differ materially from those discussed in the forward-looking statements: delays or changes in costs or plans with respect to Company projects or related projects of other companies, including difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators; governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, target rates of return, rate design and retained natural gas), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal; changes in laws, regulations or judicial interpretations to which the Company is subject, including those involving derivatives, taxes, safety, employment, climate change, other environmental matters, real property, and exploration and production activities such as hydraulic fracturing; financial and economic conditions, including the availability of credit, and occurrences affecting the Company’s ability to obtain financing on acceptable terms for working capital, capital expenditures and other investments, including any downgrades in the Company’s credit ratings and changes in interest rates and other capital market conditions; changes in the price of natural gas or oil; impairments under the SEC’s full cost ceiling test for natural gas and oil reserves; factors affecting the Company’s ability to successfully identify, drill for and produce economically viable natural gas and oil reserves, including among others geology, lease availability, title disputes, weather conditions, shortages, delays or unavailability of equipment and services required in drilling operations, insufficient gathering, processing and transportation capacity, the need to obtain governmental approvals and permits, and compliance with environmental laws and regulations; increasing health care costs and the resulting effect on health insurance premiums and on the obligation to provide other post-retirement benefits; changes in price differentials between similar quantities of natural gas or oil sold at different geographic locations, and the effect of such changes on commodity production, revenues and demand for pipeline transportation capacity to or from such locations; other changes in price differentials between similar quantities of natural gas or oil having different quality, heating value, hydrocarbon mix or delivery date; the cost and effects of legal and administrative claims against the Company or activist shareholder campaigns to effect changes at the Company; uncertainty of oil and gas reserve estimates; significant differences between the Company’s projected and actual production levels for natural gas or oil; changes in demographic patterns and weather conditions; changes in the availability, price or accounting treatment of derivative financial instruments; changes in laws, actuarial assumptions, the interest rate environment and the return on plan/trust assets related to the Company’s pension and other post-retirement benefits, which can affect future funding obligations and costs and plan liabilities; changes in economic conditions, including global, national or regional recessions, and their effect on the demand for, and customers’ ability to pay for, the Company’s products and services; the creditworthiness or performance of the Company’s key suppliers, customers and counterparties; the impact of potential information technology, cybersecurity or data security breaches; economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities or acts of war; significant differences between the Company’s projected and actual capital expenditures and operating expenses; or increasing costs of insurance, changes in coverage and the ability to obtain insurance. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date thereof.

 

                           
                           
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
QUARTER ENDED JUNE 30, 2018
(Unaudited)
                           
                           
  Upstream   Midstream Businesses   Downstream Businesses        
                           
  Exploration &   Pipeline &           Energy   Corporate/    
(Thousands of Dollars) Production   Storage   Gathering   Utility   Marketing   All Other   Consolidated*
                           
Third quarter 2017 GAAP earnings $ 30,123     $ 16,031     $ 10,107     $ 4,348     $ (564 )   $ (331 )   $ 59,714  
                           
Earnings drivers***                          
Higher (lower) crude oil prices 2,236                         2,236  
Higher (lower) natural gas prices (13,665 )                       (13,665 )
Higher (lower) natural gas production 4,464                         4,464  
Higher (lower) crude oil production (2,361 )                       (2,361 )
Lower (higher) lease operating and transportation expenses 1,954                         1,954  
Lower (higher) depreciation / depletion (2,501 )       (203 )           (283 )   (2,987 )
                           
Higher (lower) transportation and storage revenues     1,342                     1,342  
Higher (lower) gathering and processing revenues         644                 644  
Lower (higher) other operating expenses (625 )       (1,224 )   (980 )           (2,829 )
                           
Colder weather             659             659  
                           
Higher (lower) margins                 304     623     927  
                           
Higher (lower) AFUDC**     (113 )                   (113 )
                           
Lower (higher) interest expense     534                     534  
                           
Lower (higher) income tax expense / effective tax rate 1,730                     (956 )   774  
                           
Impact of 2017 Tax Reform Act                          
Impact of tax rate change on current period earnings 6,154     3,046     2,422     77         (161 )   11,538  
Refund provision on tax rate change             (358 )           (358 )
                           
All other / rounding 308     (117 )   (180 )   184     70     287     552  
Third quarter 2018 GAAP earnings $ 27,817     $ 20,723     $ 11,566     $ 3,930     $ (190 )   $ (821 )   $ 63,025  
                           
* Amounts do not reflect intercompany eliminations                          
** AFUDC = Allowance for Funds Used During Construction                        
*** Earnings drivers have been calculated using a 35% federal statutory rate. The impact of the change to a blended year 24.5% federal statutory rate is broken out separately under the caption "Impact of 2017 Tax Reform Act."        
         

 

                             
                             
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
QUARTER ENDED JUNE 30, 2018
(Unaudited)
                             
                             
    Upstream   Midstream Businesses   Downstream Businesses        
                             
    Exploration &   Pipeline &           Energy   Corporate/    
    Production   Storage   Gathering   Utility   Marketing   All Other   Consolidated*
                             
Third quarter 2017 GAAP earnings   $ 0.35     $ 0.19     $ 0.12     $ 0.05     $ (0.01 )   $ (0.01 )   $ 0.69  
                             
Earnings drivers***                            
Higher (lower) crude oil prices   0.03                         0.03  
Higher (lower) natural gas prices   (0.16 )                       (0.16 )
Higher (lower) natural gas production   0.05                         0.05  
Higher (lower) crude oil production   (0.03 )                       (0.03 )
Lower (higher) lease operating and transportation expenses   0.02                         0.02  
Lower (higher) depreciation / depletion   (0.03 )                       (0.03 )
                             
Higher (lower) transportation and storage revenues       0.02                     0.02  
Higher (lower) gathering and processing revenues           0.01                 0.01  
Lower (higher) other operating expenses   (0.01 )       (0.01 )   (0.01 )           (0.03 )
                             
Colder weather               0.01             0.01  
                             
Higher (lower) margins                       0.01     0.01  
                             
Higher (lower) AFUDC**                            
                             
Lower (higher) interest expense       0.01                     0.01  
                             
Lower (higher) income tax expense / effective tax rate   0.02                     (0.01 )   0.01  
                             
Impact of 2017 Tax Reform Act                            
Impact of tax rate change on current period earnings   0.07     0.04     0.03                 0.14  
Refund provision on tax rate change                            
                             
All other / rounding   0.01     (0.02 )   (0.02 )       0.01         (0.02 )
Third quarter 2018 GAAP earnings   $ 0.32     $ 0.24     $ 0.13     $ 0.05     $     $ (0.01 )   $ 0.73  
                             
* Amounts do not reflect intercompany eliminations                            
** AFUDC = Allowance for Funds Used During Construction                        
*** Earnings drivers have been calculated using a 35% federal statutory rate. The impact of the change to a blended year 24.5% federal statutory rate is broken out separately under the caption "Impact of 2017 Tax Reform Act."        
         

 

                           
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
NINE MONTHS ENDED JUNE 30, 2018
(Unaudited)
                           
  Upstream   Midstream Businesses   Downstream Businesses        
                           
  Exploration &   Pipeline &           Energy   Corporate/    
(Thousands of Dollars) Production   Storage   Gathering   Utility   Marketing   All Other   Consolidated*
                           
Nine months ended June 30, 2017 GAAP earnings $ 98,972     $ 54,656     $ 31,373     $ 51,103     $ 2,122     $ (320 )   $ 237,906  
                           
Earnings drivers***                          
Higher (lower) crude oil prices 6,770                         6,770  
Higher (lower) natural gas prices (31,640 )                       (31,640 )
Higher (lower) natural gas production (3,088 )                       (3,088 )
Higher (lower) crude oil production (4,449 )                       (4,449 )
Lower (higher) lease operating and transportation expenses 1,171                         1,171  
Lower (higher) depreciation / depletion (3,480 )   (1,086 )   (488 )           (479 )   (5,533 )
                           
Higher (lower) transportation and storage revenues     2,126                     2,126  
Higher (lower) gathering and processing revenues         (2,126 )               (2,126 )
Lower (higher) other operating expenses (1,635 )   2,283     (1,299 )   (505 )   234         (922 )
Lower (higher) property, franchise and other taxes     (439 )                   (439 )
                           
Impact of new rates             2,789             2,789  
Colder weather             5,621             5,621  
                           
Higher (lower) margins                 (901 )   1,634     733  
                           
Higher (lower) AFUDC**     (656 )                   (656 )
                           
Lower (higher) interest expense     1,143         772             1,915  
                           
Lower (higher) income tax expense / effective tax rate 3,871             (2,201 )       (1,381 )   289  
                           
Impact of 2017 Tax Reform Act                          
Impact of tax rate change on current period earnings 17,401     9,967     7,091     10,726     263     (322 )   45,126  
Refund provision on tax rate change             (8,678 )           (8,678 )
Remeasurement of deferred income taxes under
2017 Tax Reform
76,510     14,100     34,500         (359 )   (17,751 )   107,000  
                           
All other / rounding 649     (185 )   (315 )   (1,344 )   75     732     (388 )
Nine months ended June 30, 2018 GAAP earnings $ 161,052     $ 81,909     $ 68,736     $ 58,283     $ 1,434     $ (17,887 )   $ 353,527  
                           
* Amounts do not reflect intercompany eliminations                          
** AFUDC = Allowance for Funds Used During Construction                        
*** Earnings drivers have been calculated using a 35% federal statutory rate. The impact of the change to a blended year 24.5% federal statutory rate is broken out separately under the caption "Impact of 2017 Tax Reform Act."      
       

 

                             
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
NINE MONTHS ENDED JUNE 30, 2018
(Unaudited)
                             
    Upstream   Midstream Businesses   Downstream Businesses        
                             
    Exploration &   Pipeline &           Energy   Corporate/    
    Production   Storage   Gathering   Utility   Marketing   All Other   Consolidated*
                             
Nine months ended June 30, 2017 GAAP earnings   $ 1.15     $ 0.64     $ 0.37     $ 0.59     $ 0.02     $     $ 2.77  
                             
Earnings drivers***                            
Higher (lower) crude oil prices   0.08                         0.08  
Higher (lower) natural gas prices   (0.37 )                       (0.37 )
Higher (lower) natural gas production   (0.04 )                       (0.04 )
Higher (lower) crude oil production   (0.05 )                       (0.05 )
Lower (higher) lease operating and transportation expenses   0.01                         0.01  
Lower (higher) depreciation / depletion   (0.04 )   (0.01 )   (0.01 )           (0.01 )   (0.07 )
                             
Higher (lower) transportation and storage revenues       0.02                     0.02  
Higher (lower) gathering and processing revenues           (0.02 )               (0.02 )
Lower (higher) other operating expenses   (0.02 )   0.03     (0.02 )   (0.01 )           (0.02 )
Lower (higher) property, franchise and other taxes       (0.01 )                   (0.01 )
                             
Impact of new rates               0.03             0.03  
Colder weather               0.07             0.07  
                             
Higher (lower) margins                   (0.01 )   0.02     0.01  
                             
Higher (lower) AFUDC**       (0.01 )                   (0.01 )
                             
Lower (higher) interest expense       0.01         0.01             0.02  
                             
Lower (higher) income tax expense / effective tax rate   0.04             (0.03 )       (0.02 )   (0.01 )
                             
Impact of 2017 Tax Reform Act                            
Impact of tax rate change on current period earnings   0.20     0.12     0.08     0.12             0.52  
Refund provision on tax rate change               (0.10 )           (0.10 )
Remeasurement of deferred income taxes under
2017 Tax Reform
  0.89     0.16     0.40             (0.21 )   1.24  
                             
All other / rounding   0.01             (0.01 )   0.01     0.01     0.02  
Nine months ended June 30, 2018 GAAP earnings   $ 1.86     $ 0.95     $ 0.80     $ 0.67     $ 0.02     $ (0.21 )   $ 4.09  
                             
* Amounts do not reflect intercompany eliminations                            
** AFUDC = Allowance for Funds Used During Construction                        
*** Earnings drivers have been calculated using a 35% federal statutory rate. The impact of the change to a blended year 24.5% federal statutory rate is broken out separately under the caption "Impact of 2017 Tax Reform Act."        
         

 

                 
                 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                 
(Thousands of Dollars, except per share amounts)                
  Three Months Ended   Nine Months Ended  
  June 30,   June 30,  
  (Unaudited)   (Unaudited)  
SUMMARY OF OPERATIONS 2018   2017   2018   2017  
Operating Revenues:                
Utility and Energy Marketing Revenues $ 154,088     $ 146,360     $ 719,234     $ 663,029    
Exploration and Production and Other Revenues 137,492     151,925     425,811     473,617    
Pipeline and Storage and Gathering Revenues 51,332     50,083     158,428     156,298    
  342,912     348,368     1,303,473     1,292,944    
Operating Expenses:                
Purchased Gas 52,211     46,135     322,854     264,349    
Operation and Maintenance:                
  Utility and Energy Marketing 45,618     44,467     158,397     158,796    
  Exploration and Production and Other 31,141     34,098     106,268     102,153    
  Pipeline and Storage and Gathering 24,770     23,250     67,450     69,016    
Property, Franchise and Other Taxes 20,595     21,447     64,245     64,368    
Depreciation, Depletion and Amortization 60,817     55,617     177,802     168,812    
  235,152     225,014     897,016     827,494    
                 
Operating Income 107,760     123,354     406,457     465,450    
                 
Other Income (Expense):                
Interest Income 1,632     853     4,907     2,844    
Other Income 999     1,370     3,492     4,728    
Interest Expense on Long-Term Debt (27,177 )   (29,225 )   (82,412 )   (87,241 )  
Other Interest Expense (1,006 )   (846 )   (2,742 )   (2,680 )  
                 
Income Before Income Taxes 82,208     95,506     329,702     383,101    
                 
Income Tax Expense (Benefit) 19,183     35,792     (23,825 )   145,195    
                 
Net Income Available for Common Stock $ 63,025     $ 59,714     $ 353,527     $ 237,906    
                 
Earnings Per Common Share                
Basic $ 0.73     $ 0.70     $ 4.12     $ 2.79    
Diluted $ 0.73     $ 0.69     $ 4.09     $ 2.77    
                 
Weighted Average Common Shares:                
Used in Basic Calculation 85,930,289   85,422,313   85,789,279   85,315,154  
Used in Diluted Calculation 86,501,194   86,064,464   86,370,900   85,950,742  
                 

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
   
  June 30,   September 30,
(Thousands of Dollars)   2018     2017
       
ASSETS      
Property, Plant and Equipment $ 10,254,976     $ 9,945,560  
Less - Accumulated Depreciation, Depletion and Amortization   5,411,746       5,271,486  
Net Property, Plant and Equipment   4,843,230       4,674,074  
       
Current Assets:      
Cash and Temporary Cash Investments   313,307       555,530  
Hedging Collateral Deposits   2,283       1,741  
Receivables - Net   151,005       112,383  
Unbilled Revenue   18,930       22,883  
Gas Stored Underground   16,090       35,689  
Materials and Supplies - at average cost   34,693       33,926  
Unrecovered Purchased Gas Costs         4,623  
Other Current Assets   52,690       51,505  
Total Current Assets   588,998       818,280  
       
Other Assets:      
Recoverable Future Taxes   115,688       181,363  
Unamortized Debt Expense   7,587       1,159  
Other Regulatory Assets   171,792       174,433  
Deferred Charges   37,349       30,047  
Other Investments   130,744       125,265  
Goodwill   5,476       5,476  
Prepaid Post-Retirement Benefit Costs   61,371       56,370  
Fair Value of Derivative Financial Instruments   11,760       36,111  
Other   108       742  
Total Other Assets   541,875       610,966  
Total Assets $ 5,974,103     $ 6,103,320  
       
CAPITALIZATION AND LIABILITIES      
Capitalization:      
Comprehensive Shareholders' Equity      
Common Stock, $1 Par Value Authorized - 200,000,000 Shares; Issued and      
Outstanding - 85,943,875 Shares and 85,543,125 Shares, Respectively $ 85,944     $ 85,543  
Paid in Capital   816,395       796,646  
Earnings Reinvested in the Business   1,097,438       851,669  
Accumulated Other Comprehensive Loss   (72,396 )     (30,123 )
Total Comprehensive Shareholders' Equity   1,927,381       1,703,735  
Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issuance Costs   1,835,582       2,083,681  
Total Capitalization   3,762,963       3,787,416  
       
Current and Accrued Liabilities:      
Notes Payable to Banks and Commercial Paper          
Current Portion of Long-Term Debt   250,000       300,000  
Accounts Payable   111,812       126,443  
Amounts Payable to Customers   16,833        
Dividends Payable   36,526       35,500  
Interest Payable on Long-Term Debt   28,357       35,031  
Customer Advances   197       15,701  
Customer Security Deposits   18,468       20,372  
Other Accruals and Current Liabilities   161,252       111,889  
Fair Value of Derivative Financial Instruments   38,012       1,103  
Total Current and Accrued Liabilities   661,457       646,039  
       
Deferred Credits:      
Deferred Income Taxes   491,520       891,287  
Taxes Refundable to Customers   366,183       95,739  
Cost of Removal Regulatory Liability   213,560       204,630  
Other Regulatory Liabilities   128,184       113,716  
Pension and Other Post-Retirement Liabilities   138,275       149,079  
Asset Retirement Obligations   101,833       106,395  
Other Deferred Credits   110,128       109,019  
Total Deferred Credits   1,549,683       1,669,865  
Commitments and Contingencies          
Total Capitalization and Liabilities $ 5,974,103     $ 6,103,320  

 

         
         
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
    Nine Months Ended
    June 30,
(Thousands of Dollars)   2018   2017
         
Operating Activities:        
Net Income Available for Common Stock   $ 353,527     $ 237,906  
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
       
Depreciation, Depletion and Amortization   177,802     168,812  
Deferred Income Taxes   (43,537 )   105,073  
Stock-Based Compensation   11,770     8,857  
Other   12,311     11,084  
Change in:        
Hedging Collateral Deposits   (542 )   (658 )
Receivables and Unbilled Revenue   (35,021 )   (15,885 )
Gas Stored Underground and Materials and Supplies   18,832     15,699  
Unrecovered Purchased Gas Costs   4,623     (1,317 )
Other Current Assets   (1,185 )   8,502  
Accounts Payable   2,327     5,046  
Amounts Payable to Customers   16,833     (6,467 )
Customer Advances   (15,504 )   (14,538 )
Customer Security Deposits   (1,904 )   1,503  
Other Accruals and Current Liabilities   26,538     25,423  
Other Assets   (10,770 )   (3,548 )
Other Liabilities   1,441     5,638  
Net Cash Provided by Operating Activities   $ 517,541     $ 551,130  
         
Investing Activities:        
Capital Expenditures   $ (403,994 )   $ (314,774 )
Net Proceeds from Sale of Oil and Gas Producing Properties   55,506     26,554  
Other   (1,759 )   (10,186 )
Net Cash Used in Investing Activities   $ (350,247 )   $ (298,406 )
         
Financing Activities:        
Reduction of Long-Term Debt   $ (307,047 )   $  
Dividends Paid on Common Stock   (106,732 )   (103,594 )
Net Proceeds From Issuance of Common Stock   4,262     6,223  
Net Cash Used in Financing Activities   $ (409,517 )   $ (97,371 )
         
Net Increase (Decrease) in Cash and Temporary Cash Investments   (242,223 )   155,353  
Cash and Temporary Cash Investments at Beginning of Period   555,530     129,972  
Cash and Temporary Cash Investments at June 30   $ 313,307     $ 285,325  

 

                   
                   
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                   
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
                   
UPSTREAM BUSINESS
                   
                   
  Three Months Ended   Nine Months Ended
(Thousands of Dollars, except per share amounts) June 30,   June 30,
EXPLORATION AND PRODUCTION SEGMENT 2018   2017   Variance   2018 2017 Variance
Total Operating Revenues $ 135,828     $ 151,161     $ (15,333 )   $ 421,381   $ 471,646   $ (50,265 )
                   
Operating Expenses:                  
Operation and Maintenance:                  
General and Administrative Expense 15,239     14,170     1,069     46,175   43,674   2,501  
Lease Operating and Transportation Expense 37,624     40,630     (3,006 )   121,079   122,881   (1,802 )
All Other Operation and Maintenance Expense 2,728     2,835     (107 )   8,182   8,168   14  
Property, Franchise and Other Taxes 3,302     4,297     (995 )   10,746   11,248   (502 )
Depreciation, Depletion and Amortization 31,296     27,448     3,848     90,707   85,353   5,354  
  90,189     89,380     809     276,889   271,324   5,565  
                   
Operating Income 45,639     61,781   (16,142 )   144,492   200,322 (55,830 )
                   
Other Income (Expense):                  
Interest Income 486     217     269     1,087   451   636  
Interest Expense (13,247 )   (13,444 )   197     (40,001 ) (40,270 ) 269  
                   
Income Before Income Taxes 32,878     48,554     (15,676 )   105,578   160,503   (54,925 )
Income Tax Expense (Benefit) 5,061     18,431     (13,370 )   (55,474 ) 61,531   (117,005 )
Net Income $ 27,817     $ 30,123     $ (2,306 )   $ 161,052   $ 98,972   $ 62,080  
                   
Net Income Per Share (Diluted) $ 0.32     $ 0.35     $ (0.03 )   $ 1.86   $ 1.15   $ 0.71  
                   

 

                   
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                   
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
                   
MIDSTREAM BUSINESSES
                   
                   
  Three Months Ended   Nine Months Ended
(Thousands of Dollars, except per share amounts) June 30,   June 30,
PIPELINE AND STORAGE SEGMENT 2018   2017   Variance   2018 2017 Variance
Revenues from External Customers $ 51,363     $ 50,049     $ 1,314     $ 158,387   $ 156,212   $ 2,175  
Intersegment Revenues 22,496     21,643     853     67,524   66,389   1,135  
Total Operating Revenues 73,859     71,692     2,167     225,911   222,601   3,310  
                   
Operating Expenses:                  
Purchased Gas 105     (13 )   118     266   181   85  
Operation and Maintenance 20,262     20,607     (345 )   57,004   60,517   (3,513 )
Property, Franchise and Other Taxes 7,064     6,935     129     21,299   20,624   675  
Depreciation, Depletion and Amortization 10,888     10,513     375     32,322   30,651   1,671  
  38,319     38,042     277     110,891   111,973   (1,082 )
                   
Operating Income 35,540     33,650     1,890     115,020   110,628   4,392  
                   
Other Income (Expense):                  
Interest Income 698     393     305     1,851   984   867  
Other Income 379     449     (70 )   1,333   1,944   (611 )
Interest Expense (7,667 )   (8,489 )   822     (23,418 ) (25,177 ) 1,759  
                   
Income Before Income Taxes 28,950     26,003     2,947     94,786   88,379   6,407  
Income Tax Expense 8,227     9,972     (1,745 )   12,877   33,723   (20,846 )
Net Income $ 20,723     $ 16,031     $ 4,692     $ 81,909   $ 54,656   $ 27,253  
                   
Net Income Per Share (Diluted) $ 0.24     $ 0.19     $ 0.05     $ 0.95   $ 0.64   $ 0.31  
                   
                   
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
GATHERING SEGMENT 2018   2017   Variance   2018 2017 Variance
Revenues from External Customers $ (31 )   $ 34     $ (65 )   $ 41   $ 86   $ (45 )
Intersegment Revenues 27,908     26,853     1,055     79,404   82,629   (3,225 )
Total Operating Revenues 27,877     26,887     990     79,445   82,715   (3,270 )
                   
Operating Expenses:                  
Operation and Maintenance 4,855     2,973     1,882     11,494   9,496   1,998  
Property, Franchise and Other Taxes 14     13     1     74   45   29  
Depreciation, Depletion and Amortization 4,444     4,131     313     12,759   12,008   751  
  9,313     7,117     2,196     24,327   21,549   2,778  
                   
Operating Income 18,564     19,770     (1,206 )   55,118   61,166   (6,048 )
                   
Other Income (Expense):                  
Interest Income 160     288     (128 )   976   641   335  
Other Income               1   (1 )
Interest Expense (2,502 )   (2,411 )   (91 )   (7,349 ) (6,739 ) (610 )
                   
Income Before Income Taxes 16,222     17,647     (1,425 )   48,745   55,069   (6,324 )
Income Tax Expense (Benefit) 4,656     7,540     (2,884 )   (19,991 ) 23,696   (43,687 )
Net Income $ 11,566     $ 10,107     $ 1,459     $ 68,736   $ 31,373   $ 37,363  
                   
Net Income Per Share (Diluted) $ 0.13     $ 0.12     $ 0.01     $ 0.80   $ 0.37   $ 0.43  
                   

 

                   
                   
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                   
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
                   
DOWNSTREAM BUSINESSES
                   
                   
  Three Months Ended   Nine Months Ended
(Thousands of Dollars, except per share amounts) June 30,   June 30,
UTILITY SEGMENT 2018   2017   Variance   2018 2017 Variance
Revenues from External Customers $ 128,628     $ 121,900     $ 6,728     $ 599,495   $ 550,819   $ 48,676  
Intersegment Revenues 3,519     3,391     128     11,401   11,314   87  
Total Operating Revenues 132,147     125,291     6,856     610,896   562,133   48,763  
                   
Operating Expenses:                  
Purchased Gas 53,028     46,536     6,492     286,446   235,481   50,965  
Operation and Maintenance 44,792     43,506     1,286     155,737   155,783   (46 )
Property, Franchise and Other Taxes 9,961     9,927     34     31,349   31,637   (288 )
Depreciation, Depletion and Amortization 13,316     13,086     230     39,981   39,502   479  
  121,097     113,055     8,042     513,513   462,403   51,110  
                   
Operating Income 11,050     12,236     (1,186 )   97,383   99,730   (2,347 )
                   
Other Income (Expense):                  
Interest Income 306     141     165     1,121   418   703  
Other Income 192     438     (246 )   499   576   (77 )
Interest Expense (6,572 )   (7,062 )   490     (20,266 ) (21,454 ) 1,188  
                   
Income Before Income Taxes 4,976     5,753     (777 )   78,737   79,270   (533 )
Income Tax Expense 1,046     1,405     (359 )   20,454   28,167   (7,713 )
Net Income $ 3,930     $ 4,348     $ (418 )   $ 58,283   $ 51,103   $ 7,180  
                   
Net Income Per Share (Diluted) $ 0.05     $ 0.05     $     $ 0.67   $ 0.59   $ 0.08  
                   
                   
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
ENERGY MARKETING SEGMENT 2018   2017   Variance   2018 2017 Variance
Revenues from External Customers $ 25,460     $ 24,460     $ 1,000     $ 119,739   $ 112,210   $ 7,529  
Intersegment Revenues 512     565     (53 )   589   600   (11 )
Total Operating Revenues 25,972     25,025     947     120,328   112,810   7,518  
                   
Operating Expenses:                  
Purchased Gas 24,816     24,336     480     113,240   104,335   8,905  
Operation and Maintenance 1,575     1,706     (131 )   4,901   5,262   (361 )
Depreciation, Depletion and Amortization 69     69         207   210   (3 )
  26,460     26,111     349     118,348   109,807   8,541  
                   
Operating Income (Loss) (488 )   (1,086 )   598     1,980   3,003   (1,023 )
                   
Other Income (Expense):                  
Interest Income 202     146     56     497   418   79  
Other Income 26     22     4     52   57   (5 )
Interest Expense (4 )   (13 )   9     (16 ) (38 ) 22  
                   
Income (Loss) Before Income Taxes (264 )   (931 )   667     2,513   3,440   (927 )
Income Tax Expense (Benefit) (74 )   (367 )   293     1,079   1,318   (239 )
Net Income (Loss) $ (190 )   $ (564 )   $ 374     $ 1,434   $ 2,122   $ (688 )
                   
Net Income (Loss) Per Share (Diluted) $     $ (0.01 )   $ 0.01     $ 0.02   $ 0.02   $  
                   

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                   
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
                   
  Three Months Ended   Nine Months Ended
(Thousands of Dollars, except per share amounts) June 30,   June 30,
ALL OTHER 2018   2017   Variance   2018 2017 Variance
Total Operating Revenues $ 1,496     $ 538     $ 958     $ 3,824   $ 1,311   $ 2,513  
Operating Expenses:                  
Operation and Maintenance 414     435     (21 )   1,106   1,344   (238 )
Property, Franchise and Other Taxes 138     151     (13 )   425   445   (20 )
Depreciation, Depletion and Amortization 614     182     432     1,259   525   734  
  1,166     768     398     2,790   2,314   476  
                   
Operating Income (Loss) 330     (230 )   560     1,034   (1,003 ) 2,037  
Other Income (Expense):                  
Interest Income 108     59     49     271   147   124  
                   
Income (Loss) Before Income Taxes 438     (171 )   609     1,305   (856 ) 2,161  
Income Tax Expense (Benefit) 141     (73 )   214     1,519   (358 ) 1,877  
Net Income (Loss) $ 297     $ (98 )   $ 395     $ (214 ) $ (498 ) $ 284  
                   
Net Income (Loss) Per Share (Diluted) $     $     $     $   $   $  
                   
                   
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
CORPORATE 2018   2017   Variance   2018 2017 Variance
Revenues from External Customers $ 168     $ 226     $ (58 )   $ 606   $ 660   $ (54 )
Intersegment Revenues 999     977     22     2,998   2,930   68  
Total Operating Revenues 1,167     1,203     (36 )   3,604   3,590   14  
Operating Expenses:                  
Operation and Maintenance 3,736     3,658     78     11,255   11,054   201  
Property, Franchise and Other Taxes 116     124     (8 )   352   369   (17 )
Depreciation, Depletion and Amortization 190     188     2     567   563   4  
  4,042     3,970     72     12,174   11,986   188  
                   
Operating Loss (2,875 )   (2,767 )   (108 )   (8,570 ) (8,396 ) (174 )
                   
Other Income (Expense):                  
Interest Income 30,147     31,185     (1,038 )   91,844   93,684   (1,840 )
Other Income 402     461     (59 )   1,608   2,150   (542 )
Interest Expense on Long-Term Debt (27,177 )   (29,225 )   2,048     (82,412 ) (87,241 ) 4,829  
Other Interest Expense (1,489 )   (1,003 )   (486 )   (4,432 ) (2,901 ) (1,531 )
                   
Loss Before Income Taxes (992 )   (1,349 )   357     (1,962 ) (2,704 ) 742  
Income Tax Expense (Benefit) 126     (1,116 )   1,242     15,711   (2,882 ) 18,593  
Net Income (Loss) $ (1,118 )   $ (233 )   $ (885 )   $ (17,673 ) $ 178   $ (17,851 )
                   
Net Income (Loss) Per Share (Diluted) $ (0.01 )   $ (0.01 )   $     $ (0.21 ) $   $ (0.21 )
                   
                   
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
INTERSEGMENT ELIMINATIONS 2018   2017   Variance   2018 2017 Variance
Intersegment Revenues $ (55,434 )   $ (53,429 )   $ (2,005 )   $ (161,916 ) $ (163,862 ) $ 1,946  
Operating Expenses:                  
Purchased Gas (25,738 )   (24,724 )   (1,014 )   (77,098 ) (75,648 ) (1,450 )
Operation and Maintenance (29,696 )   (28,705 )   (991 )   (84,818 ) (88,214 ) 3,396  
  (55,434 )   (53,429 )   (2,005 )   (161,916 ) (163,862 ) 1,946  
                   
Operating Income                  
                   
Other Income (Expense):                  
Interest Income (30,475 )   (31,576 )   1,101     (92,740 ) (93,899 ) 1,159  
Interest Expense 30,475     31,576     (1,101 )   92,740   93,899   (1,159 )
Net Income $     $     $     $   $   $  
                   
Net Income Per Share (Diluted) $     $     $     $   $   $  

 

                       
                       
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                       
SEGMENT INFORMATION (Continued)
(Thousands of Dollars)
                       
                       
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
  (Unaudited)   (Unaudited)
          Increase           Increase
  2018   2017   (Decrease)   2018   2017   (Decrease)
                       
Capital Expenditures:                      
Exploration and Production $ 110,591   (1 ) $ 70,719   (3 ) $ 39,872     $ 269,876   (1)(2) $ 168,545   (3)(4) $ 101,331  
Pipeline and Storage 15,916   (1 ) 16,750   (3 ) (834 )   53,356   (1)(2) 53,528   (3)(4) (172 )
Gathering 15,484   (1 ) 9,214   (3 ) 6,270     47,767   (1)(2) 23,705   (3)(4) 24,062  
Utility 19,737   (1 ) 20,116   (3 ) (379 )   52,026   (1)(2) 56,411   (3)(4) (4,385 )
Energy Marketing 10     3     7     33     14     19  
Total Reportable Segments 161,738     116,802     44,936     423,058     302,203     120,855  
All Other             1     40     (39 )
Corporate 7     22     (15 )   51     86     (35 )
Eliminations     295     (295 )   (19,922 )   (482 )   (19,440 )
Total Capital Expenditures $ 161,745     $ 117,119     $ 44,626     $ 403,188     $ 301,847     $ 101,341  
                                               

(1)       Capital expenditures for the quarter and nine months ended June 30, 2018, include accounts payable and accrued liabilities related to capital expenditures of $49.0 million, $10.9 million, $8.2 million, and $3.3 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively.  These amounts have been excluded from the Consolidated Statement of Cash Flows at June 30, 2018, since they represent non-cash investing activities at that date.

(2)       Capital expenditures for the nine months ended June 30, 2018, exclude capital expenditures of $36.5 million, $25.1 million, $3.9 million and $6.7 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively.  These amounts were in accounts payable and accrued liabilities at September 30, 2017 and paid during the nine months ended June 30, 2018.  These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2017, since they represented non-cash investing activities at that date.  These amounts have been included in the Consolidated Statement of Cash Flows at June 30, 2018.

(3)       Capital expenditures for the quarter and nine months ended June 30, 2017, include accounts payable and accrued liabilities related to capital expenditures of $25.0 million, $10.3 million, $5.2 million, and $7.0 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively.  These amounts have been excluded from the Consolidated Statement of Cash Flows at June 30, 2017, since they represent non-cash investing activities at that date.

(4)       Capital expenditures for the nine months ended June 30, 2017, exclude capital expenditures of $25.2 million, $18.7 million, $5.3 million and $11.2 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively.  These amounts were in accounts payable and accrued liabilities at September 30, 2016 and paid during the nine months ended June 30, 2017.  These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2016, since they represented non-cash investing activities at that date.  These amounts have been included in the Consolidated Statement of Cash Flows at June 30, 2017.

                   
DEGREE DAYS                  
                   
              Percent Colder
              (Warmer) Than:
Three Months Ended June 30 Normal   2018   2017     Normal (1)   Last Year (1)
                   
Buffalo, NY 912   873   767   (4.3 )   13.8
Erie, PA 871   825   705   (5.3 )   17.0
                   
Nine Months Ended June 30                  
                   
Buffalo, NY 6,455   6,308   5,599   (2.3 )   12.7  
Erie, PA 6,023   5,929   5,082   (1.6 )   16.7  
                   

(1)       Percents compare actual 2018 degree days to normal degree days and actual 2018 degree days to actual 2017 degree days.

                         
                         
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                         
EXPLORATION AND PRODUCTION INFORMATION
                         
                         
    Three Months Ended   Nine Months Ended
    June 30,   June 30,
            Increase           Increase
    2018   2017   (Decrease)   2018   2017   (Decrease)
                         
Gas Production/Prices:                        
Production (MMcf)                        
Appalachia   40,444     37,904     2,540     117,261     118,517     (1,256 )
West Coast   526     733     (207 )   1,896     2,246     (350 )
Total Production   40,970     38,637     2,333     119,157     120,763     (1,606 )
                         
Average Prices (Per Mcf)                        
Appalachia   $ 2.30     $ 2.58     $ (0.28 )   $ 2.37     $ 2.55     $ (0.18 )
West Coast   4.41     3.39     1.02     4.62     4.07     0.55  
Weighted Average   2.32     2.59     (0.27 )   2.40     2.58     (0.18 )
Weighted Average after Hedging   2.43     2.94     (0.51 )   2.55     2.96     (0.41 )
                         
Oil Production/Prices:                        
Production (Thousands of Barrels)                        
Appalachia   1     1         3     3      
West Coast   600     669     (69 )   1,934     2,062     (128 )
Total Production   601     670     (69 )   1,937     2,065     (128 )
                         
Average Prices (Per Barrel)                        
Appalachia   $ 64.37     $ 48.34     $ 16.03     $ 55.06     $ 48.85     $ 6.21  
West Coast   71.53     45.63     25.90     64.69     45.71     18.98  
Weighted Average   71.52     45.64     25.88     64.68     45.76     18.92  
Weighted Average after Hedging   58.74     53.02     5.72     58.96     53.58     5.38  
                         
Total Production (Mmcfe)   44,576     42,657     1,919     130,779     133,153     (2,374 )
                         
Selected Operating Performance Statistics:                        
General & Administrative Expense per Mcfe (1)   $ 0.34     $ 0.33     $ 0.01     $ 0.35     $ 0.33     $ 0.02  
Lease Operating and Transportation Expense per Mcfe (1)(2)   $ 0.84     $ 0.95     $ (0.11 )   $ 0.93     $ 0.92     $ 0.01  
Depreciation, Depletion & Amortization per Mcfe (1)   $ 0.70     $ 0.64     $ 0.06     $ 0.69     $ 0.64     $ 0.05  
                         

(1)       Refer to page 15 for the General and Administrative Expense, Lease Operating and Transportation Expense and Depreciation, Depletion, and Amortization Expense for the Exploration and Production segment.

(2)     Amounts include transportation expense of $0.53 and $0.54 per Mcfe for the three months ended June 30, 2018 and June 30, 2017, respectively.  Amounts include transportation expense of $0.54 per Mcfe for both the nine months ended June 30, 2018 and June 30, 2017.

 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
             
EXPLORATION AND PRODUCTION INFORMATION
 
Hedging Summary for the Remaining Three Months of Fiscal 2018 Volume     Average Hedge Price
Oil Swaps            
Brent   114,000   BBL   $ 63.55 / BBL
NYMEX   420,000   BBL   $ 52.67 / BBL
Total   534,000   BBL   $ 54.99 / BBL
             
Gas Swaps            
NYMEX   12,260,000   MMBTU   $ 3.11 / MMBTU
DAWN   1,800,000   MMBTU   $ 3.00 / MMBTU
Fixed Price Physical Sales   21,037,880   MMBTU   $ 2.30 / MMBTU
Total   35,097,880   MMBTU   $ 2.62 / MMBTU
             
Hedging Summary for Fiscal 2019   Volume     Average Hedge Price
Oil Swaps            
Brent   744,000   BBL   $ 63.52 / BBL
NYMEX   1,068,000   BBL   $ 53.42 / BBL
Total   1,812,000   BBL   $ 57.57 / BBL
             
Gas Swaps            
NYMEX   80,980,000   MMBTU   $ 2.94 / MMBTU
DAWN   7,200,000   MMBTU   $ 3.00 / MMBTU
Fixed Price Physical Sales   56,149,146   MMBTU   $ 2.64 / MMBTU
Total   144,329,146   MMBTU   $ 2.83 / MMBTU
             
Hedging Summary for Fiscal 2020   Volume     Average Hedge Price
Oil Swaps            
Brent   732,000   BBL   $ 61.48 / BBL
NYMEX   324,000   BBL   $ 50.52 / BBL
Total   1,056,000   BBL   $ 58.12 / BBL
             
Gas Swaps            
NYMEX   18,640,000   MMBTU   $ 3.04 / MMBTU
DAWN   7,200,000   MMBTU   $ 3.00 / MMBTU
Fixed Price Physical Sales   41,833,352   MMBTU   $ 2.30 / MMBTU
Total   67,673,352   MMBTU   $ 2.58 / MMBTU
             
Hedging Summary for Fiscal 2021   Volume     Average Hedge Price
Oil Swaps            
Brent   444,000   BBL   $ 62.59 / BBL
NYMEX   156,000   BBL   $ 51.00 / BBL
Total   600,000   BBL   $ 59.58 / BBL
             
Gas Swaps            
NYMEX   4,840,000   MMBTU   $ 3.01 / MMBTU
  DAWN   600,000   MMBTU   $ 3.00 / MMBTU
Fixed Price Physical Sales   41,608,372   MMBTU   $ 2.22 / MMBTU
Total   47,048,372   MMBTU   $ 2.31 / MMBTU
             
Hedging Summary for Fiscal 2022   Volume     Average Hedge Price
Oil Swaps            
Brent   300,000   BBL   $ 60.07 / BBL
NYMEX   156,000   BBL   $ 51.00 / BBL
Total   456,000   BBL   $ 56.97 / BBL
             
Fixed Price Physical Sales   40,589,265   MMBTU   $ 2.23 / MMBTU
             
Hedging Summary for Fiscal 2023   Volume     Average Hedge Price
             
Fixed Price Physical Sales   37,079,884   MMBTU   $ 2.26 / MMBTU
             
Hedging Summary for Fiscal 2024   Volume     Average Hedge Price
             
Fixed Price Physical Sales   20,966,205   MMBTU   $ 2.25 / MMBTU
             
Hedging Summary for Fiscal 2025   Volume     Average Hedge Price
             
Fixed Price Physical Sales   2,293,200   MMBTU   $ 2.18 / MMBTU

 

                         
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                         
                         
                         
Pipeline & Storage Throughput - (millions of cubic feet - MMcf)        
                         
    Three Months Ended   Nine Months Ended
    June 30,   June 30,
            Increase           Increase
    2018   2017   (Decrease)   2018   2017   (Decrease)
Firm Transportation - Affiliated   21,714     17,734     3,980     104,106     92,583     11,523  
Firm Transportation - Non-Affiliated   155,357     165,717     (10,360 )   479,346     495,015     (15,669 )
Interruptible Transportation   1,107     1,060     47     3,153     5,078     (1,925 )
    178,178     184,511     (6,333 )   586,605     592,676     (6,071 )
                         
Gathering Volume - (MMcf)                        
    Three Months Ended   Nine Months Ended
    June 30,   June 30,
            Increase           Increase
    2018   2017   (Decrease)   2018   2017   (Decrease)
Gathered Volume - Affiliated   51,392     48,838     2,554     145,928     150,005     (4,077 )
                         
                         
Utility Throughput - (MMcf)                        
    Three Months Ended   Nine Months Ended
    June 30,   June 30,
            Increase           Increase
    2018   2017   (Decrease)   2018   2017   (Decrease)
Retail Sales:                        
Residential Sales   10,052     8,105     1,947     56,468     48,817     7,651  
Commercial Sales   1,525     1,170     355     8,621     7,373     1,248  
Industrial Sales   128     48     80     559     282     277  
    11,705     9,323     2,382     65,648     56,472     9,176  
Off-System Sales               141     1,295     (1,154 )
Transportation   15,348     13,799     1,549     66,398     60,453     5,945  
    27,053     23,122     3,931     132,187     118,220     13,967  
                         
Energy Marketing Volume                        
    Three Months Ended   Nine Months Ended
    June 30,   June 30,
            Increase           Increase
    2018   2017   (Decrease)   2018   2017   (Decrease)
Natural Gas (MMcf)   8,322     7,722     600     36,413     32,969     3,444  
                         

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

NON-GAAP FINANCIAL MEASURES

In addition to financial measures calculated in accordance with generally accepted accounting principles (GAAP), this press release contains information regarding Adjusted Operating Results and Adjusted EBITDA, which are non-GAAP financial measures.  The Company believes that these non-GAAP financial measures are useful to investors because they provide an alternative method for assessing the Company's ongoing operating results and for comparing the Company’s financial performance to other companies.  The Company's management uses these non-GAAP financial measures for the same purpose, and for planning and forecasting purposes.  The presentation of non-GAAP financial measures is not meant to be a substitute for financial measures in accordance with GAAP.

Management defines Adjusted Operating Results as reported GAAP earnings before items impacting comparability.  The following table reconciles National Fuel's reported GAAP earnings to Adjusted Operating Results for the three and nine months ended June 30, 2018 and 2017:

    Three Months Ended   Nine Months Ended
    June 30,   June 30,
(in thousands except per share amounts)   2018   2017   2018   2017
Reported GAAP Earnings   $ 63,025     $ 59,714     $ 353,527     $ 237,906  
Items impacting comparability                
Remeasurement of deferred income taxes
under 2017 Tax Reform
          (107,000 )    
Adjusted Operating Results   $ 63,025     $ 59,714     $ 246,527     $ 237,906  
                 
Reported GAAP Earnings per share   $ 0.73     $ 0.69     $ 4.09     $ 2.77  
Items impacting comparability                
Remeasurement of deferred income taxes
under 2017 Tax Reform
          (1.24 )    
Adjusted Operating Results per share   $ 0.73     $ 0.69     $ 2.85     $ 2.77  
                                 

Management defines Adjusted EBITDA as reported GAAP earnings before the following items:  interest expense, income taxes, depreciation, depletion and amortization, interest and other income, impairments, and other items reflected in operating income that impact comparability.

The following tables reconcile National Fuel's reported GAAP earnings to Adjusted EBITDA for the three and nine months ended June 30, 2018 and 2017:

         
    Three Months Ended   Nine Months Ended
    June 30,   June 30,
    2018   2017   2018   2017
(in thousands)                
Reported GAAP Earnings   $ 63,025     $ 59,714     $ 353,527     $ 237,906  
Depreciation, Depletion and Amortization   60,817     55,617     177,802     168,812  
Interest and Other Income   (2,631 )   (2,223 )   (8,399 )   (7,572 )
Interest Expense   28,183     30,071     85,154     89,921  
Income Taxes   19,183     35,792     (23,825 )   145,195  
Adjusted EBITDA   $ 168,577     $ 178,971     $ 584,259     $ 634,262  
                 
Adjusted EBITDA by Segment                
Pipeline and Storage Adjusted EBITDA   $ 46,428     $ 44,163     $ 147,342     $ 141,279  
Gathering Adjusted EBITDA   23,008     23,901     67,877     73,174  
Total Midstream Businesses Adjusted EBITDA   69,436     68,064     215,219     214,453  
Exploration and Production Adjusted EBITDA   76,935     89,229     235,199     285,675  
Utility Adjusted EBITDA   24,366     25,322     137,364     139,232  
Energy Marketing Adjusted EBITDA   (419 )   (1,017 )   2,187     3,213  
Corporate and All Other Adjusted EBITDA   (1,741 )   (2,627 )   (5,710 )   (8,311 )
Total Adjusted EBITDA   $ 168,577     $ 178,971     $ 584,259     $ 634,262  
                                 

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
 SEGMENT ADJUSTED EBITDA
 
    Three Months Ended   Nine Months Ended
    June 30,   June 30,
(in thousands)   2018   2017   2018   2017
Exploration and Production Segment                
Reported GAAP Earnings   $ 27,817     $ 30,123     $ 161,052     $ 98,972  
Depreciation, Depletion and Amortization   31,296     27,448     90,707     85,353  
Interest and Other Income   (486 )   (217 )   (1,087 )   (451 )
Interest Expense   13,247     13,444     40,001     40,270  
Income Taxes   5,061     18,431     (55,474 )   61,531  
Adjusted EBITDA   $ 76,935     $ 89,229     $ 235,199     $ 285,675  
                 
Pipeline and Storage Segment                
Reported GAAP Earnings   $ 20,723     $ 16,031     $ 81,909     $ 54,656  
Depreciation, Depletion and Amortization   10,888     10,513     32,322     30,651  
Interest and Other Income   (1,077 )   (842 )   (3,184 )   (2,928 )
Interest Expense   7,667     8,489     23,418     25,177  
Income Taxes   8,227     9,972     12,877     33,723  
Adjusted EBITDA   $ 46,428     $ 44,163     $ 147,342     $ 141,279  
                 
Gathering Segment                
Reported GAAP Earnings   $ 11,566     $ 10,107     $ 68,736     $ 31,373  
Depreciation, Depletion and Amortization   4,444     4,131     12,759     12,008  
Interest and Other Income   (160 )   (288 )   (976 )   (642 )
Interest Expense   2,502     2,411     7,349     6,739  
Income Taxes   4,656     7,540     (19,991 )   23,696  
Adjusted EBITDA   $ 23,008     $ 23,901     $ 67,877     $ 73,174  
                 
Utility Segment                
Reported GAAP Earnings   $ 3,930     $ 4,348     $ 58,283     $ 51,103  
Depreciation, Depletion and Amortization   13,316     13,086     39,981     39,502  
Interest and Other Income   (498 )   (579 )   (1,620 )   (994 )
Interest Expense   6,572     7,062     20,266     21,454  
Income Taxes   1,046     1,405     20,454     28,167  
Adjusted EBITDA   $ 24,366     $ 25,322     $ 137,364     $ 139,232  
                 
Energy Marketing Segment                
Reported GAAP Earnings   $ (190 )   $ (564 )   $ 1,434     $ 2,122  
Depreciation, Depletion and Amortization   69     69     207     210  
Interest and Other Income   (228 )   (168 )   (549 )   (475 )
Interest Expense   4     13     16     38  
Income Taxes   (74 )   (367 )   1,079     1,318  
Adjusted EBITDA   $ (419 )   $ (1,017 )   $ 2,187     $ 3,213  
                 
Corporate and All Other                
Reported GAAP Earnings   $ (821 )   $ (331 )   $ (17,887 )   $ (320 )
Depreciation, Depletion and Amortization   804     370     1,826     1,088  
Interest and Other Income   (182 )   (129 )   (983 )   (2,082 )
Interest Expense   (1,809 )   (1,348 )   (5,896 )   (3,757 )
Income Taxes   267     (1,189 )   17,230     (3,240 )
Adjusted EBITDA   $ (1,741 )   $ (2,627 )   $ (5,710 )   $ (8,311 )

 

         
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
         
         
Quarter Ended June 30 (unaudited)   2018   2017
         
Operating Revenues   $ 342,912,000     $ 348,368,000  
         
Net Income Available for Common Stock   $ 63,025,000     $ 59,714,000  
         
Earnings Per Common Share        
Basic   $ 0.73     $ 0.70  
Diluted   $ 0.73     $ 0.69  
         
Weighted Average Common Shares:        
Used in Basic Calculation   85,930,289     85,422,313  
Used in Diluted Calculation   86,501,194     86,064,464  
         
Nine Months Ended June 30 (unaudited)        
         
Operating Revenues   $ 1,303,473,000     $ 1,292,944,000  
         
Net Income Available for Common Stock   $ 353,527,000     $ 237,906,000  
         
Earnings Per Common Share:        
Basic   $ 4.12     $ 2.79  
Diluted   $ 4.09     $ 2.77  
         
Weighted Average Common Shares:        
Used in Basic Calculation   85,789,279     85,315,154  
Used in Diluted Calculation   86,370,900     85,950,742  
         
Twelve Months Ended June 30 (unaudited)        
         
Operating Revenues   $ 1,590,410,000     $ 1,585,416,000  
         
Net Income Available for Common Stock   $ 399,103,000     $ 275,459,000  
         
Earnings Per Common Share        
Basic   $ 4.66     $ 3.23  
Diluted   $ 4.62     $ 3.21  
         
Weighted Average Common Shares:        
Used in Basic Calculation   85,719,552     85,239,850  
Used in Diluted Calculation   86,333,307     85,881,424  
         

Primary Logo

Source: National Fuel Gas Company

Transfer Agent and Plan Administrator

EQ Shareowner Services (1)

  • U.S. Mail
    EQ Shareowner Services
    P.O. Box 64874
    St. Paul, MN 55164-0874
  • Overnight Delivery
    EQ Shareowner Services
    1110 Centre Pointe Curve, Suite 101
    Mendota Heights, MN 55120-4100


Toll-Free Telephone:  1-800-648-8166
Calling from outside the U.S. and Canada:  1-651-450-4064
Automated: 24 hours, 7 days a week
Attended:  8:00 am to 8:00 pm ET, Monday-Friday
Website:  www.shareowneronline.com
For additional Investor information, please click here.

(1) Effective February 1, 2018, the Wells Fargo Shareowner Service division of Wells Fargo Bank, N.A., has been sold to Equinity Group, plc.

Disclosure: Caution Concerning Forward-Looking Statements

National Fuel Gas Company is including the following cautionary statement in this corporate website 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, the Company.

Forward-looking statements include, without limitation, statements regarding future prospects, plans, objectives, goals, projections, estimates of oil and gas quantities, strategies, future events or performance and underlying assumptions, capital structure, anticipated capital expenditures, completion of construction projects, projections for pension and other post-retirement benefit obligations, impacts of the adoption of new accounting rules, and possible outcomes of litigation or regulatory proceedings, as well as statements that are identified by the use of the words "anticipates," "estimates," "expects," "forecasts," "intends," "plans," "predicts," "projects," "believes," "seeks," "will," "may" and similar expressions. All forward-looking statements, whether written or oral and whether made by or on behalf of the Company, are expressly qualified by these cautionary statements. Forward-looking statements involve risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements.

The Company's expectations, beliefs and projections are expressed in good faith and are believed by the Company to have a reasonable basis, but there can be no assurance that management's expectations, beliefs or projections will result or be achieved or accomplished.

In addition to other factors and matters discussed elsewhere in this website, the following are important factors that, in the view of the Company, could cause actual results to differ materially from those discussed in the forward-looking statements:

  1. Delays or changes in costs or plans with respect to Company projects or related projects of other companies, including difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators;
  2. Governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, target rates of return, rate design and retained natural gas), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal;
  3. Changes in laws, regulations or judicial interpretations to which the Company is subject, including those involving derivatives, taxes, safety, employment, climate change, other environmental matters, real property, and exploration and production activities such as hydraulic fracturing;
  4. Financial and economic conditions, including the availability of credit, and occurrences affecting the Company’s ability to obtain financing on acceptable terms for working capital, capital expenditures and other investments, including any downgrades in the Company’s credit ratings and changes in interest rates and other capital market conditions;
  5. Changes in the price of natural gas or oil;
  6. Impairments under the SEC’s full cost ceiling test for natural gas and oil reserves;
  7. Factors affecting the Company’s ability to successfully identify, drill for and produce economically viable natural gas and oil reserves, including among others geology, lease availability, title disputes, weather conditions, shortages, delays or unavailability of equipment and services required in drilling operations, insufficient gathering, processing and transportation capacity, the need to obtain governmental approvals and permits, and compliance with environmental laws and regulations; Increasing health care costs and the resulting effect on health insurance premiums and on the obligation to provide other post-retirement benefits;
  8. Changes in price differentials between similar quantities of natural gas or oil sold at different geographic locations, and the effect of such changes on commodity production, revenues and demand for pipeline transportation capacity to or from such locations; Other changes in price differentials between similar quantities of natural gas or oil having different quality, heating value, hydrocarbon mix or delivery date;
  9. The cost and effects of legal and administrative claims against the Company or activist shareholder campaigns to effect changes at the Company;
  10. Uncertainty of oil and gas reserve estimates;
  11. Significant differences between the Company’s projected and actual production levels for natural gas or oil;
  12. Changes in demographic patterns and weather conditions;
  13. Changes in the availability, price or accounting treatment of derivative financial instruments;
  14. Changes in laws, actuarial assumptions, the interest rate environment and the return on plan/trust assets related to the Company’s pension and other post-retirement benefits, which can affect future funding obligations and costs and plan liabilities;
  15. Changes in economic conditions, including global, national or regional recessions, and their effect on the demand for, and customers’ ability to pay for, the Company’s products and services;
  16. The creditworthiness or performance of the Company’s key suppliers, customers and counterparties;
  17. The impact of potential information technology, cybersecurity or data security breaches;
  18. Economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities or acts of war;
  19. Significant differences between the Company’s projected and actual capital expenditures and operating expenses; or
  20. Increasing costs of insurance, changes in coverage and the ability to obtain insurance.

The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date thereof.

Investor Relations

NYSE: NFG 55.59 +0.59 +1.07% Volume 337,838 Aug 14, 2018 4:02 PM.