We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for real-time alerts, custom portfolio, and market movers
| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| National Fuel Gas Co | NYSE:NFG | NYSE | Common Stock |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| -0.44 | -0.78% | 56.25 | 57.72 | 56.78 | 57.00 | 706,302 | 22:34:09 |
From Jul 2019 to Jul 2024
National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated results for the third quarter of its 2017 fiscal year and for the nine months ended June 30, 2017.
FISCAL 2017 THIRD QUARTER SUMMARY
OPERATING RESULTS
Three Months Ended Nine Months Ended June 30, June 30, (in thousands except per share amounts) 2017 2016 2017 2016 Reported GAAP earnings (loss) $ 59,714 $ 8,286 $ 237,906 $ (328,510 ) Items impacting comparability: Impairment of oil and gas properties (E&P) 82,658 915,552 Tax impact of impairment of oil and gas properties (34,716 ) (384,531 ) Joint development agreement professional fees (E&P) 3,173 7,855 Tax impact of joint development agreement professional fees (1,333 ) (3,299 ) Operating Results $ 59,714 $ 58,068 $ 237,906 $ 207,067 Reported GAAP earnings (loss) per share $ 0.69 $ 0.10 $ 2.77 $ (3.87 ) Items impacting comparability: Impairment of oil and gas properties (E&P) 0.97 10.80 Tax impact of impairment of oil and gas properties (0.41 ) (4.54 ) Joint development agreement professional fees (E&P) 0.04 0.09 Tax impact of joint development agreement professional fees (0.02 ) (0.04 ) Earnings per share impact of diluted shares (0.01 ) Operating Results per diluted share $ 0.69 $ 0.68 $ 2.77 $ 2.43MANAGEMENT COMMENTS
Ronald J. Tanski, President and Chief Executive Officer of National Fuel Gas Company, stated: “Our fiscal third quarter was a strong one with each of our business segments posting solid financial results that were in-line with expectations. Across the system, our talented teams continue to execute on our operational plans. As is typical during the summer period, our utility and transmission pipeline construction crews are busy maintaining the safety and integrity of our thousands of miles of pipelines that will assure safe, reliable, and affordable natural gas services for our region and local communities.
“As we look ahead, we continue to manage around the delay in the Northern Access Project and see plenty of opportunity in the meantime to extract value from our world class natural gas assets in Appalachia. After a year of testing, we believe we have de-risked the Utica potential in our Western Development Area, adding years of economic drilling inventory on the very same acreage we have already developed for the Marcellus. Over the next 18 months, we will continue to optimize our well designs and transition into a Utica development program that will leverage existing upstream and midstream infrastructure to drive capital, operational, and marketing efficiencies. While the commodities futures markets indicate that Seneca Resources, our exploration and production company, will likely achieve lower prices for its production next year, our proven success in driving down finding and development costs and our ability to develop our upstream and midstream assets efficiently allows us to continue to grow our integrated business, maintain a strong financial position, and add shareholder value throughout the commodity price cycle.”
DISCUSSION OF RESULTS BY SEGMENT
The following discussion of the earnings of each segment is summarized in a tabular form on pages 8 through 11 of this report. It may be helpful to refer to those tables while reviewing this discussion. Note that management defines Operating Results as reported GAAP earnings before items impacting comparability and Adjusted EBITDA as reported GAAP earnings before the following items: interest expense, depreciation and amortization, interest and other income, impairments, items impacting comparability, and income taxes.
Upstream Business
Exploration and Production Segment
The Exploration and Production segment operations are carried out by Seneca Resources Corporation ("Seneca"). Seneca explores for, develops and produces natural gas and oil reserves, primarily in Pennsylvania and California.
Three Months Ended Nine Months Ended June 30, June 30, (in thousands except per share amounts) 2017 2016 Variance 2017 2016 Variance Net Income / (Loss) $ 30,123 $ (19,165 ) $ 49,288 $ 98,972 $ (469,586 ) $ 568,558 Net Income / (Loss) Per Share (Diluted) $ 0.35 $ (0.22 ) $ 0.57 $ 1.15 $ (5.54 ) $ 6.69 Adjusted EBITDA $ 89,229 $ 97,924 $ (8,695 ) $ 285,675 $ 268,673 $ 17,002Net income for the Exploration and Production segment in the third quarter was $30.1 million, or $0.35 per share, compared to a net loss of $19.2 million, or $0.22 per share, in the prior year third quarter. The $49.3 million increase in the segment’s earnings was primarily attributable to the non-recurrence of two items that reduced earnings in the prior year. In the prior year third quarter, Seneca recorded an $82.7 million ($47.9 million after-tax) ceiling test impairment charge to reduce the book value of Seneca’s oil and gas properties. Seneca also incurred $3.2 million ($1.8 million after-tax) in the prior year third quarter for professional and legal expenses related to the extension of the joint development agreement that Seneca executed in June 2016.
Excluding these items, operating results for the segment declined $0.5 million, or $0.01 per share, as the impact of higher realized natural gas prices, lower depreciation, depletion and amortization (“DD&A”) expense, and a lower effective income tax rate were more than offset by a decline in net natural gas and oil production, lower realized oil prices and an increase in lease operating and transportation (“LOE”) expense.
Over the past two years, Seneca significantly reduced its capital expenditures in response to low commodity prices by entering into a Joint Development Agreement (“JDA”), where a partner agreed to participate in 75 new Marcellus wells as an 80 percent working interest owner, and reducing the rig count in Appalachia and activity in California. As a result, Seneca's net natural gas and oil production declined 1.3 billion cubic feet equivalent ("Bcfe"), or 3 percent, to 42.7 Bcfe in the third quarter. Net natural gas production was down nearly 1.0 Bcf due mainly to a lower average revenue interest on production from the Western Development Area (“WDA”) resulting from new JDA wells as well as natural declines in Marcellus production from the Eastern Development Area (“EDA”). Seneca’s oil production decreased 58 thousand barrels ("Mbbl") due mainly to temporary changes in steam operations and a reduction in well workover activity at its North Midway Sunset field in California, offset partially by increased activity at South Midway Sunset.
Seneca continues to grow its base of gross natural gas production. Average daily gross natural gas production during the quarter increased 6 percent to 567 million cubic feet (“MMcf’) per day driven primarily by new Marcellus and Utica wells in Appalachia. In the WDA, average daily natural gas production increased approximately 38 MMcf per day, or 16 percent, to 284 MMcf per day during the quarter. Seneca is now producing from 63 of the 75 Marcellus wells that are being developed in the Clermont / Rich Valley area under the JDA entered into with a partner in fiscal 2016. The 12 remaining JDA wells are expected to be completed and brought on-line in the first half of fiscal 2018.
In the EDA, average daily gross natural gas production decreased 4 MMcf per day, or 1 percent, to 283 MMcf per day as natural declines in Marcellus production from Tioga and Lycoming counties were partially offset by new production from the Company’s Utica well on DCNR Tract 007 in Tioga County, Pa., which has produced nearly 2.5 Bcf since it was first turned on-line in November 2016. In May, Seneca added a second rig and resumed Marcellus development activities in Lycoming County, Pa., which is expected to arrest natural production declines and maintain a base of production that will utilize firm transportation capacity on the Atlantic Sunrise pipeline expansion project forecasted to be available in the summer of 2018.
Seneca's average realized natural gas price, after the impact of hedging, for the third quarter was $2.94 per thousand cubic feet ("Mcf"), an increase of $0.08 per Mcf versus the prior year. Seneca's average realized oil price, after the impact of hedging, was $53.02 per barrel ("Bbl"), a decrease of $5.77 per Bbl. Seneca's average realized natural gas and oil prices benefited from an uplift of $0.35 per Mcf and $7.38 per Bbl, respectively, from financial hedges settled during the quarter.
LOE increased $1.8 million, or $0.07 per Mcf equivalent ("Mcfe") on a cost per unit of production basis, due primarily to higher steam fuel and well repair costs in California offset partially by lower gathering and compression costs in Appalachia. DD&A expense decreased $3.8 million due to lower production and a decrease in Seneca’s full cost pool depletion rate. Seneca’s per unit DD&A decreased by $0.07 per Mcfe to $0.64 per Mcfe due mainly to a lower depletable fixed asset balance resulting from the ceiling test impairment charges recorded in the second half of fiscal 2016.
A decrease in Seneca’s effective tax rate increased the segment’s earnings by $2.4 million in the third quarter. The decrease in the effective tax rate was due primarily to an enhanced oil recovery tax credit related to Seneca’s California properties. This credit was applicable this year as a result of relatively low domestic crude oil prices.
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 Nine Months Ended June 30, June 30, (in thousands except per share amounts) 2017 2016 Variance 2017 2016 Variance Net Income / (Loss) $ 16,031 $ 17,323 $ (1,292 ) $ 54,656 $ 59,794 $ (5,138 ) Net Income / (Loss) Per Share (Diluted) $ 0.19 $ 0.20 $ (0.01 ) $ 0.64 $ 0.71 $ (0.07 ) Adjusted EBITDA $ 44,163 $ 48,515 $ (4,352 ) $ 141,279 $ 152,929 $ (11,650 )The Pipeline and Storage segment's third quarter earnings decreased $1.3 million, or 7 percent, from the prior year due to a decline in operating revenues offset partially by a lower effective income tax rate. The $4.1 million decrease in operating revenues was expected due to a reduction in Supply Corporation and Empire’s rates related to their respective rate case settlements that went into effect in 2016, lower reservation revenues resulting from recent contract terminations and restructurings, and a decline in short-term interruptible transportation service in the current quarter.
Gathering Segment
The Gathering segment’s operations are carried out by National Fuel Gas Midstream Corporation’s subsidiary limited liability companies. The Gathering segment constructs, owns and operates natural gas gathering pipelines and compression facilities in the Appalachian region which currently delivers Seneca’s gross Appalachian production to the interstate pipeline system.
Three Months Ended Nine Months Ended June 30, June 30, (in thousands except per share amounts) 2017 2016 Variance 2017 2016 Variance Net Income / (Loss) $ 10,107 $ 9,473 $ 634 $ 31,373 $ 21,962 $ 9,411 Net Income / (Loss) Per Share (Diluted) $ 0.12 $ 0.11 $ 0.01 $ 0.37 $ 0.26 $ 0.11 Adjusted EBITDA $ 23,901 $ 22,433 $ 1,468 $ 73,174 $ 57,722 $ 15,452The Gathering segment’s third quarter earnings increased $0.6 million, or 7 percent, versus the prior year due primarily to higher operating revenues. Operating revenues increased $1.4 million as the increase in Seneca’s gross natural gas production in Appalachia, which includes production from joint development wells, helped drive higher throughput across the Company’s gathering systems. The Gathering segment transported 48.8 Bcf on its systems in the third quarter, up 2.5 Bcf or 5 percent from the prior year. Higher depreciation expense associated with new gathering and compression assets placed in service during the last twelve months partially offset the impact of higher operating revenues.
Downstream Businesses
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 Nine Months Ended June 30, June 30, (in thousands except per share amounts) 2017 2016 Variance 2017 2016 Variance Net Income / (Loss) $ 4,348 $ 2,179 $ 2,169 $ 51,103 $ 52,745 $ (1,642 ) Net Income / (Loss) Per Share (Diluted) $ 0.05 $ 0.03 $ 0.02 $ 0.59 $ 0.62 $ (0.03 ) Adjusted EBITDA $ 25,322 $ 22,900 $ 2,422 $ 139,232 $ 138,284 $ 948The Utility segment’s third quarter earnings increased $2.2 million due primarily to lower O&M expense offset partially by higher DD&A expenses. O&M expense decreased $2.5 million versus the prior year due mainly to lower pension and personnel costs. DD&A expense increased $0.9 million due to higher average plant balances for the quarter ended June 30, 2017, which was primarily driven by the replacement of Distribution’s customer information system that was placed in service in May 2016.
Energy Marketing Segment
The Energy Marketing segment's operations are carried out by National Fuel Resources, Inc. (“NFR”). NFR markets natural gas to industrial, wholesale, commercial, public authority and residential customers primarily in western and central New York and northwestern Pennsylvania, offering competitively priced natural gas to its customers.
Three Months Ended Nine Months Ended June 30, June 30, (in thousands except per share amounts) 2017 2016 Variance 2017 2016 Variance Net Income / (Loss) $ (564 ) $ (590 ) $ 26 $ 2,122 $ 4,117 $ (1,995 ) Net Income / (Loss) Per Share (Diluted) $ (0.01 ) $ (0.01 ) $ — $ 0.02 $ 0.05 $ (0.03 ) Adjusted EBITDA $ (1,017 ) $ (930 ) $ (87 ) $ 3,213 $ 6,569 $ (3,356 )The Energy Marketing segment's third quarter earnings were largely unchanged when compared to the prior year.
Corporate and All Other
The Corporate and All Other category had a net loss of $0.3 million for the third quarter compared to a net loss of $0.9 million in the prior year. The $0.6 million improvement impacted consolidated earnings by less than $0.01 per share.
GUIDANCE
The Company is raising and tightening its earnings guidance for fiscal 2017 to a range of $3.25 to $3.35 per share to reflect the impact of actual results for the nine months ended June 30, 2017, and updates to key forecast assumptions, including revisions to the Exploration and Production segment’s forecasted production, oil pricing and operating expense assumptions, as outlined in the table below.
The Company is also initiating preliminary earnings, production, capital expenditures, and certain business segment operational guidance for fiscal 2018. National Fuel is projecting that its fiscal 2018 earnings will be within a range of $2.70 to $3.05 per share, or $2.875 per share at the midpoint of the range. The $0.425 per share decrease from the fiscal 2017 earnings guidance midpoint is being driven primarily by lower expected price realizations after hedging on Seneca’s natural gas and oil production and higher expected operating costs at the Company’s regulated businesses, offset partially by the impact of normal weather on the Utility segment's earnings and an increase in projected natural gas production in Appalachia, which will benefit earnings for the Company’s Exploration and Production and Gathering segments.
Seneca’s fiscal 2018 net production is expected to be in the range of 185 to 200 Bcfe. Natural gas production in the East Division is expected to be in a range of 165 to 180 Bcf, an 11 percent increase versus fiscal 2017. Seneca added a second rig and resumed Marcellus shale development activities in Lycoming County, Pa. this past May, which is the main driver of the 17.5 Bcf increase. Seneca’s oil operations in California are expected to produce approximately 20 Bcfe, relatively flat versus fiscal 2017. The midpoint of the production range does not assume any price related curtailments.
Due to the expiration of physical firm sales and financial hedge contracts with favorable pricing relative to current market prices and hedge book, Seneca is projecting a significant decrease in natural gas and oil price realizations in fiscal 2018. Seneca’s fiscal 2018 natural gas production is 52 percent hedged at an average hedge price of $2.90 per MMBtu. Assuming NYMEX natural gas pricing of $3.00 per MMBtu, average Appalachian basin spot prices of $2.40 per MMBtu, and adjustments for transportation costs, contracted firm sale differentials, and Btu uplift, Seneca expects its fiscal 2018 net realized gas price after hedging to be approximately $2.55 per Mcf, which is a decrease of $0.41 per Mcf from Seneca’s realized pricing after hedging of $2.96 per Mcf for the nine months ended June 30, 2017. Seneca is approximately 45 percent hedged on an expected 3 million bbls of oil production in fiscal 2018 at an average hedge price of $55.46 per Bbl.
Additional details on the Company's forecast assumptions and business segment guidance for fiscal 2018 are outlined in the table below.
Updated FY 2017 Guidance Preliminary FY 2018 Guidance Consolidated Earnings per Share $3.25 to $3.35 $2.70 to $3.05 Capital Expenditures (Millions) Exploration & Production (1) $230 - $250 $275 - $325 Pipeline & Storage $100 - $110 $110 - $140 Gathering $35 - $45 $60 - $80 Utility $90 - $100 $90 - $100 Consolidated Capital Expenditures $455 - $505 $535 - $645 Updated FY 2017 Guidance Preliminary FY 2018 Guidance Exploration & Production Segment Guidance Commodity Price Assumptions NYMEX natural gas price $3.00 /MMBtu $3.00 /MMBtu Appalachian basin spot price $2.00 /MMBtu $2.40 /MMBtu NYMEX (WTI) crude oil price $50.00 /Bbl $50.00 /Bbl California oil price (% of WTI) 92% 92% Production (Bcfe) East Division - Appalachia (2) 150 to 160 165 to 180 West Division - California~ 20
~ 20
Total Production 170 to 180 185 to 200 E&P Operating Costs ($/Mcfe) LOE (3) ~$0.95 $0.90 - $1.00 G&A ~$0.35 $0.30 - $0.35 DD&A ~$0.65 $0.65 - $0.70 Other Business Segment Guidance Gathering Segment Revenues (Millions) ~$110 $115 - $125 Pipeline & Storage Segment Revenues (Millions) ~$295 ~$295 (1) Net of conveyance proceeds received from joint development partner for working interest in joint development wells. (2) Seneca East Division - Appalachia production guidance assumes approximately 35 Bcf of spot sales in FY18. (3) FY17 reflects full year average LOE. Fourth quarter FY17 LOE expected to be $1.00-$1.05 due to an increase in well workover and steam activity in California.EARNINGS TELECONFERENCE
The Company will host a conference call on Friday, August 4, 2017, at 11 a.m. Eastern Time to discuss this announcement. There are two ways to access this call. For those with Internet access, visit the NFG Investor Relations News & Events page at National Fuel’s website at investor.nationalfuelgas.com. For those without Internet access, audio access is also provided by dialing (toll-free) 844-862-1432, using conference ID number “51109130.” For those unable to listen to the live conference call, an audio replay will be available approximately two hours following the teleconference at the same website link and by phone at (toll-free) 855-859-2056 using conference ID number “51109130.” Both the webcast and a telephonic replay will be available until the close of business on Friday, August 11, 2017.
National Fuel is an integrated energy company reporting financial results for five operating segments: Exploration and Production, Pipeline and Storage, Gathering, Utility, and Energy Marketing. Additional information about National Fuel is available at www.nationalfuelgas.com.
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: delays or changes in costs or plans with respect to Company projects or related projects of other companies, including difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators; governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, target rates of return, rate design and retained natural gas), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal; 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; impairments under the SEC’s full cost ceiling test for natural gas and oil reserves; changes in the price of natural gas or oil; 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; factors affecting the Company’s ability to successfully identify, drill for and produce economically viable natural gas and oil 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; changes in price differentials between similar quantities of natural gas or oil 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; other changes in price differentials between similar quantities of natural gas or oil 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; uncertainty of oil and gas reserve estimates; significant differences between the Company’s projected and actual production levels for natural gas or oil; changes in demographic patterns and weather conditions; 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; changes in economic conditions, including global, national or regional recessions, and their effect on the demand for, and customers’ ability to pay for, the Company’s products and services; the creditworthiness or performance of the Company’s key suppliers, customers and counterparties; economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities, acts of war, cyber attacks or pest infestation; 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 RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS QUARTER ENDED JUNE 30, 2017 (Unaudited) Upstream Midstream Businesses Downstream Businesses Exploration & Pipeline & Energy Corporate / (Thousands of Dollars) Production Storage Gathering Utility Marketing All Other Consolidated* Third quarter 2016 GAAP earnings $ (19,165 ) $ 17,323 $ 9,473 $ 2,179 $ (590 ) $ (934 ) $ 8,286 Items impacting comparability: Impairment of oil and gas producing properties 82,658 82,658 Tax impact of impairment of oil and gas producing properties (34,716 ) (34,716 ) Joint development agreement professional fees 3,173 3,173 Tax impact of joint development agreement professional fees (1,333 ) (1,333 ) Third quarter 2016 operating results 30,617 17,323 9,473 2,179 (590 ) (934 ) 58,068 Drivers of operating results Higher (lower) crude oil prices (2,511 ) (2,511 ) Higher (lower) natural gas prices 2,228 2,228 Higher (lower) natural gas production (1,805 ) (1,805 ) Higher (lower) crude oil production (2,229 ) (2,229 ) Derivative mark to market adjustments 619 619 Lower (higher) lease operating and transportation expenses (1,150 ) (1,150 ) Lower (higher) depreciation / depletion 2,490 331 (340 ) (554 ) 1,927 Higher (lower) transportation revenues (2,380 ) (2,380 ) Higher (lower) gathering and processing revenues 913 913 Lower (higher) other operating expenses 1,769 (392 ) 1,377 Lower (higher) property, franchise and other taxes (428 ) (328 ) (756 ) Higher (lower) margins (630 ) (630 ) Lower (higher) interest expense (401 ) (401 ) Lower (higher) income tax expense / effective tax rate 2,383 1,214 291 987 1,580 6,455 All other / rounding (91 ) (129 ) 171 (33 ) 26 45 (11 ) Third quarter 2017 GAAP earnings and operating results $ 30,123 $ 16,031 $ 10,107 $ 4,348 $ (564 ) $ (331 ) $ 59,714 * Amounts do not reflect intercompany eliminations NATIONAL FUEL GAS COMPANY RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE QUARTER ENDED JUNE 30, 2017 (Unaudited) Upstream Midstream Businesses Downstream Businesses Exploration & Pipeline & Energy Corporate / Production Storage Gathering Utility Marketing All Other Consolidated* Third quarter 2016 GAAP earnings $ (0.22 ) $ 0.20 $ 0.11 $ 0.03 $ (0.01 ) $ (0.01 ) $ 0.10 Items impacting comparability: Impairment of oil and gas producing properties 0.97 0.97 Tax impact of impairment of oil and gas producing properties (0.41 ) (0.41 ) Joint development agreement professional fees 0.04 0.04 Tax impact of joint development agreement professional fees (0.02 ) (0.02 ) Third quarter 2016 operating results 0.36 0.20 0.11 0.03 (0.01 ) (0.01 ) 0.68 Drivers of operating results Higher (lower) crude oil prices (0.03 ) (0.03 ) Higher (lower) natural gas prices 0.03 0.03 Higher (lower) natural gas production (0.02 ) (0.02 ) Higher (lower) crude oil production (0.03 ) (0.03 ) Derivative mark to market adjustments 0.01 0.01 Lower (higher) lease operating and transportation expenses (0.01 ) (0.01 ) Lower (higher) depreciation / depletion 0.03 — — (0.01 ) 0.02 Higher (lower) transportation revenues (0.03 ) (0.03 ) Higher (lower) gathering and processing revenues 0.01 0.01 Lower (higher) other operating expenses 0.02 — 0.02 Lower (higher) property, franchise and other taxes — — — Higher (lower) margins (0.01 ) (0.01 ) Lower (higher) interest expense — — Lower (higher) income tax expense / effective tax rate 0.03 0.01 — 0.01 0.02 0.07 All other / rounding (0.02 ) 0.01 — — — (0.01 ) (0.02 ) Third quarter 2017 GAAP earnings and operating results $ 0.35 $ 0.19 $ 0.12 $ 0.05 $ (0.01 ) $ (0.01 ) $ 0.69 * Amounts do not reflect intercompany eliminations NATIONAL FUEL GAS COMPANY RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS NINE MONTHS ENDED JUNE 30, 2017 (Unaudited) Upstream Midstream Businesses Downstream Businesses Exploration & Pipeline & Energy Corporate / (Thousands of Dollars) Production Storage Gathering Utility Marketing All Other Consolidated* Nine months ended June 30, 2016 GAAP earnings $ (469,586 ) $ 59,794 $ 21,962 $ 52,745 $ 4,117 $ 2,458 $ (328,510 ) Items impacting comparability: Impairment of oil and gas producing properties 915,552 915,552 Tax impact of impairment of oil and gas producing properties (384,531 ) (384,531 ) Joint development agreement professional fees 7,855 7,855 Tax impact of joint development agreement professional fees (3,299 ) (3,299 ) Nine months ended June 30, 2016 operating results 65,991 59,794 21,962 52,745 4,117 2,458 207,067 Drivers of operating results Higher (lower) crude oil prices (4,889 ) (4,889 ) Higher (lower) natural gas prices (2,960 ) (2,960 ) Higher (lower) natural gas production 24,737 24,737 Higher (lower) crude oil production (4,999 ) (4,999 ) Derivative mark to market adjustments 510 510 Lower (higher) lease operating and transportation expenses (4,830 ) (4,830 ) Lower (higher) depreciation / depletion 17,701 970 (391 ) (2,594 ) 15,686 Higher (lower) transportation revenues (4,519 ) (4,519 ) Higher (lower) gathering and processing revenues 10,927 10,927 Lower (higher) other operating expenses 4,144 (2,191 ) (930 ) (3,876 ) (1,059 ) (3,912 ) Lower (higher) property, franchise and other taxes (655 ) (558 ) (1,213 ) Regulatory true-up adjustments 948 948 Higher (lower) usage 2,209 2,209 Impact of new rates 927 927 Higher (lower) margins (1,932 ) (951 ) (2,883 ) Higher (lower) AFUDC** (469 ) (914 ) (1,383 ) Lower (higher) interest expense 1,048 1,048 Lower (higher) income tax expense / effective tax rate 3,395 1,731 (563 ) 887 (491 ) 4,959 All other / rounding (221 ) (102 ) 368 771 (63 ) (277 ) 476 Nine months ended June 30, 2017 GAAP earnings and operating results $ 98,972 $ 54,656 $ 31,373 $ 51,103 $ 2,122 $ (320 ) $ 237,906 * Amounts do not reflect intercompany eliminations ** AFUDC = Allowance for Funds Used During Construction NATIONAL FUEL GAS COMPANY RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE NINE MONTHS ENDED JUNE 30, 2017 (Unaudited) Upstream Midstream Businesses Downstream Businesses Exploration & Pipeline & Energy Corporate / Production Storage Gathering Utility Marketing All Other Consolidated* Nine months ended June 30, 2016 GAAP earnings $ (5.54 ) $ 0.71 $ 0.26 $ 0.62 $ 0.05 $ 0.03 $ (3.87 ) Items impacting comparability: Impairment of oil and gas producing properties 10.80 10.80 Tax impact of impairment of oil and gas producing properties (4.54 ) (4.54 ) Joint development agreement professional fees 0.09 0.09 Tax impact of joint development agreement professional fees (0.04 ) (0.04 ) Earnings per share impact of diluted shares (0.01 ) (0.01 ) Nine months ended June 30, 2016 operating results 0.77 0.70 0.26 0.62 0.05 0.03 2.43 Drivers of operating results Higher (lower) crude oil prices (0.06 ) (0.06 ) Higher (lower) natural gas prices (0.03 ) (0.03 ) Higher (lower) natural gas production 0.29 0.29 Higher (lower) crude oil production (0.06 ) (0.06 ) Derivative mark to market adjustments 0.01 0.01 Lower (higher) lease operating and transportation expenses (0.06 ) (0.06 ) Lower (higher) depreciation / depletion 0.21 0.01 — (0.03 ) 0.19 Higher (lower) transportation revenues (0.05 ) (0.05 ) Higher (lower) gathering and processing revenues 0.12 0.12 Lower (higher) other operating expenses 0.05 (0.03 ) (0.01 ) (0.05 ) (0.01 ) (0.05 ) Lower (higher) property, franchise and other taxes (0.01 ) (0.01 ) (0.02 ) Regulatory true-up adjustments 0.01 0.01 Higher (lower) usage 0.03 0.03 Impact of new rates 0.01 0.01 Higher (lower) margins (0.02 ) (0.01 ) (0.03 ) Higher (lower) AFUDC** (0.01 ) (0.01 ) (0.02 ) Lower (higher) interest expense 0.01 0.01 Lower (higher) income tax expense / effective tax rate 0.04 0.02 (0.01 ) 0.01 (0.01 ) 0.05 All other / rounding (0.01 ) 0.01 0.01 — (0.01 ) — — Nine months ended June 30, 2017 GAAP earnings and operating results $ 1.15 $ 0.64 $ 0.37 $ 0.59 $ 0.02 $ — $ 2.77 * Amounts do not reflect intercompany eliminations ** AFUDC = Allowance for Funds Used During Construction 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
2017 2016 2017 2016 Operating Revenues: Utility and Energy Marketing Revenues $ 146,360 $ 123,976 $ 663,029 $ 540,981 Exploration and Production and Other Revenues 151,925 158,578 473,617 456,032 Pipeline and Storage and Gathering Revenues 50,083 53,063 156,298 162,930 348,368 335,617 1,292,944 1,159,943 Operating Expenses: Purchased Gas 46,135 23,477 264,349 147,168 Operation and Maintenance: Utility and Energy Marketing 44,467 46,616 158,796 151,474 Exploration and Production and Other 34,098 35,427 102,153 123,965 Pipeline and Storage and Gathering 23,250 23,215 69,016 64,324 Property, Franchise and Other Taxes 21,447 20,261 64,368 61,923 Depreciation, Depletion and Amortization 55,617 58,802 168,812 193,300 Impairment of Oil and Gas Producing Properties — 82,658 — 915,552 225,014 290,456 827,494 1,657,706 Operating Income (Loss) 123,354 45,161 465,450 (497,763 ) Other Income (Expense): Interest Income 853 564 2,844 2,640 Other Income 1,370 1,519 4,728 7,173 Interest Expense on Long-Term Debt (29,225 ) (28,897 ) (87,241 ) (88,263 ) Other Interest Expense (846 ) (1,321 ) (2,680 ) (3,938 ) Income (Loss) Before Income Taxes 95,506 17,026 383,101 (580,151 ) Income Tax Expense (Benefit) 35,792 8,740 145,195 (251,641 ) Net Income (Loss) Available for Common Stock $ 59,714 $ 8,286 $ 237,906 $ (328,510 ) Earnings (Loss) Per Common Share: Basic $ 0.70 $ 0.10 $ 2.79 $ (3.87 ) Diluted $ 0.69 $ 0.10 $ 2.77 $ (3.87 ) Weighted Average Common Shares: Used in Basic Calculation 85,422,313 84,917,664 85,315,154 84,791,447 Used in Diluted Calculation 86,064,464 85,470,216 85,950,742 84,791,447 NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, September 30, (Thousands of Dollars) 2017 2016 ASSETS Property, Plant and Equipment $9,816,295 $9,539,581 Less - Accumulated Depreciation, Depletion and Amortization 5,232,771 5,085,099 Net Property, Plant and Equipment 4,583,524 4,454,482 Current Assets: Cash and Temporary Cash Investments 285,325 129,972 Hedging Collateral Deposits 2,142 1,484 Receivables - Net 127,876 133,201 Unbilled Revenue 19,729 18,382 Gas Stored Underground 17,793 34,332 Materials and Supplies - at average cost 34,706 33,866 Unrecovered Purchased Gas Costs 3,757 2,440 Other Current Assets 50,852 59,354 Total Current Assets 542,180 413,031 Other Assets: Recoverable Future Taxes 182,469 177,261 Unamortized Debt Expense 1,292 1,688 Other Regulatory Assets 315,126 320,750 Deferred Charges 28,821 20,978 Other Investments 126,485 110,664 Goodwill 5,476 5,476 Prepaid Post-Retirement Benefit Costs 18,619 17,649 Fair Value of Derivative Financial Instruments 63,036 113,804 Other 479 604 Total Other Assets 741,803 768,874 Total Assets $5,867,507 $5,636,387 CAPITALIZATION AND LIABILITIES Capitalization: Comprehensive Shareholders' Equity Common Stock, $1 Par Value Authorized - 200,000,000 Shares; Issued and Outstanding - 85,467,963 Shares and 85,118,886 Shares, Respectively $85,468 $85,119 Paid in Capital 790,291 771,164 Earnings Reinvested in the Business 841,593 676,361 Accumulated Other Comprehensive Loss (33,304 ) (5,640 ) Total Comprehensive Shareholders' Equity 1,684,048 1,527,004 Long-Term Debt, Net of Unamortized Discount and Debt Issuance Costs 1,787,954 2,086,252 Total Capitalization 3,472,002 3,613,256 Current and Accrued Liabilities: Notes Payable to Banks and Commercial Paper — — Current Portion of Long-Term Debt 300,000 — Accounts Payable 98,842 108,056 Amounts Payable to Customers 13,070 19,537 Dividends Payable 35,469 34,473 Interest Payable on Long-Term Debt 28,985 34,900 Customer Advances 224 14,762 Customer Security Deposits 17,522 16,019 Other Accruals and Current Liabilities 107,101 74,430 Fair Value of Derivative Financial Instruments 922 1,560 Total Current and Accrued Liabilities 602,135 303,737 Deferred Credits: Deferred Income Taxes 881,547 823,795 Taxes Refundable to Customers 93,321 93,318 Cost of Removal Regulatory Liability 199,739 193,424 Other Regulatory Liabilities 88,647 99,789 Pension and Other Post-Retirement Liabilities 299,326 277,113 Asset Retirement Obligations 115,354 112,330 Other Deferred Credits 115,436 119,625 Total Deferred Credits 1,793,370 1,719,394 Commitments and Contingencies — — Total Capitalization and Liabilities $5,867,507 $5,636,387 NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended June 30, (Thousands of Dollars) 2017 2016 Operating Activities: Net Income (Loss) Available for Common Stock $ 237,906 $ (328,510 ) Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities: Impairment of Oil and Gas Producing Properties — 915,552 Depreciation, Depletion and Amortization 168,812 193,300 Deferred Income Taxes 105,073 (269,248 ) Excess Tax Benefits Associated with Stock-Based Compensation Awards — (1,786 ) Stock-Based Compensation 8,857 3,138 Other 11,084 9,685 Change in: Hedging Collateral Deposits (658 ) 8,116 Receivables and Unbilled Revenue (15,885 ) (7,756 ) Gas Stored Underground and Materials and Supplies 15,699 15,683 Unrecovered Purchased Gas Costs (1,317 ) (933 ) Other Current Assets 8,502 15,334 Accounts Payable 5,046 (53,687 ) Amounts Payable to Customers (6,467 ) (21,337 ) Customer Advances (14,538 ) (16,198 ) Customer Security Deposits 1,503 (396 ) Other Accruals and Current Liabilities 25,423 3,375 Other Assets (3,548 ) 3,775 Other Liabilities 5,638 (8,152 ) Net Cash Provided by Operating Activities $ 551,130 $ 459,955 Investing Activities: Capital Expenditures $ (314,774 ) $ (481,781 ) Net Proceeds from Sale of Oil and Gas Producing Properties 26,554 115,235 Other (10,186 ) (11,163 ) Net Cash Used in Investing Activities $ (298,406 ) $ (377,709 ) Financing Activities: Excess Tax Benefits Associated with Stock-Based Compensation Awards $ — $ 1,786 Dividends Paid on Common Stock (103,594 ) (100,419 ) Net Proceeds From Issuance of Common Stock 6,223 8,358 Net Cash Used in Financing Activities $ (97,371 ) $ (90,275 ) Net Increase (Decrease) in Cash and Temporary Cash Investments 155,353 (8,029 ) Cash and Temporary Cash Investments at Beginning of Period 129,972 113,596 Cash and Temporary Cash Investments at June 30 $ 285,325 $ 105,567 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
2017 2016 Variance 2017 2016 Variance Total Operating Revenues $ 151,161 $ 156,835 $ (5,674 ) $ 471,646 $ 452,583 $ 19,063 Operating Expenses: Operation and Maintenance: General and Administrative Expense 14,170 16,573 (2,403 ) 43,674 55,671 (11,997 ) Lease Operating and Transportation Expense 40,630 38,861 1,769 122,881 115,451 7,430 All Other Operation and Maintenance Expense 2,835 3,011 (176 ) 8,168 10,402 (2,234 ) Property, Franchise and Other Taxes 4,297 3,639 658 11,248 10,241 1,007 Depreciation, Depletion and Amortization 27,448 31,279 (3,831 ) 85,353 112,586 (27,233 ) Impairment of Oil and Gas Producing Properties — 82,658 (82,658 ) — 915,552 (915,552 ) 89,380 176,021 (86,641 ) 271,324 1,219,903 (948,579 ) Operating Income (Loss) 61,781 (19,186) 80,967 200,322 (767,320) 967,642 Other Income (Expense): Interest Income 217 88 129 451 781 (330 ) Interest Expense (13,444 ) (13,753 ) 309 (40,270 ) (41,882 ) 1,612 Income (Loss) Before Income Taxes 48,554 (32,851 ) 81,405 160,503 (808,421 ) 968,924 Income Tax Expense (Benefit) 18,431 (13,686 ) 32,117 61,531 (338,835 ) 400,366 Net Income (Loss) $ 30,123 $ (19,165 ) $ 49,288 $ 98,972 $ (469,586 ) $ 568,558 Net Income (Loss) Per Share (Diluted) $ 0.35 $ (0.22 ) $ 0.57 $ 1.15 $ (5.54 ) $ 6.69 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
2017 2016 Variance 2017 2016 Variance Revenues from External Customers $ 50,049 $ 52,998 $ (2,949 ) $ 156,212 $ 162,627 $ (6,415 ) Intersegment Revenues 21,643 22,795 (1,152 ) 66,389 68,272 (1,883 ) Total Operating Revenues 71,692 75,793 (4,101 ) 222,601 230,899 (8,298 ) Operating Expenses: Purchased Gas (13 ) 356 (369 ) 181 1,059 (878 ) Operation and Maintenance 20,607 20,492 115 60,517 57,145 3,372 Property, Franchise and Other Taxes 6,935 6,430 505 20,624 19,766 858 Depreciation, Depletion and Amortization 10,513 11,023 (510 ) 30,651 32,144 (1,493 ) 38,042 38,301 (259 ) 111,973 110,114 1,859 Operating Income 33,650 37,492 (3,842 ) 110,628 120,785 (10,157 ) Other Income (Expense): Interest Income 393 237 156 984 527 457 Other Income 449 657 (208 ) 1,944 2,651 (707 ) Interest Expense (8,489 ) (8,528 ) 39 (25,177 ) (25,017 ) (160 ) Income Before Income Taxes 26,003 29,858 (3,855 ) 88,379 98,946 (10,567 ) Income Tax Expense 9,972 12,535 (2,563 ) 33,723 39,152 (5,429 ) Net Income $ 16,031 $ 17,323 $ (1,292 ) $ 54,656 $ 59,794 $ (5,138 ) Net Income Per Share (Diluted) $ 0.19 $ 0.20 $ (0.01 ) $ 0.64 $ 0.71 $ (0.07 ) Three Months Ended Nine Months Ended June 30, June 30,GATHERING SEGMENT
2017 2016 Variance 2017 2016 Variance Revenues from External Customers $ 34 $ 65 $ (31 ) $ 86 $ 303 $ (217 ) Intersegment Revenues 26,853 25,417 1,436 82,629 65,601 17,028 Total Operating Revenues 26,887 25,482 1,405 82,715 65,904 16,811 Operating Expenses: Operation and Maintenance 2,973 3,018 (45 ) 9,496 8,066 1,430 Property, Franchise and Other Taxes 13 31 (18 ) 45 116 (71 ) Depreciation, Depletion and Amortization 4,131 3,608 523 12,008 11,407 601 7,117 6,657 460 21,549 19,589 1,960 Operating Income 19,770 18,825 945 61,166 46,315 14,851 Other Income (Expense): Interest Income 288 88 200 641 188 453 Other Income — 1 (1 ) 1 3 (2 ) Interest Expense (2,411 ) (1,794 ) (617 ) (6,739 ) (6,781 ) 42 Income Before Income Taxes 17,647 17,120 527 55,069 39,725 15,344 Income Tax Expense 7,540 7,647 (107 ) 23,696 17,763 5,933 Net Income $ 10,107 $ 9,473 $ 634 $ 31,373 $ 21,962 $ 9,411 Net Income Per Share (Diluted) $ 0.12 $ 0.11 $ 0.01 $ 0.37 $ 0.26 $ 0.11 NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES SEGMENT OPERATING RESULTS AND STATISTICS (UNAUDITED) DOWNSTREAM BUSINESSES Three Months Ended Nine Months Ended (Thousands of Dollars, except per share amounts) June 30, June 30,UTILITY SEGMENT
2017 2016 Variance 2017 2016 Variance Revenues from External Customers $ 121,900 $ 106,568 $ 15,332 $ 550,819 $ 463,154 $ 87,665 Intersegment Revenues 3,391 1,729 1,662 11,314 10,757 557 Total Operating Revenues 125,291 108,297 16,994 562,133 473,911 88,222 Operating Expenses: Purchased Gas 46,536 29,514 17,022 235,481 155,764 79,717 Operation and Maintenance 43,506 45,990 (2,484 ) 155,783 148,883 6,900 Property, Franchise and Other Taxes 9,927 9,893 34 31,637 30,980 657 Depreciation, Depletion and Amortization 13,086 12,234 852 39,502 35,511 3,991 113,055 97,631 15,424 462,403 371,138 91,265 Operating Income 12,236 10,666 1,570 99,730 102,773 (3,043 ) Other Income (Expense): Interest Income 141 115 26 418 321 97 Other Income 438 345 93 576 1,749 (1,173 ) Interest Expense (7,062 ) (7,192 ) 130 (21,454 ) (21,684 ) 230 Income Before Income Taxes 5,753 3,934 1,819 79,270 83,159 (3,889 ) Income Tax Expense 1,405 1,755 (350 ) 28,167 30,414 (2,247 ) Net Income $ 4,348 $ 2,179 $ 2,169 $ 51,103 $ 52,745 $ (1,642 ) Net Income Per Share (Diluted) $ 0.05 $ 0.03 $ 0.02 $ 0.59 $ 0.62 $ (0.03 ) Three Months Ended Nine Months Ended June 30, June 30,ENERGY MARKETING SEGMENT
2017 2016 Variance 2017 2016 Variance Revenues from External Customers $ 24,460 $ 17,408 $ 7,052 $ 112,210 $ 77,827 $ 34,383 Intersegment Revenues 565 231 334 600 855 (255 ) Total Operating Revenues 25,025 17,639 7,386 112,810 78,682 34,128 Operating Expenses: Purchased Gas 24,336 17,191 7,145 104,335 67,235 37,100 Operation and Maintenance 1,706 1,376 330 5,262 4,872 390 Property, Franchise and Other Taxes — 2 (2 ) — 6 (6 ) Depreciation, Depletion and Amortization 69 70 (1 ) 210 208 2 26,111 18,639 7,472 109,807 72,321 37,486 Operating Income (Loss) (1,086 ) (1,000 ) (86 ) 3,003 6,361 (3,358 ) Other Income (Expense): Interest Income 146 145 1 418 286 132 Other Income 22 20 2 57 44 13 Interest Expense (13 ) (11 ) (2 ) (38 ) (37 ) (1 ) Income (Loss) Before Income Taxes (931 ) (846 ) (85 ) 3,440 6,654 (3,214 ) Income Tax Expense (Benefit) (367 ) (256 ) (111 ) 1,318 2,537 (1,219 ) Net Income (Loss) $ (564 ) $ (590 ) $ 26 $ 2,122 $ 4,117 $ (1,995 ) Net Income (Loss) Per Share (Diluted) $ (0.01 ) $ (0.01 ) $ — $ 0.02 $ 0.05 $ (0.03 ) 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
2017 2016 Variance 2017 2016 Variance Total Operating Revenues $ 538 $ 1,508 $ (970 ) $ 1,311 $ 2,775 $ (1,464 ) Operating Expenses: Operation and Maintenance 435 256 179 1,344 495 849 Property, Franchise and Other Taxes 151 144 7 445 449 (4 ) Depreciation, Depletion and Amortization 182 399 (217 ) 525 888 (363 ) 768 799 (31 ) 2,314 1,832 482 Operating Income (Loss) (230 ) 709 (939 ) (1,003 ) 943 (1,946 ) Other Income (Expense): Interest Income 59 32 27 147 83 64 Income (Loss) Before Income Taxes (171 ) 741 (912 ) (856 ) 1,026 (1,882 ) Income Tax Expense (Benefit) (73 ) 311 (384 ) (358 ) 431 (789 ) Net Income (Loss) $ (98 ) $ 430 $ (528 ) $ (498 ) $ 595 $ (1,093 ) Net Income (Loss) Per Share (Diluted) $ — $ 0.01 $ (0.01 ) $ — $ 0.01 $ (0.01 ) Three Months Ended Nine Months Ended June 30, June 30,CORPORATE
2017 2016 Variance 2017 2016 Variance Revenues from External Customers $ 226 $ 235 $ (9 ) $ 660 $ 674 $ (14 ) Intersegment Revenues 977 967 10 2,930 2,900 30 Total Operating Revenues 1,203 1,202 1 3,590 3,574 16 Operating Expenses: Operation and Maintenance 3,658 3,236 422 11,054 10,273 781 Property, Franchise and Other Taxes 124 122 2 369 365 4 Depreciation, Depletion and Amortization 188 189 (1 ) 563 556 7 3,970 3,547 423 11,986 11,194 792 Operating Loss (2,767 ) (2,345 ) (422 ) (8,396 ) (7,620 ) (776 ) Other Income (Expense): Interest Income 31,185 30,684 501 93,684 92,767 917 Other Income 461 496 (35 ) 2,150 2,726 (576 ) Interest Expense on Long-Term Debt (29,225 ) (28,897 ) (328 ) (87,241 ) (88,263 ) 1,022 Other Interest Expense (1,003 ) (868 ) (135 ) (2,901 ) (850 ) (2,051 ) Loss Before Income Taxes (1,349 ) (930 ) (419 ) (2,704 ) (1,240 ) (1,464 ) Income Tax Expense (Benefit) (1,116 ) 434 (1,550 ) (2,882 ) (3,103 ) 221 Net Income (Loss) $ (233 ) $ (1,364 ) $ 1,131 $ 178 $ 1,863 $ (1,685 ) Net Income (Loss) Per Share (Diluted) $ (0.01 ) $ (0.02 ) $ 0.01 $ — $ 0.02 $ (0.02 ) Three Months Ended Nine Months Ended June 30, June 30,INTERSEGMENT ELIMINATIONS
2017 2016 Variance 2017 2016 Variance Intersegment Revenues $ (53,429 ) $ (51,139 ) $ (2,290 ) $ (163,862 ) $ (148,385 ) $ (15,477 ) Operating Expenses: Purchased Gas (24,724 ) (23,584 ) (1,140 ) (75,648 ) (76,890 ) 1,242 Operation and Maintenance (28,705 ) (27,555 ) (1,150 ) (88,214 ) (71,495 ) (16,719 ) (53,429 ) (51,139 ) (2,290 ) (163,862 ) (148,385 ) (15,477 ) Operating Income — — — — — — Other Income (Expense): Interest Income (31,576 ) (30,825 ) (751 ) (93,899 ) (92,313 ) (1,586 ) Interest Expense 31,576 30,825 751 93,899 92,313 1,586 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 2017 2016 (Decrease) 2017 2016 (Decrease)Capital Expenditures:
Exploration and Production $ 70,719 (1)(2) $ 47,269 (3) $ 23,450 $ 168,545 (1)(2) $ 214,923 (3)(4) $ (46,378 ) Pipeline and Storage 16,750 (1)(2) 18,325 (3) (1,575 ) 53,528 (1)(2) 76,020 (3)(4) (22,492 ) Gathering 9,214 (1)(2) 9,192 (3) 22 23,705 (1)(2) 43,715 (3)(4) (20,010 ) Utility 20,116 (1)(2) 26,280 (3) (6,164 ) 56,411 (1)(2) 72,288 (3)(4) (15,877 ) Energy Marketing 3 19 (16 ) 14 28 (14 ) Total Reportable Segments 116,802 101,085 15,717 302,203 406,974 (104,771 ) All Other — — — 40 37 3 Corporate 22 36 (14 ) 86 191 (105 ) Eliminations 295 — 295 (482 ) — (482 ) Total Capital Expenditures $ 117,119 $ 101,121 $ 15,998 $ 301,847 $ 407,202 $ (105,355 ) (1)Capital expenditures for the quarter and nine months ended June 30, 2017, include accounts payable and accrued liabilities related to capital expenditures of $25.0 million, $10.3 million, $5.2 million, and $7.0 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, 2017, since they represent non-cash investing activities at that date.
(2)Capital expenditures for the nine months ended June 30, 2017, exclude capital expenditures of $25.2 million, $18.7 million, $5.3 million and $11.2 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, 2016 and paid during the nine months ended June 30, 2017. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2016, 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, 2017.
(3)Capital expenditures for the quarter and nine months ended June 30, 2016, include accounts payable and accrued liabilities related to capital expenditures of $26.7 million, $7.6 million, $2.8 million, and $7.3 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, 2016, since they represent non-cash investing activities at that date.
(4)Capital expenditures for the nine months ended June 30, 2016, exclude capital expenditures of $46.2 million, $33.9 million, $22.4 million and $16.5 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, 2015 and paid during the nine months ended June 30, 2016. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2015, 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, 2016.
DEGREE DAYS
Percent Colder (Warmer) Than:Three Months Ended June 30
Normal 2017 2016 Normal (1) Last Year (1) Buffalo, NY 912 767 927 (15.9) (17.3) Erie, PA 871 705 936 (19.1) (24.7)Nine Months Ended June 30
Buffalo, NY 6,455 5,599 5,567 (13.3) 0.6 Erie, PA 6,023 5,082 5,159 (15.6) (1.5) (1) Percents compare actual 2017 degree days to normal degree days and actual 2017 degree days to actual 2016 degree days. NATIONAL FUEL GAS COMPANY AND SUBSIDIARIESEXPLORATION AND PRODUCTION INFORMATION
Three Months Ended Nine Months Ended June 30, June 30, Increase Increase 2017 2016 (Decrease) 2017 2016 (Decrease)Gas Production/Prices:
Production (MMcf) Appalachia 37,904 38,846 (942 ) 118,517 105,747 12,770 West Coast 733 763 (30 ) 2,246 2,310 (64 ) Total Production 38,637 39,609 (972 ) 120,763 108,057 12,706 Average Prices (Per Mcf) Appalachia $ 2.58 $ 1.73 $ 0.85 $ 2.55 $ 1.84 $ 0.71 West Coast 3.39 2.84 0.55 4.07 3.13 0.94 Weighted Average 2.59 1.75 0.84 2.58 1.87 0.71 Weighted Average after Hedging 2.94 2.86 0.08 2.96 3.00 (0.04 )Oil Production/Prices:
Production (Thousands of Barrels) Appalachia 1 6 (5 ) 3 16 (13 ) West Coast 669 722 (53 ) 2,062 2,183 (121 ) Total Production 670 728 (58 ) 2,065 2,199 (134 ) Average Prices (Per Barrel) Appalachia $ 48.34 $ 58.28 $ (9.94 ) $ 48.85 $ 44.05 $ 4.80 West Coast 45.63 38.89 6.74 45.71 34.02 11.69 Weighted Average 45.64 39.04 6.60 45.76 34.10 11.66 Weighted Average after Hedging 53.02 58.79 (5.77 ) 53.58 57.22 (3.64 ) Total Production (Mmcfe) 42,657 43,977 (1,320 ) 133,153 121,251 11,902Selected Operating Performance Statistics:
General & Administrative Expense per Mcfe (1) $ 0.33 $ 0.38 $ (0.05 ) $ 0.33 $ 0.46 $ (0.13 ) Lease Operating and Transportation Expense per Mcfe (1)(2) $ 0.95 $ 0.88 $ 0.07 $ 0.92 $ 0.95 $ (0.03 ) Depreciation, Depletion & Amortization per Mcfe (1) $ 0.64 $ 0.71 $ (0.07 ) $ 0.64 $ 0.93 $ (0.29 ) (1) Refer to page 15 for the General and Administrative Expense, Lease Operating Expense and Depreciation, Depletion, and Amortization Expense for the Exploration and Production segment. (2) Amounts include transportation expense of $0.54 and $0.53 per Mcfe for the three months ended June 30, 2017 and June 30, 2016, respectively. Amounts include transportation expense of $0.54 and $0.52 per Mcfe for the nine months ended June 30, 2017 and June 30, 2016, respectively. NATIONAL FUEL GAS COMPANY AND SUBSIDIARIESEXPLORATION AND PRODUCTION INFORMATION
Hedging Summary for the Remaining Three Months of Fiscal 2017
Volume
Average Hedge Price
Oil Swaps Brent 24,000 BBL $ 91.00 / BBL NYMEX 396,000 BBL $ 58.34 / BBL Total 420,000 BBL $ 60.21 / BBL Gas Swaps NYMEX 9,990,000 MMBTU $ 4.35 / MMBTU Dominion Transmission Appalachian (DOM) 450,000 MMBTU $ 3.82 / MMBTU Dawn Ontario (DAWN) 3,330,000 MMBTU $ 3.71 / MMBTU Fixed Price Physical Sales 17,381,568 MMBTU $ 2.45 / MMBTU Total 31,151,568 MMBTU $ 3.21 / MMBTUHedging Summary for Fiscal 2018
Volume
Average Hedge Price
Oil Swaps Brent 24,000 BBL $ 91.00 / BBL NYMEX 1,275,000 BBL $ 54.79 / BBL Total 1,299,000 BBL $ 55.46 / BBL Gas Swaps NYMEX 42,570,000 MMBTU $ 3.34 / MMBTU DOM 180,000 MMBTU $ 3.82 / MMBTU DAWN 8,400,000 MMBTU $ 3.08 / MMBTU Fixed Price Physical Sales 42,902,876 MMBTU $ 2.42 / MMBTU Total 94,052,876 MMBTU $ 2.90 / MMBTUHedging Summary for Fiscal 2019
Volume
Average Hedge Price
Oil Swaps NYMEX 912,000 BBL $ 53.84 / BBL Gas Swaps NYMEX 27,060,000 MMBTU $ 3.17 / MMBTU DAWN 7,200,000 MMBTU $ 3.00 / MMBTU Fixed Price Physical Sales 32,328,272 MMBTU $ 2.51 / MMBTU Total 66,588,272 MMBTU $ 2.83 / MMBTUHedging Summary for Fiscal 2020
Volume
Average Hedge Price
Oil Swaps NYMEX 168,000 BBL $ 50.08 / BBL Gas Swaps NYMEX 16,880,000 MMBTU $ 3.07 / MMBTU DAWN 7,200,000 MMBTU $ 3.00 / MMBTU Fixed Price Physical Sales 38,232,955 MMBTU $ 2.30 / MMBTU Total 62,312,955 MMBTU $ 2.59 / MMBTUHedging Summary for Fiscal 2021
Volume
Average Hedge Price
Gas Swaps NYMEX 4,840,000 MMBTU $ 3.01 / MMBTU DAWN 600,000 MMBTU $ 3.00 / MMBTU Fixed Price Physical Sales 38,650,830 MMBTU $ 2.22 / MMBTU Total 44,090,830 MMBTU $ 2.31 / MMBTUHedging Summary for Fiscal 2022
Volume
Average Hedge Price
Fixed Price Physical Sales 35,245,042 MMBTU $ 2.24 / MMBTUHedging Summary for Fiscal 2023
Volume
Average Hedge Price
Fixed Price Physical Sales 31,170,734 MMBTU $ 2.26 / MMBTUHedging Summary for Fiscal 2024
Volume
Average Hedge Price
Fixed Price Physical Sales 15,499,436 MMBTU $ 2.26 / 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 2017 2016 (Decrease) 2017 2016 (Decrease) Firm Transportation - Affiliated 17,734 19,836 (2,102 ) 92,583 87,169 5,414 Firm Transportation - Non-Affiliated 165,717 153,543 12,174 495,015 470,991 24,024 Interruptible Transportation 1,060 6,354 (5,294 ) 5,078 18,469 (13,391 ) 184,511 179,733 4,778 592,676 576,629 16,047 Gathering Volume - (MMcf) Three Months Ended Nine Months Ended June 30, June 30, Increase Increase 2017 2016 (Decrease) 2017 2016 (Decrease) Gathered Volume - Affiliated 48,838 46,360 2,478 150,005 119,355 30,650 Utility Throughput - (MMcf) Three Months Ended Nine Months Ended June 30, June 30, Increase Increase 2017 2016 (Decrease) 2017 2016 (Decrease) Retail Sales: Residential Sales 8,105 9,209 (1,104 ) 48,817 46,828 1,989 Commercial Sales 1,170 1,254 (84 ) 7,373 6,770 603 Industrial Sales 48 — 48 282 233 49 9,323 10,463 (1,140 ) 56,472 53,831 2,641 Off-System Sales — — — 1,295 1,243 52 Transportation 13,799 14,857 (1,058 ) 60,453 59,770 683 23,122 25,320 (2,198 ) 118,220 114,844 3,376 Energy Marketing Volume Three Months Ended Nine Months Ended June 30, June 30, Increase Increase 2017 2016 (Decrease) 2017 2016 (Decrease) Natural Gas (MMcf) 7,722 8,537 (815 ) 32,969 33,800 (831 )NATIONAL FUEL GAS COMPANYAND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
In addition to financial measures calculated in accordance with generally accepted accounting principles (GAAP), this press release contains information regarding Operating Results and Adjusted EBITDA, 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 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 Operating Results as reported GAAP earnings before items impacting comparability. The table at page 1 of this report reconciles National Fuel's reported GAAP earnings to Operating Results for the three and nine months ended June 30, 2017 and 2016.
Management defines Adjusted EBITDA as reported GAAP earnings before the following items: interest expense, depreciation, depletion and amortization, interest and other income, impairments, items impacting comparability and income taxes.
The following tables reconcile National Fuel's reported GAAP earnings to Adjusted EBITDA for the three and nine months ended June 30, 2017 and 2016:
Three Months Ended Nine Months Ended June 30, June 30, 2017 2016 2017 2016 (in thousands) Reported GAAP Earnings $ 59,714 $ 8,286 $ 237,906 $ (328,510 ) Depreciation, Depletion and Amortization 55,617 58,802 168,812 193,300 Interest and Other Income (2,223 ) (2,083 ) (7,572 ) (9,813 ) Interest Expense 30,071 30,218 89,921 92,201 Income Taxes 35,792 8,740 145,195 (251,641 ) Impairment of Oil and Gas ProducingProperties
— 82,658 — 915,552 Joint Development Agreement ProfessionalFees
— 3,173 — 7,855 Adjusted EBITDA $ 178,971 $ 189,794 $ 634,262 $ 618,944 Adjusted EBITDA by Segment Pipeline and Storage Adjusted EBITDA $ 44,163 $ 48,515 $ 141,279 $ 152,929 Gathering Adjusted EBITDA 23,901 22,433 73,174 57,722 Total Midstream Businesses Adjusted EBITDA 68,064 70,948 214,453 210,651 Exploration and Production Adjusted EBITDA 89,229 97,924 285,675 268,673 Utility Adjusted EBITDA 25,322 22,900 139,232 138,284 Energy Marketing Adjusted EBITDA (1,017 ) (930 ) 3,213 6,569 Corporate and All Other Adjusted EBITDA (2,627 ) (1,048 ) (8,311 ) (5,233 ) Total Adjusted EBITDA $ 178,971 $ 189,794 $ 634,262 $ 618,944NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
SEGMENT ADJUSTED EBITDA
Three Months Ended Nine Months Ended June 30, June 30, (in thousands) 2017 2016 2017 2016Exploration and Production Segment
Reported GAAP Earnings $ 30,123 $ (19,165 ) $ 98,972 $ (469,586 ) Depreciation, Depletion and Amortization 27,448 31,279 85,353 112,586 Interest and Other Income (217 ) (88 ) (451 ) (781 ) Interest Expense 13,444 13,753 40,270 41,882 Income Taxes 18,431 (13,686 ) 61,531 (338,835 ) Impairment of Oil and Gas Producing Properties — 82,658 — 915,552 Joint Development Agreement Professional Fees — 3,173 — 7,855 Adjusted EBITDA $ 89,229 $ 97,924 $ 285,675 $ 268,673Pipeline and Storage Segment
Reported GAAP Earnings $ 16,031 $ 17,323 $ 54,656 $ 59,794 Depreciation, Depletion and Amortization 10,513 11,023 30,651 32,144 Interest and Other Income (842 ) (894 ) (2,928 ) (3,178 ) Interest Expense 8,489 8,528 25,177 25,017 Income Taxes 9,972 12,535 33,723 39,152 Adjusted EBITDA $ 44,163 $ 48,515 $ 141,279 $ 152,929Gathering Segment
Reported GAAP Earnings $ 10,107 $ 9,473 $ 31,373 $ 21,962 Depreciation, Depletion and Amortization 4,131 3,608 12,008 11,407 Interest and Other Income (288 ) (89 ) (642 ) (191 ) Interest Expense 2,411 1,794 6,739 6,781 Income Taxes 7,540 7,647 23,696 17,763 Adjusted EBITDA $ 23,901 $ 22,433 $ 73,174 $ 57,722Utility Segment
Reported GAAP Earnings $ 4,348 $ 2,179 $ 51,103 $ 52,745 Depreciation, Depletion and Amortization 13,086 12,234 39,502 35,511 Interest and Other Income (579 ) (460 ) (994 ) (2,070 ) Interest Expense 7,062 7,192 21,454 21,684 Income Taxes 1,405 1,755 28,167 30,414 Adjusted EBITDA $ 25,322 $ 22,900 $ 139,232 $ 138,284Energy Marketing Segment
Reported GAAP Earnings $ (564 ) $ (590 ) $ 2,122 $ 4,117 Depreciation, Depletion and Amortization 69 70 210 208 Interest and Other Income (168 ) (165 ) (475 ) (330 ) Interest Expense 13 11 38 37 Income Taxes (367 ) (256 ) 1,318 2,537 Adjusted EBITDA $ (1,017 ) $ (930 ) $ 3,213 $ 6,569Corporate and All Other
Reported GAAP Earnings $ (331 ) $ (934 ) $ (320 ) $ 2,458 Depreciation, Depletion and Amortization 370 588 1,088 1,444 Interest and Other Income (129 ) (387 ) (2,082 ) (3,263 ) Interest Expense (1,348 ) (1,060 ) (3,757 ) (3,200 ) Income Taxes (1,189 ) 745 (3,240 ) (2,672 ) Adjusted EBITDA $ (2,627 ) $ (1,048 ) $ (8,311 ) $ (5,233 ) NATIONAL FUEL GAS COMPANY AND SUBSIDIARIESQuarter Ended June 30 (unaudited)
2017 2016 Operating Revenues $ 348,368,000 $ 335,617,000 Net Income Available for Common Stock $ 59,714,000 $ 8,286,000 Earnings Per Common Share: Basic $ 0.70 $ 0.10 Diluted $ 0.69 $ 0.10 Weighted Average Common Shares: Used in Basic Calculation 85,422,313 84,917,664 Used in Diluted Calculation 86,064,464 85,470,216Nine Months Ended June 30 (unaudited)
Operating Revenues $ 1,292,944,000 $ 1,159,943,000 Net Income (Loss) Available for Common Stock $ 237,906,000 $ (328,510,000 ) Earnings (Loss) Per Common Share: Basic $ 2.79 $ (3.87 ) Diluted $ 2.77 $ (3.87 ) Weighted Average Common Shares: Used in Basic Calculation 85,315,154 84,791,447 Used in Diluted Calculation 85,950,742 84,791,447Twelve Months Ended June 30 (unaudited)
Operating Revenues $ 1,585,416,000 $ 1,461,005,000 Net Income (Loss) Available for Common Stock $ 275,459,000 $ (516,213,000 ) Earnings (Loss) Per Common Share: Basic $ 3.23 $ (6.09 ) Diluted $ 3.21 $ (6.09 ) Weighted Average Common Shares: Used in Basic Calculation 85,239,850 84,735,887 Used in Diluted Calculation 85,881,424 84,735,887
View source version on businesswire.com: http://www.businesswire.com/news/home/20170803006507/en/
National Fuel Gas CompanyAnalyst:Brian M. Welsch, 716-857-7875orMedia:Karen L. Merkel, 716-857-7654
1 Year National Fuel Gas Chart |
1 Month National Fuel Gas Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
Hot Features
Premium
