National Fuel Gas Co 8-K, filed Feb 5, 2021
National Fuel Gas Co (NFG)
8-K
2021-02-05
For: 2021-02-04
View Original
Added on
April 11, 2026
About this 8-K
National Fuel Gas Co filed this 8-K on February 5, 2021, reporting on events of February 4, 2021.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 4, 2021
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
Registrant’s telephone number, including area code: (716 ) 857-7000
Former name or former address, if changed since last report: Not Applicable
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02 Results of Operations and Financial Condition.
On February 4, 2021, National Fuel Gas Company (the “Company”) issued a press release regarding its earnings for the quarter ended December 31, 2020. A copy of the press release is furnished as part of this Current Report as Exhibit 99.
Neither the furnishing of the press release as an exhibit to this Current Report nor the inclusion in such press release of any reference to the Company’s internet address shall, under any circumstances, be deemed to incorporate the information available at such internet address into this Current Report. The information available at the Company’s internet address is not part of this Current Report or any other report filed or furnished by the Company with the Securities and Exchange Commission.
In addition to financial measures calculated in accordance with generally accepted accounting principles (“GAAP”), the press release furnished as part of this Current Report as Exhibit 99 contains certain non-GAAP financial measures. The Company believes that such non-GAAP financial measures are useful to investors because they provide an alternative method for assessing the Company’s operating results in a manner that is focused on the performance of the Company’s ongoing operations, for measuring the Company’s cash flow and liquidity, and for comparing the Company’s financial performance to other companies. The Company’s management uses these non-GAAP financial measures for the same purpose, and for planning and forecasting purposes. The presentation of non-GAAP financial measures is not meant to be a substitute for financial measures prepared in accordance with GAAP.
Certain statements contained herein or in the press release furnished as part of this Current Report, including statements regarding estimated future earnings and statements that are identified by the use of the words “anticipates,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “predicts,” “projects,” “believes,” “seeks,” “will” and “may” and similar expressions, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. There can be no assurance that the Company’s projections will in fact be achieved nor do these projections reflect any acquisitions or divestitures that may occur in the future. While the Company’s expectations, beliefs and projections are expressed in good faith and are believed to have a reasonable basis, actual results may differ materially from those projected in forward-looking statements. Furthermore, each forward-looking statement speaks only as of the date on which it is made. 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: the length and severity of the recent COVID-19 pandemic, including its impacts across our businesses on demand, operations, global supply chains and liquidity; 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; changes in the price of natural gas or oil; impairments under the SEC’s full cost ceiling test for natural gas and oil reserves; the creditworthiness or performance of the Company’s key suppliers, customers and counterparties; financial and economic conditions, including the availability of credit, and occurrences affecting the Company’s ability to obtain financing on acceptable terms for working capital, capital expenditures and other investments, including any downgrades in the Company’s credit ratings and changes in interest rates and other capital market conditions; 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; delays or changes in costs or plans with respect to Company projects or related projects of other companies, including disruptions due to the COVID-19 pandemic, as well as difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of
interconnecting facility operators; the Company’s ability to complete planned strategic transactions; the Company’s ability to successfully integrate acquired assets and achieve expected cost synergies; 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 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; the impact of information technology disruptions, cybersecurity or data security breaches; factors affecting the Company’s ability to successfully identify, drill for and produce economically viable natural gas 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; 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; economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities or acts of war; significant differences between the Company’s projected and actual capital expenditures and operating expenses; or increasing costs of insurance, changes in coverage and the ability to obtain insurance. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NATIONAL FUEL GAS COMPANY | |||||
| By: | /s/ Sarah J. Mugel | ||||
| Sarah J. Mugel | |||||
| General Counsel and Secretary | |||||
Dated: February 5, 2021
Exhibit 99
| 6363 Main Street/Williamsville, NY 14221 | |||||||||||
| Release Date: | Immediate February 4, 2021 | Kenneth E. Webster Investor Relations 716-857-7067 | Karen M. Camiolo Treasurer 716-857-7344 | ||||||||
NATIONAL FUEL REPORTS FIRST QUARTER EARNINGS
WILLIAMSVILLE, N.Y.: National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated results for the first quarter of its 2021 fiscal year.
FISCAL 2021 FIRST QUARTER SUMMARY
•GAAP net income of $77.8 million, or $0.85 per share, which includes a $55.2 million non-cash, after-tax impairment of oil and gas properties, and a $37.0 million after-tax gain on the sale of the Company's timber properties, compared to GAAP net income of $86.6 million, or $1.00 per share, in the prior year.
•Adjusted operating results of $97.0 million, or $1.06 per share, compared to $87.4 million, or $1.01 per share, in the prior year (see non-GAAP reconciliation on page 2).
•Adjusted EBITDA of $251.7 million, compared to $222.9 million in the prior year (see non-GAAP reconciliation on page 21).
•Pipeline & Storage segment Adjusted EBITDA of $58.1 million, an increase of 35% from the prior year.
•Gathering segment Adjusted EBITDA of $39.8 million, an increase of 35% from the prior year.
•E&P segment Adjusted EBITDA of $100.7 million, an increase of 9% from the prior year.
•E&P segment net production of 79.5 Bcfe, an increase of 21.1 Bcfe, or 36%, from the prior year, which includes the impact of the Company's Appalachian asset acquisition and approximately 4 Bcf of price-related natural gas curtailments.
•Average realized natural gas prices of $2.14 per Mcf, down $0.18 per Mcf from the prior year.
•Average realized oil prices of $49.91 per Bbl, down $13.01 per Bbl from the prior year.
•Utility segment completed its system modernization program for calendar year 2020, replacing over 150 miles of older vintage pipelines. While maintaining the Company's long-standing focus on the safety and reliability of its distribution network, this program has contributed to the more than 60% reduction in Utility greenhouse gas emissions since 1990.
•Company completed the sale of substantially all of its timber assets in Pennsylvania, with net proceeds of $104.6 million.
•Company is increasing its fiscal 2021 earnings guidance to a range of $3.65 to $3.95, an increase of $0.10 at the midpoint.
MANAGEMENT COMMENTS
David P. Bauer, President and Chief Executive Officer of National Fuel Gas Company, stated: “National Fuel had an excellent start to our fiscal 2021 on the strength of our recently completed Empire North expansion project and our Appalachian E&P and gathering acquisition. We continue to see the benefits of these newly acquired assets, with record production at Seneca driving meaningful earnings growth in our gathering segment and long-term, sustainable reductions in the cost structure of our upstream business.
As we continue to confront the COVID-19 pandemic, the safety of our employees, customers, and communities remains paramount to our daily operations across each of our businesses. National Fuel and its dedicated workforce have retained their focus on business continuity during this health crisis, and to date, the Company has not experienced any significant financial or operational impacts.
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Looking forward, we are well-positioned to execute on our near-term integrated growth opportunities, with preliminary construction activities on our FM100 expansion and modernization project – the largest in the Company’s history – expected to start in the next few weeks. This project, which will add more than $50 million in annual Pipeline and Storage revenues, further supports the integrated development of our prolific and highly-economic Marcellus and Utica assets and puts us on a path to generating meaningful consolidated free cash flow in fiscal 2022.
Additionally, we continue to make progress with our ESG disclosures and initiatives. Across our system, we're making investments that will reduce our operational and fugitive emissions. We're also aggressively promoting our Utility's conservation and energy efficiency programs to help lower the end-use emissions of our customers. Lastly, both on our own and through participation in programs like the Low Carbon Resources Initiatives, we're evaluating new low- and zero-carbon fuel sources and technologies. All of these initiatives make National Fuel well-positioned to play a meaningful and continued role in the decarbonization of the economy.”
RECONCILIATION OF GAAP EARNINGS TO ADJUSTED OPERATING RESULTS
| Three Months Ended | ||||||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||||||
| (in thousands except per share amounts) | 2020 | 2019 | ||||||||||||||||||||||||
| Reported GAAP Earnings | $ | 77,774 | $ | 86,591 | ||||||||||||||||||||||
Items impacting comparability: | ||||||||||||||||||||||||||
Impairment of oil and gas properties (E&P) | 76,152 | — | ||||||||||||||||||||||||
Tax impact of impairment of oil and gas properties | (20,980) | — | ||||||||||||||||||||||||
| Gain on sale of timber properties (Corporate / All Other) | (51,066) | — | ||||||||||||||||||||||||
| Tax impact of gain on sale of timber properties | 14,069 | — | ||||||||||||||||||||||||
Unrealized (gain) loss on other investments (Corporate / All Other) | 1,298 | 1,019 | ||||||||||||||||||||||||
Tax impact of unrealized (gain) loss on other investments | (272) | (214) | ||||||||||||||||||||||||
| Adjusted Operating Results | $ | 96,975 | $ | 87,396 | ||||||||||||||||||||||
| Reported GAAP Earnings Per Share | $ | 0.85 | $ | 1.00 | ||||||||||||||||||||||
Items impacting comparability: | ||||||||||||||||||||||||||
Impairment of oil and gas properties, net of tax (E&P) | 0.60 | — | ||||||||||||||||||||||||
| Gain on sale of timber properties, net of tax (Corporate / All Other) | (0.40) | — | ||||||||||||||||||||||||
Unrealized (gain) loss on other investments, net of tax (Corporate / All Other) | 0.01 | 0.01 | ||||||||||||||||||||||||
| Adjusted Operating Results Per Share | $ | 1.06 | $ | 1.01 | ||||||||||||||||||||||
FISCAL 2021 GUIDANCE UPDATE
National Fuel is revising its fiscal 2021 earnings guidance to reflect the results of the first fiscal quarter, along with updated commodity price and operating unit cost assumptions for the balance of the year. The Company is now projecting that earnings, excluding items impacting comparability, will be within the range of $3.65 to $3.95 per share, an increase of $0.10 per share from the midpoint of the Company’s prior guidance range. The increase from the Company’s prior earnings guidance reflects higher expected price realizations on Seneca’s oil production and lower expected exploration and production operating unit costs, partially offset by lower expected price realizations on Seneca’s natural gas production.
The Company is now assuming that NYMEX natural gas prices will average $2.75 per MMBtu for the remainder of fiscal 2021, a decrease of $0.25 per MMBtu from the $3.00 per MMBtu assumed in the previous guidance. Additionally, the Company is now assuming that WTI oil prices will average $52.50 per Bbl for the remainder of the year, a $15.00 increase from the $37.50 per Bbl assumed in the previous guidance. For guidance purposes, the Company’s updated projections approximate the current NYMEX forward markets for natural gas and oil and consider the impact of local sales point differentials and new physical firm sales, transportation, and financial hedge contracts.
Seneca currently has firm sales contracts in place for 216 Bcf, or approximately 93% of its projected remaining fiscal 2021 Appalachian production, limiting its exposure to in-basin markets. Approximately 186 Bcf of those sales, or 80% of Seneca’s expected remaining Appalachian production, are either matched by a financial hedge, including a combination of
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swaps and no-cost collars, or were entered into at a fixed price. Additionally, Seneca has financial hedges in place for 1,079 Mbbl, or approximately 67%, of its expected remaining oil production for the fiscal year.
The Company’s other guidance assumptions remain largely unchanged from the previous guidance. Additional details on the Company's updated forecast assumptions and business segment guidance for fiscal 2021 are outlined in the table on page 7.
DISCUSSION OF FIRST QUARTER RESULTS BY SEGMENT
The following earnings discussion of each operating segment for the quarter ended December 31, 2020 is summarized in a tabular form on pages 8 and 9 of this report. It may be helpful to refer to those tables while reviewing this discussion.
Note that management defines Adjusted Operating Results as reported GAAP earnings adjusted for items impacting comparability, and Adjusted EBITDA as reported GAAP earnings before the following items: interest expense, income taxes, depreciation, depletion and amortization, other income and deductions, impairments, and other items reflected in operating income that impact comparability.
Upstream Business
Exploration and Production Segment
The Exploration and Production segment operations are carried out by Seneca Resources Company, LLC ("Seneca"). Seneca explores for, develops and produces natural gas and oil reserves, primarily in Pennsylvania and California.
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| December 31, | |||||||||||||||||||||||||||||||||||
| (in thousands) | 2020 | 2019 | Variance | ||||||||||||||||||||||||||||||||
| GAAP Earnings | $ | (29,623) | $ | 23,977 | $ | (53,600) | |||||||||||||||||||||||||||||
Impairment of oil and gas properties, net of tax | 55,172 | — | 55,172 | ||||||||||||||||||||||||||||||||
| Adjusted Operating Results | $ | 25,549 | $ | 23,977 | $ | 1,572 | |||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 100,744 | $ | 92,100 | $ | 8,644 | |||||||||||||||||||||||||||||
Seneca’s first quarter GAAP earnings decreased $53.6 million versus the prior year. This was primarily driven by a non-cash, pre-tax impairment charge of $76.2 million ($55.2 million after-tax) to write-down the value of Seneca’s oil and natural gas reserves under the full cost method of accounting. This method requires Seneca to perform a quarterly “ceiling test” comparing the present value of future net revenues from its oil and natural gas reserves based on an unweighted arithmetic average of the first day of the month oil and gas prices for each month within the 12-month period prior to the end of the reporting period (“the ceiling”) with the book value of those reserves at the balance sheet date. If the book value of the reserves exceeds the ceiling, a non-cash impairment charge must be recorded in order to reduce the book value of the reserves to the calculated ceiling. Seneca does not expect to incur impairment charges in the remaining quarters of fiscal 2021. Excluding this item, Seneca’s first quarter earnings increased $1.6 million.
Seneca produced 79.5 Bcfe during the first quarter, an increase of 21.1 Bcfe, or 36%, from the prior year, despite the impact of approximately 4 Bcf of price-related curtailments. The increase was primarily driven by higher natural gas production from the Company's fourth quarter fiscal 2020 acquisition of Appalachian upstream assets, as well as production from new Marcellus and Utica wells. Net production increased 16.4 Bcf to 45.7 Bcf in the Eastern Development Area ("EDA"), primarily due to higher production from the acquisition. Net production increased 5.0 Bcf to 29.9 Bcf in Seneca’s Western Development Area ("WDA"), primarily due to the ongoing development program in the region. Oil production for the first quarter decreased 38,000 Bbls, or 6%, from the prior year due to production declines in Seneca's Midway Sunset and Lost Hills areas as a result of reduced steam activity and delayed workover expenses in response to lower commodity prices in the second half of fiscal 2020. These declines were partially offset by new production brought on-line in Seneca’s Pioneer and Coalinga development areas.
Seneca's average realized natural gas price, after the impact of hedging and transportation costs, was $2.14 per Mcf, a decrease of $0.18 per Mcf from the prior year. Seneca's average realized oil price, after the impact of $6.43 per Bbl of
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hedging gains, was $49.91 per Bbl, a decrease of $13.01 per Bbl compared to the prior year. The decline in oil price realizations was due primarily to lower market prices for unhedged crude oil at local sales points in California.
Lease operating and transportation (“LOE”) expense increased $14.8 million primarily due to higher transportation costs in Appalachia from increased production and an increase in well repairs, as well as higher steam facility repairs and maintenance and steam fuel costs in California. LOE expense includes $46.7 million in intercompany expense for gathering and compression services used to connect Seneca’s Marcellus and Utica production to sales points along interstate pipelines. DD&A expense increased $1.2 million due largely to higher natural gas production, partially offset by the impact of ceiling test impairments recorded during fiscal 2020. Seneca's general and administrative ("G&A") expense increased $1.6 million due primarily to higher personnel costs.
On a unit of production basis, Seneca's combined G&A, LOE, other operation and maintenance ("O&M") expense, and Property, Franchise, and Other Taxes decreased $0.12 per Mcfe, or 10%, during the quarter.
Interest expense increased by $1.4 million from the prior year, primarily driven by additional long-term borrowings from the Company's long-term debt issuance in June 2020 that was used to fund a portion of the Company's Appalachian acquisition. The increase in Seneca's effective income tax rate was largely driven by an increase to a valuation allowance for deferred tax assets that was initially established in the second quarter of fiscal 2020.
Midstream Businesses
Pipeline and Storage Segment
The Pipeline and Storage segment’s operations are carried out by National Fuel Gas Supply Corporation (“Supply Corporation”) and Empire Pipeline, Inc. (“Empire”). The Pipeline and Storage segment provides natural gas transportation and storage services to affiliated and non-affiliated companies through an integrated system of pipelines and underground natural gas storage fields in western New York and Pennsylvania.
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| December 31, | |||||||||||||||||||||||||||||||||||
| (in thousands) | 2020 | 2019 | Variance | ||||||||||||||||||||||||||||||||
| GAAP Earnings | $ | 24,183 | $ | 18,105 | $ | 6,078 | |||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 58,134 | $ | 42,942 | $ | 15,192 | |||||||||||||||||||||||||||||
The Pipeline and Storage segment’s first quarter GAAP earnings increased $6.1 million versus the prior year, with higher operating revenues partially offset by higher DD&A expense and higher interest expense. The increase in operating revenues of $15.5 million, or 22%, was largely due to an increase in Supply Corporation's transportation and storage rates effective February 1, 2020, in accordance with Supply Corporation's rate case settlement, coupled with new demand charges for transportation service from the Company's Empire North expansion project, which was placed in service near the end of the fourth quarter of fiscal 2020. The increase in DD&A expense of $3.9 million was primarily attributable to an increase in Supply Corporation's depreciation rates associated with its rate case settlement combined with incremental depreciation from the Empire North expansion project. The increase in interest expense of $3.6 million was primarily driven by additional long-term borrowings from the Company's long-term debt issuance in June 2020.
Gathering Segment
The Gathering segment’s operations are carried out by National Fuel Gas Midstream Company, LLC’s limited liability companies. The Gathering segment constructs, owns and operates natural gas gathering pipelines and compression facilities in the Appalachian region, which primarily delivers Seneca’s gross Appalachian production to the interstate pipeline system.
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| December 31, | |||||||||||||||||||||||||||||||||||
| (in thousands) | 2020 | 2019 | Variance | ||||||||||||||||||||||||||||||||
| GAAP Earnings | $ | 20,550 | $ | 15,944 | $ | 4,606 | |||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 39,793 | $ | 29,431 | $ | 10,362 | |||||||||||||||||||||||||||||
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The Gathering segment’s first quarter GAAP earnings increased $4.6 million versus the prior year. The increase was primarily driven by higher operating revenues, which was partially offset by higher DD&A expense, higher O&M expenses and higher interest expense. Operating revenues increased $12.2 million, or 35%, primarily due to increased gathering throughput resulting from the Company's Appalachian acquisition in the fourth quarter of fiscal 2020 and from new Appalachian wells that were brought on-line. The increase in DD&A expense of $2.8 million was primarily attributable to incremental depreciation expense related to the recent Appalachian acquisition, as well as higher average depreciable plant in service compared to the prior year. Compression leasing expenses associated with the Appalachian acquisition were primarily responsible for the $1.9 million increase in O&M expense, partly offset by a decline in compressor station O&M expenses on Company owned facilities. The increase in interest expense of $1.9 million was primarily driven by additional long-term borrowings from the Company's long-term debt issuance in June 2020 that was used to fund a portion of the Appalachian acquisition.
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 | |||||||||||||||||||||||||||||||||||
| December 31, | |||||||||||||||||||||||||||||||||||
| (in thousands) | 2020 | 2019 | Variance | ||||||||||||||||||||||||||||||||
| GAAP Earnings | $ | 23,037 | $ | 26,583 | $ | (3,546) | |||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 56,968 | $ | 59,463 | $ | (2,495) | |||||||||||||||||||||||||||||
The Utility segment’s first quarter GAAP earnings decreased $3.5 million versus the prior year primarily due to higher O&M expense and a higher effective income tax rate. The $2.4 million increase in O&M expense was primarily attributable to incremental expense recorded to increase the allowance for uncollectible accounts due to the potential for customer non-payment resulting from the current economic backdrop brought on by COVID-19, as well as higher personnel costs. Warmer than normal weather in Distribution's Pennsylvania service territory resulted in a decline in customer usage and margin, which was largely offset by higher revenues earned through the Company's system modernization tracking mechanism in its New York service territory. Weather in Distribution's Pennsylvania service territory was 11% warmer on average than last year, and 17% warmer than normal. The impact of weather variations on earnings in Distribution's New York service territory is largely mitigated by that jurisdiction's weather normalization clause. The increase in the Utility segment's effective income tax rate was primarily due to the non-recurring impact of permanent book versus tax differences.
Corporate and All Other
The Company’s operations that are included in Corporate and All Other generated combined earnings of $39.6 million in the current year first quarter, which was a $37.6 million increase over combined earnings of $2.0 million generated in the prior-year first quarter. The increase was primarily driven by a gain recognized on the sale of the Company's timber properties of $51.1 million ($37.0 million after-tax). The Company completed the sale of substantially all of its timber assets in Pennsylvania on December 10, 2020 for net proceeds of $104.6 million. The proceeds from this sale were used to complete a reverse like-kind exchange in conjunction with the Company's fourth quarter fiscal 2020 Appalachian acquisition of certain upstream assets and midstream gathering assets.
EARNINGS TELECONFERENCE
The Company will host a conference call on Friday, February 5, 2021, at 11 a.m. Eastern Time to discuss this announcement. Pre-registration is required to access the teleconference by phone in a listen-only mode by following this link: http://www.directeventreg.com/registration/event/9363257. To access the webcast, visit the Events Calendar under the News & Events page on the NFG Investor Relations website at investor.nationalfuelgas.com. A replay of the conference call will be available approximately two hours following the teleconference at the same website link and by phone (toll-free) at 800-585-8367 using conference ID number “9363257”. Both the webcast and conference call replay will be available until the close of business on Friday, February 12, 2021.
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National Fuel is an integrated energy company reporting financial results for four operating segments: Exploration and Production, Pipeline and Storage, Gathering, and Utility. Additional information about National Fuel is available at www.nationalfuelgas.com.
| Analyst Contact: | Kenneth E. Webster | 716-857-7067 | ||||||
| Media Contact: | Karen L. Merkel | 716-857-7654 | ||||||
Certain statements contained herein, including statements identified by the use of the words “anticipates,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “predicts,” “projects,” “believes,” “seeks,” “will,” “may” and similar expressions, and statements which are other than statements of historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Company’s expectations, beliefs and projections contained herein are expressed in good faith and are believed to have a reasonable basis, but there can be no assurance that such expectations, beliefs or projections will result or be achieved or accomplished. In addition to other factors, the following are important factors that could cause actual results to differ materially from those discussed in the forward-looking statements: the length and severity of the recent COVID-19 pandemic, including its impacts across our businesses on demand, operations, global supply chains and liquidity; 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; changes in the price of natural gas or oil; impairments under the SEC’s full cost ceiling test for natural gas and oil reserves; the creditworthiness or performance of the Company’s key suppliers, customers and counterparties; financial and economic conditions, including the availability of credit, and occurrences affecting the Company’s ability to obtain financing on acceptable terms for working capital, capital expenditures and other investments, including any downgrades in the Company’s credit ratings and changes in interest rates and other capital market conditions; 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; delays or changes in costs or plans with respect to Company projects or related projects of other companies, including disruptions due to the COVID-19 pandemic, as well as difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators; the Company's ability to complete planned strategic transactions; the Company's ability to successfully integrate acquired assets and achieve expected cost synergies; 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 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; the impact of information technology disruptions, cybersecurity or data security breaches; factors affecting the Company’s ability to successfully identify, drill for and produce economically viable natural gas 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; 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; economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities or acts of war; significant differences between the Company’s projected and actual capital expenditures and operating expenses; or increasing costs of insurance, changes in coverage and the ability to obtain insurance. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date thereof.
-more-
6
Page 7.
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
GUIDANCE SUMMARY
As discussed on page 2, the Company is revising its earnings guidance for fiscal 2021. Additional details on the Company's forecast assumptions and business segment guidance are outlined in the table below.
The revised earnings guidance range does not include the impact of certain items that impacted the comparability of earnings during the first quarter, including: (1) the after-tax impairment of oil and gas properties, which reduced earnings by $0.60 per share; (2) the after-tax gain on sale of timber properties, which increased earnings by $0.40 per share; and (3) the after-tax unrealized loss on other investments, which reduced earnings by $0.01 per share. While the Company expects to record additional adjustments to unrealized gain or loss on other investments during the nine months ending September 30, 2021, the amounts of these and other potential adjustments are not reasonably determinable at this time. As such, the Company is unable to provide earnings guidance other than on a non-GAAP basis.
| Updated FY 2021 Guidance | Previous FY 2021 Guidance | ||||||||||
Consolidated Earnings per Share, excluding items impacting comparability | $3.65 to $3.95 | $3.55 to $3.85 | |||||||||
| Consolidated Effective Tax Rate | ~ 26% | ~ 26% | |||||||||
Capital Expenditures (Millions) | |||||||||||
| Exploration and Production | $350 - $390 | $350 - $390 | |||||||||
| Pipeline and Storage | $250 - $300 | $250 - $300 | |||||||||
| Gathering | $30 - $40 | $30 - $40 | |||||||||
| Utility | $90 - $100 | $90 - $100 | |||||||||
| Consolidated Capital Expenditures | $720 - $830 | $720 - $830 | |||||||||
Exploration & Production Segment Guidance* | |||||||||||
| Commodity Price Assumptions | |||||||||||
| NYMEX natural gas price | $2.75 /MMBtu | $3.00 /MMBtu | |||||||||
| Appalachian basin spot price (winter I summer) | $2.25 /MMBtu | $2.05 /MMBtu | $2.50 /MMBtu | $2.10 /MMBtu | |||||||||
| NYMEX (WTI) crude oil price | $52.50 /Bbl | $37.50 /Bbl | |||||||||
| California oil price premium (% of WTI) | 96% | 94% | |||||||||
Production (Bcfe) | |||||||||||
| East Division - Appalachia | 295 to 320 | 290 to 320 | |||||||||
| West Division - California | ~ 15 | ~ 15 | |||||||||
| Total Production | 310 to 335 | 305 to 335 | |||||||||
E&P Operating Costs ($/Mcfe) | |||||||||||
| LOE | $0.83 - $0.85 | $0.83 - $0.86 | |||||||||
| G&A | $0.20 - $0.22 | $0.21 - $0.23 | |||||||||
| DD&A | $0.58 - $0.62 | $0.60 - $0.65 | |||||||||
Other Business Segment Guidance (Millions) | |||||||||||
| Gathering Segment Revenues | $185 - $200 | $185 - $200 | |||||||||
| Pipeline and Storage Segment Revenues | $330 - $340 | $330 - $340 | |||||||||
* Commodity price assumptions are for the remaining 9 months of the fiscal year.
Page 8.
| NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||||||||||||||||||||
| RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS | |||||||||||||||||||||||||||||||||||||||||
| QUARTER ENDED DECEMBER 31, 2020 | |||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||||||||
| Upstream | Midstream | Downstream | |||||||||||||||||||||||||||||||||||||||
| Exploration & | Pipeline & | Corporate / | |||||||||||||||||||||||||||||||||||||||
| (Thousands of Dollars) | Production | Storage | Gathering | Utility | All Other | Consolidated* | |||||||||||||||||||||||||||||||||||
| First quarter 2020 GAAP earnings | $ | 23,977 | $ | 18,105 | $ | 15,944 | $ | 26,583 | $ | 1,982 | $ | 86,591 | |||||||||||||||||||||||||||||
| Items impacting comparability: | |||||||||||||||||||||||||||||||||||||||||
| Unrealized (gain) loss on other investments | 1,019 | 1,019 | |||||||||||||||||||||||||||||||||||||||
Tax impact of unrealized (gain) loss on other investments | (214) | (214) | |||||||||||||||||||||||||||||||||||||||
| First quarter 2020 adjusted operating results | 23,977 | 18,105 | 15,944 | 26,583 | 2,787 | 87,396 | |||||||||||||||||||||||||||||||||||
| Drivers of adjusted operating results** | |||||||||||||||||||||||||||||||||||||||||
| Upstream Revenues | |||||||||||||||||||||||||||||||||||||||||
| Higher (lower) natural gas production | 39,164 | 39,164 | |||||||||||||||||||||||||||||||||||||||
| Higher (lower) crude oil production | (1,885) | (1,885) | |||||||||||||||||||||||||||||||||||||||
| Higher (lower) realized natural gas prices, after hedging | (11,301) | (11,301) | |||||||||||||||||||||||||||||||||||||||
| Higher (lower) realized crude oil prices, after hedging | (5,791) | (5,791) | |||||||||||||||||||||||||||||||||||||||
| Midstream Revenues | |||||||||||||||||||||||||||||||||||||||||
| Higher (lower) operating revenues | 12,280 | 9,655 | 21,935 | ||||||||||||||||||||||||||||||||||||||
| Downstream Margins*** | |||||||||||||||||||||||||||||||||||||||||
Impact of usage and weather | (1,164) | (1,164) | |||||||||||||||||||||||||||||||||||||||
| System modernization tracker revenues | 920 | 920 | |||||||||||||||||||||||||||||||||||||||
| Higher (lower) energy marketing margins | (2,340) | (2,340) | |||||||||||||||||||||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||||||||||||||||||
| Lower (higher) lease operating and transportation expenses | (11,677) | (11,677) | |||||||||||||||||||||||||||||||||||||||
| Lower (higher) operating expenses | (1,806) | (1,470) | (1,956) | 777 | (4,455) | ||||||||||||||||||||||||||||||||||||
| Lower (higher) depreciation / depletion | (935) | (3,052) | (2,185) | (6,172) | |||||||||||||||||||||||||||||||||||||
| Other Income (Expense) | |||||||||||||||||||||||||||||||||||||||||
| (Higher) lower other deductions | (510) | 1,213 | 703 | ||||||||||||||||||||||||||||||||||||||
| (Higher) lower interest expense | (1,132) | (2,859) | (1,510) | (346) | (5,847) | ||||||||||||||||||||||||||||||||||||
| Income Taxes | |||||||||||||||||||||||||||||||||||||||||
Lower (higher) income tax expense / effective tax rate | (3,163) | 301 | (18) | (1,358) | 2,306 | (1,932) | |||||||||||||||||||||||||||||||||||
| All other / rounding | 98 | (82) | 134 | 12 | (741) | (579) | |||||||||||||||||||||||||||||||||||
| First quarter 2021 adjusted operating results | 25,549 | 24,183 | 20,550 | 23,037 | 3,656 | 96,975 | |||||||||||||||||||||||||||||||||||
| Items impacting comparability: | |||||||||||||||||||||||||||||||||||||||||
Impairment of oil and gas properties | (76,152) | (76,152) | |||||||||||||||||||||||||||||||||||||||
| Tax impact of impairment of oil and gas properties | 20,980 | 20,980 | |||||||||||||||||||||||||||||||||||||||
| Gain on sale of timber properties | 51,066 | 51,066 | |||||||||||||||||||||||||||||||||||||||
| Tax impact of gain on sale of timber properties | (14,069) | (14,069) | |||||||||||||||||||||||||||||||||||||||
Unrealized gain (loss) on other investments | (1,298) | (1,298) | |||||||||||||||||||||||||||||||||||||||
Tax impact of unrealized gain (loss) on other investments | 272 | 272 | |||||||||||||||||||||||||||||||||||||||
| First quarter 2021 GAAP earnings | $ | (29,623) | $ | 24,183 | $ | 20,550 | $ | 23,037 | $ | 39,627 | $ | 77,774 | |||||||||||||||||||||||||||||
| * Amounts do not reflect intercompany eliminations | |||||||||||||||||||||||||||||||||||||||||
| ** Drivers of operating results have been calculated using the 21% federal statutory rate. | |||||||||||||||||||||||||||||||||||||||||
| *** Downstream margin defined as operating revenues less purchased gas expense. | |||||||||||||||||||||||||||||||||||||||||
Page 9.
| NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||||||||||||||||||||
| RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE | |||||||||||||||||||||||||||||||||||||||||
| QUARTER ENDED DECEMBER 31, 2020 | |||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||||||||
| Upstream | Midstream | Downstream | |||||||||||||||||||||||||||||||||||||||
| Exploration & | Pipeline & | Corporate / | |||||||||||||||||||||||||||||||||||||||
| Production | Storage | Gathering | Utility | All Other | Consolidated* | ||||||||||||||||||||||||||||||||||||
| First quarter 2020 GAAP earnings per share | $ | 0.28 | $ | 0.21 | $ | 0.18 | $ | 0.31 | $ | 0.02 | $ | 1.00 | |||||||||||||||||||||||||||||
| Items impacting comparability: | |||||||||||||||||||||||||||||||||||||||||
| Unrealized (gain) loss on other investments, net of tax | 0.01 | 0.01 | |||||||||||||||||||||||||||||||||||||||
| First quarter 2020 adjusted operating results per share | 0.28 | 0.21 | 0.18 | 0.31 | 0.03 | 1.01 | |||||||||||||||||||||||||||||||||||
| Drivers of adjusted operating results** | |||||||||||||||||||||||||||||||||||||||||
| Upstream Revenues | |||||||||||||||||||||||||||||||||||||||||
| Higher (lower) natural gas production | 0.43 | 0.43 | |||||||||||||||||||||||||||||||||||||||
| Higher (lower) crude oil production | (0.02) | (0.02) | |||||||||||||||||||||||||||||||||||||||
Higher (lower) realized natural gas prices, after hedging | (0.12) | (0.12) | |||||||||||||||||||||||||||||||||||||||
| Higher (lower) realized crude oil prices, after hedging | (0.06) | (0.06) | |||||||||||||||||||||||||||||||||||||||
| Midstream Revenues | |||||||||||||||||||||||||||||||||||||||||
Higher (lower) operating revenues | 0.13 | 0.11 | 0.24 | ||||||||||||||||||||||||||||||||||||||
| Downstream Margins*** | |||||||||||||||||||||||||||||||||||||||||
Impact of usage and weather | (0.01) | (0.01) | |||||||||||||||||||||||||||||||||||||||
| System modernization tracker revenues | 0.01 | 0.01 | |||||||||||||||||||||||||||||||||||||||
| Higher (lower) energy marketing margins | (0.03) | (0.03) | |||||||||||||||||||||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||||||||||||||||||
Lower (higher) lease operating and transportation expenses | (0.13) | (0.13) | |||||||||||||||||||||||||||||||||||||||
| Lower (higher) operating expenses | (0.02) | (0.02) | (0.02) | 0.01 | (0.05) | ||||||||||||||||||||||||||||||||||||
| Lower (higher) depreciation / depletion | (0.01) | (0.03) | (0.02) | (0.06) | |||||||||||||||||||||||||||||||||||||
| Other Income (Expense) | |||||||||||||||||||||||||||||||||||||||||
| (Higher) lower other deductions | (0.01) | 0.01 | — | ||||||||||||||||||||||||||||||||||||||
| (Higher) lower interest expense | (0.01) | (0.03) | (0.02) | — | (0.06) | ||||||||||||||||||||||||||||||||||||
| Income Taxes | |||||||||||||||||||||||||||||||||||||||||
Lower (higher) income tax expense / effective tax rate | (0.03) | — | — | (0.01) | 0.03 | (0.01) | |||||||||||||||||||||||||||||||||||
| Impact of additional shares | (0.01) | (0.01) | (0.01) | (0.02) | — | (0.05) | |||||||||||||||||||||||||||||||||||
| All other / rounding | (0.02) | — | — | (0.01) | — | (0.03) | |||||||||||||||||||||||||||||||||||
| First quarter 2021 adjusted operating results per share | 0.28 | 0.26 | 0.22 | 0.25 | 0.05 | 1.06 | |||||||||||||||||||||||||||||||||||
| Items impacting comparability: | |||||||||||||||||||||||||||||||||||||||||
Impairment of oil and gas properties, net of tax | (0.60) | (0.60) | |||||||||||||||||||||||||||||||||||||||
| Gain on sale of timber properties, net of tax | 0.40 | 0.40 | |||||||||||||||||||||||||||||||||||||||
Unrealized gain (loss) on other investments, net of tax | (0.01) | (0.01) | |||||||||||||||||||||||||||||||||||||||
| First quarter 2021 GAAP earnings per share | $ | (0.32) | $ | 0.26 | $ | 0.22 | $ | 0.25 | $ | 0.44 | $ | 0.85 | |||||||||||||||||||||||||||||
| * Amounts do not reflect intercompany eliminations | |||||||||||||||||||||||||||||||||||||||||
| ** Drivers of operating results have been calculated using the 21% federal statutory rate. | |||||||||||||||||||||||||||||||||||||||||
| *** Downstream margin defined as operating revenues less purchased gas expense. | |||||||||||||||||||||||||||||||||||||||||
Page 10.
| NATIONAL FUEL GAS COMPANY | ||||||||||||||||||||||||||
| AND SUBSIDIARIES | ||||||||||||||||||||||||||
| (Thousands of Dollars, except per share amounts) | ||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| SUMMARY OF OPERATIONS | 2020 | 2019 | ||||||||||||||||||||||||
| Operating Revenues: | ||||||||||||||||||||||||||
| Utility and Energy Marketing Revenues | $ | 189,466 | $ | 228,026 | ||||||||||||||||||||||
| Exploration and Production and Other Revenues | 192,035 | 167,193 | ||||||||||||||||||||||||
| Pipeline and Storage and Gathering Revenues | 59,659 | 48,969 | ||||||||||||||||||||||||
| 441,160 | 444,188 | |||||||||||||||||||||||||
| Operating Expenses: | ||||||||||||||||||||||||||
| Purchased Gas | 51,620 | 92,272 | ||||||||||||||||||||||||
| Operation and Maintenance: | ||||||||||||||||||||||||||
| Utility and Energy Marketing | 44,886 | 43,256 | ||||||||||||||||||||||||
| Exploration and Production and Other | 42,027 | 36,693 | ||||||||||||||||||||||||
| Pipeline and Storage and Gathering | 28,098 | 25,885 | ||||||||||||||||||||||||
| Property, Franchise and Other Taxes | 22,781 | 23,144 | ||||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 83,120 | 74,918 | ||||||||||||||||||||||||
| Impairment of Oil and Gas Producing Properties | 76,152 | — | ||||||||||||||||||||||||
| 348,684 | 296,168 | |||||||||||||||||||||||||
| Gain on Sale of Timber Properties | 51,066 | — | ||||||||||||||||||||||||
| Operating Income | 143,542 | 148,020 | ||||||||||||||||||||||||
| Other Income (Expense): | ||||||||||||||||||||||||||
| Other Income (Deductions) | (2,176) | (3,040) | ||||||||||||||||||||||||
| Interest Expense on Long-Term Debt | (32,256) | (25,443) | ||||||||||||||||||||||||
| Other Interest Expense | (1,919) | (1,551) | ||||||||||||||||||||||||
| Income Before Income Taxes | 107,191 | 117,986 | ||||||||||||||||||||||||
| Income Tax Expense | 29,417 | 31,395 | ||||||||||||||||||||||||
| Net Income Available for Common Stock | $ | 77,774 | $ | 86,591 | ||||||||||||||||||||||
| Earnings Per Common Share | ||||||||||||||||||||||||||
| Basic | $ | 0.85 | $ | 1.00 | ||||||||||||||||||||||
| Diluted | $ | 0.85 | $ | 1.00 | ||||||||||||||||||||||
| Weighted Average Common Shares: | ||||||||||||||||||||||||||
| Used in Basic Calculation | 91,007,657 | 86,378,450 | ||||||||||||||||||||||||
| Used in Diluted Calculation | 91,508,259 | 86,883,152 | ||||||||||||||||||||||||
Page 11.
| NATIONAL FUEL GAS COMPANY | |||||||||||
| AND SUBSIDIARIES | |||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||
| (Unaudited) | |||||||||||
| December 31, | September 30, | ||||||||||
| (Thousands of Dollars) | 2020 | 2020 | |||||||||
| ASSETS | |||||||||||
| Property, Plant and Equipment | $12,495,227 | $12,351,852 | |||||||||
| Less - Accumulated Depreciation, Depletion and Amortization | 6,503,561 | 6,353,785 | |||||||||
Net Property, Plant and Equipment | 5,991,666 | 5,998,067 | |||||||||
| Assets Held for Sale, Net | — | 53,424 | |||||||||
| Current Assets: | |||||||||||
| Cash and Temporary Cash Investments | 109,413 | 20,541 | |||||||||
| Receivables - Net | 178,584 | 143,583 | |||||||||
| Unbilled Revenue | 45,829 | 17,302 | |||||||||
| Gas Stored Underground | 19,648 | 33,338 | |||||||||
| Materials, Supplies and Emission Allowances | 51,694 | 51,877 | |||||||||
| Unrecovered Purchased Gas Costs | 367 | — | |||||||||
| Other Current Assets | 47,904 | 47,557 | |||||||||
Total Current Assets | 453,439 | 314,198 | |||||||||
| Other Assets: | |||||||||||
| Recoverable Future Taxes | 117,431 | 118,310 | |||||||||
| Unamortized Debt Expense | 11,870 | 12,297 | |||||||||
| Other Regulatory Assets | 153,172 | 156,106 | |||||||||
| Deferred Charges | 61,986 | 67,131 | |||||||||
| Other Investments | 145,921 | 154,502 | |||||||||
| Goodwill | 5,476 | 5,476 | |||||||||
| Prepaid Post-Retirement Benefit Costs | 80,032 | 76,035 | |||||||||
| Fair Value of Derivative Financial Instruments | 18,094 | 9,308 | |||||||||
| Other | 81 | 81 | |||||||||
Total Other Assets | 594,063 | 599,246 | |||||||||
| Total Assets | $7,039,168 | $6,964,935 | |||||||||
| CAPITALIZATION AND LIABILITIES | |||||||||||
| Capitalization: | |||||||||||
| Comprehensive Shareholders' Equity | |||||||||||
| Common Stock, $1 Par Value Authorized - 200,000,000 Shares; Issued and | |||||||||||
Outstanding - 91,152,710 Shares and 90,954,696 Shares, Respectively | $91,153 | $90,955 | |||||||||
| Paid in Capital | 1,004,369 | 1,004,158 | |||||||||
| Earnings Reinvested in the Business | 1,028,844 | 991,630 | |||||||||
| Accumulated Other Comprehensive Loss | (79,741) | (114,757) | |||||||||
| Total Comprehensive Shareholders' Equity | 2,044,625 | 1,971,986 | |||||||||
| Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issuance Costs | 2,130,473 | 2,629,576 | |||||||||
Total Capitalization | 4,175,098 | 4,601,562 | |||||||||
| Current and Accrued Liabilities: | |||||||||||
| Notes Payable to Banks and Commercial Paper | 25,000 | 30,000 | |||||||||
| Current Portion of Long-Term Debt | 500,000 | — | |||||||||
| Accounts Payable | 96,905 | 134,126 | |||||||||
| Amounts Payable to Customers | 5,823 | 10,788 | |||||||||
| Dividends Payable | 40,560 | 40,475 | |||||||||
| Interest Payable on Long-Term Debt | 45,350 | 27,521 | |||||||||
| Customer Advances | 16,032 | 15,319 | |||||||||
| Customer Security Deposits | 17,623 | 17,199 | |||||||||
| Other Accruals and Current Liabilities | 154,377 | 140,176 | |||||||||
| Fair Value of Derivative Financial Instruments | 4,513 | 43,969 | |||||||||
Total Current and Accrued Liabilities | 906,183 | 459,573 | |||||||||
| Deferred Credits: | |||||||||||
| Deferred Income Taxes | 735,236 | 696,054 | |||||||||
| Taxes Refundable to Customers | 357,354 | 357,508 | |||||||||
| Cost of Removal Regulatory Liability | 234,641 | 230,079 | |||||||||
| Other Regulatory Liabilities | 168,188 | 161,573 | |||||||||
| Pension and Other Post-Retirement Liabilities | 124,097 | 127,181 | |||||||||
| Asset Retirement Obligations | 192,682 | 192,228 | |||||||||
| Other Deferred Credits | 145,689 | 139,177 | |||||||||
Total Deferred Credits | 1,957,887 | 1,903,800 | |||||||||
| Commitments and Contingencies | — | — | |||||||||
| Total Capitalization and Liabilities | $7,039,168 | $6,964,935 | |||||||||
Page 12.
| NATIONAL FUEL GAS COMPANY | ||||||||||||||
| AND SUBSIDIARIES | ||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Three Months Ended | ||||||||||||||
| December 31, | ||||||||||||||
| (Thousands of Dollars) | 2020 | 2019 | ||||||||||||
| Operating Activities: | ||||||||||||||
| Net Income Available for Common Stock | $ | 77,774 | $ | 86,591 | ||||||||||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||||||||||||||
| Gain on Sale of Timber Properties | (51,066) | — | ||||||||||||
| Impairment of Oil and Gas Producing Properties | 76,152 | — | ||||||||||||
| Depreciation, Depletion and Amortization | 83,120 | 74,918 | ||||||||||||
| Deferred Income Taxes | 26,591 | 51,366 | ||||||||||||
| Stock-Based Compensation | 3,933 | 3,266 | ||||||||||||
| Other | 2,887 | 1,911 | ||||||||||||
| Change in: | ||||||||||||||
| Receivables and Unbilled Revenue | (63,606) | (58,655) | ||||||||||||
| Gas Stored Underground and Materials, Supplies and Emission Allowances | 13,873 | 6,985 | ||||||||||||
| Unrecovered Purchased Gas Costs | (367) | 627 | ||||||||||||
| Other Current Assets | (251) | 14 | ||||||||||||
| Accounts Payable | (541) | 8,280 | ||||||||||||
| Amounts Payable to Customers | (4,965) | (573) | ||||||||||||
| Customer Advances | 713 | 683 | ||||||||||||
| Customer Security Deposits | 424 | (700) | ||||||||||||
| Other Accruals and Current Liabilities | 27,615 | 15,438 | ||||||||||||
| Other Assets | 10,066 | (28,259) | ||||||||||||
| Other Liabilities | 2,391 | 5,857 | ||||||||||||
| Net Cash Provided by Operating Activities | $ | 204,743 | $ | 167,749 | ||||||||||
| Investing Activities: | ||||||||||||||
| Capital Expenditures | $ | (183,301) | $ | (198,495) | ||||||||||
| Net Proceeds from Sale of Timber Properties | 104,582 | — | ||||||||||||
| Other | 11,849 | 5,212 | ||||||||||||
| Net Cash Used in Investing Activities | $ | (66,870) | $ | (193,283) | ||||||||||
| Financing Activities: | ||||||||||||||
| Changes in Notes Payable to Banks and Commercial Paper | $ | (5,000) | $ | 84,600 | ||||||||||
| Dividends Paid on Common Stock | (40,475) | (37,547) | ||||||||||||
| Net Repurchases of Common Stock | (3,526) | (4,147) | ||||||||||||
| Net Cash Provided by (Used in) Financing Activities | $ | (49,001) | $ | 42,906 | ||||||||||
| Net Increase in Cash, Cash Equivalents, and Restricted Cash | 88,872 | 17,372 | ||||||||||||
| Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 20,541 | 27,260 | ||||||||||||
| Cash, Cash Equivalents, and Restricted Cash at December 31 | $ | 109,413 | $ | 44,632 | ||||||||||
Page 13.
| NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||||||||
| AND SUBSIDIARIES | |||||||||||||||||||||||||||||
| SEGMENT OPERATING RESULTS AND STATISTICS | |||||||||||||||||||||||||||||
| (UNAUDITED) | |||||||||||||||||||||||||||||
| UPSTREAM BUSINESS | |||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||
| (Thousands of Dollars, except per share amounts) | December 31, | ||||||||||||||||||||||||||||
| EXPLORATION AND PRODUCTION SEGMENT | 2020 | 2019 | Variance | ||||||||||||||||||||||||||
| Total Operating Revenues | $ | 191,395 | $ | 165,939 | $ | 25,456 | |||||||||||||||||||||||
| Operating Expenses: | |||||||||||||||||||||||||||||
| Operation and Maintenance: | |||||||||||||||||||||||||||||
| General and Administrative Expense | 16,953 | 15,380 | 1,573 | ||||||||||||||||||||||||||
| Lease Operating and Transportation Expense | 65,581 | 50,800 | 14,781 | ||||||||||||||||||||||||||
| All Other Operation and Maintenance Expense | 3,671 | 2,958 | 713 | ||||||||||||||||||||||||||
| Property, Franchise and Other Taxes | 4,446 | 4,701 | (255) | ||||||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 45,332 | 44,148 | 1,184 | ||||||||||||||||||||||||||
| Impairment of Oil and Gas Producing Properties | 76,152 | — | 76,152 | ||||||||||||||||||||||||||
| 212,135 | 117,987 | 94,148 | |||||||||||||||||||||||||||
| Operating Income (Loss) | (20,740) | 47,952 | (68,692) | ||||||||||||||||||||||||||
| Other Income (Expense): | |||||||||||||||||||||||||||||
| Non-Service Pension and Post-Retirement Benefit Costs | (285) | (395) | 110 | ||||||||||||||||||||||||||
| Interest and Other Income | 91 | 234 | (143) | ||||||||||||||||||||||||||
| Interest Expense | (15,490) | (14,057) | (1,433) | ||||||||||||||||||||||||||
| Income (Loss) Before Income Taxes | (36,424) | 33,734 | (70,158) | ||||||||||||||||||||||||||
| Income Tax Expense (Benefit) | (6,801) | 9,757 | (16,558) | ||||||||||||||||||||||||||
| Net Income (Loss) | $ | (29,623) | $ | 23,977 | $ | (53,600) | |||||||||||||||||||||||
| Net Income (Loss) Per Share (Diluted) | $ | (0.32) | $ | 0.28 | $ | (0.60) | |||||||||||||||||||||||
Page 14.
| NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||||||||
| AND SUBSIDIARIES | |||||||||||||||||||||||||||||
| SEGMENT OPERATING RESULTS AND STATISTICS | |||||||||||||||||||||||||||||
| (UNAUDITED) | |||||||||||||||||||||||||||||
| MIDSTREAM BUSINESSES | |||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||
| (Thousands of Dollars, except per share amounts) | December 31, | ||||||||||||||||||||||||||||
| PIPELINE AND STORAGE SEGMENT | 2020 | 2019 | Variance | ||||||||||||||||||||||||||
| Revenues from External Customers | $ | 59,308 | $ | 48,969 | $ | 10,339 | |||||||||||||||||||||||
| Intersegment Revenues | 28,456 | 23,251 | 5,205 | ||||||||||||||||||||||||||
| Total Operating Revenues | 87,764 | 72,220 | 15,544 | ||||||||||||||||||||||||||
| Operating Expenses: | |||||||||||||||||||||||||||||
| Purchased Gas | 13 | (7) | 20 | ||||||||||||||||||||||||||
| Operation and Maintenance | 21,173 | 20,930 | 243 | ||||||||||||||||||||||||||
| Property, Franchise and Other Taxes | 8,444 | 8,355 | 89 | ||||||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 15,468 | 11,605 | 3,863 | ||||||||||||||||||||||||||
| 45,098 | 40,883 | 4,215 | |||||||||||||||||||||||||||
| Operating Income | 42,666 | 31,337 | 11,329 | ||||||||||||||||||||||||||
| Other Income (Expense): | |||||||||||||||||||||||||||||
Non-Service Pension and Post-Retirement Benefit (Costs) Credit | 125 | (174) | 299 | ||||||||||||||||||||||||||
| Interest and Other Income | 856 | 1,552 | (696) | ||||||||||||||||||||||||||
| Interest Expense | (10,731) | (7,112) | (3,619) | ||||||||||||||||||||||||||
| Income Before Income Taxes | 32,916 | 25,603 | 7,313 | ||||||||||||||||||||||||||
| Income Tax Expense | 8,733 | 7,498 | 1,235 | ||||||||||||||||||||||||||
| Net Income | $ | 24,183 | $ | 18,105 | $ | 6,078 | |||||||||||||||||||||||
| Net Income Per Share (Diluted) | $ | 0.26 | $ | 0.21 | $ | 0.05 | |||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||
| December 31, | |||||||||||||||||||||||||||||
| GATHERING SEGMENT | 2020 | 2019 | Variance | ||||||||||||||||||||||||||
| Revenues from External Customers | $ | 351 | $ | — | $ | 351 | |||||||||||||||||||||||
| Intersegment Revenues | 46,658 | 34,788 | 11,870 | ||||||||||||||||||||||||||
| Total Operating Revenues | 47,009 | 34,788 | 12,221 | ||||||||||||||||||||||||||
| Operating Expenses: | |||||||||||||||||||||||||||||
| Operation and Maintenance | 7,203 | 5,342 | 1,861 | ||||||||||||||||||||||||||
| Property, Franchise and Other Taxes | 13 | 15 | (2) | ||||||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 7,904 | 5,138 | 2,766 | ||||||||||||||||||||||||||
| 15,120 | 10,495 | 4,625 | |||||||||||||||||||||||||||
| Operating Income | 31,889 | 24,293 | 7,596 | ||||||||||||||||||||||||||
| Other Income (Expense): | |||||||||||||||||||||||||||||
| Non-Service Pension and Post-Retirement Benefit Costs | (68) | (71) | 3 | ||||||||||||||||||||||||||
| Interest and Other Income | 234 | 68 | 166 | ||||||||||||||||||||||||||
| Interest Expense | (4,131) | (2,219) | (1,912) | ||||||||||||||||||||||||||
| Income Before Income Taxes | 27,924 | 22,071 | 5,853 | ||||||||||||||||||||||||||
| Income Tax Expense | 7,374 | 6,127 | 1,247 | ||||||||||||||||||||||||||
| Net Income | $ | 20,550 | $ | 15,944 | $ | 4,606 | |||||||||||||||||||||||
| Net Income Per Share (Diluted) | $ | 0.22 | $ | 0.18 | $ | 0.04 | |||||||||||||||||||||||
Page 15.
| NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||||||||
| AND SUBSIDIARIES | |||||||||||||||||||||||||||||
| SEGMENT OPERATING RESULTS AND STATISTICS | |||||||||||||||||||||||||||||
| (UNAUDITED) | |||||||||||||||||||||||||||||
| DOWNSTREAM BUSINESS | |||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||
| (Thousands of Dollars, except per share amounts) | December 31, | ||||||||||||||||||||||||||||
| UTILITY SEGMENT | 2020 | 2019 | Variance | ||||||||||||||||||||||||||
| Revenues from External Customers | $ | 188,901 | $ | 194,910 | $ | (6,009) | |||||||||||||||||||||||
| Intersegment Revenues | 100 | 1,915 | (1,815) | ||||||||||||||||||||||||||
| Total Operating Revenues | 189,001 | 196,825 | (7,824) | ||||||||||||||||||||||||||
| Operating Expenses: | |||||||||||||||||||||||||||||
| Purchased Gas | 77,032 | 84,705 | (7,673) | ||||||||||||||||||||||||||
| Operation and Maintenance | 45,252 | 42,843 | 2,409 | ||||||||||||||||||||||||||
| Property, Franchise and Other Taxes | 9,749 | 9,814 | (65) | ||||||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 13,994 | 13,630 | 364 | ||||||||||||||||||||||||||
| 146,027 | 150,992 | (4,965) | |||||||||||||||||||||||||||
| Operating Income | 42,974 | 45,833 | (2,859) | ||||||||||||||||||||||||||
| Other Income (Expense): | |||||||||||||||||||||||||||||
| Non-Service Pension and Post-Retirement Benefit Costs | (6,684) | (6,764) | 80 | ||||||||||||||||||||||||||
| Interest and Other Income | 738 | 950 | (212) | ||||||||||||||||||||||||||
| Interest Expense | (5,452) | (5,673) | 221 | ||||||||||||||||||||||||||
| Income Before Income Taxes | 31,576 | 34,346 | (2,770) | ||||||||||||||||||||||||||
| Income Tax Expense | 8,539 | 7,763 | 776 | ||||||||||||||||||||||||||
| Net Income | $ | 23,037 | $ | 26,583 | $ | (3,546) | |||||||||||||||||||||||
| Net Income Per Share (Diluted) | $ | 0.25 | $ | 0.31 | $ | (0.06) | |||||||||||||||||||||||
Page 16.
| NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||||||||
| AND SUBSIDIARIES | |||||||||||||||||||||||||||||
| SEGMENT OPERATING RESULTS AND STATISTICS | |||||||||||||||||||||||||||||
| (UNAUDITED) | |||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||
| (Thousands of Dollars, except per share amounts) | December 31, | ||||||||||||||||||||||||||||
| ALL OTHER | 2020 | 2019 | Variance | ||||||||||||||||||||||||||
| Revenues from External Customers | $ | 1,110 | $ | 34,235 | $ | (33,125) | |||||||||||||||||||||||
| Intersegment Revenues | 20 | 177 | (157) | ||||||||||||||||||||||||||
| Total Operating Revenues | 1,130 | 34,412 | (33,282) | ||||||||||||||||||||||||||
| Operating Expenses: | |||||||||||||||||||||||||||||
| Purchased Gas | 2,287 | 32,033 | (29,746) | ||||||||||||||||||||||||||
| Operation and Maintenance | 764 | 1,703 | (939) | ||||||||||||||||||||||||||
| Property, Franchise and Other Taxes | 8 | 142 | (134) | ||||||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 386 | 203 | 183 | ||||||||||||||||||||||||||
| 3,445 | 34,081 | (30,636) | |||||||||||||||||||||||||||
| Gain on Sale of Timber Properties | 51,066 | — | 51,066 | ||||||||||||||||||||||||||
| Operating Income | 48,751 | 331 | 48,420 | ||||||||||||||||||||||||||
| Other Income (Expense): | |||||||||||||||||||||||||||||
| Non-Service Pension and Post-Retirement Benefit Costs | (4) | (69) | 65 | ||||||||||||||||||||||||||
| Interest and Other Income | 185 | 278 | (93) | ||||||||||||||||||||||||||
| Interest Expense | — | (18) | 18 | ||||||||||||||||||||||||||
| Income before Income Taxes | 48,932 | 522 | 48,410 | ||||||||||||||||||||||||||
| Income Tax Expense | 11,372 | 151 | 11,221 | ||||||||||||||||||||||||||
| Net Income | $ | 37,560 | $ | 371 | $ | 37,189 | |||||||||||||||||||||||
| Net Income Per Share (Diluted) | $ | 0.41 | $ | — | $ | 0.41 | |||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||
| December 31, | |||||||||||||||||||||||||||||
| CORPORATE | 2020 | 2019 | Variance | ||||||||||||||||||||||||||
| Revenues from External Customers | $ | 95 | $ | 135 | $ | (40) | |||||||||||||||||||||||
| Intersegment Revenues | 663 | 1,094 | (431) | ||||||||||||||||||||||||||
| Total Operating Revenues | 758 | 1,229 | (471) | ||||||||||||||||||||||||||
| Operating Expenses: | |||||||||||||||||||||||||||||
| Operation and Maintenance | 2,599 | 2,644 | (45) | ||||||||||||||||||||||||||
| Property, Franchise and Other Taxes | 121 | 117 | 4 | ||||||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 36 | 194 | (158) | ||||||||||||||||||||||||||
| 2,756 | 2,955 | (199) | |||||||||||||||||||||||||||
| Operating Loss | (1,998) | (1,726) | (272) | ||||||||||||||||||||||||||
| Other Income (Expense): | |||||||||||||||||||||||||||||
| Non-Service Pension and Post-Retirement Benefit Costs | (923) | (775) | (148) | ||||||||||||||||||||||||||
| Interest and Other Income | 38,979 | 31,073 | 7,906 | ||||||||||||||||||||||||||
| Interest Expense on Long-Term Debt | (32,256) | (25,443) | (6,813) | ||||||||||||||||||||||||||
| Other Interest Expense | (1,535) | (1,419) | (116) | ||||||||||||||||||||||||||
| Income before Income Taxes | 2,267 | 1,710 | 557 | ||||||||||||||||||||||||||
| Income Tax Expense | 200 | 99 | 101 | ||||||||||||||||||||||||||
| Net Income | $ | 2,067 | $ | 1,611 | $ | 456 | |||||||||||||||||||||||
| Net Income Per Share (Diluted) | $ | 0.03 | $ | 0.02 | $ | 0.01 | |||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||
| December 31, | |||||||||||||||||||||||||||||
| INTERSEGMENT ELIMINATIONS | 2020 | 2019 | Variance | ||||||||||||||||||||||||||
| Intersegment Revenues | $ | (75,897) | $ | (61,225) | $ | (14,672) | |||||||||||||||||||||||
| Operating Expenses: | |||||||||||||||||||||||||||||
| Purchased Gas | (27,712) | (24,459) | (3,253) | ||||||||||||||||||||||||||
| Operation and Maintenance | (48,185) | (36,766) | (11,419) | ||||||||||||||||||||||||||
| (75,897) | (61,225) | (14,672) | |||||||||||||||||||||||||||
| Operating Income | — | — | — | ||||||||||||||||||||||||||
| Other Income (Expense): | |||||||||||||||||||||||||||||
| Interest and Other Deductions | (35,420) | (28,947) | (6,473) | ||||||||||||||||||||||||||
| Interest Expense | 35,420 | 28,947 | 6,473 | ||||||||||||||||||||||||||
| Net Income | $ | — | $ | — | $ | — | |||||||||||||||||||||||
| Net Income Per Share (Diluted) | $ | — | $ | — | $ | — | |||||||||||||||||||||||
Page 17.
| NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||||||||||||||
| AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||
| SEGMENT INFORMATION (Continued) | |||||||||||||||||||||||||||||||||||
| (Thousands of Dollars) | |||||||||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| December 31, | |||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||
| Increase | |||||||||||||||||||||||||||||||||||
| 2020 | 2019 | (Decrease) | |||||||||||||||||||||||||||||||||
| Capital Expenditures: | |||||||||||||||||||||||||||||||||||
| Exploration and Production | $ | 81,339 | (1)(2) | $ | 126,918 | (3)(4) | $ | (45,579) | |||||||||||||||||||||||||||
| Pipeline and Storage | 43,723 | (1)(2) | 57,084 | (3)(4) | (13,361) | ||||||||||||||||||||||||||||||
| Gathering | 8,320 | (1)(2) | 9,838 | (3)(4) | (1,518) | ||||||||||||||||||||||||||||||
| Utility | 17,345 | (1)(2) | 17,165 | (3)(4) | 180 | ||||||||||||||||||||||||||||||
| Total Reportable Segments | 150,727 | 211,005 | (60,278) | ||||||||||||||||||||||||||||||||
| All Other | — | 22 | (22) | ||||||||||||||||||||||||||||||||
| Corporate | 39 | 185 | (146) | ||||||||||||||||||||||||||||||||
| Eliminations | 154 | — | 154 | ||||||||||||||||||||||||||||||||
| Total Capital Expenditures | $ | 150,920 | $ | 211,212 | $ | (60,292) | |||||||||||||||||||||||||||||
(1)Capital expenditures for the quarter ended December 31, 2020, include accounts payable and accrued liabilities related to capital expenditures of $35.1 million, $11.2 million, $2.3 million, and $3.5 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at December 31, 2020, since they represent non-cash investing activities at that date.
(2)Capital expenditures for the quarter ended December 31, 2020, exclude capital expenditures of $45.8 million, $17.3 million, $13.5 million and $10.7 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts were in accounts payable and accrued liabilities at September 30, 2020 and paid during the quarter ended December 31, 2020. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2020, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at December 31, 2020.
(3)Capital expenditures for the quarter ended December 31, 2019, include accounts payable and accrued liabilities related to capital expenditures of $62.3 million, $22.7 million, $5.3 million, and $3.5 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at December 31, 2019, since they represent non-cash investing activities at that date.
(4)Capital expenditures for the quarter ended December 31, 2019, exclude capital expenditures of $38.0 million, $23.8 million, $6.6 million and $12.7 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts were in accounts payable and accrued liabilities at September 30, 2019 and paid during the quarter ended December 31, 2019. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2019, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at December 31, 2019.
| DEGREE DAYS | |||||||||||||||||||||||||||||
| Percent Colder | |||||||||||||||||||||||||||||
| (Warmer) Than: | |||||||||||||||||||||||||||||
| Three Months Ended December 31, | Normal | 2020 | 2019 | Normal (1) | Last Year (1) | ||||||||||||||||||||||||
| Buffalo, NY | 2,253 | 1,921 | 2,232 | (14.7) | (13.9) | ||||||||||||||||||||||||
| Erie, PA | 2,044 | 1,697 | 1,906 | (17.0) | (11.0) | ||||||||||||||||||||||||
(1)Percents compare actual 2020 degree days to normal degree days and actual 2020 degree days to actual 2019 degree days.
Page 18.
| NATIONAL FUEL GAS COMPANY | ||||||||||||||||||||||||||||||||||||||
| AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||
| EXPLORATION AND PRODUCTION INFORMATION | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||||||||||||||||||
| Increase | ||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | (Decrease) | ||||||||||||||||||||||||||||||||||||
| Gas Production/Prices: | ||||||||||||||||||||||||||||||||||||||
| Production (MMcf) | ||||||||||||||||||||||||||||||||||||||
| Appalachia | 75,669 | 54,284 | 21,385 | |||||||||||||||||||||||||||||||||||
| West Coast | 441 | 487 | (46) | |||||||||||||||||||||||||||||||||||
| Total Production | 76,110 | 54,771 | 21,339 | |||||||||||||||||||||||||||||||||||
| Average Prices (Per Mcf) | ||||||||||||||||||||||||||||||||||||||
| Appalachia | $ | 2.17 | $ | 2.16 | $ | 0.01 | ||||||||||||||||||||||||||||||||
| West Coast | 5.03 | 4.98 | 0.05 | |||||||||||||||||||||||||||||||||||
| Weighted Average | 2.19 | 2.19 | — | |||||||||||||||||||||||||||||||||||
| Weighted Average after Hedging | 2.14 | 2.32 | (0.18) | |||||||||||||||||||||||||||||||||||
| Oil Production/Prices: | ||||||||||||||||||||||||||||||||||||||
| Production (Thousands of Barrels) | ||||||||||||||||||||||||||||||||||||||
| Appalachia | — | — | — | |||||||||||||||||||||||||||||||||||
| West Coast | 563 | 601 | (38) | |||||||||||||||||||||||||||||||||||
| Total Production | 563 | 601 | (38) | |||||||||||||||||||||||||||||||||||
| Average Prices (Per Barrel) | ||||||||||||||||||||||||||||||||||||||
| Appalachia | $ | 38.53 | $ | 54.49 | $ | (15.96) | ||||||||||||||||||||||||||||||||
| West Coast | 43.48 | 62.63 | (19.15) | |||||||||||||||||||||||||||||||||||
| Weighted Average | 43.48 | 62.63 | (19.15) | |||||||||||||||||||||||||||||||||||
| Weighted Average after Hedging | 49.91 | 62.92 | (13.01) | |||||||||||||||||||||||||||||||||||
| Total Production (MMcfe) | 79,488 | 58,377 | 21,111 | |||||||||||||||||||||||||||||||||||
| Selected Operating Performance Statistics: | ||||||||||||||||||||||||||||||||||||||
General & Administrative Expense per Mcfe (1) | $ | 0.21 | $ | 0.26 | $ | (0.05) | ||||||||||||||||||||||||||||||||
Lease Operating and Transportation Expense per Mcfe (1)(2) | $ | 0.83 | $ | 0.87 | $ | (0.04) | ||||||||||||||||||||||||||||||||
Depreciation, Depletion & Amortization per Mcfe (1) | $ | 0.57 | $ | 0.76 | $ | (0.19) | ||||||||||||||||||||||||||||||||
(1)Refer to page 13 for the General and Administrative Expense, Lease Operating and Transportation Expense and Depreciation, Depletion, and Amortization Expense for the Exploration and Production segment.
(2)Amounts include transportation expense of $0.57 and $0.57 per Mcfe for the three months ended December 31, 2020 and December 31, 2019, respectively.
Page 19.
| NATIONAL FUEL GAS COMPANY | ||||||||||||||||||||
| AND SUBSIDIARIES | ||||||||||||||||||||
| EXPLORATION AND PRODUCTION INFORMATION | ||||||||||||||||||||
| Hedging Summary for Remaining Nine Months of Fiscal 2021 | Volume | Average Hedge Price | ||||||||||||||||||
| Oil Swaps | ||||||||||||||||||||
| Brent | 962,000 | BBL | $ | 57.35 / BBL | ||||||||||||||||
| NYMEX | 117,000 | BBL | $ | 51.00 / BBL | ||||||||||||||||
| Total | 1,079,000 | BBL | $ | 56.66 / BBL | ||||||||||||||||
| Gas Swaps | ||||||||||||||||||||
| NYMEX | 114,630,000 | MMBTU | $ | 2.63 / MMBTU | ||||||||||||||||
| No Cost Collars | 21,150,000 | MMBTU | $ | 2.28 / MMBTU (Floor) / $2.77 / MMBTU (Ceiling) | ||||||||||||||||
| Fixed Price Physical Sales | 55,788,503 | MMBTU | $ | 2.24 / MMBTU | ||||||||||||||||
| Total | 191,568,503 | MMBTU | ||||||||||||||||||
| Hedging Summary for Fiscal 2022 | Volume | Average Hedge Price | ||||||||||||||||||
| Oil Swaps | ||||||||||||||||||||
| Brent | 540,000 | BBL | $ | 55.14 / BBL | ||||||||||||||||
| NYMEX | 156,000 | BBL | $ | 51.00 / BBL | ||||||||||||||||
| Total | 696,000 | BBL | $ | 54.21 / BBL | ||||||||||||||||
| Gas Swaps | ||||||||||||||||||||
| NYMEX | 140,630,000 | MMBTU | $ | 2.65 / MMBTU | ||||||||||||||||
| No Cost Collars | 2,350,000 | MMBTU | $ | 2.28 / MMBTU (Floor) / $2.77 / MMBTU (Ceiling) | ||||||||||||||||
| Fixed Price Physical Sales | 45,887,027 | MMBTU | $ | 2.24 / MMBTU | ||||||||||||||||
| Total | 188,867,027 | MMBTU | ||||||||||||||||||
| Hedging Summary for Fiscal 2023 | Volume | Average Hedge Price | ||||||||||||||||||
| Oil Swaps | ||||||||||||||||||||
| Brent | 120,000 | BBL | $ | 50.00 / BBL | ||||||||||||||||
| Total | 120,000 | BBL | $ | 50.00 / BBL | ||||||||||||||||
| Gas Swaps | ||||||||||||||||||||
| NYMEX | 24,340,000 | MMBTU | $ | 2.55 / MMBTU | ||||||||||||||||
| Fixed Price Physical Sales | 38,313,018 | MMBTU | $ | 2.26 / MMBTU | ||||||||||||||||
| Total | 62,653,018 | MMBTU | ||||||||||||||||||
| Hedging Summary for Fiscal 2024 | Volume | Average Hedge Price | ||||||||||||||||||
| Oil Swaps | ||||||||||||||||||||
| Brent | 120,000 | BBL | $ | 50.30 / BBL | ||||||||||||||||
| Total | 120,000 | BBL | $ | 50.30 / BBL | ||||||||||||||||
| Gas Swaps | ||||||||||||||||||||
| NYMEX | 1,150,000 | MMBTU | $ | 2.45 / MMBTU | ||||||||||||||||
| Fixed Price Physical Sales | 20,799,229 | MMBTU | $ | 2.25 / MMBTU | ||||||||||||||||
| Total | 21,949,229 | MMBTU | ||||||||||||||||||
| Hedging Summary for Fiscal 2025 | Volume | Average Hedge Price | ||||||||||||||||||
| Fixed Price Physical Sales | 2,293,200 | MMBTU | $ | 2.18 / MMBTU | ||||||||||||||||
Page 20.
| NATIONAL FUEL GAS COMPANY | ||||||||||||||||||||||||||||||||||||||
| AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||
| Pipeline & Storage Throughput - (millions of cubic feet - MMcf) | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||||||||||||||||||
| Increase | ||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | (Decrease) | ||||||||||||||||||||||||||||||||||||
| Firm Transportation - Affiliated | 29,964 | 34,667 | (4,703) | |||||||||||||||||||||||||||||||||||
| Firm Transportation - Non-Affiliated | 173,064 | 173,981 | (917) | |||||||||||||||||||||||||||||||||||
| Interruptible Transportation | 590 | 714 | (124) | |||||||||||||||||||||||||||||||||||
| 203,618 | 209,362 | (5,744) | ||||||||||||||||||||||||||||||||||||
| Gathering Volume - (MMcf) | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||||||||||||||||||
| Increase | ||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | (Decrease) | ||||||||||||||||||||||||||||||||||||
| Gathered Volume | 87,135 | 64,392 | 22,743 | |||||||||||||||||||||||||||||||||||
| Utility Throughput - (MMcf) | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||||||||||||||||||
| Increase | ||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | (Decrease) | ||||||||||||||||||||||||||||||||||||
| Retail Sales: | ||||||||||||||||||||||||||||||||||||||
| Residential Sales | 18,412 | 19,476 | (1,064) | |||||||||||||||||||||||||||||||||||
| Commercial Sales | 2,528 | 2,812 | (284) | |||||||||||||||||||||||||||||||||||
| Industrial Sales | 153 | 217 | (64) | |||||||||||||||||||||||||||||||||||
| 21,093 | 22,505 | (1,412) | ||||||||||||||||||||||||||||||||||||
| Transportation | 17,935 | 20,556 | (2,621) | |||||||||||||||||||||||||||||||||||
| 39,028 | 43,061 | (4,033) | ||||||||||||||||||||||||||||||||||||
Page 21.
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
In addition to financial measures calculated in accordance with generally accepted accounting principles (GAAP), this press release contains information regarding Adjusted Operating Results, Adjusted EBITDA and free cash flow, which are non-GAAP financial measures. The Company believes that these non-GAAP financial measures are useful to investors because they provide an alternative method for assessing the Company's ongoing operating results or liquidity and for comparing the Company’s financial performance to other companies. The Company's management uses these non-GAAP financial measures for the same purpose, and for planning and forecasting purposes. The presentation of non-GAAP financial measures is not meant to be a substitute for financial measures in accordance with GAAP.
Management defines Adjusted Operating Results as reported GAAP earnings before items impacting comparability. The following table reconciles National Fuel's reported GAAP earnings to Adjusted Operating Results for the three months ended December 31, 2020 and 2019:
| Three Months Ended | ||||||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||||||
| (in thousands except per share amounts) | 2020 | 2019 | ||||||||||||||||||||||||
| Reported GAAP Earnings | $ | 77,774 | $ | 86,591 | ||||||||||||||||||||||
Items impacting comparability: | ||||||||||||||||||||||||||
Impairment of oil and gas properties (E&P) | 76,152 | — | ||||||||||||||||||||||||
Tax impact of impairment of oil and gas properties | (20,980) | — | ||||||||||||||||||||||||
| Gain on sale of timber properties (Corporate/All Other) | (51,066) | — | ||||||||||||||||||||||||
| Tax impact of gain on sale of timber properties | 14,069 | — | ||||||||||||||||||||||||
Unrealized (gain) loss on other investments (Corporate/All Other) | 1,298 | 1,019 | ||||||||||||||||||||||||
Tax impact of unrealized (gain) loss on other investments | (272) | (214) | ||||||||||||||||||||||||
| Adjusted Operating Results | $ | 96,975 | $ | 87,396 | ||||||||||||||||||||||
| Reported GAAP Earnings per share | $ | 0.85 | $ | 1.00 | ||||||||||||||||||||||
Items impacting comparability: | ||||||||||||||||||||||||||
Impairment of oil and gas properties, net of tax (E&P) | 0.60 | — | ||||||||||||||||||||||||
Gain on sale of timber properties, net of tax (Corporate/All Other) | (0.40) | — | ||||||||||||||||||||||||
Unrealized (gain) loss on other investments, net of tax (Corporate/All Other) | 0.01 | 0.01 | ||||||||||||||||||||||||
| Adjusted Operating Results Per Share | $ | 1.06 | $ | 1.01 | ||||||||||||||||||||||
Management defines Adjusted EBITDA as reported GAAP earnings before the following items: interest expense, income taxes, depreciation, depletion and amortization, other income and deductions, impairments, and other items reflected in operating income that impact comparability. The following tables reconcile National Fuel's reported GAAP earnings to Adjusted EBITDA for the three months ended December 31, 2020 and 2019:
| Three Months Ended | ||||||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||||||
| (in thousands) | 2020 | 2019 | ||||||||||||||||||||||||
| Reported GAAP Earnings | $ | 77,774 | $ | 86,591 | ||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 83,120 | 74,918 | ||||||||||||||||||||||||
| Other (Income) Deductions | 2,176 | 3,040 | ||||||||||||||||||||||||
| Interest Expense | 34,175 | 26,994 | ||||||||||||||||||||||||
| Income Taxes | 29,417 | 31,395 | ||||||||||||||||||||||||
| Impairment of Oil and Gas Producing Properties | 76,152 | — | ||||||||||||||||||||||||
| Gain on Sale of Timber Properties | (51,066) | — | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | 251,748 | $ | 222,938 | ||||||||||||||||||||||
| Adjusted EBITDA by Segment | ||||||||||||||||||||||||||
| Pipeline and Storage Adjusted EBITDA | $ | 58,134 | $ | 42,942 | ||||||||||||||||||||||
| Gathering Adjusted EBITDA | 39,793 | 29,431 | ||||||||||||||||||||||||
| Total Midstream Businesses Adjusted EBITDA | 97,927 | 72,373 | ||||||||||||||||||||||||
| Exploration and Production Adjusted EBITDA | 100,744 | 92,100 | ||||||||||||||||||||||||
| Utility Adjusted EBITDA | 56,968 | 59,463 | ||||||||||||||||||||||||
| Corporate and All Other Adjusted EBITDA | (3,891) | (998) | ||||||||||||||||||||||||
| Total Adjusted EBITDA | $ | 251,748 | $ | 222,938 | ||||||||||||||||||||||
Page 22.
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
SEGMENT ADJUSTED EBITDA
| Three Months Ended | ||||||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||||||
| (in thousands) | 2020 | 2019 | ||||||||||||||||||||||||
| Exploration and Production Segment | ||||||||||||||||||||||||||
| Reported GAAP Earnings | $ | (29,623) | $ | 23,977 | ||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 45,332 | 44,148 | ||||||||||||||||||||||||
| Other (Income) Deductions | 194 | 161 | ||||||||||||||||||||||||
| Interest Expense | 15,490 | 14,057 | ||||||||||||||||||||||||
| Income Taxes | (6,801) | 9,757 | ||||||||||||||||||||||||
| Impairment of Oil and Gas Producing Properties | 76,152 | — | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | 100,744 | $ | 92,100 | ||||||||||||||||||||||
| Pipeline and Storage Segment | ||||||||||||||||||||||||||
| Reported GAAP Earnings | $ | 24,183 | $ | 18,105 | ||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 15,468 | 11,605 | ||||||||||||||||||||||||
| Other (Income) Deductions | (981) | (1,378) | ||||||||||||||||||||||||
| Interest Expense | 10,731 | 7,112 | ||||||||||||||||||||||||
| Income Taxes | 8,733 | 7,498 | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | 58,134 | $ | 42,942 | ||||||||||||||||||||||
| Gathering Segment | ||||||||||||||||||||||||||
| Reported GAAP Earnings | $ | 20,550 | $ | 15,944 | ||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 7,904 | 5,138 | ||||||||||||||||||||||||
| Other (Income) Deductions | (166) | 3 | ||||||||||||||||||||||||
| Interest Expense | 4,131 | 2,219 | ||||||||||||||||||||||||
| Income Taxes | 7,374 | 6,127 | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | 39,793 | $ | 29,431 | ||||||||||||||||||||||
| Utility Segment | ||||||||||||||||||||||||||
| Reported GAAP Earnings | $ | 23,037 | $ | 26,583 | ||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 13,994 | 13,630 | ||||||||||||||||||||||||
| Other (Income) Deductions | 5,946 | 5,814 | ||||||||||||||||||||||||
| Interest Expense | 5,452 | 5,673 | ||||||||||||||||||||||||
| Income Taxes | 8,539 | 7,763 | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | 56,968 | $ | 59,463 | ||||||||||||||||||||||
| Corporate and All Other | ||||||||||||||||||||||||||
| Reported GAAP Earnings | $ | 39,627 | $ | 1,982 | ||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 422 | 397 | ||||||||||||||||||||||||
| Gain on Sale of Timber Properties | (51,066) | — | ||||||||||||||||||||||||
| Other (Income) Deductions | (2,817) | (1,560) | ||||||||||||||||||||||||
| Interest Expense | (1,629) | (2,067) | ||||||||||||||||||||||||
| Income Taxes | 11,572 | 250 | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | (3,891) | $ | (998) | ||||||||||||||||||||||
Management defines free cash flow as funds from operations less capital expenditures. The Company is unable to provide a reconciliation of projected free cash flow as described in this release to its comparable financial measure calculated in accordance with GAAP without unreasonable efforts. This is due to our inability to calculate the comparable GAAP projected metrics, including operating income and total production costs, given the unknown effect, timing, and potential significance of certain income statement items.