WILLIAMSVILLE, N.Y., Aug. 04, 2022 (GLOBE NEWSWIRE) -- National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated results for the third quarter of its 2022 fiscal year and for the nine months ended June 30, 2022.
FISCAL 2022 THIRD QUARTER SUMMARY
- GAAP net income of $108.2 million, or $1.17 per share, compared to GAAP net income of $86.5 million, or $0.94 per share, in the prior year, an increase of 24% per share.
- Adjusted operating results of $141.9 million, or $1.54 per share, an increase of 66%, compared to $0.93 per share, in the prior year (see non-GAAP reconciliation on page 2).
- Adjusted EBITDA of $318.1 million, an increase of 36%, compared to $234.2 million in the prior year (see non-GAAP reconciliation on page 25).
- Successfully closed the sale of the Company's California assets for net cash proceeds of approximately $241 million, after customary closing adjustments, and future contingent consideration with a potential value of up to $30 million.
- Company is revising its fiscal 2022 earnings guidance to a range of $5.85 to $5.95 per share, excluding items impacting comparability, and initiating its fiscal 2023 earnings guidance with a range of $7.25 to $7.75 per share, an increase of 27% from fiscal 2022, 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 had an excellent third quarter, with adjusted operating results increasing 66% compared to the prior year. The benefits of our integrated approach to development were evident during the quarter, with the FM100 Project driving meaningful growth in our Pipeline and Storage segment, while providing a valuable outlet for Seneca’s natural gas production. Moreover, our coordinated approach to Appalachian development, in which we own and operate 100% of our gathering infrastructure, allowed us to maximize Seneca’s production during the quarter, capitalizing on the further improved commodity price environment.”
"As we look to next year, the Company is poised for continued earnings growth and sustained free cash flow generation. Underpinned by our highly-efficient Appalachian development program, our valuable firm transportation portfolio, and a strong natural gas price outlook, we expect to continue to grow our natural gas production base, with our gathering business growing in lockstep. This, coupled with our ongoing investment in modernizing our resilient and reliable transmission, storage, and distribution infrastructure, positions the Company to deliver value through further earnings growth, deleveraging our balance sheet, and the predictable return of an increasing amount of cash to shareholders.”
RECONCILIATION OF GAAP EARNINGS TO ADJUSTED OPERATING RESULTS
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(in thousands except per share amounts) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Reported GAAP Earnings | $ | 108,158 | $ | 86,475 | $ | 407,879 | $ | 276,685 | ||||||||
Items impacting comparability: | ||||||||||||||||
Items related to West Coast asset sale: | ||||||||||||||||
Gain on sale of West Coast assets (E&P) | (12,736 | ) | — | (12,736 | ) | — | ||||||||||
Tax impact of gain on sale of West Coast assets | 3,225 | — | 3,225 | — | ||||||||||||
Loss from discontinuance of crude oil cash flow hedges (E&P) | 44,632 | — | 44,632 | — | ||||||||||||
Tax impact of loss from discontinuance of crude oil cash flow hedges | (11,303 | ) | — | (11,303 | ) | — | ||||||||||
Transaction and severance costs (E&P) | 9,693 | — | 9,693 | — | ||||||||||||
Tax impact of transaction and severance costs | (2,455 | ) | — | (2,455 | ) | — | ||||||||||
Total items impacting comparability related to West Coast asset sale | 31,056 | — | 31,056 | — | ||||||||||||
Reduction of other post-retirement regulatory liability (Utility) | — | — | (18,533 | ) | — | |||||||||||
Tax impact of reduction of other post-retirement regulatory liability | — | — | 3,892 | — | ||||||||||||
Unrealized (gain) loss on other investments (Corporate / All Other) | 3,434 | (1,025 | ) | 10,093 | (575 | ) | ||||||||||
Tax impact of unrealized (gain) loss on other investments | (721 | ) | 215 | (2,120 | ) | 120 | ||||||||||
Impairment of oil and gas properties (E&P) | — | — | — | 76,152 | ||||||||||||
Tax impact of impairment of oil and gas properties | — | — | — | (20,980 | ) | |||||||||||
Gain on sale of timber properties (Corporate / All Other) | — | — | — | (51,066 | ) | |||||||||||
Tax impact of gain on sale of timber properties | — | — | — | 14,069 | ||||||||||||
Premium paid on early redemption of debt | — | — | — | 15,715 | ||||||||||||
Tax impact of premium paid on early redemption of debt | — | — | — | (4,321 | ) | |||||||||||
Adjusted Operating Results | $ | 141,927 | $ | 85,665 | $ | 432,267 | $ | 305,799 | ||||||||
Reported GAAP Earnings Per Share | $ | 1.17 | $ | 0.94 | $ | 4.43 | $ | 3.02 | ||||||||
Items impacting comparability: | ||||||||||||||||
Items related to West Coast asset sale: | ||||||||||||||||
Gain on sale of West Coast assets, net of tax (E&P) | (0.10 | ) | — | (0.10 | ) | — | ||||||||||
Loss from discontinuance of crude oil cash flow hedges, net of tax (E&P) | 0.36 | — | 0.36 | — | ||||||||||||
Transaction and severance costs, net of tax (E&P) | 0.08 | — | 0.08 | — | ||||||||||||
Total items impacting comparability related to West Coast asset sale | 0.34 | — | 0.34 | — | ||||||||||||
Reduction of other post-retirement regulatory liability, net of tax (Utility) | — | — | (0.16 | ) | — | |||||||||||
Unrealized (gain) loss on other investments, net of tax (Corporate / All Other) | 0.03 | (0.01 | ) | 0.08 | — | |||||||||||
Impairment of oil and gas properties, net of tax (E&P) | — | — | — | 0.60 | ||||||||||||
Gain on sale of timber properties, net of tax (Corporate / All Other) | — | — | — | (0.40 | ) | |||||||||||
Premium paid on early redemption of debt, net of tax | — | — | — | 0.12 | ||||||||||||
Adjusted Operating Results Per Share | $ | 1.54 | $ | 0.93 | $ | 4.69 | $ | 3.34 |
DISCUSSION OF GUIDANCE UPDATE
National Fuel is revising its fiscal 2022 earnings guidance range and is now projecting earnings, excluding items impacting comparability, will be within the range of $5.85 to $5.95 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 2022 net production is expected to be in the range of 350 to 355 Bcfe, an increase of 2.5 Bcfe from the prior midpoint. Seneca currently has firm sales contracts in place for approximately 90% of its projected remaining fiscal 2022 natural gas production, limiting its exposure to in-basin markets. Approximately 80% of expected remaining Appalachian 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 2023 with earnings projected to be within a range of $7.25 to $7.75 per share, or $7.50 per share at the midpoint of the range, an increase of 27% from the midpoint of the fiscal 2022 guidance range. The anticipated increase in earnings is being driven largely by higher anticipated commodity price realizations, as well as forecasted growth in natural gas production and the associated impact on Gathering revenues.
Seneca’s fiscal 2023 net production is increasing to an expected range of 370 to 390 Bcfe, an increase of 27.5 Bcfe versus fiscal 2022 at the midpoint of the respective guidance ranges. When adjusting for the sale of Seneca’s California properties, fiscal 2023 production is expected to be 11% higher than fiscal 2022, at the midpoint of the respective guidance ranges.
In addition, the Company anticipates its natural gas price realizations after hedging to increase by approximately $0.62 per Mcf from its estimated fiscal 2022 realizations, driven in large part by lower expected hedge losses. Overall, Seneca has firm sales contracts in place for approximately 87% of its expected fiscal 2023 natural gas production, limiting its exposure to in-basin markets, while also having 67% supported by financial hedges, limiting exposure to potential swings in natural gas prices in fiscal 2023.
The Company’s consolidated capital expenditures in fiscal 2023 are expected to be in a range of $830 million to $940 million, an increase of $77.5 million versus the midpoint of its fiscal 2022 guidance. This preliminary guidance range incorporates planned activity, as described below, as well as anticipated inflationary impacts across all segments.
The Exploration and Production segment expects to maintain its current two-rig program for the entirety of fiscal 2023, and modestly increase completion activity relative to fiscal 2022. This increased level of completion activity is expected to be coupled with a greater share of our development program targeting the prolific Tioga County acreage. This will require incremental near-term capital expenditures in the Gathering segment to build out necessary infrastructure to support Seneca's growing production in the region.
In the Company’s regulated Pipeline and Storage and Utility segments, capital expenditures are primarily focused on modernizing existing infrastructure, which is expected to drive rate base growth in the range of 3% to 5%, on average over the next several years. These modernization efforts continue to enhance the safety and resiliency of our infrastructure and contribute to the ongoing reduction in the Company’s emissions profile.
Additional details on the Company's updated forecast assumptions and business segment guidance for fiscal 2022 and fiscal 2023 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, 2022 is summarized in a tabular form on pages 9 and 10 of this report (earnings drivers for the nine months ended June 30, 2022 are summarized on pages 11 and 12). It may be helpful to refer to those tables while reviewing this discussion.
Note that management defines Adjusted Operating Results as reported GAAP earnings adjusted for items impacting comparability, and Adjusted EBITDA as reported GAAP earnings before the following items: interest expense, income taxes, depreciation, depletion and amortization, other income and deductions, impairments, and other items reflected in operating income that impact comparability.
Upstream Business
Exploration and Production Segment
The Exploration and Production segment operations are carried out by Seneca Resources Company, LLC ("Seneca"). Seneca explores for, develops and produces natural gas and oil reserves, primarily in Pennsylvania.
Three Months Ended | ||||||||||
June 30, | ||||||||||
(in thousands) | 2022 | 2021 | Variance | |||||||
GAAP Earnings | $ | 56,497 | $ | 39,015 | $ | 17,482 | ||||
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 | $ | 87,553 | $ | 39,015 | $ | 48,538 | ||||
Adjusted EBITDA | $ | 184,622 | $ | 116,052 | $ | 68,570 |
Seneca’s third quarter GAAP earnings, which increased $17.5 million versus the prior year, include several items related to the sale of its California assets. In particular, Seneca recorded a $12.7 million ($9.5 million after-tax) gain related to assets that were not subject to the full cost method of accounting. The Company also recorded a loss of $44.6 million ($33.3 million after-tax) related to the termination of its remaining crude oil derivative contracts as a result of the sale. In addition, the Company incurred transaction and severance costs of $9.7 million ($7.2 million after-tax) related to the California asset sale. Excluding these items noted above, Seneca’s earnings increased $48.5 million primarily due to higher realized natural gas and crude oil prices, higher natural gas production, and a lower effective income tax rate, all of which were partially offset by higher operating expenses and higher interest expense.
Seneca produced 92.4 Bcfe during the third quarter, an increase of 9.4 Bcfe, or 11%, from the prior year. This is a result of a 9.5 Bcf increase in natural gas production primarily due to growth from Seneca's development program in Appalachia. Seneca's crude oil production decreased 32 MBbls, or 6%, versus the prior year primarily due to natural production decline in California.
Seneca's average realized natural gas price, after the impact of hedging and transportation costs, was $2.87 per Mcf, an increase of $0.67 per Mcf from the prior year. This increase was primarily due to higher NYMEX prices and higher spot prices at local sales points in Pennsylvania. Seneca's average realized oil price, after the impact of hedging, was $77.65 per Bbl, an increase of $18.43 per Bbl compared to the prior year.
Lease operating and transportation (“LOE”) expense increased $12.8 million primarily due to higher transportation costs in Appalachia as a result of increased production, and higher steam fuel, labor, utilities, well repair and workover expenses in California. LOE expense includes $53.1 million in intercompany expense for gathering and compression services used to connect Seneca's Appalachian production to sales points along interstate pipelines. Depreciation, depletion and amortization ("DD&A") expense increased $9.3 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. Excluding the impact of the transaction and severance costs related to the sale of Seneca's California assets noted above, Seneca's other operating expenses increased $6.1 million due primarily to the accrual of estimated plugging and abandonment expenses related to certain offshore Gulf of Mexico wells that were formerly owned by the Company. Several years ago, Seneca sold those wells to an operator that has since gone bankrupt. As a result of that bankruptcy, the cost of abandoning the wells will likely revert back to Seneca.
Interest expense increased $2.6 million due primarily to a higher average amount of intercompany short-term borrowings outstanding coupled with a higher weighted average interest rate on such borrowings. The reduction in Seneca's effective income tax rate was primarily driven by the realization of the Enhanced Oil Recovery tax credit in fiscal 2022, which was not available in 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) | 2022 | 2021 | Variance | |||||
GAAP Earnings | $ | 26,599 | $ | 21,948 | $ | 4,651 | ||
Adjusted EBITDA | $ | 62,565 | $ | 53,086 | $ | 9,479 |
The Pipeline and Storage segment’s third quarter GAAP earnings increased $4.7 million versus the prior year primarily due to an increase in operating revenues, partially offset by higher operation and maintenance ("O&M") expense and higher DD&A expense. The increase in operating revenues of $11.5 million was primarily attributable to higher transportation revenues from Supply Corporation's FM100 Project, which was placed in service in December 2021. O&M expense increased $1.7 million primarily due to an increase in personnel costs, as well as higher vehicle fuel costs and compressor station maintenance costs. The increase in DD&A expense of $1.7 million was primarily attributable to incremental depreciation expense from the FM100 Project.
Gathering Segment
The Gathering segment’s operations are carried out by National Fuel Gas Midstream Company, LLC’s limited liability companies. The Gathering segment constructs, owns and operates natural gas gathering pipelines and compression facilities in the Appalachian region, which primarily delivers Seneca’s gross Appalachian production to the interstate pipeline system.
Three Months Ended | ||||||||
June 30, | ||||||||
(in thousands) | 2022 | 2021 | Variance | |||||
GAAP Earnings | $ | 24,658 | $ | 20,427 | $ | 4,231 | ||
Adjusted EBITDA | $ | 46,151 | $ | 39,929 | $ | 6,222 |
The Gathering segment’s third quarter GAAP earnings increased $4.2 million versus the prior year primarily due to higher operating revenues, which was partially offset by higher O&M expense. Operating revenues increased $7.3 million, or 15%, primarily driven by an 18.0 Bcf increase in gathered volumes from new wells that were brought on-line in Appalachia. The increase in O&M expense of $1.1 million was primarily due to an increase in personnel costs, higher costs for materials, and an increase in compressor station operating and preventative maintenance activity during the quarter.
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) | 2022 | 2021 | Variance | ||||||
GAAP Earnings | $ | 4,622 | $ | 4,841 | $ | (219 | ) | ||
Adjusted EBITDA | $ | 27,042 | $ | 29,431 | $ | (2,389 | ) |
The Utility segment’s third quarter GAAP earnings were essentially flat versus the prior year as the benefit of higher customer margin (operating revenues less purchased gas sold) and a decrease in non-service post-retirement benefit costs recorded in other income (deductions) were offset by higher O&M expense. The increase in customer margin was due primarily to higher revenues from the Company's system modernization tracking mechanism in its New York service territory, partially offset by a reduction in base rates in Pennsylvania as a result of a rate proceeding in Pennsylvania that concluded in the second quarter whereby the Utility agreed to lower the amount of other post-employment benefit (“OPEB”) expense it recovers in rates. With the elimination of OPEB expenses in rates, there was also a decrease in non-service post-retirement benefit costs recorded in other income (deductions). The increase in O&M expense was primarily attributable to higher personnel costs and an increase in vehicle fuel costs.
Corporate and All Other
The Company’s operations that are included in Corporate and All Other generated a combined net loss of $4.2 million in the current year third quarter, which was a $4.4 million decrease from the combined earnings of $0.2 million generated in the prior-year third quarter. The decrease in earnings was primarily driven by unrealized losses on investment securities recognized in the current quarter compared to unrealized gains on investment securities in the prior-year third quarter.
EARNINGS TELECONFERENCE
The Company will host a conference call on Friday, August 5, 2022, at 11 a.m. Eastern Time to discuss this announcement. Pre-registration is required to access the teleconference by phone in a listen-only mode by following this link: https://conferencingportals.com/event/LUMnWUbV. To access the webcast, visit the Events Calendar on the NFG Investor Relations website at investor.nationalfuelgas.com. An audio replay of the teleconference call will be available approximately two hours following the teleconference at the same website link and by phone at 800-770-2030 or 647-362-9199 using conference ID number “99543”. Both the webcast and conference call replay will be available until the close of business on Friday, August 12, 2022.
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 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; the length and severity of the ongoing COVID-19 pandemic, including its impacts across our businesses on demand, operations, global supply chains and liquidity; 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, including disruptions due to the COVID-19 pandemic, as well as difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators; the Company's ability to complete planned strategic transactions; the Company's ability to successfully integrate acquired assets and achieve expected cost synergies; changes in price differentials between similar quantities of natural gas 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, 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 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; 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 2022 and initiating guidance for fiscal 2023. Additional details on the Company's forecast assumptions and business segment guidance for fiscal 2022 and fiscal 2023 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, 2022, including: (1) the after-tax gain on the sale of West Coast assets, which increased earnings by $0.10 per share; (2) the after-tax loss from the discontinuance of crude oil cash flow hedges, which reduced earnings by $0.36 per share; (3) after-tax transaction and severance costs related to the West Coast asset sale, which reduced earnings by $0.08 per share; (4) the after-tax reduction of an other post-retirement regulatory liability, which increased earnings by $0.16 per share; and (5) after-tax unrealized losses on other investments, which reduced earnings by $0.08 per share. While the Company expects to record certain adjustments to unrealized gain or loss on investments during the three months ending September 30, 2022, 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 2022 Guidance | Preliminary FY 2023 Guidance | ||
Consolidated Earnings per Share, excluding items impacting comparability | $5.85 to $5.95 | $7.25 to $7.75 | |
Consolidated Effective Tax Rate | ~ 25 - 25.5% | ~ 25.5 - 26% | |
Capital Expenditures (Millions) | |||
Exploration and Production | $525 - $550 | $525 - $575 | |
Pipeline and Storage | $100 - $120 | $110 - $130 | |
Gathering | $50 - $60 | $85 - $105 | |
Utility | $100 - $110 | $110 - $130 | |
Consolidated Capital Expenditures | $775 - $840 | $830 - $940 | |
Exploration & Production Segment Guidance* | |||
Commodity Price Assumptions | |||
NYMEX natural gas price (Oct - Mar | Apr - Sep) | $7.75 /MMBtu | $7.50 /MMBtu l $5.00 /MMBtu | |
Appalachian basin spot price (Oct - Mar | Apr - Sep) | $7.20 /MMBtu | $6.50 /MMBtu l $3.90 /MMBtu | |
Production (Bcfe) | 350 to 355 | 370 to 390 | |
E&P Operating Costs ($/Mcfe) | |||
LOE | $0.70 - $0.71 | $0.67 - $0.69 | |
G&A | ~$0.18 | $0.17 - $0.19 | |
DD&A | $0.57 - $0.59 | $0.60 - $0.64 | |
Other Business Segment Guidance (Millions) | |||
Gathering Segment Revenues | $210 - $220 | $235 - $250 | |
Pipeline and Storage Segment Revenues | $365 - $375 | $360 - $380 |
* Fiscal 2022 commodity price assumptions and operating costs are for the remaining 3 months of the fiscal year.
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS | |||||||||||||||||||||||
QUARTER ENDED JUNE 30, 2022 | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Upstream | Midstream | Downstream | |||||||||||||||||||||
Exploration & | Pipeline & | Corporate / | |||||||||||||||||||||
(Thousands of Dollars) | Production | Storage | Gathering | Utility | All Other | Consolidated* | |||||||||||||||||
Third quarter 2021 GAAP earnings | $ | 39,015 | $ | 21,948 | $ | 20,427 | $ | 4,841 | $ | 244 | $ | 86,475 | |||||||||||
Items impacting comparability: | |||||||||||||||||||||||
Unrealized (gain) loss on other investments | (1,025 | ) | (1,025 | ) | |||||||||||||||||||
Tax impact of unrealized (gain) loss on other investments | 215 | 215 | |||||||||||||||||||||
Third quarter 2021 adjusted operating results | 39,015 | 21,948 | 20,427 | 4,841 | (566 | ) | 85,665 | ||||||||||||||||
Drivers of adjusted operating results** | |||||||||||||||||||||||
Upstream Revenues | |||||||||||||||||||||||
Higher (lower) natural gas production | 16,589 | 16,589 | |||||||||||||||||||||
Higher (lower) crude oil production | (1,499 | ) | (1,499 | ) | |||||||||||||||||||
Higher (lower) realized natural gas prices, after hedging | 47,404 | 47,404 | |||||||||||||||||||||
Higher (lower) realized crude oil prices, after hedging | 7,663 | 7,663 | |||||||||||||||||||||
Midstream Revenues | |||||||||||||||||||||||
Higher (lower) operating revenues | 9,174 | 5,747 | 14,921 | ||||||||||||||||||||
Downstream Margins*** | |||||||||||||||||||||||
Impact of usage and weather | 232 | 232 | |||||||||||||||||||||
Impact of new rates | (1,105 | ) | (1,105 | ) | |||||||||||||||||||
System modernization tracker revenues | 1,345 | 1,345 | |||||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||
Lower (higher) lease operating and transportation expenses | (10,129 | ) | (10,129 | ) | |||||||||||||||||||
Lower (higher) operating expenses | (4,806 | ) | (1,360 | ) | (833 | ) | (2,629 | ) | 1,616 | (8,012 | ) | ||||||||||||
Lower (higher) depreciation / depletion | (7,308 | ) | (1,353 | ) | (8,661 | ) | |||||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||
(Higher) lower other deductions | 1,938 | (1,781 | ) | 157 | |||||||||||||||||||
(Higher) lower interest expense | (2,039 | ) | (587 | ) | (508 | ) | 965 | (2,169 | ) | ||||||||||||||
Income Taxes | |||||||||||||||||||||||
Lower (higher) income tax expense / effective tax rate | 3,267 | (658 | ) | (317 | ) | 388 | (1,715 | ) | 965 | ||||||||||||||
All other / rounding | (604 | ) | (565 | ) | (366 | ) | 120 | (24 | ) | (1,439 | ) | ||||||||||||
Third quarter 2022 adjusted operating results | 87,553 | 26,599 | 24,658 | 4,622 | (1,505 | ) | 141,927 | ||||||||||||||||
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 GAAP earnings | $ | 56,497 | $ | 26,599 | $ | 24,658 | $ | 4,622 | $ | (4,218 | ) | $ | 108,158 | ||||||||||
* Amounts do not reflect intercompany eliminations. | |||||||||||||||||||||||
** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate. | |||||||||||||||||||||||
*** Downstream margin defined as operating revenues less purchased gas expense. |
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE | |||||||||||||||||||||||
QUARTER ENDED JUNE 30, 2022 | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Upstream | Midstream | Downstream | |||||||||||||||||||||
Exploration & | Pipeline & | Corporate / | |||||||||||||||||||||
Production | Storage | Gathering | Utility | All Other | Consolidated* | ||||||||||||||||||
Third quarter 2021 GAAP earnings per share | $ | 0.43 | $ | 0.24 | $ | 0.22 | $ | 0.05 | $ | — | $ | 0.94 | |||||||||||
Items impacting comparability: | |||||||||||||||||||||||
Unrealized (gain) loss on other investments, net of tax | (0.01 | ) | (0.01 | ) | |||||||||||||||||||
Third quarter 2021 adjusted operating results per share | 0.43 | 0.24 | 0.22 | 0.05 | (0.01 | ) | 0.93 | ||||||||||||||||
Drivers of adjusted operating results** | |||||||||||||||||||||||
Upstream Revenues | |||||||||||||||||||||||
Higher (lower) natural gas production | 0.18 | 0.18 | |||||||||||||||||||||
Higher (lower) crude oil production | (0.02 | ) | (0.02 | ) | |||||||||||||||||||
Higher (lower) realized natural gas prices, after hedging | 0.51 | 0.51 | |||||||||||||||||||||
Higher (lower) realized crude oil prices, after hedging | 0.08 | 0.08 | |||||||||||||||||||||
Midstream Revenues | |||||||||||||||||||||||
Higher (lower) operating revenues | 0.10 | 0.06 | 0.16 | ||||||||||||||||||||
Downstream Margins*** | |||||||||||||||||||||||
Impact of usage and weather | — | — | |||||||||||||||||||||
Impact of new rates | (0.01 | ) | (0.01 | ) | |||||||||||||||||||
System modernization tracker revenues | 0.01 | 0.01 | |||||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||
Lower (higher) lease operating and transportation expenses | (0.11 | ) | (0.11 | ) | |||||||||||||||||||
Lower (higher) operating expenses | (0.05 | ) | (0.01 | ) | (0.01 | ) | (0.03 | ) | 0.02 | (0.08 | ) | ||||||||||||
Lower (higher) depreciation / depletion | (0.08 | ) | (0.01 | ) | (0.09 | ) | |||||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||
(Higher) lower other deductions | 0.02 | (0.02 | ) | — | |||||||||||||||||||
(Higher) lower interest expense | (0.02 | ) | (0.01 | ) | (0.01 | ) | 0.01 | (0.03 | ) | ||||||||||||||
Income Taxes | |||||||||||||||||||||||
Lower (higher) income tax expense / effective tax rate | 0.04 | (0.01 | ) | — | — | (0.02 | ) | 0.01 | |||||||||||||||
All other / rounding | (0.01 | ) | (0.01 | ) | — | 0.02 | — | — | |||||||||||||||
Third quarter 2022 adjusted operating results per share | 0.95 | 0.29 | 0.27 | 0.05 | (0.02 | ) | 1.54 | ||||||||||||||||
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 GAAP earnings per share | $ | 0.61 | $ | 0.29 | $ | 0.27 | $ | 0.05 | $ | (0.05 | ) | $ | 1.17 | ||||||||||
* Amounts do not reflect intercompany eliminations. | |||||||||||||||||||||||
** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate. | |||||||||||||||||||||||
*** Downstream margin defined as operating revenues less purchased gas expense. |
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS | |||||||||||||||||||||||
NINE MONTHS ENDED JUNE 30, 2022 | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Upstream | Midstream | Downstream | |||||||||||||||||||||
Exploration & | Pipeline & | Corporate / | |||||||||||||||||||||
(Thousands of Dollars) | Production | Storage | Gathering | Utility | All Other | Consolidated* | |||||||||||||||||
Nine months ended June 30, 2021 GAAP earnings | $ | 46,213 | $ | 71,060 | $ | 61,677 | $ | 59,922 | $ | 37,813 | $ | 276,685 | |||||||||||
Items impacting comparability: | |||||||||||||||||||||||
Impairment of oil and gas properties | 76,152 | 76,152 | |||||||||||||||||||||
Tax impact of impairment of oil and gas properties | (20,980 | ) | (20,980 | ) | |||||||||||||||||||
Gain on sale of timber properties | (51,066 | ) | (51,066 | ) | |||||||||||||||||||
Tax impact of gain on sale of timber properties | 14,069 | 14,069 | |||||||||||||||||||||
Premium paid on early redemption of debt | 14,772 | 943 | 15,715 | ||||||||||||||||||||
Tax impact of premium paid on early redemption of debt | (4,062 | ) | (259 | ) | (4,321 | ) | |||||||||||||||||
Unrealized (gain) loss on other investments | (575 | ) | (575 | ) | |||||||||||||||||||
Tax impact of unrealized (gain) loss on other investments | 120 | 120 | |||||||||||||||||||||
Nine months ended June 30, 2021 adjusted operating results | 112,095 | 71,060 | 62,361 | 59,922 | 361 | 305,799 | |||||||||||||||||
Drivers of adjusted operating results** | |||||||||||||||||||||||
Upstream Revenues | |||||||||||||||||||||||
Higher (lower) natural gas production | 30,188 | 30,188 | |||||||||||||||||||||
Higher (lower) crude oil production | (3,787 | ) | (3,787 | ) | |||||||||||||||||||
Higher (lower) realized natural gas prices, after hedging | 93,251 | 93,251 | |||||||||||||||||||||
Higher (lower) realized crude oil prices, after hedging | 19,312 | 19,312 | |||||||||||||||||||||
Higher (lower) other operating revenues | 4,772 | 4,772 | |||||||||||||||||||||
Midstream Revenues | |||||||||||||||||||||||
Higher (lower) operating revenues | 15,550 | 11,717 | 27,267 | ||||||||||||||||||||
Downstream Margins*** | |||||||||||||||||||||||
Impact of usage and weather | 3,194 | 3,194 | |||||||||||||||||||||
Impact of new rates | (5,945 | ) | (5,945 | ) | |||||||||||||||||||
System modernization tracker revenues | 3,719 | 3,719 | |||||||||||||||||||||
Regulatory revenue adjustments | (1,047 | ) | (1,047 | ) | |||||||||||||||||||
Higher (lower) energy marketing margins | 1,301 | 1,301 | |||||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||
Lower (higher) lease operating and transportation expenses | (17,314 | ) | (17,314 | ) | |||||||||||||||||||
Lower (higher) operating expenses | (7,841 | ) | (5,878 | ) | (2,180 | ) | (4,542 | ) | 1,756 | (18,685 | ) | ||||||||||||
Lower (higher) property, franchise and other taxes | (3,136 | ) | (751 | ) | (3,887 | ) | |||||||||||||||||
Lower (higher) depreciation / depletion | (14,089 | ) | (2,853 | ) | (957 | ) | (17,899 | ) | |||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||
(Higher) lower other deductions | 710 | 8,828 | (1,875 | ) | 7,663 | ||||||||||||||||||
(Higher) lower interest expense | 3,176 | (679 | ) | 2,497 | |||||||||||||||||||
Income Taxes | |||||||||||||||||||||||
Lower (higher) income tax expense / effective tax rate | 3,833 | (436 | ) | (1,019 | ) | 1,243 | (2,943 | ) | 678 | ||||||||||||||
All other / rounding | 583 | (166 | ) | (35 | ) | 466 | 342 | 1,190 | |||||||||||||||
Nine months ended June 30, 2022 adjusted operating results | 221,043 | 77,236 | 69,887 | 65,159 | (1,058 | ) | 432,267 | ||||||||||||||||
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 GAAP earnings | $ | 189,987 | $ | 77,236 | $ | 69,887 | $ | 79,800 | $ | (9,031 | ) | $ | 407,879 | ||||||||||
* Amounts do not reflect intercompany eliminations. | |||||||||||||||||||||||
** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate. | |||||||||||||||||||||||
*** Downstream margin defined as operating revenues less purchased gas expense. |
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE | |||||||||||||||||||||||
NINE MONTHS ENDED JUNE 30, 2022 | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Upstream | Midstream | Downstream | |||||||||||||||||||||
Exploration & | Pipeline & | Corporate / | |||||||||||||||||||||
Production | Storage | Gathering | Utility | All Other | Consolidated* | ||||||||||||||||||
Nine months ended June 30, 2021 GAAP earnings per share | $ | 0.50 | $ | 0.78 | $ | 0.67 | $ | 0.65 | $ | 0.42 | $ | 3.02 | |||||||||||
Items impacting comparability: | |||||||||||||||||||||||
Impairment of oil and gas properties, net of tax | 0.60 | 0.60 | |||||||||||||||||||||
Gain on sale of timber properties, net of tax | (0.40 | ) | (0.40 | ) | |||||||||||||||||||
Premium paid on early redemption of debt, net of tax | 0.12 | — | 0.12 | ||||||||||||||||||||
Unrealized (gain) loss on other investments, net of tax | — | — | |||||||||||||||||||||
Rounding | 0.01 | (0.01 | ) | — | |||||||||||||||||||
Nine months ended June 30, 2021 adjusted operating results per share | 1.22 | 0.78 | 0.68 | 0.65 | 0.01 | 3.34 | |||||||||||||||||
Drivers of adjusted operating results** | |||||||||||||||||||||||
Upstream Revenues | |||||||||||||||||||||||
Higher (lower) natural gas production | 0.33 | 0.33 | |||||||||||||||||||||
Higher (lower) crude oil production | (0.04 | ) | (0.04 | ) | |||||||||||||||||||
Higher (lower) realized natural gas prices, after hedging | 1.01 | 1.01 | |||||||||||||||||||||
Higher (lower) realized crude oil prices, after hedging | 0.21 | 0.21 | |||||||||||||||||||||
Higher (lower) other operating revenues | 0.05 | 0.05 | |||||||||||||||||||||
Midstream Revenues | |||||||||||||||||||||||
Higher (lower) operating revenues | 0.17 | 0.13 | 0.30 | ||||||||||||||||||||
Downstream Margins*** | |||||||||||||||||||||||
Impact of usage and weather | 0.03 | 0.03 | |||||||||||||||||||||
Impact of new rates | (0.06 | ) | (0.06 | ) | |||||||||||||||||||
System modernization tracker revenues | 0.04 | 0.04 | |||||||||||||||||||||
Regulatory revenue adjustments | (0.01 | ) | (0.01 | ) | |||||||||||||||||||
Higher (lower) energy marketing margins | 0.01 | 0.01 | |||||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||
Lower (higher) lease operating and transportation expenses | (0.19 | ) | (0.19 | ) | |||||||||||||||||||
Lower (higher) operating expenses | (0.09 | ) | (0.06 | ) | (0.02 | ) | (0.05 | ) | 0.02 | (0.20 | ) | ||||||||||||
Lower (higher) property, franchise and other taxes | (0.03 | ) | (0.01 | ) | (0.04 | ) | |||||||||||||||||
Lower (higher) depreciation / depletion | (0.15 | ) | (0.03 | ) | (0.01 | ) | (0.19 | ) | |||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||
(Higher) lower other deductions | 0.01 | 0.10 | (0.02 | ) | 0.09 | ||||||||||||||||||
(Higher) lower interest expense | 0.03 | (0.01 | ) | 0.02 | |||||||||||||||||||
Income Taxes | |||||||||||||||||||||||
Lower (higher) income tax expense / effective tax rate | 0.04 | — | (0.01 | ) | 0.01 | (0.03 | ) | 0.01 | |||||||||||||||
All other / rounding | 0.01 | (0.02 | ) | (0.01 | ) | 0.01 | (0.01 | ) | (0.02 | ) | |||||||||||||
Nine months ended June 30, 2022 adjusted operating results per share | 2.40 | 0.84 | 0.76 | 0.71 | (0.02 | ) | 4.69 | ||||||||||||||||
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 GAAP earnings per share | $ | 2.06 | $ | 0.84 | $ | 0.76 | $ | 0.87 | $ | (0.10 | ) | $ | 4.43 | ||||||||||
* Amounts do not reflect intercompany eliminations. | |||||||||||||||||||||||
** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate. | |||||||||||||||||||||||
*** Downstream margin defined as operating revenues less purchased gas expense. |
NATIONAL FUEL GAS COMPANY | |||||||||||||||
AND SUBSIDIARIES | |||||||||||||||
(Thousands of Dollars, except per share amounts) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
SUMMARY OF OPERATIONS | 2022 | 2021 | 2022 | 2021 | |||||||||||
Operating Revenues: | |||||||||||||||
Utility and Energy Marketing Revenues | $ | 179,888 | $ | 126,933 | $ | 785,664 | $ | 587,247 | |||||||
Exploration and Production and Other Revenues | 252,638 | 209,618 | 758,594 | 621,933 | |||||||||||
Pipeline and Storage and Gathering Revenues | 70,098 | 57,846 | 206,642 | 177,491 | |||||||||||
502,624 | 394,397 | 1,750,900 | 1,386,671 | ||||||||||||
Operating Expenses: | |||||||||||||||
Purchased Gas | 67,948 | 18,737 | 369,168 | 177,018 | |||||||||||
Operation and Maintenance: | |||||||||||||||
Utility and Energy Marketing | 46,403 | 42,577 | 146,523 | 139,521 | |||||||||||
Exploration and Production and Other | 64,593 | 43,112 | 160,016 | 127,033 | |||||||||||
Pipeline and Storage and Gathering | 33,988 | 31,239 | 97,434 | 87,471 | |||||||||||
Property, Franchise and Other Taxes | 25,874 | 24,492 | 78,093 | 71,259 | |||||||||||
Depreciation, Depletion and Amortization | 95,857 | 84,170 | 275,681 | 251,632 | |||||||||||
Impairment of Oil and Gas Producing Properties | — | — | — | 76,152 | |||||||||||
334,663 | 244,327 | 1,126,915 | 930,086 | ||||||||||||
Gain on Sale of Assets | 12,736 | — | 12,736 | 51,066 | |||||||||||
Operating Income | 180,697 | 150,070 | 636,721 | 507,651 | |||||||||||
Other Income (Expense): | |||||||||||||||
Other Income (Deductions) | (5,649 | ) | (2,028 | ) | 3,291 | (15,078 | ) | ||||||||
Interest Expense on Long-Term Debt | (30,091 | ) | (30,220 | ) | (90,300 | ) | (111,296 | ) | |||||||
Other Interest Expense | (3,882 | ) | (1,012 | ) | (6,561 | ) | (4,630 | ) | |||||||
Income Before Income Taxes | 141,075 | 116,810 | 543,151 | 376,647 | |||||||||||
Income Tax Expense | 32,917 | 30,335 | 135,272 | 99,962 | |||||||||||
Net Income Available for Common Stock | $ | 108,158 | $ | 86,475 | $ | 407,879 | $ | 276,685 | |||||||
Earnings Per Common Share | |||||||||||||||
Basic | $ | 1.18 | $ | 0.95 | $ | 4.46 | $ | 3.04 | |||||||
Diluted | $ | 1.17 | $ | 0.94 | $ | 4.43 | $ | 3.02 | |||||||
Weighted Average Common Shares: | |||||||||||||||
Used in Basic Calculation | 91,456,265 | 91,172,683 | 91,388,417 | 91,113,973 | |||||||||||
Used in Diluted Calculation | 92,168,518 | 91,762,898 | 92,083,560 | 91,642,849 |
NATIONAL FUEL GAS COMPANY | |||||||
AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) | |||||||
June 30, | September 30, | ||||||
(Thousands of Dollars) | 2022 | 2021 | |||||
ASSETS | |||||||
Property, Plant and Equipment | $ | 12,299,545 | $ | 13,103,639 | |||
Less - Accumulated Depreciation, Depletion and Amortization | 5,914,097 | 6,719,356 | |||||
Net Property, Plant and Equipment | 6,385,448 | 6,384,283 | |||||
Current Assets: | |||||||
Cash and Temporary Cash Investments | 432,576 | 31,528 | |||||
Hedging Collateral Deposits | 154,470 | 88,610 | |||||
Receivables - Net | 399,033 | 205,294 | |||||
Unbilled Revenue | 18,525 | 17,000 | |||||
Gas Stored Underground | 12,336 | 33,669 | |||||
Materials, Supplies and Emission Allowances | 39,634 | 53,560 | |||||
Unrecovered Purchased Gas Costs | 32,412 | 33,128 | |||||
Other Current Assets | 61,359 | 59,660 | |||||
Total Current Assets | 1,150,345 | 522,449 | |||||
Other Assets: | |||||||
Recoverable Future Taxes | 125,576 | 121,992 | |||||
Unamortized Debt Expense | 9,308 | 10,589 | |||||
Other Regulatory Assets | 58,075 | 60,145 | |||||
Deferred Charges | 77,542 | 59,939 | |||||
Other Investments | 96,566 | 149,632 | |||||
Goodwill | 5,476 | 5,476 | |||||
Prepaid Pension and Post-Retirement Benefit Costs | 187,692 | 149,151 | |||||
Fair Value of Derivative Financial Instruments | 12,571 | — | |||||
Other | 3,487 | 1,169 | |||||
Total Other Assets | 576,293 | 558,093 | |||||
Total Assets | $ | 8,112,086 | $ | 7,464,825 | |||
CAPITALIZATION AND LIABILITIES | |||||||
Capitalization: | |||||||
Comprehensive Shareholders' Equity | |||||||
Common Stock, $1 Par Value Authorized - 200,000,000 Shares; Issued and | |||||||
Outstanding - 91,465,569 Shares and 91,181,549 Shares, Respectively | $ | 91,466 | $ | 91,182 | |||
Paid in Capital | 1,022,954 | 1,017,446 | |||||
Earnings Reinvested in the Business | 1,472,395 | 1,191,175 | |||||
Accumulated Other Comprehensive Loss | (582,868 | ) | (513,597 | ) | |||
Total Comprehensive Shareholders' Equity | 2,003,947 | 1,786,206 | |||||
Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issuance Costs | 2,082,463 | 2,628,687 | |||||
Total Capitalization | 4,086,410 | 4,414,893 | |||||
Current and Accrued Liabilities: | |||||||
Notes Payable to Banks and Commercial Paper | 400,000 | 158,500 | |||||
Current Portion of Long-Term Debt | 549,000 | — | |||||
Accounts Payable | 145,320 | 171,655 | |||||
Amounts Payable to Customers | 292 | 21 | |||||
Dividends Payable | 43,446 | 41,487 | |||||
Interest Payable on Long-Term Debt | 45,017 | 17,376 | |||||
Customer Advances | — | 17,223 | |||||
Customer Security Deposits | 25,200 | 19,292 | |||||
Other Accruals and Current Liabilities | 254,383 | 194,169 | |||||
Fair Value of Derivative Financial Instruments | 703,788 | 616,410 | |||||
Total Current and Accrued Liabilities | 2,166,446 | 1,236,133 | |||||
Other Liabilities: | |||||||
Deferred Income Taxes | 767,207 | 660,420 | |||||
Taxes Refundable to Customers | 346,577 | 354,089 | |||||
Cost of Removal Regulatory Liability | 256,092 | 245,636 | |||||
Other Regulatory Liabilities | 199,094 | 200,643 | |||||
Pension and Other Post-Retirement Liabilities | 4,732 | 7,526 | |||||
Asset Retirement Obligations | 152,100 | 209,639 | |||||
Other Liabilities | 133,428 | 135,846 | |||||
Total Other Liabilities | 1,859,230 | 1,813,799 | |||||
Commitments and Contingencies | — | — | |||||
Total Capitalization and Liabilities | $ | 8,112,086 | $ | 7,464,825 |
NATIONAL FUEL GAS COMPANY | ||||||||
AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited) | ||||||||
Nine Months Ended | ||||||||
June 30, | ||||||||
(Thousands of Dollars) | 2022 | 2021 | ||||||
Operating Activities: | ||||||||
Net Income Available for Common Stock | $ | 407,879 | $ | 276,685 | ||||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||||||||
Gain on Sale of Assets | (12,736 | ) | (51,066 | ) | ||||
Impairment of Oil and Gas Producing Properties | — | 76,152 | ||||||
Depreciation, Depletion and Amortization | 275,681 | 251,632 | ||||||
Deferred Income Taxes | 121,150 | 89,277 | ||||||
Premium Paid on Early Redemption of Debt | — | 15,715 | ||||||
Stock-Based Compensation | 15,178 | 12,296 | ||||||
Reduction of Other Post-Retirement Regulatory Liability | (18,533 | ) | — | |||||
Other | 27,527 | 7,795 | ||||||
Change in: | ||||||||
Receivables and Unbilled Revenue | (194,832 | ) | (40,733 | ) | ||||
Gas Stored Underground and Materials, Supplies and Emission Allowances | 24,141 | 19,024 | ||||||
Unrecovered Purchased Gas Costs | 716 | — | ||||||
Other Current Assets | (1,699 | ) | (4,282 | ) | ||||
Accounts Payable | 19,259 | 7,474 | ||||||
Amounts Payable to Customers | 271 | (3,595 | ) | |||||
Customer Advances | (17,223 | ) | (15,319 | ) | ||||
Customer Security Deposits | 5,908 | 2,073 | ||||||
Other Accruals and Current Liabilities | 61,322 | 23,154 | ||||||
Other Assets | (44,184 | ) | 5,839 | |||||
Other Liabilities | (15,809 | ) | (311 | ) | ||||
Net Cash Provided by Operating Activities | $ | 654,016 | $ | 671,810 | ||||
Investing Activities: | ||||||||
Capital Expenditures | $ | (592,487 | ) | $ | (512,775 | ) | ||
Net Proceeds from Sale of Oil and Gas Producing Properties | 254,439 | — | ||||||
Net Proceeds from Sale of Timber Properties | — | 104,582 | ||||||
Sale of Fixed Income Mutual Fund Shares in Grantor Trust | 30,000 | — | ||||||
Other | 13,528 | 11,223 | ||||||
Net Cash Used in Investing Activities | $ | (294,520 | ) | $ | (396,970 | ) | ||
Financing Activities: | ||||||||
Changes in Notes Payable to Banks and Commercial Paper | $ | 241,500 | $ | (30,000 | ) | |||
Reduction of Long-Term Debt | — | (515,715 | ) | |||||
Dividends Paid on Common Stock | (124,701 | ) | (121,606 | ) | ||||
Net Proceeds From Issuance of Long-Term Debt | — | 495,267 | ||||||
Net Repurchases of Common Stock | (9,387 | ) | (3,605 | ) | ||||
Net Cash Provided by (Used in) Financing Activities | $ | 107,412 | $ | (175,659 | ) | |||
Net Increase in Cash, Cash Equivalents, and Restricted Cash | 466,908 | 99,181 | ||||||
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 120,138 | 20,541 | ||||||
Cash, Cash Equivalents, and Restricted Cash at June 30 | $ | 587,046 | $ | 119,722 |
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 | 2022 | 2021 | Variance | 2022 | 2021 | Variance | |||||||||||||||
Total Operating Revenues | $ | 252,638 | $ | 209,535 | $ | 43,103 | $ | 758,428 | $ | 621,116 | $ | 137,312 | |||||||||
Operating Expenses: | |||||||||||||||||||||
Operation and Maintenance: | |||||||||||||||||||||
General and Administrative Expense | 26,844 | 16,165 | 10,679 | 63,396 | 51,017 | 12,379 | |||||||||||||||
Lease Operating and Transportation Expense | 79,529 | 66,708 | 12,821 | 221,213 | 199,296 | 21,917 | |||||||||||||||
All Other Operation and Maintenance Expense | 8,854 | 3,757 | 5,097 | 18,183 | 10,944 | 7,239 | |||||||||||||||
Property, Franchise and Other Taxes | 7,114 | 6,853 | 261 | 19,888 | 15,918 | 3,970 | |||||||||||||||
Depreciation, Depletion and Amortization | 55,136 | 45,886 | 9,250 | 155,190 | 137,356 | 17,834 | |||||||||||||||
Impairment of Oil and Gas Producing Properties | — | — | — | — | 76,152 | (76,152 | ) | ||||||||||||||
177,477 | 139,369 | 38,108 | 477,870 | 490,683 | (12,813 | ) | |||||||||||||||
Gain on Sale of Assets | 12,736 | — | 12,736 | 12,736 | — | 12,736 | |||||||||||||||
Operating Income | 87,897 | 70,166 | 17,731 | 293,294 | 130,433 | 162,861 | |||||||||||||||
Other Income (Expense): | |||||||||||||||||||||
Non-Service Pension and Post-Retirement Benefit Costs | (186 | ) | (289 | ) | 103 | (558 | ) | (860 | ) | 302 | |||||||||||
Interest and Other Income | 482 | 18 | 464 | 613 | 176 | 437 | |||||||||||||||
Interest Expense on Long-Term Debt | — | — | — | — | (15,119 | ) | 15,119 | ||||||||||||||
Interest Expense | (14,589 | ) | (12,008 | ) | (2,581 | ) | (38,927 | ) | (42,601 | ) | 3,674 | ||||||||||
Income Before Income Taxes | 73,604 | 57,887 | 15,717 | 254,422 | 72,029 | 182,393 | |||||||||||||||
Income Tax Expense | 17,107 | 18,872 | (1,765 | ) | 64,435 | 25,816 | 38,619 | ||||||||||||||
Net Income | $ | 56,497 | $ | 39,015 | $ | 17,482 | $ | 189,987 | $ | 46,213 | $ | 143,774 | |||||||||
Net Income Per Share (Diluted) | $ | 0.61 | $ | 0.43 | $ | 0.18 | $ | 2.06 | $ | 0.50 | $ | 1.56 | |||||||||
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 | 2022 | 2021 | Variance | 2022 | 2021 | Variance | |||||||||||||||
Revenues from External Customers | $ | 67,236 | $ | 57,258 | $ | 9,978 | $ | 196,579 | $ | 175,881 | $ | 20,698 | |||||||||
Intersegment Revenues | 28,312 | 26,805 | 1,507 | 82,716 | 82,651 | 65 | |||||||||||||||
Total Operating Revenues | 95,548 | 84,063 | 11,485 | 279,295 | 258,532 | 20,763 | |||||||||||||||
Operating Expenses: | |||||||||||||||||||||
Purchased Gas | (139 | ) | (11 | ) | (128 | ) | 1,298 | 219 | 1,079 | ||||||||||||
Operation and Maintenance | 24,639 | 22,918 | 1,721 | 71,249 | 63,809 | 7,440 | |||||||||||||||
Property, Franchise and Other Taxes | 8,483 | 8,070 | 413 | 25,664 | 24,713 | 951 | |||||||||||||||
Depreciation, Depletion and Amortization | 17,322 | 15,609 | 1,713 | 50,417 | 46,806 | 3,611 | |||||||||||||||
50,305 | 46,586 | 3,719 | 148,628 | 135,547 | 13,081 | ||||||||||||||||
Operating Income | 45,243 | 37,477 | 7,766 | 130,667 | 122,985 | 7,682 | |||||||||||||||
Other Income (Expense): | |||||||||||||||||||||
Non-Service Pension and Post-Retirement Benefit Credit | 767 | 125 | 642 | 2,302 | 376 | 1,926 | |||||||||||||||
Interest and Other Income | 735 | 1,364 | (629 | ) | 2,330 | 3,159 | (829 | ) | |||||||||||||
Interest Expense | (10,813 | ) | (10,070 | ) | (743 | ) | (31,564 | ) | (31,353 | ) | (211 | ) | |||||||||
Income Before Income Taxes | 35,932 | 28,896 | 7,036 | 103,735 | 95,167 | 8,568 | |||||||||||||||
Income Tax Expense | 9,333 | 6,948 | 2,385 | 26,499 | 24,107 | 2,392 | |||||||||||||||
Net Income | $ | 26,599 | $ | 21,948 | $ | 4,651 | $ | 77,236 | $ | 71,060 | $ | 6,176 | |||||||||
Net Income Per Share (Diluted) | $ | 0.29 | $ | 0.24 | $ | 0.05 | $ | 0.84 | $ | 0.78 | $ | 0.06 | |||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
March 31, | June 30, | ||||||||||||||||||||
GATHERING SEGMENT | 2022 | 2021 | Variance | 2022 | 2021 | Variance | |||||||||||||||
Revenues from External Customers | $ | 2,862 | $ | 588 | $ | 2,274 | $ | 10,063 | $ | 1,610 | $ | 8,453 | |||||||||
Intersegment Revenues | 53,069 | 48,068 | 5,001 | 150,696 | 144,317 | 6,379 | |||||||||||||||
Total Operating Revenues | 55,931 | 48,656 | 7,275 | 160,759 | 145,927 | 14,832 | |||||||||||||||
Operating Expenses: | |||||||||||||||||||||
Operation and Maintenance | 9,770 | 8,715 | 1,055 | 27,509 | 24,750 | 2,759 | |||||||||||||||
Property, Franchise and Other Taxes | 10 | 12 | (2 | ) | 12 | 30 | (18 | ) | |||||||||||||
Depreciation, Depletion and Amortization | 8,589 | 8,131 | 458 | 25,343 | 24,132 | 1,211 | |||||||||||||||
18,369 | 16,858 | 1,511 | 52,864 | 48,912 | 3,952 | ||||||||||||||||
Operating Income | 37,562 | 31,798 | 5,764 | 107,895 | 97,015 | 10,880 | |||||||||||||||
Other Income (Expense): | |||||||||||||||||||||
Non-Service Pension and Post-Retirement Benefit Costs | (56 | ) | (68 | ) | 12 | (168 | ) | (203 | ) | 35 | |||||||||||
Interest and Other Income | 53 | 10 | 43 | 81 | 253 | (172 | ) | ||||||||||||||
Interest Expense on Long-Term Debt | — | — | — | — | (965 | ) | 965 | ||||||||||||||
Interest Expense | (4,164 | ) | (4,102 | ) | (62 | ) | (12,383 | ) | (12,435 | ) | 52 | ||||||||||
Income Before Income Taxes | 33,395 | 27,638 | 5,757 | 95,425 | 83,665 | 11,760 | |||||||||||||||
Income Tax Expense | 8,737 | 7,211 | 1,526 | 25,538 | 21,988 | 3,550 | |||||||||||||||
Net Income | $ | 24,658 | $ | 20,427 | $ | 4,231 | $ | 69,887 | $ | 61,677 | $ | 8,210 | |||||||||
Net Income Per Share (Diluted) | $ | 0.27 | $ | 0.22 | $ | 0.05 | $ | 0.76 | $ | 0.67 | $ | 0.09 | |||||||||
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||
AND SUBSIDIARIES | |||||||||||||||||||||
SEGMENT OPERATING RESULTS AND STATISTICS | |||||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||||
DOWNSTREAM BUSINESS | |||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(Thousands of Dollars, except per share amounts) | June 30, | June 30, | |||||||||||||||||||
UTILITY SEGMENT | 2022 | 2021 | Variance | 2022 | 2021 | Variance | |||||||||||||||
Revenues from External Customers | $ | 179,888 | $ | 126,934 | $ | 52,954 | $ | 785,664 | $ | 586,618 | $ | 199,046 | |||||||||
Intersegment Revenues | 60 | 74 | (14 | ) | 245 | 271 | (26 | ) | |||||||||||||
Total Operating Revenues | 179,948 | 127,008 | 52,940 | 785,909 | 586,889 | 199,020 | |||||||||||||||
Operating Expenses: | |||||||||||||||||||||
Purchased Gas | 95,587 | 44,848 | 50,739 | 448,268 | 255,011 | 193,257 | |||||||||||||||
Operation and Maintenance | 47,176 | 43,296 | 3,880 | 148,885 | 141,412 | 7,473 | |||||||||||||||
Property, Franchise and Other Taxes | 10,143 | 9,433 | 710 | 32,156 | 30,181 | 1,975 | |||||||||||||||
Depreciation, Depletion and Amortization | 14,765 | 14,505 | 260 | 44,592 | 42,811 | 1,781 | |||||||||||||||
167,671 | 112,082 | 55,589 | 673,901 | 469,415 | 204,486 | ||||||||||||||||
Operating Income | 12,277 | 14,926 | (2,649 | ) | 112,008 | 117,474 | (5,466 | ) | |||||||||||||
Other Income (Expense): | |||||||||||||||||||||
Non-Service Pension and Post-Retirement Benefit Credit (Costs) | (2,678 | ) | (5,747 | ) | 3,069 | 6,018 | (24,674 | ) | 30,692 | ||||||||||||
Interest and Other Income | 349 | 960 | (611 | ) | 1,162 | 2,142 | (980 | ) | |||||||||||||
Interest Expense | (6,087 | ) | (5,510 | ) | (577 | ) | (17,115 | ) | (16,457 | ) | (658 | ) | |||||||||
Income Before Income Taxes | 3,861 | 4,629 | (768 | ) | 102,073 | 78,485 | 23,588 | ||||||||||||||
Income Tax Expense (Benefit) | (761 | ) | (212 | ) | (549 | ) | 22,273 | 18,563 | 3,710 | ||||||||||||
Net Income | $ | 4,622 | $ | 4,841 | $ | (219 | ) | $ | 79,800 | $ | 59,922 | $ | 19,878 | ||||||||
Net Income Per Share (Diluted) | $ | 0.05 | $ | 0.05 | $ | — | $ | 0.87 | $ | 0.65 | $ | 0.22 | |||||||||
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 | 2022 | 2021 | Variance | 2022 | 2021 | Variance | |||||||||||||||
Revenues from External Customers | $ | — | $ | (1 | ) | $ | 1 | $ | — | $ | 1,174 | $ | (1,174 | ) | |||||||
Intersegment Revenues | — | 2 | (2 | ) | 6 | 22 | (16 | ) | |||||||||||||
Total Operating Revenues | — | 1 | (1 | ) | 6 | 1,196 | (1,190 | ) | |||||||||||||
Operating Expenses: | |||||||||||||||||||||
Purchased Gas | — | 4 | (4 | ) | 6 | 2,297 | (2,291 | ) | |||||||||||||
Operation and Maintenance | — | 17 | (17 | ) | 5 | 701 | (696 | ) | |||||||||||||
Property, Franchise and Other Taxes | — | — | — | — | 47 | (47 | ) | ||||||||||||||
Depreciation, Depletion and Amortization | — | — | — | — | 394 | (394 | ) | ||||||||||||||
— | 21 | (21 | ) | 11 | 3,439 | (3,428 | ) | ||||||||||||||
Gain on Sale of Assets | — | — | — | — | 51,066 | (51,066 | ) | ||||||||||||||
Operating Income (Loss) | — | (20 | ) | 20 | (5 | ) | 48,823 | (48,828 | ) | ||||||||||||
Other Income (Expense): | |||||||||||||||||||||
Non-Service Pension and Post-Retirement Benefit Costs | — | — | — | — | (7 | ) | 7 | ||||||||||||||
Interest and Other Income | — | 3 | (3 | ) | 2 | 229 | (227 | ) | |||||||||||||
Income (Loss) before Income Taxes | — | (17 | ) | 17 | (3 | ) | 49,045 | (49,048 | ) | ||||||||||||
Income Tax Expense (Benefit) | — | (1,056 | ) | 1,056 | 4 | 11,428 | (11,424 | ) | |||||||||||||
Net Income (Loss) | $ | — | $ | 1,039 | $ | (1,039 | ) | $ | (7 | ) | $ | 37,617 | $ | (37,624 | ) | ||||||
Net Income (Loss) Per Share (Diluted) | $ | — | $ | 0.01 | $ | (0.01 | ) | $ | — | $ | 0.41 | $ | (0.41 | ) | |||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
CORPORATE | 2022 | 2021 | Variance | 2022 | 2021 | Variance | |||||||||||||||
Revenues from External Customers | $ | — | $ | 83 | $ | (83 | ) | $ | 166 | $ | 272 | $ | (106 | ) | |||||||
Intersegment Revenues | 1,082 | 1,027 | 55 | 3,247 | 2,718 | 529 | |||||||||||||||
Total Operating Revenues | 1,082 | 1,110 | (28 | ) | 3,413 | 2,990 | 423 | ||||||||||||||
Operating Expenses: | |||||||||||||||||||||
Operation and Maintenance | 3,195 | 5,224 | (2,029 | ) | 10,039 | 11,566 | (1,527 | ) | |||||||||||||
Property, Franchise and Other Taxes | 124 | 124 | — | 373 | 370 | 3 | |||||||||||||||
Depreciation, Depletion and Amortization | 45 | 39 | 6 | 139 | 133 | 6 | |||||||||||||||
3,364 | 5,387 | (2,023 | ) | 10,551 | 12,069 | (1,518 | ) | ||||||||||||||
Operating Loss | (2,282 | ) | (4,277 | ) | 1,995 | (7,138 | ) | (9,079 | ) | 1,941 | |||||||||||
Other Income (Expense): | |||||||||||||||||||||
Non-Service Pension and Post-Retirement Benefit Costs | (1,017 | ) | (923 | ) | (94 | ) | (3,052 | ) | (2,769 | ) | (283 | ) | |||||||||
Interest and Other Income | 31,019 | 33,433 | (2,414 | ) | 92,937 | 107,728 | (14,791 | ) | |||||||||||||
Interest Expense on Long-Term Debt | (30,091 | ) | (30,220 | ) | 129 | (90,300 | ) | (95,212 | ) | 4,912 | |||||||||||
Other Interest Expense | (3,346 | ) | (236 | ) | (3,110 | ) | (4,948 | ) | (2,412 | ) | (2,536 | ) | |||||||||
Loss before Income Taxes | (5,717 | ) | (2,223 | ) | (3,494 | ) | (12,501 | ) | (1,744 | ) | (10,757 | ) | |||||||||
Income Tax Benefit | (1,499 | ) | (1,428 | ) | (71 | ) | (3,477 | ) | (1,940 | ) | (1,537 | ) | |||||||||
Net Income (Loss) | $ | (4,218 | ) | $ | (795 | ) | $ | (3,423 | ) | $ | (9,024 | ) | $ | 196 | $ | (9,220 | ) | ||||
Net Income (Loss) Per Share (Diluted) | $ | (0.05 | ) | $ | (0.01 | ) | $ | (0.04 | ) | $ | (0.10 | ) | $ | 0.01 | $ | (0.11 | ) | ||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
INTERSEGMENT ELIMINATIONS | 2022 | 2021 | Variance | 2022 | 2021 | Variance | |||||||||||||||
Intersegment Revenues | $ | (82,523 | ) | $ | (75,976 | ) | $ | (6,547 | ) | $ | (236,910 | ) | $ | (229,979 | ) | $ | (6,931 | ) | |||
Operating Expenses: | |||||||||||||||||||||
Purchased Gas | (27,500 | ) | (26,104 | ) | (1,396 | ) | (80,404 | ) | (80,509 | ) | 105 | ||||||||||
Operation and Maintenance | (55,023 | ) | (49,872 | ) | (5,151 | ) | (156,506 | ) | (149,470 | ) | (7,036 | ) | |||||||||
(82,523 | ) | (75,976 | ) | (6,547 | ) | (236,910 | ) | (229,979 | ) | (6,931 | ) | ||||||||||
Operating Income | — | — | — | — | — | — | |||||||||||||||
Other Income (Expense): | |||||||||||||||||||||
Interest and Other Deductions | (35,117 | ) | (30,914 | ) | (4,203 | ) | (98,376 | ) | (100,628 | ) | 2,252 | ||||||||||
Interest Expense | 35,117 | 30,914 | 4,203 | 98,376 | 100,628 | (2,252 | ) | ||||||||||||||
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 | ||||||||||||||||||||
2022 | 2021 | (Decrease) | 2022 | 2021 | (Decrease) | ||||||||||||||||
Capital Expenditures: | |||||||||||||||||||||
Exploration and Production | $ | 131,776 | (1) | $ | 94,152 | (3) | $ | 37,624 | $ | 405,736 | (1)(2) | $ | 263,763 | (3)(4) | $ | 141,973 | |||||
Pipeline and Storage | 19,778 | (1) | 63,863 | (3) | (44,085 | ) | 58,243 | (1)(2) | 155,556 | (3)(4) | (97,313 | ) | |||||||||
Gathering | 8,614 | (1) | 6,209 | (3) | 2,405 | 28,588 | (1)(2) | 25,628 | (3)(4) | 2,960 | |||||||||||
Utility | 27,664 | (1) | 24,866 | (3) | 2,798 | 70,972 | (1)(2) | 66,691 | (3)(4) | 4,281 | |||||||||||
Total Reportable Segments | 187,832 | 189,090 | (1,258 | ) | 563,539 | 511,638 | 51,901 | ||||||||||||||
All Other | — | — | — | — | — | — | |||||||||||||||
Corporate | 166 | 129 | 37 | 663 | 218 | 445 | |||||||||||||||
Eliminations | — | (1,898 | ) | 1,898 | — | (2,118 | ) | 2,118 | |||||||||||||
Total Capital Expenditures | $ | 187,998 | $ | 187,321 | $ | 677 | $ | 564,202 | $ | 509,738 | $ | 54,464 |
(1) 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.
(2) 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.
(3) Capital expenditures for the quarter and nine months ended June 30, 2021, include accounts payable and accrued liabilities related to capital expenditures of $49.7 million, $25.8 million, $0.9 million, and $5.1 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at June 30, 2021, since they represent non-cash investing activities at that date.
(4) Capital expenditures for the nine months ended June 30, 2021, exclude capital expenditures of $45.8 million, $17.3 million, $13.5 million and $10.7 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts were in accounts payable and accrued liabilities at September 30, 2020 and paid during the nine months ended June 30, 2021. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2020, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at June 30, 2021.
DEGREE DAYS | |||||||||||
Percent Colder | |||||||||||
(Warmer) Than: | |||||||||||
Three Months Ended June 30, | Normal | 2022 | 2021 | Normal (1) | Last Year (1) | ||||||
Buffalo, NY | 912 | 797 | 794 | (12.6 | ) | 0.4 | |||||
Erie, PA | 871 | 741 | 741 | (14.9 | ) | — | |||||
Nine Months Ended June 30, | |||||||||||
Buffalo, NY | 6,455 | 5,662 | 5,693 | (12.3 | ) | (0.5 | ) | ||||
Erie, PA | 6,023 | 5,274 | 5,188 | (12.4 | ) | 1.7 | |||||
(1) Percents compare actual 2022 degree days to normal degree days and actual 2022 degree days to actual 2021 degree days.
NATIONAL FUEL GAS COMPANY | ||||||||||||||||||||
AND SUBSIDIARIES | ||||||||||||||||||||
EXPLORATION AND PRODUCTION INFORMATION | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||
Increase | Increase | |||||||||||||||||||
2022 | 2021 | (Decrease) | 2022 | 2021 | (Decrease) | |||||||||||||||
Gas Production/Prices: | ||||||||||||||||||||
Production (MMcf) | ||||||||||||||||||||
Appalachia | 88,888 | 79,314 | 9,574 | 253,842 | 236,429 | 17,413 | ||||||||||||||
West Coast | 405 | 431 | (26 | ) | 1,210 | 1,300 | (90 | ) | ||||||||||||
Total Production | 89,293 | 79,745 | 9,548 | 255,052 | 237,729 | 17,323 | ||||||||||||||
Average Prices (Per Mcf) | ||||||||||||||||||||
Appalachia | $ | 5.50 | $ | 2.29 | $ | 3.21 | $ | 4.64 | $ | 2.25 | $ | 2.39 | ||||||||
West Coast | 10.29 | 5.36 | 4.93 | 10.04 | 5.83 | 4.21 | ||||||||||||||
Weighted Average | 5.52 | 2.31 | 3.21 | 4.67 | 2.27 | 2.40 | ||||||||||||||
Weighted Average after Hedging | 2.87 | 2.20 | 0.67 | 2.67 | 2.21 | 0.46 | ||||||||||||||
Oil Production/Prices: | ||||||||||||||||||||
Production (Thousands of Barrels) | ||||||||||||||||||||
Appalachia | 7 | 1 | 6 | 8 | 2 | 6 | ||||||||||||||
West Coast | 519 | 557 | (38 | ) | 1,589 | 1,681 | (92 | ) | ||||||||||||
Total Production | 526 | 558 | (32 | ) | 1,597 | 1,683 | (86 | ) | ||||||||||||
Average Prices (Per Barrel) | ||||||||||||||||||||
Appalachia | $ | 108.47 | $ | 42.09 | $ | 66.38 | $ | 104.83 | $ | 43.13 | $ | 61.70 | ||||||||
West Coast | 110.79 | 67.55 | 43.24 | 94.06 | 56.92 | 37.14 | ||||||||||||||
Weighted Average | 110.76 | 67.52 | 43.24 | 94.11 | 56.90 | 37.21 | ||||||||||||||
Weighted Average after Hedging (1) | 77.65 | 59.22 | 18.43 | 70.71 | 55.40 | 15.31 | ||||||||||||||
Total Production (MMcfe) | 92,449 | 83,093 | 9,356 | 264,634 | 247,827 | 16,807 | ||||||||||||||
Selected Operating Performance Statistics: | ||||||||||||||||||||
General & Administrative Expense per Mcfe (2) | $ | 0.19 | $ | 0.19 | $ | — | $ | 0.20 | $ | 0.21 | $ | (0.01 | ) | |||||||
Lease Operating and Transportation Expense per Mcfe (2)(3) | $ | 0.86 | $ | 0.80 | $ | 0.06 | $ | 0.84 | $ | 0.80 | $ | 0.04 | ||||||||
Depreciation, Depletion & Amortization per Mcfe (2) | $ | 0.60 | $ | 0.55 | $ | 0.05 | $ | 0.59 | $ | 0.55 | $ | 0.04 | ||||||||
(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 $44,632.
(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 $0.57 and $0.57 per Mcfe for the three months ended June 30, 2022 and June 30, 2021, respectively. Amounts include transportation expense of $0.56 and $0.57 per Mcfe for the nine months ended June 30, 2022 and June 30, 2021, respectively.
NATIONAL FUEL GAS COMPANY | ||||||
AND SUBSIDIARIES | ||||||
EXPLORATION AND PRODUCTION INFORMATION | ||||||
Hedging Summary for Remaining Three Months of Fiscal 2022 | Volume | Average Hedge Price | ||||
Gas Swaps | ||||||
NYMEX | 53,580,000 MMBTU | $ | 2.76 / MMBTU | |||
Fixed Price Physical Sales | 18,940,197 MMBTU | $ | 2.62 / MMBTU | |||
Total | 72,520,197 MMBTU | $ | 2.72 / MMBTU | |||
Hedging Summary for Fiscal 2023 | Volume | Average Hedge Price | ||||
Gas Swaps | ||||||
NYMEX | 116,200,000 MMBTU | $ | 2.79 / MMBTU | |||
No Cost Collars | 70,400,000 MMBTU | $ | 3.11 / MMBTU (Floor) / $3.64 / MMBTU (Ceiling) | |||
Fixed Price Physical Sales | 73,107,694 MMBTU | $ | 2.44 / MMBTU | |||
Total | 259,707,694 MMBTU | |||||
Hedging Summary for Fiscal 2024 | Volume | Average Hedge Price | ||||
Gas Swaps | ||||||
NYMEX | 61,080,000 MMBTU | $ | 2.72 / MMBTU | |||
No Cost Collars | 59,200,000 MMBTU | $ | 3.20 / MMBTU (Floor) / $3.78 / MMBTU (Ceiling) | |||
Fixed Price Physical Sales | 60,223,801 MMBTU | $ | 2.22 / MMBTU | |||
Total | 180,503,801 MMBTU | |||||
Hedging Summary for Fiscal 2025 | Volume | Average Hedge Price | ||||
Gas Swaps | ||||||
NYMEX | 23,660,000 MMBTU | $ | 2.74 / MMBTU | |||
No Cost Collars | 43,960,000 MMBTU | $ | 3.49 / MMBTU (Floor) / $4.65 / MMBTU (Ceiling) | |||
Fixed Price Physical Sales | 57,180,046 MMBTU | $ | 2.21 / MMBTU | |||
Total | 124,800,046 MMBTU | |||||
Hedging Summary for Fiscal 2026 | Volume | Average Hedge Price | ||||
Gas Swaps | ||||||
NYMEX | 1,720,000 MMBTU | $ | 2.75 / MMBTU | |||
No Cost Collars | 42,720,000 MMBTU | $ | 3.53 / MMBTU (Floor) / $4.76 / MMBTU (Ceiling) | |||
Fixed Price Physical Sales | 60,185,049 MMBTU | $ | 2.30 / MMBTU | |||
Total | 104,625,049 MMBTU | |||||
Hedging Summary for Fiscal 2027 | Volume | Average Hedge Price | ||||
No Cost Collars | 3,560,000 MMBTU | $ | 3.53 / MMBTU (Floor) / $4.76 / MMBTU (Ceiling) | |||
Fixed Price Physical Sales | 43,434,257 MMBTU | $ | 2.35 / MMBTU | |||
Total | 46,994,257 MMBTU | |||||
Hedging Summary for Fiscal 2028 | Volume | Average Hedge Price | ||||
Fixed Price Physical Sales | 11,850,451 MMBTU | $ | 2.48 / MMBTU | |||
Hedging Summary for Fiscal 2029 | Volume | Average Hedge Price | ||||
Fixed Price Physical Sales | 766,673 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 | ||||||||||||
2022 | 2021 | (Decrease) | 2022 | 2021 | (Decrease) | ||||||||
Firm Transportation - Affiliated | 19,558 | 19,202 | 356 | 94,213 | 92,290 | 1,923 | |||||||
Firm Transportation - Non-Affiliated | 156,310 | 155,022 | 1,288 | 507,278 | 494,458 | 12,820 | |||||||
Interruptible Transportation | 206 | 181 | 25 | 1,726 | 1,205 | 521 | |||||||
176,074 | 174,405 | 1,669 | 603,217 | 587,953 | 15,264 | ||||||||
Gathering Volume - (MMcf) | |||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
Increase | Increase | ||||||||||||
2022 | 2021 | (Decrease) | 2022 | 2021 | (Decrease) | ||||||||
Gathered Volume | 109,797 | 91,817 | 17,980 | 314,625 | 275,283 | 39,342 | |||||||
Utility Throughput - (MMcf) | |||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
Increase | Increase | ||||||||||||
2022 | 2021 | (Decrease) | 2022 | 2021 | (Decrease) | ||||||||
Retail Sales: | |||||||||||||
Residential Sales | 10,344 | 9,776 | 568 | 59,865 | 57,241 | 2,624 | |||||||
Commercial Sales | 1,511 | 1,369 | 142 | 8,977 | 8,206 | 771 | |||||||
Industrial Sales | 74 | 65 | 9 | 466 | 441 | 25 | |||||||
11,929 | 11,210 | 719 | 69,308 | 65,888 | 3,420 | ||||||||
Transportation | 12,936 | 13,298 | (362 | ) | 56,274 | 55,815 | 459 | ||||||
24,865 | 24,508 | 357 | 125,582 | 121,703 | 3,879 | ||||||||
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
In addition to financial measures calculated in accordance with generally accepted accounting principles (GAAP), this press release contains information regarding Adjusted Operating Results, Adjusted EBITDA and free cash flow, which are non-GAAP financial measures. The Company believes that these non-GAAP financial measures are useful to investors because they provide an alternative method for assessing the Company's ongoing operating results or liquidity and for comparing the Company’s financial performance to other companies. The Company's management uses these non-GAAP financial measures for the same purpose, and for planning and forecasting purposes. The presentation of non-GAAP financial measures is not meant to be a substitute for financial measures in accordance with GAAP.
Management defines Adjusted Operating Results as reported GAAP earnings before items impacting comparability. The following table reconciles National Fuel's reported GAAP earnings to Adjusted Operating Results for the three and nine months ended June 30, 2022 and 2021:
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(in thousands except per share amounts) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Reported GAAP Earnings | $ | 108,158 | $ | 86,475 | $ | 407,879 | $ | 276,685 | ||||||||
Items impacting comparability: | ||||||||||||||||
Items related to West Coast asset sale: | ||||||||||||||||
Gain on sale of West Coast assets (E&P) | (12,736 | ) | — | (12,736 | ) | — | ||||||||||
Tax impact of gain on sale of West Coast assets | 3,225 | — | 3,225 | — | ||||||||||||
Loss from discontinuance of crude oil cash flow hedges (E&P) | 44,632 | — | 44,632 | — | ||||||||||||
Tax impact of loss from discontinuance of crude oil cash flow hedges | (11,303 | ) | — | (11,303 | ) | — | ||||||||||
Transaction and severance costs (E&P) | 9,693 | — | 9,693 | — | ||||||||||||
Tax impact of transaction and severance costs | (2,455 | ) | — | (2,455 | ) | — | ||||||||||
Total items impacting comparability related to West Coast asset sale | 31,056 | — | 31,056 | — | ||||||||||||
Reduction of other post-retirement regulatory liability (Utility) | — | — | (18,533 | ) | — | |||||||||||
Tax impact of reduction of other post-retirement regulatory liability | — | — | 3,892 | — | ||||||||||||
Unrealized (gain) loss on other investments (Corporate/All Other) | 3,434 | (1,025 | ) | 10,093 | (575 | ) | ||||||||||
Tax impact of unrealized (gain) loss on other investments | (721 | ) | 215 | (2,120 | ) | 120 | ||||||||||
Impairment of oil and gas properties (E&P) | — | — | — | 76,152 | ||||||||||||
Tax impact of impairment of oil and gas properties | — | — | — | (20,980 | ) | |||||||||||
Gain on sale of timber properties (Corporate/All Other) | — | — | — | (51,066 | ) | |||||||||||
Tax impact of gain on sale of timber properties | — | — | — | 14,069 | ||||||||||||
Premium paid on early redemption of debt | — | — | — | 15,715 | ||||||||||||
Tax impact of premium paid on early redemption of debt | — | — | — | (4,321 | ) | |||||||||||
Adjusted Operating Results | $ | 141,927 | $ | 85,665 | $ | 432,267 | $ | 305,799 | ||||||||
Reported GAAP Earnings Per Share | $ | 1.17 | $ | 0.94 | $ | 4.43 | $ | 3.02 | ||||||||
Items impacting comparability: | ||||||||||||||||
Items related to West Coast asset sale: | ||||||||||||||||
Gain on sale of West Coast assets, net of tax (E&P) | (0.10 | ) | — | (0.10 | ) | — | ||||||||||
Loss from discontinuance of crude oil cash flow hedges, net of tax (E&P) | 0.36 | — | 0.36 | — | ||||||||||||
Transaction and severance costs, net of tax (E&P) | 0.08 | — | 0.08 | — | ||||||||||||
Total items impacting comparability related to West Coast asset sale | 0.34 | — | 0.34 | — | ||||||||||||
Reduction of other post-retirement regulatory liability, net of tax (Utility) | — | — | (0.16 | ) | — | |||||||||||
Unrealized (gain) loss on other investments, net of tax (Corporate/All Other) | 0.03 | (0.01 | ) | 0.08 | — | |||||||||||
Impairment of oil and gas properties, net of tax (E&P) | — | — | — | 0.60 | ||||||||||||
Gain on sale of timber properties, net of tax (Corporate/All Other) | — | — | — | (0.40 | ) | |||||||||||
Premium paid on early redemption of debt, net of tax | — | — | — | 0.12 | ||||||||||||
Adjusted Operating Results Per Share | $ | 1.54 | $ | 0.93 | $ | 4.69 | $ | 3.34 |
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES (Continued)
Management defines Adjusted EBITDA as reported GAAP earnings before the following items: interest expense, income taxes, depreciation, depletion and amortization, other income and deductions, impairments, and other items reflected in operating income that impact comparability. The following tables reconcile National Fuel's reported GAAP earnings to Adjusted EBITDA for the three and nine months ended June 30, 2022 and 2021:
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(in thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Reported GAAP Earnings | $ | 108,158 | $ | 86,475 | $ | 407,879 | $ | 276,685 | ||||||||
Depreciation, Depletion and Amortization | 95,857 | 84,170 | 275,681 | 251,632 | ||||||||||||
Other (Income) Deductions | 5,649 | 2,028 | (3,291 | ) | 15,078 | |||||||||||
Interest Expense | 33,973 | 31,232 | 96,861 | 115,926 | ||||||||||||
Income Taxes | 32,917 | 30,335 | 135,272 | 99,962 | ||||||||||||
Impairment of Oil and Gas Producing Properties | — | — | — | 76,152 | ||||||||||||
Gain on Sale of Assets | (12,736 | ) | — | (12,736 | ) | (51,066 | ) | |||||||||
Loss from discontinuance of crude oil cash flow hedges (E&P) | 44,632 | — | 44,632 | — | ||||||||||||
Transaction and severance costs related to West Coast asset sale (E&P) | 9,693 | — | 9,693 | — | ||||||||||||
Adjusted EBITDA | $ | 318,143 | $ | 234,240 | $ | 953,991 | $ | 784,369 | ||||||||
Adjusted EBITDA by Segment | ||||||||||||||||
Pipeline and Storage Adjusted EBITDA | $ | 62,565 | $ | 53,086 | $ | 181,084 | $ | 169,791 | ||||||||
Gathering Adjusted EBITDA | 46,151 | 39,929 | 133,238 | 121,147 | ||||||||||||
Total Midstream Businesses Adjusted EBITDA | 108,716 | 93,015 | 314,322 | 290,938 | ||||||||||||
Exploration and Production Adjusted EBITDA | 184,622 | 116,052 | 490,073 | 343,941 | ||||||||||||
Utility Adjusted EBITDA |