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

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

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

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

  1. Changes in laws, regulations or judicial interpretations to which the Company is subject, including those involving derivatives, taxes, safety, employment, climate change, other environmental matters, real property, and exploration and production activities such as hydraulic fracturing;
  2. Delays or changes in costs or plans with respect to Company projects or related projects of other companies, including difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators;
  3. Governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, target rates of return, rate design and retained natural gas), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal;
  4. 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 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 Third Quarter Earnings and Provides Preliminary Guidance for Fiscal 2020

08/01/2019

WILLIAMSVILLE, N.Y., Aug. 01, 2019 (GLOBE NEWSWIRE) -- National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated results for the third quarter of its 2019 fiscal year and for the nine months ended June 30, 2019.

FISCAL 2019 THIRD QUARTER SUMMARY

  • GAAP earnings of $63.8 million, or $0.73 per share, compared to $63.0 million, or $0.73 per share, in the prior year
  • Adjusted operating results of $61.8 million, or $0.71 per share, compared to $63.3 million, or $0.73 per share, in the prior year (see non-GAAP reconciliation on page 2)
  • Adjusted EBITDA of $182.9 million compared to $175.2 million in the prior year (non-GAAP reconciliation on page 24)
  • E&P segment net production of 54.7 Bcfe, an increase of 23% from the prior year and 12% from the second quarter
  • Average natural gas prices, after the impact of hedging, of $2.36 per Mcf, down $0.07 per Mcf from the prior year
  • Average oil prices, after the impact of hedging, of $62.92 per Bbl, up $4.18 per Bbl from the prior year
  • Gathering segment operating revenues increased $5.0 million on an 18% increase in gathered volumes
  • Utility segment net income increased $3.4 million, or 87%, on higher customer margins

FISCAL 2019 AND FISCAL 2020 GUIDANCE UPDATE SUMMARY

The Company is updating its fiscal 2019 guidance and providing preliminary fiscal 2020 guidance relating to earnings, capital expenditures, and production.  See pages 5 and 6 for additional discussion.

  Updated
FY 2019
Guidance
  Preliminary
FY 2020
Guidance
  Key Forecast Drivers
           
Earnings per Share $3.40 to $3.50   $3.25 to $3.55   Increase in production offset by lower natural gas prices
           
Capital Expenditures ($MM) $745 to $800   $725 to $820    
E&P and Gathering $525 to $550   $455 to $505   Seneca to drop rig in Q2 fiscal 2020
Pipeline and Storage $130 to $150   $180 to $215   Empire North expansion project
Utility $90 to $100   $90 to $100   System modernization backed by rate tracker in NY
           
E&P Production (Bcfe) 205 to 215   235 to 245   Utica and Marcellus development
           

MANAGEMENT COMMENTS

David P. Bauer, President and Chief Executive Officer of National Fuel Gas Company, stated: “Our fiscal third quarter results once again demonstrate why the integrated model is a significant advantage for National Fuel, particularly during periods of commodity price volatility. Our Utility and Gathering businesses led the way with significant year over year earnings growth, along with the strong operational performance of our Exploration and Production business. As we look to fiscal 2020, we do so with a close eye on longer-term natural gas prices and a focus on prudently deploying capital and maintaining our strong balance sheet. We plan to reduce our drilling activity accordingly but will continue to invest in pipeline expansion projects and utility system modernization opportunities that add shareholder value and position National Fuel for long-term growth and success

 
RECONCILIATION OF GAAP EARNINGS TO ADJUSTED OPERATING RESULTS 
    Three Months Ended   Nine Months Ended
    June 30,   June 30,
(in thousands except per share amounts)   2019   2018   2019   2018
Reported GAAP Earnings   $ 63,753     $ 63,025     $ 257,009     $ 353,527  
Items impacting comparability                
Remeasurement of deferred income taxes under 2017 Tax Reform           (5,000 )   (107,000 )
Mark-to-market adjustments due to hedge ineffectiveness (E&P)   (1,020 )   339     (783 )   436  
Tax impact of mark-to-market adjustments due to hedge ineffectiveness   214     (83 )   164     (107 )
Unrealized (gain) loss on other investments (Corporate / All Other)   (1,420 )       1,096      
Tax impact of unrealized (gain) loss on other investments   298         (230 )    
Adjusted Operating Results   $ 61,825     $ 63,281     $ 252,256     $ 246,856  
                 
Reported GAAP Earnings per share   $ 0.73     $ 0.73     $ 2.96     $ 4.09  
Items impacting comparability                
Remeasurement of deferred income taxes under 2017 Tax Reform           (0.06 )   (1.24 )
Mark-to-market adjustments due to hedge ineffectiveness (E&P)   (0.01 )       (0.01 )   0.01  
Tax impact of mark-to-market adjustments due to hedge ineffectiveness                
Unrealized (gain) loss on other investments (Corporate / All Other)   (0.02 )       0.01      
Tax impact of unrealized (gain) loss on other investments                
Rounding   0.01         0.01      
Adjusted Operating Results per share   $ 0.71     $ 0.73     $ 2.91     $ 2.86  
                                 

DISCUSSION OF RESULTS BY SEGMENT

The following discussion of earnings of each operating segment for the quarter ended June 30, 2019, is summarized in a tabular form on pages 9 and 10 of this report (earnings drivers for the nine months ended June 30, 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
  June 30,
(in thousands) 2019   2018   Variance
GAAP Earnings $ 26,512     $ 27,817     $ (1,305 )
Mark-to-market adjustments due to hedge ineffectiveness $ (1,020 )   $ 339     $ (1,359 )
Tax impact of mark-to-market adjustments due to hedge ineffectiveness $ 214     $ (83 )   $ 297  
Adjusted Operating Results $ 25,706     $ 28,073     $ (2,367 )
           
Adjusted EBITDA $ 88,175     $ 77,567     $ 10,608  

The Exploration and Production segment’s third quarter GAAP earnings decreased $1.3 million versus the prior year, which includes the net impact of non-cash mark-to-market adjustments recorded during the current and prior year quarters relating to hedge ineffectiveness.  Excluding these adjustments (see table above), the $2.4 million reduction in the Exploration and Production segment’s third quarter earnings was due primarily to a higher effective income tax rate, which was largely the result of tax benefits realized in the prior year that did not recur in the current year.  Before considering these tax items, Seneca’s third quarter earnings were higher due primarily to the positive impacts of higher natural gas production and better realized crude oil prices, which were partially offset by the impacts of lower crude oil production, lower realized natural gas prices, higher lease operating and transportation (“LOE”) expense, and higher depreciation, depletion and amortization (“DD&A”) expense.

Seneca’s third quarter net production was 54.7 Bcfe, an increase of 10.1 Bcfe, or 23 percent, from the prior year.  Natural gas production increased 10.3 billion cubic feet (“Bcf”), or 25 percent, due primarily to production from new Marcellus and Utica wells completed and connected to sales in Appalachia.  Net production increased 4.8 Bcf in Seneca’s Eastern Development Area due largely to increased Utica development in the EDA-Tioga area and Marcellus development in the EDA-Lycoming area.  Net gas production increased 5.5 Bcf in the WDA-Clermont area, where Seneca added a second rig in May 2018 and continues to experience stronger production and shallower declines from its Utica development program. Seneca’s oil production for the third quarter decreased 25 thousand barrels ("Mbbl"), or 4 percent, from the prior year.

Seneca's average realized natural gas price, after the impact of hedging and transportation costs, was $2.36 per thousand cubic feet ("Mcf"), a decrease of $0.07 per Mcf from the prior year. Seneca's average realized oil price, after the impact of hedging, was $62.92 per barrel ("Bbl"), an increase of $4.18 per Bbl over the prior year.  The improvement in oil price realizations was due primarily to stronger price differentials at local sales points in California relative to West Texas Intermediate (WTI) prices.

LOE expense increased $10.1 million due mostly to higher gathering expenses in Appalachia resulting from the increase in natural gas production coupled with an increase in well repair costs in California.  DD&A expense increased $8.8 million due to the increase in production and a $0.03 per Mcfe increase in the unit depletion rate.

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
  June 30,
(in thousands) 2019   2018   Variance
GAAP Earnings $ 15,792     $ 20,723     $ (4,931 )
           
Adjusted EBITDA $ 37,328     $ 46,072     $ (8,744 )

The Pipeline and Storage segment’s third 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 the impact of a lower effective tax rate.  The $5.0 million decrease in operating revenues was due largely to the expiration of a significant firm transportation contract on the Empire system in December 2018.  The impact of the contract expiration was partially offset by an increase in Empire’s transportation rates following the settlement of Empire’s rate case that was effective starting in January 2019. O&M expense increased $3.5 million due primarily to an increase in pipeline integrity maintenance activity during the quarter and higher personnel costs. The reduction in the Pipeline and Storage segment’s effective tax rate was due mostly to the impact of the 2017 Tax Reform Act, which lowered the Company’s statutory federal income tax rate from a blended 24.5 percent in fiscal 2018 to 21 percent in fiscal 2019, and decreased income tax expense on current period income by $0.6 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
  June 30,
(in thousands) 2019   2018   Variance
GAAP Earnings $ 14,638     $ 11,566     $ 3,072  
           
Adjusted EBITDA $ 27,852     $ 23,090     $ 4,762  

The Gathering segment’s third quarter GAAP earnings increased $3.1 million over the prior year.  The increase was driven primarily by higher operating revenues, which were partially offset by an increase in DD&A expense.  Operating revenues increased $5.0 million, or 18 percent, due primarily to a 9.4 Bcf net increase in gathered volume from Seneca’s Appalachian natural gas production. Throughput on the Gathering segment’s Wellsboro, Clermont, and Trout Run systems increased 4.9 Bcf, 3.6 Bcf, and 2.6 Bcf, respectively. The $1.0 million increase in DD&A expense was largely due to a $0.7 million impairment recorded during the quarter to write-down the Company’s minority ownership in a non-operated gas processing facility. The benefit of a lower statutory federal income tax rate due to the 2017 Tax Reform Act was offset by the net impact of other items that increased the Gathering segment’s effective tax rate, including the non-recurrence of a tax benefit recorded in the prior year relating to the blended federal rate’s impact on deferred taxes.

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
  June 30,
(in thousands) 2019   2018   Variance
GAAP Earnings $ 7,362     $ 3,930     $ 3,432  
           
Adjusted EBITDA $ 33,163     $ 30,300     $ 2,863  

The Utility segment’s third quarter GAAP earnings increased $3.4 million over the prior year.  The increase was due primarily to higher customer margin (operating revenues less purchased gas sold) and lower interest expense.  A number of items contributed to the increase in customer margin, including changes in customer usage and a modest increase in residential customers, an increase in revenues relating to a system modernization tracking mechanism, and the net impact of adjustments related to regulatory rate mechanisms.  These positive items were partially offset by $1.8 million increase in the refund provision recorded by the Utility segment during the quarter to return the net effect of the 2017 Tax Reform Act to its customers.  Interest expense decreased $0.8 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.

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.

  Three Months Ended
  June 30,
(in thousands) 2019   2018   Variance
GAAP Earnings $ (1,441 )   $ (190 )   $ (1,251 )
           
Adjusted EBITDA $ (2,075 )   $ (295 )   $ (1,780 )

The Energy Marketing segment’s third quarter GAAP earnings decreased $1.3 million due primarily to a decline in customer margins (operating revenues less purchased gas sold).

Corporate and All Other

Corporate and All Other operations had combined earnings of $0.9 million in the current year third quarter, which was $1.7 million higher than the loss of $0.8 million in the prior-year third quarter.  The increase in earnings was primarily attributable to the impact of $1.4 million in unrealized gains on investments in equity securities recorded during the quarter ($1.1 million after-tax), lower interest expense and a lower effective tax rate.  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.

DISCUSSION OF GUIDANCE UPDATE

National Fuel is revising its full-year earnings guidance for fiscal 2019.  The Company projects that earnings on a non-GAAP basis will be within the range of $3.40 to $3.50 per share, or $3.45 per share at the midpoint of the range. The Company’s revised earnings guidance range reflects the impact of actual results for the nine months ended June 30, 2019, and, among other forecast updates, lower commodity price assumptions to reflect current market prices for natural gas and crude oil for the remaining three months of the fiscal year.  The Company is reaffirming its Exploration and Production segment’s fiscal 2019 net production guidance, which is expected to be in the range of 205 to 215 Bcfe.  The Company now expects fiscal 2019 consolidated capital expenditures to be within the range of $745 million to $800 million, or $772.5 million at the midpoint.

The Company is also initiating preliminary guidance for fiscal 2020.  National Fuel is projecting that its fiscal 2020 earnings will be within a range of $3.25 to $3.55 per share, or $3.40 per share at the midpoint of the range and generally in line with fiscal 2019. The Company’s fiscal 2020 earnings projections are largely being driven by an increase in Seneca’s forecasted natural gas production and the associated impact on Gathering segment revenues, offset by lower expected natural gas price realizations and modest increases in operating expenses.  Seneca’s fiscal 2020 net production is expected to be in the range of 235 to 245 Bcfe, an increase of 30 Bcf versus fiscal 2019.  The Company is projecting its natural gas price realizations after hedging to decline approximately $0.20 per Mcf, driven in large part by lower expected NYMEX and regional spot prices for natural gas.

In response to the deterioration in near-term commodity prices, the Company’s Exploration and Production segment is planning to reduce its development activity in Appalachia and drop one of the three horizontal drilling rigs it is currently operating during the second quarter of fiscal 2020.  As a result, the Exploration and Production segment’s capital expenditures are expected to be in the range of $415 million to $455 million, a $50 million reduction versus fiscal 2019 at the midpoint.  At the reduced activity level, Seneca expects to generate production to fully utilize its firm sales and transportation commitments.  Gathering segment capital expenditures are expected to be $40 million to $50 million in fiscal 2020, a decline of $7.5 million at the midpoint.

Pipeline and Storage segment capital expenditures are expected to be in the range of $180 million to $215 million.  The $57.5 million increase at the midpoint of the range is due primarily to higher spending on expansion projects, including the fully-subscribed Empire North project that is expected to add $25 million in annual revenues after the project goes into service, which is anticipated in the second half of fiscal 2020.  Utility segment capital expenditures are expected to be flat versus fiscal 2019 at $90 million to $100 million as the Company continues to invest in the modernization of its gas distribution systems.

Mr. Bauer added: “Our integrated model and diversified asset base in Appalachia provide the flexibility to respond to market conditions and to efficiently allocate capital to opportunities across the natural gas value chain. Just as we have done in the past, we will again lean on that flexibility in fiscal 2020 by reducing the level of investment at the drill bit while continuing to invest in the expansion and modernization of our rate-regulated pipeline and utility systems, which we expect will generate future earnings growth and stable, value-added returns for our shareholders.”

In total, the Company’s consolidated capital expenditures in fiscal 2020 are expected to be in a range of $725 million to $820 million, flat versus fiscal 2019 at the midpoint of the respective ranges.

The Company’s fiscal 2019 earnings guidance range does not include the impact of certain items that impacted the comparability of earnings during the nine months ended June 30, 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 nine months ended June 30, 2019 by $0.06 per share; (2) the full-year impact of the Exploration and Production segment’s mark-to-market adjustments for hedge ineffectiveness; and (3) the unrealized loss on other investments due to the change in an accounting rule discussed above, which lowered earnings by $0.01 per share.  While the Company expects to record additional adjustments to one or more of these items during the remaining three 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.

EARNINGS TELECONFERENCE

The Company will host a conference call on Friday, August 2, 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 “2194110”.  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 “2194110”.  Both the webcast and a telephonic replay will be available until the close of business on Friday, August 9, 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: changes in laws, regulations or judicial interpretations to which the Company is subject, including those involving derivatives, taxes, safety, employment, climate change, other environmental matters, real property, and exploration and production activities such as hydraulic fracturing; delays or changes in costs or plans with respect to Company projects or related projects of other companies, including difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators; governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, target rates of return, rate design and retained natural gas), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal; 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  information technology, cybersecurity or data security breaches; economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities or acts of war; significant differences between the Company’s projected and actual capital expenditures and operating expenses; or increasing costs of insurance, changes in coverage and the ability to obtain insurance. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date thereof.

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 
GUIDANCE SUMMARY

As discussed on pages 5 and 6, the Company is revising its earnings guidance for fiscal 2019 and initiating preliminary guidance for fiscal 2020.  Additional details on the Company's forecast assumptions and business segment guidance for fiscal 2019 and fiscal 2020 are outlined in the table below.

The Company's fiscal 2019 earnings guidance range does not include the impact of certain items that impacted the comparability of earnings during the nine months ended June 30, 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 nine months ended June 30, 2019 by $0.06 per share; (2) the full-year impact of the Exploration and Production segment’s mark-to-market adjustments for 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 $0.01 per share.  While the Company expects to record additional adjustments to one or more of these items during the remaining three 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   Preliminary FY 2020 Guidance
Consolidated Earnings per Share $3.40 to $3.50   $3.25 to $3.55
Consolidated Effective Tax Rate ~ 24%   ~ 25%
       
Capital Expenditures (Millions)      
Exploration and Production $475 - $495   $415 - $455
Pipeline and Storage $130 - $150   $180 - $215
Gathering $50 - $55   $40 - $50
Utility $90 - $100   $90 - $100
Consolidated Capital Expenditures $745 - $800   $725 - $820
       
Exploration & Production Segment Guidance      
       
Commodity Price Assumptions (1)      
NYMEX natural gas price $2.40 /MMBtu   $2.55 /MMBtu
Appalachian basin spot price (winter | summer) $2.10 /MMBtu   $2.20 /MMBtu | $2.00 /MMBtu
NYMEX (WTI) crude oil price $57.50 /Bbl   $55.00 /Bbl
California oil price premium (% of WTI) 108%   108%
       
Production (Bcfe)      
East Division - Appalachia 189 to 199   219 to 229
West Division - California ~ 16   ~ 16
Total Production 205 to 215   235 to 245
       
E&P Operating Costs ($/Mcfe)      
LOE $0.85 - $0.90   $0.85 - $0.90
G&A ~$0.30   $0.25 - $0.30
DD&A $0.70 - $0.75   $0.70 - $0.75
       
Other Business Segment Guidance (Millions)      
Gathering Segment Revenues $125 - $130   $135 - $145
Pipeline and Storage Segment Revenues ~$285   $290 - $295
 
(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 JUNE 30, 2019
(Unaudited)
                           
  Upstream   Midstream
Businesses
  Downstream
Businesses
       
                           
  Exploration &   Pipeline &           Energy   Corporate /    
(Thousands of Dollars) Production   Storage   Gathering   Utility   Marketing   All Other   Consolidated*
                           
Third quarter 2018 GAAP earnings $ 27,817     $ 20,723     $ 11,566     $ 3,930     $ (190 )   $ (821 )   $ 63,025  
                           
Items impacting comparability:                          
Mark-to-market adjustments due to hedge ineffectiveness 339                         339  
Tax impact of mark-to-market adjustments due to hedge ineffectiveness (83 )                       (83 )
Third quarter 2018 adjusted operating results 28,073     20,723     11,566     3,930     (190 )   (821 )   63,281  
                           
Drivers of adjusted operating results**                          
                           
Upstream Revenues                          
Higher (lower) natural gas production 18,891                         18,891  
Higher (lower) crude oil production (1,119 )                       (1,119 )
Higher (lower) realized natural gas prices, after hedging (2,950 )                       (2,950 )
Higher (lower) realized crude oil prices, after hedging 1,817                         1,817  
                           
Midstream and All Other Revenues                          
Higher (lower) operating revenues     (3,693 )   3,773             (485 )   (405 )
                           
Downstream Margins***                          
Impact of usage and weather             1,425             1,425  
System modernization tracker revenues             1,033             1,033  
Lower (higher) refund provision on tax rate change             (1,386 )           (1,386 )
Regulatory true-up adjustments             1,069             1,069  
Higher (lower) marketing margins                 (1,251 )       (1,251 )
                           
Operating Expenses                          
Lower (higher) lease operating and transportation expenses (7,618 )                       (7,618 )
Lower (higher) operating expenses     (2,606 )                   (2,606 )
Lower (higher) depreciation / depletion (6,613 )       (786 )               (7,399 )
                           
Other Income (Expense)                          
(Higher) lower interest expense (455 )   335     162     588         636     1,266  
                           
Income Taxes                          
Impact of tax rate reduction due to 2017 Tax Reform 953     602     819     271     (69 )   (20 )   2,556  
Lower (higher) income tax expense / effective tax rate (4,281 )   169     (789 )   269     75     723     (3,834 )
                           
All other / rounding (992 )   262     (107 )   163     (6 )   (265 )   (945 )
Third quarter 2019 adjusted operating results 25,706     15,792     14,638     7,362     (1,441 )   (232 )   61,825  
                           
Items impacting comparability:                          
Mark-to-market adjustments due to hedge ineffectiveness 1,020                         1,020  
Tax impact of mark-to-market adjustments due to hedge ineffectiveness (214 )                       (214 )
Unrealized gain (loss) on other investments                     1,420     1,420  
Tax impact of unrealized gain (loss) on other investments                     (298 )   (298 )
Third quarter 2019 GAAP earnings $ 26,512     $ 15,792     $ 14,638     $ 7,362     $ (1,441 )   $ 890     $ 63,753  
                           
* 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 JUNE 30, 2019
(Unaudited)
                           
  Upstream   Midstream
Businesses
  Downstream
Businesses
       
                           
  Exploration &   Pipeline &           Energy   Corporate /    
  Production   Storage   Gathering   Utility   Marketing   All Other   Consolidated*
                           
Third quarter 2018 GAAP earnings per share $ 0.32     $ 0.24     $ 0.13     $ 0.05     $     $ (0.01 )   $ 0.73  
Items impacting comparability:                          
Mark-to-market adjustments due to hedge ineffectiveness                          
Tax impact of mark-to-market adjustments due to hedge ineffectiveness                          
Third quarter 2018 adjusted operating results per share 0.32     0.24     0.13     0.05         (0.01 )   0.73  
                           
Drivers of adjusted operating results**                          
                           
Upstream Revenues                          
Higher (lower) natural gas production 0.22                         0.22  
Higher (lower) crude oil production (0.01 )                       (0.01 )
Higher (lower) realized natural gas prices, after hedging (0.03 )                       (0.03 )
Higher (lower) realized crude oil prices, after hedging 0.02                         0.02  
                           
Midstream and All Other Revenues                          
Higher (lower) operating revenues     (0.04 )   0.04             (0.01 )   (0.01 )
                           
Downstream Margins***                          
Impact of usage and weather             0.02             0.02  
System modernization tracker revenues             0.01             0.01  
Lower (higher) refund provision on tax rate change             (0.02 )           (0.02 )
Regulatory true-up adjustments             0.01             0.01  
Higher (lower) marketing margins                 (0.01 )       (0.01 )
                           
Operating Expenses                          
Lower (higher) lease operating and transportation expenses (0.09 )                       (0.09 )
Lower (higher) operating expenses     (0.03 )                   (0.03 )
Lower (higher) depreciation / depletion (0.08 )       (0.01 )               (0.09 )
                           
Other Income (Expense)                          
(Higher) lower interest expense (0.01 )           0.01         0.01     0.01  
                           
Income Taxes                          
Impact of tax rate reduction due to 2017 Tax Reform 0.01     0.01     0.01                 0.03  
Lower (higher) income tax expense / effective tax rate (0.05 )       (0.01 )           0.01     (0.05 )
                           
All other / rounding         0.01         (0.01 )        
Third quarter 2019 adjusted operating results per share 0.30     0.18     0.17     0.08     (0.02 )       0.71  
                           
Items impacting comparability:                          
Mark-to-market adjustments due to hedge ineffectiveness 0.01                         0.01  
Tax impact of mark-to-market adjustments due to hedge ineffectiveness                          
Unrealized gain (loss) on other investments                     0.02     0.02  
Tax impact of unrealized gain (loss) on other investments                          
Rounding                     (0.01 )   (0.01 )
Third quarter 2019 GAAP earnings per share $ 0.31     $ 0.18     $ 0.17     $ 0.08     $ (0.02 )   $ 0.01     $ 0.73  
                           
* 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
NINE MONTHS ENDED JUNE 30, 2019
(Unaudited)
                           
  Upstream   Midstream
Businesses
  Downstream
Businesses
       
                           
  Exploration &   Pipeline &           Energy   Corporate /    
(Thousands of Dollars) Production   Storage   Gathering   Utility   Marketing   All Other   Consolidated*
                           
Nine months ended June 30, 2018 GAAP earnings $ 161,052     $ 81,909     $ 68,736     $ 58,283     $ 1,434     $ (17,887 )   $ 353,527  
                           
Items impacting comparability:                          
Remeasurement of deferred taxes under 2017 Tax Reform (76,510 )   (14,100 )   (34,500 )       359     17,751     (107,000 )
Mark-to-market adjustments due to hedge ineffectiveness 436                         436  
Tax impact of mark-to-market adjustments due to hedge ineffectiveness (107 )                       (107 )
Nine months ended June 30, 2018 adjusted operating results 84,871     67,809     34,236     58,283     1,793     (136 )   246,856  
                           
Drivers of adjusted operating results**                          
                           
Upstream Revenues                          
Higher (lower) natural gas production 44,802                         44,802  
Higher (lower) crude oil production (10,025 )                       (10,025 )
Higher (lower) realized natural gas prices, after hedging (4,248 )                       (4,248 )
Higher (lower) realized crude oil prices, after hedging 3,782                         3,782  
                           
Midstream and All Other Revenues                          
Higher (lower) operating revenues     (5,690 )   9,428             (1,249 )   2,489  
                           
Downstream Margins***                          
Impact of usage and weather             3,684             3,684  
System modernization tracker revenues             2,601             2,601  
Lower (higher) refund provision on tax rate change             (3,801 )           (3,801 )
Regulatory true-up adjustments             1,173             1,173  
Higher (lower) marketing margins                 (3,360 )       (3,360 )
                           
Operating Expenses                          
Lower (higher) lease operating and transportation expenses (11,429 )                       (11,429 )
Lower (higher) operating expenses (1,636 )   (7,956 )   (1,680 )   (895 )           (12,167 )
Lower (higher) property, franchise and other taxes (2,123 )   (867 )                   (2,990 )
Lower (higher) depreciation / depletion (15,052 )   (935 )   (1,568 )               (17,555 )
                           
Other Income (Expense)                          
(Higher) lower other deductions     1,581         2,421             4,002  
(Higher) lower interest expense (423 )   1,064     256     1,749         1,188     3,834  
                           
Income Taxes                          
Impact of tax rate reduction due to 2017 Tax Reform 3,556     2,220     1,969     2,813     (76 )   (216 )   10,266  
Lower (higher) income tax expense / effective tax rate (7,376 )   1,885     (1,393 )   195     248     817     (5,624 )
                           
All other / rounding 291     (468 )   (237 )   377     (1 )   4     (34 )
Nine months ended June 30, 2019 adjusted operating results 84,990     58,643     41,011     68,600     (1,396 )   408     252,256  
                           
Items impacting comparability:                          
Remeasurement of deferred taxes under 2017 Tax Reform 990         500         198     3,312     5,000  
Mark-to-market adjustments due to hedge ineffectiveness 783                         783  
Tax impact of mark-to-market adjustments due to hedge ineffectiveness (164 )                       (164 )
Unrealized gain (loss) on other investments                     (1,096 )   (1,096 )
Tax impact of unrealized gain (loss) on other investments                     230     230  
Nine months ended June 30, 2019 GAAP earnings $ 86,599     $ 58,643     $ 41,511     $ 68,600     $ (1,198 )   $ 2,854     $ 257,009  
                           
* 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
NINE MONTHS ENDED JUNE 30, 2019
(Unaudited)
                           
  Upstream   Midstream
Businesses
  Downstream
Businesses
       
                           
  Exploration &   Pipeline &           Energy   Corporate /    
  Production   Storage   Gathering   Utility   Marketing   All Other   Consolidated*
Nine months ended June 30, 2018 GAAP earnings per share $ 1.86     $ 0.95     $ 0.80     $ 0.67     $ 0.02     $ (0.21 )   $ 4.09  
Items impacting comparability:                          
Remeasurement of deferred taxes under 2017 Tax Reform (0.89 )   (0.16 )   (0.40 )           0.21     (1.24 )
Mark-to-market adjustments due to hedge ineffectiveness 0.01                         0.01  
Tax impact of mark-to-market adjustments due to hedge ineffectiveness                          
Nine months ended June 30, 2018 adjusted operating results per share 0.98     0.79     0.40     0.67     0.02         2.86  
                           
Drivers of adjusted operating results**                          
                           
Upstream Revenues                          
Higher (lower) natural gas production 0.52                         0.52  
Higher (lower) crude oil production (0.12 )                       (0.12 )
Higher (lower) realized natural gas prices, after hedging (0.05 )                       (0.05 )
Higher (lower) realized crude oil prices, after hedging 0.04                         0.04  
                           
Midstream and All Other Revenues                          
Higher (lower) operating revenues     (0.07 )   0.11             (0.01 )   0.03  
                           
Downstream Margins***                          
Impact of usage and weather             0.04             0.04  
System modernization tracker revenues             0.03             0.03  
Lower (higher) refund provision on tax rate change             (0.04 )           (0.04 )
Regulatory true-up adjustments             0.01             0.01  
Higher (lower) marketing margins                 (0.04 )       (0.04 )
                           
Operating Expenses                          
Lower (higher) lease operating and transportation expenses (0.13 )                       (0.13 )
Lower (higher) operating expenses (0.02 )   (0.09 )   (0.02 )   (0.01 )           (0.14 )
Lower (higher) property, franchise and other taxes (0.02 )   (0.01 )                   (0.03 )
Lower (higher) depreciation / depletion (0.17 )   (0.01 )   (0.02 )               (0.20 )
                           
Other Income (Expense)                          
(Higher) lower other deductions     0.02         0.03             0.05  
(Higher) lower interest expense     0.01         0.02         0.01     0.04  
                           
Income Taxes                          
Impact of tax rate reduction due to 2017 Tax Reform 0.04     0.03     0.02     0.03             0.12  
Lower (higher) income tax expense / effective tax rate (0.09 )   0.02     (0.02 )           0.01     (0.08 )
                           
All other / rounding     (0.01 )       0.01              
Nine months ended June 30, 2019 adjusted operating results per share 0.98     0.68     0.47     0.79     (0.02 )   0.01     2.91  
                           
Items impacting comparability:                          
Remeasurement of deferred taxes under 2017 Tax Reform 0.01         0.01             0.04     0.06  
Mark-to-market adjustments due to hedge ineffectiveness 0.01                         0.01  
Tax impact of mark-to-market adjustments due to hedge ineffectiveness                          
Unrealized gain (loss) on other investments                     (0.01 )   (0.01 )
Tax impact of unrealized gain (loss) on other investments                          
Rounding                 0.01     (0.02 )   (0.01 )
Nine months ended June 30, 2019 GAAP earnings per share $ 1.00     $ 0.68     $ 0.48     $ 0.79     $ (0.01 )   $ 0.02     $ 2.96  
                           
* 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   Nine Months Ended
    June 30,   June 30,
    (Unaudited)   (Unaudited)
SUMMARY OF OPERATIONS   2019   2018   2019   2018
Operating Revenues:                
Utility and Energy Marketing Revenues   $ 151,312     $ 154,088     $ 781,059     $ 719,234  
Exploration and Production and Other Revenues   159,864     137,492     470,267     425,811  
Pipeline and Storage and Gathering Revenues   46,024     51,332     148,665     158,428  
    357,200     342,912     1,399,991     1,303,473  
Operating Expenses:                
Purchased Gas   47,839     52,211     381,537     322,854  
Operation and Maintenance:                
  Utility and Energy Marketing   39,607     39,560     132,082     130,348  
  Exploration and Production and Other   35,674     30,682     108,610     104,891  
  Pipeline and Storage and Gathering   28,675     25,044     80,857     68,272  
Property, Franchise and Other Taxes   21,506     20,595     68,046     64,245  
Depreciation, Depletion and Amortization   71,072     60,817     200,990     177,802  
    244,373     228,909     972,122     868,412  
                 
Operating Income   112,827     114,003     427,869     435,061  
                 
Other Income (Expense):                
Other Income (Deductions)   (1,456 )   (3,612 )   (16,977 )   (20,205 )
Interest Expense on Long-Term Debt   (25,303 )   (27,177 )   (76,016 )   (82,412 )
Other Interest Expense   (1,202 )   (1,006 )   (4,061 )   (2,742 )
                 
Income Before Income Taxes   84,866     82,208     330,815     329,702  
                 
Income Tax Expense (Benefit)   21,113     19,183     73,806     (23,825 )
                 
Net Income Available for Common Stock   $ 63,753     $ 63,025     $ 257,009     $ 353,527  
                 
Earnings Per Common Share                
Basic   $ 0.74     $ 0.73     $ 2.98     $ 4.12  
Diluted   $ 0.73     $ 0.73     $ 2.96     $ 4.09  
                 
Weighted Average Common Shares:                
Used in Basic Calculation   86,306,434   85,930,289   86,208,766   85,789,279
Used in Diluted Calculation   86,839,841   86,501,194   86,765,781   86,370,900
                 
                 

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
   
  June 30,   September 30,
(Thousands of Dollars) 2019   2018
       
ASSETS      
Property, Plant and Equipment $ 10,988,435     $ 10,439,839  
Less - Accumulated Depreciation, Depletion and Amortization   5,636,065       5,462,696  
Net Property, Plant and Equipment   5,352,370       4,977,143  
       
Current Assets:      
Cash and Temporary Cash Investments   87,515       229,606  
Hedging Collateral Deposits   6,835       3,441  
Receivables - Net   178,762       141,498  
Unbilled Revenue   18,047       24,182  
Gas Stored Underground   17,075       37,813  
Materials and Supplies - at average cost   39,010       35,823  
Unrecovered Purchased Gas Costs         4,204  
Other Current Assets   56,052       68,024  
Total Current Assets   403,296       544,591  
       
Other Assets:      
Recoverable Future Taxes   113,619       115,460  
Unamortized Debt Expense   14,432       15,975  
Other Regulatory Assets   107,206       112,918  
Deferred Charges   33,627       40,025  
Other Investments   137,847       132,545  
Goodwill   5,476       5,476  
Prepaid Post-Retirement Benefit Costs   88,939       82,733  
Fair Value of Derivative Financial Instruments   36,803       9,518  
Other   42,632       102  
Total Other Assets   580,581       514,752  
Total Assets $ 6,336,247     $ 6,036,486  
       
CAPITALIZATION AND LIABILITIES      
Capitalization:      
Comprehensive Shareholders' Equity      
Common Stock, $1 Par Value Authorized - 200,000,000 Shares; Issued and      
Outstanding - 86,306,593 Shares and 85,956,814 Shares, Respectively $ 86,307     $ 85,957  
Paid in Capital   827,243       820,223  
Earnings Reinvested in the Business   1,262,867       1,098,900  
Accumulated Other Comprehensive Loss   (32,666 )     (67,750 )
Total Comprehensive Shareholders' Equity   2,143,751       1,937,330  
Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issuance Costs   2,133,101       2,131,365  
Total Capitalization   4,276,852       4,068,695  
       
Current and Accrued Liabilities:      
Notes Payable to Banks and Commercial Paper          
Current Portion of Long-Term Debt          
Accounts Payable   112,782       160,031  
Amounts Payable to Customers   14,546       3,394  
Dividends Payable   37,543       36,532  
Interest Payable on Long-Term Debt   29,461       19,062  
Customer Advances   166       13,609  
Customer Security Deposits   16,801       25,703  
Other Accruals and Current Liabilities   180,063       132,693  
Fair Value of Derivative Financial Instruments   4,563       49,036  
Total Current and Accrued Liabilities   395,925       440,060  
       
Deferred Credits:      
Deferred Income Taxes   647,602       512,686  
Taxes Refundable to Customers   366,184       370,628  
Cost of Removal Regulatory Liability   218,340       212,311  
Other Regulatory Liabilities   159,259       146,743  
Pension and Other Post-Retirement Liabilities   53,142       66,103  
Asset Retirement Obligations   104,732       108,235  
Other Deferred Credits   114,211       111,025  
Total Deferred Credits   1,663,470       1,527,731  
Commitments and Contingencies          
Total Capitalization and Liabilities $ 6,336,247     $ 6,036,486  
               
               

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
    Nine Months Ended
    June 30,
(Thousands of Dollars)   2019   2018
         
Operating Activities:        
Net Income Available for Common Stock   $ 257,009     $ 353,527  
Adjustments to Reconcile Net Income to Net Cash        
Provided by Operating Activities:        
Depreciation, Depletion and Amortization   200,990     177,802  
Deferred Income Taxes   111,123     (43,537 )
Stock-Based Compensation   16,144     11,770  
Other   7,964     12,311  
Change in:        
Receivables and Unbilled Revenue   (31,584 )   (35,021 )
Gas Stored Underground and Materials and Supplies   17,551     18,832  
Unrecovered Purchased Gas Costs   4,204     4,623  
Other Current Assets   11,972     (1,185 )
Accounts Payable   (16,132 )   2,327  
Amounts Payable to Customers   11,152     16,833  
Customer Advances   (13,443 )   (15,504 )
Customer Security Deposits   (8,902 )   (1,904 )
Other Accruals and Current Liabilities   36,040     26,538  
Other Assets   (34,594 )   (10,770 )
Other Liabilities   1,061     1,441  
Net Cash Provided by Operating Activities   $ 570,555     $ 518,083  
         
Investing Activities:        
Capital Expenditures   $ (587,442 )   $ (403,994 )
Net Proceeds from Sale of Oil and Gas Producing Properties       55,506  
Other   (3,071 )   (1,759 )
Net Cash Used in Investing Activities   $ (590,513 )   $ (350,247 )
         
Financing Activities:        
Reduction of Long-Term Debt   $     $ (307,047 )
Dividends Paid on Common Stock   (109,875 )   (106,732 )
Net Proceeds from Issuance (Repurchase) of Common Stock   (8,864 )   4,262  
Net Cash Used in Financing Activities   $ (118,739 )   $ (409,517 )
         
Net Decrease in Cash, Cash Equivalents, and Restricted Cash   (138,697 )   (241,681 )
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period   233,047     557,271  
Cash, Cash Equivalents, and Restricted Cash at June 30   $ 94,350     $ 315,590  
                 
                 

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                   
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
                   
UPSTREAM BUSINESS
                   
                   
  Three Months Ended   Nine Months Ended
(Thousands of Dollars, except per share amounts) June 30,   June 30,
EXPLORATION AND PRODUCTION SEGMENT 2019   2018   Variance   2019 2018 Variance
Total Operating Revenues $ 158,875     $ 135,828     $ 23,047     $ 467,853   $ 421,381   $ 46,472  
                   
Operating Expenses:                  
Operation and Maintenance:                  
General and Administrative Expense 15,628     14,946     682     47,940   45,296   2,644  
Lease Operating and Transportation Expense 47,714     37,624     10,090     136,217   121,079   15,138  
All Other Operation and Maintenance Expense 2,453     2,728     (275 )   7,705   8,182   (477 )
Property, Franchise and Other Taxes 3,885     3,302     583     13,558   10,746   2,812  
Depreciation, Depletion and Amortization 40,055     31,296     8,759     110,643   90,707   19,936  
  109,735     89,896     19,839     316,063   276,010   40,053  
                   
Operating Income 49,140     45,932   3,208     151,790   145,371 6,419  
                   
Other Income (Expense):                  
Other Income (Deductions) 268     193     75     822   208   614  
Other Interest Expense (13,850 )   (13,247 )   (603 )   (40,561 ) (40,001 ) (560 )
                   
Income Before Income Taxes 35,558     32,878     2,680     112,051   105,578   6,473  
Income Tax Expense (Benefit) 9,046     5,061     3,985     25,452   (55,474 ) 80,926  
Net Income $ 26,512     $ 27,817     $ (1,305 )   $ 86,599   $ 161,052   $ (74,453 )
                   
Net Income Per Share (Diluted) $ 0.31     $ 0.32     $ (0.01 )   $ 1.00   $ 1.86   $ (0.86 )
                   
                   

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                   
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
                   
MIDSTREAM BUSINESSES
                   
                   
  Three Months Ended   Nine Months Ended
(Thousands of Dollars, except per share amounts) June 30,   June 30,
PIPELINE AND STORAGE SEGMENT 2019   2018   Variance   2019 2018 Variance
Revenues from External Customers $ 46,024     $ 51,363     $ (5,339 )   $ 148,663   $ 158,387   $ (9,724 )
Intersegment Revenues 22,943     22,496     447     69,712   67,524   2,188  
Total Operating Revenues 68,967     73,859     (4,892 )   218,375   225,911   (7,536 )
                   
Operating Expenses:                  
Purchased Gas 70     105     (35 )   884   266   618  
Operation and Maintenance 24,070     20,618     3,452     68,610   58,072   10,538  
Property, Franchise and Other Taxes 7,499     7,064     435     22,448   21,299   1,149  
Depreciation, Depletion and Amortization 11,154     10,888     266     33,561   32,322   1,239  
  42,793     38,675     4,118     125,503   111,959   13,544  
                   
Operating Income 26,174     35,184     (9,010 )   92,872   113,952   (21,080 )
                   
Other Income (Expense):                  
Other Income (Deductions) 2,447     1,433     1,014     6,346   4,252   2,094  
Interest Expense (7,223 )   (7,667 )   444     (22,009 ) (23,418 ) 1,409  
                   
Income Before Income Taxes 21,398     28,950     (7,552 )   77,209   94,786   (17,577 )
Income Tax Expense 5,606     8,227     (2,621 )   18,566   12,877   5,689  
Net Income $ 15,792     $ 20,723     $ (4,931 )   $ 58,643   $ 81,909   $ (23,266 )
                   
Net Income Per Share (Diluted) $ 0.18     $ 0.24     $ (0.06 )   $ 0.68   $ 0.95   $ (0.27 )
                   
                   
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
GATHERING SEGMENT 2019   2018   Variance   2019 2018 Variance
Revenues from External Customers $     $ (31 )   $ 31     $ 2   $ 41   $ (39 )
Intersegment Revenues 32,875     27,908     4,967     91,931   79,404   12,527  
Total Operating Revenues 32,875     27,877     4,998     91,933   79,445   12,488  
                   
Operating Expenses:                  
Operation and Maintenance 5,009     4,773     236     13,473   11,248   2,225  
Property, Franchise and Other Taxes 14     14         62   74   (12 )
Depreciation, Depletion and Amortization 5,485     4,444     1,041     14,836   12,759   2,077  
  10,508     9,231     1,277     28,371   24,081   4,290  
                   
Operating Income 22,367     18,646     3,721     63,562   55,364   8,198  
                   
Other Income (Expense):                  
Other Income (Deductions) 172     78     94     404   730   (326 )
Interest Expense (2,288 )   (2,502 )   214     (7,010 ) (7,349 ) 339  
                   
Income Before Income Taxes 20,251     16,222     4,029     56,956   48,745   8,211  
Income Tax Expense (Benefit) 5,613     4,656     957     15,445   (19,991 ) 35,436  
Net Income $ 14,638     $ 11,566     $ 3,072     $ 41,511   $ 68,736   $ (27,225 )
                   
Net Income Per Share (Diluted) $ 0.17     $ 0.13     $ 0.04     $ 0.48   $ 0.80   $ (0.32 )
                   
                   

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                   
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
                   
DOWNSTREAM BUSINESSES
                   
  Three Months Ended   Nine Months Ended
(Thousands of Dollars, except per share amounts) June 30,   June 30,
UTILITY SEGMENT 2019   2018   Variance   2019 2018 Variance
Revenues from External Customers $ 129,977     $ 128,628     $ 1,349     $ 648,624   $ 599,495   $ 49,129  
Intersegment Revenues 2,944     3,519     (575 )   9,984   11,401   (1,417 )
Total Operating Revenues 132,921     132,147     774     658,608   610,896   47,712  
                   
Operating Expenses:                  
Purchased Gas 51,003     53,028     (2,025 )   328,119   286,446   41,673  
Operation and Maintenance 38,890     38,858     32     129,839   128,060   1,779  
Property, Franchise and Other Taxes 9,865     9,961     (96 )   31,229   31,349   (120 )
Depreciation, Depletion and Amortization 13,546     13,316     230     40,202   39,981   221  
  113,304     115,163     (1,859 )   529,389   485,836   43,553  
                   
Operating Income 19,617     16,984     2,633     129,219   125,060   4,159  
                   
Other Income (Expense):                  
Other Income (Deductions) (5,017 )   (5,436 )   419     (22,851 ) (26,057 ) 3,206  
Interest Expense (5,793 )   (6,572 )   779     (17,950 ) (20,266 ) 2,316  
                   
Income Before Income Taxes 8,807     4,976     3,831     88,418   78,737   9,681  
Income Tax Expense 1,445     1,046     399     19,818   20,454   (636 )
Net Income $ 7,362     $ 3,930     $ 3,432     $ 68,600   $ 58,283   $ 10,317  
                   
Net Income Per Share (Diluted) $ 0.08     $ 0.05     $ 0.03     $ 0.79   $ 0.67   $ 0.12  
                   
                   
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
ENERGY MARKETING SEGMENT 2019   2018   Variance   2019 2018 Variance
Revenues from External Customers $ 21,335     $ 25,460     $ (4,125 )   $ 132,435   $ 119,739   $ 12,696  
Intersegment Revenues 681     512     169     1,056   589   467  
Total Operating Revenues 22,016     25,972     (3,956 )   133,491   120,328   13,163  
                   
Operating Expenses:                  
Purchased Gas 22,517     24,816     (2,299 )   130,853   113,240   17,613  
Operation and Maintenance 1,574     1,451     123     4,814   4,529   285  
Depreciation, Depletion and Amortization 72     69     3     213   207   6  
  24,163     26,336     (2,173 )   135,880   117,976   17,904  
                   
Operating Income (Loss) (2,147 )   (364 )   (1,783 )   (2,389 ) 2,352   (4,741 )
                   
Other Income (Expense):                  
Other Income (Deductions) 221     104     117     466   177   289  
Interest Expense (3 )   (4 )   1     (16 ) (16 )  
                   
Income (Loss) Before Income Taxes (1,929 )   (264 )   (1,665 )   (1,939 ) 2,513   (4,452 )
Income Tax Expense (Benefit) (488 )   (74 )   (414 )   (741 ) 1,079   (1,820 )
Net Income (Loss) $ (1,441 )   $ (190 )   $ (1,251 )   $ (1,198 ) $ 1,434   $ (2,632 )
                   
Net Income (Loss) Per Share (Diluted) $ (0.02 )   $     $ (0.02 )   $ (0.01 ) $ 0.02   $ (0.03 )
                   

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                   
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
                   
  Three Months Ended   Nine Months Ended
(Thousands of Dollars, except per share amounts) June 30,   June 30,
ALL OTHER 2019   2018   Variance   2019 2018 Variance
Total Operating Revenues $ 854     $ 1,496     $ (642 )   $ 2,170   $ 3,824   $ (1,654 )
Operating Expenses:                  
Operation and Maintenance 316     404     (88 )   899   1,076   (177 )
Property, Franchise and Other Taxes 127     138     (11 )   398   425   (27 )
Depreciation, Depletion and Amortization 568     614     (46 )   963   1,259   (296 )
  1,011     1,156     (145 )   2,260   2,760   (500 )
                   
Operating Income (Loss) (157 )   340     (497 )   (90 ) 1,064   (1,154 )
                   
Other Income (Expense):                  
Other Income (Deductions) 155     98     57     443   241   202  
                   
Income (Loss) Before Income Taxes (2 )   438     (440 )   353   1,305   (952 )
Income Tax Expense 1     141     (140 )   101   1,519   (1,418 )
Net Income (Loss) $ (3 )   $ 297     $ (300 )   $ 252   $ (214 ) $ 466  
                   
Net Income (Loss) Per Share (Diluted) $     $     $     $   $   $  
                   
                   
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
CORPORATE 2019   2018   Variance   2019 2018 Variance
Revenues from External Customers $ 135     $ 168     $ (33 )   $ 244   $ 606   $ (362 )
Intersegment Revenues 1,165     999     166     3,494   2,998   496  
Total Operating Revenues 1,300     1,167     133     3,738   3,604   134  
Operating Expenses:                  
Operation and Maintenance 3,159     3,580     (421 )   9,910   10,787   (877 )
Property, Franchise and Other Taxes 116     116         351   352   (1 )
Depreciation, Depletion and Amortization 192     190     2     572   567   5  
  3,467     3,886     (419 )   10,833   11,706   (873 )
                   
Operating Loss (2,167 )   (2,719 )   552     (7,095 ) (8,102 ) 1,007  
                   
Other Income (Expense):                  
Other Income (Deductions) 29,588     30,393     (805 )   84,580   92,984   (8,404 )
Interest Expense on Long-Term Debt (25,303 )   (27,177 )   1,874     (76,016 ) (82,412 ) 6,396  
Other Interest Expense (1,335 )   (1,489 )   154     (3,702 ) (4,432 ) 730  
                   
Income (Loss) before Income Taxes 783     (992 )   1,775     (2,233 ) (1,962 ) (271 )
Income Tax Expense (Benefit) (110 )   126     (236 )   (4,835 ) 15,711   (20,546 )
Net Income (Loss) $ 893     $ (1,118 )   $ 2,011     $ 2,602   $ (17,673 ) $ 20,275  
                   
Net Income (Loss) Per Share (Diluted) $ 0.01     $ (0.01 )   $ 0.02     $ 0.02   $ (0.21 ) $ 0.23  
                   
                   
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
INTERSEGMENT ELIMINATIONS 2019   2018   Variance   2019 2018 Variance
Intersegment Revenues $ (60,608 )   $ (55,434 )   $ (5,174 )   $ (176,177 ) $ (161,916 ) $ (14,261 )
Operating Expenses:                  
Purchased Gas (25,751 )   (25,738 )   (13 )   (78,319 ) (77,098 ) (1,221 )
Operation and Maintenance (34,857 )   (29,696 )   (5,161 )   (97,858 ) (84,818 ) (13,040 )
  (60,608 )   (55,434 )   (5,174 )   (176,177 ) (161,916 ) (14,261 )
                   
Operating Income                  
                   
Other Income (Expense):                  
Other Income (Deductions) (29,290 )   (30,475 )   1,185     (87,187 ) (92,740 ) 5,553  
Interest Expense 29,290     30,475     (1,185 )   87,187   92,740   (5,553 )
Net Income $     $     $     $   $   $  
Net Income Per Share (Diluted) $     $     $     $   $   $  
                                           
                                           

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                       
SEGMENT INFORMATION (Continued)
(Thousands of Dollars)
                       
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
  (Unaudited)   (Unaudited)
          Increase           Increase
  2019   2018   (Decrease)   2019   2018   (Decrease)
                       
Capital Expenditures:                      
Exploration and Production $ 128,888   (1) $ 110,591   (3) $ 18,297     $ 391,674   (1)(2) $ 269,876   (3)(4) $ 121,798  
Pipeline and Storage 35,489   (1) 15,916   (3) 19,573     88,127   (1)(2) 53,356   (3)(4) 34,771  
Gathering 17,926   (1) 15,484   (3) 2,442     39,396   (1)(2) 47,767   (3)(4) (8,371 )
Utility 22,706   (1) 19,737   (3) 2,969     58,363   (1)(2) 52,026   (3)(4) 6,337  
Energy Marketing 14     10     4     56     33     23  
Total Reportable Segments 205,023     161,738     43,285     577,616     423,058     154,558  
All Other 68         68     68     1     67  
Corporate 267     7     260     369     51     318  
Eliminations                 (19,922 )   19,922  
Total Capital Expenditures $ 205,358     $ 161,745     $ 43,613     $ 578,053     $ 403,188     $ 174,865  

(1)  Capital expenditures for the quarter and nine months ended June 30, 2019, include accounts payable and accrued liabilities related to capital expenditures of $51.0 million, $14.0 million, $8.3 million, and $6.1 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively.  These amounts have been excluded from the Consolidated Statement of Cash Flows at June 30, 2019, since they represent non-cash investing activities at that date.

(2)  Capital expenditures for the nine months ended June 30, 2019, exclude capital expenditures of $51.3 million, $21.9 million, $6.1 million and $9.5 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively.  These amounts were in accounts payable and accrued liabilities at September 30, 2018 and paid during the nine months ended June 30, 2019.  These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2018, since they represented non-cash investing activities at that date.  These amounts have been included in the Consolidated Statement of Cash Flows at June 30, 2019.

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

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

                   
                   
DEGREE DAYS                  
                   
              Percent Colder
              (Warmer) Than:
Three Months Ended June 30 Normal   2019   2018     Normal (1)   Last Year (1)
                     
Buffalo, NY 912   957   873   4.9     9.6  
Erie, PA 871   773   825   (11.3 )   (6.3 )
                       
Nine Months Ended June 30                      
                       
Buffalo, NY 6,455   6,654   6,308   3.1     5.5  
Erie, PA 6,023   5,899   5,929   (2.1 )   (0.5 )
 
(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   Nine Months Ended
    June 30,   June 30,
            Increase           Increase
    2019   2018   (Decrease)   2019   2018   (Decrease)
                         
Gas Production/Prices:                        
Production (MMcf)                        
Appalachia   50,766     40,444     10,322     140,954     117,261     23,693  
West Coast   494     526     (32 )   1,483     1,896     (413 )
Total Production   51,260     40,970     10,290     142,437     119,157     23,280  
                         
Average Prices (Per Mcf)                        
Appalachia   $ 2.21     $ 2.30     $ (0.09 )   $ 2.58     $ 2.37     $ 0.21  
West Coast   3.84     4.41     (0.57 )   5.55     4.62     0.93  
Weighted Average   2.22     2.32     (0.10 )   2.61     2.40     0.21  
Weighted Average after Hedging   2.36     2.43     (0.07 )   2.51     2.55     (0.04 )
                         
Oil Production/Prices:                        
Production (Thousands of Barrels)                        
Appalachia   1     1         2     3     (1 )
West Coast   575     600     (25 )   1,710     1,934     (224 )
Total Production   576     601     (25 )   1,712     1,937     (225 )
                         
Average Prices (Per Barrel)                        
Appalachia   $ 55.45     $ 64.37     $ (8.92 )   $ 55.80     $ 55.06     $ 0.74  
West Coast   67.43     71.53     (4.10 )   65.01     64.69     0.32  
Weighted Average   67.41     71.52     (4.11 )   65.00     64.68     0.32  
Weighted Average after Hedging   62.92     58.74     4.18     61.88     58.96     2.92  
                         
Total Production (MMcfe)   54,716     44,576     10,140     152,709     130,779     21,930  
                         
Selected Operating Performance Statistics:                        
General & Administrative Expense per Mcfe (1)   $ 0.29     $ 0.34     $ (0.05 )   $ 0.31     $ 0.35     $ (0.04 )
Lease Operating and Transportation Expense per Mcfe (1)(2)   $ 0.87     $ 0.84     $ 0.03     $ 0.89     $ 0.93     $ (0.04 )
Depreciation, Depletion & Amortization per Mcfe (1)   $ 0.73     $ 0.70     $ 0.03     $ 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 $0.57 and $0.53 per Mcfe for the three months ended June 30, 2019 and June 30, 2018, respectively. Amounts include transportation expense of $0.55 and $0.54 per Mcfe for the nine months ended June 30, 2019 and June 30, 2018, respectively.

 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
             
EXPLORATION AND PRODUCTION INFORMATION
 
Hedging Summary for Remaining Three Months of Fiscal 2019 Volume     Average Hedge Price
Oil Swaps            
Brent   186,000   BBL   $ 63.52 / BBL
NYMEX   267,000   BBL   $ 53.42 / BBL
Total   453,000   BBL   $ 57.57 / BBL
             
Gas Swaps            
NYMEX   20,040,000   MMBTU   $ 2.93 / MMBTU
DAWN   1,800,000   MMBTU   $ 3.00 / MMBTU
Fixed Price Physical Sales   19,579,555   MMBTU   $ 2.61 / MMBTU
Total   41,419,555   MMBTU   $ 2.78 / MMBTU
             
Hedging Summary for Fiscal 2020   Volume     Average Hedge Price
Oil Swaps            
Brent   1,260,000   BBL   $ 64.66 / BBL
NYMEX   324,000   BBL   $ 50.52 / BBL
Total   1,584,000   BBL   $ 61.77 / BBL
             
Gas Swaps            
NYMEX   40,990,000   MMBTU   $ 2.92 / MMBTU
DAWN   7,200,000   MMBTU   $ 3.00 / MMBTU
Fixed Price Physical Sales   46,430,854   MMBTU   $ 2.37 / MMBTU
Total   94,620,854   MMBTU   $ 2.65 / 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   41,381,641   MMBTU   $ 2.22 / MMBTU
Total   48,771,641   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   40,533,125   MMBTU   $ 2.23 / MMBTU
             
Hedging Summary for Fiscal 2023   Volume     Average Hedge Price
Fixed Price Physical Sales   37,174,130   MMBTU   $ 2.26 / MMBTU
             
Hedging Summary for Fiscal 2024   Volume     Average Hedge Price
Fixed Price Physical Sales   21,053,189   MMBTU   $ 2.25 / MMBTU
             
Hedging Summary for Fiscal 2025   Volume     Average Hedge Price
Fixed Price Physical Sales   2,293,200   MMBTU   $ 2.18 / MMBTU
               
               

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                         
         
Pipeline & Storage Throughput - (millions of cubic feet - MMcf)        
                         
    Three Months Ended   Nine Months Ended
    June 30,   June 30,
            Increase           Increase
    2019   2018   (Decrease)   2019   2018   (Decrease)
Firm Transportation - Affiliated   20,755     21,714     (959 )   107,423     104,106     3,317  
Firm Transportation - Non-Affiliated   137,984     155,357     (17,373 )   442,839     479,346     (36,507 )
Interruptible Transportation   309     1,107     (798 )   1,974     3,153     (1,179 )
    159,048     178,178     (19,130 )   552,236     586,605     (34,369 )
                         
Gathering Volume - (MMcf)                        
    Three Months Ended   Nine Months Ended
    June 30,   June 30,
            Increase           Increase
    2019   2018   (Decrease)   2019   2018   (Decrease)
Gathered Volume - Affiliated   60,745     51,392     9,353     169,590     145,928     23,662  
                         
                         
Utility Throughput - (MMcf)                        
    Three Months Ended   Nine Months Ended
    June 30,   June 30,
            Increase           Increase
    2019   2018   (Decrease)   2019   2018   (Decrease)
Retail Sales:                        
Residential Sales   9,895     10,052     (157 )   60,581     56,468     4,113  
Commercial Sales   1,441     1,525     (84 )   8,999     8,621     378  
Industrial Sales   151     128     23     639     559     80  
    11,487     11,705     (218 )   70,219     65,648     4,571  
Off-System Sales                   141     (141 )
Transportation   14,716     15,348     (632 )   65,914     66,398     (484 )
    26,203     27,053     (850 )   136,133     132,187     3,946  
                         
Energy Marketing Volume                        
    Three Months Ended   Nine Months Ended
    June 30,   June 30,
            Increase           Increase
    2019   2018   (Decrease)   2019   2018   (Decrease)
Natural Gas (MMcf)   7,429     8,322     (893 )   36,039     36,413     (374 )
                         
                         

 

 NATIONAL FUEL GAS COMPANY
 AND SUBSIDIARIES
 
 NON-GAAP FINANCIAL MEASURES

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

Management defines Adjusted Operating Results as reported GAAP earnings before items impacting comparability.  The following table reconciles National Fuel's reported GAAP earnings to Adjusted Operating Results for the three and nine months ended June 30, 2019 and 2018:

    Three Months Ended   Nine Months Ended
    June 30,   June 30,
(in thousands except per share amounts)   2019   2018   2019   2018
Reported GAAP Earnings   $ 63,753     $ 63,025     $ 257,009     $ 353,527  
Items impacting comparability                
Remeasurement of deferred income taxes under 2017 Tax Reform           (5,000 )   (107,000 )
Mark-to-market adjustments due to hedge ineffectiveness (E&P)   (1,020 )   339     (783 )   436  
Tax impact of mark-to-market adjustments due to hedge ineffectiveness   214     (83 )   164     (107 )
Unrealized (gain) loss on other investments (Corporate/All Other)   (1,420 )       1,096      
Tax impact of unrealized (gain) loss on other investments   298         (230 )    
Adjusted Operating Results   $ 61,825     $ 63,281     $ 252,256     $ 246,856  
                 
Reported GAAP Earnings per share   $ 0.73     $ 0.73     $ 2.96     $ 4.09  
Items impacting comparability                
Remeasurement of deferred income taxes under 2017 Tax Reform           (0.06 )   (1.24 )
Mark-to-market adjustments due to hedge ineffectiveness (E&P)   (0.01 )       (0.01 )   0.01  
Tax impact of mark-to-market adjustments due to hedge ineffectiveness                
Unrealized (gain) loss on other investments (Corporate/All Other)   (0.02 )       0.01      
Tax impact of unrealized (gain) loss on other investments                
Rounding   0.01         0.01      
Adjusted Operating Results per share   $ 0.71     $ 0.73     $ 2.91     $ 2.86  
                                 

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 nine months ended June 30, 2019 and 2018:

         
    Three Months Ended   Nine Months Ended
    June 30,   June 30,
    2019   2018   2019   2018
(in thousands)                
Reported GAAP Earnings   $ 63,753     $ 63,025     $ 257,009     $ 353,527  
Depreciation, Depletion and Amortization   71,072     60,817     200,990     177,802  
Other (Income) Deductions   1,456     3,612     16,977     20,205  
Interest Expense   26,505     28,183     80,077     85,154  
Income Taxes   21,113     19,183     73,806     (23,825 )
Mark-to-Market Adjustments due to Hedge Ineffectiveness   (1,020 )   339     (783 )   436  
Adjusted EBITDA   $ 182,879     $ 175,159     $ 628,076     $ 613,299  
                 
Adjusted EBITDA by Segment                
Pipeline and Storage Adjusted EBITDA   $ 37,328     $ 46,072     $ 126,433     $ 146,274  
Gathering Adjusted EBITDA   27,852     23,090     78,398     68,123  
Total Midstream Businesses Adjusted EBITDA   65,180     69,162     204,831     214,397  
Exploration and Production Adjusted EBITDA   88,175     77,567     261,650     236,514  
Utility Adjusted EBITDA   33,163     30,300     169,421     165,041  
Energy Marketing Adjusted EBITDA   (2,075 )   (295 )   (2,176 )   2,559  
Corporate and All Other Adjusted EBITDA   (1,564 )   (1,575 )   (5,650 )   (5,212 )
Total Adjusted EBITDA   $ 182,879     $ 175,159     $ 628,076     $ 613,299  
                                 
                                 

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
SEGMENT ADJUSTED EBITDA
 
    Three Months Ended   Nine Months Ended
    June 30,   June 30,
(in thousands)   2019   2018   2019   2018
Exploration and Production Segment                
Reported GAAP Earnings   $ 26,512     $ 27,817     $ 86,599     $ 161,052  
Depreciation, Depletion and Amortization   40,055     31,296     110,643     90,707  
Other (Income) Deductions   (268 )   (193 )   (822 )   (208 )
Interest Expense   13,850     13,247     40,561     40,001  
Income Taxes   9,046     5,061     25,452     (55,474 )
Mark-to-Market Adjustments due to Hedge Ineffectiveness   (1,020 )   339     (783 )   436  
Adjusted EBITDA   $ 88,175     $ 77,567     $ 261,650     $ 236,514  
                 
Pipeline and Storage Segment                
Reported GAAP Earnings   $ 15,792     $ 20,723     $ 58,643     $ 81,909  
Depreciation, Depletion and Amortization   11,154     10,888     33,561     32,322  
Other (Income) Deductions   (2,447 )   (1,433 )   (6,346 )   (4,252 )
Interest Expense   7,223     7,667     22,009     23,418  
Income Taxes   5,606     8,227     18,566     12,877  
Adjusted EBITDA   $ 37,328     $ 46,072     $ 126,433     $ 146,274  
                 
Gathering Segment                
Reported GAAP Earnings   $ 14,638     $ 11,566     $ 41,511     $ 68,736  
Depreciation, Depletion and Amortization   5,485     4,444     14,836     12,759  
Other (Income) Deductions   (172 )   (78 )   (404 )   (730 )
Interest Expense   2,288     2,502     7,010     7,349  
Income Taxes   5,613     4,656     15,445     (19,991 )
Adjusted EBITDA   $ 27,852     $ 23,090     $ 78,398     $ 68,123  
                 
Utility Segment                
Reported GAAP Earnings   $ 7,362     $ 3,930     $ 68,600     $ 58,283  
Depreciation, Depletion and Amortization   13,546     13,316     40,202     39,981  
Other (Income) Deductions   5,017     5,436     22,851     26,057  
Interest Expense   5,793     6,572     17,950     20,266  
Income Taxes   1,445     1,046     19,818     20,454  
Adjusted EBITDA   $ 33,163     $ 30,300     $ 169,421     $ 165,041  
                 
Energy Marketing Segment                
Reported GAAP Earnings   $ (1,441 )   $ (190 )   $ (1,198 )   $ 1,434  
Depreciation, Depletion and Amortization   72     69     213     207  
Other (Income) Deductions   (221 )   (104 )   (466 )   (177 )
Interest Expense   3     4     16     16  
Income Taxes   (488 )   (74 )   (741 )   1,079  
Adjusted EBITDA   $ (2,075 )   $ (295 )   $ (2,176 )   $ 2,559  
                 
Corporate and All Other                
Reported GAAP Earnings   $ 890     $ (821 )   $ 2,854     $ (17,887 )
Depreciation, Depletion and Amortization   760     804     1,535     1,826  
Other (Income) Deductions   (453 )   (16 )   2,164     (485 )
Interest Expense   (2,652 )   (1,809 )   (7,469 )   (5,896 )
Income Taxes   (109 )   267     (4,734 )   17,230  
Adjusted EBITDA   $ (1,564 )   $ (1,575 )   $ (5,650 )   $ (5,212 )
                                 

hirescolorlogo.png

Source: National Fuel Gas Company

Transfer Agent and Plan Administrator

EQ Shareowner Services (1)

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


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

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

Disclosure: Caution Concerning Forward-Looking Statements

National Fuel Gas Company is including the following cautionary statement in this corporate website to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of, the Company.

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

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

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

  1. Changes in laws, regulations or judicial interpretations to which the Company is subject, including those involving derivatives, taxes, safety, employment, climate change, other environmental matters, real property, and exploration and production activities such as hydraulic fracturing;
  2. Delays or changes in costs or plans with respect to Company projects or related projects of other companies, including difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators;
  3. Governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, target rates of return, rate design and retained natural gas), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal;
  4. 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 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.