National Fuel Reports Third Quarter Earnings and Announces Preliminary Guidance For Fiscal 2023


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. Haspett716-857-7697
Media Contact:Karen L. Merkel716-857-7654


 

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, NY912 797 794 (12.6) 0.4 
Erie, PA871 741 741 (14.9)  
          
Nine Months Ended June 30,         
Buffalo, NY6,455 5,662 5,693 (12.3) (0.5)
Erie, PA6,023 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  27,042   29,431   156,600   160,285 
Corporate and All Other Adjusted EBITDA  (2,237)  (4,258)  (7,004)  (10,795)
Total Adjusted EBITDA $318,143  $234,240  $953,991  $784,369 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
SEGMENT ADJUSTED EBITDA

  Three Months Ended Nine Months Ended
  June 30, June 30,
(in thousands)  2022   2021   2022   2021 
Exploration and Production Segment        
Reported GAAP Earnings $56,497  $39,015  $189,987  $46,213 
Depreciation, Depletion and Amortization  55,136   45,886   155,190   137,356 
Other (Income) Deductions  (296)  271   (55)  684 
Interest Expense  14,589   12,008   38,927   57,720 
Income Taxes  17,107   18,872   64,435   25,816 
Impairment of Oil and Gas Producing Properties           76,152 
Gain on Sale of West Coast assets  (12,736)     (12,736)   
Loss from discontinuance of crude oil cash flow hedges  44,632      44,632    
Transaction and severance costs related to West Coast asset sale  9,693      9,693    
Adjusted EBITDA $184,622  $116,052  $490,073  $343,941 
         
Pipeline and Storage Segment        
Reported GAAP Earnings $26,599  $21,948  $77,236  $71,060 
Depreciation, Depletion and Amortization  17,322   15,609   50,417   46,806 
Other (Income) Deductions  (1,502)  (1,489)  (4,632)  (3,535)
Interest Expense  10,813   10,070   31,564   31,353 
Income Taxes  9,333   6,948   26,499   24,107 
Adjusted EBITDA $62,565  $53,086  $181,084  $169,791 
         
Gathering Segment        
Reported GAAP Earnings $24,658  $20,427  $69,887  $61,677 
Depreciation, Depletion and Amortization  8,589   8,131   25,343   24,132 
Other (Income) Deductions  3   58   87   (50)
Interest Expense  4,164   4,102   12,383   13,400 
Income Taxes  8,737   7,211   25,538   21,988 
Adjusted EBITDA $46,151  $39,929  $133,238  $121,147 
         
Utility Segment        
Reported GAAP Earnings $4,622  $4,841  $79,800  $59,922 
Depreciation, Depletion and Amortization  14,765   14,505   44,592   42,811 
Other (Income) Deductions  2,329   4,787   (7,180)  22,532 
Interest Expense  6,087   5,510   17,115   16,457 
Income Taxes  (761)  (212)  22,273   18,563 
Adjusted EBITDA $27,042  $29,431  $156,600  $160,285 
         
Corporate and All Other        
Reported GAAP Earnings $(4,218) $244  $(9,031) $37,813 
Depreciation, Depletion and Amortization  45   39   139   527 
Other (Income) Deductions  5,115   (1,599)  8,489   (4,553)
Interest Expense  (1,680)  (458)  (3,128)  (3,004)
Income Taxes  (1,499)  (2,484)  (3,473)  9,488 
Gain on Sale of Timber Properties           (51.066)
Adjusted EBITDA $(2,237) $(4,258) $(7,004) $(10,795)

Management defines free cash flow as funds from operations (net cash provided by operating activities less changes in working capital) less capital expenditures. The Company is unable to provide a reconciliation of projected free cash flow as described in this release to its comparable financial measure calculated in accordance with GAAP without unreasonable efforts. This is due to our inability to calculate 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.

 

 

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