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. 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;
  2. 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;
  3. 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;
  4. Changes in the price of natural gas or oil;
  5. Impairments under the SEC’s full cost ceiling test for natural gas and oil reserves;
  6. 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;
  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 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
  22. Increasing costs of insurance, changes in coverage and the ability to obtain insurance.

Forward-looking statements include estimates of oil and gas quantities. Proved oil and gas reserves are those quantities of oil and gas which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible under existing economic conditions, operating methods and government regulations. Other estimates of oil and gas quantities, including estimates of probable reserves, possible reserves, and resource potential, are by their nature more speculative than estimates of proved reserves. Accordingly, estimates other than proved reserves are subject to substantially greater risk of being actually realized.

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 Fourth Quarter and Full Year Fiscal 2019 Earnings

10/31/2019

WILLIAMSVILLE, N.Y., Oct. 31, 2019 (GLOBE NEWSWIRE) -- National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated results for the three months and fiscal year ended September 30, 2019.

FISCAL 2019 FOURTH QUARTER SUMMARY

  • GAAP earnings of $47.3 million, or $0.54 per share, compared to $38.0 million, or $0.44 per share, in the prior year
  • Adjusted operating results of $47.0 million, or $0.54 per share, compared to $42.5 million, or $0.49 per share, in the prior year (see non-GAAP reconciliation on page 2)
  • Adjusted EBITDA of $157.3 million compared to $148.2 million in the prior year (non-GAAP reconciliation on page 24)
  • E&P segment net production of 59.1 Bcfe, an increase of 25% from the prior year and 8% from the third quarter
  • Average natural gas prices, after the impact of hedging, of $2.26 per Mcf, down $0.19 per Mcf from the prior year
  • Average oil prices, after the impact of hedging, of $61.00 per Bbl, up $3.29 per Bbl from the prior year
  • Gathering segment revenues increased $6.7 million, or 24%, on higher throughput from Seneca

FISCAL 2019 HIGHLIGHTS

  • GAAP earnings of $304.3 million, or $3.51 per share, compared to $391.5 million, or $4.53 per share, in the prior year
  • Adjusted operating results of $299.3 million, or $3.45 per share, compared to $289.4 million, or $3.35 per share, in the prior year (see non-GAAP reconciliation on page 2)
  • Adjusted EBITDA of $785.4 million, an increase of $23.9 million over fiscal 2018 (non-GAAP reconciliation on page 24)
  • E&P segment net production of 211.8 Bcfe, an increase of 19% over fiscal 2018 and the highest output in Company history
  • Proved reserves at September 30, 2019, of 3.1 Tcfe, an increase of 23% from September 30, 2018
  • Gathering segment revenues increased $19.2 million, or 18%, on higher throughput from Seneca
  • Utility segment net income of $60.9 million, an increase of $9.7 million, or 19%, over fiscal 2018
  • Increased shareholder dividend for the 49th consecutive year to an annual rate of $1.74 per share

MANAGEMENT COMMENTS

David P. Bauer, President and Chief Executive Officer of National Fuel Gas Company, stated: “National Fuel capped off our 2019 fiscal year with an excellent fourth quarter, including operating results that were up approximately 10% from the prior year.  Despite a challenging commodity price environment, the Company also grew its earnings year over year, evidencing the value of our integrated business model.  The high degree of integration between our Exploration and Production and Gathering operations provided meaningful consolidated benefits, as Seneca’s record annual production drove a significant increase in our Gathering segment revenues this year, offsetting the impact of lower natural gas realizations.  Our regulated Downstream and Midstream operations continue to provide diversification and predictable cash flows.  The Utility segment delivered strong results in 2019, driven largely by modest customer growth and our ongoing investments in the modernization of our distribution network. These investments, which exceeded $74 million this fiscal year, further enhanced the safety and integrity of our pipeline systems, and contributed to earnings and rate base growth.”

RECONCILIATION OF GAAP EARNINGS TO ADJUSTED OPERATING RESULTS

                 
    Three Months Ended   Fiscal Year Ended
    September 30,   September 30,
(in thousands except per share amounts)   2019   2018   2019   2018
Reported GAAP Earnings   $ 47,281     $ 37,994     $ 304,290     $ 391,521  
Items impacting comparability                
Remeasurement of deferred income taxes under 2017 Tax Reform       3,516     (5,000 )   (103,484 )
Mark-to-market adjustments due to hedge ineffectiveness (E&P)   (1,313 )   346     (2,096 )   782  
Tax impact of mark-to-market adjustments due to hedge ineffectiveness   276     (85 )   440     (192 )
Unrealized (gain) loss on other investments (Corporate / All Other)   949         2,045      
Tax impact of unrealized (gain) loss on other investments   (199 )       (429 )    
Premium paid on early redemption of debt (E&P)       962         962  
Tax impact of premium paid on early redemption of debt       (235 )       (235 )
Adjusted Operating Results   $ 46,994     $ 42,498     $ 299,250     $ 289,354  
                 
Reported GAAP Earnings per share   $ 0.54     $ 0.44     $ 3.51     $ 4.53  
Items impacting comparability                
Remeasurement of deferred income taxes under 2017 Tax Reform       0.04     (0.06 )   (1.20 )
Mark-to-market adjustments due to hedge ineffectiveness, net of tax (E&P)   (0.01 )       (0.02 )   0.01  
Unrealized (gain) loss on other investments, net of tax (Corporate / All Other)   0.01         0.02      
Premium paid on early redemption of debt, net of tax (E&P)       0.01         0.01  
Adjusted Operating Results per share   $ 0.54     $ 0.49     $ 3.45     $ 3.35  
                                 

FISCAL 2020 GUIDANCE UPDATE

National Fuel is revising its fiscal 2020 earnings guidance to reflect updated forecast assumptions and projections, including the expected impact of the decline in near-term natural gas prices that has occurred since the Company’s preliminary guidance was announced in August 2019.  The Company is now projecting that earnings will be within the range of $3.00 to $3.30 per share, or $3.15 per share at the midpoint of the range. The decrease from the preliminary guidance is primarily due to lower expected price realizations on Seneca’s production, higher expected depreciation, depletion and amortization (“DD&A”) rates at Seneca, and higher expected pension and other post-retirement benefit expenses. The increase in Seneca’s projected DD&A rate is largely due to higher expected future plugging and abandonment costs in California. The increase in pension and other post-retirement benefit costs is being driven by changes in actuarial assumptions, primarily a lower discount rate resulting from the recent decline in interest rates.

The Company is now assuming that NYMEX natural gas prices will average $2.40 per MMBtu in fiscal 2020, a decrease of $0.15 per MMBtu from the $2.55 per MMBtu assumed in the preliminary guidance. For guidance purposes, the Company’s updated projections reflect the current NYMEX forward markets for natural gas and oil and consider the impact of local sales point differentials and new physical firm sales, transportation, or financial hedge contracts. During the fourth quarter, Seneca executed approximately 42 billion cubic feet (“Bcf”) of new NYMEX swap contracts. The Company currently has financial hedges and fixed price physical firm sales contracts in place on approximately 60% of Seneca’s expected fiscal 2020 production that, on average, lock-in a price realization of $2.30 per thousand cubic feet (“Mcf”).

The Exploration and Production segment’s fiscal 2020 net production forecast remains unchanged in the range of 235 to 245 billion cubic feet equivalent (“Bcfe”).  The Company’s fiscal 2020 consolidated and individual segment capital expenditures guidance also remains unchanged from the preliminary guidance. The Company announced in August that it plans to reduce Seneca’s development activity in Appalachia in response to the decline in near-term natural gas prices.  As planned, during the second quarter of fiscal 2020, Seneca expects to drop one of the three horizontal drilling rigs it is currently operating in Appalachia.  Because the Company owns a majority of its natural gas interests in fee, Seneca has the flexibility to further reduce its capital investments should market conditions continue to weaken in order to preserve the economics of its development program.

Mr. Bauer added: “As we look to the future, despite the headwind of natural gas prices in fiscal 2020, we are well-positioned to responsibly grow the Company in a manner that maintains the strength of our balance sheet and drives value for our shareholders.  With line of sight on new firm transportation capacity to premium markets, Seneca will maintain its focus on prudently developing its Utica Shale reserves in our Western Development Area, where we are able to utilize our existing infrastructure, including gathering facilities, to enhance our consolidated upstream and midstream returns.  Our Gathering business will continue to grow in lockstep with Seneca’s production, and is expected to see near-term annual revenue growth of approximately 10%.  Our Pipeline and Storage business is targeting the completion of multiple expansion projects by the close of calendar 2021, which we expect to collectively grow annual revenues by approximately $65 million.  And, our Utility business will continue to make investments to modernize its facilities, and to enhance the long-term reliability of our distribution systems, which we expect to modestly grow rate base and margin.  All told, National Fuel is poised for continuing long-term success.”

Additional details on the Company's updated forecast assumptions and business segment guidance for fiscal 2020 are outlined in the table on page 7.

DISCUSSION OF FOURTH QUARTER RESULTS BY SEGMENT

The following discussion of earnings of each operating segment for the quarter ended September 30, 2019, is summarized in a tabular form on pages 8 and 9 of this report (earnings drivers for the fiscal year ended September 30, 2019 are summarized on pages 10 and 11).  It may be helpful to refer to those tables while reviewing this discussion.  As of the quarter ended September 30, 2019, the Company is no longer reporting the Energy Marketing operations as a reportable segment.  The Energy Marketing operations have been included in the All Other category in the disclosures and tables that follow below.  Prior year segment information has been restated to reflect this change in presentation.

Note that management defines Adjusted Operating Results as reported GAAP earnings adjusted for items impacting comparability, and Adjusted EBITDA as reported GAAP earnings before the following items: interest expense, income taxes, depreciation, depletion and amortization, other income and deductions, 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
  September 30,
(in thousands) 2019   2018   Variance
GAAP Earnings $ 25,208     $ 19,580     $ 5,628  
Remeasurement of deferred taxes under 2017 Tax Reform     2,804     (2,804 )
Mark-to-market adjustments due to hedge ineffectiveness, net of tax (1,037 )   261     (1,298 )
Premium paid on early redemption of debt, net of tax     727     (727 )
Adjusted Operating Results $ 24,171     $ 23,372     $ 799  
           
Adjusted EBITDA $ 89,509     $ 81,194     $ 8,315  
                       

Seneca’s fourth quarter GAAP earnings increased $5.6 million versus the prior year, which includes the net impact of non-cash mark-to-market adjustments recorded during the current and prior year relating to hedge ineffectiveness and certain items that impacted earnings in the prior year that did not recur in the current year (see table above).  Excluding these items, Seneca’s fourth quarter earnings increased $0.8 million as the positive impacts of higher production and better realized crude oil prices on operating revenues, along with a lower effective income tax rate, were mostly offset by the negative impacts of lower realized natural gas prices on operating revenues and higher operating expenses.

Seneca produced 59.1 Bcfe during the fourth quarter, an increase of 11.8 Bcfe, or 25%, from the prior year. Natural gas production increased 11.7 billion cubic feet (“Bcf”), or 27%, due primarily to production from new Marcellus and Utica wells completed and connected to sales in Appalachia. Net production in Seneca’s Eastern Development Area increased 7.7 Bcf to 30.7 Bcf due largely to increased Utica development in the EDA-Tioga area and Marcellus development in the EDA-Lycoming area. Net gas production increased 4.0 Bcf to 24.1 Bcf in the WDA-Clermont area, where Seneca continues to experience stronger production and shallower declines from its Utica development program. Seneca’s oil production for the fourth quarter increased 14 thousand barrels ("Mbbl") from the prior year due to new wells coming online in the Pioneer development area in California.

Seneca's average realized natural gas price, after the impact of hedging and transportation costs, was $2.26 per Mcf, a decrease of $0.19 per Mcf from the prior year. This decline was largely due to lower NYMEX prices and lower spot pricing at local sales points in Pennsylvania. Seneca's average realized oil price, after the impact of hedging, was $61.00 per barrel ("Bbl"), an increase of $3.29 per Bbl over the prior year.  The improvement in oil price realizations was due primarily to stronger price differentials at local sales points in California relative to West Texas Intermediate (WTI) prices.

The $22.3 million increase in Seneca’s total operating expenses was largely due to the higher production during the quarter.  On a unit of production basis, operating expenses excluding DD&A expense declined $0.07 per thousand cubic feet equivalent (“Mcfe”), or 5%, to $1.25 per Mcfe from the $1.32 per Mcfe realized in the prior year. Lease operating and transportation (“LOE”) expense, which increased $8.8 million, includes the fees paid to the Company’s Gathering segment for gathering and compression services used to connect Seneca’s Marcellus and Utica production to sales points along interstate pipelines. The $10.6 million increase in DD&A expense was also due to a higher DD&A rate, which was driven by an increase in capitalized costs in Seneca’s full cost pool. The decline in Seneca’s effective tax rate was largely driven by the positive impact of the 2017 Tax Reform Act, a higher Enhanced Oil Recovery credit, and lower state taxes in the current year.

Proved Reserves Year-End Update

Seneca’s total proved natural gas and crude oil reserves at September 30, 2019 were 3,099 Bcfe, an increase of 575 Bcfe, or 23%, from the proved reserves reported at September 30, 2018.  Seneca’s proved developed reserves at the end of fiscal 2019 were 2,081 Bcfe, representing 67% of total proved reserves. The proved reserves base is approximately 95% natural gas and 5% oil.  In fiscal 2019, Seneca recorded 691 Bcfe of proved reserve extensions and discoveries, due primarily to Utica and Marcellus locations in Appalachia, and 96 Bcfe of net positive revisions due largely to improvements in well performance and Seneca’s shift towards drilling wells with longer laterals. As a result, Seneca replaced 372% of its fiscal 2019 production.  Seneca’s three-year average finding and development cost at the end of fiscal 2019 was $0.56 per Mcfe, down $0.18 per Mcfe from the three-year average of $0.74 per Mcfe at the end of fiscal 2018.

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
  September 30,
(in thousands) 2019   2018   Variance
GAAP Earnings $ 15,368     $ 15,337     $ 31  
           
Adjusted EBITDA $ 35,747     $ 37,699     $ (1,952 )

The Pipeline and Storage segment’s fourth quarter GAAP earnings were largely unchanged versus the prior year, as lower operating revenues were offset by lower operation and maintenance (“O&M”) and interest expenses.  The $4.5 million decrease in operating revenues was due largely to the expiration of a significant firm transportation contract on the Empire system in December 2018.  The impact of the contract expiration was partially offset by an increase in Empire’s transportation rates following the settlement of Empire’s rate case that became effective in January 2019.  O&M expense decreased $2.7 million due primarily to lower compressor and facility maintenance costs.  Interest expense decreased $0.8 million due primarily to lower borrowing rates.

Gathering Segment

The Gathering segment’s operations are carried out by National Fuel Gas Midstream Company, LLC’s 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
  September 30,
(in thousands) 2019   2018   Variance
GAAP Earnings $ 16,902     $ 14,783     $ 2,119  
Remeasurement of deferred taxes under 2017 Tax Reform     12     (12 )
Adjusted Operating Results $ 16,902     $ 14,795     $ 2,107  
           
Adjusted EBITDA $ 29,895     $ 23,814     $ 6,081  

The Gathering segment’s fourth quarter GAAP earnings increased $2.1 million over the prior year.  The increase was driven primarily by higher operating revenues, which were partially offset by modest increases in O&M expense and DD&A expense and the impact of a higher effective tax rate.  Operating revenues increased $6.7 million, or 24%, due primarily to a 12.7 Bcf increase in gathered volume from Seneca’s Appalachian natural gas production. The $0.6 million increase in O&M expense was due to an increase in compressor station operating and preventative maintenance activity as a result of higher throughput during the quarter. The $0.6 million increase in DD&A expense was due primarily to a $46 million increase in average plant assets in-service versus the prior year.

The increase in the Gathering segment’s effective tax rate was largely due to a deferred state tax adjustment that lowered prior year income tax expense. This nonrecurring item was partially offset by the impact of the 2017 Tax Reform Act, which lowered the Company’s statutory federal income tax rate from a blended 24.5% in fiscal 2018 to 21% in fiscal 2019.

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
  September 30,
(in thousands) 2019   2018   Variance
GAAP Earnings $ (7,728 )   $ (7,067 )   $ (661 )
           
Adjusted EBITDA $ 6,714     $ 10,514     $ (3,800 )

The $0.7 million increase in the Utility segment’s fourth quarter net loss was due largely to lower margin (operating revenues less purchased gas sold), partially offset by lower interest expense.  A number of items contributed to the decrease in customer margin, including warmer weather and the net impact of revenue adjustments related to regulatory rate mechanisms.  These items were offset partially by an increase in revenues relating to a system modernization tracking mechanism that became effective in December 2018.  Interest expense decreased $1.0 million due primarily to lower borrowing rates following the Company’s early refinancing of an 8.75% coupon 10-year note at the end of the prior year.

Corporate and All Other

The Company’s operations that are included in Corporate and All Other, which now include the Company’s energy marketing business, generated a combined net loss of $2.5 million in the current year fourth quarter, which was $2.1 million lower than the loss of $4.6 million in the prior-year fourth quarter.  The reduction in the net loss was driven primarily by lower interest expense and lower income tax expense. The lower income tax expense was due, in part, to the impact of the 2017 Tax Reform Act, which resulted in a remeasurement of deferred taxes that increased income tax expense in the prior year.

EARNINGS TELECONFERENCE

The Company will host a conference call on Friday, November 1, 2019, 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 “4581569”.  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 “4581569”.  Both the webcast and a telephonic replay will be available until the close of business on Friday, November 8, 2019.

National Fuel is an integrated energy company reporting financial results for four operating segments: Exploration and Production, Pipeline and Storage, Gathering, and Utility.  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: 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; 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 the price of natural gas or oil; impairments under the SEC’s full cost ceiling test for natural gas and oil reserves; 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; 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  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
AND SUBSIDIARIES

GUIDANCE SUMMARY

As discussed on pages 2 and 3, the Company is revising its earnings guidance for fiscal 2020.  Additional details on the Company's forecast assumptions and business segment guidance are outlined in the table below.

  Preliminary FY 2020 Guidance   Updated FY 2020 Guidance
Consolidated Earnings per Share $3.25 to $3.55   $3.00 to $3.30
       
Consolidated Effective Tax Rate ~ 25%   ~ 25%
       
Capital Expenditures (Millions)      
Exploration and Production $415 - $455   $415 - $455
Pipeline and Storage $180 - $215   $180 - $215
Gathering $40 - $50   $40 - $50
Utility $90 - $100   $90 - $100
Consolidated Capital Expenditures $725 - $820   $725 - $820
       
Exploration & Production Segment Guidance      
       
Commodity Price Assumptions      
NYMEX natural gas price $2.55 /MMBtu   $2.40 /MMBtu
Appalachian basin spot price (winter | summer) $2.20 /MMBtu | $2.00 /MMBtu   $2.20 /MMBtu | $2.00 /MMBtu
NYMEX (WTI) crude oil price $55.00 /Bbl   $55.00 /Bbl
California oil price premium (% of WTI) 108%   106%
       
Production (Bcfe)      
East Division - Appalachia 219 to 229   219 to 229
West Division - California ~ 16   ~ 16
Total Production 235 to 245   235 to 245
       
E&P Operating Costs ($/Mcfe)      
LOE $0.85 - $0.90   $0.85 - $0.89
G&A $0.25 - $0.30   $0.27 - $0.30
DD&A $0.70 - $0.75   $0.73 - $0.77
       
Other Business Segment Guidance (Millions)      
Gathering Segment Revenues $135 - $145   $135 - $145
Pipeline and Storage Segment Revenues $290 - $295   $290 - $295

 

NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
QUARTER ENDED SEPTEMBER 30, 2019
(Unaudited)
                       
  Upstream   Midstream   Downstream        
                       
  Exploration &   Pipeline &           Corporate /    
(Thousands of Dollars) Production   Storage   Gathering   Utility   All Other   Consolidated*
                       
Fourth quarter 2018 GAAP earnings $ 19,580     $ 15,337     $ 14,783     $ (7,067 )   $ (4,639 )   $ 37,994  
                       
Items impacting comparability:                      
Remeasurement of deferred taxes under 2017 Tax Reform 2,804         12         700     3,516  
Mark-to-market adjustments due to hedge ineffectiveness 346                     346  
Tax impact of mark-to-market adjustments due to hedge ineffectiveness (85 )                   (85 )
Premium paid on early redemption of debt 962                     962  
Tax impact of premium paid on early redemption of debt (235 )                   (235 )
Fourth quarter 2018 adjusted operating results 23,372     15,337     14,795     (7,067 )   (3,939 )   42,498  
                       
Drivers of adjusted operating results**                      
                       
Upstream Revenues                      
Higher (lower) natural gas production 21,591                     21,591  
Higher (lower) crude oil production 593                     593  
Higher (lower) realized natural gas prices, after hedging (7,923 )                   (7,923 )
Higher (lower) realized crude oil prices, after hedging 1,521                     1,521  
                       
Midstream Revenues                      
Higher (lower) operating revenues     (3,404 )   5,051             1,647  
                       
Downstream Margins***                      
Impact of usage and weather             (1,131 )       (1,131 )
System modernization tracker revenues             484         484  
Regulatory revenue adjustments             (757 )       (757 )
                       
Operating Expenses                      
Lower (higher) lease operating and transportation expenses (6,619 )                   (6,619 )
Lower (higher) operating expenses (1,862 )   2,043     (464 )   (815 )       (1,098 )
Lower (higher) depreciation / depletion (7,983 )       (489 )           (8,472 )
                       
Other Income (Expense)                      
(Higher) lower other deductions     860         1,394         2,254  
(Higher) lower interest expense (672 )   629     (140 )   751     736     1,304  
                       
Income Taxes                      
Impact of tax rate reduction due to 2017 Tax Reform 1,543     675     547     (562 )   (23 )   2,180  
Lower (higher) income tax expense / effective tax rate 1,551     (473 )   (2,408 )   895     726     291  
                       
All other / rounding (941 )   (299 )   10     (920 )   781     (1,369 )
Fourth quarter 2019 adjusted operating results 24,171     15,368     16,902     (7,728 )   (1,719 )   46,994  
                       
Items impacting comparability:                      
Mark-to-market adjustments due to hedge ineffectiveness 1,313                     1,313  
Tax impact of mark-to-market adjustments due to hedge ineffectiveness (276 )                   (276 )
Unrealized gain (loss) on other investments                 (949 )   (949 )
Tax impact of unrealized gain (loss) on other investments                 199     199  
Fourth quarter 2019 GAAP earnings $ 25,208     $ 15,368     $ 16,902     $ (7,728 )   $ (2,469 )   $ 47,281  
                       
* Amounts do not reflect intercompany eliminations
** Operating results have been calculated using the 24.5% federal statutory rate effective for the 2018 fiscal year. The impact of the change to a 21% federal statutory rate for the 2019 fiscal year is broken out separately under the caption "Income Taxes".
*** Downstream margin defined as operating revenues less purchased gas expense.

 

NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
QUARTER ENDED SEPTEMBER 30, 2019
(Unaudited)
                       
  Upstream   Midstream   Downstream        
                       
  Exploration &   Pipeline &           Corporate /    
  Production   Storage   Gathering   Utility   All Other   Consolidated*
                       
Fourth quarter 2018 GAAP earnings per share $ 0.23     $ 0.18     $ 0.17     $ (0.08 )   $ (0.06 )   $ 0.44  
Items impacting comparability:                      
Remeasurement of deferred taxes under 2017 Tax Reform 0.03                 0.01     0.04  
Mark-to-market adjustments due to hedge ineffectiveness, net of tax                      
Premium paid on early redemption of debt, net of tax 0.01                     0.01  
Fourth quarter 2018 adjusted operating results per share 0.27     0.18     0.17     (0.08 )   (0.05 )   0.49  
                       
Drivers of adjusted operating results**                      
                       
Upstream Revenues                      
Higher (lower) natural gas production 0.25                     0.25  
Higher (lower) crude oil production 0.01                     0.01  
Higher (lower) realized natural gas prices, after hedging (0.09 )                   (0.09 )
Higher (lower) realized crude oil prices, after hedging 0.02                     0.02  
                       
Midstream Revenues                      
Higher (lower) operating revenues     (0.04 )   0.06             0.02  
                       
Downstream Margins***                      
Impact of usage and weather             (0.01 )       (0.01 )
System modernization tracker revenues             0.01         0.01  
Regulatory revenue adjustments             (0.01 )       (0.01 )
                       
Operating Expenses                      
Lower (higher) lease operating and transportation expenses (0.08 )                   (0.08 )
Lower (higher) operating expenses (0.02 )   0.02     (0.01 )   (0.01 )       (0.02 )
Lower (higher) depreciation / depletion (0.09 )       (0.01 )           (0.10 )
                       
Other Income (Expense)                      
(Higher) lower other deductions     0.01         0.02         0.03  
(Higher) lower interest expense (0.01 )   0.01         0.01     0.01     0.02  
                       
Income Taxes                      
Impact of tax rate reduction due to 2017 Tax Reform 0.02     0.01     0.01     (0.01 )       0.03  
Lower (higher) income tax expense / effective tax rate 0.02     (0.01 )   (0.03 )   0.01     0.01      
                       
All other / rounding (0.02 )           (0.02 )   0.01     (0.03 )
Fourth quarter 2019 adjusted operating results per share 0.28     0.18     0.19     (0.09 )   (0.02 )   0.54  
                       
Items impacting comparability:                      
Mark-to-market adjustments due to hedge ineffectiveness, net of tax 0.01                     0.01  
Unrealized gain (loss) on other investments, net of tax                 (0.01 )   (0.01 )
Fourth quarter 2019 GAAP earnings per share $ 0.29     $ 0.18     $ 0.19     $ (0.09 )   $ (0.03 )   $ 0.54  
                       
* Amounts do not reflect intercompany eliminations
** Operating results have been calculated using the 24.5% federal statutory rate effective for the 2018 fiscal year. The impact of the change to a 21% federal statutory rate for the 2019 fiscal year is broken out separately under the caption "Income Taxes".
*** Downstream margin defined as operating revenues less purchased gas expense.

 

NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
TWELVE MONTHS ENDED SEPTEMBER 30, 2019
(Unaudited)
                       
  Upstream   Midstream   Downstream        
                       
  Exploration &   Pipeline &           Corporate /    
(Thousands of Dollars) Production   Storage   Gathering   Utility   All Other   Consolidated*
                       
Fiscal 2018 GAAP earnings $ 180,632     $ 97,246     $ 83,519     $ 51,217     $ (21,093 )   $ 391,521  
                       
Items impacting comparability:                      
Remeasurement of deferred taxes under 2017 Tax Reform (73,706 )   (14,100 )   (34,488 )       18,810     (103,484 )
Mark-to-market adjustments due to hedge ineffectiveness 782                     782  
Tax impact of mark-to-market adjustments due to hedge ineffectiveness (192 )                   (192 )
Premium paid on early redemption of debt 962                     962  
Tax impact of premium paid on early redemption of debt (235 )                   (235 )
Fiscal 2018 adjusted operating results 108,243     83,146     49,031     51,217     (2,283 )   289,354  
                       
Drivers of adjusted operating results**                      
                       
Upstream Revenues                      
Higher (lower) natural gas production 66,573                     66,573  
Higher (lower) crude oil production (9,372 )                   (9,372 )
Higher (lower) realized natural gas prices, after hedging (12,350 )                   (12,350 )
Higher (lower) realized crude oil prices, after hedging 5,243                     5,243  
                       
Midstream Revenues                      
Higher (lower) operating revenues     (9,092 )   14,479             5,387  
                       
Downstream Margins***                      
Impact of usage and weather             2,554         2,554  
System modernization tracker revenues             3,085         3,085  
Lower (higher) refund provision on tax rate change             (3,783 )       (3,783 )
Regulatory revenue adjustments             416         416  
Higher (lower) energy marketing margins                 (3,841 )   (3,841 )
                       
Operating Expenses                      
Lower (higher) lease operating and transportation expenses (18,048 )                   (18,048 )
Lower (higher) operating expenses (3,497 )   (5,914 )   (2,144 )   (1,710 )       (13,265 )
Lower (higher) property, franchise and other taxes (2,511 )   (1,055 )               (3,566 )
Lower (higher) depreciation / depletion (23,035 )   (1,120 )   (2,057 )           (26,212 )
                       
Other Income (Expense)                      
(Higher) lower other deductions     2,439         3,814         6,253  
(Higher) lower interest expense (1,096 )   1,692     116     2,501     1,925     5,138  
                       
Income Taxes                      
Impact of tax rate reduction due to 2017 Tax Reform 5,099     2,895     2,516     2,251     (315 )   12,446  
Lower (higher) income tax expense / effective tax rate (5,825 )   1,411     (3,801 )   1,089     1,792     (5,334 )
                       
All other / rounding (263 )   (391 )   (227 )   (563 )   16     (1,428 )
Fiscal 2019 adjusted operating results 109,161     74,011     57,913     60,871     (2,706 )   299,250  
                       
Items impacting comparability:                      
Remeasurement of deferred taxes under 2017 Tax Reform 990         500         3,510     5,000  
Mark-to-market adjustments due to hedge ineffectiveness 2,096                     2,096  
Tax impact of mark-to-market adjustments due to hedge ineffectiveness (440 )                   (440 )
Unrealized gain (loss) on other investments                 (2,045 )   (2,045 )
Tax impact of unrealized gain (loss) on other investments                 429     429  
Fiscal 2019 GAAP earnings $ 111,807     $ 74,011     $ 58,413     $ 60,871     $ (812 )   $ 304,290  
                       
* Amounts do not reflect intercompany eliminations                      
** Operating results have been calculated using the 24.5% federal statutory rate effective for the 2018 fiscal year. The impact of the change to a 21% federal statutory rate for the 2019 fiscal year is broken out separately under the caption "Income Taxes".
*** Downstream margin defined as operating revenues less purchased gas expense.

 

NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
TWELVE MONTHS ENDED SEPTEMBER 30, 2019
(Unaudited)
                       
  Upstream   Midstream   Downstream        
                       
  Exploration &   Pipeline &           Corporate /    
  Production   Storage   Gathering   Utility   All Other   Consolidated*
Fiscal 2018 GAAP earnings per share $ 2.09     $ 1.13     $ 0.97     $ 0.59     $ (0.25 )   $ 4.53  
Items impacting comparability:                      
Remeasurement of deferred taxes under 2017 Tax Reform (0.85 )   (0.16 )   (0.40 )       0.21     (1.20 )
Mark-to-market adjustments due to hedge ineffectiveness, net of tax 0.01                     0.01  
Premium paid on early redemption of debt, net of tax 0.01                     0.01  
Rounding (0.01 )   (0.01 )           0.02      
Fiscal 2018 adjusted operating results per share 1.25     0.96     0.57     0.59     (0.02 )   3.35  
                       
Drivers of adjusted operating results**                      
                       
Upstream Revenues                      
Higher (lower) natural gas production 0.77                     0.77  
Higher (lower) crude oil production (0.11 )                   (0.11 )
Higher (lower) realized natural gas prices, after hedging (0.14 )                   (0.14 )
Higher (lower) realized crude oil prices, after hedging 0.06                     0.06  
                       
Midstream Revenues                      
Higher (lower) operating revenues     (0.10 )   0.17             0.07  
                       
Downstream Margins***                      
Impact of usage and weather             0.03         0.03  
System modernization tracker revenues             0.04         0.04  
Lower (higher) refund provision on tax rate change             (0.04 )       (0.04 )
Regulatory revenue adjustments                      
Higher (lower) energy marketing margins                 (0.04 )   (0.04 )
                       
Operating Expenses                      
Lower (higher) lease operating and transportation expenses (0.21 )                   (0.21 )
Lower (higher) operating expenses (0.04 )   (0.07 )   (0.02 )   (0.02 )       (0.15 )
Lower (higher) property, franchise and other taxes (0.03 )   (0.01 )               (0.04 )
Lower (higher) depreciation / depletion (0.27 )   (0.01 )   (0.02 )           (0.30 )
                       
Other Income (Expense)                      
(Higher) lower other deductions     0.03         0.04         0.07  
(Higher) lower interest expense (0.01 )   0.02         0.03     0.02     0.06  
                       
Income Taxes                      
Impact of tax rate reduction due to 2017 Tax Reform 0.06     0.03     0.03     0.03         0.15  
Lower (higher) income tax expense / effective tax rate (0.07 )   0.02     (0.04 )   0.01     0.02     (0.06 )
                       
All other / rounding     (0.02 )   (0.02 )   (0.01 )   (0.01 )   (0.06 )
Fiscal 2019 adjusted operating results per share 1.26     0.85     0.67     0.70     (0.03 )   3.45  
                       
Items impacting comparability:                      
Remeasurement of deferred taxes under 2017 Tax Reform 0.01         0.01         0.04     0.06  
Mark-to-market adjustments due to hedge ineffectiveness, net of tax 0.02                     0.02  
Unrealized gain (loss) on other investments, net of tax                 (0.02 )   (0.02 )
Rounding         (0.01 )       0.01      
Fiscal 2019 GAAP earnings per share $ 1.29     $ 0.85     $ 0.67     $ 0.70     $     $ 3.51  
                       
* Amounts do not reflect intercompany eliminations
** Operating results have been calculated using the 24.5% federal statutory rate effective for the 2018 fiscal year. The impact of the change to a 21% federal statutory rate for the 2019 fiscal year is broken out separately under the caption "Income Taxes".
*** Downstream margin defined as operating revenues less purchased gas expense.

 

               
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
               
(Thousands of Dollars, except per share amounts)              
  Three Months Ended   Twelve Months Ended
  September 30,   September 30,
  (Unaudited)   (Unaudited)
SUMMARY OF OPERATIONS 2019   2018   2019   2018
Operating Revenues:              
Utility and Energy Marketing Revenues $ 79,925     $ 93,240     $ 860,985     $ 812,474  
Exploration and Production and Other Revenues 166,262     143,998     636,528     569,808  
Pipeline and Storage and Gathering Revenues 47,153     51,958     195,819     210,386  
  293,340     289,196     1,693,332     1,592,668  
Operating Expenses:              
Purchased Gas 4,728     14,968     386,265     337,822  
Operation and Maintenance:              
Utility and Energy Marketing 39,390     38,537     171,472     168,885  
Exploration and Production and Other 38,847     34,656     147,457     139,546  
Pipeline and Storage and Gathering 30,926     33,067     111,783     101,338  
Property, Franchise and Other Taxes 20,839     20,148     88,886     84,393  
Depreciation, Depletion and Amortization 74,670     63,159     275,660     240,961  
  209,400     204,535     1,181,523     1,072,945  
               
Operating Income 83,940     84,661     511,809     519,723  
               
Other Income (Expense):              
Other Income (Deductions) 1,435     (968 )   (15,542 )   (21,174 )
Interest Expense on Long-Term Debt (25,598 )   (28,534 )   (101,614 )   (110,946 )
Other Interest Expense (1,081 )   (834 )   (5,142 )   (3,576 )
               
Income Before Income Taxes 58,696     54,325     389,511     384,027  
               
Income Tax Expense (Benefit) 11,415     16,331     85,221     (7,494 )
               
Net Income Available for Common Stock $ 47,281     $ 37,994     $ 304,290     $ 391,521  
               
Earnings Per Common Share              
Basic $ 0.55     $ 0.44     $ 3.53     $ 4.56  
Diluted $ 0.54     $ 0.44     $ 3.51     $ 4.53  
               
Weighted Average Common Shares:              
Used in Basic Calculation 86,315,038   85,953,204   86,235,550   85,830,597
Used in Diluted Calculation 86,807,821   86,650,677   86,773,259   86,439,698

 

 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
   
  September 30,   September 30,
(Thousands of Dollars) 2019   2018
       
ASSETS      
Property, Plant and Equipment $ 11,204,838     $ 10,439,839  
Less - Accumulated Depreciation, Depletion and Amortization   5,695,328       5,462,696  
Net Property, Plant and Equipment   5,509,510       4,977,143  
       
Current Assets:      
Cash and Temporary Cash Investments   20,428       229,606  
Hedging Collateral Deposits   6,832       3,441  
Receivables - Net   139,956       141,498  
Unbilled Revenue   18,758       24,182  
Gas Stored Underground   36,632       37,813  
Materials and Supplies - at average cost   40,717       35,823  
Unrecovered Purchased Gas Costs   2,246       4,204  
Other Current Assets   97,054       68,024  
Total Current Assets   362,623       544,591  
       
Other Assets:      
Recoverable Future Taxes   115,197       115,460  
Unamortized Debt Expense   14,005       15,975  
Other Regulatory Assets   167,320       112,918  
Deferred Charges   33,843       40,025  
Other Investments   144,917       132,545  
Goodwill   5,476       5,476  
Prepaid Post-Retirement Benefit Costs   60,517       82,733  
Fair Value of Derivative Financial Instruments   48,669       9,518  
Other   80       102  
Total Other Assets   590,024       514,752  
Total Assets $ 6,462,157     $ 6,036,486  
       
CAPITALIZATION AND LIABILITIES      
Capitalization:      
Comprehensive Shareholders' Equity      
Common Stock, $1 Par Value Authorized - 200,000,000 Shares; Issued and      
Outstanding - 86,315,287 Shares and 85,956,814 Shares, Respectively $ 86,315     $ 85,957  
Paid in Capital   832,264       820,223  
Earnings Reinvested in the Business   1,272,601       1,098,900  
Accumulated Other Comprehensive Loss   (52,155 )     (67,750 )
Total Comprehensive Shareholders' Equity   2,139,025       1,937,330  
Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issuance Costs   2,133,718       2,131,365  
Total Capitalization   4,272,743       4,068,695  
       
Current and Accrued Liabilities:      
Notes Payable to Banks and Commercial Paper   55,200        
Current Portion of Long-Term Debt          
Accounts Payable   132,208       160,031  
Amounts Payable to Customers   7,445       3,394  
Dividends Payable   37,547       36,532  
Interest Payable on Long-Term Debt   18,508       19,062  
Customer Advances   13,044       13,609  
Customer Security Deposits   16,210       25,703  
Other Accruals and Current Liabilities   139,600       132,693  
Fair Value of Derivative Financial Instruments   5,574       49,036  
Total Current and Accrued Liabilities   425,336       440,060  
       
Deferred Credits:      
Deferred Income Taxes   653,382       512,686  
Taxes Refundable to Customers   366,503       370,628  
Cost of Removal Regulatory Liability   221,699       212,311  
Other Regulatory Liabilities   138,939       146,743  
Pension and Other Post-Retirement Liabilities   133,729       66,103  
Asset Retirement Obligations   127,458       108,235  
Other Deferred Credits   122,368       111,025  
Total Deferred Credits   1,764,078       1,527,731  
Commitments and Contingencies          
Total Capitalization and Liabilities $ 6,462,157     $ 6,036,486  

 

       
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
  Twelve Months Ended
  September 30,
(Thousands of Dollars) 2019   2018
       
Operating Activities:      
Net Income Available for Common Stock $ 304,290     $ 391,521  
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:      
Depreciation, Depletion and Amortization 275,660     240,961  
Deferred Income Taxes 122,265     (18,153 )
Stock-Based Compensation 21,186     15,762  
Other 8,608     16,133  
Change in:      
Receivables and Unbilled Revenue 6,379     (30,882 )
Gas Stored Underground and Materials and Supplies (3,713 )   (4,021 )
Unrecovered Purchased Gas Costs 1,958     419  
Other Current Assets (29,030 )   (16,519 )
Accounts Payable (24,770 )   17,962  
Amounts Payable to Customers 4,051     3,394  
Customer Advances (565 )   (2,092 )
Customer Security Deposits (9,493 )   5,331  
Other Accruals and Current Liabilities 10,992     3,865  
Other Assets 5,115     (9,556 )
Other Liabilities 1,550     1,178  
Net Cash Provided by Operating Activities $ 694,483     $ 615,303  
       
Investing Activities:      
Capital Expenditures $ (788,938 )   $ (584,004 )
Net Proceeds from Sale of Oil and Gas Producing Properties     55,506  
Other (10,237 )   (389 )
Net Cash Used in Investing Activities $ (799,175 )   $ (528,887 )
       
Financing Activities:      
Changes in Notes Payable to Banks and Commercial Paper $ 55,200     $  
Reduction of Long-Term Debt     (566,512 )
Dividends Paid on Common Stock (147,418 )   (143,258 )
Net Proceeds From Issuance of Long-Term Debt     295,020  
Net Proceeds from Issuance (Repurchase) of Common Stock (8,877 )   4,110  
Net Cash Used in Financing Activities $ (101,095 )   $ (410,640 )
       
Net Decrease in Cash, Cash Equivalents, and Restricted Cash (205,787 )   (324,224 )
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period 233,047     557,271  
Cash, Cash Equivalents, and Restricted Cash at September 30 $ 27,260     $ 233,047  

 

                   
                   
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                   
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
                   
UPSTREAM BUSINESS
                   
                   
  Three Months Ended   Twelve Months Ended
(Thousands of Dollars, except per share amounts) September 30,   September 30,
EXPLORATION AND PRODUCTION SEGMENT 2019   2018   Variance   2019 2018 Variance
Total Operating Revenues $ 164,887     $ 143,167     $ 21,720     $ 632,740   $ 564,547   $ 68,193  
                   
Operating Expenses:                  
Operation and Maintenance:                  
General and Administrative Expense 16,063     14,127     1,936     64,003   59,424   4,579  
Lease Operating and Transportation Expense 50,409     41,642     8,767     186,626   162,721   23,905  
All Other Operation and Maintenance Expense 3,425     2,895     530     11,130   11,077   53  
Property, Franchise and Other Taxes 4,168     3,655     513     17,726   14,400   3,326  
Depreciation, Depletion and Amortization 44,141     33,567     10,574     154,784   124,274   30,510  
  118,206     95,886     22,320     434,269   371,896   62,373  
                   
Operating Income 46,681     47,281   (600 )   198,471   192,651 5,820  
                   
Other Income (Expense):                  
Non-Service Pension and Post-Retirement Benefit Costs (4 )   (293 )   289     (16 ) (1,172 ) 1,156  
Interest and Other Income 273     392     (119 )   1,107   1,479   (372 )
Interest Expense on Long-Term Debt     (962 )   962       (962 ) 962  
Other Interest Expense (14,216 )   (13,326 )   (890 )   (54,777 ) (53,326 ) (1,451 )
                   
Income Before Income Taxes 32,734     33,092     (358 )   144,785   138,670   6,115  
Income Tax Expense (Benefit) 7,526     13,512     (5,986 )   32,978   (41,962 ) 74,940  
Net Income $ 25,208     $ 19,580     $ 5,628     $ 111,807   $ 180,632   $ (68,825 )
                   
Net Income Per Share (Diluted) $ 0.29     $ 0.23     $ 0.06     $ 1.29   $ 2.09   $ (0.80 )
                   

 

                   
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                   
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
                   
MIDSTREAM BUSINESSES
                   
                   
  Three Months Ended   Twelve Months Ended
(Thousands of Dollars, except per share amounts) September 30,   September 30,
PIPELINE AND STORAGE SEGMENT 2019   2018   Variance   2019 2018 Variance
Revenues from External Customers $ 47,143     $ 51,958     $ (4,815 )   $ 195,808   $ 210,345   $ (14,537 )
Intersegment Revenues 22,764     22,457     307     92,475   89,981   2,494  
Total Operating Revenues 69,907     74,415     (4,508 )   288,283   300,326   (12,043 )
                   
Operating Expenses:                  
Purchased Gas 241     341     (100 )   1,124   607   517  
Operation and Maintenance 26,099     28,805     (2,706 )   94,710   86,877   7,833  
Property, Franchise and Other Taxes 7,820     7,570     250     30,268   28,870   1,398  
Depreciation, Depletion and Amortization 11,387     11,141     246     44,947   43,463   1,484  
  45,547     47,857     (2,310 )   171,049   159,817   11,232  
                   
Operating Income 24,360     26,558     (2,198 )   117,234   140,509   (23,275 )
                   
Other Income (Expense):                  
Non-Service Pension and Post-Retirement Benefit Credit 930     353     577     3,257   1,421   1,836  
Interest and Other Income 1,882     1,320     562     5,900   4,505   1,395  
Interest Expense (7,132 )   (7,965 )   833     (29,142 ) (31,383 ) 2,241  
                   
Income Before Income Taxes 20,040     20,266     (226 )   97,249   115,052   (17,803 )
Income Tax Expense 4,672     4,929     (257 )   23,238   17,806   5,432  
Net Income $ 15,368     $ 15,337     $ 31     $ 74,011   $ 97,246   $ (23,235 )
                   
Net Income Per Share (Diluted) $ 0.18     $ 0.18     $     $ 0.85   $ 1.13   $ (0.28 )
                   
                   
  Three Months Ended   Twelve Months Ended
  September 30,   September 30,
GATHERING SEGMENT 2019   2018   Variance   2019 2018 Variance
Revenues from External Customers $ 10     $     $ 10     $ 11   $ 41   $ (30 )
Intersegment Revenues 35,132     28,452     6,680     127,064   107,856   19,208  
Total Operating Revenues 35,142     28,452     6,690     127,075   107,897   19,178  
                   
Operating Expenses:                  
Operation and Maintenance 5,229     4,615     614     18,702   15,862   2,840  
Property, Franchise and Other Taxes 18     23     (5 )   81   98   (17 )
Depreciation, Depletion and Amortization 5,202     4,554     648     20,038   17,313   2,725  
  10,449     9,192     1,257     38,821   33,273   5,548  
                   
Operating Income 24,693     19,260     5,433     88,254   74,624   13,630  
                   
Other Income (Expense):                  
Non-Service Pension and Post-Retirement Benefit Costs (1 )   (82 )   81     (86 ) (328 ) 242  
Interest and Other Income 57     130     (73 )   546   1,106   (560 )
Interest Expense (2,397 )   (2,211 )   (186 )   (9,406 ) (9,560 ) 154  
                   
Income Before Income Taxes 22,352     17,097     5,255     79,308   65,842   13,466  
Income Tax Expense (Benefit) 5,450     2,314     3,136     20,895   (17,677 ) 38,572  
Net Income $ 16,902     $ 14,783     $ 2,119     $ 58,413   $ 83,519   $ (25,106 )
                   
Net Income Per Share (Diluted) $ 0.19     $ 0.17     $ 0.02     $ 0.67   $ 0.97   $ (0.30 )
                   

 

                   
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                   
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
                   
DOWNSTREAM BUSINESS
                   
                   
  Three Months Ended   Twelve Months Ended
(Thousands of Dollars, except per share amounts) September 30,   September 30,
UTILITY SEGMENT 2019   2018   Variance   2019 2018 Variance
Revenues from External Customers $ 67,189     $ 75,231     $ (8,042 )   $ 715,813   $ 674,726   $ 41,087  
Intersegment Revenues 1,645     1,399     246     11,629   12,800   (1,171 )
Total Operating Revenues 68,834     76,630     (7,796 )   727,442   687,526   39,916  
                   
Operating Expenses:                  
Purchased Gas 14,712     19,683     (4,971 )   342,832   306,130   36,702  
Operation and Maintenance 38,845     37,798     1,047     168,684   165,858   2,826  
Property, Franchise and Other Taxes 8,563     8,635     (72 )   39,792   39,984   (192 )
Depreciation, Depletion and Amortization 13,630     13,272     358     53,832   53,253   579  
  75,750     79,388     (3,638 )   605,140   565,225   39,915  
                   
Operating Income (Loss) (6,916 )   (2,758 )   (4,158 )   122,302   122,301   1  
                   
Other Income (Expense):                  
Non-Service Pension and Post-Retirement Benefit Costs (2,040 )   (3,722 )   1,682     (27,600 ) (31,399 ) 3,799  
Interest and Other Income 870     705     165     3,579   2,326   1,253  
Interest Expense (5,492 )   (6,487 )   995     (23,443 ) (26,753 ) 3,310  
                   
Income (Loss) Before Income Taxes (13,578 )   (12,262 )   (1,316 )   74,838   66,475   8,363  
Income Tax Expense (Benefit) (5,850 )   (5,195 )   (655 )   13,967   15,258   (1,291 )
Net Income (Loss) $ (7,728 )   $ (7,067 )   $ (661 )   $ 60,871   $ 51,217   $ 9,654  
                   
Net Income (Loss) Per Share (Diluted) $ (0.09 )   $ (0.08 )   $ (0.01 )   $ 0.70   $ 0.59   $ 0.11  
                   

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                   
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
                   
  Three Months Ended   Twelve Months Ended
(Thousands of Dollars, except per share amounts) September 30,   September 30,
ALL OTHER 2019   2018   Variance   2019 2018 Variance
Revenues from External Customers $ 13,977     $ 18,785     $ (4,808 )   $ 148,582   $ 142,349   $ 6,233  
Intersegment Revenues 71     237     (166 )   1,127   826   301  
Total Operating Revenues 14,048     19,022     (4,974 )   149,709   143,175   6,534  
Operating Expenses:                  
Purchased Gas 13,439     18,242     (4,803 )   144,292   131,481   12,811  
Operation and Maintenance 1,837     1,833     4     7,549   7,438   111  
Property, Franchise and Other Taxes 141     140     1     540   565   (25 )
Depreciation, Depletion and Amortization 115     436     (321 )   1,291   1,902   (611 )
  15,532     20,651     (5,119 )   153,672   141,386   12,286  
                   
Operating Income (Loss) (1,484 )   (1,629 )   145     (3,963 ) 1,789   (5,752 )
                   
Other Income (Expense):                  
Non-Service Pension and Post-Retirement Benefit Costs (11 )   (133 )   122     (153 ) (535 ) 382  
Interest and Other Income 319     335     (16 )   1,371   1,154   217  
Other Interest Expense (6 )   (5 )   (1 )   (21 ) (22 ) 1  
                   
Income (Loss) Before Income Taxes (1,182 )   (1,432 )   250     (2,766 ) 2,386   (5,152 )
Income Tax Expense (Benefit) (316 )   (474 )   158     (955 ) 2,125   (3,080 )
Net Income (Loss) $ (866 )   $ (958 )   $ 92     $ (1,811 ) $ 261   $ (2,072 )
Net Income (Loss) Per Share (Diluted) $ (0.01 )   $ (0.01 )   $     $ (0.02 ) $   $ (0.02 )
       
       
  Three Months Ended   Twelve Months Ended
  September 30,   September 30,
CORPORATE 2019   2018   Variance   2019 2018 Variance
Revenues from External Customers $ 134     $ 55     $ 79     $ 378   $ 660   $ (282 )
Intersegment Revenues 1,144     1,047     97     4,638   4,045   593  
Total Operating Revenues 1,278     1,102     176     5,016   4,705   311  
Operating Expenses:                  
Operation and Maintenance 4,348     4,839     (491 )   14,258   15,624   (1,366 )
Property, Franchise and Other Taxes 129     125     4     479   476   3  
Depreciation, Depletion and Amortization 195     189     6     768   756   12  
  4,672     5,153     (481 )   15,505   16,856   (1,351 )
                   
Operating Loss (3,394 )   (4,051 )   657     (10,489 ) (12,151 ) 1,662  
                   
Other Income (Expense):                  
Non-Service Pension and Post-Retirement Benefit Costs (647 )   (156 )   (491 )   (2,679 ) (624 ) (2,055 )
Interest and Other Income 28,993     30,552     (1,559 )   115,605   124,002   (8,397 )
Interest Expense on Long-Term Debt (25,598 )   (27,572 )   1,974     (101,614 ) (109,984 ) 8,370  
Other Interest Expense (1,024 )   (1,209 )   185     (4,726 ) (5,641 ) 915  
                   
Loss before Income Taxes (1,670 )   (2,436 )   766     (3,903 ) (4,398 ) 495  
Income Tax Expense (Benefit) (67 )   1,245     (1,312 )   (4,902 ) 16,956   (21,858 )
Net Income (Loss) $ (1,603 )   $ (3,681 )   $ 2,078     $ 999   $ (21,354 ) $ 22,353  
Net Income (Loss) Per Share (Diluted) $ (0.02 )   $ (0.05 )   $ 0.03     $ 0.02   $ (0.25 ) $ 0.27  
                   
                   
  Three Months Ended   Twelve Months Ended
  September 30,   September 30,
INTERSEGMENT ELIMINATIONS 2019   2018   Variance   2019 2018 Variance
Intersegment Revenues $ (60,756 )   $ (53,592 )   $ (7,164 )   $ (236,933 ) $ (215,508 ) $ (21,425 )
Operating Expenses:                  
Purchased Gas (23,664 )   (23,298 )   (366 )   (101,983 ) (100,396 ) (1,587 )
Operation and Maintenance (37,092 )   (30,294 )   (6,798 )   (134,950 ) (115,112 ) (19,838 )
  (60,756 )   (53,592 )   (7,164 )   (236,933 ) (215,508 ) (21,425 )
                   
Operating Income                  
                   
Other Income (Expense):                  
Interest and Other Deductions (29,186 )   (30,369 )   1,183     (116,373 ) (123,109 ) 6,736  
Interest Expense 29,186     30,369     (1,183 )   116,373   123,109   (6,736 )
Net Income (Loss) $     $     $     $   $   $  
Net Income (Loss) Per Share (Diluted) $     $     $     $   $   $  

 

                       
                       
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                       
SEGMENT INFORMATION (Continued)
(Thousands of Dollars)
                       
                       
  Three Months Ended   Twelve Months Ended
  September 30,   September 30,
  (Unaudited)   (Unaudited)
          Increase           Increase
  2019   2018   (Decrease)   2019   2018   (Decrease)
                       
Capital Expenditures:                      
Exploration and Production $ 100,215   (1) $ 110,801   (2) $ (10,586 )   $ 491,889   (1)(2) $ 380,677   (2)(3) $ 111,212  
Pipeline and Storage 54,878   (1) 39,476   (2) 15,402     143,005   (1)(2) 92,832   (2)(3) 50,173  
Gathering 10,254   (1) 13,961   (2) (3,707 )   49,650   (1)(2) 61,728   (2)(3) (12,078 )
Utility 37,483   (1) 33,621   (2) 3,862     95,847   (1)(2) 85,648   (2)(3) 10,199  
Total Reportable Segments 202,830     197,859     4,971     780,391     620,885     159,506  
All Other 5     7     (2 )   128     41     87  
Corporate 358     131     227     727     181     546  
Eliminations     (583 )   583         (20,505 )   20,505  
Total Capital Expenditures $ 203,193     $ 197,414     $ 5,779     $ 781,246     $ 600,602     $ 180,644  

(1)  Capital expenditures for the quarter and year ended September 30, 2019, include accounts payable and accrued liabilities related to capital expenditures of $38.0 million, $23.8 million, $6.6 million, and $12.7 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 September 30, 2019, since they represent non-cash investing activities at that date.

(2)  Capital expenditures for the year ended September 30, 2019, exclude capital expenditures of $51.3 million, $21.9 million, $6.1 million and $9.5 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, 2018 and paid during the year ended September 30, 2019.  These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2018, since they represented non-cash investing activities at that date.  These amounts have been included in the Consolidated Statement of Cash Flows at September 30, 2019.

(3)  Capital expenditures for the year ended September 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 year ended September 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 September 30, 2018.

                   
DEGREE DAYS                  
                   
              Percent Colder
              (Warmer) Than:
Three Months Ended September 30 Normal   2019   2018   Normal (1)   Last Year (1)
                   
Buffalo, NY 162   45   83   (72.2 )   (45.8 )
Erie, PA 124   12   47   (90.3 )   (74.5 )
                   
Twelve Months Ended September 30                  
                       
Buffalo, NY 6,617   6,699   6,391   1.2     4.8  
Erie, PA 6,147   5,911   5,976   (3.8 )   (1.1 )
                   

(1)  Percents compare actual 2019 degree days to normal degree days and actual 2019 degree days to actual 2018 degree days.

                         
                         
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                         
EXPLORATION AND PRODUCTION INFORMATION
                         
                         
    Three Months Ended   Twelve Months Ended
    September 30,   September 30,
            Increase           Increase
    2019   2018   (Decrease)   2019   2018   (Decrease)
                         
Gas Production/Prices:                        
Production (MMcf)                        
Appalachia   54,952     43,238     11,714     195,906     160,499     35,407  
West Coast   491     511     (20 )   1,974     2,407     (433 )
Total Production   55,443     43,749     11,694     197,880     162,906     34,974  
                         
Average Prices (Per Mcf)                        
Appalachia   $ 1.95     $ 2.34     $ (0.39 )   $ 2.40     $ 2.36     $ 0.04  
West Coast   3.94     5.73     (1.79 )   5.15     4.86     0.29  
Weighted Average   1.97     2.38     (0.41 )   2.43     2.40     0.03  
Weighted Average after Hedging   2.26     2.45     (0.19 )   2.44     2.52     (0.08 )
                         
Oil Production/Prices:                        
Production (Thousands of Barrels)                        
Appalachia   1     1         3     4     (1 )
West Coast   611     597     14     2,320     2,531     (211 )
Total Production   612     598     14     2,323     2,535     (212 )
                         
Average Prices (Per Barrel)                        
Appalachia   $ 60.70     $ 66.97     $ (6.27 )   $ 57.14     $ 57.76     $ (0.62 )
West Coast   61.85     71.91     (10.06 )   64.18     66.39     (2.21 )
Weighted Average   61.85     71.90     (10.05 )   64.17     66.38     (2.21 )
Weighted Average after Hedging   61.00     57.71     3.29     61.65     58.66     2.99  
                         
Total Production (MMcfe)   59,115     47,337     11,778     211,818     178,116     33,702  
                         
Selected Operating Performance Statistics:                        
General & Administrative Expense per Mcfe (1)   $ 0.27     $ 0.30     $ (0.03 )   $ 0.30     $ 0.33     $ (0.03 )
Lease Operating and Transportation Expense per Mcfe (1)(2)   $ 0.85     $ 0.88     $ (0.03 )   $ 0.88     $ 0.91     $ (0.03 )
Depreciation, Depletion & Amortization per Mcfe (1)   $ 0.75     $ 0.71     $ 0.04     $ 0.73     $ 0.70     $ 0.03  
                         

(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 $0.56 and $0.53 per Mcfe for the three months ended September 30, 2019 and September 30, 2018, respectively. Amounts include transportation expense of $0.56 and $0.54 per Mcfe for the twelve months ended September 30, 2019 and September 30, 2018, respectively.

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
               
EXPLORATION AND PRODUCTION INFORMATION
 
Hedging Summary for Fiscal 2020   Volume       Average Hedge Price
Oil Swaps              
Brent   1,260,000   BBL   $   64.66 / BBL
NYMEX   324,000   BBL   $   50.52 / BBL
Total   1,584,000   BBL   $   61.77 / BBL
               
Gas Swaps              
NYMEX   84,630,000   MMBTU   $   2.72 / MMBTU
DAWN   7,200,000   MMBTU   $   3.00 / MMBTU
Fixed Price Physical Sales   48,281,386   MMBTU   $   2.38 / MMBTU
Total   140,111,386   MMBTU   $   2.62 / MMBTU
               
Hedging Summary for Fiscal 2021   Volume       Average Hedge Price
Oil Swaps              
Brent   576,000   BBL   $   64.48 / BBL
NYMEX   156,000   BBL   $   51.00 / BBL
Total   732,000   BBL   $   61.61 / BBL
               
Gas Swaps              
NYMEX   10,630,000   MMBTU   $   2.80 / MMBTU
DAWN   600,000   MMBTU   $   3.00 / MMBTU
Fixed Price Physical Sales   41,206,344   MMBTU   $   2.21 / MMBTU
Total   52,436,344   MMBTU   $   2.34 / 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   40,242,536   MMBTU   $   2.23 / MMBTU
               
Hedging Summary for Fiscal 2023   Volume       Average Hedge Price
Fixed Price Physical Sales   36,807,532   MMBTU   $   2.25 / MMBTU
               
Hedging Summary for Fiscal 2024   Volume       Average Hedge Price
Fixed Price Physical Sales   20,801,194   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
         
EXPLORATION AND PRODUCTION INFORMATION
         
Reserve Quantity Information
(Unaudited)
         
    Gas MMcf
    U.S.
    Appalachian West Coast Total
    Region Region Company
Proved Developed and Undeveloped Reserves:        
September 30, 2018   2,320,502   36,840   2,357,342  
Extensions and Discoveries   686,549     686,549  
Revisions of Previous Estimates   104,741   (1,233 ) 103,508  
Production   (195,906 ) (1,974 ) (197,880 )
September 30, 2019   2,915,886   33,633   2,949,519  
         
Proved Developed Reserves:        
         
September 30, 2018   1,569,692   36,840   1,606,532  
September 30, 2019   1,901,162   33,633   1,934,795  
         
         
    Oil Mbbl
    U.S.
    Appalachian West Coast Total
    Region Region Company
Proved Developed and Undeveloped Reserves:        
September 30, 2018   14   27,649   27,663  
Extensions and Discoveries     787   787  
Revisions of Previous Estimates   2   (1,256 ) (1,254 )
Production   (3 ) (2,320 ) (2,323 )
September 30, 2019   13   24,860   24,873  
         
Proved Developed Reserves:        
         
September 30, 2018   14   26,689   26,703  
September 30, 2019   13   24,246   24,259  
         

 

                         
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                         
                         
                         
Pipeline & Storage Throughput - (millions of cubic feet - MMcf)        
                         
    Three Months Ended   Twelve Months Ended
    September 30,   September 30,
            Increase           Increase
    2019   2018   (Decrease)   2019   2018   (Decrease)
Firm Transportation - Affiliated   14,194     15,058     (864 )   121,618     119,164     2,454  
Firm Transportation - Non-Affiliated   153,838     165,809     (11,971 )   596,676     645,156     (48,480 )
Interruptible Transportation   189     393     (204 )   2,163     3,546     (1,383 )
    168,221     181,260     (13,039 )   720,457     767,866     (47,409 )
                         
Gathering Volume - (MMcf)                        
    Three Months Ended   Twelve Months Ended
    September 30,   September 30,
            Increase           Increase
    2019   2018   (Decrease)   2019   2018   (Decrease)
Gathered Volume - Affiliated   65,170     52,427     12,743     234,760     198,355     36,405  
                         
                         
Utility Throughput - (MMcf)                        
    Three Months Ended   Twelve Months Ended
    September 30,   September 30,
            Increase           Increase
    2019   2018   (Decrease)   2019   2018   (Decrease)
Retail Sales:                        
Residential Sales   3,247     3,707     (460 )   63,828     60,174     3,654  
Commercial Sales   490     567     (77 )   9,489     9,187     302  
Industrial Sales   63     63         702     623     79  
    3,800     4,337     (537 )   74,019     69,984     4,035  
Off-System Sales                   141     (141 )
Transportation   10,115     10,430     (315 )   76,028     76,828     (800 )
    13,915     14,767     (852 )   150,047     146,953     3,094  
                         
                         

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 twelve months ended September 30, 2019 and 2018:

    Three Months Ended   Twelve Months Ended
    September 30,   September 30,
(in thousands except per share amounts)   2019   2018   2019   2018
Reported GAAP Earnings   $ 47,281     $ 37,994     $ 304,290     $ 391,521  
Items impacting comparability                
Remeasurement of deferred income taxes under 2017 Tax Reform       3,516     (5,000 )   (103,484 )
Mark-to-market adjustments due to hedge ineffectiveness (E&P)   (1,313 )   346     (2,096 )   782  
Tax impact of mark-to-market adjustments due to hedge ineffectiveness   276     (85 )   440     (192 )
Unrealized (gain) loss on other investments (Corporate/All Other)   949         2,045      
Tax impact of unrealized (gain) loss on other investments   (199 )       (429 )    
Premium paid on early redemption of debt (E&P)       962         962  
Tax impact of premium paid on early redemption of debt       (235 )       (235 )
Adjusted Operating Results   $ 46,994     $ 42,498     $ 299,250     $ 289,354  
                 
Reported GAAP Earnings per share   $ 0.54     $ 0.44     $ 3.51     $ 4.53  
Items impacting comparability                
Remeasurement of deferred income taxes under 2017 Tax Reform       0.04     (0.06 )   (1.20 )
Mark-to-market adjustments due to hedge ineffectiveness, net of tax (E&P)   (0.01 )       (0.02 )   0.01  
Unrealized (gain) loss on other investments, net of tax (Corporate/All Other)   0.01         0.02      
Premium paid on early redemption of debt, net of tax (E&P)       0.01         0.01  
Adjusted Operating Results per share   $ 0.54     $ 0.49     $ 3.45     $ 3.35  

Management defines Adjusted EBITDA as reported GAAP earnings before the following items:  interest expense, income taxes, depreciation, depletion and amortization, other income and deductions, 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 twelve months ended September 30, 2019 and 2018:

    Three Months Ended   Twelve Months Ended
    September 30,   September 30,
(in thousands)   2019   2018   2019   2018
Reported GAAP Earnings   $ 47,281     $ 37,994     $ 304,290     $ 391,521  
Depreciation, Depletion and Amortization   74,670     63,159     275,660     240,961  
Other (Income) Deductions   (1,435 )   968     15,542     21,174  
Interest Expense   26,679     29,368     106,756     114,522  
Income Taxes   11,415     16,331     85,221     (7,494 )
Mark-to-Market Adjustments due to Hedge Ineffectiveness   (1,313 )   346     (2,096 )   782  
Adjusted EBITDA   $ 157,297     $ 148,166     $ 785,373     $ 761,466  
                 
Adjusted EBITDA by Segment                
Pipeline and Storage Adjusted EBITDA   $ 35,747     $ 37,699     $ 162,181     $ 183,972  
Gathering Adjusted EBITDA   29,895     23,814     108,292     91,937  
Total Midstream Businesses Adjusted EBITDA   65,642     61,513     270,473     275,909  
Exploration and Production Adjusted EBITDA   89,509     81,194     351,159     317,707  
Utility Adjusted EBITDA   6,714     10,514     176,134     175,554  
Corporate and All Other Adjusted EBITDA   (4,568 )   (5,055 )   (12,393 )   (7,704 )
Total Adjusted EBITDA   $ 157,297     $ 148,166     $ 785,373     $ 761,466  
                                 
                                 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
 SEGMENT ADJUSTED EBITDA

    Three Months Ended   Twelve Months Ended
    September 30,   September 30,
(in thousands)   2019   2018   2019   2018
Exploration and Production Segment                
Reported GAAP Earnings   $ 25,208     $ 19,580     $ 111,807     $ 180,632  
Depreciation, Depletion and Amortization   44,141     33,567     154,784     124,274  
Other (Income) Deductions   (269 )   (99 )   (1,091 )   (307 )
Interest Expense   14,216     14,288     54,777     54,288  
Income Taxes   7,526     13,512     32,978     (41,962 )
Mark-to-Market Adjustments due to Hedge Ineffectiveness   (1,313 )   346     (2,096 )   782  
Adjusted EBITDA   $ 89,509     $ 81,194     $ 351,159     $ 317,707  
                 
Pipeline and Storage Segment                
Reported GAAP Earnings   $ 15,368     $ 15,337     $ 74,011     $ 97,246  
Depreciation, Depletion and Amortization   11,387     11,141     44,947     43,463  
Other (Income) Deductions   (2,812 )   (1,673 )   (9,157 )   (5,926 )
Interest Expense   7,132     7,965     29,142     31,383  
Income Taxes   4,672     4,929     23,238     17,806  
Adjusted EBITDA   $ 35,747     $ 37,699     $ 162,181     $ 183,972  
                 
Gathering Segment                
Reported GAAP Earnings   $ 16,902     $ 14,783     $ 58,413     $ 83,519  
Depreciation, Depletion and Amortization   5,202     4,554     20,038     17,313  
Other (Income) Deductions   (56 )   (48 )   (460 )   (778 )
Interest Expense   2,397     2,211     9,406     9,560  
Income Taxes   5,450     2,314     20,895     (17,677 )
Adjusted EBITDA   $ 29,895     $ 23,814     $ 108,292     $ 91,937  
                 
Utility Segment                
Reported GAAP Earnings   $ (7,728 )   $ (7,067 )   $ 60,871     $ 51,217  
Depreciation, Depletion and Amortization   13,630     13,272     53,832     53,253  
Other (Income) Deductions   1,170     3,017     24,021     29,073  
Interest Expense   5,492     6,487     23,443     26,753  
Income Taxes   (5,850 )   (5,195 )   13,967     15,258  
Adjusted EBITDA   $ 6,714     $ 10,514     $ 176,134     $ 175,554  
                 
Corporate and All Other                
Reported GAAP Earnings   $ (2,469 )   $ (4,639 )   $ (812 )   $ (21,093 )
Depreciation, Depletion and Amortization   310     625     2,059     2,658  
Other (Income) Deductions   532     (229 )   2,229     (888 )
Interest Expense   (2,558 )   (1,583 )   (10,012 )   (7,462 )
Income Taxes   (383 )   771     (5,857 )   19,081  
Adjusted EBITDA   $ (4,568 )   $ (5,055 )   $ (12,393 )   $ (7,704 )

 

 

hirescolorlogo.png

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. 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;
  2. 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;
  3. 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;
  4. Changes in the price of natural gas or oil;
  5. Impairments under the SEC’s full cost ceiling test for natural gas and oil reserves;
  6. 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;
  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 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
  22. 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.