National Fuel Reports Third Quarter Earnings And Announces Preliminary Guidance For Fiscal 2024
WILLIAMSVILLE, N.Y., Aug. 02, 2023 (GLOBE NEWSWIRE) -- National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated results for the third quarter of its 2023 fiscal year and for the nine months ended June 30, 2023.
FISCAL 2023 THIRD QUARTER SUMMARY
- GAAP net income of
$92.6 million , or$1.00 per share, compared to GAAP net income of$108.2 million , or$1.17 per share, in the prior year. - Adjusted operating results of
$93.4 million , or$1.01 per share, compared to$141.9 million , or$1.54 per share, in the prior year (see non-GAAP reconciliation on page 2). - E&P segment net Appalachian natural gas production of 94.7 Bcfe, an increase of 5.9 Bcfe, or
7% , compared to the prior year, and a2% increase when compared to fiscal 2023 second quarter. - Successfully closed on the purchase of three separate upstream assets that total approximately 36,000 net acres with flowing net production of approximately 16 million cubic feet per day in the E&P segment’s Eastern Development Area, for total consideration of
$138.9 million . - The Pennsylvania Public Utility Commission approved a joint settlement in the Utility segment’s Pennsylvania rate case proceeding that, effective August 1, 2023, will increase annual base rate delivery revenues by
$23 million and, among other stipulations, includes a newly implemented weather normalization adjustment mechanism. - The Company is narrowing its fiscal 2023 earnings guidance to a range of
$5.15 t o$5.25 per share, excluding items impacting comparability, and initiating its fiscal 2024 earnings guidance with a range of$5.50 t o$6.00 per share, an increase of11% from fiscal 2023, at the midpoint (see Guidance Summary on page 8).
MANAGEMENT COMMENTS
David P. Bauer, President and Chief Executive Officer of National Fuel Gas Company, stated: “National Fuel achieved strong operational results in the third quarter, but lower natural gas price realizations at Seneca and higher operating expenses across our regulated operations weighed on our financial results. Looking ahead to fiscal 2024, we expect significant earnings growth, driven by our integrated development program coupled with improved earnings at our rate-regulated businesses as a result of rate case outcomes.
“Longer-term, our continued investment in the modernization of our rate-regulated infrastructure, along with a disciplined approach to Seneca’s development program and an improved long-term outlook for natural gas prices, positions the Company well to deliver shareholder value through future earnings growth and increasing free cash flow generation.”
RECONCILIATION OF GAAP EARNINGS TO ADJUSTED OPERATING RESULTS
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(in thousands except per share amounts) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Reported GAAP Earnings | $ | 92,620 | $ | 108,158 | $ | 403,189 | $ | 407,879 | ||||||||
Items impacting comparability: | ||||||||||||||||
Unrealized (gain) loss on derivative asset (E&P) | 1,430 | — | 3,702 | — | ||||||||||||
Tax impact of unrealized (gain) loss on derivative asset | (392 | ) | — | (1,015 | ) | — | ||||||||||
Unrealized (gain) loss on other investments (Corporate / All Other) | (355 | ) | 3,434 | (1,632 | ) | 10,093 | ||||||||||
Tax impact of unrealized (gain) loss on other investments | 74 | (721 | ) | 343 | (2,120 | ) | ||||||||||
Items impacting comparability from West Coast asset sale (E&P)(1) | — | 41,589 | — | 41,589 | ||||||||||||
Tax impact of items impacting comparability from West Coast asset sale(1) | — | (10,533 | ) | — | (10,533 | ) | ||||||||||
Reduction of other post-retirement regulatory liability (Utility) | — | — | — | (18,533 | ) | |||||||||||
Tax impact of reduction of other post-retirement regulatory liability | — | — | — | 3,892 | ||||||||||||
Adjusted Operating Results | $ | 93,377 | $ | 141,927 | $ | 404,587 | $ | 432,267 | ||||||||
Reported GAAP Earnings Per Share | $ | 1.00 | $ | 1.17 | $ | 4.37 | $ | 4.43 | ||||||||
Items impacting comparability: | ||||||||||||||||
Unrealized (gain) loss on derivative asset, net of tax (E&P) | 0.01 | — | 0.03 | — | ||||||||||||
Unrealized (gain) loss on other investments, net of tax (Corporate / All Other) | — | 0.03 | (0.01 | ) | 0.08 | |||||||||||
Items impacting comparability from West Coast asset sale, net of tax (E&P)(1) | — | 0.34 | — | 0.34 | ||||||||||||
Reduction of other post-retirement regulatory liability, net of tax (Utility) | — | — | — | (0.16 | ) | |||||||||||
Rounding | — | — | (0.01 | ) | — | |||||||||||
Adjusted Operating Results Per Share | $ | 1.01 | $ | 1.54 | $ | 4.38 | $ | 4.69 |
(1) Refer to non-GAAP reconciliation on page 24 for a separate breakout of items impacting comparability from the West Coast asset sale.
DISCUSSION OF GUIDANCE UPDATE
National Fuel is revising its fiscal 2023 earnings guidance range and is now projecting that earnings, excluding items impacting comparability, will be within the range of
The Exploration and Production segment’s fiscal 2023 net production is now expected to be in the range of 370 to 380 Bcfe, which reflects the impacts of over 5 Bcfe of price-related curtailments and volumes shut-in due to the operational impacts of low in-basin pricing and third-party pipeline system constraints during the third quarter. This guidance range does not incorporate any additional price-related curtailments over the remainder of the fiscal year. Seneca currently has firm sales contracts in place for approximately
The Company is also initiating preliminary guidance for fiscal 2024 with earnings projected to be within a range of
Seneca’s fiscal 2024 net production forecast is increasing to an expected range of 390 to 410 Bcfe, an increase of
The Company’s consolidated capital expenditures in fiscal 2024 are expected to be in a range of
Capital expenditures in the Company’s rate-regulated Pipeline and Storage and Utility segments are expected to be in the range of
In the Exploration and Production segment, Seneca’s activity is expected to further moderate as it continues a planned transition that targets a maintenance-to-low single-digit, long-term production growth profile. Capital spending for fiscal 2024 is expected to be in the range of
Additional details on the Company’s updated forecast assumptions and business segment guidance for fiscal 2023 and fiscal 2024 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, 2023 is summarized in a tabular form on pages 9 and 10 of this report (earnings drivers for the nine months ended June 30, 2023 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 primarily natural gas reserves in Pennsylvania.
Three Months Ended | ||||||||||
June 30 | ||||||||||
(in thousands) | 2023 | 2022 | Variance | |||||||
GAAP Earnings | $ | 43,329 | $ | 56,497 | $ | (13,168 | ) | |||
Unrealized (gain) loss on derivative asset, net of tax | 1,038 | — | 1,038 | |||||||
Gain on sale of West Coast assets, net of tax | — | (9,511 | ) | 9,511 | ||||||
Loss from discontinuance of crude oil cash flow hedges, net of tax | — | 33,329 | (33,329 | ) | ||||||
Transaction and severance costs related to West Coast asset sale, net of tax | — | 7,238 | (7,238 | ) | ||||||
Adjusted Operating Results | $ | 44,367 | $ | 87,553 | $ | (43,186 | ) | |||
Adjusted EBITDA | $ | 134,236 | $ | 184,622 | $ | (50,386 | ) |
Seneca’s third quarter GAAP earnings decreased
Seneca produced 94.8 Bcfe during the third quarter, an increase of 2.3 Bcfe, or
Seneca’s average realized natural gas price, after the impact of hedging and transportation costs, was
On an absolute basis, lease operating and transportation expense (“LOE”) decreased
The decrease in Seneca’s other operating expense of
Depreciation, depletion and amortization (“DD&A”) expense increased
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) | 2023 | 2022 | Variance | ||||||
GAAP Earnings | $ | 23,813 | $ | 26,599 | $ | (2,786 | ) | ||
Adjusted EBITDA | $ | 57,636 | $ | 62,565 | $ | (4,929 | ) |
The Pipeline and Storage segment’s third quarter GAAP earnings decreased
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 delivers Seneca and other non-affiliated Appalachian production to the interstate pipeline system.
Three Months Ended | |||||||||
June 30 | |||||||||
(in thousands) | 2023 | 2022 | Variance | ||||||
GAAP Earnings | $ | 24,135 | $ | 24,658 | $ | (523 | ) | ||
Adjusted EBITDA | $ | 46,032 | $ | 46,151 | $ | (119 | ) |
The Gathering segment’s third quarter GAAP earnings decreased
Downstream Business
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) | 2023 | 2022 | Variance | ||||||
GAAP Earnings | $ | 37 | $ | 4,622 | $ | (4,585 | ) | ||
Adjusted EBITDA | $ | 20,912 | $ | 27,042 | $ | (6,130 | ) |
The Utility segment’s third quarter GAAP earnings decreased
The decline in customer margin of
O&M expense increased by
Corporate and All Other
The Company’s operations that are included in Corporate and All Other generated combined earnings of
EARNINGS TELECONFERENCE
The Company will host a conference call on Thursday, August 3, 2023, at 10 a.m. Eastern Time to discuss this announcement. To pre-register for this call (recommended), please visit https://conferencingportals.com/event/ygNxHFJo. After registering, you will receive your access details via email. To join by telephone on the day of the call, dial U.S. toll free 1-888–330–2513 and provide Conference ID 47961. The teleconference will be simultaneously webcast online and can be accessed on the NFG Investor Relations website at investor.nationalfuelgas.com. An audio replay of the teleconference call will be available until Thursday, August 10, 2023. To access the telephone replay, dial U.S. toll free 1-800-770-2030 and provide Conference ID 47961.
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: | Brandon J. Haspett | 716-857-7697 |
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, retained natural gas and system modernization), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal; the Company’s ability to estimate accurately the time and resources necessary to meet emissions targets; governmental/regulatory actions and/or market pressures to reduce or eliminate reliance on natural gas; changes in economic conditions, including inflationary pressures, supply chain issues, liquidity challenges, and 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; 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; impairments under the SEC’s full cost ceiling test for natural gas reserves; increased costs or delays or changes in plans with respect to Company projects or related projects of other companies, 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; changes in price differentials between similar quantities of natural gas 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 reserves, including among others geology, lease availability and costs, 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 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; negotiations with the collective bargaining units representing the Company's workforce, including potential work stoppages during negotiations; uncertainty of natural gas reserve estimates; significant differences between the Company’s projected and actual production levels for natural gas; changes in demographic patterns and weather conditions (including those related to climate change); 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, as well as economic and operational disruptions due to third-party outages; 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 2023 and initiating guidance for fiscal 2024. Additional details on the Company's forecast assumptions and business segment guidance for fiscal 2023 and fiscal 2024 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, 2023, including: (1) after-tax unrealized losses on a derivative asset, which reduced earnings by
Updated FY 2023 Guidance | Preliminary FY 2024 Guidance | ||
Adjusted Consolidated Earnings per Share, excluding items impacting comparability | |||
Consolidated Effective Tax Rate | ~ | ~ 25.5 - | |
Capital Expenditures (Millions)* | |||
Exploration and Production | |||
Pipeline and Storage | |||
Gathering | |||
Utility | |||
Consolidated Capital Expenditures | |||
Exploration & Production Segment Guidance** | |||
Commodity Price Assumptions | |||
NYMEX natural gas price | |||
Appalachian basin spot price | |||
Production (Bcfe) | 370 to 380 | 390 to 410 | |
E&P Operating Costs ($/Mcfe) | |||
LOE | |||
G&A | ~ | ||
DD&A | |||
Other Business Segment Guidance (Millions) | |||
Gathering Segment Revenues | |||
Pipeline and Storage Segment Revenues |
* Capital expenditures guidance for fiscal 2023 excludes capital related to acquisitions announced during the fiscal year.
** Fiscal 2023 commodity price assumptions are for the remaining three months of the fiscal year.
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS | |||||||||||||||||||||||
QUARTER ENDED JUNE 30, 2023 | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Upstream | Midstream | Downstream | |||||||||||||||||||||
Exploration & | Pipeline & | Corporate / | |||||||||||||||||||||
(Thousands of Dollars) | Production | Storage | Gathering | Utility | All Other | Consolidated* | |||||||||||||||||
Third quarter 2022 GAAP earnings | $ | 56,497 | $ | 26,599 | $ | 24,658 | $ | 4,622 | $ | (4,218 | ) | $ | 108,158 | ||||||||||
Items impacting comparability: | |||||||||||||||||||||||
Gain on sale of West Coast assets | (12,736 | ) | (12,736 | ) | |||||||||||||||||||
Tax impact of gain on sale of West Coast assets | 3,225 | 3,225 | |||||||||||||||||||||
Loss from discontinuance of crude oil cash flow hedges | 44,632 | 44,632 | |||||||||||||||||||||
Tax impact of loss from discontinuance of crude oil cash flow hedges | (11,303 | ) | (11,303 | ) | |||||||||||||||||||
Transaction and severance costs related to West Coast asset sale | 9,693 | 9,693 | |||||||||||||||||||||
Tax impact of transaction and severance costs related to West Coast asset sale | (2,455 | ) | (2,455 | ) | |||||||||||||||||||
Unrealized (gain) loss on other investments | 3,434 | 3,434 | |||||||||||||||||||||
Tax impact of unrealized (gain) loss on other investments | (721 | ) | (721 | ) | |||||||||||||||||||
Third quarter 2022 adjusted operating results | 87,553 | 26,599 | 24,658 | 4,622 | (1,505 | ) | 141,927 | ||||||||||||||||
Drivers of adjusted operating results** | |||||||||||||||||||||||
Upstream Revenues | |||||||||||||||||||||||
Higher (lower) natural gas production | 12,371 | 12,371 | |||||||||||||||||||||
Higher (lower) crude oil production | (31,860 | ) | (31,860 | ) | |||||||||||||||||||
Higher (lower) realized natural gas prices, after hedging | (44,649 | ) | (44,649 | ) | |||||||||||||||||||
Midstream Revenues | |||||||||||||||||||||||
Higher (lower) operating revenues | (2,491 | ) | 2,350 | (141 | ) | ||||||||||||||||||
Downstream Margins*** | |||||||||||||||||||||||
Impact of new rates**** | (2,015 | ) | (2,015 | ) | |||||||||||||||||||
System modernization and improvement tracker revenues | 866 | 866 | |||||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||
Lower (higher) lease operating and transportation expenses | 13,994 | 13,994 | |||||||||||||||||||||
Lower (higher) operating expenses | 6,138 | (1,239 | ) | (2,432 | ) | (3,105 | ) | (638 | ) | ||||||||||||||
Lower (higher) property, franchise and other taxes | 3,807 | 3,807 | |||||||||||||||||||||
Lower (higher) depreciation / depletion | (4,304 | ) | (324 | ) | (314 | ) | (4,942 | ) | |||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||
(Higher) lower other deductions | 533 | 1,292 | 3,188 | 5,013 | |||||||||||||||||||
(Higher) lower interest expense | 759 | 435 | (2,154 | ) | 2,199 | 1,239 | |||||||||||||||||
Income Taxes | |||||||||||||||||||||||
Lower (higher) income tax expense / effective tax rate | (370 | ) | 187 | (631 | ) | (884 | ) | 146 | (1,552 | ) | |||||||||||||
All other / rounding | 395 | (211 | ) | 69 | (481 | ) | 185 | (43 | ) | ||||||||||||||
Third quarter 2023 adjusted operating results | 44,367 | 23,813 | 24,135 | 37 | 1,025 | 93,377 | |||||||||||||||||
Items impacting comparability: | |||||||||||||||||||||||
Unrealized gain (loss) on derivative asset | (1,430 | ) | (1,430 | ) | |||||||||||||||||||
Tax impact of unrealized gain (loss) on derivative asset | 392 | 392 | |||||||||||||||||||||
Unrealized gain (loss) on other investments | 355 | 355 | |||||||||||||||||||||
Tax impact of unrealized gain (loss) on other investments | (74 | ) | (74 | ) | |||||||||||||||||||
Third quarter 2023 GAAP earnings | $ | 43,329 | $ | 23,813 | $ | 24,135 | $ | 37 | $ | 1,306 | $ | 92,620 | |||||||||||
* Amounts do not reflect intercompany eliminations. | |||||||||||||||||||||||
** Drivers of adjusted operating results have been calculated using the | |||||||||||||||||||||||
*** Downstream margin defined as operating revenues less purchased gas expense. | |||||||||||||||||||||||
**** Amount is offset by corresponding decrease in other deductions and will have no earnings impact for the year ended September 30, 2023. |
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE | |||||||||||||||||||||||
QUARTER ENDED JUNE 30, 2023 | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Upstream | Midstream | Downstream | |||||||||||||||||||||
Exploration & | Pipeline & | Corporate / | |||||||||||||||||||||
Production | Storage | Gathering | Utility | All Other | Consolidated* | ||||||||||||||||||
Third quarter 2022 GAAP earnings per share | $ | 0.61 | $ | 0.29 | $ | 0.27 | $ | 0.05 | $ | (0.05 | ) | $ | 1.17 | ||||||||||
Items impacting comparability: | |||||||||||||||||||||||
Gain on sale of West Coast assets, net of tax | (0.10 | ) | (0.10 | ) | |||||||||||||||||||
Loss from discontinuance of crude oil cash flow hedges, net of tax | 0.36 | 0.36 | |||||||||||||||||||||
Transaction and severance costs related to West Coast asset sale, net of tax | 0.08 | 0.08 | |||||||||||||||||||||
Unrealized (gain) loss on other investments, net of tax | 0.03 | 0.03 | |||||||||||||||||||||
Third quarter 2022 adjusted operating results per share | 0.95 | 0.29 | 0.27 | 0.05 | (0.02 | ) | 1.54 | ||||||||||||||||
Drivers of adjusted operating results** | |||||||||||||||||||||||
Upstream Revenues | |||||||||||||||||||||||
Higher (lower) natural gas production | 0.13 | 0.13 | |||||||||||||||||||||
Higher (lower) crude oil production | (0.35 | ) | (0.35 | ) | |||||||||||||||||||
Higher (lower) realized natural gas prices, after hedging | (0.48 | ) | (0.48 | ) | |||||||||||||||||||
Midstream Revenues | |||||||||||||||||||||||
Higher (lower) operating revenues | (0.03 | ) | 0.03 | — | |||||||||||||||||||
Downstream Margins*** | |||||||||||||||||||||||
Impact of new rates**** | (0.02 | ) | (0.02 | ) | |||||||||||||||||||
System modernization and improvement tracker revenues | 0.01 | 0.01 | |||||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||
Lower (higher) lease operating and transportation expenses | 0.15 | 0.15 | |||||||||||||||||||||
Lower (higher) operating expenses | 0.07 | (0.01 | ) | (0.03 | ) | (0.03 | ) | — | |||||||||||||||
Lower (higher) property, franchise and other taxes | 0.04 | 0.04 | |||||||||||||||||||||
Lower (higher) depreciation / depletion | (0.05 | ) | — | — | (0.05 | ) | |||||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||
(Higher) lower other deductions | 0.01 | 0.01 | 0.03 | 0.05 | |||||||||||||||||||
(Higher) lower interest expense | 0.01 | — | (0.02 | ) | 0.02 | 0.01 | |||||||||||||||||
Income Taxes | |||||||||||||||||||||||
Lower (higher) income tax expense / effective tax rate | — | — | (0.01 | ) | (0.01 | ) | — | (0.02 | ) | ||||||||||||||
All other / rounding | — | — | — | (0.01 | ) | 0.01 | — | ||||||||||||||||
Third quarter 2023 adjusted operating results per share | 0.48 | 0.26 | 0.26 | — | 0.01 | 1.01 | |||||||||||||||||
Items impacting comparability: | |||||||||||||||||||||||
Unrealized gain (loss) on derivative asset, net of tax | (0.01 | ) | (0.01 | ) | |||||||||||||||||||
Unrealized gain (loss) on other investments, net of tax | — | — | |||||||||||||||||||||
Third quarter 2023 GAAP earnings per share | $ | 0.47 | $ | 0.26 | $ | 0.26 | $ | — | $ | 0.01 | $ | 1.00 | |||||||||||
* Amounts do not reflect intercompany eliminations. | |||||||||||||||||||||||
** Drivers of adjusted operating results have been calculated using the | |||||||||||||||||||||||
*** Downstream margin defined as operating revenues less purchased gas expense. | |||||||||||||||||||||||
**** Amount is offset by corresponding decrease in other deductions and will have no earnings impact for the year ended September 30, 2023. |
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS | |||||||||||||||||||||||
NINE MONTHS ENDED JUNE 30, 2023 | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Upstream | Midstream | Downstream | |||||||||||||||||||||
Exploration & | Pipeline & | Corporate / | |||||||||||||||||||||
(Thousands of Dollars) | Production | Storage | Gathering | Utility | All Other | Consolidated* | |||||||||||||||||
Nine months ended June 30, 2022 GAAP earnings | $ | 189,987 | $ | 77,236 | $ | 69,887 | $ | 79,800 | $ | (9,031 | ) | $ | 407,879 | ||||||||||
Items impacting comparability: | |||||||||||||||||||||||
Reduction of other post-retirement regulatory liability | (18,533 | ) | (18,533 | ) | |||||||||||||||||||
Tax impact of reduction of other post-retirement regulatory liability | 3,892 | 3,892 | |||||||||||||||||||||
Gain on sale of West Coast assets | (12,736 | ) | (12,736 | ) | |||||||||||||||||||
Tax impact of gain on sale of West Coast assets | 3,225 | 3,225 | |||||||||||||||||||||
Loss from discontinuance of crude oil cash flow hedges | 44,632 | 44,632 | |||||||||||||||||||||
Tax impact of loss from discontinuance of crude oil cash flow hedges | (11,303 | ) | (11,303 | ) | |||||||||||||||||||
Transaction and severance costs related to West Coast asset sale | 9,693 | 9,693 | |||||||||||||||||||||
Tax impact of transaction and severance costs related to West Coast asset sale | (2,455 | ) | (2,455 | ) | |||||||||||||||||||
Unrealized (gain) loss on other investments | 10,093 | 10,093 | |||||||||||||||||||||
Tax impact of unrealized (gain) loss on other investments | (2,120 | ) | (2,120 | ) | |||||||||||||||||||
Nine months ended June 30, 2022 adjusted operating results | 221,043 | 77,236 | 69,887 | 65,159 | (1,058 | ) | 432,267 | ||||||||||||||||
Drivers of adjusted operating results** | |||||||||||||||||||||||
Upstream Revenues | |||||||||||||||||||||||
Higher (lower) natural gas production | 49,567 | 49,567 | |||||||||||||||||||||
Higher (lower) crude oil production | (87,986 | ) | (87,986 | ) | |||||||||||||||||||
Higher (lower) realized natural gas prices, after hedging | (10,815 | ) | (10,815 | ) | |||||||||||||||||||
Higher (lower) other operating revenues | (2,161 | ) | (2,161 | ) | |||||||||||||||||||
Midstream Revenues | |||||||||||||||||||||||
Higher (lower) operating revenues | 4,629 | 9,117 | 13,746 | ||||||||||||||||||||
Downstream Margins*** | |||||||||||||||||||||||
Impact of new rates**** | (11,126 | ) | (11,126 | ) | |||||||||||||||||||
System modernization and improvement tracker revenues | 3,462 | 3,462 | |||||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||
Lower (higher) lease operating and transportation expenses | 25,335 | 25,335 | |||||||||||||||||||||
Lower (higher) operating expenses | 12,644 | (4,939 | ) | (4,537 | ) | (7,213 | ) | (590 | ) | (4,635 | ) | ||||||||||||
Lower (higher) property, franchise and other taxes | 4,697 | 4,697 | |||||||||||||||||||||
Lower (higher) depreciation / depletion | (15,450 | ) | (1,941 | ) | (1,003 | ) | (18,394 | ) | |||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||
(Higher) lower other deductions | 2,837 | 2,810 | 519 | 12,840 | (3,585 | ) | 15,421 | ||||||||||||||||
(Higher) lower interest expense | (899 | ) | 653 | (7,577 | ) | 5,837 | (1,986 | ) | |||||||||||||||
Income Taxes | |||||||||||||||||||||||
Lower (higher) income tax expense / effective tax rate | (1,807 | ) | (64 | ) | (1,408 | ) | (144 | ) | (13 | ) | (3,436 | ) | |||||||||||
All other / rounding | 286 | 315 | (21 | ) | 173 | (122 | ) | 631 | |||||||||||||||
Nine months ended June 30, 2023 adjusted operating results | 198,190 | 77,147 | 73,207 | 55,574 | 469 | 404,587 | |||||||||||||||||
Items impacting comparability: | |||||||||||||||||||||||
Unrealized gain (loss) on derivative asset | (3,702 | ) | (3,702 | ) | |||||||||||||||||||
Tax impact of unrealized gain (loss) on derivative asset | 1,015 | 1,015 | |||||||||||||||||||||
Unrealized gain (loss) on other investments | 1,632 | 1,632 | |||||||||||||||||||||
Tax impact of unrealized gain (loss) on other investments | (343 | ) | (343 | ) | |||||||||||||||||||
Nine months ended June 30, 2023 GAAP earnings | $ | 195,503 | $ | 77,147 | $ | 73,207 | $ | 55,574 | $ | 1,758 | $ | 403,189 | |||||||||||
* Amounts do not reflect intercompany eliminations. | |||||||||||||||||||||||
** Drivers of adjusted operating results have been calculated using the | |||||||||||||||||||||||
*** Downstream margin defined as operating revenues less purchased gas expense. | |||||||||||||||||||||||
**** Amount is offset by corresponding decrease in other deductions and will have no earnings impact for the year ended September 30, 2023. |
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE | |||||||||||||||||||||||
NINE MONTHS ENDED JUNE 30, 2023 | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Upstream | Midstream | Downstream | |||||||||||||||||||||
Exploration & | Pipeline & | Corporate / | |||||||||||||||||||||
Production | Storage | Gathering | Utility | All Other | Consolidated* | ||||||||||||||||||
Nine months ended June 30, 2022 GAAP earnings per share | $ | 2.06 | $ | 0.84 | $ | 0.76 | $ | 0.87 | $ | (0.10 | ) | $ | 4.43 | ||||||||||
Items impacting comparability: | |||||||||||||||||||||||
Reduction of other post-retirement regulatory liability, net of tax | (0.16 | ) | (0.16 | ) | |||||||||||||||||||
Gain on sale of West Coast assets, net of tax | (0.10 | ) | (0.10 | ) | |||||||||||||||||||
Loss from discontinuance of crude oil cash flow hedges, net of tax | 0.36 | 0.36 | |||||||||||||||||||||
Transaction and severance costs related to West Coast asset sale, net of tax | 0.08 | 0.08 | |||||||||||||||||||||
Unrealized (gain) loss on other investments, net of tax | 0.08 | 0.08 | |||||||||||||||||||||
Nine months ended June 30, 2022 adjusted operating results per share | 2.40 | 0.84 | 0.76 | 0.71 | (0.02 | ) | 4.69 | ||||||||||||||||
Drivers of adjusted operating results** | |||||||||||||||||||||||
Upstream Revenues | |||||||||||||||||||||||
Higher (lower) natural gas production | 0.54 | 0.54 | |||||||||||||||||||||
Higher (lower) crude oil production | (0.95 | ) | (0.95 | ) | |||||||||||||||||||
Higher (lower) realized natural gas prices, after hedging | (0.12 | ) | (0.12 | ) | |||||||||||||||||||
Higher (lower) other operating revenues | (0.02 | ) | (0.02 | ) | |||||||||||||||||||
Midstream Revenues | |||||||||||||||||||||||
Higher (lower) operating revenues | 0.05 | 0.10 | 0.15 | ||||||||||||||||||||
Downstream Margins*** | |||||||||||||||||||||||
Impact of new rates**** | (0.12 | ) | (0.12 | ) | |||||||||||||||||||
System modernization and improvement tracker revenues | 0.04 | 0.04 | |||||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||
Lower (higher) lease operating and transportation expenses | 0.27 | 0.27 | |||||||||||||||||||||
Lower (higher) operating expenses | 0.14 | (0.05 | ) | (0.05 | ) | (0.08 | ) | (0.01 | ) | (0.05 | ) | ||||||||||||
Lower (higher) property, franchise and other taxes | 0.05 | 0.05 | |||||||||||||||||||||
Lower (higher) depreciation / depletion | (0.17 | ) | (0.02 | ) | (0.01 | ) | (0.20 | ) | |||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||
(Higher) lower other deductions | 0.03 | 0.03 | 0.01 | 0.14 | (0.04 | ) | 0.17 | ||||||||||||||||
(Higher) lower interest expense | (0.01 | ) | 0.01 | (0.08 | ) | 0.06 | (0.02 | ) | |||||||||||||||
Income Taxes | |||||||||||||||||||||||
Lower (higher) income tax expense / effective tax rate | (0.02 | ) | — | (0.02 | ) | — | — | (0.04 | ) | ||||||||||||||
All other / rounding | — | — | (0.01 | ) | (0.01 | ) | 0.01 | (0.01 | ) | ||||||||||||||
Nine months ended June 30, 2023 adjusted operating results per share | 2.15 | 0.84 | 0.79 | 0.60 | — | 4.38 | |||||||||||||||||
Items impacting comparability: | |||||||||||||||||||||||
Unrealized gain (loss) on derivative asset, net of tax | (0.03 | ) | (0.03 | ) | |||||||||||||||||||
Unrealized gain (loss) on other investments, net of tax | 0.01 | 0.01 | |||||||||||||||||||||
Rounding | 0.01 | 0.01 | |||||||||||||||||||||
Nine months ended June 30, 2023 GAAP earnings per share | $ | 2.12 | $ | 0.84 | $ | 0.79 | $ | 0.60 | $ | 0.02 | $ | 4.37 | |||||||||||
* Amounts do not reflect intercompany eliminations. | |||||||||||||||||||||||
** Drivers of adjusted operating results have been calculated using the | |||||||||||||||||||||||
*** Downstream margin defined as operating revenues less purchased gas expense. | |||||||||||||||||||||||
**** Amount is offset by corresponding decrease in other deductions and will have no earnings impact for the year ended September 30, 2023. |
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 | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Operating Revenues: | ||||||||||||||||
Utility Revenues | $ | 144,538 | $ | 179,888 | $ | 862,914 | $ | 785,664 | ||||||||
Exploration and Production and Other Revenues | 216,581 | 252,638 | 738,107 | 758,594 | ||||||||||||
Pipeline and Storage and Gathering Revenues | 67,585 | 70,098 | 203,803 | 206,642 | ||||||||||||
428,704 | 502,624 | 1,804,824 | 1,750,900 | |||||||||||||
Operating Expenses: | ||||||||||||||||
Purchased Gas | 35,425 | 67,948 | 450,461 | 369,168 | ||||||||||||
Operation and Maintenance: | ||||||||||||||||
Utility | 50,080 | 46,403 | 156,885 | 146,523 | ||||||||||||
Exploration and Production and Other | 27,659 | 64,593 | 86,315 | 160,016 | ||||||||||||
Pipeline and Storage and Gathering | 38,607 | 33,988 | 109,347 | 97,434 | ||||||||||||
Property, Franchise and Other Taxes | 20,427 | 25,874 | 71,999 | 78,093 | ||||||||||||
Depreciation, Depletion and Amortization | 102,410 | 95,857 | 299,973 | 275,681 | ||||||||||||
274,608 | 334,663 | 1,174,980 | 1,126,915 | |||||||||||||
Gain on Sale of Assets | — | 12,736 | — | 12,736 | ||||||||||||
Operating Income | 154,096 | 180,697 | 629,844 | 636,721 | ||||||||||||
Other Income (Expense): | ||||||||||||||||
Other Income (Deductions) | 3,551 | (5,649 | ) | 12,754 | 3,291 | |||||||||||
Interest Expense on Long-Term Debt | (26,311 | ) | (30,091 | ) | (83,499 | ) | (90,300 | ) | ||||||||
Other Interest Expense | (5,781 | ) | (3,882 | ) | (15,485 | ) | (6,561 | ) | ||||||||
Income Before Income Taxes | 125,555 | 141,075 | 543,614 | 543,151 | ||||||||||||
Income Tax Expense | 32,935 | 32,917 | 140,425 | 135,272 | ||||||||||||
Net Income Available for Common Stock | $ | 92,620 | $ | 108,158 | $ | 403,189 | $ | 407,879 | ||||||||
Earnings Per Common Share | ||||||||||||||||
Basic | $ | 1.01 | $ | 1.18 | $ | 4.40 | $ | 4.46 | ||||||||
Diluted | $ | 1.00 | $ | 1.17 | $ | 4.37 | $ | 4.43 | ||||||||
Weighted Average Common Shares: | ||||||||||||||||
Used in Basic Calculation | 91,803,638 | 91,456,265 | 91,725,286 | 91,388,417 | ||||||||||||
Used in Diluted Calculation | 92,294,666 | 92,168,518 | 92,268,904 | 92,083,560 |
NATIONAL FUEL GAS COMPANY | |||||||
AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) | |||||||
June 30, | September 30, | ||||||
(Thousands of Dollars) | 2023 | 2022 | |||||
ASSETS | |||||||
Property, Plant and Equipment | $ | 13,326,563 | $ | 12,551,909 | |||
Less - Accumulated Depreciation, Depletion and Amortization | 6,245,650 | 5,985,432 | |||||
Net Property, Plant and Equipment | 7,080,913 | 6,566,477 | |||||
Current Assets: | |||||||
Cash and Temporary Cash Investments | 53,415 | 46,048 | |||||
Hedging Collateral Deposits | — | 91,670 | |||||
Receivables - Net | 183,377 | 361,626 | |||||
Unbilled Revenue | 13,476 | 30,075 | |||||
Gas Stored Underground | 13,047 | 32,364 | |||||
Materials and Supplies - at average cost | 48,288 | 40,637 | |||||
Unrecovered Purchased Gas Costs | 24,098 | 99,342 | |||||
Other Current Assets | 71,586 | 59,369 | |||||
Total Current Assets | 407,287 | 761,131 | |||||
Other Assets: | |||||||
Recoverable Future Taxes | 104,794 | 106,247 | |||||
Unamortized Debt Expense | 7,651 | 8,884 | |||||
Other Regulatory Assets | 63,398 | 67,101 | |||||
Deferred Charges | 77,886 | 77,472 | |||||
Other Investments | 74,777 | 95,025 | |||||
Goodwill | 5,476 | 5,476 | |||||
Prepaid Pension and Post-Retirement Benefit Costs | 234,425 | 196,597 | |||||
Fair Value of Derivative Financial Instruments | 46,280 | 9,175 | |||||
Other | 3,745 | 2,677 | |||||
Total Other Assets | 618,432 | 568,654 | |||||
Total Assets | $ | 8,106,632 | $ | 7,896,262 | |||
CAPITALIZATION AND LIABILITIES | |||||||
Capitalization: | |||||||
Comprehensive Shareholders' Equity | |||||||
Common Stock, | |||||||
Outstanding - 91,803,996 Shares and 91,478,064 Shares, Respectively | $ | 91,804 | $ | 91,478 | |||
Paid in Capital | 1,035,852 | 1,027,066 | |||||
Earnings Reinvested in the Business | 1,857,630 | 1,587,085 | |||||
Accumulated Other Comprehensive Loss | (49,384 | ) | (625,733 | ) | |||
Total Comprehensive Shareholders' Equity | 2,935,902 | 2,079,896 | |||||
Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issuance Costs | 2,383,685 | 2,083,409 | |||||
Total Capitalization | 5,319,587 | 4,163,305 | |||||
Current and Accrued Liabilities: | |||||||
Notes Payable to Banks and Commercial Paper | 138,500 | 60,000 | |||||
Current Portion of Long-Term Debt | — | 549,000 | |||||
Accounts Payable | 91,808 | 178,945 | |||||
Amounts Payable to Customers | 22,391 | 419 | |||||
Dividends Payable | 45,444 | 43,452 | |||||
Interest Payable on Long-Term Debt | 40,134 | 17,376 | |||||
Customer Advances | — | 26,108 | |||||
Customer Security Deposits | 34,024 | 24,283 | |||||
Other Accruals and Current Liabilities | 260,897 | 257,327 | |||||
Fair Value of Derivative Financial Instruments | 32,502 | 785,659 | |||||
Total Current and Accrued Liabilities | 665,700 | 1,942,569 | |||||
Other Liabilities: | |||||||
Deferred Income Taxes | 1,030,526 | 698,229 | |||||
Taxes Refundable to Customers | 347,066 | 362,098 | |||||
Cost of Removal Regulatory Liability | 272,740 | 259,947 | |||||
Other Regulatory Liabilities | 190,907 | 188,803 | |||||
Other Post-Retirement Liabilities | 2,921 | 3,065 | |||||
Asset Retirement Obligations | 160,415 | 161,545 | |||||
Other Liabilities | 116,770 | 116,701 | |||||
Total Other Liabilities | 2,121,345 | 1,790,388 | |||||
Commitments and Contingencies | — | — | |||||
Total Capitalization and Liabilities | $ | 8,106,632 | $ | 7,896,262 |
NATIONAL FUEL GAS COMPANY | ||||||||
AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited) | ||||||||
Nine Months Ended | ||||||||
June 30, | ||||||||
(Thousands of Dollars) | 2023 | 2022 | ||||||
Operating Activities: | ||||||||
Net Income Available for Common Stock | $ | 403,189 | $ | 407,879 | ||||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||||||||
Gain on Sale of Assets | — | (12,736 | ) | |||||
Depreciation, Depletion and Amortization | 299,973 | 275,681 | ||||||
Deferred Income Taxes | 101,096 | 121,150 | ||||||
Stock-Based Compensation | 15,807 | 15,178 | ||||||
Reduction of Other Post-Retirement Regulatory Liability | — | (18,533 | ) | |||||
Other | 16,640 | 27,527 | ||||||
Change in: | ||||||||
Receivables and Unbilled Revenue | 192,324 | (194,832 | ) | |||||
Gas Stored Underground and Materials, Supplies and Emission Allowances | 11,757 | 24,141 | ||||||
Unrecovered Purchased Gas Costs | 75,244 | 716 | ||||||
Other Current Assets | (12,230 | ) | (1,699 | ) | ||||
Accounts Payable | (52,340 | ) | 19,259 | |||||
Amounts Payable to Customers | 21,972 | 271 | ||||||
Customer Advances | (26,108 | ) | (17,223 | ) | ||||
Customer Security Deposits | 9,741 | 5,908 | ||||||
Other Accruals and Current Liabilities | 45,363 | 61,322 | ||||||
Other Assets | (39,367 | ) | (44,184 | ) | ||||
Other Liabilities | (7,949 | ) | (15,809 | ) | ||||
Net Cash Provided by Operating Activities | $ | 1,055,112 | $ | 654,016 | ||||
Investing Activities: | ||||||||
Capital Expenditures | $ | (727,738 | ) | $ | (592,487 | ) | ||
Net Proceeds from Sale of Oil and Gas Producing Properties | — | 254,439 | ||||||
Acquisition of Upstream Assets | (124,758 | ) | — | |||||
Sale of Fixed Income Mutual Fund Shares in Grantor Trust | 10,000 | 30,000 | ||||||
Other | 13,397 | 13,528 | ||||||
Net Cash Used in Investing Activities | $ | (829,099 | ) | $ | (294,520 | ) | ||
Financing Activities: | ||||||||
Proceeds from Issuance of Short-Term Note Payable to Bank | $ | 250,000 | $ | — | ||||
Repayment of Short-Term Note Payable to Bank | (250,000 | ) | — | |||||
Net Change in Other Short-Term Notes Payable to Banks and Commercial Paper | 78,500 | 241,500 | ||||||
Reduction of Long-Term Debt | (549,000 | ) | — | |||||
Dividends Paid on Common Stock | (130,653 | ) | (124,701 | ) | ||||
Net Proceeds From Issuance of Long-Term Debt | 297,533 | — | ||||||
Net Repurchases of Common Stock | (6,696 | ) | (9,387 | ) | ||||
Net Cash Provided by (Used in) Financing Activities | $ | (310,316 | ) | $ | 107,412 | |||
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | (84,303 | ) | 466,908 | |||||
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 137,718 | 120,138 | ||||||
Cash, Cash Equivalents, and Restricted Cash at June 30 | $ | 53,415 | $ | 587,046 |
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 | 2023 | 2022 | Variance | 2023 | 2022 | Variance | |||||||||||||||
Total Operating Revenues | $ | 216,581 | $ | 252,638 | $ | (36,057 | ) | $ | 738,107 | $ | 758,428 | $ | (20,321 | ) | |||||||
Operating Expenses: | |||||||||||||||||||||
Operation and Maintenance: | |||||||||||||||||||||
General and Administrative Expense | 15,877 | 26,844 | (10,967 | ) | 48,910 | 63,396 | (14,486 | ) | |||||||||||||
Lease Operating and Transportation Expense | 61,815 | 79,529 | (17,714 | ) | 189,144 | 221,213 | (32,069 | ) | |||||||||||||
All Other Operation and Maintenance Expense | 2,358 | 8,854 | (6,496 | ) | 6,970 | 18,183 | (11,213 | ) | |||||||||||||
Property, Franchise and Other Taxes | 2,295 | 7,114 | (4,819 | ) | 13,943 | 19,888 | (5,945 | ) | |||||||||||||
Depreciation, Depletion and Amortization | 60,584 | 55,136 | 5,448 | 174,747 | 155,190 | 19,557 | |||||||||||||||
142,929 | 177,477 | (34,548 | ) | 433,714 | 477,870 | (44,156 | ) | ||||||||||||||
Gain on Sale of Assets | — | 12,736 | (12,736 | ) | — | 12,736 | (12,736 | ) | |||||||||||||
Operating Income | 73,652 | 87,897 | (14,245 | ) | 304,393 | 293,294 | 11,099 | ||||||||||||||
Other Income (Expense): | |||||||||||||||||||||
Non-Service Pension and Post-Retirement Benefit (Costs) Credit | 347 | (186 | ) | 533 | 1,042 | (558 | ) | 1,600 | |||||||||||||
Interest and Other Income (Deductions) | (806 | ) | 482 | (1,288 | ) | (1,098 | ) | 613 | (1,711 | ) | |||||||||||
Interest Expense | (13,628 | ) | (14,589 | ) | 961 | (39,049 | ) | (38,927 | ) | (122 | ) | ||||||||||
Income Before Income Taxes | 59,565 | 73,604 | (14,039 | ) | 265,288 | 254,422 | 10,866 | ||||||||||||||
Income Tax Expense | 16,236 | 17,107 | (871 | ) | 69,785 | 64,435 | 5,350 | ||||||||||||||
Net Income | $ | 43,329 | $ | 56,497 | $ | (13,168 | ) | $ | 195,503 | $ | 189,987 | $ | 5,516 | ||||||||
Net Income Per Share (Diluted) | $ | 0.47 | $ | 0.61 | $ | (0.14 | ) | $ | 2.12 | $ | 2.06 | $ | 0.06 | ||||||||
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 | 2023 | 2022 | Variance | 2023 | 2022 | Variance | |||||||||||||||
Revenues from External Customers | $ | 62,956 | $ | 67,236 | $ | (4,280 | ) | $ | 194,800 | $ | 196,579 | $ | (1,779 | ) | |||||||
Intersegment Revenues | 29,439 | 28,312 | 1,127 | 90,354 | 82,716 | 7,638 | |||||||||||||||
Total Operating Revenues | 92,395 | 95,548 | (3,153 | ) | 285,154 | 279,295 | 5,859 | ||||||||||||||
Operating Expenses: | |||||||||||||||||||||
Purchased Gas | 223 | (139 | ) | 362 | 1,111 | 1,298 | (187 | ) | |||||||||||||
Operation and Maintenance | 26,207 | 24,639 | 1,568 | 77,501 | 71,249 | 6,252 | |||||||||||||||
Property, Franchise and Other Taxes | 8,329 | 8,483 | (154 | ) | 25,452 | 25,664 | (212 | ) | |||||||||||||
Depreciation, Depletion and Amortization | 17,732 | 17,322 | 410 | 52,874 | 50,417 | 2,457 | |||||||||||||||
52,491 | 50,305 | 2,186 | 156,938 | 148,628 | 8,310 | ||||||||||||||||
Operating Income | 39,904 | 45,243 | (5,339 | ) | 128,216 | 130,667 | (2,451 | ) | |||||||||||||
Other Income (Expense): | |||||||||||||||||||||
Non-Service Pension and Post-Retirement Benefit Credit | 1,330 | 767 | 563 | 3,990 | 2,302 | 1,688 | |||||||||||||||
Interest and Other Income | 1,831 | 735 | 1,096 | 4,653 | 2,330 | 2,323 | |||||||||||||||
Interest Expense | (10,873 | ) | (10,813 | ) | (60 | ) | (32,702 | ) | (31,564 | ) | (1,138 | ) | |||||||||
Income Before Income Taxes | 32,192 | 35,932 | (3,740 | ) | 104,157 | 103,735 | 422 | ||||||||||||||
Income Tax Expense | 8,379 | 9,333 | (954 | ) | 27,010 | 26,499 | 511 | ||||||||||||||
Net Income | $ | 23,813 | $ | 26,599 | $ | (2,786 | ) | $ | 77,147 | $ | 77,236 | $ | (89 | ) | |||||||
Net Income Per Share (Diluted) | $ | 0.26 | $ | 0.29 | $ | (0.03 | ) | $ | 0.84 | $ | 0.84 | $ | — | ||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
GATHERING SEGMENT | 2023 | 2022 | Variance | 2023 | 2022 | Variance | |||||||||||||||
Revenues from External Customers | $ | 4,629 | $ | 2,862 | $ | 1,767 | $ | 9,003 | $ | 10,063 | $ | (1,060 | ) | ||||||||
Intersegment Revenues | 54,277 | 53,069 | 1,208 | 163,297 | 150,696 | 12,601 | |||||||||||||||
Total Operating Revenues | 58,906 | 55,931 | 2,975 | 172,300 | 160,759 | 11,541 | |||||||||||||||
Operating Expenses: | |||||||||||||||||||||
Operation and Maintenance | 12,849 | 9,770 | 3,079 | 33,252 | 27,509 | 5,743 | |||||||||||||||
Property, Franchise and Other Taxes | 25 | 10 | 15 | 39 | 12 | 27 | |||||||||||||||
Depreciation, Depletion and Amortization | 8,987 | 8,589 | 398 | 26,613 | 25,343 | 1,270 | |||||||||||||||
21,861 | 18,369 | 3,492 | 59,904 | 52,864 | 7,040 | ||||||||||||||||
Operating Income | 37,045 | 37,562 | (517 | ) | 112,396 | 107,895 | 4,501 | ||||||||||||||
Other Income (Expense): | |||||||||||||||||||||
Non-Service Pension and Post-Retirement Benefit (Costs) Credit | 37 | (56 | ) | 93 | 112 | (168 | ) | 280 | |||||||||||||
Interest and Other Income | 63 | 53 | 10 | 458 | 81 | 377 | |||||||||||||||
Interest Expense | (3,613 | ) | (4,164 | ) | 551 | (11,556 | ) | (12,383 | ) | 827 | |||||||||||
Income Before Income Taxes | 33,532 | 33,395 | 137 | 101,410 | 95,425 | 5,985 | |||||||||||||||
Income Tax Expense | 9,397 | 8,737 | 660 | 28,203 | 25,538 | 2,665 | |||||||||||||||
Net Income | $ | 24,135 | $ | 24,658 | $ | (523 | ) | $ | 73,207 | $ | 69,887 | $ | 3,320 | ||||||||
Net Income Per Share (Diluted) | $ | 0.26 | $ | 0.27 | $ | (0.01 | ) | $ | 0.79 | $ | 0.76 | $ | 0.03 | ||||||||
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 | 2023 | 2022 | Variance | 2023 | 2022 | Variance | |||||||||||||||
Revenues from External Customers | $ | 144,538 | $ | 179,888 | $ | (35,350 | ) | $ | 862,914 | $ | 785,664 | $ | 77,250 | ||||||||
Intersegment Revenues | 79 | 60 | 19 | 500 | 245 | 255 | |||||||||||||||
Total Operating Revenues | 144,617 | 179,948 | (35,331 | ) | 863,414 | 785,909 | 77,505 | ||||||||||||||
Operating Expenses: | |||||||||||||||||||||
Purchased Gas | 63,151 | 95,587 | (32,436 | ) | 533,452 | 448,268 | 85,184 | ||||||||||||||
Operation and Maintenance | 50,915 | 47,176 | 3,739 | 159,483 | 148,885 | 10,598 | |||||||||||||||
Property, Franchise and Other Taxes | 9,639 | 10,143 | (504 | ) | 32,169 | 32,156 | 13 | ||||||||||||||
Depreciation, Depletion and Amortization | 14,997 | 14,765 | 232 | 45,425 | 44,592 | 833 | |||||||||||||||
138,702 | 167,671 | (28,969 | ) | 770,529 | 673,901 | 96,628 | |||||||||||||||
Operating Income | 5,915 | 12,277 | (6,362 | ) | 92,885 | 112,008 | (19,123 | ) | |||||||||||||
Other Income (Expense): | |||||||||||||||||||||
Non-Service Pension and Post-Retirement Benefit (Costs) Credit | 8 | (2,678 | ) | 2,686 | (5 | ) | 6,018 | (6,023 | ) | ||||||||||||
Interest and Other Income | 1,694 | 349 | 1,345 | 4,903 | 1,162 | 3,741 | |||||||||||||||
Interest Expense | (8,441 | ) | (6,087 | ) | (2,354 | ) | (26,193 | ) | (17,115 | ) | (9,078 | ) | |||||||||
Income (Loss) Before Income Taxes | (824 | ) | 3,861 | (4,685 | ) | 71,590 | 102,073 | (30,483 | ) | ||||||||||||
Income Tax Expense (Benefit) | (861 | ) | (761 | ) | (100 | ) | 16,016 | 22,273 | (6,257 | ) | |||||||||||
Net Income | $ | 37 | $ | 4,622 | $ | (4,585 | ) | $ | 55,574 | $ | 79,800 | $ | (24,226 | ) | |||||||
Net Income Per Share (Diluted) | $ | — | $ | 0.05 | $ | (0.05 | ) | $ | 0.60 | $ | 0.87 | $ | (0.27 | ) | |||||||
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 | 2023 | 2022 | Variance | 2023 | 2022 | Variance | |||||||||||||||
Revenues from External Customers | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Intersegment Revenues | — | — | — | — | 6 | (6 | ) | ||||||||||||||
Total Operating Revenues | — | — | — | — | 6 | (6 | ) | ||||||||||||||
Operating Expenses: | |||||||||||||||||||||
Purchased Gas | — | — | — | — | 6 | (6 | ) | ||||||||||||||
Operation and Maintenance | — | — | — | 21 | 5 | 16 | |||||||||||||||
— | — | — | 21 | 11 | 10 | ||||||||||||||||
Operating Loss | — | — | — | (21 | ) | (5 | ) | (16 | ) | ||||||||||||
Other Income (Expense): | |||||||||||||||||||||
Interest and Other Income (Deductions) | (65 | ) | — | (65 | ) | (451 | ) | 2 | (453 | ) | |||||||||||
Interest Expense | (41 | ) | — | (41 | ) | (89 | ) | — | (89 | ) | |||||||||||
Loss before Income Taxes | (106 | ) | — | (106 | ) | (561 | ) | (3 | ) | (558 | ) | ||||||||||
Income Tax Expense (Benefit) | (25 | ) | — | (25 | ) | (131 | ) | 4 | (135 | ) | |||||||||||
Net Loss | $ | (81 | ) | $ | — | $ | (81 | ) | $ | (430 | ) | $ | (7 | ) | $ | (423 | ) | ||||
Net Loss Per Share (Diluted) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
CORPORATE | 2023 | 2022 | Variance | 2023 | 2022 | Variance | |||||||||||||||
Revenues from External Customers | $ | — | $ | — | $ | — | $ | — | $ | 166 | $ | (166 | ) | ||||||||
Intersegment Revenues | 1,152 | 1,082 | 70 | 3,455 | 3,247 | 208 | |||||||||||||||
Total Operating Revenues | 1,152 | 1,082 | 70 | 3,455 | 3,413 | 42 | |||||||||||||||
Operating Expenses: | |||||||||||||||||||||
Operation and Maintenance | 3,323 | 3,195 | 128 | 10,770 | 10,039 | 731 | |||||||||||||||
Property, Franchise and Other Taxes | 139 | 124 | 15 | 396 | 373 | 23 | |||||||||||||||
Depreciation, Depletion and Amortization | 110 | 45 | 65 | 314 | 139 | 175 | |||||||||||||||
3,572 | 3,364 | 208 | 11,480 | 10,551 | 929 | ||||||||||||||||
Operating Loss | (2,420 | ) | (2,282 | ) | (138 | ) | (8,025 | ) | (7,138 | ) | (887 | ) | |||||||||
Other Income (Expense): | |||||||||||||||||||||
Non-Service Pension and Post-Retirement Benefit Costs | (354 | ) | (1,017 | ) | 663 | (1,063 | ) | (3,052 | ) | 1,989 | |||||||||||
Interest and Other Income | 36,312 | 31,019 | 5,293 | 111,598 | 92,937 | 18,661 | |||||||||||||||
Interest Expense on Long-Term Debt | (26,311 | ) | (30,091 | ) | 3,780 | (83,499 | ) | (90,300 | ) | 6,801 | |||||||||||
Other Interest Expense | (6,031 | ) | (3,346 | ) | (2,685 | ) | (17,281 | ) | (4,948 | ) | (12,333 | ) | |||||||||
Income (Loss) before Income Taxes | 1,196 | (5,717 | ) | 6,913 | 1,730 | (12,501 | ) | 14,231 | |||||||||||||
Income Tax Benefit | (191 | ) | (1,499 | ) | 1,308 | (458 | ) | (3,477 | ) | 3,019 | |||||||||||
Net Income (Loss) | $ | 1,387 | $ | (4,218 | ) | $ | 5,605 | $ | 2,188 | $ | (9,024 | ) | $ | 11,212 | |||||||
Net Income (Loss) Per Share (Diluted) | $ | 0.01 | $ | (0.05 | ) | $ | 0.06 | $ | 0.02 | $ | (0.10 | ) | $ | 0.12 | |||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
INTERSEGMENT ELIMINATIONS | 2023 | 2022 | Variance | 2023 | 2022 | Variance | |||||||||||||||
Intersegment Revenues | $ | (84,947 | ) | $ | (82,523 | ) | $ | (2,424 | ) | $ | (257,606 | ) | $ | (236,910 | ) | $ | (20,696 | ) | |||
Operating Expenses: | |||||||||||||||||||||
Purchased Gas | (27,949 | ) | (27,500 | ) | (449 | ) | (84,102 | ) | (80,404 | ) | (3,698 | ) | |||||||||
Operation and Maintenance | (56,998 | ) | (55,023 | ) | (1,975 | ) | (173,504 | ) | (156,506 | ) | (16,998 | ) | |||||||||
(84,947 | ) | (82,523 | ) | (2,424 | ) | (257,606 | ) | (236,910 | ) | (20,696 | ) | ||||||||||
Operating Income | — | — | — | — | — | — | |||||||||||||||
Other Income (Expense): | |||||||||||||||||||||
Interest and Other Deductions | (36,846 | ) | (35,117 | ) | (1,729 | ) | (111,385 | ) | (98,376 | ) | (13,009 | ) | |||||||||
Interest Expense | 36,846 | 35,117 | 1,729 | 111,385 | 98,376 | 13,009 | |||||||||||||||
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 | ||||||||||||||||||
2023 | 2022 | (Decrease) | 2023 | 2022 | (Decrease) | ||||||||||||||
Capital Expenditures: | |||||||||||||||||||
Exploration and Production(1) | $ | 269,171 | (2) | $ | 131,776 | (4) | $ | 137,395 | $ | 592,787 | (2)(3) | $ | 405,736 | (4)(5) | $ | 187,051 | |||
Pipeline and Storage | 33,503 | (2) | 19,778 | (4) | 13,725 | 66,767 | (2)(3) | 58,243 | (4)(5) | 8,524 | |||||||||
Gathering | 21,297 | (2) | 8,614 | (4) | 12,683 | 55,379 | (2)(3) | 28,588 | (4)(5) | 26,791 | |||||||||
Utility | 39,446 | (2) | 27,664 | (4) | 11,782 | 88,676 | (2)(3) | 70,972 | (4)(5) | 17,704 | |||||||||
Total Reportable Segments | 363,417 | 187,832 | 175,585 | 803,609 | 563,539 | 240,070 | |||||||||||||
All Other | — | — | — | — | — | — | |||||||||||||
Corporate | 45 | 166 | (121 | ) | 449 | 663 | (214 | ) | |||||||||||
Total Capital Expenditures | $ | 363,462 | $ | 187,998 | $ | 175,464 | $ | 804,058 | $ | 564,202 | $ | 239,856 |
(1) The quarter and nine months ended June 30, 2023 includes
(2) Capital expenditures for the quarter and nine months ended June 30, 2023, include accounts payable and accrued liabilities related to capital expenditures of
(3) Capital expenditures for the nine months ended June 30, 2023, exclude capital expenditures of
(4) Capital expenditures for the quarter and nine months ended June 30, 2022, include accounts payable and accrued liabilities related to capital expenditures of
(5) Capital expenditures for the nine months ended June 30, 2022, exclude capital expenditures of
DEGREE DAYS | |||||||||||
Percent Colder | |||||||||||
(Warmer) Than: | |||||||||||
Three Months Ended June 30, | Normal | 2023 | 2022 | Normal(1) | Last Year(1) | ||||||
Buffalo, NY | 912 | 788 | 797 | (13.6 | ) | (1.1 | ) | ||||
Erie, PA | 871 | 802 | 741 | (7.9 | ) | 8.2 | |||||
Nine Months Ended June 30, | |||||||||||
Buffalo, NY | 6,455 | 5,656 | 5,662 | (12.4 | ) | (0.1 | ) | ||||
Erie, PA | 6,023 | 5,434 | 5,274 | (9.8 | ) | 3.0 | |||||
(1) Percents compare actual 2023 degree days to normal degree days and actual 2023 degree days to actual 2022 degree days.
NATIONAL FUEL GAS COMPANY | ||||||||||||||||||||
AND SUBSIDIARIES | ||||||||||||||||||||
EXPLORATION AND PRODUCTION INFORMATION | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||
Increase | Increase | |||||||||||||||||||
2023 | 2022 | (Decrease) | 2023 | 2022 | (Decrease) | |||||||||||||||
Gas Production/Prices: | ||||||||||||||||||||
Production (MMcf) | ||||||||||||||||||||
Appalachia | 94,747 | 88,888 | 5,859 | 278,562 | 253,842 | 24,720 | ||||||||||||||
West Coast | — | 405 | (405 | ) | — | 1,210 | (1,210 | ) | ||||||||||||
Total Production | 94,747 | 89,293 | 5,454 | 278,562 | 255,052 | 23,510 | ||||||||||||||
Average Prices (Per Mcf) | ||||||||||||||||||||
Appalachia | $ | 1.66 | $ | 5.50 | $ | (3.84 | ) | $ | 3.05 | $ | 4.64 | $ | (1.59 | ) | ||||||
West Coast | N/M | 10.29 | N/M | N/M | 10.04 | N/M | ||||||||||||||
Weighted Average | 1.66 | 5.52 | (3.86 | ) | 3.05 | 4.67 | (1.62 | ) | ||||||||||||
Weighted Average after Hedging | 2.27 | 2.87 | (0.60 | ) | 2.62 | 2.67 | (0.05 | ) | ||||||||||||
Oil Production/Prices: | ||||||||||||||||||||
Production (Thousands of Barrels) | ||||||||||||||||||||
Appalachia | 7 | 7 | — | 22 | 8 | 14 | ||||||||||||||
West Coast | — | 519 | (519 | ) | — | 1,589 | (1,589 | ) | ||||||||||||
Total Production | 7 | 526 | (519 | ) | 22 | 1,597 | (1,575 | ) | ||||||||||||
Average Prices (Per Barrel) | ||||||||||||||||||||
Appalachia | $ | 69.66 | $ | 108.47 | $ | (38.81 | ) | $ | 75.50 | $ | 104.83 | $ | (29.33 | ) | ||||||
West Coast | N/M | 110.79 | N/M | N/M | 94.06 | N/M | ||||||||||||||
Weighted Average | 69.66 | 110.76 | (41.10 | ) | 75.50 | 94.11 | (18.61 | ) | ||||||||||||
Weighted Average after Hedging(1) | 69.66 | 77.65 | (7.99 | ) | 75.50 | 70.71 | 4.79 | |||||||||||||
Total Production (MMcfe) | 94,789 | 92,449 | 2,340 | 278,694 | 264,634 | 14,060 | ||||||||||||||
Selected Operating Performance Statistics: | ||||||||||||||||||||
General & Administrative Expense per Mcfe(2) | $ | 0.17 | $ | 0.19 | $ | (0.02 | ) | $ | 0.18 | $ | 0.20 | $ | (0.02 | ) | ||||||
Lease Operating and Transportation Expense per Mcfe(2)(3) | $ | 0.65 | $ | 0.86 | $ | (0.21 | ) | $ | 0.68 | $ | 0.84 | $ | (0.16 | ) | ||||||
Depreciation, Depletion & Amortization per Mcfe(2) | $ | 0.64 | $ | 0.60 | $ | 0.04 | $ | 0.63 | $ | 0.59 | $ | 0.04 | ||||||||
N/M Not Meaningful (as a result of the sale of Seneca's West Coast assets in June 2022)
(1) Weighted average oil price after hedging for the three and nine months ended June 30, 2022 excludes a loss on discontinuance of crude oil cash flow hedges of
(2) 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. General and Administrative Expense per Mcfe for the three and nine months ended June 30, 2022 excludes transaction and severance costs related to the California asset sale.
(3) Amounts include transportation expense of
NATIONAL FUEL GAS COMPANY | ||||||
AND SUBSIDIARIES | ||||||
EXPLORATION AND PRODUCTION INFORMATION | ||||||
Hedging Summary for Remaining Three Months of Fiscal 2023 | Volume | Average Hedge Price | ||||
Gas Swaps | ||||||
NYMEX | 32,820,000 | MMBTU | $ | 2.88 / MMBTU | ||
No Cost Collars | 23,940,000 | MMBTU | $ | 3.43 / MMBTU (Floor) / | ||
Fixed Price Physical Sales | 23,006,166 | MMBTU | $ | 2.20 / MMBTU | ||
Total | 79,766,166 | MMBTU | ||||
Hedging Summary for Fiscal 2024 | Volume | Average Hedge Price | ||||
Gas Swaps | ||||||
NYMEX | 134,930,000 | MMBTU | $ | 3.34 / MMBTU | ||
No Cost Collars | 65,280,000 | MMBTU | $ | 3.33 / MMBTU (Floor) / | ||
Fixed Price Physical Sales | 75,554,510 | MMBTU | $ | 2.44 / MMBTU | ||
Total | 275,764,510 | MMBTU | ||||
Hedging Summary for Fiscal 2025 | Volume | Average Hedge Price | ||||
Gas Swaps | ||||||
NYMEX | 80,560,000 | MMBTU | $ | 3.49 / MMBTU | ||
No Cost Collars | 43,960,000 | MMBTU | $ | 3.49 / MMBTU (Floor) / | ||
Fixed Price Physical Sales | 73,371,069 | MMBTU | $ | 2.49 / MMBTU | ||
Total | 197,891,069 | MMBTU | ||||
Hedging Summary for Fiscal 2026 | Volume | Average Hedge Price | ||||
Gas Swaps | ||||||
NYMEX | 29,020,000 | MMBTU | $ | 3.98 / MMBTU | ||
No Cost Collars | 42,720,000 | MMBTU | $ | 3.53 / MMBTU (Floor) / | ||
Fixed Price Physical Sales | 65,847,497 | MMBTU | $ | 2.39 / MMBTU | ||
Total | 137,587,497 | MMBTU | ||||
Hedging Summary for Fiscal 2027 | Volume | Average Hedge Price | ||||
Gas Swaps | ||||||
NYMEX | 12,750,000 | MMBTU | $ | 4.27 / MMBTU | ||
No Cost Collars | 3,560,000 | MMBTU | $ | 3.53 / MMBTU (Floor) / | ||
Fixed Price Physical Sales | 45,656,079 | MMBTU | $ | 2.39 / MMBTU | ||
Total | 61,966,079 | MMBTU | ||||
Hedging Summary for Fiscal 2028 | Volume | Average Hedge Price | ||||
Gas Swaps | ||||||
NYMEX | 1,000,000 | MMBTU | $ | 4.29 / MMBTU | ||
Fixed Price Physical Sales | 12,081,308 | MMBTU | $ | 2.48 / MMBTU | ||
Total | 13,081,308 | MMBTU | ||||
Hedging Summary for Fiscal 2029 | Volume | Average Hedge Price | ||||
Fixed Price Physical Sales | 782,637 | MMBTU | $ | 2.54 / 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 | |||||||||||||
2023 | 2022 | (Decrease) | 2023 | 2022 | (Decrease) | |||||||||
Firm Transportation - Affiliated | 22,295 | 19,558 | 2,737 | 108,911 | 94,213 | 14,698 | ||||||||
Firm Transportation - Non-Affiliated | 159,145 | 156,310 | 2,835 | 528,234 | 507,278 | 20,956 | ||||||||
Interruptible Transportation | 97 | 206 | (109 | ) | 2,024 | 1,726 | 298 | |||||||
181,537 | 176,074 | 5,463 | 639,169 | 603,217 | 35,952 | |||||||||
Gathering Volume - (MMcf) | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
June 30, | June 30, | |||||||||||||
Increase | Increase | |||||||||||||
2023 | 2022 | (Decrease) | 2023 | 2022 | (Decrease) | |||||||||
Gathered Volume | 118,707 | 109,797 | 8,910 | 336,078 | 314,625 | 21,453 | ||||||||
Utility Throughput - (MMcf) | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
June 30, | June 30, | |||||||||||||
Increase | Increase | |||||||||||||
2023 | 2022 | (Decrease) | 2023 | 2022 | (Decrease) | |||||||||
Retail Sales: | ||||||||||||||
Residential Sales | 9,600 | 10,344 | (744 | ) | 57,636 | 59,865 | (2,229 | ) | ||||||
Commercial Sales | 1,434 | 1,511 | (77 | ) | 8,812 | 8,977 | (165 | ) | ||||||
Industrial Sales | 87 | 74 | 13 | 506 | 466 | 40 | ||||||||
11,121 | 11,929 | (808 | ) | 66,954 | 69,308 | (2,354 | ) | |||||||
Transportation | 12,468 | 12,936 | (468 | ) | 53,567 | 56,274 | (2,707 | ) | ||||||
23,589 | 24,865 | (1,276 | ) | 120,521 | 125,582 | (5,061 | ) | |||||||
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, 2023 and 2022:
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(in thousands except per share amounts) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Reported GAAP Earnings | $ | 92,620 | $ | 108,158 | $ | 403,189 | $ | 407,879 | ||||||||
Items impacting comparability: | ||||||||||||||||
Items related to West Coast asset sale: | ||||||||||||||||
Gain on sale of West Coast assets (E&P) | — | (12,736 | ) | — | (12,736 | ) | ||||||||||
Tax impact of gain on sale of West Coast assets | — | 3,225 | — | 3,225 | ||||||||||||
Loss from discontinuance of crude oil cash flow hedges (E&P) | — | 44,632 | — | 44,632 | ||||||||||||
Tax impact of loss from discontinuance of crude oil cash flow hedges | — | (11,303 | ) | — | (11,303 | ) | ||||||||||
Transaction and severance costs (E&P) | — | 9,693 | — | 9,693 | ||||||||||||
Tax impact of transaction and severance costs | — | (2,455 | ) | — | (2,455 | ) | ||||||||||
Total items impacting comparability related to West Coast asset sale | — | 31,056 | — | 31,056 | ||||||||||||
Unrealized (gain) loss on derivative asset (E&P) | 1,430 | — | 3,702 | — | ||||||||||||
Tax impact of unrealized (gain) loss on derivative asset | (392 | ) | — | (1,015 | ) | — | ||||||||||
Unrealized (gain) loss on other investments (Corporate / All Other) | (355 | ) | 3,434 | (1,632 | ) | 10,093 | ||||||||||
Tax impact of unrealized (gain) loss on other investments | 74 | (721 | ) | 343 | (2,120 | ) | ||||||||||
Reduction of other post-retirement regulatory liability (Utility) | — | — | — | (18,533 | ) | |||||||||||
Tax impact of reduction of other post-retirement regulatory liability | — | — | — | 3,892 | ||||||||||||
Adjusted Operating Results | $ | 93,377 | $ | 141,927 | $ | 404,587 | $ | 432,267 | ||||||||
Reported GAAP Earnings Per Share | $ | 1.00 | $ | 1.17 | $ | 4.37 | $ | 4.43 | ||||||||
Items impacting comparability: | ||||||||||||||||
Items related to West Coast asset sale: | ||||||||||||||||
Gain on sale of West Coast assets, net of tax (E&P) | — | (0.10 | ) | — | (0.10 | ) | ||||||||||
Loss from discontinuance of crude oil cash flow hedges, net of tax (E&P) | — | 0.36 | — | 0.36 | ||||||||||||
Transaction and severance costs, net of tax (E&P) | — | 0.08 | — | 0.08 | ||||||||||||
Total items impacting comparability related to West Coast asset sale | — | 0.34 | — | 0.34 | ||||||||||||
Unrealized (gain) loss on derivative asset, net of tax (E&P) | 0.01 | — | 0.03 | — | ||||||||||||
Unrealized (gain) loss on other investments, net of tax (Corporate / All Other) | — | 0.03 | (0.01 | ) | 0.08 | |||||||||||
Reduction of other post-retirement regulatory liability, net of tax (Utility) | — | — | — | (0.16 | ) | |||||||||||
Rounding | — | — | (0.01 | ) | — | |||||||||||
Adjusted Operating Results Per Share | $ | 1.01 | $ | 1.54 | $ | 4.38 | $ | 4.69 |
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES (Continued)
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, 2023 and 2022:
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Reported GAAP Earnings | $ | 92,620 | $ | 108,158 | $ | 403,189 | $ | 407,879 | ||||||||
Depreciation, Depletion and Amortization | 102,410 | 95,857 | 299,973 | 275,681 | ||||||||||||
Other (Income) Deductions | (3,551 | ) | 5,649 | (12,754 | ) | (3,291 | ) | |||||||||
Interest Expense | 32,092 | 33,973 | 98,984 | 96,861 | ||||||||||||
Income Taxes | 32,935 | 32,917 | 140,425 | 135,272 | ||||||||||||
Gain on Sale of Assets | — | (12,736 | ) | — | (12,736 | ) | ||||||||||
Loss from discontinuance of crude oil cash flow hedges (E&P) | — | 44,632 | — | 44,632 | ||||||||||||
Transaction and severance costs related to West Coast asset sale (E&P) | — | 9,693 | — | 9,693 | ||||||||||||
Adjusted EBITDA | $ | 256,506 | $ | 318,143 | $ | 929,817 | $ | 953,991 | ||||||||
Adjusted EBITDA by Segment | ||||||||||||||||
Pipeline and Storage Adjusted EBITDA | $ | 57,636 | $ | 62,565 | $ | 181,090 | $ | 181,084 | ||||||||
Gathering Adjusted EBITDA | 46,032 | 46,151 | 139,009 | 133,238 | ||||||||||||
Total Midstream Businesses Adjusted EBITDA | 103,668 | 108,716 | 320,099 | 314,322 | ||||||||||||
Exploration and Production Adjusted EBITDA | 134,236 | 184,622 | 479,140 | 490,073 | ||||||||||||
Utility Adjusted EBITDA | 20,912 | 27,042 | 138,310 | 156,600 | ||||||||||||
Corporate and All Other Adjusted EBITDA | (2,310 | ) | (2,237 | ) | (7,732 | ) | (7,004 | ) | ||||||||
Total Adjusted EBITDA | $ | 256,506 | $ | 318,143 | $ | 929,817 | $ | 953,991 |
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) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Exploration and Production Segment | ||||||||||||||||
Reported GAAP Earnings | $ | 43,329 | $ | 56,497 | $ | 195,503 | $ | 189,987 | ||||||||
Depreciation, Depletion and Amortization | 60,584 | 55,136 | 174,747 | 155,190 | ||||||||||||
Other (Income) Deductions | 459 | (296 | ) | 56 | (55 | ) | ||||||||||
Interest Expense | 13,628 | 14,589 | 39,049 | 38,927 | ||||||||||||
Income Taxes | 16,236 | 17,107 | 69,785 | 64,435 | ||||||||||||
Gain on Sale of West Coast Assets | — | (12,736 | ) | — | (12,736 | ) | ||||||||||
Loss from Discontinuance of Crude Oil Cash Flow Hedges | — | 44,632 | — | 44,632 | ||||||||||||
Transaction and Severance Costs related to West Coast Asset Sale | — | 9,693 | — | 9,693 | ||||||||||||
Adjusted EBITDA | $ | 134,236 | $ | 184,622 | $ | 479,140 | $ | 490,073 | ||||||||
Pipeline and Storage Segment | ||||||||||||||||
Reported GAAP Earnings | $ | 23,813 | $ | 26,599 | $ | 77,147 | $ | 77,236 | ||||||||
Depreciation, Depletion and Amortization | 17,732 | 17,322 | 52,874 | 50,417 | ||||||||||||
Other (Income) Deductions | (3,161 | ) | (1,502 | ) | (8,643 | ) | (4,632 | ) | ||||||||
Interest Expense | 10,873 | 10,813 | 32,702 | 31,564 | ||||||||||||
Income Taxes | 8,379 | 9,333 | 27,010 | 26,499 | ||||||||||||
Adjusted EBITDA | $ | 57,636 | $ | 62,565 | $ | 181,090 | $ | 181,084 | ||||||||
Gathering Segment | ||||||||||||||||
Reported GAAP Earnings | $ | 24,135 | $ | 24,658 | $ | 73,207 | $ | 69,887 | ||||||||
Depreciation, Depletion and Amortization | 8,987 | 8,589 | 26,613 | 25,343 | ||||||||||||
Other (Income) Deductions | (100 | ) | 3 | (570 | ) | 87 | ||||||||||
Interest Expense | 3,613 | 4,164 | 11,556 | 12,383 | ||||||||||||
Income Taxes | 9,397 | 8,737 | 28,203 | 25,538 | ||||||||||||
Adjusted EBITDA | $ | 46,032 | $ | 46,151 | $ | 139,009 | $ | 133,238 | ||||||||
Utility Segment | ||||||||||||||||
Reported GAAP Earnings | $ | 37 | $ | 4,622 | $ | 55,574 | $ | 79,800 | ||||||||
Depreciation, Depletion and Amortization | 14,997 | 14,765 | 45,425 | 44,592 | ||||||||||||
Other (Income) Deductions | (1,702 | ) | 2,329 | (4,898 | ) | (7,180 | ) | |||||||||
Interest Expense | 8,441 | 6,087 | 26,193 | 17,115 | ||||||||||||
Income Taxes | (861 | ) | (761 | ) | 16,016 | 22,273 | ||||||||||
Adjusted EBITDA | $ | 20,912 | $ | 27,042 | $ | 138,310 | $ | 156,600 | ||||||||
Corporate and All Other | ||||||||||||||||
Reported GAAP Earnings | $ | 1,306 | $ | (4,218 | ) | $ | 1,758 | $ | (9,031 | ) | ||||||
Depreciation, Depletion and Amortization | 110 | 45 | 314 | 139 | ||||||||||||
Other (Income) Deductions | 953 | 5,115 | 1,301 | 8,489 | ||||||||||||
Interest Expense | (4,463 | ) | (1,680 | ) | (10,516 | ) | (3,128 | ) | ||||||||
Income Taxes | (216 | ) | (1,499 | ) | (589 | ) | (3,473 | ) | ||||||||
Adjusted EBITDA | $ | (2,310 | ) | $ | (2,237 | ) | $ | (7,732 | ) | $ | (7,004 | ) |
Management defines free cash flow as net cash provided by operating activities less capital expenditures. The Company is unable to provide a reconciliation of projected free cash flow as described in this release to its comparable financial measure calculated in accordance with GAAP without unreasonable efforts. This is due to our inability to reliably predict the comparable GAAP projected metrics, including operating income and total production costs, given the unknown effect, timing, and potential significance of certain income statement items.