Commentary on this conference call may contain forward-looking statements within the meaning of the federal securities laws. National Fuel Gas Company (the “Company”) is providing this cautionary statement to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of, the Company.

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

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

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

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

05/02/2019

WILLIAMSVILLE, N.Y., May 02, 2019 (GLOBE NEWSWIRE) -- National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated results for the second quarter of its 2019 fiscal year and for the six months ended March 31, 2019.

FISCAL 2019 SECOND QUARTER SUMMARY

  • GAAP earnings of $90.6 million, or $1.04 per share, compared to $91.8 million, or $1.06 per share, in the prior year
  • Adjusted operating results of $92.9 million, or $1.07 per share, compared to $95.6 million, or $1.11 per share, in the prior year (see non-GAAP reconciliation below)
  • Consolidated Adjusted EBITDA of $225.8 million compared to $232.4 million in the prior year (see non-GAAP reconciliation on page 24)
  • E&P segment net production of 48.8 Bcfe, an increase of 6% from the prior year
  • Appalachian net natural gas production of 499 MMcf/d, up 8% from the prior year and up 1% from the first quarter
  • Average natural gas prices, after the impact of hedging, of $2.58 per Mcf, up $0.06 per Mcf from the prior year
  • Average oil prices, after the impact of hedging, of $61.01 per Bbl, up $2.70 per Bbl from the prior year
  • Gathering segment operating revenues increased $1.6 million on 5% increase in gathered volumes
  • Utility segment net income increased $2.2 million, or 7%, on higher customer margins and lower interest expense

 

                 
    Three Months Ended   Six Months Ended
    March 31,   March 31,
(in thousands except per share amounts)   2019   2018   2019   2018
Reported GAAP Earnings   $ 90,595     $ 91,847     $ 193,256     $ 290,501  
Items impacting comparability                
Remeasurement of deferred income taxes under 2017 Tax Reform       4,000     (5,000 )   (107,000 )
Unrealized (gain) loss on hedge ineffectiveness (E&P)   6,742     (335 )   237     98  
Tax impact of unrealized (gain) loss on hedge ineffectiveness   (1,416 )   82     (50 )   (24 )
Unrealized (gain) loss on other investments (Corporate / All Other)   (3,831 )       2,516      
Tax impact of unrealized (gain) loss on other investments   805         (528 )    
Adjusted Operating Results   $ 92,895     $ 95,594     $ 190,431     $ 183,575  
                 
Reported GAAP Earnings per share   $ 1.04     $ 1.06     $ 2.23     $ 3.37  
Items impacting comparability                
Remeasurement of deferred income taxes under 2017 Tax Reform       0.05     (0.06 )   (1.24 )
Unrealized (gain) loss on hedge ineffectiveness (E&P)   0.08              
Tax impact of unrealized (gain) loss on hedge ineffectiveness   (0.02 )            
Unrealized (gain) loss on other investments (Corporate / All Other)   (0.04 )       0.03      
Tax impact of unrealized (gain) loss on other investments   0.01         (0.01 )    
Rounding           0.01      
Adjusted Operating Results per share   $ 1.07     $ 1.11     $ 2.20     $ 2.13  
                                 

MANAGEMENT COMMENTS

Ronald J. Tanski, President and Chief Executive Officer of National Fuel Gas Company, stated: “The Company’s second fiscal quarter results evidence the value of our integrated business model, where the consistent earnings from each of our major operating segments contributed to our balanced consolidated earnings.  Our financial results were in line with our forecast for the quarter, and keep us on track to deliver results in line with our fiscal year earnings guidance, which remains unchanged.

“Financial results in our regulated businesses were consistent with the prior year, where higher earnings in the utility business offset a portion of the expected decline in the interstate pipeline business caused by the expiration of a large transportation contract.  In our Exploration & Production business, we experienced a few operational delays during the quarter, which deferred a portion of our production that was scheduled to come online this quarter into the latter part of fiscal 2019.   We still expect, however, that our steady, three-rig drilling program will deliver average production growth of 15 to 20 percent through our fiscal 2022 forecast period.  Given our large undeveloped acreage position, our production growth can be sustained throughout the next decade.

“We are excited that that our various Pipeline & Storage projects under development continue to take meaningful strides forward, including the recent receipt of the FERC Certificate for our Empire North project, positive legal and regulatory developments on our Northern Access project, and the commencement of construction on our Line N to Monaca project.  Each of these projects will help to meet the increasing regional demand for domestic and abundant natural gas supplies. As the nation’s electric grid continues to decrease reliance on aging coal-fired plants and integrate more intermittent renewable generation facilities, more reliance will be placed on natural gas electric generation, much like many of our residential customers depend on their gas-powered back-up generators.”

FISCAL 2019 GUIDANCE

National Fuel is reaffirming its full year earnings guidance for fiscal 2019.  The Company projects that earnings on a non-GAAP basis will be within the range of $3.45 to $3.65 per share, or $3.55 per share at the midpoint of the range. The Company’s earnings guidance range reflects the impact of actual results for the six months ended March 31, 2019, an update to the Company’s commodity price assumptions to reflect the current futures market, including a $10 per barrel increase in NYMEX crude oil, offset by the consolidated impact of the reduction in its production guidance discussed below.  Further changes in NYMEX or Appalachian basin spot natural gas prices are not expected to have a significant impact on current year earnings as the realizations on a large portion of the Company’s remaining natural gas production are locked in with firm sales and financial hedges. Projections for consolidated and individual segment capital expenditures are unchanged.

The Company is revising its Exploration and Production segment’s fiscal 2019 net production guidance to be in the range of 205 to 215 billion cubic feet equivalent (“Bcfe”).  At the midpoint of the range, the Company’s revised fiscal 2019 production guidance represents an 18 percent increase over fiscal 2018.

The 10 Bcfe, or 5 percent, decrease from the midpoint of the Company’s previous guidance range is primarily due to the following factors:

  • Drilling and completion delays at DCNR tracts 007 and 100 in the EDA, which has deferred forecasted production online dates;
  • The impact of the Company's ongoing testing efforts to optimize its Utica drilling and completion design in the WDA; and
  • The Company's continued trend towards drilling longer laterals, which is expected to benefit the program's economics, but defers the online dates related to future development pads beyond the previous plan.

While the delays in new well turn on dates have the effect of pushing production to future periods, they are not expected to have a material impact on the ultimate recovery of the Company’s reserves or the economics of its Marcellus and Utica programs.

The Company’s earnings guidance range does not include the impact of certain items that impacted the comparability of earnings during the six months ended March 31, 2019, including: (1) the remeasurement of deferred income taxes resulting from the 2017 Tax Reform Act, which reduced the Company’s income tax expense and benefited consolidated earnings in the six months ended March 31, 2019 by $0.06 per share; (2) the full year impact of the Exploration and Production segment’s unrealized gain on hedging ineffectiveness; and (3) the unrealized loss on other investments due to the change in an accounting rule discussed on page 6, which lowered earnings by $0.02 per share.  While the Company expects to record additional adjustments to one or more of these items during the remaining six months ending September 30, 2019, the amounts of these and other potential adjustments are not reasonably determinable at this time.   As such, the Company is unable to provide earnings guidance other than on a non-GAAP basis.

Additional details on the Company's forecast assumptions and business segment guidance for fiscal 2019 are outlined in the table on page 8.

DISCUSSION OF RESULTS BY SEGMENT

The following discussion of earnings of each operating segment for the quarter ended March 31, 2019 is summarized in a tabular form on pages 9 and 10 of this report (earnings drivers for the six months ended March 31, 2019 are summarized on pages 11 and 12).  It may be helpful to refer to those tables while reviewing this discussion.  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
  March 31,
(in thousands) 2019   2018   Variance
GAAP Earnings $ 21,873     $ 26,537     $ (4,664 )
Remeasurement of deferred taxes under 2017 Tax Reform $     $ 790     $ (790 )
Unrealized (gain) loss on hedge ineffectiveness $ 6,742     $ (335 )   $ 7,077  
Tax impact of unrealized (gain) loss on hedge ineffectiveness $ (1,416 )   $ 82     $ (1,498 )
Adjusted Operating Results $ 27,199     $ 27,074     $ 125  
           
Adjusted EBITDA $ 83,580     $ 78,728     $ 4,852  

The Exploration and Production segment’s second quarter GAAP earnings decreased $4.7 million versus the prior year, driven primarily by the net impact of unrealized gains and losses that were recognized due to hedge accounting ineffectiveness and an $0.8 million adjustment recorded in the prior year second quarter relating to the remeasurement of deferred income taxes under the 2017 Tax Reform Act.  Excluding these items (see table above), the Exploration and Production segment’s second quarter earnings increased $0.1 million as the positive impacts of higher natural gas production and better realized natural gas and crude oil prices were offset by lower crude oil production, higher lease operating and transportation (“LOE”) expense, higher depreciation, depletion and amortization (“DD&A”) expense, and the impact of income taxes.

Seneca’s second quarter net production was 48.8 Bcfe, an increase of 2.7 Bcfe, or 6 percent, from the prior year.  Natural gas production increased 3.3 billion cubic feet (“Bcf”), or 8 percent, due primarily to production from new Marcellus and Utica wells completed and connected to sales in Appalachia.  Seneca increased production in the WDA-Clermont area by 4.4 Bcf, where Seneca has increased development activity. Seneca's average realized natural gas price, after the impact of hedging and transportation costs, was $2.58 per thousand cubic feet ("Mcf"), an increase of $0.06 per Mcf from the prior year. The improvement was driven primarily by higher NYMEX pricing and local spot pricing in Pennsylvania, which benefited realizations on Seneca’s unhedged production.

Seneca’s oil production for the second quarter decreased 99 thousand barrels ("Mbbl") due largely to the impact of the sale of Seneca’s Sespe properties in California in the third quarter of fiscal 2018.  Seneca's average realized oil price, after the impact of hedging, was $61.01 per barrel ("Bbl"), an increase of $2.70 per Bbl over the prior year.  The improvement in oil price realizations was due primarily to stronger price differentials relative to West Texas Intermediate (WTI) index prices at local sales points in California.

LOE expense increased $2.1 million due mostly to higher gathering expenses in Appalachia resulting from the increase in natural gas production coupled with an increase in well repairs, contract labor and steam fuel costs in the West Coast region, partially offset by lower operating costs in California following the sale of Seneca’s Sespe properties.  DD&A expense increased $3.9 million due to the increase in production and a higher unit depletion rate.

The 2017 Tax Reform Act lowered the Company’s statutory federal income tax rate from a blended 24.5 percent in fiscal 2018 to 21 percent in fiscal 2019, which decreased the segment’s income tax expense on current period income by $1.0 million.  The impact of the lower federal rate on current quarter income was more than offset by the net effect of other items that increased income tax expense by $1.9 million.

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
  March 31,
(in thousands) 2019   2018   Variance
GAAP Earnings $ 17,749     $ 22,724     $ (4,975 )
           
Adjusted EBITDA $ 41,281     $ 49,786     $ (8,505 )

The Pipeline and Storage segment’s second quarter GAAP earnings decreased $5.0 million versus the prior year.  The decrease was driven primarily by lower operating revenues and higher operation and maintenance (“O&M”) expenses, which were partially offset by lower income tax expense due to the impact of the 2017 Tax Reform Act.   The $4.4 million decrease in operating revenues was due largely to the anticipated 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 Company’s rate case settlement effective January 1, 2019.  The settlement remains subject to FERC approval.  O&M expense increased $3.1 million due primarily to an increase in compressor and facility maintenance activity during the quarter and higher personnel costs.

The 2017 Tax Reform Act lowered the Company’s statutory federal income tax rate from a blended 24.5 percent in fiscal 2018 to 21 percent in fiscal 2019, which decreased the Pipeline and Storage segment’s income tax expense on current period income by $0.8 million.

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
  March 31,
(in thousands) 2019   2018   Variance
GAAP Earnings $ 12,690     $ 11,770     $ 920  
Remeasurement of deferred taxes under 2017 Tax Reform $     $ 400     $ (400 )
Adjusted Operating Results $ 12,690     $ 12,170     $ 520  
           
Adjusted EBITDA $ 24,598     $ 24,220     $ 378  

The $0.9 million increase in the Gathering segment’s second quarter GAAP earnings was driven primarily by higher operating revenues and the net impact of the 2017 Tax Reform Act, which were partially offset by higher O&M expenses.  Operating revenues increased $1.6 million, or 6 percent, due primarily to a 2.8 Bcf increase in gathered volume from Seneca’s Appalachian natural gas production.  O&M expenses increased $1.3 million in the second quarter due largely to the operation of additional compression facilities along the Covington gathering system, which were acquired from affiliate Seneca in March 2018, and an increase in normal-course preventative compressor maintenance activity at the Clermont gathering system.

The 2017 Tax Reform Act lowered the Company’s statutory federal income tax rate from a blended 24.5 percent in fiscal 2018 to 21 percent in fiscal 2019, which decreased the segment’s income tax expense on current period income by $0.6 million.  Additionally, the Gathering segment recorded a $0.4 million adjustment in the prior year second quarter to the remeasurement of deferred income taxes under the 2017 Tax Reform Act, which increased income tax expense and lowered earnings in the prior year.

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
  March 31,
(in thousands) 2019   2018   Variance
GAAP Earnings $ 35,589     $ 33,360     $ 2,229  
           
Adjusted EBITDA $ 78,688     $ 80,591     $ (1,903 )

The $2.2 million increase in the Utility segment’s second quarter GAAP earnings was due primarily to higher customer margins and lower interest expense partially offset by the net impact of the 2017 Tax Reform Act.  Higher customer usage, an increase in revenues relating to a system modernization tracking mechanism, and the impact of regulatory adjustments contributed to the increase in customer margins. Interest expense decreased $0.6 million due primarily to the Company’s early refinancing of an 8.75 percent coupon 10-year note that was set to mature in May 2019. The $1.9 million increase in O&M expense was substantially offset by the $2.3 million decrease in other deductions, which was largely a result of non-service pension and postretirement benefit costs that are now reported separately from O&M expenses following the adoption of new accounting guidance in the current year.

The 2017 Tax Reform Act lowered the Company’s statutory federal income tax rate from a blended 24.5 percent in fiscal 2018 to 21 percent in fiscal 2019, which decreased income tax expense on current period income by $1.5 million.  In accordance with state regulatory orders, the Utility segment has been recording a refund provision to return the net effect of the 2017 Tax Reform Act to its customers.  The refund provision recorded during the quarter as a reduction to operating revenues was $3.7 million higher than the refund provision recorded in the prior year, reducing second quarter earnings by $2.8 million and offsetting the benefit of the lower federal income tax rate.

Energy Marketing Segment

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

  Three Months Ended
  March 31,
(in thousands) 2019   2018   Variance
GAAP Earnings $ 544     $ 578     $ (34 )
Remeasurement of deferred taxes under 2017 Tax Reform $     $ 159     $ (159 )
Adjusted Operating Results $ 544     $ 737     $ (193 )
           
Adjusted EBITDA $ 620     $ 1,048     $ (428 )

The Energy Marketing segment’s second quarter GAAP earnings were largely unchanged versus the prior year, as the slight decline in customer margins (operating revenues less purchased gas sold) was offset by the impact of an adjustment made in the prior year second quarter to the segment’s remeasurement of deferred income taxes under the 2017 Tax Reform Act.

Corporate and All Other

Corporate and All Other operations had combined earnings of $2.2 million in the current year second quarter, which was $5.3 million higher than the loss of $3.1 million in the prior year second quarter.  The increase in earnings was primarily attributable to the impact of the 2017 Tax Reform Act, which resulted in a remeasurement of deferred income taxes that increased the prior year’s second quarter income tax expense by $2.7 million, and the impact of $3.8 million in unrealized gains on investments in equity securities recorded during the quarter ($3.0 million after-tax).  Unrealized gains and losses on investments in equity securities are now recognized in earnings following the adoption of new accounting guidance in the current year.  These unrealized gains and losses had been previously recorded as other comprehensive income. These increases were partially offset by lower operating revenues from the sale of standing timber by the Company’s land and timber operations.

EARNINGS TELECONFERENCE

The Company will host a conference call on Friday, May 3, 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 “6683755”.  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 “6683755”.  Both the webcast and a telephonic replay will be available until the close of business on Friday, May 10, 2019.

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

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

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

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

GUIDANCE SUMMARY

As discussed on page 2, the Company is revising its earnings guidance for fiscal 2019.  Additional details on the Company's forecast assumptions and business segment guidance for fiscal 2019 are outlined in the table below.

The Company's earnings guidance range does not include the impact of certain items that impacted the comparability of earnings during the six months ended March 31, 2019, including: (1) the remeasurement of deferred income taxes resulting from the 2017 Tax Reform Act, which reduced the Company’s income tax expense and benefited consolidated earnings in the six months ended March 31, 2019 by $0.06 per share; (2) the full year impact of the Exploration and Production segment’s unrealized gain on hedging ineffectiveness; and (3) the unrealized loss on other investments due to the change in an accounting rule discussed on page 6, which lowered earnings by $0.02 per share.  While the Company expects to record additional adjustments to one or more of these items during the remaining six months ending September 30, 2019, the amounts of these and other potential adjustments are not reasonably determinable at this time.  As such, the Company is unable to provide earnings guidance other than on a non-GAAP basis.

  Updated FY 2019 Guidance   Previous FY 2019 Guidance
Consolidated Earnings per Share $3.45 to $3.65   $3.45 to $3.65
       
Consolidated Effective Tax Rate ~ 24%   24% to 25%
       
Capital Expenditures (Millions)      
  Exploration and Production $460 - $495   $460 - $495
  Pipeline and Storage $120 - $150   $120 - $150
  Gathering $55 - $65   $55 - $65
  Utility $90 - $100   $90 - $100
  Consolidated Capital Expenditures $725 - $810   $725 - $810
       
Exploration & Production Segment Guidance      
       
  Commodity Price Assumptions (1)      
  NYMEX natural gas price $2.60 /MMBtu   $3.25 /MMBtu | $2.75 /MMBtu
  Appalachian basin spot price $2.10 /MMBtu   $2.75 /MMBtu | $2.25 /MMBtu
  NYMEX (WTI) crude oil price $65.00 /Bbl   $55.00 /Bbl
  California oil price (% of WTI) 108 %   102 %
       
  Production (Bcfe)      
  East Division - Appalachia 189 to 199   194 to 214
  West Division - California ~ 16   ~ 16
  Total Production 205 to 215   210 to 230
       
  E&P Operating Costs ($/Mcfe)      
  LOE $0.85 - $0.90   $0.85 - $0.90
  G&A $0.25 - $0.35   $0.25 - $0.35
  DD&A $0.70 - $0.75   $0.70 - $0.75
       
Other Business Segment Guidance (Millions)      
  Gathering Segment Revenues $125 - $130   $130 - $140
  Pipeline and Storage Segment Revenues ~$285   ~$285

(1)  Revised commodity price assumptions reflect the Company's forecast for the remainder of fiscal 2019.

 
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
QUARTER ENDED MARCH 31, 2019
(Unaudited)
                           
  Upstream   Midstream
Businesses
  Downstream
Businesses
       
                           
  Exploration &   Pipeline &           Energy   Corporate /    
(Thousands of Dollars) Production   Storage   Gathering   Utility   Marketing   All Other   Consolidated*
                           
Second quarter 2018 GAAP earnings $ 26,537     $ 22,724     $ 11,770     $ 33,360     $ 578     $ (3,122 )   $ 91,847  
                           
Items impacting comparability:                          
Remeasurement of deferred taxes under 2017 Tax Reform 790         400         159     2,651     4,000  
Unrealized (gain) loss on hedge ineffectiveness (335 )                       (335 )
Tax impact of unrealized gain) loss on hedge ineffectiveness 82                         82  
Second quarter 2018 adjusted operating results 27,074     22,724     12,170     33,360     737     (471 )   95,594  
                           
Drivers of adjusted operating results**                          
                           
Upstream Revenues                          
Higher (lower) natural gas production 6,261                         6,261  
Higher (lower) crude oil production (4,359 )                       (4,359 )
Higher (lower) realized natural gas prices, after hedging 2,018                         2,018  
Higher (lower) realized crude oil prices, after hedging 1,154                         1,154  
                           
Midstream and All Other Revenues                          
Higher (lower) operating revenues     (3,336 )   1,234             (699 )   (2,801 )
                           
Downstream Margins***                          
Impact of higher usage and weather             618             618  
System modernization tracker revenues             680             680  
Lower (higher) refund provision on tax rate change             (2,827 )           (2,827 )
Regulatory true-up adjustments             886             886  
                           
Operating Expenses                          
Lower (higher) lease operating and transportation expenses (1,610 )                       (1,610 )
Lower (higher) operating expenses     (2,359 )   (953 )   (1,255 )           (4,567 )
Lower (higher) depreciation / depletion (2,946 )                       (2,946 )
                           
Other Income (Expense)                          
(Higher) lower other deductions             1,746             1,746  
(Higher) lower interest expense (127 )   283     123     448     (6 )   276     997  
                           
Income Taxes                          
Impact of tax rate reduction due to 2017 Tax Reform 1,010     822     564     1,535     23     22     3,976  
Lower (higher) income tax expense / effective tax rate (1,910 )   81     (4 )   (44 )   11     (10 )   (1,876 )
                           
All other / rounding 634     (466 )   (444 )   442     (221 )   6     (49 )
Second quarter 2019 adjusted operating results 27,199     17,749     12,690     35,589     544     (876 )   92,895  
                           
Items impacting comparability:                          
Unrealized gain (loss) on hedge ineffectiveness (6,742 )                       (6,742 )
Tax impact of unrealized gain (loss) on hedge ineffectiveness 1,416                         1,416  
Unrealized gain (loss) on other investments                     3,831     3,831  
Tax impact of unrealized gain (loss) on other investments                     (805 )   (805 )
Second quarter 2019 GAAP earnings $ 21,873     $ 17,749     $ 12,690     $ 35,589     $ 544     $ 2,150     $ 90,595  
                           
* 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 MARCH 31, 2019
(Unaudited)
                           
  Upstream   Midstream
Businesses
  Downstream
Businesses
       
                           
  Exploration &   Pipeline &           Energy   Corporate /    
  Production   Storage   Gathering   Utility   Marketing   All Other   Consolidated*
                           
Second quarter 2018 GAAP earnings per share $ 0.31     $ 0.26     $ 0.14     $ 0.39     $ 0.01     $ (0.05 )   $ 1.06  
Items impacting comparability:                          
Remeasurement of deferred taxes under 2017 Tax Reform 0.01         0.01             0.03     0.05  
Unrealized (gain) loss on hedge ineffectiveness                          
Tax impact of unrealized (gain) loss on hedge ineffectiveness                          
Rounding (0.01 )       (0.01 )           0.02      
Second quarter 2018 adjusted operating results per share 0.31     0.26     0.14     0.39     0.01         1.11  
                           
Drivers of adjusted operating results**                          
                           
Upstream Revenues                          
Higher (lower) natural gas production 0.07                         0.07  
Higher (lower) crude oil production (0.05 )                       (0.05 )
Higher (lower) realized natural gas prices, after hedging 0.02                         0.02  
Higher (lower) realized crude oil prices, after hedging 0.01                         0.01  
                           
Midstream and All Other Revenues                          
Higher (lower) operating revenues     (0.04 )   0.01             (0.01 )   (0.04 )
                           
Downstream Margins***                          
Impact of higher usage and weather             0.01             0.01  
System modernization tracker revenues             0.01             0.01  
Lower (higher) refund provision on tax rate change             (0.03 )           (0.03 )
Regulatory true-up adjustments             0.01             0.01  
                           
Operating Expenses                          
Lower (higher) lease operating and transportation expenses (0.02 )                       (0.02 )
Lower (higher) operating expenses     (0.03 )   (0.01 )   (0.01 )           (0.05 )
Lower (higher) depreciation / depletion (0.03 )                       (0.03 )
                           
Other Income (Expense)                          
(Higher) lower other deductions             0.02             0.02  
(Higher) lower interest expense             0.01             0.01  
                           
Income Taxes                          
Impact of tax rate reduction due to 2017 Tax Reform 0.01     0.01     0.01     0.02             0.05  
Lower (higher) income tax expense / effective tax rate (0.02 )                       (0.02 )
                           
All other / rounding 0.01             (0.02 )           (0.01 )
Second quarter 2019 adjusted operating results per share 0.31     0.20     0.15     0.41     0.01     (0.01 )   1.07  
                           
Items impacting comparability:                          
Unrealized gain (loss) on hedge ineffectiveness (0.08 )                       (0.08 )
Tax impact of unrealized gain (loss) on hedge ineffectiveness 0.02                         0.02  
Unrealized gain (loss) on other investments                     0.04     0.04  
Tax impact of unrealized gain (loss) on other investments                     (0.01 )   (0.01 )
Second quarter 2019 GAAP earnings per share $ 0.25     $ 0.20     $ 0.15     $ 0.41     $ 0.01     $ 0.02     $ 1.04  
                           
* 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
SIX MONTHS ENDED MARCH 31, 2019
(Unaudited)
                           
  Upstream   Midstream
Businesses
  Downstream
Businesses
       
                           
  Exploration &   Pipeline &           Energy   Corporate /    
(Thousands of Dollars) Production   Storage   Gathering   Utility   Marketing   All Other   Consolidated*
                           
Six months ended March 31, 2018 GAAP earnings $ 133,235     $ 61,186     $ 57,169     $ 54,353     $ 1,624     $ (17,066 )   $ 290,501  
                           
Items impacting comparability:                          
Remeasurement of deferred taxes under 2017 Tax Reform (76,510 )   (14,100 )   (34,500 )       359     17,751     (107,000 )
Unrealized (gain) loss on hedge ineffectiveness 98                         98  
Tax impact of unrealized (gain) loss on hedge ineffectiveness (24 )                       (24 )
Six months ended March 31, 2018 adjusted operating results 56,799     47,086     22,669     54,353     1,983     685     183,575  
                           
Drivers of adjusted operating results**                          
                           
Upstream Revenues                          
Higher (lower) natural gas production 25,603                         25,603  
Higher (lower) crude oil production (8,915 )                       (8,915 )
Higher (lower) realized natural gas prices, after hedging (989 )                       (989 )
Higher (lower) realized crude oil prices, after hedging 1,973                         1,973  
                           
Midstream and All Other Revenues                          
Higher (lower) operating revenues     (1,997 )   5,655             (764 )   2,894  
                           
Downstream Margins***                          
Impact of higher usage and weather             2,220             2,220  
System modernization tracker revenues             1,568             1,568  
Lower (higher) refund provision on tax rate change             (2,414 )           (2,414 )
Higher (lower) marketing margins                 (2,110 )       (2,110 )
                           
Operating Expenses                          
Lower (higher) lease operating and transportation expenses (3,811 )                       (3,811 )
Lower (higher) operating expenses (1,328 )   (5,350 )   (1,502 )   (880 )           (9,060 )
Lower (higher) property, franchise and other taxes (1,684 )   (539 )                   (2,223 )
Lower (higher) depreciation / depletion (8,439 )   (735 )   (782 )               (9,956 )
                           
Other Income (Expense)                          
(Higher) lower other deductions             2,103             2,103  
(Higher) lower interest expense 32     729     94     1,161     (1 )   550     2,565  
                           
Income Taxes                          
Impact of tax rate reduction due to 2017 Tax Reform 2,603     1,618     1,150     2,542     (7 )   (196 )   7,710  
Lower (higher) income tax expense / effective tax rate (3,094 )   1,715     (604 )   (75 )   172     97     (1,789 )
                           
All other / rounding 534     324     (308 )   659     8     270     1,487  
Six months ended March 31, 2019 adjusted operating results 59,284     42,851     26,372     61,237     45     642     190,431  
                           
Items impacting comparability:                          
Remeasurement of deferred taxes under 2017 Tax Reform 990         500         198     3,312     5,000  
Unrealized gain (loss) on hedge ineffectiveness (237 )                       (237 )
Tax impact of unrealized gain (loss) on hedge ineffectiveness 50                         50  
Unrealized gain (loss) on other investments                     (2,516 )   (2,516 )
Tax impact of unrealized gain (loss) on other investments                     528     528  
Six months ended March 31, 2019 GAAP earnings $ 60,087     $ 42,851     $ 26,872     $ 61,237     $ 243     $ 1,966     $ 193,256  
                           
* 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
SIX MONTHS ENDED MARCH 31, 2019
(Unaudited)
                           
  Upstream   Midstream
Businesses
  Downstream
Businesses
       
                           
  Exploration &   Pipeline &           Energy   Corporate /    
  Production   Storage   Gathering   Utility   Marketing   All Other   Consolidated*
Six months ended March 31, 2018 GAAP earnings per share $ 1.54     $ 0.71     $ 0.66     $ 0.63     $ 0.02     $ (0.19 )   $ 3.37  
Items impacting comparability:                          
Remeasurement of deferred taxes under 2017 Tax Reform (0.89 )   (0.16 )   (0.40 )           0.21     (1.24 )
Unrealized (gain) loss on hedge ineffectiveness                          
Tax impact of unrealized (gain) loss on hedge ineffectiveness                          
Rounding 0.01                     (0.01 )    
Six months ended March 31, 2018 adjusted operating results per share 0.66     0.55     0.26     0.63     0.02     0.01     2.13  
                           
Drivers of adjusted operating results**                          
                           
Upstream Revenues                          
Higher (lower) natural gas production 0.30                         0.30  
Higher (lower) crude oil production (0.10 )                       (0.10 )
Higher (lower) realized natural gas prices, after hedging (0.01 )                       (0.01 )
Higher (lower) realized crude oil prices, after hedging 0.02                         0.02  
                           
Midstream and All Other Revenues                          
Higher (lower) operating revenues     (0.02 )   0.07             (0.01 )   0.04  
                           
Downstream Margins***                          
Impact of higher usage and weather             0.03             0.03  
System modernization tracker revenues             0.02             0.02  
Lower (higher) refund provision on tax rate change             (0.03 )           (0.03 )
Higher (lower) marketing margins                 (0.02 )       (0.02 )
                           
Operating Expenses                          
Lower (higher) lease operating and transportation expenses (0.04 )                       (0.04 )
Lower (higher) operating expenses (0.02 )   (0.06 )   (0.02 )   (0.01 )           (0.11 )
Lower (higher) property, franchise and other taxes (0.02 )   (0.01 )                   (0.03 )
Lower (higher) depreciation / depletion (0.10 )   (0.01 )   (0.01 )               (0.12 )
                           
Other Income (Expense)                          
(Higher) lower other deductions             0.02             0.02  
(Higher) lower interest expense     0.01         0.01         0.01     0.03  
                           
Income Taxes                          
Impact of tax rate reduction due to 2017 Tax Reform 0.03     0.02     0.01     0.03             0.09  
Lower (higher) income tax expense / effective tax rate (0.04 )   0.02     (0.01 )               (0.03 )
                           
All other / rounding     (0.01 )       0.01         0.01     0.01  
Six months ended March 31, 2019 adjusted operating results per share 0.68     0.49     0.30     0.71         0.02     2.20  
                           
Items impacting comparability:                          
Remeasurement of deferred taxes under 2017 Tax Reform 0.01         0.01             0.04     0.06  
Unrealized gain (loss) on hedge ineffectiveness                          
Tax impact of unrealized gain (loss) on hedge ineffectiveness                          
Unrealized gain (loss) on other investments                     (0.03 )   (0.03 )
Tax impact of unrealized gain (loss) on other investments                     0.01     0.01  
Rounding                     (0.01 )   (0.01 )
Six months ended March 31, 2019 GAAP earnings per share $ 0.69     $ 0.49     $ 0.31     $ 0.71     $     $ 0.03     $ 2.23  
                           
* 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   Six Months Ended  
  March 31,   March 31,  
  (Unaudited)   (Unaudited)  
SUMMARY OF OPERATIONS 2019   2018   2019   2018  
Operating Revenues:                
Utility and Energy Marketing Revenues $ 357,654     $ 339,422     $ 629,747     $ 565,147    
Exploration and Production and Other Revenues 146,467     147,868     310,403     288,318    
Pipeline and Storage and Gathering Revenues 48,423     53,615     102,641     107,096    
  552,544     540,905     1,042,791     960,561    
Operating Expenses:                
Purchased Gas 195,037     176,608     333,697     270,642    
Operation and Maintenance:                
  Utility and Energy Marketing 48,559     46,708     92,475     90,789    
  Exploration and Production and Other 40,141     39,127     72,936     74,209    
  Pipeline and Storage and Gathering 27,249     22,916     52,182     43,227    
Property, Franchise and Other Taxes 22,535     22,802     46,540     43,650    
Depreciation, Depletion and Amortization 65,664     61,155     129,918     116,985    
  399,185     369,316     727,748     639,502    
                 
Operating Income 153,359     171,589     315,043     321,059    
                 
Other Income (Expense):                
Other Income (Deductions) (5,919 )   (13,092 )   (15,521 )   (16,594 )  
Interest Expense on Long-Term Debt (25,273 )   (27,148 )   (50,713 )   (55,235 )  
Other Interest Expense (1,787 )   (1,233 )   (2,860 )   (1,736 )  
                 
Income Before Income Taxes 120,380     130,116     245,949     247,494    
                 
Income Tax Expense (Benefit) 29,785     38,269     52,693     (43,007 )  
                 
Net Income Available for Common Stock $ 90,595     $ 91,847     $ 193,256     $ 290,501    
                 
Earnings Per Common Share                
Basic $ 1.05     $ 1.07     $ 2.24     $ 3.39    
Diluted $ 1.04     $ 1.06     $ 2.23     $ 3.37    
                 
Weighted Average Common Shares:                
Used in Basic Calculation 86,290,047   85,809,233   86,159,932   85,718,779  
Used in Diluted Calculation 86,767,673   86,323,636   86,738,809   86,318,892  

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
   
  March 31,   September 30,
(Thousands of Dollars)   2019     2018
       
ASSETS      
Property, Plant and Equipment $ 10,788,894     $ 10,439,839  
Less - Accumulated Depreciation, Depletion and Amortization   5,573,020       5,462,696  
Net Property, Plant and Equipment   5,215,874       4,977,143  
       
Current Assets:      
Cash and Temporary Cash Investments   100,643       229,606  
Hedging Collateral Deposits   1,983       3,441  
Receivables - Net   235,586       141,498  
Unbilled Revenue   60,196       24,182  
Gas Stored Underground   6,848       37,813  
Materials and Supplies - at average cost   37,695       35,823  
Unrecovered Purchased Gas Costs   5,760       4,204  
Other Current Assets   57,586       68,024  
Total Current Assets   506,297       544,591  
       
Other Assets:      
Recoverable Future Taxes   113,441       115,460  
Unamortized Debt Expense   14,922       15,975  
Other Regulatory Assets   108,193       112,918  
Deferred Charges   39,634       40,025  
Other Investments   135,022       132,545  
Goodwill   5,476       5,476  
Prepaid Post-Retirement Benefit Costs   86,802       82,733  
Fair Value of Derivative Financial Instruments   11,130       9,518  
Other   42,184       102  
Total Other Assets   556,804       514,752  
Total Assets $ 6,278,975     $ 6,036,486  
       
CAPITALIZATION AND LIABILITIES      
Capitalization:      
Comprehensive Shareholders' Equity      
Common Stock, $1 Par Value Authorized - 200,000,000 Shares; Issued and      
Outstanding - 86,300,675 Shares and 85,956,814 Shares, Respectively $ 86,301     $ 85,957  
Paid in Capital   821,837       820,223  
Earnings Reinvested in the Business   1,236,657       1,098,900  
Accumulated Other Comprehensive Loss   (54,286 )     (67,750 )
Total Comprehensive Shareholders' Equity   2,090,509       1,937,330  
Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issuance Costs   2,132,488       2,131,365  
Total Capitalization   4,222,997       4,068,695  
       
Current and Accrued Liabilities:      
Notes Payable to Banks and Commercial Paper          
Current Portion of Long-Term Debt          
Accounts Payable   141,851       160,031  
Amounts Payable to Customers   15,463       3,394  
Dividends Payable   36,678       36,532  
Interest Payable on Long-Term Debt   18,508       19,062  
Customer Advances   433       13,609  
Customer Security Deposits   18,519       25,703  
Other Accruals and Current Liabilities   195,797       132,693  
Fair Value of Derivative Financial Instruments   5,749       49,036  
Total Current and Accrued Liabilities   432,998       440,060  
       
Deferred Credits:      
Deferred Income Taxes   618,850       512,686  
Taxes Refundable to Customers   365,380       370,628  
Cost of Removal Regulatory Liability   215,864       212,311  
Other Regulatory Liabilities   156,722       146,743  
Pension and Other Post-Retirement Liabilities   49,213       66,103  
Asset Retirement Obligations   104,138       108,235  
Other Deferred Credits   112,813       111,025  
Total Deferred Credits   1,622,980       1,527,731  
Commitments and Contingencies          
Total Capitalization and Liabilities $ 6,278,975     $ 6,036,486  

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
    Six Months Ended
    March 31,
(Thousands of Dollars)   2019   2018
         
Operating Activities:        
Net Income Available for Common Stock   $ 193,256     $ 290,501  
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
       
Depreciation, Depletion and Amortization   129,918     116,985  
Deferred Income Taxes   90,468     (62,459 )
Stock-Based Compensation   10,731     7,862  
Other   7,997     8,052  
Change in:        
Receivables and Unbilled Revenue   (130,377 )   (123,954 )
Gas Stored Underground and Materials and Supplies   29,093     28,004  
Unrecovered Purchased Gas Costs   (1,556 )   4,197  
Other Current Assets   10,438     (8,819 )
Accounts Payable   10,226     10,838  
Amounts Payable to Customers   12,069     12,083  
Customer Advances   (13,176 )   (15,547 )
Customer Security Deposits   (7,184 )   (1,399 )
Other Accruals and Current Liabilities   48,028     37,646  
Other Assets   (38,686 )   (9,541 )
Other Liabilities   (10,410 )   (5,767 )
Net Cash Provided by Operating Activities   $ 340,835     $ 288,682  
         
Investing Activities:        
Capital Expenditures   $ (386,579 )   $ (261,720 )
Net Proceeds from Sale of Oil and Gas Producing Properties       17,310  
Other   (2,616 )   5,355  
Net Cash Used in Investing Activities   $ (389,195 )   $ (239,055 )
         
Financing Activities:        
Reduction of Long-Term Debt   $     $ (307,047 )
Dividends Paid on Common Stock   (73,197 )   (71,091 )
Net Proceeds from Issuance (Repurchase) of Common Stock   (8,864 )   2,891  
Net Cash Used in Financing Activities   $ (82,061 )   $ (375,247 )
         
Net Decrease in Cash, Cash Equivalents, and Restricted Cash   (130,421 )   (325,620 )
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period   233,047     557,271  
Cash, Cash Equivalents, and Restricted Cash at March 31   $ 102,626     $ 231,651  

 

                   
                   
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                   
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
                   
UPSTREAM BUSINESS
                   
                   
  Three Months Ended   Six Months Ended
(Thousands of Dollars, except per share amounts) March 31,   March 31,
EXPLORATION AND PRODUCTION SEGMENT 2019   2018   Variance   2019 2018 Variance
Total Operating Revenues $ 146,102     $ 146,411     $ (309 )   $ 308,978   $ 285,552   $ 23,426  
                   
Operating Expenses:                  
Operation and Maintenance:                  
General and Administrative Expense 17,113     16,748     365     32,312   30,350   1,962  
Lease Operating and Transportation Expense 45,941     43,808     2,133     88,503   83,455   5,048  
All Other Operation and Maintenance Expense 2,900     2,919     (19 )   5,252   5,454   (202 )
Property, Franchise and Other Taxes 3,310     3,873     (563 )   9,673   7,443   2,230  
Depreciation, Depletion and Amortization 35,888     31,986     3,902     70,588   59,411   11,177  
  105,152     99,334     5,818     206,328   186,113   20,215  
                   
Operating Income 40,950     47,077   (6,127 )   102,650   99,439 3,211  
                   
Other Income (Expense):                  
Other Income (Deductions) 275     12     263     554   15   539  
Other Interest Expense (13,548 )   (13,380 )   (168 )   (26,711 ) (26,753 ) 42  
                   
Income Before Income Taxes 27,677     33,709     (6,032 )   76,493   72,701   3,792  
Income Tax Expense (Benefit) 5,804     7,172     (1,368 )   16,406   (60,534 ) 76,940  
Net Income $ 21,873     $ 26,537     $ (4,664 )   $ 60,087   $ 133,235   $ (73,148 )
                   
Net Income Per Share (Diluted) $ 0.25     $ 0.31     $ (0.06 )   $ 0.69   $ 1.54   $ (0.85 )
                   

 

                   
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                   
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
                   
MIDSTREAM BUSINESSES
                   
                   
  Three Months Ended   Six Months Ended
(Thousands of Dollars, except per share amounts) March 31,   March 31,
PIPELINE AND STORAGE SEGMENT 2019   2018   Variance   2019 2018 Variance
Revenues from External Customers $ 48,421     $ 53,714     $ (5,293 )   $ 102,639   $ 107,025   $ (4,386 )
Intersegment Revenues 23,918     23,044     874     46,769   45,028   1,741  
Total Operating Revenues 72,339     76,758     (4,419 )   149,408   152,053   (2,645 )
                   
Operating Expenses:                  
Purchased Gas 510     55     455     813   161   652  
Operation and Maintenance 22,907     19,782     3,125     44,540   37,454   7,086  
Property, Franchise and Other Taxes 7,641     7,135     506     14,949   14,235   714  
Depreciation, Depletion and Amortization 11,293     10,838     455     22,407   21,434   973  
  42,351     37,810     4,541     82,709   73,284   9,425  
                   
Operating Income 29,988     38,948     (8,960 )   66,699   78,769   (12,070 )
                   
Other Income (Expense):                  
Other Income (Deductions) 1,973     1,173     800     3,899   2,819   1,080  
Interest Expense (7,500 )   (7,875 )   375     (14,786 ) (15,752 ) 966  
                   
Income Before Income Taxes 24,461     32,246     (7,785 )   55,812   65,836   (10,024 )
Income Tax Expense 6,712     9,522     (2,810 )   12,961   4,650   8,311  
Net Income $ 17,749     $ 22,724     $ (4,975 )   $ 42,851   $ 61,186   $ (18,335 )
                   
Net Income Per Share (Diluted) $ 0.20     $ 0.26     $ (0.06 )   $ 0.49   $ 0.71   $ (0.22 )
                   
                   
  Three Months Ended   Six Months Ended
  March 31,   March 31,
GATHERING SEGMENT 2019   2018   Variance   2019 2018 Variance
Revenues from External Customers $ 2     $ (99 )   $ 101     $ 2   $ 71   $ (69 )
Intersegment Revenues 29,366     27,832     1,534     59,056   51,497   7,559  
Total Operating Revenues 29,368     27,733     1,635     59,058   51,568   7,490  
                   
Operating Expenses:                  
Operation and Maintenance 4,752     3,490     1,262     8,464   6,474   1,990  
Property, Franchise and Other Taxes 18     23     (5 )   48   61   (13 )
Depreciation, Depletion and Amortization 4,673     4,227     446     9,351   8,315   1,036  
  9,443     7,740     1,703     17,863   14,850   3,013  
                   
Operating Income 19,925     19,993     (68 )   41,195   36,718   4,477  
                   
Other Income (Expense):                  
Other Income (Deductions) 189     337     (148 )   232   651   (419 )
Interest Expense (2,345 )   (2,508 )   163     (4,723 ) (4,847 ) 124  
                   
Income Before Income Taxes 17,769     17,822     (53 )   36,704   32,522   4,182  
Income Tax Expense (Benefit) 5,079     6,052     (973 )   9,832   (24,647 ) 34,479  
Net Income $ 12,690     $ 11,770     $ 920     $ 26,872   $ 57,169   $ (30,297 )
                   
Net Income Per Share (Diluted) $ 0.15     $ 0.14     $ 0.01     $ 0.31   $ 0.66   $ (0.35 )
                   

 

                   
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                   
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
                   
DOWNSTREAM BUSINESSES
                   
                   
  Three Months Ended   Six Months Ended
(Thousands of Dollars, except per share amounts) March 31,   March 31,
UTILITY SEGMENT 2019   2018   Variance   2019 2018 Variance
Revenues from External Customers $ 298,636     $ 283,778     $ 14,858     $ 518,647   $ 470,867   $ 47,780  
Intersegment Revenues 4,394     5,700     (1,306 )   7,040   7,882   (842 )
Total Operating Revenues 303,030     289,478     13,552     525,687   478,749   46,938  
                   
Operating Expenses:                  
Purchased Gas 165,235     151,493     13,742     277,115   233,418   43,697  
Operation and Maintenance 47,795     45,885     1,910     90,950   89,203   1,747  
Property, Franchise and Other Taxes 11,312     11,509     (197 )   21,365   21,388   (23 )
Depreciation, Depletion and Amortization 13,365     13,340     25     26,656   26,665   (9 )
  237,707     222,227     15,480     416,086   370,674   45,412  
                   
Operating Income 65,323     67,251     (1,928 )   109,601   108,075   1,526  
                   
Other Income (Expense):                  
Other Income (Deductions) (11,618 )   (13,930 )   2,312     (17,834 ) (20,620 ) 2,786  
Interest Expense (6,263 )   (6,857 )   594     (12,157 ) (13,695 ) 1,538  
                   
Income Before Income Taxes 47,442     46,464     978     79,610   73,760   5,850  
Income Tax Expense 11,853     13,104     (1,251 )   18,373   19,407   (1,034 )
Net Income $ 35,589     $ 33,360     $ 2,229     $ 61,237   $ 54,353   $ 6,884  
                   
Net Income Per Share (Diluted) $ 0.41     $ 0.39     $ 0.02     $ 0.71   $ 0.63   $ 0.08  
                   
                   
  Three Months Ended   Six Months Ended
  March 31,   March 31,
ENERGY MARKETING SEGMENT 2019   2018   Variance   2019 2018 Variance
Revenues from External Customers $ 59,018     $ 55,644     $ 3,374     $ 111,100   $ 94,280   $ 16,820  
Intersegment Revenues 43     (51 )   94     375   76   299  
Total Operating Revenues 59,061     55,593     3,468     111,475   94,356   17,119  
                   
Operating Expenses:                  
Purchased Gas 56,820     52,980     3,840     108,337   88,423   19,914  
Operation and Maintenance 1,621     1,565     56     3,239   3,079   160  
Depreciation, Depletion and Amortization 71     68     3     141   138   3  
  58,512     54,613     3,899     111,717   91,640   20,077  
                   
Operating Income (Loss) 549     980     (431 )   (242 ) 2,716   (2,958 )
                   
Other Income (Expense):                  
Other Income (Deductions) 198     59     139     245   72   173  
Interest Expense (8 )       (8 )   (13 ) (12 ) (1 )
                   
Income (Loss) Before Income Taxes 739     1,039     (300 )   (10 ) 2,776   (2,786 )
Income Tax Expense (Benefit) 195     461     (266 )   (253 ) 1,152   (1,405 )
Net Income $ 544     $ 578     $ (34 )   $ 243   $ 1,624   $ (1,381 )
                   
Net Income Per Share (Diluted) $ 0.01     $ 0.01     $     $   $ 0.02   $ (0.02 )
                   

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                   
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
                   
  Three Months Ended   Six Months Ended
(Thousands of Dollars, except per share amounts) March 31,   March 31,
ALL OTHER 2019   2018   Variance   2019 2018 Variance
Total Operating Revenues $ 310     $ 1,232     $ (922 )   $ 1,316   $ 2,328   $ (1,012 )
Operating Expenses:                  
Operation and Maintenance 323     357     (34 )   583   671   (88 )
Property, Franchise and Other Taxes 134     145     (11 )   270   288   (18 )
Depreciation, Depletion and Amortization 183     506     (323 )   395   645   (250 )
  640     1,008     (368 )   1,248   1,604   (356 )
                   
Operating Income (Loss) (330 )   224     (554 )   68   724   (656 )
                   
Other Income (Expense):                  
Other Income (Deductions) 151     81     70     288   143   145  
                   
Income (Loss) Before Income Taxes (179 )   305     (484 )   356   867   (511 )
Income Tax Expense (Benefit) (51 )   98     (149 )   100   1,378   (1,278 )
Net Income (Loss) $ (128 )   $ 207     $ (335 )   $ 256   $ (511 ) $ 767  
                   
Net Income (Loss) Per Share (Diluted) $     $     $     $ 0.01   $   $ 0.01  
                   
                   
  Three Months Ended   Six Months Ended
  March 31,   March 31,
CORPORATE 2019   2018   Variance   2019 2018 Variance
Revenues from External Customers $ 55     $ 225     $ (170 )   $ 109   $ 438   $ (329 )
Intersegment Revenues 1,165     999     166     2,329   1,999   330  
Total Operating Revenues 1,220     1,224     (4 )   2,438   2,437   1  
Operating Expenses:                  
Operation and Maintenance 3,955     3,801     154     6,751   7,207   (456 )
Property, Franchise and Other Taxes 120     117     3     235   235    
Depreciation, Depletion and Amortization 191     190     1     380   377   3  
  4,266     4,108     158     7,366   7,819   (453 )
                   
Operating Loss (3,046 )   (2,884 )   (162 )   (4,928 ) (5,382 ) 454  
                   
Other Income (Expense):                  
Other Income (Deductions) 32,114     30,122     1,992     54,992   62,591   (7,599 )
Interest Expense on Long-Term Debt (25,273 )   (27,148 )   1,875     (50,713 ) (55,235 ) 4,522  
Other Interest Expense (1,324 )   (1,559 )   235     (2,367 ) (2,942 ) 575  
                   
Income (Loss) before Income Taxes 2,471     (1,469 )   3,940     (3,016 ) (968 ) (2,048 )
Income Tax Expense (Benefit) 193     1,860     (1,667 )   (4,726 ) 15,587   (20,313 )
Net Income (Loss) $ 2,278     $ (3,329 )   $ 5,607     $ 1,710   $ (16,555 ) $ 18,265  
                   
Net Income (Loss) Per Share (Diluted) $ 0.02     $ (0.05 )   $ 0.07     $ 0.02   $ (0.19 ) $ 0.21  
                   
                   
  Three Months Ended   Six Months Ended
  March 31,   March 31,
INTERSEGMENT ELIMINATIONS 2019   2018   Variance   2019 2018 Variance
Intersegment Revenues $ (58,886 )   $ (57,524 )   $ (1,362 )   $ (115,569 ) $ (106,482 ) $ (9,087 )
Operating Expenses:                  
Purchased Gas (27,528 )   (27,920 )   392     (52,568 ) (51,360 ) (1,208 )
Operation and Maintenance (31,358 )   (29,604 )   (1,754 )   (63,001 ) (55,122 ) (7,879 )
  (58,886 )   (57,524 )   (1,362 )   (115,569 ) (106,482 ) (9,087 )
                   
Operating Income                  
                   
Other Income (Expense):                  
Other Income (Deductions) (29,201 )   (30,946 )   1,745     (57,897 ) (62,265 ) 4,368  
Interest Expense 29,201     30,946     (1,745 )   57,897   62,265   (4,368 )
Net Income $     $     $     $   $   $  
                   
Net Income Per Share (Diluted) $     $     $     $   $   $  

 

                       
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                       
SEGMENT INFORMATION (Continued)
(Thousands of Dollars)
                       
                       
  Three Months Ended   Six Months Ended
  March 31,   March 31,
  (Unaudited)   (Unaudited)
          Increase           Increase
  2019   2018   (Decrease)   2019   2018   (Decrease)
                       
Capital Expenditures:                      
Exploration and Production $ 142,571   (1) $ 84,559   (3) $ 58,012     $ 262,786   (1)(2) $ 159,285   (3)(4) $ 103,501  
Pipeline and Storage 22,674   (1) 15,167   (3) 7,507     52,638   (1)(2) 37,440   (3)(4) 15,198  
Gathering 12,680   (1) 19,352   (3) (6,672 )   21,470   (1)(2) 32,283   (3)(4) (10,813 )
Utility 19,735   (1) 15,755   (3) 3,980     35,657   (1)(2) 32,290   (3)(4) 3,367  
Energy Marketing 22     4     18     41     22     19  
Total Reportable Segments 197,682     134,837     62,845     372,592     261,320     111,272  
All Other                 1     (1 )
Corporate 85     15     70     103     44     59  
Eliminations     (19,922 )   19,922         (19,922 )   19,922  
Total Capital Expenditures $ 197,767     $ 114,930     $ 82,837     $ 372,695     $ 241,443     $ 131,252  

(1)       Capital expenditures for the quarter and six months ended March 31, 2019, include accounts payable and accrued liabilities related to capital expenditures of $53.4 million, $10.7 million, $7.4 million, and $3.4 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 March 31, 2019, since they represent non-cash investing activities at that date.

(2)       Capital expenditures for the six months ended March 31, 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 six months ended March 31, 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 March 31, 2019.

(3)       Capital expenditures for the quarter and six months ended March 31, 2018, include accounts payable and accrued liabilities related to capital expenditures of $38.8 million, $9.0 million, $1.6 million, and $2.5 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 March 31, 2018, since they represent non-cash investing activities at that date.

(4)       Capital expenditures for the six months ended March 31, 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 six months ended March 31, 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 March 31, 2018.

                   
DEGREE DAYS                  
                   
              Percent Colder
              (Warmer) Than:
Three Months Ended March 31 Normal   2019   2018     Normal (1)   Last Year (1)
                   
Buffalo, NY 3,290   3,372   3,208   2.5   5.1
Erie, PA 3,108   3,096   3,075   (0.4)   0.7
                   
Six Months Ended March 31                  
                   
Buffalo, NY 5,543   5,697   5,435   2.8   4.8
Erie, PA 5,152   5,126   5,104   (0.5)   0.4
                   

(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   Six Months Ended
    March 31,   March 31,
            Increase           Increase
    2019   2018   (Decrease)   2019   2018   (Decrease)
                         
Gas Production/Prices:                        
Production (MMcf)                        
Appalachia   44,883     41,403     3,480     90,188     76,817     13,371  
West Coast   487     675     (188 )   989     1,370     (381 )
Total Production   45,370     42,078     3,292     91,177     78,187     12,990  
                         
Average Prices (Per Mcf)                        
Appalachia   $ 2.65     $ 2.46     $ 0.19     $ 2.79     $ 2.41     $ 0.38  
West Coast   6.06     4.40     1.66     6.40     4.70     1.70  
Weighted Average   2.69     2.49     0.20     2.83     2.45     0.38  
Weighted Average after Hedging   2.58     2.52     0.06     2.60     2.61     (0.01 )
                         
Oil Production/Prices:                        
Production (Thousands of Barrels)                        
Appalachia   1     1         2     2      
West Coast   563     662     (99 )   1,134     1,334     (200 )
Total Production   564     663     (99 )   1,136     1,336     (200 )
                         
Average Prices (Per Barrel)                        
Appalachia   $ 47.54     $ 58.54     $ (11.00 )   $ 55.93     $ 49.82     $ 6.11  
West Coast   61.85     65.39     (3.54 )   63.79     61.61     2.18  
Weighted Average   61.82     65.39     (3.57 )   63.78     61.60     2.18  
Weighted Average after Hedging   61.01     58.31     2.70     61.36     59.05     2.31  
                         
Total Production (MMcfe)   48,754     46,056     2,698     97,993     86,203     11,790  
                         
Selected Operating Performance Statistics:                        
General & Administrative Expense per Mcfe (1)   $ 0.35     $ 0.36     $ (0.01 )   $ 0.33     $ 0.35     $ (0.02 )
Lease Operating and Transportation Expense per Mcfe (1)(2)   $ 0.94     $ 0.95     $ (0.01 )   $ 0.90     $ 0.97     $ (0.07 )
Depreciation, Depletion & Amortization per Mcfe (1)   $ 0.74     $ 0.69     $ 0.05     $ 0.72     $ 0.69     $ 0.03  
                         

(1)       Refer to page 16 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 $0.54 per Mcfe for the three months ended March 31, 2019 and March 31, 2018, respectively. Amounts include transportation expense of $0.55 and $0.54 per Mcfe for the six months ended March 31, 2019 and March 31, 2018, respectively.

 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
             
EXPLORATION AND PRODUCTION INFORMATION
 
Hedging Summary for Remaining Six Months of Fiscal 2019 Volume     Average Hedge Price
Oil Swaps            
Brent   372,000   BBL   $ 63.52 / BBL
NYMEX   534,000   BBL   $ 53.42 / BBL
Total   906,000   BBL   $ 57.57 / BBL
             
Gas Swaps            
NYMEX   40,080,000   MMBTU   $ 2.93 / MMBTU
DAWN   3,600,000   MMBTU   $ 3.00 / MMBTU
Fixed Price Physical Sales   37,356,436   MMBTU   $ 2.61 / MMBTU
Total   81,036,436   MMBTU   $ 2.78 / MMBTU
             
Hedging Summary for Fiscal 2020   Volume     Average Hedge Price
Oil Swaps            
Brent   1,128,000   BBL   $ 64.26 / BBL
NYMEX   324,000   BBL   $ 50.52 / BBL
Total   1,452,000   BBL   $ 61.20 / BBL
             
Gas Swaps            
NYMEX   40,990,000   MMBTU   $ 2.92 / MMBTU
DAWN   7,200,000   MMBTU   $ 3.00 / MMBTU
Fixed Price Physical Sales   45,816,742   MMBTU   $ 2.35 / MMBTU
Total   94,006,742   MMBTU   $ 2.64 / 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   6,790,000   MMBTU   $ 2.95 / MMBTU
  DAWN   600,000   MMBTU   $ 3.00 / MMBTU
Fixed Price Physical Sales   41,567,229   MMBTU   $ 2.22 / MMBTU
Total   48,957,229   MMBTU   $ 2.33 / 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   40,683,056   MMBTU   $ 2.23 / MMBTU
             
Hedging Summary for Fiscal 2023   Volume     Average Hedge Price
Fixed Price Physical Sales   37,225,983   MMBTU   $ 2.26 / MMBTU
             
Hedging Summary for Fiscal 2024   Volume     Average Hedge Price
Fixed Price Physical Sales   21,074,815   MMBTU   $ 2.25 / MMBTU
             
Hedging Summary for Fiscal 2025   Volume     Average Hedge Price
Fixed Price Physical Sales   2,293,200   MMBTU   $ 2.18 / MMBTU

 

                         
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                         
                         
Pipeline & Storage Throughput - (millions of cubic feet - MMcf)        
                         
    Three Months Ended   Six Months Ended
    March 31,   March 31,
            Increase           Increase
    2019   2018   (Decrease)   2019   2018   (Decrease)
Firm Transportation - Affiliated   50,967     47,551     3,416     86,668     82,392     4,276  
Firm Transportation - Non-Affiliated   148,653     152,128     (3,475 )   304,855     323,989     (19,134 )
Interruptible Transportation   750     1,165     (415 )   1,665     2,046     (381 )
    200,370     200,844     (474 )   393,188     408,427     (15,239 )
                         
Gathering Volume - (MMcf)                        
    Three Months Ended   Six Months Ended
    March 31,   March 31,
            Increase           Increase
    2019   2018   (Decrease)   2019   2018   (Decrease)
Gathered Volume - Affiliated   54,157     51,374     2,783     108,845     94,536     14,309  
                         
                         
Utility Throughput - (MMcf)                        
    Three Months Ended   Six Months Ended
    March 31,   March 31,
            Increase           Increase
    2019   2018   (Decrease)   2019   2018   (Decrease)
Retail Sales:                        
Residential Sales   30,906     28,568     2,338     50,686     46,415     4,271  
Commercial Sales   4,712     4,500     212     7,558     7,096     462  
Industrial Sales   284     287     (3 )   488     431     57  
    35,902     33,355     2,547     58,732     53,942     4,790  
Off-System Sales       119     (119 )       141     (141 )
Transportation   28,928     29,624     (696 )   51,198     51,051     147  
    64,830     63,098     1,732     109,930     105,134     4,796  
                         
Energy Marketing Volume                        
    Three Months Ended   Six Months Ended
    March 31,   March 31,
            Increase           Increase
    2019   2018   (Decrease)   2019   2018   (Decrease)
Natural Gas (MMcf)   16,191     16,112     79     28,610     28,091     519  
                         

 

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 six months ended March 31, 2019 and 2018:

    Three Months Ended   Six Months Ended
    March 31,   March 31,
(in thousands except per share amounts)   2019   2018   2019   2018
Reported GAAP Earnings   $ 90,595     $ 91,847     $ 193,256     $ 290,501  
Items impacting comparability                
Remeasurement of deferred income taxes under 2017 Tax Reform       4,000     (5,000 )   (107,000 )
Unrealized (gain) loss on hedge ineffectiveness (E&P)   6,742     (335 )   237     98  
Tax impact of unrealized (gain) loss on hedge ineffectiveness   (1,416 )   82     (50 )   (24 )
Unrealized (gain) loss on other investments (Corporate/All Other)   (3,831 )       2,516      
Tax impact of unrealized (gain) loss on other investments   805         (528 )    
Adjusted Operating Results   $ 92,895     $ 95,594     $ 190,431     $ 183,575  
                 
Reported GAAP Earnings per share   $ 1.04     $ 1.06     $ 2.23     $ 3.37  
Items impacting comparability                
Remeasurement of deferred income taxes under 2017 Tax Reform       0.05     (0.06 )   (1.24 )
Unrealized (gain) loss on hedge ineffectiveness (E&P)   0.08              
Tax impact of unrealized (gain) loss on hedge ineffectiveness   (0.02 )            
Unrealized (gain) loss on other investments (Corporate/All Other)   (0.04 )       0.03      
Tax impact of unrealized (gain) loss on other investments   0.01         (0.01 )    
Rounding           0.01      
Adjusted Operating Results per share   $ 1.07     $ 1.11     $ 2.20     $ 2.13  
                                 

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 six months ended March 31, 2019 and 2018:

    Three Months Ended   Six Months Ended
    March 31,   March 31,
    2019   2018   2019   2018
(in thousands)                
Reported GAAP Earnings   $ 90,595     $ 91,847     $ 193,256     $ 290,501  
Depreciation, Depletion and Amortization   65,664     61,155     129,918     116,985  
Other (Income) Deductions   5,919     13,092     15,521     16,594  
Interest Expense   27,060     28,381     53,573     56,971  
Income Taxes   29,785     38,269     52,693     (43,007 )
Unrealized (Gain) Loss on Hedge Ineffectiveness   6,742     (335 )   237     98  
Adjusted EBITDA   $ 225,765     $ 232,409     $ 445,198     $ 438,142  
                 
Adjusted EBITDA by Segment                
Pipeline and Storage Adjusted EBITDA   $ 41,281     $ 49,786     $ 89,106     $ 100,203  
Gathering Adjusted EBITDA   24,598     24,220     50,546     45,033  
Total Midstream Businesses Adjusted EBITDA   65,879     74,006     139,652     145,236  
Exploration and Production Adjusted EBITDA   83,580     78,728     173,475     158,948  
Utility Adjusted EBITDA   78,688     80,591     136,257     134,740  
Energy Marketing Adjusted EBITDA   620     1,048     (101 )   2,854  
Corporate and All Other Adjusted EBITDA   (3,002 )   (1,964 )   (4,085 )   (3,636 )
Total Adjusted EBITDA   $ 225,765     $ 232,409     $ 445,198     $ 438,142  
                                 

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

    Three Months Ended   Six Months Ended
    March 31,   March 31,
(in thousands)   2019   2018   2019   2018
Exploration and Production Segment                
Reported GAAP Earnings   $ 21,873     $ 26,537     $ 60,087     $ 133,235  
Depreciation, Depletion and Amortization   35,888     31,986     70,588     59,411  
Other (Income) Deductions   (275 )   (12 )   (554 )   (15 )
Interest Expense   13,548     13,380     26,711     26,753  
Income Taxes   5,804     7,172     16,406     (60,534 )
Unrealized (Gain) Loss on Hedge Ineffectiveness   6,742     (335 )   237     98  
Adjusted EBITDA   $ 83,580     $ 78,728     $ 173,475     $ 158,948  
                 
Pipeline and Storage Segment                
Reported GAAP Earnings   $ 17,749     $ 22,724     $ 42,851     $ 61,186  
Depreciation, Depletion and Amortization   11,293     10,838     22,407     21,434  
Other (Income) Deductions   (1,973 )   (1,173 )   (3,899 )   (2,819 )
Interest Expense   7,500     7,875     14,786     15,752  
Income Taxes   6,712     9,522     12,961     4,650  
Adjusted EBITDA   $ 41,281     $ 49,786     $ 89,106     $ 100,203  
                 
Gathering Segment                
Reported GAAP Earnings   $ 12,690     $ 11,770     $ 26,872     $ 57,169  
Depreciation, Depletion and Amortization   4,673     4,227     9,351     8,315  
Other (Income) Deductions   (189 )   (337 )   (232 )   (651 )
Interest Expense   2,345     2,508     4,723     4,847  
Income Taxes   5,079     6,052     9,832     (24,647 )
Adjusted EBITDA   $ 24,598     $ 24,220     $ 50,546     $ 45,033  
                 
Utility Segment                
Reported GAAP Earnings   $ 35,589     $ 33,360     $ 61,237     $ 54,353  
Depreciation, Depletion and Amortization   13,365     13,340     26,656     26,665  
Other (Income) Deductions   11,618     13,930     17,834     20,620  
Interest Expense   6,263     6,857     12,157     13,695  
Income Taxes   11,853     13,104     18,373     19,407  
Adjusted EBITDA   $ 78,688     $ 80,591     $ 136,257     $ 134,740  
                 
Energy Marketing Segment                
Reported GAAP Earnings   $ 544     $ 578     $ 243     $ 1,624  
Depreciation, Depletion and Amortization   71     68     141     138  
Other (Income) Deductions   (198 )   (59 )   (245 )   (72 )
Interest Expense   8         13     12  
Income Taxes   195     461     (253 )   1,152  
Adjusted EBITDA   $ 620     $ 1,048     $ (101 )   $ 2,854  
                 
Corporate and All Other                
Reported GAAP Earnings   $ 2,150     $ (3,122 )   $ 1,966     $ (17,066 )
Depreciation, Depletion and Amortization   374     696     775     1,022  
Other (Income) Deductions   (3,064 )   743     2,617     (469 )
Interest Expense   (2,604 )   (2,239 )   (4,817 )   (4,088 )
Income Taxes   142     1,958     (4,626 )   16,965  
Adjusted EBITDA   $ (3,002 )   $ (1,964 )   $ (4,085 )   $ (3,636 )

 

Kenneth E. Webster
Investor Relations
716-857-7067

David P. Bauer
Treasurer
716-857-7318

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

Investor Relations

NYSE: NFG 56.77 -0.07 -0.12% Volume 397,318 May 21, 2019 4:02 PM.