National Fuel Gas Co 10-Q for FY2020 Q1

National Fuel Gas Co (NFG)

10-Q 2020-01-31 For: 2019-12-31

Added on April 11, 2026

About this 10-Q

National Fuel Gas Co filed this 10-Q on January 31, 2020, covering the quarter ended December 31, 2019 (FY2020 Q1).

Headline figures

Quarter ended December 31, 2019, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $444.19M; down 9.4% from $490.25M a year earlier
Net income: $86.59M; down 15.7% from net income of $102.66M a year earlier
Diluted EPS: $1.00; down 15.3% from $1.18 a year earlier

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New Jersey		13-1086010
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

6363 Main Street
Williamsville,	New York	14221
(Address of principal executive offices)		(Zip Code)



Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $1.00 per share	NFG	New York Stock Exchange



Large Accelerated Filer	☑	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐



National Fuel Gas Companies
Company	The Registrant, the Registrant and its subsidiaries or the Registrant’s subsidiaries as appropriate in the context of the disclosure
Distribution Corporation	National Fuel Gas Distribution Corporation
Empire	Empire Pipeline, Inc.
Midstream Company	National Fuel Gas Midstream Company, LLC
National Fuel	National Fuel Gas Company
NFR	National Fuel Resources, Inc.
Registrant	National Fuel Gas Company
Seneca	Seneca Resources Company, LLC
Supply Corporation	National Fuel Gas Supply Corporation



Regulatory Agencies
CFTC	Commodity Futures Trading Commission
EPA	United States Environmental Protection Agency
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
NYDEC	New York State Department of Environmental Conservation
NYPSC	State of New York Public Service Commission
PaDEP	Pennsylvania Department of Environmental Protection
PaPUC	Pennsylvania Public Utility Commission
SEC	Securities and Exchange Commission



Other
2019 Form 10-K	The Company’s Annual Report on Form 10-K for the year ended September 30, 2019
2017 Tax Reform Act	Tax legislation referred to as the "Tax Cuts and Jobs Act," enacted December 22, 2017.
Bbl	Barrel (of oil)
Bcf	Billion cubic feet (of natural gas)
Bcfe (or Mcfe) – represents Bcf (or Mcf) Equivalent	The total heat value (Btu) of natural gas and oil expressed as a volume of natural gas. The Company uses a conversion formula of 1 barrel of oil = 6 Mcf of natural gas.
Btu	British thermal unit; the amount of heat needed to raise the temperature of one pound of water one degree Fahrenheit
Capital expenditure	Represents additions to property, plant, and equipment, or the amount of money a company spends to buy capital assets or upgrade its existing capital assets.
Cashout revenues	A cash resolution of a gas imbalance whereby a customer (e.g. a marketer) pays for gas the customer receives in excess of amounts delivered into pipeline/storage or distribution systems by the customer’s shipper.
CLCPA	Legislation referred to as the "Climate Leadership & Community Protection Act," enacted by the State of New York on July 18, 2019.
Degree day	A measure of the coldness of the weather experienced, based on the extent to which the daily average temperature falls below a reference temperature, usually 65 degrees Fahrenheit.



Derivative	A financial instrument or other contract, the terms of which include an underlying variable (a price, interest rate, index rate, exchange rate, or other variable) and a notional amount (number of units, barrels, cubic feet, etc.). The terms also permit for the instrument or contract to be settled net and no initial net investment is required to enter into the financial instrument or contract. Examples include futures contracts, forward contracts, options, no cost collars and swaps.
Development costs	Costs incurred to obtain access to proved oil and gas reserves and to provide facilities for extracting, treating, gathering and storing the oil and gas
Dodd-Frank Act	Dodd-Frank Wall Street Reform and Consumer Protection Act.
Dth	Decatherm; one Dth of natural gas has a heating value of 1,000,000 British thermal units, approximately equal to the heating value of 1 Mcf of natural gas.
Exchange Act	Securities Exchange Act of 1934, as amended
Expenditures for long-lived assets	Includes capital expenditures, stock acquisitions and/or investments in partnerships.
Exploration costs	Costs incurred in identifying areas that may warrant examination, as well as costs incurred in examining specific areas, including drilling exploratory wells.
Exploratory well	A well drilled in unproven or semi-proven territory for the purpose of ascertaining the presence underground of a commercial hydrocarbon deposit.
FERC 7(c) application	An application to the FERC under Section 7(c) of the federal Natural Gas Act for authority to construct, operate (and provide services through) facilities to transport or store natural gas in interstate commerce.
Firm transportation and/or storage	The transportation and/or storage service that a supplier of such service is obligated by contract to provide and for which the customer is obligated to pay whether or not the service is utilized.
GAAP	Accounting principles generally accepted in the United States of America
Goodwill	An intangible asset representing the difference between the fair value of a company and the price at which a company is purchased.
Hedging	A method of minimizing the impact of price, interest rate, and/or foreign currency exchange rate changes, often times through the use of derivative financial instruments.
Hub	Location where pipelines intersect enabling the trading, transportation, storage, exchange, lending and borrowing of natural gas.
ICE	Intercontinental Exchange. An exchange which maintains a futures market for crude oil and natural gas.
Interruptible transportation and/or storage	The transportation and/or storage service that, in accordance with contractual arrangements, can be interrupted by the supplier of such service, and for which the customer does not pay unless utilized.
LDC	Local distribution company
LIBOR	London Interbank Offered Rate
LIFO	Last-in, first-out
Marcellus Shale	A Middle Devonian-age geological shale formation that is present nearly a mile or more below the surface in the Appalachian region of the United States, including much of Pennsylvania and southern New York.
Mbbl	Thousand barrels (of oil)
Mcf	Thousand cubic feet (of natural gas)
MD&A	Management’s Discussion and Analysis of Financial Condition and Results of Operations
MDth	Thousand decatherms (of natural gas)
MMBtu	Million British thermal units (heating value of one decatherm of natural gas)
MMcf	Million cubic feet (of natural gas)



NGA	The Natural Gas Act of 1938, as amended; the federal law regulating interstate natural gas pipeline and storage companies, among other things, codified beginning at 15 U.S.C. Section 717.
NYMEX	New York Mercantile Exchange. An exchange which maintains a futures market for crude oil and natural gas.
Open Season	A bidding procedure used by pipelines to allocate firm transportation or storage capacity among prospective shippers, in which all bids submitted during a defined time period are evaluated as if they had been submitted simultaneously.
Precedent Agreement	An agreement between a pipeline company and a potential customer to sign a service agreement after specified events (called “conditions precedent”) happen, usually within a specified time.
Proved developed reserves	Reserves that can be expected to be recovered through existing wells with existing equipment and operating methods.
Proved undeveloped (PUD) reserves	Reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required to make these reserves productive.
Reserves	The unproduced but recoverable oil and/or gas in place in a formation which has been proven by production.
Revenue decoupling mechanism	A rate mechanism which adjusts customer rates to render a utility financially indifferent to throughput decreases resulting from conservation.
S&P	Standard & Poor’s Rating Service
SAR	Stock appreciation right
Service agreement	The binding agreement by which the pipeline company agrees to provide service and the shipper agrees to pay for the service.
Stock acquisitions	Investments in corporations
Utica Shale	A Middle Ordovician-age geological formation lying several thousand feet below the Marcellus Shale in the Appalachian region of the United States, including much of Ohio, Pennsylvania, West Virginia and southern New York.
VEBA	Voluntary Employees’ Beneficiary Association
WNC	Weather normalization clause; a clause in utility rates which adjusts customer rates to allow a utility to recover its normal operating costs calculated at normal temperatures. If temperatures during the measured period are warmer than normal, customer rates are adjusted upward in order to recover projected operating costs. If temperatures during the measured period are colder than normal, customer rates are adjusted downward so that only the projected operating costs will be recovered.



INDEX		Page

Part I. Financial Information

Item 1. Financial Statements (Unaudited)		6

a. Consolidated Statements of Income and Earnings Reinvested in the Business - Three Months Ended December 31, 2019 and 2018		6
b. Consolidated Statements of Comprehensive Income – Three Months Ended December 31, 2019 and 2018		7
c. Consolidated Balance Sheets – December 31, 2019 and September 30, 2019		8
d. Consolidated Statements of Cash Flows – Three Months Ended December 31, 2019 and 2018		10
e. Notes to Condensed Consolidated Financial Statements		11
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		29
Item 3. Quantitative and Qualitative Disclosures About Market Risk		44
Item 4. Controls and Procedures		44

Part II. Other Information

Item 1. Legal Proceedings		45
Item 1 A. Risk Factors		45
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		45
Item 3. Defaults Upon Senior Securities		•
Item 4. Mine Safety Disclosures		•
Item 5. Other Information		•
Item 6. Exhibits		46
Signatures		47



	Three Months Ended December 31,
(Thousands of U.S. Dollars, Except Per Common Share Amounts)	2019			2018
INCOME
Operating Revenues:
Utility and Energy Marketing Revenues	$	228,026		$	272,092
Exploration and Production and Other Revenues	167,193			163,937
Pipeline and Storage and Gathering Revenues	48,969			54,218
	444,188			490,247

Operating Expenses:
Purchased Gas	92,272			138,660
Operation and Maintenance:
Utility and Energy Marketing	43,256			43,915
Exploration and Production and Other	36,693			32,795
Pipeline and Storage and Gathering	25,885			24,934
Property, Franchise and Other Taxes	23,144			24,005
Depreciation, Depletion and Amortization	74,918			64,255
	296,168			328,564
Operating Income	148,020			161,683
Other Income (Expense):
Other Income (Deductions)	(3,040		)	(9,602		)
Interest Expense on Long-Term Debt	(25,443		)	(25,439		)
Other Interest Expense	(1,551		)	(1,073		)
Income Before Income Taxes	117,986			125,569
Income Tax Expense	31,395			22,909

Net Income Available for Common Stock	86,591			102,660

EARNINGS REINVESTED IN THE BUSINESS
Balance at Beginning of Period	1,272,601			1,098,900
	1,359,192			1,201,560

Dividends on Common Stock	(37,650		)	(36,663		)
Cumulative Effect of Adoption of Authoritative Guidance for Hedging	(950		)	—
Cumulative Effect of Adoption of Authoritative Guidance for Financial Assets and Liabilities	—			7,437
Balance at December 31	$	1,320,592		$	1,172,334

Earnings Per Common Share:
Basic:
Net Income Available for Common Stock	$	1.00		$	1.19
Diluted:
Net Income Available for Common Stock	$	1.00		$	1.18
Weighted Average Common Shares Outstanding:
Used in Basic Calculation	86,378,450			86,032,729
Used in Diluted Calculation	86,883,152			86,708,814
Dividends Per Common Share:
Dividends Declared	$	0.435		$	0.425



	Three Months Ended December 31,
(Thousands of U.S. Dollars)	2019			2018
Net Income Available for Common Stock	$	86,591		$	102,660
Other Comprehensive Income (Loss), Before Tax:
Unrealized Gain (Loss) on Derivative Financial Instruments Arising During the Period	495			44,518
Reclassification Adjustment for Realized (Gains) Losses on Derivative Financial Instruments in Net Income	(7,352		)	20,517
Cumulative Effect of Adoption of Authoritative Guidance for Hedging	1,313			—
Reclassification Adjustment for the Cumulative Effect of Adoption of Authoritative Guidance for Financial Assets and Liabilities to Earnings Reinvested in the Business	—			(11,738		)
Other Comprehensive Income (Loss), Before Tax	(5,544		)	53,297
Income Tax Expense (Benefit) Related to Unrealized Gain (Loss) on Derivative Financial Instruments Arising During the Period	119			12,744
Reclassification Adjustment for Income Tax Benefit (Expense) on Realized Losses (Gains) from Derivative Financial Instruments in Net Income	(2,031		)	5,794
Income Tax Benefit (Expense) on Cumulative Effect of Adoption of Authoritative Guidance for Hedging	363			—
Reclassification Adjustment for Income Tax Benefit (Expense) on the Cumulative Effect of Adoption of Authoritative Guidance for Financial Assets and Liabilities to Earnings Reinvested in the Business	—			(4,301		)
Income Taxes – Net	(1,549		)	14,237
Other Comprehensive Income (Loss)	(3,995		)	39,060
Comprehensive Income	$	82,596		$	141,720



	December 31, 2019		September 30, 2019
(Thousands of U.S. Dollars)
ASSETS
Property, Plant and Equipment	$	11,402,308	$	11,204,838
Less - Accumulated Depreciation, Depletion and Amortization	5,756,084		5,695,328
	5,646,224		5,509,510
Current Assets
Cash and Temporary Cash Investments	34,966		20,428
Hedging Collateral Deposits	9,666		6,832
Receivables – Net of Allowance for Uncollectible Accounts of $26,717and $25,788, Respectively	158,944		139,956
Unbilled Revenue	58,306		18,758
Gas Stored Underground	29,991		36,632
Materials and Supplies - at average cost	40,373		40,717
Unrecovered Purchased Gas Costs	1,619		2,246
Other Current Assets	96,831		97,054
	430,696		362,623

Other Assets
Recoverable Future Taxes	116,188		115,197
Unamortized Debt Expense	13,578		14,005
Other Regulatory Assets	165,409		167,320
Deferred Charges	56,936		33,843
Other Investments	141,229		144,917
Goodwill	5,476		5,476
Prepaid Post-Retirement Benefit Costs	64,999		60,517
Fair Value of Derivative Financial Instruments	40,569		48,669
Other	21,354		80
	625,738		590,024

Total Assets	$	6,702,658	$	6,462,157



	Three Months Ended December 31, 2019				Three Months Ended December 31, 2018
	Balance at October 1, 2019		Balance at December 31, 2019		Balance at October 1, 2018		Balance at December 31, 2018

Cash and Temporary Cash Investments	$	20,428	$	34,966	$	229,606	$	109,754
Hedging Collateral Deposits	6,832		9,666		3,441		2,784
Cash, Cash Equivalents, and Restricted Cash	$	27,260	$	44,632	$	233,047	$	112,538



	Gains and Losses on Derivative Financial Instruments			Gains and Losses on Securities Available for Sale			Funded Status of the Pension and Other Post-Retirement Benefit Plans			Total
Three Months Ended December 31, 2019
Balance at October 1, 2019	$	34,675		$	—		$	(86,830	)	$	(52,155	)
Other Comprehensive Gains and Losses Before Reclassifications	376			—			—			376
Amounts Reclassified From Other Comprehensive Income (Loss)	(5,321		)	—			—			(5,321		)
Cumulative Effect of Adoption of Authoritative Guidance for Hedging	950			—			—			950
Balance at December 31, 2019	$	30,680		$	—		$	(86,830	)	$	(56,150	)
Three Months Ended December 31, 2018
Balance at October 1, 2018	$	(28,611	)	$	7,437		$	(46,576	)	$	(67,750	)
Other Comprehensive Gains and Losses Before Reclassifications	31,774			—			—			31,774
Amounts Reclassified From Other Comprehensive Income (Loss)	14,723			—			—			14,723
Reclassification Adjustment for the Cumulative Effect of Adoption of Authoritative Guidance for Financial Assets and Liabilities	—			(7,437		)	—			(7,437		)
Balance at December 31, 2018	$	17,886		$	—		$	(46,576	)	$	(28,690	)



Details About Accumulated Other Comprehensive Loss Components	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Loss						Affected Line Item in the Statement Where Net Income is Presented
	Three Months Ended December 31,
	2019			2018
Gains (Losses) on Derivative Financial Instrument Cash Flow Hedges:
Commodity Contracts		$7,541			($18,522	)	Operating Revenues
Commodity Contracts	2			(902		)	Purchased Gas
Foreign Currency Contracts	(191		)	(1,093		)	Operating Revenues
	7,352			(20,517		)	Total Before Income Tax
	(2,031		)	5,794			Income Tax Expense
		$5,321			($14,723	)	Net of Tax



	December 31, 2019			September 30, 2019
(Thousands of U.S. Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Comprehensive Shareholders’ Equity
Common Stock, $1 Par Value
Authorized - 200,000,000 Shares; Issued And Outstanding – 86,551,528 Shares and 86,315,287 Shares, Respectively	$	86,552		$	86,315
Paid in Capital	831,146			832,264
Earnings Reinvested in the Business	1,320,592			1,272,601
Accumulated Other Comprehensive Loss	(56,150		)	(52,155		)
Total Comprehensive Shareholders’ Equity	2,182,140			2,139,025
Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issuance Costs	2,134,339			2,133,718
Total Capitalization	4,316,479			4,272,743

Current and Accrued Liabilities
Notes Payable to Banks and Commercial Paper	139,800			55,200
Current Portion of Long-Term Debt	—			—
Accounts Payable	126,985			132,208
Amounts Payable to Customers	3,444			4,017
Dividends Payable	37,650			37,547
Interest Payable on Long-Term Debt	29,461			18,508
Customer Advances	13,727			13,044
Customer Security Deposits	15,510			16,210
Other Accruals and Current Liabilities	173,603			139,600
Fair Value of Derivative Financial Instruments	6,282			5,574
	546,462			421,908

Deferred Credits
Deferred Income Taxes	708,774			653,382
Taxes Refundable to Customers	361,556			366,503
Cost of Removal Regulatory Liability	222,172			221,699
Other Regulatory Liabilities	148,350			142,367
Pension and Other Post-Retirement Liabilities	129,616			133,729
Asset Retirement Obligations	128,382			127,458
Other Deferred Credits	140,867			122,368
	1,839,717			1,767,506
Commitments and Contingencies (Note 8)	—			—



	At December 31, 2019		At September 30, 2019

Accrued Capital Expenditures	$	59,933	$	33,713
Regulatory Liabilities	50,713		50,332
Reserve for Gas Replacement	1,100		—
Liability for Royalty and Working Interests	20,052		18,057
Non-Qualified Benefit Plan Liability	13,194		13,194
Other	28,611		24,304
	$	173,603	$	139,600


1.	For contracts that commenced prior to and existed as of October 1, 2019, a package of practical expedients to not reassess whether a contract is or contains a lease, lease classification, and initial direct costs under the new authoritative guidance;


2.	An election not to apply the recognition requirements in the new authoritative guidance to short-term leases (a lease that at commencement date has a lease term of one year or less);



	At December 31, 2019		At September 30, 2019

Prepayments	$	9,135	$	12,728
Prepaid Property and Other Taxes	15,340		14,361
Federal Income Taxes Receivable	42,389		42,388
State Income Taxes Receivable	5,576		8,579
Fair Values of Firm Commitments	9,803		7,538
Regulatory Assets	14,588		11,460
	$	96,831	$	97,054



Quarter Ended December 31, 2019 (Thousands)
Revenues By Type of Service	Exploration and Production		Pipeline and Storage		Gathering		Utility			All Other			Corporate and Intersegment Eliminations			Total Consolidated
Production of Natural Gas	$	119,874	$	—	$	—	$	—		$	—		$	—		$	119,874
Production of Crude Oil	37,664		—		—		—			—			—			37,664
Natural Gas Processing	688		—		—		—			—			—			688
Natural Gas Gathering Services	—		—		34,788		—			—			(34,788		)	—
Natural Gas Transportation Service	—		53,452		—		32,808			—			(16,986		)	69,274
Natural Gas Storage Service	—		18,426		—		—			—			(7,993		)	10,433
Natural Gas Residential Sales	—		—		—		144,370			—			—			144,370
Natural Gas Commercial Sales	—		—		—		18,841			—			—			18,841
Natural Gas Industrial Sales	—		—		—		1,270			—			—			1,270
Natural Gas Marketing	—		—		—		—			34,108			(177		)	33,931
Other	172		342		—		(3,324		)	1,120			(52		)	(1,742		)
Total Revenues from Contracts with Customers	158,398		72,220		34,788		193,965			35,228			(59,996		)	434,603
Alternative Revenue Programs	—		—		—		2,860			—			—			2,860
Derivative Financial Instruments	7,541		—		—		—			(816		)	—			6,725
Total Revenues	$	165,939	$	72,220	$	34,788	$	196,825		$	34,412		$	(59,996	)	$	444,188



Quarter Ended December 31, 2018 (Thousands)
Revenues By Type of Service	Exploration and Production			Pipeline and Storage		Gathering		Utility			All Other		Corporate and Intersegment Eliminations			Total Consolidated
Production of Natural Gas	$	135,911		$	—	$	—	$	—		$	—	$	—		$	135,911
Production of Crude Oil	37,555			—		—		—			—		—			37,555
Natural Gas Processing	975			—		—		—			—		—			975
Natural Gas Gathering Services	—			—		29,690		—			—		(29,690		)	—
Natural Gas Transportation Service	—			56,135		—		35,631			—		(17,065		)	74,701
Natural Gas Storage Service	—			18,929		—		—			—		(7,973		)	10,956
Natural Gas Residential Sales	—			—		—		166,867			—		—			166,867
Natural Gas Commercial Sales	—			—		—		22,047			—		—			22,047
Natural Gas Industrial Sales	—			—		—		1,501			—		—			1,501
Natural Gas Marketing	—			—		—		—			49,287		(332		)	48,955
Other	382			2,005		—		(2,861		)	1,007		(404		)	129
Total Revenues from Contracts with Customers	174,823			77,069		29,690		223,185			50,294		(55,464		)	499,597
Alternative Revenue Programs	—			—		—		(528		)	—		—			(528		)
Derivative Financial Instruments	(11,947		)	—		—		—			3,125		—			(8,822		)
Total Revenues	$	162,876		$	77,069	$	29,690	$	222,657		$	53,419	$	(55,464	)	$	490,247


3.	A practical expedient to not reassess certain land easements that existed prior to October 1, 2019 and were not previously accounted for as leases under the prior authoritative guidance; and


4.	A practical expedient that permits combining lease and non-lease components in a contract and accounting for the combination as a lease (elected by asset-class).



	Three Months Ended December 31, 2019

Operating Lease Expense	$	974
Variable Lease Expense ⁽¹⁾	134
Short-Term Lease Expense ⁽²⁾	64
Sublease Income	(80		)
Total Lease Expense	$	1,092

Short-Term Lease Costs Recorded to Property, Plant and Equipment ⁽³⁾	$	7,512


⁽¹⁾	Variable lease payments that are not dependent on an index or rate are not included in the lease liability.


⁽²⁾	Short-term lease costs exclude expenses related to leases with a lease term of one month or less.


⁽³⁾	Short-term lease costs relating to drilling rig leases that are capitalized as part of oil and natural gas properties under full cost pool accounting.



	At December 31, 2019
Assets:
Deferred Charges	$	18,940

Liabilities:
Other Accruals and Current Liabilities	$	3,298
Other Deferred Credits	$	15,434



	At December 31, 2019

2020 (remaining 9 months)	$	2,575
2021	2,813
2022	2,264
2023	2,270
2024	2,237
Thereafter	9,717
Total Lease Payments	21,876
Less: Interest	(3,144		)
Total Lease Liability	$	18,732



	At September 30, 2019

2020 ⁽¹⁾	$	12,356
2021	2,813
2022	2,264
2023	2,270
2024	2,237
Thereafter	9,717
Total Operating Lease Obligations	$	31,657


⁽¹⁾	The future minimum operating lease payment amount for 2020 includes short-term leases, including drilling rigs, that are not included in the schedule of operating lease liability maturities above under the new authoritative guidance.



Recurring Fair Value Measures	At fair value as of December 31, 2019
(Thousands of Dollars)	Level 1		Level 2		Level 3		Netting Adjustments⁽¹⁾			Total⁽¹⁾
Assets:
Cash Equivalents – Money Market Mutual Funds	$	20,924	$	—	$	—	$	—		$	20,924
Derivative Financial Instruments:
Commodity Futures Contracts – Gas	2,096		—		—		(2,096		)	—
Over the Counter Swaps – Gas and Oil	—		46,686		—		(5,031		)	41,655
Foreign Currency Contracts	—		118		—		(1,204		)	(1,086		)
Other Investments:
Balanced Equity Mutual Fund	36,740		—		—		—			36,740
Fixed Income Mutual Fund	62,220		—		—		—			62,220
Common Stock – Financial Services Industry	933		—		—		—			933
Hedging Collateral Deposits	9,666		—		—		—			9,666
Total	$	132,579	$	46,804	$	—	$	(8,331	)	$	171,052

Liabilities:
Derivative Financial Instruments:
Commodity Futures Contracts – Gas	$	7,741	$	—	$	—	$	(2,096	)	$	5,645
Over the Counter Swaps – Gas and Oil	—		5,524		—		(5,031		)	493
Foreign Currency Contracts	—		1,348		—		(1,204		)	144
Total	$	7,741	$	6,872	$	—	$	(8,331	)	$	6,282
Total Net Assets/(Liabilities)	$	124,838	$	39,932	$	—	$	—		$	164,770



Recurring Fair Value Measures	At fair value as of September 30, 2019
(Thousands of Dollars)	Level 1		Level 2		Level 3		Netting Adjustments⁽¹⁾			Total⁽¹⁾
Assets:
Cash Equivalents – Money Market Mutual Funds	$	10,521	$	—	$	—	$	—		$	10,521
Derivative Financial Instruments:
Commodity Futures Contracts – Gas	2,055		—		—		(2,055		)	—
Over the Counter Swaps – Gas and Oil	—		52,076		—		(1,483		)	50,593
Foreign Currency Contracts	—		5		—		(2,052		)	(2,047		)
Other Investments:
Balanced Equity Mutual Fund	40,660		—		—		—			40,660
Fixed Income Mutual Fund	62,339		—		—		—			62,339
Common Stock – Financial Services Industry	844		—		—		—			844
Hedging Collateral Deposits	6,832		—		—		—			6,832
Total	$	123,251	$	52,081	$	—	$	(5,590	)	$	169,742

Liabilities:
Derivative Financial Instruments:
Commodity Futures Contracts – Gas	$	7,149	$	—	$	—	$	(2,055	)	$	5,094
Over the Counter Swaps – Gas and Oil	—		1,671		—		(1,483		)	188
Foreign Currency Contracts	—		2,344		—		(2,052		)	292
Total	$	7,149	$	4,015	$	—	$	(5,590	)	$	5,574
Total Net Assets/(Liabilities)	$	116,102	$	48,066	$	—	$	—		$	164,168


⁽¹⁾	Netting Adjustments represent the impact of legally-enforceable master netting arrangements that allow the Company to net gain and loss positions held with the same counterparties. The net asset or net liability for each counterparty is recorded as an asset or liability on the Company’s balance sheet.



	December 31, 2019				September 30, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-Term Debt	$	2,134,339	$	2,253,232	$	2,133,718	$	2,257,085



	At December 31, 2019		At September 30, 2019

Life Insurance Contracts	$	41,336	$	41,074
Equity Mutual Fund	36,740		40,660
Fixed Income Mutual Fund	62,220		62,339
Marketable Equity Securities	933		844
	$	141,229	$	144,917



Commodity	Units
Natural Gas	88.1	Bcf (short positions)
Natural Gas	2.7	Bcf (long positions)
Crude Oil	2,376,000	Bbls (short positions)



The Effect of Derivative Financial Instruments on the Statement of Financial Performance for the
Three Months Ended December 31, 2019 and 2018 (Thousands of Dollars)
Derivatives in Cash Flow Hedging Relationships	Amount of Derivative Gain or (Loss) Recognized in Other Comprehensive Income (Loss) on the Consolidated Statement of Comprehensive Income (Loss) for the Three Months Ended December 31,						Location of Derivative Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) on the Consolidated Balance Sheet into the Consolidated Statement of Income	Amount of Derivative Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) on the Consolidated Balance Sheet into the Consolidated Statement of Income for the Three Months Ended December 31,
	2019			2018				2019			2018
Commodity Contracts	$	(1,555	)	$	50,052		Operating Revenue	$	7,541		$	(18,522	)
Commodity Contracts	1,131			(1,279		)	Purchased Gas	2			(902		)
Foreign Currency Contracts	919			(4,255		)	Operating Revenue	(191		)	(1,093		)
Total	$	495		$	44,518			$	7,352		$	(20,517	)