National Fuel Reports Third Quarter Earnings

Business Wire

WILLIAMSVILLE, N.Y.--(BUSINESS WIRE)--

National Fuel Gas Company (“National Fuel” or the “Company”) (NFG) today announced consolidated earnings for the third quarter of fiscal 2013 and for the nine months ended June 30, 2013.

HIGHLIGHTS

  • Earnings for the third quarter of fiscal 2013 of $58.5 million, or $0.69 per share, increased $15.3 million, or $0.17 per share, compared to $43.2 million, or $0.52 per share, for the prior year’s third quarter. The increase is due to higher earnings across all segments.
  • Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) for the third quarter of fiscal 2013 were $215.1 million compared to $164.5 million for the prior year’s third quarter, an increase of 31%.
  • Seneca Resources Corporation’s (“Seneca”) third quarter production of natural gas and crude oil was 34.1 billion cubic feet equivalent (“Bcfe”), an increase of 11.9 Bcfe or approximately 54%.
  • The Company is updating and narrowing its GAAP earnings guidance range for fiscal 2013 to a range of $3.00 to $3.10 per share. The previous earnings guidance had been a range of $2.95 to $3.10 per share. This revised guidance assumes flat NYMEX equivalent pricing of $3.50 per Million British Thermal Units (“MMBtu”) for natural gas (Henry Hub) and $100 per barrel (“Bbl”) for crude oil (West Texas Intermediate) for unhedged production for the remainder of the fiscal year. Production for the entire 2013 fiscal year is projected to be between 118 and 124 Bcfe. The previous guidance for projected production was between 110 and 118 Bcfe.
  • The Company’s preliminary GAAP earnings guidance for fiscal 2014 is in the range of $3.05 to $3.30 per share. The 2014 preliminary guidance includes oil and gas production for the Exploration and Production segment in the range of 134 to 146 Bcfe and is based on an assumed flat NYMEX price of $4.00 per MMBtu for natural gas and $90 per Bbl for oil.
  • A conference call is scheduled for Friday, August 9, 2013, at 11 a.m. Eastern Standard Time.

MANAGEMENT COMMENTS

Ronald J. Tanski, President and Chief Executive Officer of National Fuel Gas Company, stated: “The third quarter was another strong quarter for National Fuel. All of our business segments delivered impressive operating results, which translated into a 35 percent increase in consolidated quarterly earnings.

“The connection of new multi-well pads to our midstream production pipelines, and robust production from Seneca’s Pennsylvania wells in Tioga and Lycoming counties helped deliver a 54 percent increase in production over last year’s third quarter. Our program to evaluate the Marcellus Shale formation across our substantial legacy acreage position also made great strides during the quarter. Seneca achieved very promising initial results from four new delineation wells across Elk County, Pa. While the success of these wells is certainly important for the ongoing growth of our upstream exploration and production business, continued development of this Western Development Area acreage will also create additional expansion opportunities for our midstream pipeline businesses.

“As we look forward to fiscal 2014, we are in a great position to achieve continued success. With our solid financial position and considerable growth opportunities, we will remain focused on developing Seneca’s oil and natural gas reserves and building out our pipeline infrastructure to get those reserves to market. We believe that these assets will produce long-term value for our shareholders.”

SUMMARY OF RESULTS

National Fuel had consolidated earnings for the quarter ended June 30, 2013, of $58.5 million, or $0.69 per share, compared to the prior year’s third quarter of $43.2 million, or $0.52 per share, an increase of $15.3 million or $0.17 per share. The increase is due to higher earnings in all segments and the All Other category. (Note: All references to earnings per share are to diluted earnings per share, all amounts are stated in U.S. dollars and all amounts used in the discussion of earnings are after tax unless otherwise noted.)

Consolidated earnings for the nine months ended June 30, 2013, of $212.2 million, or $2.52 per share, increased $40.9 million, or $0.47 per share, from the same period in the prior year where earnings were $171.3 million or $2.05 per share.

 

OPERATING RESULTS

 
          Three Months       Nine Months
Ended June 30, Ended June 30,
2013       2012 2013       2012
(in thousands except per share amounts)
Reported GAAP earnings $ 58,495 $ 43,184 $ 212,159 $ 171,275
Items impacting comparability1:
Pennsylvania impact fee 4,034
               
Operating Results $ 58,495 $ 43,184 $ 212,159 $ 175,309
 
Reported GAAP earnings per share $ 0.69 $ 0.52 $ 2.52 $ 2.05
Items impacting comparability1:
Pennsylvania impact fee 0.05
               
Operating Results $ 0.69 $ 0.52 $ 2.52 $ 2.10
 

1 See discussion of these individual items below.

 

As outlined in the table above, certain items included in GAAP earnings impacted the comparability of the Company’s financial results when comparing the nine months ended June 30, 2013, to the comparable periods in fiscal 2012. Excluding one item in the prior fiscal year, Operating Results for the nine months ended June 30, 2013, of $175.3 million, or $2.10 per share, increased $36.9 million, or $0.42 per share, compared to the same period in the prior year. Items impacting comparability will be discussed in more detail within the discussion of segment earnings below.

DISCUSSION OF RESULTS BY SEGMENT

The following discussion of the earnings of each segment is summarized in a tabular form at pages 9 through 12 of this report. It may be helpful to refer to those tables while reviewing this discussion.

Exploration and Production Segment

The Exploration and Production segment operations are carried out by Seneca Resources Corporation (“Seneca”). Seneca explores for, develops and produces natural gas and oil reserves in Appalachia and California.

The Exploration and Production segment’s earnings in the third quarter of fiscal 2013 of $31.7 million, or $0.38 per share, increased $9.8 million, or $0.12 per share, when compared with the prior year’s third quarter.

Overall production of natural gas and crude oil for the current quarter of 34.1 Bcfe increased approximately 11.9 Bcfe, or 54.0 percent, compared to the prior year’s third quarter. Production from Seneca’s Appalachia properties increased approximately 12.2 Bcfe largely because of Seneca’s strong well results in Lycoming County. California production of 5.0 Bcfe decreased 5.8 percent compared to the prior year’s third quarter primarily due to a temporary gas transportation issue and natural field decline.

Changes in commodity prices realized after hedging also impacted earnings. The weighted average natural gas price received by Seneca (after hedging) for the quarter ended June 30, 2013, was $4.16 per thousand cubic feet (“Mcf”), an increase of $0.09 per Mcf compared to the prior year’s third quarter. Higher crude oil prices realized after hedging increased earnings. The weighted average oil price received by Seneca (after hedging) for the quarter ended June 30, 2013, was $97.90 per Bbl, an increase of $8.20 per Bbl.

Depletion expense for the current year’s third quarter increased over last year’s third quarter due to the higher production activity discussed above. On a per unit basis, depletion decreased $0.40 per thousand cubic feet equivalent (“Mcfe”) due to higher natural gas reserve balances at June 30, 2013, compared to the prior year. Lease operating and transportation expenses (“LOE”) increased due to higher production costs in Appalachia and well repair and workover costs and steam fuel costs in California. On a per unit basis, LOE increased $0.08 per Mcfe. General and administrative expenses (“G&A”) increased over the prior year’s third quarter due to higher labor expenses; however, on a per unit basis G&A decreased $0.13 per Mcfe. Earnings were also impacted by higher interest expense due to a higher outstanding debt balance and higher state income taxes due to increased production in Pennsylvania.

The Exploration and Production segment’s earnings of $86.1 million, or $1.02 per share, for the nine months ended June 30, 2013, increased $11.7 million, or $0.13 per share, when compared with the nine months ended June 30, 2012.

In February 2012, the Commonwealth of Pennsylvania passed legislation that included a “natural gas impact fee.” The fee was retroactive and applied to wells drilled before and after the legislation was passed. The impact fee recorded in the second quarter of fiscal 2012 that related to prior fiscal years was $6.2 million (pre-tax). Excluding this amount from the prior year’s results, Operating Results for the nine months ended June 30, 2013, of $86.1 million, or $1.02 per share, compared to Operating Results of $78.5 million, or $0.94 per share for the prior year’s nine-month period.

Overall production for the nine months ended June 30, 2013, increased approximately 48.7 percent to 87.4 Bcfe. Production from Seneca’s Appalachia properties increased approximately 29.3 Bcfe. California production of 14.8 Bcfe decreased slightly compared with the prior year’s nine-month period for the reasons noted above.

Changes in commodity prices realized after hedging also impacted earnings. The weighted average natural gas price received by Seneca (after hedging) for the nine months ended June 30, 2013, was $4.13 per Mcf, a decrease of $0.44 per Mcf compared to the prior year’s nine-month period. Higher crude oil prices realized after hedging increased earnings. The weighted average oil price received by Seneca (after hedging) for the nine months ended June 30, 2013, was $97.88 per Bbl, an increase of $6.38 per Bbl.

Depletion, LOE and G&A for the nine months ended June 30, 2013, increased compared to the prior year’s nine-month period due to the higher production activity discussed above. On a per unit basis, depletion, LOE and G&A decreased $0.28 per Mcfe, $0.02 per Mcfe and $0.16 per Mcfe, respectively. Earnings were also impacted by higher interest expense due to a higher outstanding debt balance and higher state income taxes as noted above for the quarter.

Pipeline and Storage Segment

The Pipeline and Storage segment 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 western Pennsylvania.

The Pipeline and Storage segment’s earnings of $14.1 million, or $0.17 per share, for the quarter ended June 30, 2013, increased $1.4 million, or $0.02 per share, when compared with the same period in the prior fiscal year. The increase in earnings is mainly due to higher non-affiliated transportation revenues from the Northern Access and Line N 2012 Expansion projects, which were completed and placed in service in the current year’s first quarter. Earnings also increased due to lower depreciation expense, which was largely driven by a reduction in Supply Corporation’s depreciation rates as required by its 2012 rate case settlement. Earnings were reduced by higher operating expenses, higher income taxes and a lower allowance for funds used during construction (due to the completion of the expansion projects mentioned above).

The Pipeline and Storage segment’s earnings of $47.8 million, or $0.57 per share, for the nine months ended June 30, 2013, increased $12.4 million, or $0.15 per share, when compared with the same period in the prior fiscal year. The increase was mostly due to higher non-affiliated transportation revenues from the Northern Access and Line N 2012 Expansion projects and lower depreciation expense as required by Supply Corporation’s 2012 rate case settlement. Earnings were reduced by higher operating expenses, higher income taxes and lower AFUDC as noted above for the quarter.

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.

The Utility segment’s earnings of $7.6 million, or $0.09 per share, for the quarter ended June 30, 2013, increased $2.5 million or $0.03 per share. Colder weather combined with higher usage in Pennsylvania was the primary reason for the increase in earnings in the current year’s third quarter. Temperatures in Pennsylvania were 5.3 percent colder in the current year’s third quarter than the third quarter of 2012. In New York, the impact of weather variations on earnings is mitigated by that jurisdiction’s weather normalization clause.

The Utility segment’s earnings of $65.0 million, or $0.77 per share, for the nine months ended June 30, 2013, increased from earnings of $52.7 million, or $0.63 per share, for the nine months ended June 30, 2012. Colder weather in Pennsylvania was the main reason for the increase in earnings in the current nine-month period. Temperatures in Pennsylvania were 18.1 percent colder in the nine months ended June 30, 2013, than in the prior year’s nine-month period. Lower operating expenses (mainly attributable to a decrease in bad debt expense), lower interest expense (mainly due to a lower outstanding debt balance) and a lower effective tax rate (as a result of a settlement with taxing authorities), also contributed to higher earnings in the Utility segment.

Energy Marketing Segment

National Fuel Resources, Inc. (“NFR”) comprises the Company’s Energy Marketing segment. NFR markets natural gas to industrial, wholesale, commercial, public authority and residential customers primarily in western and central New York and northwestern Pennsylvania, offering competitively priced natural gas to its customers.

The Energy Marketing segment’s earnings for the quarter ended June 30, 2013, of $1.0 million increased by less than $0.1 million from the prior year’s third quarter earnings. Earnings for the nine months ended June 30, 2013, of $5.7 million increased $1.1 million compared to the prior year’s nine-month period. The increase in earnings for the nine-month period was mainly due to higher average margins largely driven by a greater benefit derived from the Energy Marketing segment’s contracts for storage capacity.

Corporate and All Other

The Corporate and All Other category includes the following active, wholly owned subsidiaries of the Company: National Fuel Gas Midstream Corporation (“Midstream”), formed to build, own and operate natural gas processing and pipeline gathering facilities in the Appalachian region and the Northeast division of Seneca Resources Corporation that markets high quality hardwoods from Appalachian land holdings.

The Corporate and All Other category earnings of $4.1 million, for the quarter ended June 30, 2013, increased $1.5 million compared to the prior year’s third quarter. Earnings for the nine months ended June 30, 2013, of $7.5 million increased $3.4 million compared to the prior year’s nine-month period. The increase in earnings in both the current quarter and nine-month period is mainly due to higher earnings from Midstream’s pipeline gathering and natural gas processing operation. Midstream’s Trout Run gathering system in Lycoming County, Pa., and its Covington gathering system in Tioga County, Pa., have provided the critical gathering infrastructure for transporting Seneca’s Marcellus Shale production to the interstate pipeline system.

EARNINGS GUIDANCE

The Company is updating and narrowing its GAAP earnings guidance range for fiscal 2013 to a range of $3.00 to $3.10 per share. The previous earnings guidance had been a range of $2.95 to $3.10 per share. This revised guidance assumes flat NYMEX equivalent pricing of $3.50 per MMBtu for natural gas (Henry Hub) and $100 per Bbl for crude oil (West Texas Intermediate) for unhedged production for the remainder of the fiscal year. Production for the entire 2013 fiscal year is projected to be between 118 and 124 Bcfe. The previous guidance for projected production was between 110 and 118 Bcfe.

The Company’s preliminary GAAP earnings guidance for fiscal 2014 is in the range of $3.05 to $3.30 per share. This includes oil and gas production for the Exploration and Production segment in the range of 134 to 146 Bcfe and is based on an assumed flat NYMEX price of $4.00 per MMBtu for natural gas and $90 per Bbl for crude oil.

EARNINGS TELECONFERENCE

The Company will host a conference call on Friday, August 9, 2013, at 11 a.m. (Eastern Time) to discuss this announcement. There are two ways to access this call. For those with Internet access, visit the investor relations page at National Fuel’s website at investor.nationalfuelgas.com. For those without Internet access, access is also provided by dialing (toll-free) 1-866-788-0542, and using the passcode “45174998.” For those unable to listen to the live conference call, a replay will be available at approximately 2 p.m. (Eastern Time) at the same website link and by phone at (toll-free) 1-888-286-8010 using passcode “99154741.” Both the webcast and telephonic replay will be available until the close of business on Friday, August 16, 2013.

National Fuel is an integrated energy company with $6.3 billion in assets comprised of the following four operating segments: Exploration and Production, Pipeline and Storage, Utility, and Energy Marketing. Additional information about National Fuel is available at www.nationalfuelgas.com.

Certain statements contained herein, including statements identified by the use of the words “anticipates,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “predicts,” “projects,” “believes,” “seeks,” “will,” “may” and similar expressions, and statements which are other than statements of historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Company’s expectations, beliefs and projections contained herein are expressed in good faith and are believed to have a reasonable basis, but there can be no assurance that such expectations, beliefs or projections will result or be achieved or accomplished. In addition to other factors, the following are important factors that could cause actual results to differ materially from those discussed in the forward-looking statements: 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; 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; changes in the price of natural gas or oil; impairments under the SEC’s full cost ceiling test for natural gas and oil reserves; 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; governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, allowed rates of return, rate design and retained natural gas), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal; delays or changes in costs or plans with respect to Company projects or related projects of other companies, including difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators; 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 economic conditions, including global, national or regional recessions, and their effect on the demand for, and customers’ ability to pay for, the Company’s products and services; the creditworthiness or performance of the Company’s key suppliers, customers and counterparties; economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities, acts of war, cyber attacks or pest infestation; changes in price differential between similar quantities of natural gas at different geographic locations, and the effect of such changes on the demand for pipeline transportation capacity to or from such locations; other changes in price differentials between similar quantities of oil or natural gas having different quality, heating value, geographic location or delivery date; significant differences between the Company’s projected and actual capital expenditures and operating expenses; 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; the cost and effects of legal and administrative claims against the Company or activist shareholder campaigns to effect changes at the Company; increasing health care costs and the resulting effect on health insurance premiums and on the obligation to provide other post-retirement benefits; or increasing costs of insurance, changes in coverage and the ability to obtain insurance. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date thereof.

 
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
QUARTER ENDED JUNE 30, 2013
 
                                       
Exploration & Pipeline & Energy Corporate /
(Thousands of Dollars)   Production         Storage         Utility         Marketing         All Other         Consolidated*
 
Third quarter 2012 GAAP earnings $ 21,915 $ 12,627 $ 5,096 $ 923 $ 2,623 $ 43,184
 
Drivers of operating results
Higher (lower) crude oil prices 3,780 3,780
Higher (lower) natural gas prices 1,824 1,824
Higher (lower) natural gas production 31,784 31,784
Higher (lower) crude oil production (696 ) (696 )
Lower (higher) lease operating and transportation expenses (8,761 ) (8,761 )
Lower (higher) depreciation / depletion (9,602 ) 489 (346 ) (9,459 )
 
Higher (lower) transportation and storage revenues 3,986 3,986
Higher (lower) gathering and processing revenues 3,960 3,960
Lower (higher) operating expenses (1,983 ) (1,160 ) (1,348 ) (4,491 )
 
Colder weather 423 423
Higher (lower) usage 985 985
 
Higher (lower) AFUDC** (647 ) (647 )
 
(Higher) lower interest expense (1,346 ) 608 (738 )
 
Lower (higher) income tax expense / effective tax rate (5,128 ) (1,337 ) (883 ) (7,348 )
 
All other / rounding   (53 )         117           518         40         87           709  
 
Third quarter 2013 GAAP earnings $ 31,734         $ 14,075         $ 7,630       $ 963       $ 4,093         $ 58,495  
 
* Amounts do not reflect intercompany eliminations
** AFUDC = Allowance for Funds Used During Construction
 
 
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
QUARTER ENDED JUNE 30, 2013
 
                                       
Exploration & Pipeline & Energy Corporate /
  Production         Storage         Utility         Marketing         All Other         Consolidated*
 
Third quarter 2012 GAAP earnings $ 0.26 $ 0.15 $ 0.06 $ 0.01 $ 0.04 $ 0.52
 
Drivers of operating results
Higher (lower) crude oil prices 0.04 0.04
Higher (lower) natural gas prices 0.02 0.02
Higher (lower) natural gas production 0.38 0.38
Higher (lower) crude oil production (0.01 ) (0.01 )
Lower (higher) lease operating and transportation expenses (0.10 ) (0.10 )
Lower (higher) depreciation / depletion (0.11 ) 0.01 - (0.10 )
 
Higher (lower) transportation and storage revenues 0.05 0.05
Higher (lower) gathering and processing revenues 0.05 0.05
Lower (higher) operating expenses (0.02 ) (0.01 ) (0.02 ) (0.05 )
 
Colder weather 0.01 0.01
Higher (lower) usage 0.01 0.01
 
Higher (lower) AFUDC** (0.01 ) (0.01 )
 
(Higher) lower interest expense (0.02 ) 0.01 (0.01 )
 
Lower (higher) income tax expense / effective tax rate (0.06 ) (0.02 ) (0.01 ) (0.09 )
 
All other / rounding   -           -           -         -         (0.02 )         (0.02 )
 
Third quarter 2013 GAAP earnings $ 0.38         $ 0.17         $ 0.09       $ 0.01       $ 0.04         $ 0.69  
 
* Amounts do not reflect intercompany eliminations
** AFUDC = Allowance for Funds Used During Construction
 
 
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
NINE MONTHS ENDED JUNE 30, 2013
 
                                       
Exploration & Pipeline & Energy Corporate /
(Thousands of Dollars)   Production         Storage         Utility         Marketing         All Other         Consolidated*
 
Nine months ended June 30, 2012 GAAP earnings $ 74,422 $ 35,428 $ 52,725 $ 4,662 $ 4,038 $ 171,275
Items impacting comparability:
Pennsylvania impact fee   4,034                                                   4,034  
Nine months ended June 30, 2012 operating results 78,456 35,428 52,725 4,662 4,038 175,309
 
Drivers of operating results
Higher (lower) crude oil prices 8,766 8,766
Higher (lower) natural gas prices (21,308 ) (21,308 )
Higher (lower) natural gas production 86,084 86,084
Higher (lower) crude oil production (3,015 ) (3,015 )
Lower (higher) lease operating and transportation expenses (17,845 ) (17,845 )
Lower (higher) depreciation / depletion (27,313 ) 2,202 (1,564 ) (26,675 )
 
Higher (lower) transportation and storage revenues 14,288 14,288
Higher (lower) gathering and processing revenues 8,505 8,505
Lower (higher) operating expenses (6,804 ) (1,048 ) 1,444 279 (1,718 ) (7,847 )
Lower (higher) property, franchise and other taxes 577 577
 
Colder weather 6,796 6,796
Higher (lower) usage 500 500
 
Higher (lower) margins 869 869
 
Higher (lower) AFUDC** (508 ) (508 )
 
Lower (higher) interest expense (5,405 ) 1,440 (3,965 )
 
Lower (higher) income tax expense / effective tax rate (5,360 ) (2,313 ) 2,029 (1,207 ) (6,851 )
 
All other / rounding   (708 )         (246 )         90         (69 )         (588 )         (1,521 )
 
Nine months ended June 30, 2013 GAAP earnings $ 86,125         $ 47,803         $ 65,024       $ 5,741         $ 7,466         $ 212,159  
 
*Amounts do not reflect intercompany eliminations
** AFUDC = Allowance for Funds Used During Construction
 
...
 
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
NINE MONTHS ENDED JUNE 30, 2013
 
                                       
Exploration & Pipeline & Energy Corporate /
  Production         Storage         Utility         Marketing         All Other         Consolidated*
 
Nine months ended June 30, 2012 GAAP earnings $ 0.89 $ 0.42 $ 0.63 $ 0.06 $ 0.05 $ 2.05
Items impacting comparability:
Pennsylvania impact fee   0.05                                                   0.05  
Nine months ended June 30, 2012 operating results 0.94 0.42 0.63 0.06 0.05 2.10
 
Drivers of operating results
Higher (lower) crude oil prices 0.10 0.10
Higher (lower) natural gas prices (0.25 ) (0.25 )
Higher (lower) natural gas production 1.02 1.02
Higher (lower) crude oil production (0.04 ) (0.04 )
Lower (higher) lease operating and transportation expenses (0.21 ) (0.21 )
Lower (higher) depreciation / depletion (0.32 ) 0.03 (0.02 ) (0.31 )
 
Higher (lower) transportation and storage revenues 0.17 0.17
Higher (lower) gathering and processing revenues 0.10 0.10
Lower (higher) operating expenses (0.08 ) (0.01 ) 0.02 - (0.02 ) (0.09 )
Lower (higher) property, franchise and other taxes 0.01 0.01
 
Colder weather 0.08 0.08
Higher (lower) usage 0.01 0.01
 
Higher (lower) margins 0.01 0.01
 
Higher (lower) AFUDC** (0.01 ) (0.01 )
 
Lower (higher) interest expense (0.06 ) 0.02 (0.04 )
 
Lower (higher) income tax expense / effective tax rate (0.06 ) (0.03 ) 0.02 (0.01 ) (0.08 )
 
All other / rounding   (0.03 )         -           (0.01 )         -         (0.01 )         (0.05 )
 
Nine months ended June 30, 2013 GAAP earnings $ 1.02         $ 0.57         $ 0.77         $ 0.07       $ 0.09         $ 2.52  
 
*Amounts do not reflect intercompany eliminations
** AFUDC = Allowance for Funds Used During Construction
 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 
(Thousands of Dollars, except per share amounts)                            
Three Months Ended Nine Months Ended
June 30, June 30,
(Unaudited) (Unaudited)

SUMMARY OF OPERATIONS

2013 2012   2013   2012
Operating Revenues $ 440,008   $ 328,861   $ 1,490,688   $ 1,313,593  
 
Operating Expenses:
Purchased Gas 95,164 50,160 426,900 390,889
Operation and Maintenance 108,497 93,749 338,533 311,857
Property, Franchise and Other Taxes 21,201 20,432 63,550 70,138
Depreciation, Depletion and Amortization   88,142     74,227     240,503     199,925  
313,004 238,568 1,069,486 972,809
 
Operating Income 127,004 90,293 421,202 340,784
 
Other Income (Expense):
Interest Income 317 390 1,844 1,686
Other Income 1,163 1,086 3,666 4,076
Interest Expense on Long-Term Debt (22,998 ) (21,529 ) (67,232 ) (60,594 )
Other Interest Expense   (1,303 )   (828 )   (2,898 )   (2,851 )
 
Income Before Income Taxes 104,183 69,412 356,582 283,101
 
Income Tax Expense   45,688     26,228     144,423     111,826  
 
Net Income Available for Common Stock $ 58,495   $ 43,184   $ 212,159   $ 171,275  
 
Earnings Per Common Share:
Basic $ 0.70   $ 0.52   $ 2.54   $ 2.06  
Diluted $ 0.69   $ 0.52   $ 2.52   $ 2.05  
 
Weighted Average Common Shares:
Used in Basic Calculation   83,557,968     83,227,602     83,481,849     83,068,083  
Used in Diluted Calculation   84,325,465     83,674,823     84,242,128     83,690,436  
 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
            June 30,         September 30,
(Thousands of Dollars)             2013         2012
 
ASSETS
Property, Plant and Equipment $ 7,102,369 $ 6,615,813
Less - Accumulated Depreciation, Depletion and Amortization               2,088,337             1,876,010  
Net Property, Plant and Equipment               5,014,032             4,739,803  
 
Current Assets:
Cash and Temporary Cash Investments 134,582 74,494
Hedging Collateral Deposits 694 364
Receivables - Net 165,047 115,818
Unbilled Utility Revenue 13,643 19,652
Gas Stored Underground 22,180 49,795
Materials and Supplies - at average cost 31,641 28,577
Other Current Assets 46,205 56,121
Deferred Income Taxes               15,148             10,755  
Total Current Assets               429,140             355,576  
 
Other Assets:
Recoverable Future Taxes 152,122 150,941
Unamortized Debt Expense 17,227 13,409
Other Regulatory Assets 556,449 546,851
Deferred Charges 8,051 7,591
Other Investments 93,749 86,774
Goodwill 5,476 5,476
Fair Value of Derivative Financial Instruments 65,170 27,616
Other               2,524             1,105  
Total Other Assets               900,768             839,763  
Total Assets             $ 6,343,940           $ 5,935,142  
 
CAPITALIZATION AND LIABILITIES
Capitalization:
Comprehensive Shareholders' Equity
Common Stock, $1 Par Value Authorized - 200,000,000
Shares; Issued and Outstanding - 83,587,858 Shares
and 83,330,140 Shares, Respectively $ 83,588 $ 83,330
Paid in Capital 686,038 669,501
Earnings Reinvested in the Business 1,426,148 1,306,284
Accumulated Other Comprehensive Loss               (58,609 )           (99,020 )
Total Comprehensive Shareholders' Equity 2,137,165 1,960,095
Long-Term Debt, Net of Current Portion               1,649,000             1,149,000  
Total Capitalization               3,786,165             3,109,095  
 
Current and Accrued Liabilities:
Notes Payable to Banks and Commercial Paper - 171,000
Current Portion of Long-Term Debt - 250,000
Accounts Payable 77,466 87,985
Amounts Payable to Customers 12,386 19,964
Dividends Payable 31,346 30,416
Interest Payable on Long-Term Debt 18,976 29,491
Customer Advances 246 24,055
Customer Security Deposits 16,830 17,942
Other Accruals and Current Liabilities 109,933 79,099
Fair Value of Derivative Financial Instruments               2,217             24,527  
Total Current and Accrued Liabilities               269,400             734,479  
 
Deferred Credits:
Deferred Income Taxes 1,237,727 1,065,757
Taxes Refundable to Customers 65,069 66,392
Unamortized Investment Tax Credit 1,685 2,005
Cost of Removal Regulatory Liability 151,846 139,611
Other Regulatory Liabilities 33,247 21,014
Pension and Other Post-Retirement Liabilities 511,516 516,197
Asset Retirement Obligations 126,879 119,246
Other Deferred Credits               160,406             161,346  
Total Deferred Credits               2,288,375             2,091,568  
Commitments and Contingencies               -             -  
Total Capitalization and Liabilities             $ 6,343,940           $ 5,935,142  
 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
          Nine Months Ended
June 30,
(Thousands of Dollars)           2013       2012
     
Operating Activities:
Net Income Available for Common Stock $ 212,159 $ 171,275
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation, Depletion and Amortization 240,503 199,925
Deferred Income Taxes 141,007 104,948
Excess Tax Benefits Associated with Stock-Based Compensation Awards (4,314 ) (1,511 )
Other 19,744 6,618
Change in:
Hedging Collateral Deposits (330 ) 16,309
Receivables and Unbilled Utility Revenue (43,138 ) 23,008
Gas Stored Underground and Materials and Supplies 24,551 30,853
Unrecovered Purchased Gas Costs - (2,100 )
Other Current Assets 14,228 18,190
Accounts Payable 11,241 (5,825 )
Amounts Payable to Customers (7,578 ) 2,242
Customer Advances (23,809 ) (19,328 )
Customer Security Deposits (1,112 ) (474 )
Other Accruals and Current Liabilities 3,534 17,083
Other Assets (5,010 ) (1,538 )
Other Liabilities             5,557           14,080  
Net Cash Provided by Operating Activities           $ 587,233         $ 573,755  
 
Investing Activities:
Capital Expenditures $ (513,399 ) $ (809,661 )
Other             (3,885 )         (1,267 )
Net Cash Used in Investing Activities           $ (517,284 )       $ (810,928 )
 
Financing Activities:
Changes in Notes Payable to Banks and Commercial Paper $ (171,000 ) $ 30,200
Excess Tax Benefits Associated with Stock-Based Compensation Awards 4,314 1,511
Reduction of Long-Term Debt (250,000 ) (150,000 )
Net Proceeds From Issuance of Long-Term Debt 495,415 496,085
Dividends Paid on Common Stock (91,364 ) (88,404 )
Net Proceeds From Issuance of Common Stock             2,774           8,168  
Net Cash Provided By (Used in) Financing Activities           $ (9,861 )       $ 297,560  
Net Increase in Cash and Temporary
Cash Investments 60,088 60,387
Cash and Temporary Cash Investments
at Beginning of Period             74,494           80,428  
Cash and Temporary Cash Investments
at June 30           $ 134,582         $ 140,815  
 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
 
          Three Months Ended       Nine Months Ended
(Thousands of Dollars, except per share amounts) June 30, June 30,

EXPLORATION AND PRODUCTION SEGMENT

2013   2012   Variance 2013   2012   Variance
Total Operating Revenues $ 195,213   $ 138,549   $ 56,664 $ 518,742   $ 411,449   $ 107,293
 
Operating Expenses:
Operation and Maintenance:
General and Administrative Expense 15,716 12,952 2,764 47,089 41,253 5,836
Lease Operating and Transportation Expense 33,717 20,238 13,479 87,275 59,821 27,454
All Other Operation and Maintenance Expense 2,077 1,790 287 9,497 4,865 4,632
Property, Franchise and Other Taxes 4,471 4,264 207 11,904 18,998 (7,094)
Depreciation, Depletion and Amortization   67,213     52,440     14,773   178,282     136,262     42,020
  123,194     91,684     31,510   334,047     261,199     72,848
 
Operating Income 72,019 46,865 25,154 184,695 150,250 34,445
 
Other Income (Expense):
Interest Income 315 403 (88) 1,191 1,070 121
Other Interest Expense   (10,443)     (8,372)     (2,071)   (29,180)     (20,864)     (8,316)
 
Income Before Income Taxes 61,891 38,896 22,995 156,706 130,456 26,250
Income Tax Expense   30,157     16,981     13,176   70,581     56,034     14,547
Net Income $ 31,734   $ 21,915   $ 9,819 $ 86,125   $ 74,422   $ 11,703
 
Net Income Per Share (Diluted) $ 0.38   $ 0.26   $ 0.12 $ 1.02   $ 0.89   $ 0.13
 
 
 
 
 
Three Months Ended Nine Months Ended
June 30, June 30,

PIPELINE AND STORAGE SEGMENT

  2013     2012     Variance   2013     2012     Variance
Revenues from External Customers $ 43,055 $ 36,631 $ 6,424 $ 132,897 $ 113,976 $ 18,921
Intersegment Revenues   21,708     22,076     (368)   68,216     64,434     3,782
Total Operating Revenues   64,763     58,707     6,056   201,113     178,410     22,703
 
Operating Expenses:
Purchased Gas (47) 65 (112) 1,048 193 855
Operation and Maintenance 20,269 18,486 1,783 60,142 58,529 1,613
Property, Franchise and Other Taxes 5,464 5,319 145 16,582 16,232 350
Depreciation, Depletion and Amortization   8,810     9,563     (753)   26,158     29,546     (3,388)
  34,496     33,433     1,063   103,930     104,500     (570)
 
Operating Income 30,267 25,274 4,993 97,183 73,910 23,273
 
Other Income (Expense):
Interest Income 34 46 (12) 154 137 17
Other Income 151 524 (373) 1,601 2,031 (430)
Other Interest Expense   (6,707)     (6,381)     (326)   (19,542)     (19,279)     (263)
 
Income Before Income Taxes 23,745 19,463 4,282 79,396 56,799 22,597
Income Tax Expense   9,670     6,836     2,834   31,593     21,371     10,222
Net Income $ 14,075   $ 12,627   $ 1,448 $ 47,803   $ 35,428   $ 12,375
 
Net Income Per Share (Diluted) $ 0.17   $ 0.15   $ 0.02 $ 0.57   $ 0.42   $ 0.15
 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
 
          Three Months Ended       Nine Months Ended
(Thousands of Dollars, except per share amounts) June 30, June 30,

UTILITY SEGMENT

2013       2012         Variance 2013       2012         Variance
Revenues from External Customers $ 141,257       $ 117,240       $ 24,017 $ 653,211       $ 622,836       $ 30,375
Intersegment Revenues   3,305           2,703           602     14,012           12,643           1,369  
Total Operating Revenues   144,562           119,943           24,619     667,223           635,479           31,744  
 
Operating Expenses:
Purchased Gas 63,369 41,628 21,741 337,453 316,877 20,576
Operation and Maintenance 41,065 40,719 346 142,657 144,701 (2,044 )
Property, Franchise and Other Taxes 10,515 10,057 458 32,924 32,627 297
Depreciation, Depletion and Amortization   10,791           11,437           (646 )   32,036           32,503           (467 )
  125,740           103,841           21,899     545,070           526,708           18,362  
 
Operating Income 18,822 16,102 2,720 122,153 108,771 13,382
 
Other Income (Expense):
Interest Income 42 99 (57 ) 994 820 174
Other Income 260 (5 ) 265 701 671 30
Other Interest Expense   (7,175 )         (8,110 )         935     (22,294 )         (24,509 )         2,215  
 
Income Before Income Taxes 11,949 8,086 3,863 101,554 85,753 15,801
Income Tax Expense   4,319           2,990           1,329     36,530           33,028           3,502  
Net Income $ 7,630         $ 5,096         $ 2,534   $ 65,024         $ 52,725         $ 12,299  
 
Net Income Per Share (Diluted) $ 0.09         $ 0.06         $ 0.03   $ 0.77         $ 0.63         $ 0.14  
 
 
 
 
 
Three Months Ended Nine Months Ended
June 30, June 30,

ENERGY MARKETING SEGMENT

2013           2012           Variance 2013           2012           Variance
Revenues from External Customers $ 59,128 $ 35,377 $ 23,751 $ 182,282 $ 161,822 $ 20,460
Intersegment Revenues   446           579           (133 )   1,080           1,135           (55 )
Total Operating Revenues   59,574           35,956           23,618     183,362           162,957           20,405  
 
Operating Expenses:
Purchased Gas 56,821 33,114 23,707 169,543 150,475 19,068
Operation and Maintenance 1,246 1,347 (101 ) 4,490 4,920 (430 )
Property, Franchise and Other Taxes 10 36 (26 ) 77 60 17
Depreciation, Depletion and Amortization   31           22           9     76           69           7  
  58,108           34,519           23,589     174,186           155,524           18,662  
 
Operating Income 1,466 1,437 29 9,176 7,433 1,743
 
Other Income (Expense):
Interest Income 40 59 (19 ) 137 127 10
Other Income 24 25 (1 ) 52 88 (36 )
Other Interest Expense   (8 )         (9 )         1     (29 )         (17 )         (12 )
 
Income Before Income Taxes 1,522 1,512 10 9,336 7,631 1,705
Income Tax Expense   559           589           (30 )   3,595           2,969           626  
Net Income $ 963         $ 923         $ 40   $ 5,741         $ 4,662         $ 1,079  
 
Net Income Per Share (Diluted) $ 0.01         $ 0.01         $ -   $ 0.07         $ 0.06         $ 0.01  
 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
 
          Three Months Ended       Nine Months Ended
(Thousands of Dollars, except per share amounts) June 30, June 30,

ALL OTHER

2013         2012           Variance 2013         2012           Variance
Revenues from External Customers $ 1,121       $ 824       $ 297 $ 2,898       $ 2,784       $ 114
Intersegment Revenues   10,244           4,307           5,937     23,622           10,828           12,794  
Total Operating Revenues   11,365           5,131           6,234     26,520           13,612           12,908  
 
Operating Expenses:
Operation and Maintenance 1,606 876 730 4,189 2,794 1,395
Property, Franchise and Other Taxes 199 205 (6 ) 713 569 144
Depreciation, Depletion and Amortization   1,097           567           530     3,351           959           2,392  
  2,902           1,648           1,254     8,253           4,322           3,931  
 
Operating Income 8,463 3,483 4,980 18,267 9,290 8,977
 
Other Income (Expense):
Interest Income 44 38 6 126 136 (10 )
Other Income (10 ) (70 ) 60 (47 ) (220 ) 173
Other Interest Expense   (648 )         (427 )         (221 )   (1,695 )         (1,290 )         (405 )
 
Income Before Income Taxes 7,849 3,024 4,825 16,651 7,916 8,735
Income Tax Expense   3,350           209           3,141     7,202           2,359           4,843  
Net Income $ 4,499         $ 2,815         $ 1,684   $ 9,449         $ 5,557         $ 3,892  
 
Net Income Per Share (Diluted) $ 0.05         $ 0.04         $ 0.01   $ 0.11         $ 0.07         $ 0.04  
 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
 
          Three Months Ended       Nine Months Ended
(Thousands of Dollars, except per share amounts) June 30, June 30,

CORPORATE

2013         2012           Variance 2013         2012           Variance
Revenues from External Customers $ 234       $ 240       $ (6 ) $ 658       $ 726       $ (68 )
Intersegment Revenues   957           780           177     2,462           2,837           (375 )
Total Operating Revenues   1,191           1,020           171     3,120           3,563           (443 )
 
Operating Expenses:
Operation and Maintenance 4,482 3,139 1,343 11,442 10,195 1,247
Property, Franchise and Other Taxes 542 551 (9 ) 1,350 1,652 (302 )
Depreciation, Depletion and Amortization   200           198           2     600           586           14  
  5,224           3,888           1,336     13,392           12,433           959  
 
Operating Loss (4,033 ) (2,868 ) (1,165 ) (10,272 ) (8,870 ) (1,402 )
 
Other Income (Expense):
Interest Income 24,054 22,799 1,255 71,249 65,568 5,681
Other Income 738 612 126 1,359 1,506 (147 )
Interest Expense on Long-Term Debt (22,998 ) (21,529 ) (1,469 ) (67,232 ) (60,594 ) (6,638 )
Other Interest Expense   (534 )         (583 )         49     (2,165 )         (3,064 )         899  
 
Loss Before Income Taxes (2,773 ) (1,569 ) (1,204 ) (7,061 ) (5,454 ) (1,607 )
Income Tax Benefit   (2,367 )         (1,377 )         (990 )   (5,078 )         (3,935 )         (1,143 )
Net Loss $ (406 )       $ (192 )       $ (214 ) $ (1,983 )       $ (1,519 )       $ (464 )
 
Net Loss Per Share (Diluted) $ (0.01 )       $ -         $ (0.01 ) $ (0.02 )       $ (0.02 )       $ -  
 
 
 
 
 
Three Months Ended Nine Months Ended
June 30, June 30,

INTERSEGMENT ELIMINATIONS

2013         2012         Variance 2013         2012           Variance
Intersegment Revenues $ (36,660 )       $ (30,445 )       $ (6,215 ) $ (109,392 )       $ (91,877 )       $ (17,515 )
 
Operating Expenses:
Purchased Gas (24,979 ) (24,647 ) (332 ) (81,144 ) (76,656 ) (4,488 )
Operation and Maintenance   (11,681 )         (5,798 )         (5,883 )   (28,248 )         (15,221 )         (13,027 )
  (36,660 )         (30,445 )         (6,215 )   (109,392 )         (91,877 )         (17,515 )
 
Operating Income - - - - - -
 
Other Income (Expense):
Interest Income (24,212 ) (23,054 ) (1,158 ) (72,007 ) (66,172 ) (5,835 )
Other Interest Expense   24,212           23,054           1,158     72,007           66,172           5,835  
 
Net Income $ -         $ -         $ -   $ -         $ -         $ -  
 
Net Income Per Share (Diluted) $ -         $ -         $ -   $ -         $ -         $ -  
 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 
SEGMENT INFORMATION (Continued)
(Thousands of Dollars)
 
 
          Three Months Ended       Nine Months Ended
June 30, June 30,
(Unaudited) (Unaudited)
               
Increase Increase
2013 2012 (Decrease) 2013 2012 (Decrease)
 

Capital Expenditures:

Exploration and Production $ 124,471 (1) $ 189,429 (3) $ (64,958) $ 385,009 (1)(2) $ 598,560 (3)(4) $ (213,551)
Pipeline and Storage 3,635 (1) 34,032 (3) (30,397) 41,000 (1)(2) 97,253 (3)(4) (56,253)
Utility 14,472 (1) 14,518 (3) (46) 42,968 (1)(2) 39,858 (3)(4) 3,110
Energy Marketing 224 154 70 528 420 108
Total Reportable Segments 142,802 238,133 (95,331) 469,505 736,091 (266,586)
All Other 12,323 (1) 23,151 (3) (10,828) 34,939 (1)(2) 66,788 (3)(4) (31,849)
Corporate 76 121 (45) 84 291 (207)
Total Capital Expenditures $ 155,201 $ 261,405 $ (106,204) $ 504,528 $ 803,170 $ (298,642)
 
(1)   Capital expenditures for the quarter and nine months ended June 30, 2013 include accounts payable and accrued liabilities related to capital expenditures of $49.1 million, $6.9 million, $0.2 million, and $2.4 million in the Exploration and Production segment, Pipeline and Storage segment, Utility segment and the All Other category, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at June 30, 2013 since they represent non-cash investing activities at that date.
 
(2) Capital expenditures for the nine months ended June 30, 2013 exclude capital expenditures of $38.9 million, $12.7 million, $3.2 million and $12.7 million in the Exploration and Production segment, Pipeline and Storage segment, Utility segment and the All Other category, respectively. These amounts were in accounts payable and accrued liabilities at September 30, 2012 and paid during the nine months ended June 30, 2013. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2012 since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at June 30, 2013.
 
(3) Capital expenditures for the quarter and nine months ended June 30, 2012 include accounts payable and accrued liabilities related to capital expenditures of $92.2 million, $8.6 million, $1.0 million and $16.8 million in the Exploration and Production segment, Pipeline and Storage segment, Utility segment and the All Other category, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at June 30, 2012 since they represented non-cash investing activities at that date.
 
(4) Capital expenditures for the nine months ended June 30, 2012 exclude capital expenditures of $103.3 million, $16.4 million, $2.3 million and $3.1 million in the Exploration and Production segment, Pipeline and Storage segment, Utility segment and the All Other category, respectively. These amounts were in accounts payable and accrued liabilities at September 30, 2011 and paid during the nine months ended June 30, 2012. These amounts were excluded from the Consolidated Statements of Cash Flows at September 30, 2011 since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at June 30, 2012.
 
 

DEGREE DAYS

                                         
 
Percent Colder
(Warmer) Than:

Three Months Ended June 30

Normal 2013 2012 Normal (1) Last Year (1)
 
Buffalo, NY 912 790 751 (13.4) 5.2
Erie, PA 871 791 751 (9.2) 5.3
 

Nine Months Ended June 30

 
Buffalo, NY 6,455 5,971 5,171 (7.5) 15.5
Erie, PA 6,023 5,756 4,875 (4.4) 18.1
 
(1)   Percents compare actual 2013 degree days to normal degree days and actual 2013 degree days to actual 2012 degree days.
 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 

EXPLORATION AND PRODUCTION INFORMATION

 
 
          Three Months Ended       Nine Months Ended
June 30, June 30,
            Increase             Increase
2013 2012 (Decrease) 2013 2012 (Decrease)
 

Gas Production/Prices:

Production (MMcf)
Appalachia 29,038 16,778 12,260 72,518 43,125 29,393
West Coast 780 1,025 (245 ) 2,240 2,670 (430 )
Total Production 29,818 17,803 12,015   74,758 45,795 28,963  
 
Average Prices (Per Mcf)
Appalachia $ 3.97 $ 2.14 $ 1.83 $ 3.58 $ 2.70 $ 0.88

West Coast (3)

6.73 5.42 1.31 6.50 6.64 (0.14 )
Weighted Average 4.04 2.33 1.71 3.67 2.93 0.74
Weighted Average after Hedging 4.16 4.07 0.09 4.13 4.57 (0.44 )
 

Oil Production/Prices:

Production (Thousands of Barrels)
Appalachia 9 11 (2 ) 21 29 (8 )
West Coast 700 710 (10 ) 2,093 2,136 (43 )
Total Production 709 721 (12 ) 2,114 2,165 (51 )
 
Average Prices (Per Barrel)
Appalachia $ 95.06 $ 95.43 $ (0.37 ) $ 93.18 $ 94.24 $ (1.06 )
West Coast 101.05 104.24 (3.19 ) 102.44 108.56 (6.12 )
Weighted Average 100.98 104.11 (3.13 ) 102.35 108.37 (6.02 )
Weighted Average after Hedging 97.90 89.70 8.20 97.88 91.50 6.38
 
Total Production (Mmcfe) 34,072 22,129 11,943   87,442 58,785 28,657  
 

Selected Operating Performance Statistics:

General & Administrative Expense per Mcfe (1) $ 0.46 $ 0.59 $ (0.13 ) $ 0.54 $ 0.70 $ (0.16 )
Lease Operating and Transportation Expense per Mcfe (1)(2) $ 0.99 $ 0.91 $ 0.08 $ 1.00 $ 1.02 $ (0.02 )
Depreciation, Depletion & Amortization per Mcfe (1) $ 1.97 $ 2.37 $ (0.40 ) $ 2.04 $ 2.32 $ (0.28 )
 

(1)

  Refer to page 16 for the General and Administrative Expense, Lease Operating Expense and Depreciation, Depletion, and Amortization Expense for the Exploration and Production segment.

(2)

Amounts include transportation expense of $0.36 and $0.23 per Mcfe for the three months ended June 30, 2013 and June 30, 2012, respectively. Amounts include transportation expense of $0.35 and $0.22 per Mcfe for the nine months ended June 30, 2013 and June 30, 2012, respectively.

(3)

Prices reflect revenues from gas produced on the West Coast, including natural gas liquids.

 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

EXPLORATION AND PRODUCTION INFORMATION

 
Hedging Summary for the Remaining Three Months of Fiscal 2013
                 

SWAPS

Volume

Average Hedge Price
Oil 0.4 MMBBL $ 94.92 / BBL
Gas 19.4 BCF $ 4.49 / MCF
Hedging Summary for Fiscal 2014

SWAPS

Volume

Average Hedge Price
Oil 2.0 MMBBL $ 100.22 / BBL
Gas 63.8 BCF $ 4.28 / MCF
Hedging Summary for Fiscal 2015

SWAPS

Volume

Average Hedge Price
Oil 1.1 MMBBL $ 94.95 / BBL
Gas 42.5 BCF $ 4.29 / MCF
Hedging Summary for Fiscal 2016

SWAPS

Volume

Average Hedge Price
Oil 0.8 MMBBL $ 91.60 / BBL
Gas 38.2 BCF $ 4.35 / MCF
Hedging Summary for Fiscal 2017

SWAPS

Volume

Average Hedge Price
Oil 0.2 MMBBL $ 91.50 / BBL
Gas 38.8 BCF $ 4.45 / MCF
Hedging Summary for Fiscal 2018

SWAPS

Volume

Average Hedge Price
Oil 0.05 MMBBL $ 91.00 / BBL
Gas 5.3 BCF $ 4.81 / MCF
 
 

Gross Wells in Process of Drilling

                     

Nine Months Ended June 30, 2013

Total

East

West

Company

Wells in Process - Beginning of Period
Exploratory 1.000 1.000 2.000
Developmental 82.000 0.000 82.000
Wells Commenced
Exploratory 0.000 4.000 4.000
Developmental 33.000 69.000 102.000
Wells Completed
Exploratory 0.000 5.000 5.000
Developmental 34.000 67.000 101.000
Wells Plugged & Abandoned
Exploratory 1.000 0.000 1.000
Developmental 0.000 0.000 0.000
Wells in Process - End of Period
Exploratory 0.000 0.000 0.000
Developmental 81.000 2.000 83.000
 
 

Net Wells in Process of Drilling

                     

Nine Months Ended June 30, 2013

Total

East

West

Company

Wells in Process - Beginning of Period
Exploratory 1.000 0.125 1.125
Developmental 59.500 0.000 59.500
Wells Commenced
Exploratory 0.000 0.500 0.500
Developmental 33.000 68.996 101.996
Wells Completed
Exploratory 0.000 0.625 0.625
Developmental 31.500 66.996 98.496
Wells Plugged & Abandoned
Exploratory 1.000 0.000 1.000
Developmental 0.000 0.000 0.000
Wells in Process - End of Period
Exploratory 0.000 0.000 0.000
Developmental 61.000 2.000 63.000
 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 

EXPLORATION AND PRODUCTION INFORMATION

 
Updated Fiscal 2014 Financial & Operating Guidance
 
         

Guidance

 
Total Production (Bcfe) 134 - 146
 
Production by Division (Bcfe)
East 114 - 124
West 20 - 22
 
Cost and Expenses $ per Mcfe
Lease Operating and Transportation Expenses $0.90 - $1.10
Depreciation, Depletion and Amortization $1.95 - $2.05
Other Taxes $0.10 - $0.20
General and Administrative $0.45 - $0.50
 
Other Operating Expenses (in millions) $8 - $10
 
Capital Investment by Division (in millions)
 
East Division $460 - $520
West Division $90 - $130
Exploration & Production Segment Total $550 - $650
 
Updated Pricing Guidance for Fiscal 2014
 
Guidance Based on Average Crude Oil NYMEX Price ($/Bbl) (without hedges) of $90.00
 
Forecast price differentials
West $0.00 to +$10.00
 
Guidance Based on Average Natural Gas NYMEX Price ($/MMBtu) (without hedges) of $4.00
 
Forecast price differentials
East -$0.10 to -$0.20
West +$0.80 to +$0.90
 

Earnings per share sensitivity to changes from prices used in guidance* ^

 

$0.50 change per MMBtu

    $5 change per Bbl oil
Increase     Decrease Increase     Decrease
 
+$ 0.20     -$ 0.20 +$ 0.03     -$ 0.03
 

* Please refer to forward looking statement footnote beginning at page 7 of document.

^ This sensitivity table is current as of August 8, 2013 and only considers revenue from the Exploration and Production segment's crude oil and natural gas sales. This revenue is based upon pricing used in the Company's earnings forecast. For its fiscal 2014 earnings forecast, the Company is utilizing flat NYMEX equivalent commodity pricing, exclusive of basis differential, of $4.00 per MMBtu for natural gas and $90 per Bbl for crude oil. The sensitivities will become obsolete with the passage of time, changes in Seneca's production forecast, changes in basis differential, as additional hedging contracts are entered into, and with the settling of hedge contracts at their maturity.

 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 
 
 
Pipeline & Storage Throughput - (millions of cubic feet - MMcf)
 
          Three Months Ended       Nine Months Ended
June 30, June 30,
            Increase             Increase
2013 2012 (Decrease) 2013 2012 (Decrease)
Firm Transportation - Affiliated 15,177 17,507 (2,330 ) 86,638 81,174 5,464
Firm Transportation - Non-Affiliated 113,844 62,414 51,430 340,571 200,405 140,166
Interruptible Transportation 540 247 293   2,506 1,511 995  
129,561 80,168 49,393   429,715 283,090 146,625  
 
Utility Throughput - (MMcf)
Three Months Ended Nine Months Ended
June 30, June 30,
Increase Increase
2013 2012 (Decrease) 2013 2012 (Decrease)
Retail Sales:
Residential Sales 8,600 7,543 1,057 49,124 43,476 5,648
Commercial Sales 1,187 954 233 7,025 6,109 916
Industrial Sales 113 168 (55 ) 820 456 364  
9,900 8,665 1,235 56,969 50,041 6,928
Off-System Sales - - - 6,716 9,544 (2,828 )
Transportation 13,282 12,016 1,266   59,536 51,663 7,873  
23,182 20,681 2,501   123,221 111,248 11,973  
 
Energy Marketing Volumes
Three Months Ended Nine Months Ended
June 30, June 30,
Increase Increase
2013 2012 (Decrease) 2013 2012 (Decrease)
Natural Gas (MMcf) 12,508 10,818 1,690   40,266 38,857 1,409  
 
 

NATIONAL FUEL GAS COMPANY

AND SUBSIDIARIES

 

ADJUSTED EBITDA

 

In addition to financial measures calculated in accordance with generally accepted accounting principles (GAAP), this press release contains information regarding Adjusted EBITDA, which is a non-GAAP financial measure. The Company believes that this non-GAAP financial measure is useful to investors because it provides an alternative method for assessing the Company's ongoing operating results. The Company's management uses this non-GAAP financial measure 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 EBITDA as reported GAAP earnings before the following items: interest expense, depreciation, depletion and amortization, interest and other income, impairments, items impacting comparability and income taxes. Management believes Adjusted EBITDA is an important measure of the Company’s cash flow and liquidity, and a key measure for comparing the Company’s financial performance to other companies.

The following tables reconcile National Fuel's net income to Adjusted EBITDA for the three and nine months ended June 30, 2013:

 
          Three Months       Nine Months
Ended June 30, Ended June 30,
2013       2012 2013       2012
(in thousands)
Reported GAAP Earnings $ 58,495 $ 43,184 $ 212,159 $ 171,275
Depreciation, Depletion and Amortization 88,142 74,227 240,503 199,925
Interest and Other Income (1,480 ) (1,476 ) (5,510 ) (5,762 )
Interest Expense 24,301 22,357 70,130 63,445
Income Taxes 45,688 26,228 144,423 111,826
Pennsylvania Impact Fee   -     -     -     6,206  
Adjusted EBITDA $ 215,146   $ 164,520   $ 661,705   $ 546,915  
 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 
 

Quarter Ended June 30 (unaudited)

          2013       2012
 
Operating Revenues $ 440,008,000 $ 328,861,000
 
Net Income Available for Common Stock $ 58,495,000 $ 43,184,000
 
Earnings Per Common Share:
Basic $ 0.70 $ 0.52
Diluted $ 0.69 $ 0.52
 
Weighted Average Common Shares:
Used in Basic Calculation   83,557,968   83,227,602
Used in Diluted Calculation   84,325,465   83,674,823
 

Nine Months Ended June 30 (unaudited)

 
Operating Revenues $ 1,490,688,000 $ 1,313,593,000
 
Net Income Available for Common Stock $ 212,159,000 $ 171,275,000
 
Earnings Per Common Share:
Basic $ 2.54 $ 2.06
Diluted $ 2.52 $ 2.05
 
Weighted Average Common Shares:
Used in Basic Calculation   83,481,849   83,068,083
Used in Diluted Calculation   84,242,128   83,690,436
 

Twelve Months Ended June 30 (unaudited)

 
Operating Revenues $ 1,803,948,000 $ 1,599,626,000
 
Net Income Available for Common Stock $ 260,961,000 $ 208,631,000
 
Earnings Per Common Share:
Basic $ 3.13 $ 2.51
Diluted $ 3.10 $ 2.49
 
Weighted Average Common Shares:
Used in Basic Calculation   83,437,479   82,986,564
Used in Diluted Calculation   84,147,383   83,717,869
 

Contact:
National Fuel Gas Company
Analyst:
Timothy J. Silverstein, 716-857-6987
or
Media:
Karen L. Merkel, 716-857-7654

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