National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated results for the first quarter of its 2024 fiscal year.

FISCAL 2024 FIRST QUARTER SUMMARY

  • GAAP net income of $133.0 million, or $1.44 per share, compared to GAAP net income of $169.7 million, or $1.84 per share, in the prior year.
  • Adjusted operating results of $135.2 million, or $1.46 per share, compared to $169.5 million, or $1.84 per share, in the prior year (see non-GAAP reconciliation on page 2).
  • Exploration & Production segment produced 101 Bcf of natural gas, an increase of 11% from the prior year, and 8% higher than the fiscal 2023 fourth quarter, driven by strong operational execution in its Eastern Development Area.
  • Gathering segment earnings increased $4.1 million, or 17%, from the prior year primarily as a result of an increase in throughput from both Seneca Resources and third-party producers.
  • Utility segment earnings increased by $2.7 million, or 11%, from the prior year primarily due to an increase in base rates from our 2023 Pennsylvania jurisdiction rate case settlement.
  • Seneca Resources achieved a peer-leading “A” grade under Equitable Origin's EO100TM Standard for 100% of Appalachian natural gas production, as part of an annual verification audit.

MANAGEMENT COMMENTS

David P. Bauer, President and Chief Executive Officer of National Fuel Gas Company, stated: “National Fuel had a strong start to fiscal 2024, with solid operational execution across our businesses. We continued to see excellent well results in our Eastern Development Area (“EDA”), which led to double-digit increases in Seneca’s production and Gathering segment throughput. As we continue to high-grade our upstream activity and focus our development activities in the EDA where we have more than a decade of high-quality inventory, we expect an ongoing improvement in capital efficiency and free cash flow generation.

“In our regulated businesses, the positive impacts of our recently settled rate case in Pennsylvania drove increased Utility earnings. As we move through the remainder of this year and into 2025, we expect our other ongoing rate proceedings will contribute to a further improvement in earnings. Longer-term, the continued need to invest in modernizing our infrastructure positions us well to deliver additional growth for the foreseeable future.

“Taken together, the long-term outlook for meaningful growth in our regulated businesses, improving capital efficiency and free cash flow generation potential from our non-regulated operations, and the strength of our investment grade balance sheet, position the Company to deliver significant shareholder value well into the future.”

RECONCILIATION OF GAAP EARNINGS TO ADJUSTED OPERATING RESULTS

         
    Three Months Ended
    December 31,
(in thousands except per share amounts)     2023       2022  
Reported GAAP Earnings   $ 133,020     $ 169,689  
Items impacting comparability:        
Unrealized (gain) loss on derivative asset (E&P)     4,198        
Tax impact of unrealized (gain) loss on derivative asset     (1,151 )      
Unrealized (gain) loss on other investments (Corporate / All Other)     (1,049 )     (209 )
Tax impact of unrealized (gain) loss on other investments     220       44  
Adjusted Operating Results   $ 135,238     $ 169,524  
         
Reported GAAP Earnings Per Share   $ 1.44     $ 1.84  
Items impacting comparability:        
Unrealized (gain) loss on derivative asset, net of tax (E&P)     0.03        
Unrealized (gain) loss on other investments, net of tax (Corporate / All Other)     (0.01 )      
Adjusted Operating Results Per Share   $ 1.46     $ 1.84  

FISCAL 2024 GUIDANCE UPDATE

National Fuel is revising its fiscal 2024 earnings guidance to reflect the results of the first quarter, along with updated forecast assumptions and projections. The Company is now projecting that earnings, excluding items impacting comparability, will be within the range of $4.90 to $5.20 per share, a decrease of $0.60 per share from the midpoint of the Company’s prior guidance range. The decrease from the Company’s prior earnings guidance primarily reflects the impact of lower natural gas price expectations, partially offset by the improved outlook for both production and lease operating and transportation expense (“LOE”) in the Exploration and Production segment.

The Company is now assuming that NYMEX natural gas prices will average $2.40 per MMBtu for the remainder of fiscal 2024, a decrease of $0.85 per MMBtu from the $3.25 per MMBtu assumed in the previous guidance. For guidance purposes, the Company’s updated natural gas price projections approximate the current NYMEX forward curve and consider the impact of local sales point differentials and new physical firm sales, transportation, and financial hedge contracts.

The Exploration and Production segment’s fiscal 2024 net production guidance is now expected to be in the range of 395 to 410 Bcf, an increase of 2.5 Bcf at the midpoint. This guidance range does not incorporate any price-related curtailments over the remainder of the fiscal year. Seneca currently has firm sales contracts in place for approximately 90% of its projected remaining fiscal 2024 production, limiting its exposure to in-basin markets. Approximately 72% of Seneca’s expected remaining production is either matched by a financial hedge, including a combination of swaps and no-cost collars, or was entered into at a fixed price.

The Company’s consolidated capital expenditures are now expected to be in the range of $885 to $1,000 million, a 2% increase from the midpoint of previous guidance. This increase is due to the estimated impact of New York State’s recently enacted Roadway Excavation Quality Assurance Act (“REQAA”), which requires that contractors pay state published prevailing wages to their employees on projects that require a permit to operate in a public right of way. We anticipate these higher costs to be passed on to the Company, which are expected to be recoverable and are being addressed in the Company’s ongoing rate case proceeding in New York.

The Company’s other guidance assumptions remain largely unchanged from the previous guidance. The details are outlined in the table on page 7.

DISCUSSION OF FIRST QUARTER RESULTS BY SEGMENT

The following earnings discussion of each operating segment for the quarter ended December 31, 2023 is summarized in a tabular form on pages 8 and 9 of this report. 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
  December 31
(in thousands)   2023     2022   Variance
GAAP Earnings $ 52,483   $ 91,192   $ (38,709 )
Unrealized (gain) loss on derivative asset, net of tax   3,047         3,047  
Adjusted Operating Results $ 55,530   $ 91,192   $ (35,662 )
           
Adjusted EBITDA $ 159,970   $ 190,330   $ (30,360 )

Seneca’s first quarter GAAP earnings decreased $38.7 million versus the prior year. Higher natural gas production, lower per unit LOE, and lower other taxes were more than offset by lower realized natural gas prices, and increases in per unit depreciation, depletion and amortization (“DD&A”), general and administrative (“G&A”), other operation and maintenance (“O&M”) and interest expenses. The earnings decrease also includes an unrealized loss of $4.2 million ($3.0 million after-tax) recognized during the current-year first quarter from a reduction in the fair value of the contingent consideration Seneca received in connection with the June 2022 divestiture of its California assets. Excluding this loss, Seneca's earnings decreased $35.7 million,

During this year's first quarter, Seneca produced 100.8 Bcf of natural gas, an increase of 10.2 Bcf, or 11%, from the prior year, largely due to production from new Marcellus and Utica wells in Seneca's EDA.

Seneca’s average realized natural gas price, after the impact of hedging and transportation costs, was $2.51 per Mcf, a decrease of $0.51 per Mcf from the prior year.

On a per unit basis, LOE was $0.67 per Mcf, a decrease of $0.01 per Mcf from the prior year. On an absolute basis, LOE increased $5.5 million due primarily to higher transportation and gathering costs as a result of increased production. LOE includes $56.2 million for gathering and compression services from NFG Midstream to connect Seneca’s production to sales points along interstate pipelines.

G&A expense was $0.18 per Mcf, an increase of less than $0.01 per Mcf from the prior year. On an absolute basis, Seneca’s G&A expense increased $2.2 million primarily due to an increase in personnel costs.

DD&A expense was $0.71 per Mcf, an increase of $0.10 per Mcf from the prior year. Absolute DD&A expense increased $16.4 million due to higher natural gas production and a higher per unit DD&A rate. The higher per unit rate was driven by an increase in Seneca's full cost pool due to a combination of higher capitalized costs and an increase in estimated future development costs related to proved undeveloped wells.

Other taxes decreased $3.3 million largely as a result of lower Impact Fees in Pennsylvania due to the decline in NYMEX natural gas prices. Seneca's all other O&M expense increased $3.0 million due primarily to the accrual of estimated plugging and abandonment expenses related to certain California wells that were sold by Seneca in 2004 to an operator that is no longer in business. As a result, the cost of abandoning the wells will likely revert back to Seneca.

Interest expense increased $2.0 million due primarily to higher average interest rates combined with a higher average amount of net borrowings.

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
  December 31
(in thousands)   2023     2022   Variance
GAAP Earnings $ 24,055   $ 29,476   $ (5,421 )
           
Adjusted EBITDA $ 59,142   $ 64,528   $ (5,386 )

The Pipeline and Storage segment’s first quarter GAAP earnings decreased $5.4 million versus the prior year primarily due to lower operating revenues, higher O&M and DD&A expenses. The decrease in operating revenues of $3.2 million was primarily attributable to contract expirations that occurred near the end of the prior-year first quarter. O&M expense increased $1.9 million primarily due to an increase in personnel costs. The increase in DD&A expense of $0.8 million was attributable to higher average depreciable plant in service compared to the prior year.

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
  December 31
(in thousands)   2023     2022   Variance
GAAP Earnings $ 28,825   $ 24,738   $ 4,087
           
Adjusted EBITDA $ 53,061   $ 46,715   $ 6,346

The Gathering segment’s first quarter GAAP earnings increased $4.1 million versus the prior year due primarily to higher operating revenues, partly offset by higher DD&A expense. Operating revenues increased $6.2 million, or 11%, which was the result of a $4.2 million increase in revenue from Seneca and a $2.0 million increase in revenue from non-affiliated parties. DD&A expense increased $0.7 million due primarily to higher average depreciable plant in service compared to the prior year.

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
  December 31
(in thousands)   2023     2022   Variance
GAAP Earnings $ 26,551   $ 23,817   $ 2,734
           
Adjusted EBITDA $ 53,366   $ 51,577   $ 1,789

The Utility segment’s first quarter GAAP earnings increased $2.7 million versus the prior year due to higher customer margins (operating revenues less purchased gas sold) and a lower effective income tax rate, partially offset by increases in O&M and DD&A expenses.

The $4.7 million increase in customer margin for the quarter was primarily a result of the $23 million annual rate increase in Distribution's Pennsylvania jurisdiction that was approved last year and went into effect in August 2023. Higher revenues from the Company’s system modernization tracking mechanisms in its New York service territory also contributed to the increase. These increases were partially offset by a decrease in customer usage due in large part to warmer weather as compared to the prior-year first quarter. The impact of temperature fluctuations on usage and margin revenues is largely protected by weather normalization adjustment (“WNA”) mechanisms in both the New York and Pennsylvania jurisdictions. The Company's WNA mechanism in Pennsylvania, which went into effect for the first time in October 2023, is subject to a dead-band threshold whereby margin impacted by weather that is more than 3% warmer or colder than normal is recovered or refunded through the mechanism.

O&M expense increased by $3.4 million, primarily driven by higher personnel costs and an increase in expenses related to the current New York rate case proceeding filed during the quarter. These increases were partially offset by a decline in the accrual for uncollectible accounts due to a decrease in the natural gas commodity component of customer bills. DD&A expense increased $1.2 million primarily due to higher average depreciable plant in service compared to the prior year.

The reduction in the Utility segment's effective income tax rate was primarily driven by an increase in tax deductions related to certain repairs and maintenance expenditures as a result of recently updated IRS guidance.

Corporate and All Other

The Company’s operations that are included in Corporate and All Other generated combined earnings of $1.1 million in the current year first quarter, which was $0.6 million higher than the combined earnings of $0.5 million in the prior-year first quarter. The increase in earnings was primarily driven by a higher amount of unrealized gains on investment securities recognized in the current quarter as compared to the prior-year first quarter.

EARNINGS TELECONFERENCE

The Company will host a conference call on Thursday, February 8, 2024, at 10 a.m. Eastern Time to discuss this announcement. To pre-register for the call (recommended), please visit https://www.netroadshow.com/events/login?show=4b2c797c&confId=59975. 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 1-833–470–1428 and provide Participant Access Code 059311. The teleconference will also be simultaneously webcast online and can be accessed on the NFG Investor Relations website at investor.nationalfuelgas.com. A telephone replay of the teleconference call will be available through the end of the day on Thursday, February 15, 2024. To access the replay, dial U.S. toll free 1-866-813-9403 and provide Replay Access Code 385109.

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; impairments under the SEC’s full cost ceiling test for natural gas reserves; the creditworthiness or performance of the Company’s key suppliers, customers and counterparties; financial and economic conditions, including the availability of credit, and occurrences affecting the Company’s ability to obtain financing on acceptable terms for working capital, capital expenditures and other investments, including any downgrades in the Company’s credit ratings and changes in interest rates and other capital market conditions; 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; 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, water availability and disposal or recycling opportunities of used water, 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; the Company’s ability to complete strategic transactions; 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 COMPANYAND SUBSIDIARIES

GUIDANCE SUMMARY

As discussed on page 2, the Company is revising its earnings guidance for fiscal 2024. Additional details on the Company's forecast assumptions and business segment guidance are outlined in the table below.

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 nine months ending September 30, 2024, 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.

  Previous FY 2024 Guidance   Updated FY 2024 Guidance
Adjusted Consolidated Earnings per Share, excluding items impacting comparability $5.40 to $5.90   $4.90 to $5.20
Consolidated Effective Tax Rate ~ 25 - 25.5%   ~ 25 - 25.5%
       
Capital Expenditures (Millions)      
Exploration and Production $525 - $575   $525 - $575
Pipeline and Storage $120 - $140   $120 - $140
Gathering $90 - $110   $90 - $110
Utility $130 - $150   $150 - $175
Consolidated Capital Expenditures $865 - $975   $885 - $1,000
       
Exploration & Production Segment Guidance*      
       
Commodity Price Assumptions      
NYMEX natural gas price $3.25 /MMBtu   $2.40 /MMBtu
Appalachian basin spot price $2.40 - $2.45 /MMBtu   $1.70 /MMBtu
       
Production (Bcf) 390 to 410   395 to 410
       
E&P Operating Costs ($/Mcf)      
LOE $0.69 - $0.71   $0.69 - $0.70
G&A $0.17 - $0.19   $0.17 - $0.19
DD&A $0.69 - $0.74   $0.69 - $0.74
       
Other Business Segment Guidance (Millions)      
Gathering Segment Revenues $240 - $260   $245 - $260
Pipeline and Storage Segment Revenues $380 - $420   $380 - $420

* Commodity price assumptions are for the remaining 9 months of the fiscal year.

NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
QUARTER ENDED DECEMBER 31, 2023
(Unaudited)
                       
  Upstream   Midstream   Downstream        
                       
  Exploration &   Pipeline &           Corporate /    
(Thousands of Dollars) Production   Storage   Gathering   Utility   All Other   Consolidated*
                       
First quarter 2023 GAAP earnings $ 91,192     $ 29,476     $ 24,738     $ 23,817     $ 466     $ 169,689  
Items impacting comparability:                      
Unrealized (gain) loss on other investments                   (209 )     (209 )
Tax impact of unrealized (gain) loss on other investments                   44       44  
First quarter 2023 adjusted operating results   91,192       29,476       24,738       23,817       301       169,524  
Drivers of adjusted operating results**                      
Upstream Revenues                      
Higher (lower) natural gas production   24,265                       24,265  
Higher (lower) realized natural gas prices, after hedging   (40,682 )                     (40,682 )
Midstream Revenues                      
Higher (lower) operating revenues       (2,561 )     4,878               2,317  
Downstream Margins***                      
Impact of usage and weather               (2,759 )         (2,759 )
Impact of new rates in Pennsylvania               6,849           6,849  
System modernization and improvement tracker revenues               918           918  
Operating Expenses                      
Lower (higher) lease operating and transportation expenses   (4,367 )                     (4,367 )
Lower (higher) operating expenses   (4,121 )     (1,526 )         (3,787 )     (465 )     (9,899 )
Lower (higher) property, franchise and other taxes   2,637                       2,637  
Lower (higher) depreciation / depletion   (12,962 )     (631 )     (592 )     (919 )         (15,104 )
Other Income (Expense)                      
Higher (lower) other income               748       (911 )     (163 )
(Higher) lower interest expense   (1,607 )     (611 )             1,280       (938 )
Income Taxes                      
Lower (higher) income tax expense / effective tax rate   2,017       128       (483 )     1,817       27       3,506  
All other / rounding   (842 )     (220 )     284       (133 )     45       (866 )
First quarter 2024 adjusted operating results   55,530       24,055       28,825       26,551       277       135,238  
Items impacting comparability:                      
Unrealized gain (loss) on derivative asset   (4,198 )                     (4,198 )
Tax impact of unrealized gain (loss) on derivative asset   1,151                       1,151  
Unrealized gain (loss) on other investments                   1,049       1,049  
Tax impact of unrealized gain (loss) on other investments                   (220 )     (220 )
First quarter 2024 GAAP earnings $ 52,483     $ 24,055     $ 28,825     $ 26,551     $ 1,106     $ 133,020  
                       
* Amounts do not reflect intercompany eliminations.           
** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate.
*** Downstream margin defined as operating revenues less purchased gas expense.
 
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
QUARTER ENDED DECEMBER 31, 2023
(Unaudited)
                       
  Upstream   Midstream   Downstream        
                       
  Exploration &   Pipeline &           Corporate /    
  Production   Storage   Gathering   Utility   All Other   Consolidated*
                       
First quarter 2023 GAAP earnings per share $ 0.99     $ 0.32     $ 0.27     $ 0.26     $     $ 1.84  
Items impacting comparability:                      
Unrealized (gain) loss on other investments, net of tax                          
First quarter 2023 adjusted operating results per share   0.99       0.32       0.27       0.26             1.84  
Drivers of adjusted operating results**                      
Upstream Revenues                      
Higher (lower) natural gas production   0.26                       0.26  
Higher (lower) realized natural gas prices, after hedging   (0.44 )                     (0.44 )
Midstream Revenues                      
Higher (lower) operating revenues       (0.03 )     0.05               0.02  
Downstream Margins***                      
Impact of usage and weather               (0.03 )         (0.03 )
Impact of new rates in Pennsylvania               0.07           0.07  
System modernization and improvement tracker revenues               0.01           0.01  
Operating Expenses                      
Lower (higher) lease operating and transportation expenses   (0.05 )                     (0.05 )
Lower (higher) operating expenses   (0.04 )     (0.02 )         (0.04 )     (0.01 )     (0.11 )
Lower (higher) property, franchise and other taxes   0.03                       0.03  
Lower (higher) depreciation / depletion   (0.14 )     (0.01 )     (0.01 )     (0.01 )         (0.17 )
Other Income (Expense)                      
Higher (lower) other income               0.01       (0.01 )      
(Higher) lower interest expense   (0.02 )     (0.01 )             0.01       (0.02 )
Income Taxes                      
Lower (higher) income tax expense / effective tax rate   0.02             (0.01 )     0.02             0.03  
All other / rounding   (0.01 )     0.01       0.01             0.01       0.02  
First quarter 2024 adjusted operating results per share   0.60       0.26       0.31       0.29             1.46  
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  
First quarter 2024 GAAP earnings per share $ 0.57     $ 0.26     $ 0.31     $ 0.29     $ 0.01     $ 1.44  
                       
* Amounts do not reflect intercompany eliminations.           
** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate.
*** Downstream margin defined as operating revenues less purchased gas expense.
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
       
(Thousands of Dollars, except per share amounts)      
  Three Months Ended
  December 31,
  (Unaudited)
SUMMARY OF OPERATIONS   2023       2022  
Operating Revenues:      
Utility Revenues $ 201,920     $ 311,619  
Exploration and Production and Other Revenues   254,019       276,973  
Pipeline and Storage and Gathering Revenues   69,422       70,267  
    525,361       658,859  
Operating Expenses:      
Purchased Gas   56,552       171,197  
Operation and Maintenance:      
Utility   53,705       50,352  
Exploration and Production and Other   34,826       26,874  
Pipeline and Storage and Gathering   34,962       33,261  
Property, Franchise and Other Taxes   22,416       26,205  
Depreciation, Depletion and Amortization   115,790       96,600  
    318,251       404,489  
       
Operating Income   207,110       254,370  
       
Other Income (Expense):      
Other Income (Deductions)   3,732       6,318  
Interest Expense on Long-Term Debt   (28,462 )     (29,604 )
Other Interest Expense   (6,273 )     (3,843 )
       
Income Before Income Taxes   176,107       227,241  
       
Income Tax Expense   43,087       57,552  
       
Net Income Available for Common Stock $ 133,020     $ 169,689  
       
Earnings Per Common Share      
Basic $ 1.45     $ 1.85  
Diluted $ 1.44     $ 1.84  
       
Weighted Average Common Shares:      
Used in Basic Calculation   91,910,244       91,579,814  
Used in Diluted Calculation   92,442,145       92,268,210  
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
   
  December 31,   September 30,
(Thousands of Dollars)   2023       2023  
ASSETS      
Property, Plant and Equipment $ 13,857,060     $ 13,635,303  
Less - Accumulated Depreciation, Depletion and Amortization   6,435,129       6,335,441  
Net Property, Plant and Equipment   7,421,931       7,299,862  
Current Assets:      
Cash and Temporary Cash Investments   41,685       55,447  
Receivables - Net   189,669       160,601  
Unbilled Revenue   48,265       16,622  
Gas Stored Underground   26,891       32,509  
Materials and Supplies - at average cost   47,692       48,989  
Other Current Assets   99,400       100,260  
Total Current Assets   453,602       414,428  
Other Assets:      
Recoverable Future Taxes   73,283       69,045  
Unamortized Debt Expense   6,829       7,240  
Other Regulatory Assets   72,088       72,138  
Deferred Charges   80,347       82,416  
Other Investments   76,633       73,976  
Goodwill   5,476       5,476  
Prepaid Pension and Post-Retirement Benefit Costs   208,015       200,301  
Fair Value of Derivative Financial Instruments   184,739       50,487  
Other   4,549       4,891  
Total Other Assets   711,959       565,970  
Total Assets $ 8,587,492     $ 8,280,260  
CAPITALIZATION AND LIABILITIES      
Capitalization:      
Comprehensive Shareholders' Equity      
Common Stock, $1 Par Value Authorized - 200,000,000 Shares; Issued and      
Outstanding - 92,115,581 Shares and 91,819,405 Shares, Respectively $ 92,116     $ 91,819  
Paid in Capital   1,041,226       1,040,761  
Earnings Reinvested in the Business   1,973,279       1,885,856  
Accumulated Other Comprehensive Income (Loss)   67,381       (55,060 )
Total Comprehensive Shareholders' Equity   3,174,002       2,963,376  
Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issuance Costs   2,385,523       2,384,485  
Total Capitalization   5,559,525       5,347,861  
Current and Accrued Liabilities:      
Notes Payable to Banks and Commercial Paper   300,000       287,500  
Accounts Payable   105,390       152,193  
Amounts Payable to Customers   60,032       59,019  
Dividends Payable   45,597       45,451  
Interest Payable on Long-Term Debt   42,288       20,399  
Customer Advances   23,086       21,003  
Customer Security Deposits   30,843       28,764  
Other Accruals and Current Liabilities   200,009       160,974  
Fair Value of Derivative Financial Instruments         31,009  
Total Current and Accrued Liabilities   807,245       806,312  
Other Liabilities:      
Deferred Income Taxes   1,164,512       1,124,170  
Taxes Refundable to Customers   317,838       268,562  
Cost of Removal Regulatory Liability   284,687       277,694  
Other Regulatory Liabilities   165,988       165,441  
Other Post-Retirement Liabilities   2,859       2,915  
Asset Retirement Obligations   164,777       165,492  
Other Liabilities   120,061       121,813  
Total Other Liabilities   2,220,722       2,126,087  
Commitments and Contingencies          
Total Capitalization and Liabilities $ 8,587,492     $ 8,280,260  
         
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
    Three Months Ended
    December 31,
(Thousands of Dollars)     2023       2022  
         
Operating Activities:        
Net Income Available for Common Stock   $ 133,020     $ 169,689  
Adjustments to Reconcile Net Income to Net Cash        
Provided by Operating Activities:        
Depreciation, Depletion and Amortization     115,790       96,600  
Deferred Income Taxes     38,362       53,457  
Stock-Based Compensation     4,660       5,575  
Other     8,041       4,078  
Change in:        
Receivables and Unbilled Revenue     (58,459 )     (29,522 )
Gas Stored Underground and Materials and Supplies     6,915       5,622  
Unrecovered Purchased Gas Costs           20,603  
Other Current Assets     892       (1,748 )
Accounts Payable     (3,355 )     6,091  
Amounts Payable to Customers     1,013       (265 )
Customer Advances     2,083       5,206  
Customer Security Deposits     2,079       4,546  
Other Accruals and Current Liabilities     28,612       4,523  
Other Assets     (6,306 )     (20,238 )
Other Liabilities     (2,403 )     3,122  
Net Cash Provided by Operating Activities   $ 270,944     $ 327,339  
         
Investing Activities:        
Capital Expenditures   $ (246,938 )   $ (233,473 )
Sale of Fixed Income Mutual Fund Shares in Grantor Trust           10,000  
Other     (920 )     14,637  
Net Cash Used in Investing Activities   $ (247,858 )   $ (208,836 )
         
Financing Activities:        
Proceeds from Issuance of Short-Term Note Payable to Bank   $     $ 250,000  
Net Change in Other Short-Term Notes Payable to Banks and Commercial Paper     12,500       (60,000 )
Reduction of Long-Term Debt           (150,000 )
Dividends Paid on Common Stock     (45,451 )     (43,452 )
Net Repurchases of Common Stock     (3,897 )     (6,694 )
Net Cash Used in Financing Activities   $ (36,848 )   $ (10,146 )
         
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash     (13,762 )     108,357  
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period     55,447       137,718  
Cash, Cash Equivalents, and Restricted Cash at December 31   $ 41,685     $ 246,075  
           
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
           
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
           
UPSTREAM BUSINESS
           
  Three Months Ended
(Thousands of Dollars, except per share amounts) December 31,
EXPLORATION AND PRODUCTION SEGMENT   2023       2022     Variance
Total Operating Revenues $ 254,019     $ 276,973     $ (22,954 )
Operating Expenses:          
Operation and Maintenance:          
General and Administrative Expense   17,793       15,598       2,195  
Lease Operating and Transportation Expense   67,074       61,546       5,528  
All Other Operation and Maintenance Expense   5,544       2,523       3,021  
Property, Franchise and Other Taxes   3,638       6,976       (3,338 )
Depreciation, Depletion and Amortization   71,965       55,558       16,407  
    166,014       142,201       23,813  
           
Operating Income   88,005       134,772       (46,767 )
           
Other Income (Expense):          
Non-Service Pension and Post-Retirement Benefit Credit   100       347       (247 )
Interest and Other Income (Deductions)   (1,513 )     1,331       (2,844 )
Interest Expense   (15,268 )     (13,234 )     (2,034 )
Income Before Income Taxes   71,324       123,216       (51,892 )
Income Tax Expense   18,841       32,024       (13,183 )
Net Income $ 52,483     $ 91,192     $ (38,709 )
Net Income Per Share (Diluted) $ 0.57     $ 0.99     $ (0.42 )
           
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
           
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
           
MIDSTREAM BUSINESSES
           
  Three Months Ended
(Thousands of Dollars, except per share amounts) December 31,
PIPELINE AND STORAGE SEGMENT   2023       2022     Variance
Revenues from External Customers $ 64,826     $ 67,621     $ (2,795 )
Intersegment Revenues   29,587       30,034       (447 )
Total Operating Revenues   94,413       97,655       (3,242 )
Operating Expenses:          
Purchased Gas   601       425       176  
Operation and Maintenance   25,950       24,018       1,932  
Property, Franchise and Other Taxes   8,720       8,684       36  
Depreciation, Depletion and Amortization   18,213       17,414       799  
    53,484       50,541       2,943  
           
Operating Income   40,929       47,114       (6,185 )
           
Other Income (Expense):          
Non-Service Pension and Post-Retirement Benefit Credit   1,257       1,330       (73 )
Interest and Other Income   1,931       1,864       67  
Interest Expense   (11,725 )     (10,952 )     (773 )
Income Before Income Taxes   32,392       39,356       (6,964 )
Income Tax Expense   8,337       9,880       (1,543 )
Net Income $ 24,055     $ 29,476     $ (5,421 )
Net Income Per Share (Diluted) $ 0.26     $ 0.32     $ (0.06 )
           
           
  Three Months Ended
  December 31,
GATHERING SEGMENT   2023       2022     Variance
Revenues from External Customers $ 4,596     $ 2,646     $ 1,950  
Intersegment Revenues   57,992       53,767       4,225  
Total Operating Revenues   62,588       56,413       6,175  
Operating Expenses:          
Operation and Maintenance   9,504       9,687       (183 )
Property, Franchise and Other Taxes   23       11       12  
Depreciation, Depletion and Amortization   9,458       8,709       749  
    18,985       18,407       578  
           
Operating Income   43,603       38,006       5,597  
           
Other Income (Expense):          
Non-Service Pension and Post-Retirement Benefit Credit   9       37       (28 )
Interest and Other Income   73       170       (97 )
Interest Expense   (3,729 )     (4,042 )     313  
Income Before Income Taxes   39,956       34,171       5,785  
Income Tax Expense   11,131       9,433       1,698  
Net Income $ 28,825     $ 24,738     $ 4,087  
Net Income Per Share (Diluted) $ 0.31     $ 0.27     $ 0.04  
           
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
           
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
           
DOWNSTREAM BUSINESS
           
  Three Months Ended
(Thousands of Dollars, except per share amounts) December 31,
UTILITY SEGMENT   2023       2022     Variance
Revenues from External Customers $ 201,920     $ 311,619     $ (109,699 )
Intersegment Revenues   87       62       25  
Total Operating Revenues   202,007       311,681       (109,674 )
Operating Expenses:          
Purchased Gas   84,051       198,420       (114,369 )
Operation and Maintenance   54,684       51,276       3,408  
Property, Franchise and Other Taxes   9,906       10,408       (502 )
Depreciation, Depletion and Amortization   16,037       14,874       1,163  
    164,678       274,978       (110,300 )
           
Operating Income   37,329       36,703       626  
           
Other Income (Expense):          
Non-Service Pension and Post-Retirement Benefit (Costs) Credit   470       (8 )     478  
Interest and Other Income   1,911       1,440       471  
Interest Expense   (8,457 )     (8,043 )     (414 )
Income Before Income Taxes   31,253       30,092       1,161  
Income Tax Expense   4,702       6,275       (1,573 )
Net Income $ 26,551     $ 23,817     $ 2,734  
Net Income Per Share (Diluted) $ 0.29     $ 0.26     $ 0.03  
           
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
           
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
           
  Three Months Ended
(Thousands of Dollars, except per share amounts) December 31,
ALL OTHER   2023       2022     Variance
Revenues from External Customers $     $     $  
Intersegment Revenues                
Total Operating Revenues                
Operating Expenses:          
Operation and Maintenance         21       (21 )
          21       (21 )
           
Operating Loss         (21 )     21  
Other Income (Expense):          
Interest and Other Income (Deductions)   (77 )     (324 )     247  
Interest Expense   (81 )     (21 )     (60 )
Loss before Income Taxes   (158 )     (366 )     208  
Income Tax Benefit   (37 )     (86 )     49  
Net Loss $ (121 )   $ (280 )   $ 159  
Net Loss Per Share (Diluted) $     $ (0.01 )   $ 0.01  
   
  Three Months Ended
  December 31,
CORPORATE   2023       2022     Variance
Revenues from External Customers $     $     $  
Intersegment Revenues   1,285       1,152       133  
Total Operating Revenues   1,285       1,152       133  
Operating Expenses:          
Operation and Maintenance   3,795       3,185       610  
Property, Franchise and Other Taxes   129       126       3  
Depreciation, Depletion and Amortization   117       45       72  
    4,041       3,356       685  
           
Operating Loss   (2,756 )     (2,204 )     (552 )
Other Income (Expense):          
Non-Service Pension and Post-Retirement Benefit Costs   (387 )     (354 )     (33 )
Interest and Other Income   41,030       37,877       3,153  
Interest Expense on Long-Term Debt   (28,462 )     (29,604 )     1,142  
Other Interest Expense   (8,085 )     (4,943 )     (3,142 )
Income before Income Taxes   1,340       772       568  
Income Tax Expense   113       26       87  
Net Income $ 1,227     $ 746     $ 481  
Net Income Per Share (Diluted) $ 0.01     $ 0.01     $  
           
           
  Three Months Ended
  December 31,
INTERSEGMENT ELIMINATIONS   2023       2022     Variance
Intersegment Revenues $ (88,951 )   $ (85,015 )   $ (3,936 )
Operating Expenses:          
Purchased Gas   (28,100 )     (27,648 )     (452 )
Operation and Maintenance   (60,851 )     (57,367 )     (3,484 )
    (88,951 )     (85,015 )     (3,936 )
Operating Income                
Other Income (Expense):          
Interest and Other Deductions   (41,072 )     (37,392 )     (3,680 )
Interest Expense   41,072       37,392       3,680  
Net Income $     $     $  
Net Income Per Share (Diluted) $     $     $  
           
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
           
SEGMENT INFORMATION (Continued)
(Thousands of Dollars)
           
  Three Months Ended
  December 31,
  (Unaudited)
          Increase
    2023     2022   (Decrease)
Capital Expenditures:          
Exploration and Production $ 160,957 (1)(2) $ 168,505 (3)(4) $ (7,548 )
Pipeline and Storage   24,554 (1)(2)   16,427 (3)(4)   8,127  
Gathering   19,569 (1)(2)   13,293 (3)(4)   6,276  
Utility   30,510 (1)(2)   25,288 (3)(4)   5,222  
Total Reportable Segments   235,590     223,513     12,077  
All Other            
Corporate   61     12     49  
Total Capital Expenditures $ 235,651   $ 223,525   $ 12,126  
(1) Capital expenditures for the quarter ended December 31, 2023, include accounts payable and accrued liabilities related to capital expenditures of $74.9 million, $5.5 million, $11.1 million, and $6.4 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at December 31, 2023, since they represent non-cash investing activities at that date.
(2) Capital expenditures for the quarter ended December 31, 2023, exclude capital expenditures of $43.2 million, $31.8 million, $20.6 million and $13.6 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, 2023 and paid during the quarter ended December 31, 2023. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2023, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at December 31, 2023.
(3) Capital expenditures for the quarter ended December 31, 2022, include accounts payable and accrued liabilities related to capital expenditures of $102.9 million, $2.1 million, $1.1 million, and $4.2 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts were excluded from the Consolidated Statement of Cash Flows at December 31, 2022, since they represented non-cash investing activities at that date.
(4) Capital expenditures for the year ended December 31, 2022, 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 quarter ended December 31, 2022. 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 December 31, 2022.

 

                   
DEGREE DAYS                  
              Percent Colder
              (Warmer) Than:
Three Months Ended December 31, Normal   2023   2022   Normal (1)   Last Year (1)
Buffalo, NY 2,253   1,858   2,048   (17.5 )   (9.3 )
Erie, PA(2) 1,894   1,664   1,987   (12.1 )   (16.3 )
(1) Percents compare actual 2023 degree days to normal degree days and actual 2023 degree days to actual 2022 degree days.
(2) Normal degree days changed from NOAA 30-year degree days to NOAA 15-year degree days with the implementation of new base rates in Pennsylvania in August 2023.

 

             
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
             
EXPLORATION AND PRODUCTION INFORMATION
             
    Three Months Ended
    December 31,
            Increase
      2023     2022   (Decrease)
Gas Production/Prices:            
Production (MMcf)            
Appalachia     100,757     90,574     10,183  
             
Average Prices (Per Mcf)            
Weighted Average   $ 2.31   $ 4.77   $ (2.46 )
Weighted Average after Hedging     2.51     3.02     (0.51 )
             
Selected Operating Performance Statistics:            
General & Administrative Expense per Mcf (1)   $ 0.18   $ 0.17   $ 0.01  
Lease Operating and Transportation Expense per Mcf (1)(2)   $ 0.67   $ 0.68   $ (0.01 )
Depreciation, Depletion & Amortization per Mcf (1)   $ 0.71   $ 0.61   $ 0.10  
             
(1) Refer to page 13 for the General and Administrative Expense, Lease Operating and Transportation Expense and Depreciation, Depletion, and Amortization Expense for the Exploration and Production segment.
(2) Amounts include transportation expense of $0.56 and $0.59 per Mcf for the three months ended December 31, 2023 and December 31, 2022, respectively.

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
               
EXPLORATION AND PRODUCTION INFORMATION
 
Hedging Summary for Remaining Nine Months of Fiscal 2024   Volume     Average Hedge Price
Gas Swaps              
NYMEX   112,110,000   MMBTU   $ 3.37 / MMBTU
No Cost Collars   45,900,000   MMBTU   $ 3.29 / MMBTU (Floor) / $4.08 / MMBTU (Ceiling)
Fixed Price Physical Sales   65,537,550   MMBTU   $ 2.44 / MMBTU
Total   223,547,550   MMBTU      
               
Hedging Summary for Fiscal 2025   Volume     Average Hedge Price
Gas Swaps              
NYMEX   94,960,000   MMBTU   $ 3.50 / MMBTU
No Cost Collars   43,960,000   MMBTU   $ 3.49 / MMBTU (Floor) / $4.65 / MMBTU (Ceiling)
Fixed Price Physical Sales   76,425,978   MMBTU   $ 2.47 / MMBTU
Total   215,345,978   MMBTU      
               
Hedging Summary for Fiscal 2026   Volume     Average Hedge Price
Gas Swaps              
NYMEX   38,020,000   MMBTU   $ 3.98 / MMBTU
No Cost Collars   42,720,000   MMBTU   $ 3.53 / MMBTU (Floor) / $4.76 / MMBTU (Ceiling)
Fixed Price Physical Sales   69,397,972   MMBTU   $ 2.41 / MMBTU
Total   150,137,972   MMBTU      
               
Hedging Summary for Fiscal 2027   Volume     Average Hedge Price
Gas Swaps              
NYMEX   21,750,000   MMBTU   $ 4.16 / MMBTU
No Cost Collars   3,560,000   MMBTU   $ 3.53 / MMBTU (Floor) / $4.76 / MMBTU (Ceiling)
Fixed Price Physical Sales   49,183,383   MMBTU   $ 2.42 / MMBTU
Total   74,493,383   MMBTU      
               
Hedging Summary for Fiscal 2028   Volume     Average Hedge Price
Gas Swaps              
NYMEX   1,750,000   MMBTU   $ 4.16 / MMBTU
Fixed Price Physical Sales   12,469,845   MMBTU   $ 2.49 / MMBTU
Total   14,219,845   MMBTU      
               
Hedging Summary for Fiscal 2029   Volume     Average Hedge Price
Fixed Price Physical Sales   788,352   MMBTU   $ 2.54 / MMBTU
             
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
             
Pipeline & Storage Throughput - (millions of cubic feet - MMcf)
             
    Three Months Ended
    December 31,
            Increase
    2023   2022   (Decrease)
Firm Transportation - Affiliated   31,495   38,469   (6,974 )
Firm Transportation - Non-Affiliated   168,606   186,154   (17,548 )
Interruptible Transportation   118   1,308   (1,190 )
    200,219   225,931   (25,712 )
             
Gathering Volume - (MMcf)            
    Three Months Ended
    December 31,
            Increase
    2023   2022   (Decrease)
Gathered Volume   124,261   108,027   16,234  
             
             
Utility Throughput - (MMcf)            
    Three Months Ended
    December 31,
            Increase
    2023   2022   (Decrease)
Retail Sales:            
Residential Sales   17,982   20,153   (2,171 )
Commercial Sales   2,800   2,994   (194 )
Industrial Sales   138   151   (13 )
    20,920   23,298   (2,378 )
Transportation   17,528   18,310   (782 )
    38,448   41,608   (3,160 )
             

  

NATIONAL FUEL GAS COMPANYAND 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 months ended December 31, 2023 and 2022:

    Three Months Ended
    December 31,
(in thousands except per share amounts)     2023       2022  
Reported GAAP Earnings   $ 133,020     $ 169,689  
Items impacting comparability:        
Unrealized (gain) loss on derivative asset (E&P)     4,198        
Tax impact of unrealized (gain) loss on derivative asset     (1,151 )      
Unrealized (gain) loss on other investments (Corporate / All Other)     (1,049 )     (209 )
Tax impact of unrealized (gain) loss on other investments     220       44  
Adjusted Operating Results   $ 135,238     $ 169,524  
         
Reported GAAP Earnings Per Share   $ 1.44     $ 1.84  
Items impacting comparability:        
Unrealized (gain) loss on derivative asset, net of tax (E&P)     0.03        
Unrealized (gain) loss on other investments, net of tax (Corporate / All Other)     (0.01 )      
Adjusted Operating Results Per Share   $ 1.46     $ 1.84  

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 months ended December 31, 2023 and 2022:

    Three Months Ended
    December 31,
(in thousands)     2023       2022  
Reported GAAP Earnings   $ 133,020     $ 169,689  
Depreciation, Depletion and Amortization     115,790       96,600  
Other (Income) Deductions     (3,732 )     (6,318 )
Interest Expense     34,735       33,447  
Income Taxes     43,087       57,552  
Adjusted EBITDA   $ 322,900     $ 350,970  
         
Adjusted EBITDA by Segment        
Pipeline and Storage Adjusted EBITDA   $ 59,142     $ 64,528  
Gathering Adjusted EBITDA     53,061       46,715  
Total Midstream Businesses Adjusted EBITDA     112,203       111,243  
Exploration and Production Adjusted EBITDA     159,970       190,330  
Utility Adjusted EBITDA     53,366       51,577  
Corporate and All Other Adjusted EBITDA     (2,639 )     (2,180 )
Total Adjusted EBITDA   $ 322,900     $ 350,970  

 
NATIONAL FUEL GAS COMPANYAND SUBSIDIARIESNON-GAAP FINANCIAL MEASURES SEGMENT ADJUSTED EBITDA
 
    Three Months Ended
    December 31,
(in thousands)     2023       2022  
Exploration and Production Segment        
Reported GAAP Earnings   $ 52,483     $ 91,192  
Depreciation, Depletion and Amortization     71,965       55,558  
Other (Income) Deductions     1,413       (1,678 )
Interest Expense     15,268       13,234  
Income Taxes     18,841       32,024  
Adjusted EBITDA   $ 159,970     $ 190,330  
         
Pipeline and Storage Segment        
Reported GAAP Earnings   $ 24,055     $ 29,476  
Depreciation, Depletion and Amortization     18,213       17,414  
Other (Income) Deductions     (3,188 )     (3,194 )
Interest Expense     11,725       10,952  
Income Taxes     8,337       9,880  
Adjusted EBITDA   $ 59,142     $ 64,528  
         
Gathering Segment        
Reported GAAP Earnings   $ 28,825     $ 24,738  
Depreciation, Depletion and Amortization     9,458       8,709  
Other (Income) Deductions     (82 )     (207 )
Interest Expense     3,729       4,042  
Income Taxes     11,131       9,433  
Adjusted EBITDA   $ 53,061     $ 46,715  
         
Utility Segment        
Reported GAAP Earnings   $ 26,551     $ 23,817  
Depreciation, Depletion and Amortization     16,037       14,874  
Other (Income) Deductions     (2,381 )     (1,432 )
Interest Expense     8,457       8,043  
Income Taxes     4,702       6,275  
Adjusted EBITDA   $ 53,366     $ 51,577  
         
Corporate and All Other        
Reported GAAP Earnings   $ 1,106     $ 466  
Depreciation, Depletion and Amortization     117       45  
Other (Income) Deductions     506       193  
Interest Expense     (4,444 )     (2,824 )
Income Taxes     76       (60 )
Adjusted EBITDA   $ (2,639 )   $ (2,180 )

Management defines free cash flow as net cash provided by operating activities, less net cash used in investing activities, adjusted for acquisitions and divestitures. 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.

Brandon J. Haspett
Investor Relations
716-857-7697

Timothy J. Silverstein
Treasurer
716-857-6987
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