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 a 2% 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 to $5.25 per share, excluding items impacting comparability, and initiating its fiscal 2024 earnings guidance with a range of $5.50 to $6.00 per share, an increase of 11% 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 $5.15 to $5.25 per share. This updated range reflects the results of the third quarter, along with updated assumptions for the balance of the year, as detailed on page 8.

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 95% of its projected remaining fiscal 2023 natural gas production, significantly limiting its exposure to in-basin markets. Approximately 80% of expected remaining production is either matched by a financial hedge or was entered into at a fixed price.

The Company is also initiating preliminary guidance for fiscal 2024 with earnings projected to be within a range of $5.50 to $6.00 per share, or $5.75 per share at the midpoint of the range, an increase of 11% from the midpoint of the revised fiscal 2023 guidance range. Drivers of the expected increase in earnings include anticipated higher natural gas price realizations, further growth in natural gas production and the associated impact on Gathering segment revenues, and substantial growth in earnings from the regulated segments expected as a result of anticipated base rate increases.

Seneca’s fiscal 2024 net production forecast is increasing to an expected range of 390 to 410 Bcfe, an increase of 7% versus fiscal 2023 at the midpoint of the guidance range. In addition, the Company is assuming NYMEX natural gas prices of $3.25 per MMBtu for the year, which will drive expected natural gas price realizations after hedging to increase by approximately $0.10 per Mcf from its estimated fiscal 2023 realizations. Overall, Seneca has firm sales contracts in place for approximately 88% of its expected fiscal 2024 natural gas production, significantly limiting its exposure to in-basin markets. Approximately 67% of expected production is supported by financial hedges or fixed price contracts, limiting exposure to potential swings in natural gas prices in fiscal 2024.

The Company’s consolidated capital expenditures in fiscal 2024 are expected to be in a range of $865 million to $975 million, which at the midpoint, is generally in line with its fiscal 2023 guidance.

Capital expenditures in the Company’s rate-regulated Pipeline and Storage and Utility segments are expected to be in the range of $250 million to $290 million for fiscal 2024, an increase of $25 million from fiscal 2023 at the midpoint. Most of this spending will be focused on ongoing infrastructure modernization programs that are geared toward enhancing the safety, reliability, and resiliency of the Company's critical infrastructure, as well as contributing to the ongoing reduction in the Company’s emissions profile. The ability to ramp up growth investments in these businesses provides for the ability to generate stable, predictable, value-accretive returns, and is an efficient means of deploying excess free cash flow generated across the Company to the long-term benefit of shareholders.

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 $525 million to $575 million, a decrease of 7% from fiscal 2023 at the midpoint. In addition to moderating long-term capital spending levels, Seneca is shifting the vast majority of its development activity to its highly prolific Eastern Development Area where, as a result of acquisitions over the past three years, it has a significant inventory of well locations that generate superior returns. As part of this transition, costs related to water management will lead to modestly higher capital spending on a per foot basis as the transition is fully executed. Further, Seneca plans to spend more than $35 million of one-time costs in fiscal 2024 related to this transition as it bolsters its seismic inventory, expands its produced water infrastructure, and increases its leasehold position in Lycoming County. In addition, the Gathering segment will continue its multi-year build out of key infrastructure in the Tioga County region and as a result, expects spending to be in the range of $90 million to $110 million, which is generally consistent with the current fiscal year.

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 $13.2 million versus the prior year. Last year’s third quarter earnings included several one-time items impacting comparability shown in the table above related to the divestiture of Seneca’s California assets in June 2022 that did not recur this year. Earnings were also impacted by an unrealized loss of $1.4 million ($1.0 million after-tax) recognized during the current-year third quarter from a reduction in the implied fair value of an asset related to the contingent consideration in connection with this divestiture. Excluding these items, Seneca’s earnings decreased $43.2 million. Higher natural gas production was more than offset by lower Appalachian realized natural gas prices and the loss of earnings related to the divestiture of Seneca’s crude oil production in California.

Seneca produced 94.8 Bcfe during the third quarter, an increase of 2.3 Bcfe, or 3%, from the prior year. Despite the combined impact of approximately 5 Bcfe of price-related curtailments and other volumes shut-in due to the operational impacts of low in-basin pricing and third-party pipeline system constraints, production in Appalachia increased 5.9 Bcfe, or 7%. This increase was partially offset by a 3.5 Bcfe decrease in production related to the aforementioned California sale.

Seneca’s average realized natural gas price, after the impact of hedging and transportation costs, was $2.27 per Mcf, a decrease of $0.60 per Mcf from the prior year. Lower natural gas prices, before the impact of hedging, were partially offset by an increase in the weighted average hedge price compared to the prior-year third quarter.

On an absolute basis, lease operating and transportation expense (“LOE”) decreased $17.7 million primarily due to the California sale, slightly offset by increases in LOE from higher well repair costs in Appalachia. LOE expense includes $54.3 million in intercompany expense for gathering and compression services used to connect Seneca’s production to sales points along interstate pipelines. On a per unit basis, LOE was $0.65 per Mcfe, a decrease of $0.21 per Mcfe from the prior year.

The decrease in Seneca’s other operating expense of $6.5 million was primarily due to the prior-year third quarter, non-recurring accrual of plugging and abandonment expenses related to certain formerly owned offshore Gulf of Mexico wells that were sold in prior years, as well as the sale of Seneca’s California assets. Other taxes decreased $4.8 million largely attributable to both the impact of the sale of Seneca's California assets as well as lower Impact Fees in Pennsylvania due to the decrease in NYMEX natural gas prices.

Depreciation, depletion and amortization (“DD&A”) expense increased $5.4 million due to higher natural gas production and a higher per unit DD&A rate, which was driven by an increase in capitalized costs in Seneca’s full cost pool. DD&A expense was $0.64 per Mcfe, an increase of $0.04 per Mcfe from the prior year.

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 $2.8 million versus the prior year primarily due to lower operating revenues and higher operation and maintenance (“O&M”) expense, partially offset by an increase in other income. The decrease in operating revenues of $3.2 million was primarily attributable to contract expirations, partially offset by an increase in new short-term contracts. O&M expense increased $1.6 million primarily due to higher pipeline integrity and personnel costs. The increase in other income of $1.7 million was primarily attributable to a higher weighted average interest rate on intercompany short-term notes receivables.

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 $0.5 million versus the prior year primarily due to higher O&M expense and higher income tax expense, both of which were almost entirely offset by higher operating revenues. Operating revenues increased $3.0 million, or 5%, which was the result of an 8.9 Bcf increase in gathered volumes due to an increase in natural gas production from both Seneca and non-affiliated parties. The increase in O&M expense of $3.1 million was due to an increase in compressor station preventative maintenance activity and higher compression leasing expenses, as well as increases in personnel expenses and costs for materials. The increase in material costs primarily reflects a higher amount of materials being purchased as a result of the increase in gathered volume, and to a lesser extent, rising costs from inflation. The increase in income tax expense was primarily driven by a higher effective state income tax rate.

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 $4.6 million versus the prior year primarily due to lower customer margins (operating revenues less purchased gas sold), as well as increases in O&M and interest expense, partially offset by a decrease in non-service pension and OPEB costs and higher other income.

The decline in customer margin of $2.9 million was due primarily to a $2.6 million reduction in base rates in New York as a result of a rate proceeding that became effective October 1, 2022 which temporarily reduced the Utility’s recovery of pension and other post-employment benefit (“OPEB”) expenses to zero. In addition to lowering rates, the proceeding mandated a corresponding decrease in pension and OPEB expense, most of which had been previously recorded in “below the line” non-service pension and OPEB costs. This decrease was partially offset by higher revenues from the Company’s system modernization and improvement tracking mechanisms in its New York service territory.

O&M expense increased by $3.7 million due primarily to higher personnel costs and an increase in legal and consulting expenses. An increase in the cost of materials and transportation expenses, primarily as a result of rising costs from inflation, also contributed to higher O&M expense for the quarter. Interest expense increased $2.4 million due primarily to a higher weighted average interest rate on intercompany short-term borrowings. The increase in other income of $1.3 million was primarily attributable to interest earned on deferred gas costs.

Corporate and All Other

The Company’s operations that are included in Corporate and All Other generated combined earnings of $1.3 million in the current quarter, which was a $5.5 million increase over the combined net loss of $4.2 million in the prior-year third quarter. The increase in earnings was primarily driven by unrealized gains on investment securities recognized in the current quarter compared to unrealized losses on investment securities recognized in the prior-year third quarter. Also contributing to the increase were changes in cash surrender value of life insurance policies, which increased in value $1.1 million during the current quarter compared to a decrease in value of less than $0.1 million during the prior-year third quarter.

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 $0.03 per share; and (2) after-tax unrealized gains on other investments, which increased earnings by $0.01 per share. While the Company expects to record certain adjustments to unrealized gain or loss on a derivative asset and unrealized gain or loss on investments during the three months ending September 30, 2023, 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 2023
Guidance
  Preliminary FY 2024 Guidance
Adjusted Consolidated Earnings per Share, excluding items impacting comparability $5.15 to $5.25   $5.50 to $6.00
Consolidated Effective Tax Rate ~ 25.5%   ~ 25.5 - 26%
       
Capital Expenditures (Millions)*      
Exploration and Production $575 - $600   $525 - $575
Pipeline and Storage $110 - $130   $120 - $140
Gathering $95 - $105   $90 - $110
Utility $125 - $135   $130 - $150
Consolidated Capital Expenditures $905 - $970   $865 - $975
       
Exploration & Production Segment Guidance**      
       
Commodity Price Assumptions      
NYMEX natural gas price $2.60 /MMBtu   $3.25 /MMBtu
Appalachian basin spot price $1.60 /MMBtu   $2.45 /MMBtu
       
Production (Bcfe) 370 to 380   390 to 410
       
E&P Operating Costs ($/Mcfe)      
LOE $0.67 - $0.68   $0.69 - $0.71
G&A ~$0.18   $0.17 - $0.19
DD&A $0.62 - $0.64   $0.66 - $0.70
       
Other Business Segment Guidance (Millions)      
Gathering Segment Revenues $225 - $235   $240 - $260
Pipeline and Storage Segment Revenues $370 - $380   $380 - $420

* 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 21% federal statutory rate.
*** 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 21% federal statutory rate.
*** 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 21% federal statutory rate.
*** 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 21% federal statutory rate.
*** 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, $1 Par Value Authorized - 200,000,000 Shares; Issued and      
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 $124.8 million related to the acquisition of upstream assets acquired from SWN. The acquisition cost is reported as a component of Acquisition of Upstream Assets on the Consolidated Statement of Cash Flows.

(2)   Capital expenditures for the quarter and nine months ended June 30, 2023, include accounts payable and accrued liabilities related to capital expenditures of $52.8 million, $7.7 million, $2.8 million, and $8.5 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at June 30, 2023, since they represent non-cash investing activities at that date.

(3)   Capital expenditures for the nine months ended June 30, 2023, exclude capital expenditures of $83.0 million, $15.2 million, $10.7 million and $11.4 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, 2022 and paid during the nine months ended June 30, 2023. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2022, 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, 2023.

(4)   Capital expenditures for the quarter and nine months ended June 30, 2022, include accounts payable and accrued liabilities related to capital expenditures of $62.0 million, $5.2 million, $2.5 million, and $4.7 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, 2022, since they represent non-cash investing activities at that date.

(5)   Capital expenditures for the nine months ended June 30, 2022, exclude capital expenditures of $47.9 million, $39.4 million, $4.8 million and $10.6 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, 2021 and paid during the nine months ended June 30, 2022. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2021, 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, 2022.

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 $44.6 million.

(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 $0.55 and $0.57 per Mcfe for the three months ended June 30, 2023 and June 30, 2022, respectively. Amounts include transportation expense of $0.57 and $0.56 per Mcfe for the nine months ended June 30, 2023 and June 30, 2022, respectively.

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) / $4.13 / MMBTU (Ceiling)
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) / $4.17 / MMBTU (Ceiling)
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) / $4.65 / MMBTU (Ceiling)
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) / $4.76 / MMBTU (Ceiling)
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) / $4.76 / MMBTU (Ceiling)
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