Press Release Details

Forward Looking Statement Disclosure

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. Governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, target rates of return, rate design and retained natural gas), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal;
  3. The length and severity of the ongoing COVID-19 pandemic, including its impacts across our businesses on demand, operations, global supply chains and liquidity;
  4. 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;
  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. The creditworthiness or performance of the Company’s key suppliers, customers and counterparties;
  8. 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;
  9. The Company’s ability to estimate accurately the time and resources necessary to meet emissions targets;
  10. Disallowance by applicable regulatory bodies of appropriate rate recovery for system modernization; moves to reduce or eliminate reliance on natural gas;
  11. Delays or changes in costs or plans with respect to Company projects or related projects of other companies, including disruptions due to the COVID-19 pandemic, as well as difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators;
  12. The Company's ability to complete planned strategic transactions;
  13. The Company's ability to successfully integrate acquired assets and achieve expected cost synergies;
  14. 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;
  15. The impact of information technology disruptions, cybersecurity or data security breaches;
  16. 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;
  17. Increasing health care costs and the resulting effect on health insurance premiums and on the obligation to provide other post-retirement benefits; 
  18. Other changes in price differentials between similar quantities of natural gas or oil having different quality, heating value, hydrocarbon mix or delivery date;
  19. The cost and effects of legal and administrative claims against the Company or activist shareholder campaigns to effect changes at the Company;
  20. Uncertainty of oil and gas reserve estimates;
  21. Significant differences between the Company’s projected and actual production levels for natural gas or oil;
  22. Changes in demographic patterns and weather conditions;
  23. Changes in the availability, price or accounting treatment of derivative financial instruments;
  24. 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;
  25. Economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities or acts of war;
  26. Significant differences between the Company’s projected and actual capital expenditures and operating expenses; or
  27. 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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National Fuel Reports Third Quarter Earnings and Announces Preliminary Guidance for Fiscal 2022

08/05/2021

WILLIAMSVILLE, N.Y., Aug. 05, 2021 (GLOBE NEWSWIRE) -- National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated results for the third quarter of its 2021 fiscal year and for the nine months ended June 30, 2021.

FISCAL 2021 THIRD QUARTER SUMMARY

  • GAAP net income of $86.5 million, or $0.94 per share, compared to $41.3 million, or $0.47 per share, in the prior year.
  • Adjusted operating results of $85.7 million, or $0.93 per share, compared to $50.0 million, or $0.57 per share, in the prior year (see non-GAAP reconciliation on page 2).
  • Adjusted EBITDA of $234.2 million, an increase of 36%, compared to $171.9 million in the prior year (see non-GAAP reconciliation on page 24).
  • Pipeline & Storage segment Adjusted EBITDA of $53.1 million, an increase of 5% from the prior year.
  • Gathering segment Adjusted EBITDA of $39.9 million, an increase of 43% from the prior year.
  • E&P segment Adjusted EBITDA of $116.1 million, an increase of 79% from the prior year.
  • E&P segment net production of 83.1 Bcfe, an increase of 27.1 Bcfe, or 48%, from the prior year.
  • E&P segment cash operating costs (combined G&A expenses, LOE expense, other operation and maintenance expense, and property, franchise, and other taxes), of $1.13 per Mcfe, a 5% decrease from the prior year.
  • Average realized natural gas prices of $2.20 per Mcf, an increase $0.28 per Mcf from the prior year.
  • Average realized oil prices of $59.22 per Bbl, an increase of $8.52 per Bbl from the prior year.
  • Company is increasing its fiscal 2021 earnings guidance to a range of $4.05 to $4.15 per share, an increase of $0.15 at the midpoint, excluding items impacting comparability (see Guidance Summary on page 8).
  • Company is initiating its fiscal 2022 earnings guidance with a range of $4.40 to $4.80 per share, an increase of 12% from the midpoint of the Company's updated fiscal 2021 guidance (see Guidance Summary on page 8).

MANAGEMENT COMMENTS

David P. Bauer, President and Chief Executive Officer of National Fuel Gas Company, stated: “National Fuel had a strong third quarter, with adjusted operating results per share increasing more than 60% from the prior year. As we look to fiscal 2022, the Company is poised for continued earnings growth, as evidenced by our greater than 10% projected increase in earnings per share, driven by the significantly improved outlook for natural gas prices and the expected completion of our FM100 expansion and modernization project in late calendar 2021. Once complete, this project, in addition to providing long-term system integrity and reliability benefits for our existing pipeline transportation customers, puts National Fuel on a pathway to generating significant annual free cash flow across each of our major businesses, allowing the Company to maintain the strength of its balance sheet while continuing to return cash to shareholders in the years ahead.”

RECONCILIATION OF GAAP EARNINGS TO ADJUSTED OPERATING RESULTS

               
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
(in thousands except per share amounts) 2021   2020   2021   2020
Reported GAAP Earnings $ 86,475     $ 41,250     $ 276,685     $ 21,773  
Items impacting comparability:              
Impairment of oil and gas properties (E&P)     18,236     76,152     195,997  
Tax impact of impairment of oil and gas properties     (4,986 )   (20,980 )   (53,489 )
Gain on sale of timber properties (Corporate / All Other)         (51,066 )    
Tax impact of gain on sale of timber properties         14,069      
Premium paid on early redemption of debt         15,715      
Tax impact of premium paid on early redemption of debt         (4,321 )    
Deferred tax valuation allowance             56,770  
Unrealized (gain) loss on other investments (Corporate / All Other) (1,025 )   (5,639 )   (575 )   794  
Tax impact of unrealized (gain) loss on other investments 215     1,184     120     (167 )
Adjusted Operating Results $ 85,665     $ 50,045     $ 305,799     $ 221,678  
               
Reported GAAP Earnings Per Share $ 0.94     $ 0.47     $ 3.02     $ 0.25  
Items impacting comparability:              
Impairment of oil and gas properties, net of tax (E&P)     0.15     0.60     1.63  
Gain on sale of timber properties, net of tax (Corporate / All Other)         (0.40 )    
Premium paid on early redemption of debt, net of tax         0.12      
Deferred tax valuation allowance             0.65  
Unrealized (gain) loss on other investments, net of tax (Corporate / All Other) (0.01 )   (0.05 )       0.01  
Adjusted Operating Results Per Share $ 0.93     $ 0.57     $ 3.34     $ 2.54  

DISCUSSION OF GUIDANCE UPDATE

National Fuel is revising its fiscal 2021 earnings guidance to reflect the results of the third quarter, along with updated assumptions for the balance of the year, as detailed on page 8. The Company is now projecting that earnings, excluding items impacting comparability, will be within the range of $4.05 to $4.15 per share, an increase of $0.15 per share from the midpoint of the Company’s prior guidance range.

For the balance of fiscal 2021, Seneca currently has price certainty on approximately 79% of its expected remaining Appalachian production, utilizing a combination of physical firm sales contracts and financial hedges, including swaps, and floor protection on an additional approximately 9% of its expected remaining Appalachian production via no-cost collars. Additionally, Seneca has financial hedges in place for approximately 72% of its expected remaining oil production in fiscal 2021.

The Company is also initiating preliminary guidance for fiscal 2022 with earnings projected to be within a range of $4.40 to $4.80 per share, or $4.60 per share at the midpoint of the range, an increase of 12% from the midpoint of the fiscal 2021 guidance range. The anticipated increase in earnings is being driven largely by higher anticipated commodity price realizations and expected late calendar 2021 completion of the Company's FERC-regulated FM100 expansion and modernization project. This project is expected to generate approximately $50 million of annualized revenue and 330,000 Dekatherms per day of new firm transportation capacity. This incremental pipeline capacity provides a key outlet for Seneca’s natural gas production and is the primary driver behind the forecasted growth in natural gas production and the associated impact on Gathering revenues.

With this incremental transportation capacity, Seneca’s fiscal 2022 net production is increasing to an expected range of 335 to 365 Bcfe, an increase of 25 Bcfe versus fiscal 2021 at the midpoint of the respective guidance ranges. In addition, the Company anticipates its natural gas price realizations after hedging to increase by approximately $0.10 per Mcf from its estimated fiscal 2021 realizations, driven in large part by higher expected NYMEX and regional spot prices for natural gas. Overall, Seneca has firm sales contracts in place for approximately 93% of its expected fiscal 2022 Appalachian production at the midpoint of the Company's production guidance range. The Company is also well positioned with respect to potential swings in natural gas prices in fiscal 2022, with financial hedges on approximately 76% of Seneca’s projected fiscal 2022 Appalachian natural gas production.

The Company’s consolidated capital expenditures in fiscal 2022 are expected to be in a range of $640 million to $760 million, a decrease of $90 million versus the midpoint of its fiscal 2021 guidance. The primary drivers are a significant decrease in Pipeline and Storage segment capital as a result of the expected completion of its FM100 project, partially offset by a higher average activity level in the Exploration and Production segment. The Company added a second drilling rig in the second quarter of fiscal 2021 and expects to maintain its current two-rig program for the entirety of fiscal 2022 along with elevated levels of completion activity designed to efficiently utilize the entirety of Seneca’s new transportation capacity over the course of the fiscal year.

Additional details on the Company's updated forecast assumptions and business segment guidance for fiscal 2021 and fiscal 2022 are outlined in the table on page 8.

DISCUSSION OF THIRD QUARTER RESULTS BY SEGMENT

The following earnings discussion of each operating segment for the quarter ended June 30, 2021 is summarized in a tabular form on pages 9 and 10 of this report (earnings drivers for the nine months ended June 30, 2021 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) 2021   2020   Variance
GAAP Earnings $ 39,015     $ (6,434 )   $ 45,449  
Impairment of oil and gas properties, net of tax     13,250     (13,250 )
Adjusted Operating Results $ 39,015     $ 6,816     $ 32,199  
           
Adjusted EBITDA $ 116,052     $ 64,780     $ 51,272  

Seneca’s third quarter GAAP earnings increased $45.4 million versus the prior year, which includes the impact of a non-cash ceiling test impairment charge of $13.2 million (after-tax) recorded in the prior year's third quarter. Excluding this item, Seneca’s third quarter earnings increased $32.2 million primarily due to the positive impacts of higher natural gas production, higher realized natural gas and crude oil prices as well as lower per unit operating costs, partially offset by lower crude oil production and a higher effective income tax rate.

Seneca produced 83.1 Bcfe during the third quarter, an increase of 27.1 Bcfe, or 48%, from the prior year. The improvement was primarily from a 27.3 Bcf increase in natural gas production, largely related to the Company's fourth quarter fiscal 2020 acquisition of Appalachian upstream assets, as well as production growth from Seneca's other core development areas, partially offset by a 4% decrease, or 26 MBbls, of crude oil production in California largely due to natural declines. Approximately 21.6 Bcf of the natural gas production increase came from the Eastern Development Area ("EDA"), with the remainder attributable to Seneca’s Western Development Area ("WDA").

Seneca's average realized natural gas price, after the impact of hedging and transportation costs, was $2.20 per Mcf, an increase of $0.28 per Mcf from the prior year. This increase was primarily due to higher NYMEX prices and higher spot prices at local sales points in Pennsylvania. Seneca's average realized oil price, after the impact of hedging, was $59.22 per Bbl, an increase of $8.52 per Bbl compared to the prior year. The improvement in oil price realizations was primarily due to stronger commodity pricing.

Lease operating and transportation (“LOE”) expense increased $20.6 million primarily due to higher transportation costs in Appalachia from increased production, as well as higher well repairs, workover activity and steam fuel costs in California. LOE expense includes $48.1 million in intercompany expense for gathering and compression services used to connect Seneca’s Marcellus and Utica production to sales points along interstate pipelines. DD&A expense increased $6.5 million due largely to higher natural gas production, partially offset by the impact of ceiling test impairments recorded during fiscal 2020. Seneca's general and administrative ("G&A") expense increased $2.2 million due primarily to higher personnel costs and technology-related expenses. Other taxes increased $3.5 million primarily due to higher impact fee accruals in Pennsylvania, driven by higher expected NYMEX natural gas prices for calendar 2021. The increase in Seneca's effective income tax rate was primarily driven by a higher effective state income tax rate as a result of the Company's Appalachian acquisition that caused a change in the mix of earnings between state jurisdictions.

On a unit of production basis, Seneca's combined general and administrative ("G&A"), LOE, other operation and maintenance ("O&M") expense, and Property, Franchise, and Other Taxes decreased $0.06 per Mcfe, or 5%, during the quarter.

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) 2021   2020   Variance
GAAP Earnings $ 21,948     $ 22,623     $ (675 )
           
Adjusted EBITDA $ 53,086     $ 50,511     $ 2,575  

The Pipeline and Storage segment’s third quarter GAAP earnings decreased $0.7 million versus the prior year as higher operating revenues were more than offset by the negative impacts of higher O&M expense, higher DD&A expense and higher interest expense. The increase in operating revenues of $6.3 million, or 8%, was largely due to new demand charges for transportation service from the Company's Empire North expansion project, which was placed in service near the end of the fourth quarter of fiscal 2020, combined with an increase in revenues from a surcharge for pipeline safety and greenhouse gas regulatory costs, which went into effect in November 2020 in accordance with Supply Corporation's fiscal 2020 rate case settlement. Additionally, the Company recognized increased revenue from a surcharge mechanism for power costs related to electric motor drive compression on the Empire North project, for which offsetting O&M expense was recognized during the quarter. These positive items were partially offset by a modest decrease in transportation revenue from miscellaneous contract revisions. O&M expense increased $3.7 million primarily due to higher pipeline integrity costs, higher compressor and facility maintenance costs, and higher personnel costs, as well as the aforementioned Empire power costs. The increase in DD&A expense of $1.3 million was primarily attributable to incremental depreciation from the Empire North expansion project. The increase in interest expense of $2.3 million was primarily driven by additional long-term borrowings from the Company's long-term debt issuance in June 2020.

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 primarily delivers Seneca’s gross Appalachian production to the interstate pipeline system.

  Three Months Ended
  June 30,
(in thousands) 2021   2020   Variance
GAAP Earnings $ 20,427     $ 15,239     $ 5,188
           
Adjusted EBITDA $ 39,929     $ 27,844     $ 12,085

The Gathering segment’s third quarter GAAP earnings increased $5.2 million versus the prior year. The earnings increase was primarily driven by higher operating revenues, which was partially offset by higher DD&A expense, higher O&M expense, higher interest expense and a higher effective income tax rate. Operating revenues increased $15.4 million, or 46%, primarily due to increased gathering throughput resulting from the Company's Appalachian acquisition in the fourth quarter of fiscal 2020 and from new Marcellus and Utica wells that were brought on-line. The increase in DD&A expense of $2.9 million was primarily attributable to incremental depreciation expense related to the Company's Appalachian acquisition, as well as higher average depreciable plant in service compared to the prior year. Compression leasing expenses, as well as higher facility, personnel and contractor costs, all associated with the Appalachian acquisition, were primarily responsible for the $3.3 million increase in O&M expense. Interest expense increased by $1.7 million from the prior year, primarily driven by additional long-term borrowings from the Company's long-term debt issuances in June 2020 and February 2021. The increase in the Gathering segment's effective income tax rate was primarily driven by a higher effective state income tax rate as a result of the Company's Appalachian acquisition that caused a change in the mix of earnings between state jurisdictions.

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) 2021   2020   Variance
GAAP Earnings $ 4,841     $ 6,254     $ (1,413 )
           
Adjusted EBITDA $ 29,431     $ 30,214     $ (783 )

The Utility segment’s third quarter GAAP earnings decreased $1.4 million versus the prior year primarily due to lower customer margins (operating revenues less purchased gas sold) and higher DD&A expense. The decline in customer margin was due primarily to warmer weather in Distribution's Pennsylvania service territory that resulted in a decrease in customer usage, partially offset by higher revenues earned through the Company's system modernization tracking mechanism in its New York service territory. Weather in Distribution's Pennsylvania service territory was 20% warmer on average than last year. The impact of weather variations on earnings for the quarter in Distribution's New York service territory is largely mitigated by that jurisdiction's weather normalization clause. The $0.6 million increase in DD&A expense was primarily attributable to higher average depreciable plant in service compared to the prior year.

Corporate and All Other

The Company’s operations that are included in Corporate and All Other generated combined earnings of $0.2 million in the current year third quarter, which was $3.4 million lower than the combined earnings of $3.6 million in the prior-year third quarter. The decrease in earnings was primarily driven by lower unrealized gains on investment securities quarter over quarter.

EARNINGS TELECONFERENCE

The Company will host a conference call on Friday, August 6, 2021, at 11 a.m. Eastern Time to discuss this announcement. Pre-registration is required to access the teleconference by phone in a listen-only mode by following this link: http://www.directeventreg.com/registration/event/1368175. To access the webcast, visit the Events Calendar under the News & Events page on the NFG Investor Relations website at investor.nationalfuelgas.com. A replay of the conference call will be available approximately two hours following the teleconference at the same website link and by phone (toll-free) at 800-585-8367 using conference ID number “1368175”. Both the webcast and conference call replay will be available until the close of business on Friday, August 13, 2021.

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

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

Certain statements contained herein, including statements identified by the use of the words “anticipates,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “predicts,” “projects,” “believes,” “seeks,” “will,” “may” and similar expressions, and statements which are other than statements of historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Company’s expectations, beliefs and projections contained herein are expressed in good faith and are believed to have a reasonable basis, but there can be no assurance that such expectations, beliefs or projections will result or be achieved or accomplished. In addition to other factors, the following are important factors that could cause actual results to differ materially from those discussed in the forward-looking statements: changes in laws, regulations or judicial interpretations to which the Company is subject, including those involving derivatives, taxes, safety, employment, climate change, other environmental matters, real property, and exploration and production activities such as hydraulic fracturing; 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; the length and severity of the ongoing COVID-19 pandemic, including its impacts across our businesses on demand, operations, global supply chains and liquidity; 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; changes in the price of natural gas or oil; impairments under the SEC’s full cost ceiling test for natural gas and oil reserves; the creditworthiness or performance of the Company’s key suppliers, customers and counterparties; 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; delays or changes in costs or plans with respect to Company projects or related projects of other companies, including disruptions due to the COVID-19 pandemic, as well as difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators; the Company's ability to complete planned strategic transactions; the Company's ability to successfully integrate acquired assets and achieve expected cost synergies; 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; the impact of information technology disruptions, cybersecurity or data security breaches; 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; 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; economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities or acts of war; significant differences between the Company’s projected and actual capital expenditures and operating expenses; or increasing costs of insurance, changes in coverage and the ability to obtain insurance. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date thereof.

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

GUIDANCE SUMMARY

As discussed on page 2, the Company is revising its earnings guidance for fiscal 2021 and initiating preliminary guidance for fiscal 2022. Additional details on the Company's forecast assumptions and business segment guidance for fiscal 2021 and fiscal 2022 are outlined in the table below.

The revised earnings guidance range does not include the impact of certain items that impacted the comparability of earnings during the nine months ended June 30, 2021, including: (1) the after-tax impairment of oil and gas properties, which reduced earnings by $0.60 per share; (2) the after-tax gain on sale of timber properties, which increased earnings by $0.40 per share; and (3) the after-tax premium paid on early redemption of debt, which reduced earnings by $0.12 per share. While the Company expects to record certain adjustments to unrealized gain or loss on investments during the three months ending September 30, 2021, 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 2021 Guidance   Preliminary FY 2022 Guidance
Consolidated Earnings per Share, excluding items impacting comparability $4.05 to $4.15   $4.40 to $4.80
Consolidated Effective Tax Rate ~ 26%   ~ 25-26%
       
Capital Expenditures (Millions)      
Exploration and Production $370 - $390   $400 - $450
Pipeline and Storage $250 - $300   $100 - $150
Gathering $35 - $45   $50 - $60
Utility $90 - $100   $90 - $100
Consolidated Capital Expenditures $745 - $835   $640 - $760
       
Exploration & Production Segment Guidance *      
       
Commodity Price Assumptions      
NYMEX natural gas price $3.75 /MMBtu   $3.50 /MMBtu
Appalachian basin spot price (winter | summer) $2.75 /MMBtu   $2.85 /MMBtu | $2.25 /MMBtu
NYMEX (WTI) crude oil price $70.00 /Bbl   $65.00 /Bbl
California oil price premium (% of WTI) 96%   96%
       
Production (Bcfe) 320 to 330   335 to 365
       
E&P Operating Costs ($/Mcfe)      
LOE $0.81 - $0.83   $0.82 - $0.85
G&A $0.20 - $0.22   $0.19 - $0.21
DD&A $0.55 - $0.57   $0.59 - $0.62
       
Other Business Segment Guidance (Millions)      
Gathering Segment Revenues $190 - $195   $200 - $225
Pipeline and Storage Segment Revenues $340 - $345   $360 - $380

* Fiscal 2021 commodity price assumptions are for the remaining 3 months of the fiscal year.

NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
QUARTER ENDED JUNE 30, 2021
(Unaudited)
                       
  Upstream   Midstream   Downstream        
                       
  Exploration &   Pipeline &           Corporate /    
(Thousands of Dollars) Production   Storage   Gathering   Utility   All Other   Consolidated*
                       
Third quarter 2020 GAAP earnings $ (6,434 )   $ 22,623     $ 15,239     $ 6,254     $ 3,568     $ 41,250  
Items impacting comparability:                      
Impairment of oil and gas properties 18,236                     18,236  
Tax impact of impairment of oil and gas properties (4,986 )                   (4,986 )
Unrealized (gain) loss on other investments                 (5,639 )   (5,639 )
Tax impact of unrealized (gain) loss on other investments                 1,184     1,184  
Third quarter 2020 adjusted operating results 6,816     22,623     15,239     6,254     (887 )   50,045  
Drivers of adjusted operating results**                      
Upstream Revenues                      
Higher (lower) natural gas production 41,361                     41,361  
Higher (lower) crude oil production (1,042 )                   (1,042 )
Higher (lower) realized natural gas prices, after hedging 17,437                     17,437  
Higher (lower) realized crude oil prices, after hedging 3,760                     3,760  
Midstream and All Other Revenues                      
Higher (lower) operating revenues     4,938     12,132         (801 )   16,269  
Downstream Margins***                      
Impact of usage and weather             (796 )       (796 )
System modernization tracker revenues             369         369  
Regulatory revenue adjustments             (149 )       (149 )
Higher (lower) energy marketing margins                 (1,246 )   (1,246 )
Operating Expenses                      
Lower (higher) lease operating and transportation expenses (16,235 )                   (16,235 )
Lower (higher) operating expenses (2,372 )   (2,888 )   (2,585 )           (7,845 )
Lower (higher) property, franchise and other taxes (2,751 )                   (2,751 )
Lower (higher) depreciation / depletion (5,146 )   (993 )   (2,286 )   (510 )       (8,935 )
Other Income (Expense)                      
(Higher) lower other deductions             (573 )   719     146  
(Higher) lower interest expense 1,829     (1,815 )   (1,358 )       (554 )   (1,898 )
Income Taxes                      
Lower (higher) income tax expense / effective tax rate (4,975 )   177     (693 )   501     2,054     (2,936 )
All other / rounding 333     (94 )   (22 )   (255 )   149     111  
Third quarter 2021 adjusted operating results 39,015     21,948     20,427     4,841     (566 )   85,665  
Items impacting comparability:                      
Unrealized gain (loss) on other investments                 1,025     1,025  
Tax impact of unrealized gain (loss) on other investments                 (215 )   (215 )
Third quarter 2021 GAAP earnings $ 39,015     $ 21,948     $ 20,427     $ 4,841     $ 244     $ 86,475  
                       
* Amounts do not reflect intercompany eliminations.
** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate.
*** 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, 2021
(Unaudited)
                       
  Upstream   Midstream   Downstream        
                       
  Exploration &   Pipeline &           Corporate /    
  Production   Storage   Gathering   Utility   All Other   Consolidated*
                       
Third quarter 2020 GAAP earnings per share $ (0.07 )   $ 0.26     $ 0.17     $ 0.07     $ 0.04     $ 0.47  
Items impacting comparability:                      
Impairment of oil and gas properties, net of tax 0.15                     0.15  
Unrealized (gain) loss on other investments, net of tax                 (0.05 )   (0.05 )
Third quarter 2020 adjusted operating results per share 0.08     0.26     0.17     0.07     (0.01 )   0.57  
Drivers of adjusted operating results**                      
Upstream Revenues                      
Higher (lower) natural gas production 0.45                     0.45  
Higher (lower) crude oil production (0.01 )                   (0.01 )
Higher (lower) realized natural gas prices, after hedging 0.19                     0.19  
Higher (lower) realized crude oil prices, after hedging 0.04                     0.04  
Midstream and All Other Revenues                      
Higher (lower) operating revenues     0.05     0.13         (0.01 )   0.17  
Downstream Margins***                      
Impact of usage and weather             (0.01 )       (0.01 )
System modernization tracker revenues                      
Regulatory revenue adjustments                      
Higher (lower) energy marketing margins                 (0.01 )   (0.01 )
Operating Expenses                      
Lower (higher) lease operating and transportation expenses (0.18 )                   (0.18 )
Lower (higher) operating expenses (0.03 )   (0.03 )   (0.03 )           (0.09 )
Lower (higher) property, franchise and other taxes (0.03 )                   (0.03 )
Lower (higher) depreciation / depletion (0.06 )   (0.01 )   (0.02 )   (0.01 )       (0.10 )
Other Income (Expense)                      
(Higher) lower other deductions             (0.01 )   0.01      
(Higher) lower interest expense 0.02     (0.02 )   (0.01 )       (0.01 )   (0.02 )
Income Taxes                      
Lower (higher) income tax expense / effective tax rate (0.05 )       (0.01 )   0.01     0.02     (0.03 )
Impact of additional shares     (0.01 )   (0.01 )           (0.02 )
All other / rounding 0.01                     0.01  
Third quarter 2021 adjusted operating results per share 0.43     0.24     0.22     0.05     (0.01 )   0.93  
Items impacting comparability:                      
Unrealized gain (loss) on other investments, net of tax                 0.01     0.01  
Third quarter 2021 GAAP earnings per share $ 0.43     $ 0.24     $ 0.22     $ 0.05     $     $ 0.94  
                       
* Amounts do not reflect intercompany eliminations.
** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate.
*** 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, 2021
(Unaudited)
                       
  Upstream   Midstream   Downstream        
                       
  Exploration &   Pipeline &           Corporate /    
(Thousands of Dollars) Production   Storage   Gathering   Utility   All Other   Consolidated*
                       
Nine months ended June 30, 2020 GAAP earnings $ (157,733 )   $ 62,815     $ 51,081     $ 64,335     $ 1,275     $ 21,773  
Items impacting comparability:                      
Impairment of oil and gas properties 195,997                     195,997  
Tax impact of impairment of oil and gas properties (53,489 )                   (53,489 )
Deferred tax valuation allowance 60,463         (3,769 )       76     56,770  
Unrealized (gain) loss on other investments                 794     794  
Tax impact of unrealized (gain) loss on other investments                 (167 )   (167 )
Nine months ended June 30, 2020 adjusted operating results 45,238     62,815     47,312     64,335     1,978     221,678  
Drivers of adjusted operating results**                      
Upstream Revenues                      
Higher (lower) natural gas production 124,819                     124,819  
Higher (lower) crude oil production (4,923 )                   (4,923 )
Higher (lower) realized natural gas prices, after hedging 15,081                     15,081  
Higher (lower) realized crude oil prices, after hedging (2,590 )                   (2,590 )
Midstream and All Other Revenues                      
Higher (lower) operating revenues     23,111     33,632         (1,925 )   54,818  
Downstream Margins***                      
Impact of usage and weather             (476 )       (476 )
System modernization tracker revenues             2,851         2,851  
Regulatory revenue adjustments             (1,167 )       (1,167 )
Higher (lower) energy marketing margins                 (5,914 )   (5,914 )
Operating Expenses                      
Lower (higher) lease operating and transportation expenses (39,981 )                   (39,981 )
Lower (higher) operating expenses (4,891 )   (1,266 )   (6,528 )   (3,201 )   1,902     (13,984 )
Lower (higher) property, franchise and other taxes (3,456 )                   (3,456 )
Lower (higher) depreciation / depletion (6,873 )   (5,919 )   (6,697 )   (1,240 )   529     (20,200 )
Other Income (Expense)                      
(Higher) lower other deductions     (1,038 )       (446 )   2,289     805  
(Higher) lower interest expense     (7,360 )   (4,482 )       (1,621 )   (13,463 )
Income Taxes                      
Lower (higher) income tax expense / effective tax rate (10,584 )   634     (927 )   (665 )   3,287     (8,255 )
All other / rounding 255     83     51     (69 )   (164 )   156  
Nine months ended June 30, 2021 adjusted operating results 112,095     71,060     62,361     59,922     361     305,799  
Items impacting comparability:                      
Impairment of oil and gas properties (76,152 )                   (76,152 )
Tax impact of impairment of oil and gas properties 20,980                     20,980  
Gain on sale of timber properties                 51,066     51,066  
Tax impact of gain on sale of timber properties                 (14,069 )   (14,069 )
Premium paid on early redemption of debt (14,772 )       (943 )           (15,715 )
Tax impact of premium paid on early redemption of debt 4,062         259             4,321  
Unrealized gain (loss) on other investments                 575     575  
Tax impact of unrealized gain (loss) on other investments                 (120 )   (120 )
Nine months ended June 30, 2021 GAAP earnings $ 46,213     $ 71,060     $ 61,677     $ 59,922     $ 37,813     $ 276,685  
                       
* Amounts do not reflect intercompany eliminations.
** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate.
*** 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, 2021
(Unaudited)
                       
  Upstream   Midstream   Downstream        
                       
  Exploration &   Pipeline &           Corporate /    
  Production   Storage   Gathering   Utility   All Other   Consolidated*
Nine months ended June 30, 2020 GAAP earnings per share $ (1.81 )   $ 0.72     $ 0.58     $ 0.74     $ 0.02     $ 0.25  
Items impacting comparability:                      
Impairment of oil and gas properties, net of tax 1.63                     1.63  
Deferred tax valuation allowance 0.69         (0.04 )           0.65  
Unrealized (gain) loss on other investments, net of tax                 0.01     0.01  
Rounding 0.01                 (0.01 )    
Nine months ended June 30, 2020 adjusted operating results per share 0.52     0.72     0.54     0.74     0.02     2.54  
Drivers of adjusted operating results**                      
Upstream Revenues                      
Higher (lower) natural gas production 1.36                     1.36  
Higher (lower) crude oil production (0.05 )                   (0.05 )
Higher (lower) realized natural gas prices, after hedging 0.16                     0.16  
Higher (lower) realized crude oil prices, after hedging (0.03 )                   (0.03 )
Midstream and All Other Revenues                      
Higher (lower) operating revenues     0.25     0.37         (0.02 )   0.60  
Downstream Margins***                      
Impact of usage and weather             (0.01 )       (0.01 )
System modernization tracker revenues             0.03         0.03  
Regulatory revenue adjustments             (0.01 )       (0.01 )
Higher (lower) energy marketing margins                 (0.06 )   (0.06 )
Operating Expenses                      
Lower (higher) lease operating and transportation expenses (0.44 )                   (0.44 )
Lower (higher) operating expenses (0.05 )   (0.01 )   (0.07 )   (0.03 )   0.02     (0.14 )
Lower (higher) property, franchise and other taxes (0.04 )                   (0.04 )
Lower (higher) depreciation / depletion (0.07 )   (0.06 )   (0.07 )   (0.01 )   0.01     (0.20 )
Other Income (Expense)                      
(Higher) lower other deductions     (0.01 )           0.02     0.01  
(Higher) lower interest expense     (0.08 )   (0.05 )       (0.02 )   (0.15 )
Income Taxes                      
Lower (higher) income tax expense / effective tax rate (0.12 )   0.01     (0.01 )   (0.01 )   0.04     (0.09 )
Impact of additional shares (0.02 )   (0.03 )   (0.03 )   (0.04 )       (0.12 )
All other / rounding     (0.01 )       (0.01 )       (0.02 )
Nine months ended June 30, 2021 adjusted operating results per share 1.22     0.78     0.68     0.65     0.01     3.34  
Items impacting comparability:                      
Impairment of oil and gas properties, net of tax (0.60 )                   (0.60 )
Gain on sale of timber properties, net of tax                 0.40     0.40  
Premium paid on early redemption of debt, net of tax (0.12 )                   (0.12 )
Unrealized gain (loss) on other investments, net of tax                      
Rounding         (0.01 )       0.01      
Nine months ended June 30, 2021 GAAP earnings per share $ 0.50     $ 0.78     $ 0.67     $ 0.65     $ 0.42     $ 3.02  
                       
* Amounts do not reflect intercompany eliminations.                      
** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate.
*** 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 2021   2020   2021   2020
Operating Revenues:              
Utility and Energy Marketing Revenues $ 126,933     $ 139,661     $ 587,247     $ 650,320  
Exploration and Production and Other Revenues 209,618     132,338     621,933     456,073  
Pipeline and Storage and Gathering Revenues 57,846     51,020     177,491     151,908  
  394,397     323,019     1,386,671     1,258,301  
Operating Expenses:              
Purchased Gas 18,737     29,121     177,018     239,663  
Operation and Maintenance:              
Utility and Energy Marketing 42,577     43,950     139,521     138,931  
Exploration and Production and Other 43,112     32,404     127,033     109,056  
Pipeline and Storage and Gathering 31,239     24,298     87,471     77,488  
Property, Franchise and Other Taxes 24,492     21,381     71,259     67,268  
Depreciation, Depletion and Amortization 84,170     73,232     251,632     226,062  
Impairment of Oil and Gas Producing Properties     18,236     76,152     195,997  
  244,327     242,622     930,086     1,054,465  
Gain on Sale of Timber Properties         51,066      
Operating Income 150,070     80,397     507,651     203,836  
               
Other Income (Expense):              
Other Income (Deductions) (2,028 )   2,547     (15,078 )   (17,971 )
Interest Expense on Long-Term Debt (30,220 )   (27,140 )   (111,296 )   (77,853 )
Other Interest Expense (1,012 )   (1,420 )   (4,630 )   (4,863 )
               
Income Before Income Taxes 116,810     54,384     376,647     103,149  
               
Income Tax Expense 30,335     13,134     99,962     81,376  
               
Net Income Available for Common Stock $ 86,475     $ 41,250     $ 276,685     $ 21,773  
               
Earnings Per Common Share              
Basic $ 0.95     $ 0.47     $ 3.04     $ 0.25  
Diluted $ 0.94     $ 0.47     $ 3.02     $ 0.25  
               
Weighted Average Common Shares:              
Used in Basic Calculation 91,172,683     87,966,289     91,113,973     86,966,448  
Used in Diluted Calculation 91,762,898     88,323,699     91,642,849     87,346,362  

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
   
  June 30,   September 30,
(Thousands of Dollars) 2021   2020
ASSETS      
Property, Plant and Equipment $ 12,834,695     $ 12,351,852  
Less - Accumulated Depreciation, Depletion and Amortization   6,649,038       6,353,785  
Net Property, Plant and Equipment   6,185,657       5,998,067  
Assets Held for Sale, Net         53,424  
Current Assets:      
Cash and Temporary Cash Investments   118,012       20,541  
Hedging Collateral Deposits   1,710        
Receivables - Net   188,863       143,583  
Unbilled Revenue   12,812       17,302  
Gas Stored Underground   12,451       33,338  
Materials, Supplies and Emission Allowances   53,740       51,877  
Other Current Assets   51,969       47,557  
Total Current Assets   439,557       314,198  
Other Assets:      
Recoverable Future Taxes   118,883       118,310  
Unamortized Debt Expense   11,016       12,297  
Other Regulatory Assets   145,632       156,106  
Deferred Charges   58,807       67,131  
Other Investments   149,250       154,502  
Goodwill   5,476       5,476  
Prepaid Post-Retirement Benefit Costs   93,627       76,035  
Fair Value of Derivative Financial Instruments   770       9,308  
Other         81  
Total Other Assets   583,461       599,246  
Total Assets $ 7,208,675     $ 6,964,935  
CAPITALIZATION AND LIABILITIES      
Capitalization:      
Comprehensive Shareholders' Equity      
Common Stock, $1 Par Value Authorized - 200,000,000 Shares; Issued and      
Outstanding - 91,172,701 Shares and 90,954,696 Shares, Respectively $ 91,173     $ 90,955  
Paid in Capital   1,012,703       1,004,158  
Earnings Reinvested in the Business   1,145,700       991,630  
Accumulated Other Comprehensive Loss   (238,462 )     (114,757 )
Total Comprehensive Shareholders' Equity   2,011,114       1,971,986  
Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issuance Costs   2,627,860       2,629,576  
Total Capitalization   4,638,974       4,601,562  
Current and Accrued Liabilities:      
Notes Payable to Banks and Commercial Paper         30,000  
Accounts Payable   113,470       134,126  
Amounts Payable to Customers   7,193       10,788  
Dividends Payable   41,484       40,475  
Interest Payable on Long-Term Debt   45,304       27,521  
Customer Advances         15,319  
Customer Security Deposits   19,272       17,199  
Other Accruals and Current Liabilities   168,378       140,176  
Fair Value of Derivative Financial Instruments   205,501       43,969  
Total Current and Accrued Liabilities   600,602       459,573  
Deferred Credits:      
Deferred Income Taxes   742,638       696,054  
Taxes Refundable to Customers   353,736       357,508  
Cost of Removal Regulatory Liability   241,377       230,079  
Other Regulatory Liabilities   182,430       161,573  
Pension and Other Post-Retirement Liabilities   117,291       127,181  
Asset Retirement Obligations   191,853       192,228  
Other Deferred Credits   139,774       139,177  
Total Deferred Credits   1,969,099       1,903,800  
Commitments and Contingencies          
Total Capitalization and Liabilities $ 7,208,675     $ 6,964,935  

 

       
       
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
  Nine Months Ended
  June 30,
(Thousands of Dollars) 2021   2020
       
Operating Activities:      
Net Income Available for Common Stock $ 276,685     $ 21,773  
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
     
Gain on Sale of Timber Properties (51,066 )    
Impairment of Oil and Gas Producing Properties 76,152     195,997  
Depreciation, Depletion and Amortization 251,632     226,062  
Deferred Income Taxes 89,277     116,332  
Premium Paid on Early Redemption of Debt 15,715      
Stock-Based Compensation 12,296     9,716  
Other 7,795     5,645  
Change in:      
Receivables and Unbilled Revenue (40,733 )   4,045  
Gas Stored Underground and Materials, Supplies and Emission Allowances 19,024     11,597  
Unrecovered Purchased Gas Costs     2,246  
Other Current Assets (4,282 )   49,312  
Accounts Payable 7,474     (13,166 )
Amounts Payable to Customers (3,595 )   14,755  
Customer Advances (15,319 )   (12,483 )
Customer Security Deposits 2,073     (984 )
Other Accruals and Current Liabilities 23,154     6,774  
Other Assets 5,839     (18,215 )
Other Liabilities (311 )   4,464  
Net Cash Provided by Operating Activities $ 671,810     $ 623,870  
       
Investing Activities:      
Capital Expenditures $ (512,775 )   $ (551,004 )
Net Proceeds from Sale of Timber Properties 104,582      
Acquisition of Upstream Assets and Midstream Gathering Assets     (27,050 )
Other 11,223     4,126  
Net Cash Used in Investing Activities $ (396,970 )   $ (573,928 )
       
Financing Activities:      
Changes in Notes Payable to Banks and Commercial Paper $ (30,000 )   $ (55,200 )
Reduction of Long-Term Debt (515,715 )    
Dividends Paid on Common Stock (121,606 )   (112,851 )
Net Proceeds From Issuance of Long-Term Debt 495,267     493,108  
Net Proceeds from Issuance (Repurchase) of Common Stock (3,605 )   161,704  
Net Cash Provided by (Used in) Financing Activities $ (175,659 )   $ 486,761  
       
Net Increase in Cash, Cash Equivalents, and Restricted Cash 99,181     536,703  
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period 20,541     27,260  
Cash, Cash Equivalents, and Restricted Cash at June 30 $ 119,722     $ 563,963  

 

                   
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 2021   2020   Variance   2021 2020 Variance
Total Operating Revenues $ 209,535     $ 131,228     $ 78,307     $ 621,116     $ 452,728     $ 168,388  
Operating Expenses:                  
Operation and Maintenance:                  
General and Administrative Expense 16,165     13,968     2,197     51,017     46,777     4,240  
Lease Operating and Transportation Expense 66,708     46,157     20,551     199,296     148,687     50,609  
All Other Operation and Maintenance Expense 3,757     2,952     805     10,944     8,994     1,950  
Property, Franchise and Other Taxes 6,853     3,371     3,482     15,918     11,543     4,375  
Depreciation, Depletion and Amortization 45,886     39,372     6,514     137,356     128,656     8,700  
Impairment of Oil and Gas Producing Properties     18,236     (18,236 )   76,152     195,997     (119,845 )
  139,369     124,056     15,313     490,683     540,654     (49,971 )
                   
Operating Income (Loss) 70,166     7,172     62,994     130,433     (87,926 )   218,359  
                   
Other Income (Expense):                  
Non-Service Pension and Post-Retirement Benefit Costs (289 )   (395 )   106     (860 )   (1,185 )   325  
Interest and Other Income 18     142     (124 )   176     583     (407 )
Interest Expense on Long-Term Debt             (15,119 )       (15,119 )
Interest Expense (12,008 )   (14,323 )   2,315     (42,601 )   (42,543 )   (58 )
Income (Loss) Before Income Taxes 57,887     (7,404 )   65,291     72,029     (131,071 )   203,100  
Income Tax Expense (Benefit) 18,872     (970 )   19,842     25,816     26,662     (846 )
Net Income (Loss) $ 39,015     $ (6,434 )   $ 45,449     $ 46,213     $ (157,733 )   $ 203,946  
Net Income (Loss) Per Share (Diluted) $ 0.43     $ (0.07 )   $ 0.50     $ 0.50     $ (1.81 )   $ 2.31  
                   

 

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 2021   2020   Variance   2021 2020 Variance
Revenues from External Customers $ 57,258     $ 51,020     $ 6,238     $ 175,881     $ 151,908     $ 23,973  
Intersegment Revenues 26,805     26,793     12     82,651     77,370     5,281  
Total Operating Revenues 84,063     77,813     6,250     258,532     229,278     29,254  
Operating Expenses:                  
Purchased Gas (11 )   11     (22 )   219     1     218  
Operation and Maintenance 22,918     19,262     3,656     63,809     62,207     1,602  
Property, Franchise and Other Taxes 8,070     8,029     41     24,713     24,515     198  
Depreciation, Depletion and Amortization 15,609     14,352     1,257     46,806     39,313     7,493  
  46,586     41,654     4,932     135,547     126,036     9,511  
                   
Operating Income 37,477     36,159     1,318     122,985     103,242     19,743  
                   
Other Income (Expense):                  
Non-Service Pension and Post-Retirement Benefit (Costs) Credit 125     (174 )   299     376     (523 )   899  
Interest and Other Income 1,364     1,763     (399 )   3,159     4,851     (1,692 )
Interest Expense (10,070 )   (7,773 )   (2,297 )   (31,353 )   (22,037 )   (9,316 )
Income Before Income Taxes 28,896     29,975     (1,079 )   95,167     85,533     9,634  
Income Tax Expense 6,948     7,352     (404 )   24,107     22,718     1,389  
Net Income $ 21,948     $ 22,623     $ (675 )   $ 71,060     $ 62,815     $ 8,245  
Net Income Per Share (Diluted) $ 0.24     $ 0.26     $ (0.02 )   $ 0.78     $ 0.72     $ 0.06  
                   
                   
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
GATHERING SEGMENT 2021   2020   Variance   2021 2020 Variance
Revenues from External Customers $ 588     $     $ 588     $ 1,610     $     $ 1,610  
Intersegment Revenues 48,068     33,299     14,769     144,317     103,355     40,962  
Total Operating Revenues 48,656     33,299     15,357     145,927     103,355     42,572  
Operating Expenses:                  
Operation and Maintenance 8,715     5,443     3,272     24,750     16,487     8,263  
Property, Franchise and Other Taxes 12     12         30     50     (20 )
Depreciation, Depletion and Amortization 8,131     5,237     2,894     24,132     15,655     8,477  
  16,858     10,692     6,166     48,912     32,192     16,720  
                   
Operating Income 31,798     22,607     9,191     97,015     71,163     25,852  
                   
Other Income (Expense):                  
Non-Service Pension and Post-Retirement Benefit Costs (68 )   (71 )   3     (203 )   (214 )   11  
Interest and Other Income 10     41     (31 )   253     198     55  
Interest Expense on Long-Term Debt             (965 )       (965 )
Interest Expense (4,102 )   (2,383 )   (1,719 )   (12,435 )   (6,762 )   (5,673 )
Income Before Income Taxes 27,638     20,194     7,444     83,665     64,385     19,280  
Income Tax Expense 7,211     4,955     2,256     21,988     13,304     8,684  
Net Income $ 20,427     $ 15,239     $ 5,188     $ 61,677     $ 51,081     $ 10,596  
Net Income Per Share (Diluted) $ 0.22     $ 0.17     $ 0.05     $ 0.67     $ 0.58     $ 0.09  
                   

 

                   
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                   
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
                   
DOWNSTREAM BUSINESS
                   
                   
  Three Months Ended   Nine Months Ended
(Thousands of Dollars, except per share amounts) June 30,   June 30,
UTILITY SEGMENT 2021   2020   Variance   2021 2020 Variance
Revenues from External Customers $ 126,934     $ 124,390     $ 2,544     $ 586,618     $ 569,856     $ 16,762  
Intersegment Revenues 74     2,647     (2,573 )   271     8,499     (8,228 )
Total Operating Revenues 127,008     127,037     (29 )   586,889     578,355     8,534  
Operating Expenses:                  
Purchased Gas 44,848     43,752     1,096     255,011     247,869     7,142  
Operation and Maintenance 43,296     43,410     (114 )   141,412     137,323     4,089  
Property, Franchise and Other Taxes 9,433     9,661     (228 )   30,181     30,295     (114 )
Depreciation, Depletion and Amortization 14,505     13,860     645     42,811     41,241     1,570  
  112,082     110,683     1,399     469,415     456,728     12,687  
                   
Operating Income 14,926     16,354     (1,428 )   117,474     121,627     (4,153 )
                   
Other Income (Expense):                  
Non-Service Pension and Post-Retirement Benefit Costs (5,747 )   (5,811 )   64     (24,674 )   (24,962 )   288  
Interest and Other Income 960     1,749     (789 )   2,142     2,994     (852 )
Interest Expense (5,510 )   (5,240 )   (270 )   (16,457 )   (16,430 )   (27 )
Income Before Income Taxes 4,629     7,052     (2,423 )   78,485     83,229     (4,744 )
Income Tax Expense (Benefit) (212 )   798     (1,010 )   18,563     18,894     (331 )
Net Income $ 4,841     $ 6,254     $ (1,413 )   $ 59,922     $ 64,335     $ (4,413 )
Net Income Per Share (Diluted) $ 0.05     $ 0.07     $ (0.02 )   $ 0.65     $ 0.74     $ (0.09 )
                   

 

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 2021   2020   Variance   2021 2020 Variance
Revenues from External Customers $ (1 )   $ 16,286     $ (16,287 )   $ 1,174     $ 83,445     $ (82,271 )
Intersegment Revenues 2     341     (339 )   22     598     (576 )
Total Operating Revenues 1     16,627     (16,626 )   1,196     84,043     (82,847 )
Operating Expenses:                  
Purchased Gas 4     14,038     (14,034 )   2,297     75,222     (72,925 )
Operation and Maintenance 17     2,176     (2,159 )   701     5,754     (5,053 )
Property, Franchise and Other Taxes     202     (202 )   47     522     (475 )
Depreciation, Depletion and Amortization     245     (245 )   394     653     (259 )
  21     16,661     (16,640 )   3,439     82,151     (78,712 )
Gain on Sale of Timber Properties             51,066         51,066  
Operating Income (Loss) (20 )   (34 )   14     48,823     1,892     46,931  
Other Income (Expense):                  
Non-Service Pension and Post-Retirement Benefit Costs     (69 )   69     (7 )   (207 )   200  
Interest and Other Income 3     202     (199 )   229     674     (445 )
Interest Expense     (10 )   10         (52 )   52  
Income (Loss) before Income Taxes (17 )   89     (106 )   49,045     2,307     46,738  
Income Tax Expense (Benefit) (1,056 )   98     (1,154 )   11,428     775     10,653  
Net Income (Loss) $ 1,039     $ (9 )   $ 1,048     $ 37,617     $ 1,532     $ 36,085  
Net Income (Loss) Per Share (Diluted) $ 0.01     $     $ 0.01     $ 0.41     $ 0.02     $ 0.39  
           
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
CORPORATE 2021   2020   Variance   2021 2020 Variance
Revenues from External Customers $ 83     $ 95     $ (12 )   $ 272     $ 364     $ (92 )
Intersegment Revenues 1,027     1,094     (67 )   2,718     3,281     (563 )
Total Operating Revenues 1,110     1,189     (79 )   2,990     3,645     (655 )
Operating Expenses:                  
Operation and Maintenance 5,224     2,778     2,446     11,566     8,920     2,646  
Property, Franchise and Other Taxes 124     106     18     370     343     27  
Depreciation, Depletion and Amortization 39     166     (127 )   133     544     (411 )
  5,387     3,050     2,337     12,069     9,807     2,262  
                   
Operating Loss (4,277 )   (1,861 )   (2,416 )   (9,079 )   (6,162 )   (2,917 )
Other Income (Expense):                  
Non-Service Pension and Post-Retirement Benefit Costs (923 )   (775 )   (148 )   (2,769 )   (2,326 )   (443 )
Interest and Other Income 33,433     35,919     (2,486 )   107,728     89,795     17,933  
Interest Expense on Long-Term Debt (30,220 )   (27,140 )   (3,080 )   (95,212 )   (77,853 )   (17,359 )
Other Interest Expense (236 )   (1,665 )   1,429     (2,412 )   (4,688 )   2,276  
Income (Loss) before Income Taxes (2,223 )   4,478     (6,701 )   (1,744 )   (1,234 )   (510 )
Income Tax Expense (Benefit) (1,428 )   901     (2,329 )   (1,940 )   (977 )   (963 )
Net Income (Loss) $ (795 )   $ 3,577     $ (4,372 )   $ 196     $ (257 )   $ 453  
Net Income (Loss) Per Share (Diluted) $ (0.01 )   $ 0.04     $ (0.05 )   $ 0.01     $     $ 0.01  
                   
                   
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
INTERSEGMENT ELIMINATIONS 2021   2020   Variance   2021 2020 Variance
Intersegment Revenues $ (75,976 )   $ (64,174 )   $ (11,802 )   $ (229,979 )   $ (193,103 )   $ (36,876 )
Operating Expenses:                  
Purchased Gas (26,104 )   (28,680 )   2,576     (80,509 )   (83,429 )   2,920  
Operation and Maintenance (49,872 )   (35,494 )   (14,378 )   (149,470 )   (109,674 )   (39,796 )
  (75,976 )   (64,174 )   (11,802 )   (229,979 )   (193,103 )   (36,876 )
Operating Income                      
Other Income (Expense):                  
Interest and Other Deductions (30,914 )   (29,974 )   (940 )   (100,628 )   (87,649 )   (12,979 )
Interest Expense 30,914     29,974     940     100,628     87,649     12,979  
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
  2021   2020   (Decrease)   2021   2020   (Decrease)
                       
Capital Expenditures:                      
Exploration and Production $ 94,152   (1) $ 65,647 (3) $ 28,505     $ 263,763   (1)(2) $ 294,990 (3)(4) $ (31,227 )
Pipeline and Storage 63,863   (1) 41,494 (3) 22,369     155,556   (1)(2) 124,131 (3)(4) 31,425  
Gathering 6,209   (1) 21,289 (3) (15,080 )   25,628   (1)(2) 46,200 (3)(4) (20,572 )
Utility 24,866   (1) 25,616 (3) (750 )   66,691   (1)(2) 62,238 (3)(4) 4,453  
Total Reportable Segments 189,090     154,046   35,044     511,638     527,559   (15,921 )
All Other     16   (16 )       38   (38 )
Corporate 129     100   29     218     420   (202 )
Eliminations (1,898 )     (1,898 )   (2,118 )     (2,118 )
Total Capital Expenditures $ 187,321     $ 154,162   $ 33,159     $ 509,738     $ 528,017   $ (18,279 )

 

(1) Capital expenditures for the quarter and nine months ended June 30, 2021, include accounts payable and accrued liabilities related to capital expenditures of $49.7 million, $25.8 million, $0.9 million, and $5.1 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, 2021, since they represent non-cash investing activities at that date.
(2) Capital expenditures for the nine months ended June 30, 2021, exclude capital expenditures of $45.8 million, $17.3 million, $13.5 million and $10.7 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, 2020 and paid during the nine months ended June 30, 2021. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2020, 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, 2021.
(3) Capital expenditures for the quarter and nine months ended June 30, 2020, include accounts payable and accrued liabilities related to capital expenditures of $26.5 million, $16.4 million, $6.5 million, and $8.7 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at June 30, 2020, since they represent non-cash investing activities at that date.
(4) Capital expenditures for the nine months ended June 30, 2020, exclude capital expenditures of $38.0 million, $23.8 million, $6.6 million and $12.7 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts were in accounts payable and accrued liabilities at September 30, 2019 and paid during the nine months ended June 30, 2020. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2019, 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, 2020.

 

                   
DEGREE DAYS                  
              Percent Colder
              (Warmer) Than:
Three Months Ended June 30, Normal   2021   2020   Normal (1)   Last Year (1)
Buffalo, NY 912   794   1,032   (12.9 )   (23.1 )
Erie, PA 871   741   920   (14.9 )   (19.5 )
                   
Nine Months Ended June 30,                  
Buffalo, NY 6,455   5,693   6,002   (11.8 )   (5.1 )
Erie, PA 6,023   5,188   5,381   (13.9 )   (3.6 )
                   

(1)   Percents compare actual 2021 degree days to normal degree days and actual 2021 degree days to actual 2020 degree days.

                       
                       
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
                       
EXPLORATION AND PRODUCTION INFORMATION
                       
                       
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
          Increase           Increase
  2021   2020   (Decrease)   2021   2020   (Decrease)
                       
Gas Production/Prices:                      
Production (MMcf)                      
Appalachia 79,314   52,043   27,271     236,429   161,965   74,464  
West Coast 431   468   (37 )   1,300   1,434   (134 )
Total Production 79,745   52,511   27,234     237,729   163,399   74,330  
                       
Average Prices (Per Mcf)                      
Appalachia $ 2.29   $ 1.45   $ 0.84     $ 2.25   $ 1.80   $ 0.45  
West Coast 5.36   2.58   2.78     5.83   3.98   1.85  
Weighted Average 2.31   1.46   0.85     2.27   1.82   0.45  
Weighted Average after Hedging 2.20   1.92   0.28     2.21   2.13   0.08  
                       
Oil Production/Prices:                      
Production (Thousands of Barrels)                      
Appalachia 1     1     2   2    
West Coast 557   584   (27 )   1,681   1,790   (109 )
Total Production 558   584   (26 )   1,683   1,792   (109 )
                       
Average Prices (Per Barrel)                      
Appalachia $ 42.09   $ 27.50   $ 14.59     $ 43.13   $ 50.28   $ (7.15 )
West Coast 67.55   29.13   38.42     56.92   47.40   9.52  
Weighted Average 67.52   29.12   38.40     56.90   47.41   9.49  
Weighted Average after Hedging 59.22   50.70   8.52     55.40   57.35   (1.95 )
                       
Total Production (MMcfe) 83,093   56,015   27,078     247,827   174,151   73,676  
                       
Selected Operating Performance Statistics:                      
General & Administrative Expense per Mcfe (1) $ 0.19   $ 0.25   $ (0.06 )   $ 0.21   $ 0.27   $ (0.06 )
Lease Operating and Transportation Expense per Mcfe (1)(2) $ 0.80   $ 0.82   $ (0.02 )   $ 0.80   $ 0.85   $ (0.05 )
Depreciation, Depletion & Amortization per Mcfe (1) $ 0.55   $ 0.70   $ (0.15 )   $ 0.55   $ 0.74   $ (0.19 )
                       

 

(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 $0.57 per Mcfe for the three months ended June 30, 2021 and June 30, 2020, respectively. Amounts include transportation expense of $0.57 and $0.57 per Mcfe for the nine months ended June 30, 2021 and June 30, 2020, respectively.

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
             
EXPLORATION AND PRODUCTION INFORMATION
 
             
Hedging Summary for Remaining Three Months of Fiscal 2021   Volume     Average Hedge Price
Oil Swaps            
Brent   354,000   BBL   $ 57.57 / BBL
NYMEX   39,000   BBL   $ 51.00 / BBL
Total   393,000    BBL   $ 56.91 / BBL
Gas Swaps            
NYMEX   37,170,000   MMBTU   $ 2.62 / MMBTU
No Cost Collars   7,050,000   MMBTU   $ 2.28 / MMBTU (Floor) / $2.77 / MMBTU (Ceiling)
Fixed Price Physical Sales   25,768,709   MMBTU   $ 2.27 / MMBTU
Total   69,988,709    MMBTU      
Hedging Summary for Fiscal 2022   Volume     Average Hedge Price
Oil Swaps            
Brent   1,140,000   BBL   $ 58.28 / BBL
NYMEX   156,000   BBL   $ 51.00 / BBL
Total   1,296,000    BBL   $ 57.40 / BBL
Gas Swaps            
NYMEX   208,500,000   MMBTU   $ 2.75 / MMBTU
No Cost Collars   2,350,000   MMBTU   $ 2.28 / MMBTU (Floor) / $2.77 / MMBTU (Ceiling)
Fixed Price Physical Sales   51,121,738   MMBTU   $ 2.27 / MMBTU
Total   261,971,738    MMBTU      
Hedging Summary for Fiscal 2023   Volume     Average Hedge Price
Oil Swaps            
Brent   480,000   BBL   $ 58.48 / BBL
Total   480,000    BBL   $ 58.48 / BBL
Gas Swaps            
NYMEX   98,710,000   MMBTU   $ 2.69 / MMBTU
No Cost Collars   7,700,000   MMBTU   $ 2.76 / MMBTU (Floor) / $3.16 / MMBTU (Ceiling)
Fixed Price Physical Sales   48,121,254   MMBTU   $ 2.23 / MMBTU
Total   154,531,254    MMBTU      
Hedging Summary for Fiscal 2024   Volume     Average Hedge Price
Oil Swaps            
Brent   120,000   BBL   $ 50.30 / BBL
Total   120,000    BBL   $ 50.30 / BBL
Gas Swaps            
NYMEX   59,490,000   MMBTU   $ 2.71 / MMBTU
No Cost Collars   700,000   MMBTU   $ 2.76 / MMBTU (Floor) / $3.16 / MMBTU (Ceiling)
Fixed Price Physical Sales   27,530,402   MMBTU   $ 2.18 / MMBTU
Total   87,720,402    MMBTU      
Hedging Summary for Fiscal 2025   Volume     Average Hedge Price
Oil Swaps            
Brent   120,000   BBL   $ 50.32 / BBL
Total   120,000    BBL   $ 50.32 / BBL
Gas Swaps            
NYMEX   4,740,000   MMBTU   $ 2.71 / MMBTU
Fixed Price Physical Sales   8,835,284   MMBTU   $ 2.06 / MMBTU
Total   13,575,284    MMBTU      
             
Hedging Summary for Fiscal 2026   Volume     Average Hedge Price
Fixed Price Physical Sales   4,923,270   MMBTU   $ 2.02 / MMBTU
             
Hedging Summary for Fiscal 2027   Volume     Average Hedge Price
Fixed Price Physical Sales   286,249   MMBTU   $ 2.02 / 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
  2021   2020   (Decrease)   2021   2020   (Decrease)
Firm Transportation - Affiliated 19,202     20,877     (1,675 )   92,290     98,145     (5,855 )
Firm Transportation - Non-Affiliated 155,022     151,702     3,320     494,458     478,880     15,578  
Interruptible Transportation 181     757     (576 )   1,205     2,002     (797 )
  174,405     173,336     1,069     587,953     579,027     8,926  
                       
Gathering Volume - (MMcf)                      
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
          Increase           Increase
  2021   2020   (Decrease)   2021   2020   (Decrease)
Gathered Volume 91,817     61,338     30,479     275,283     190,864     84,419  
                       
                       
Utility Throughput - (MMcf)                      
  Three Months Ended   Nine Months Ended
  June 30,   June 30,
          Increase           Increase
  2021   2020   (Decrease)   2021   2020   (Decrease)
Retail Sales:                      
Residential Sales 9,776     11,312     (1,536 )   57,241     56,943     298  
Commercial Sales 1,369     1,450     (81 )   8,206     8,295     (89 )
Industrial Sales 65     106     (41 )   441     506     (65 )
  11,210     12,868     (1,658 )   65,888     65,744     144  
Transportation 13,298     13,520     (222 )   55,815     59,233     (3,418 )
  24,508     26,388     (1,880 )   121,703     124,977     (3,274 )
                       


  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, Adjusted EBITDA and free cash flow, 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 or liquidity 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, 2021 and 2020:

  Three Months Ended   Nine Months Ended
  June 30,   June 30,
(in thousands except per share amounts) 2021   2020   2021   2020
Reported GAAP Earnings $ 86,475     $ 41,250     $ 276,685     $ 21,773  
Items impacting comparability:              
Impairment of oil and gas properties (E&P)     18,236     76,152     195,997  
Tax impact of impairment of oil and gas properties     (4,986 )   (20,980 )   (53,489 )
Gain on sale of timber properties (Corporate/All Other)         (51,066 )    
Tax impact of gain on sale of timber properties         14,069      
Premium paid on early redemption of debt         15,715      
Tax impact of premium paid on early redemption of debt         (4,321 )    
Deferred tax valuation allowance             56,770  
Unrealized (gain) loss on other investments (Corporate/All Other) (1,025 )   (5,639 )   (575 )   794  
Tax impact of unrealized (gain) loss on other investments 215     1,184     120     (167 )
Adjusted Operating Results