National Fuel Reports Third Quarter Earnings and Provides Preliminary Guidance for Fiscal 2021
WILLIAMSVILLE, N.Y., Aug. 06, 2020 (GLOBE NEWSWIRE) -- National Fuel Gas Company (National Fuel or the Company) (NYSE: NFG ) today announced consolidated results for the third quarter of its 2020 fiscal year and for the nine months ended June 30, 2020.
FISCAL 2020 THIRD QUARTER SUMMARY
GAAP earnings of $41.3 million, or $0.47 per share, which includes a $13.2 million after-tax impairment of oil and gas properties, compared to GAAP net income of $63.8 million, or $0.73 per share, in the prior year
Adjusted operating results of $50.0 million, or $0.57 per share, compared to $61.8 million, or $0.71 per share, in the prior year (see non-GAAP reconciliation on page 2)
Adjusted EBITDA of $171.9 million compared to $182.9 million in the prior year (non-GAAP reconciliation on page 24)
Pipeline & Storage Adjusted EBITDA of $50.5 million, an increase of 35% from the prior year, driven primarily by the successful resolution of a National Fuel Gas Supply Corporation rate proceeding, and reduced O&M expense
E&P segment net production of 56.0 Bcfe, an increase of 1.3 Bcfe from the prior year
7.3 Bcf of price-related natural gas curtailments due to sustained low Appalachian pricing
Average natural gas prices, after the impact of hedging, of $1.92 per Mcf, down $0.44 per Mcf from the prior year
Average oil prices, after the impact of hedging, of $50.70 per Bbl, down $12.22 per Bbl from the prior year
Gathering Adjusted EBITDA of $27.8 million, largely unchanged from the prior year despite the impact of price-related curtailments
MANAGEMENT COMMENTS ON THIRD QUARTER RESULTS
David P. Bauer, President and Chief Executive Officer of National Fuel Gas Company, stated: The benefits of our integrated, diversified business model are evident as we move through fiscal 2020, with strong results from our rate-regulated subsidiaries providing an important measure of stability in the face of commodity price headwinds. To the latter point, our Exploration and Production segment activity level dropped to a single rig in mid-June and we continue to voluntarily curtail a portion of our Appalachian spot market volumes, which we anticipate will continue while low prices persist through the remainder of the summer.
Turning to fiscal 2021, as we integrate our recently-closed, highly-accretive Appalachian acquisition into our longer-term plans, we expect our Upstream and Gathering operations to immediately generate significant free cash flow. Additionally, we have line of sight on meaningful growth in our Pipeline & Storage business, driven largely by near-term expansion and modernization projects, including our Empire North project which we expect to come online in the next few months. Overall, National Fuel is well-positioned to grow our earnings and cash flows, maintain the strength of our balance sheet, and generate strong returns for our shareholders in the years ahead.
RECONCILIATION OF GAAP EARNINGS TO ADJUSTED OPERATING RESULTS
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| Three Months Ended |
| Nine Months Ended | ||||||||||||
| June 30, |
| June 30, | ||||||||||||
(in thousands except per share amounts) | 2020 |
| 2019 |
| 2020 |
| 2019 | ||||||||
Reported GAAP Earnings | $ | 41,250 |
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| $ | 63,753 |
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| $ | 21,773 |
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| $ | 257,009 |
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Items impacting comparability: |
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Impairment of oil and gas properties (E&P) | 18,236 |
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| 195,997 |
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Tax impact of impairment of oil and gas properties | (4,986 | ) |
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| (53,489 | ) |
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Deferred tax valuation allowance as of March 31, 2020 |
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| 56,770 |
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Remeasurement of deferred income taxes under 2017 Tax Reform |
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| (5,000 | ) | |||||||
Mark-to-market adjustments due to hedge ineffectiveness (E&P) |
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| (1,020 | ) |
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| (783 | ) | ||||||
Tax impact of mark-to-market adjustments due to hedge ineffectiveness |
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| 214 |
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| 164 |
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Unrealized (gain) loss on other investments (Corporate / All Other) | (5,639 | ) |
| (1,420 | ) |
| 794 |
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| 1,096 |
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Tax impact of unrealized (gain) loss on other investments | 1,184 |
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| 298 |
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| (167 | ) |
| (230 | ) | ||||
Adjusted Operating Results | $ | 50,045 |
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| $ | 61,825 |
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| $ | 221,678 |
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| $ | 252,256 |
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Reported GAAP Earnings Per Share | $ | 0.47 |
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| $ | 0.73 |
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| $ | 0.25 |
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| $ | 2.96 |
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Items impacting comparability: |
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Impairment of oil and gas properties, net of tax (E&P) | 0.15 |
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| 1.63 |
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Deferred tax valuation allowance as of March 31, 2020 |
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| 0.65 |
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Remeasurement of deferred income taxes under 2017 Tax Reform |
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| (0.06 | ) | |||||||
Mark-to-market adjustments due to hedge ineffectiveness, net of tax (E&P) |
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| (0.01 | ) |
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| (0.01 | ) | ||||||
Unrealized (gain) loss on other investments, net of tax (Corporate / All Other) | (0.05 | ) |
| (0.01 | ) |
| 0.01 |
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| 0.01 |
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Rounding |
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| 0.01 |
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Adjusted Operating Results Per Share | $ | 0.57 |
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| $ | 0.71 |
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| $ | 2.54 |
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| $ | 2.91 |
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SALE OF TIMBER PROPERTIES
The Company has executed a purchase and sale agreement to divest substantially all of its Pennsylvania timber assets for approximately $116 million, subject to customary closing adjustments. The transaction is expected to close on or before November 1, 2020. The Company intends to use the proceeds from this sale to complete the permanent financing of its recently-closed Appalachian acquisition.
DISCUSSION OF GUIDANCE UPDATE
National Fuel is revising its fiscal 2020 earnings guidance to reflect the impact of revised commodity price assumptions for the balance of the fiscal year, projected price-related Appalachian production curtailments, and the results of the fiscal third quarter. The Company is now projecting that earnings, excluding items impacting comparability, will be within the range of $2.75 to $2.85 per share.
The Company is assuming that NYMEX natural gas prices will average $1.85 per MMBtu for the remainder of fiscal 2020, down $0.20 per MMBtu from the previous guidance. Based on current forward differentials between NYMEX and regional spot prices for natural gas, the Company is assuming that its remaining approximately 6 Bcf of fiscal 2020 Appalachian production volumes exposed to the spot market will be curtailed. Taking into account these assumed curtailments, as well as the Companys 7.3 Bcf of natural gas curtailments in the third fiscal quarter, the Company is decreasing its production guidance range to 240 to 245 Bcfe for fiscal 2020. Additionally, the Company is now assuming that WTI oil prices will average $40.00 per barrel (Bbl) for the remainder of fiscal 2020, an increase of $17.50 per Bbl from the $22.50 assumed in the previous guidance. The Companys other guidance assumptions remain largely unchanged from the previous guidance.
The Company is also initiating preliminary guidance for fiscal 2021. National Fuel is projecting that its fiscal 2021 earnings will be within a range of $3.40 to $3.70 per share, or $3.55 per share at the midpoint of the range, an increase of approximately 27% from the midpoint of the Companys updated fiscal 2020 guidance range. The Companys fiscal 2021 earnings projections are being driven largely by an increase in Senecas forecasted natural gas production and the associated impact on Gathering segment revenues resulting from the Companys recent Appalachian acquisition, as well as the expected commencement of full service on the Companys Empire North project in late fiscal 2020.
Senecas fiscal 2021 net production is expected to be in the range of 305 to 335 Bcfe, an increase of 77.5 Bcf versus fiscal 2020. This expected increase is driven by the aforementioned acquisition, which includes significant flowing natural gas production, all of which will be gathered by Company-owned facilities. As a result, the Company expects Gathering segment revenues to be in the range of $185 million to $200 million, an increase of $50 million from the midpoint of the Companys fiscal 2020 guidance.
In addition, the Company is projecting its natural gas price realizations after hedging to increase by approximately $0.10 per Mcf from its estimated fiscal 2020 realizations, driven in large part by higher expected NYMEX and regional spot prices for natural gas. Through physical firm sales contracts in place with third parties, as well as its firm transport capacity, Seneca currently has secured marketing outlets for 278 Bcf, or approximately 91%, of its projected fiscal 2021 Appalachian production. Approximately 202 Bcf of these sales, or 66% of the Companys projected fiscal 2021 Appalachian production, are either matched with a financial hedge, including a combination of swaps and no cost collars, or were entered into at a fixed price.
As a result of the Companys increased production base, as well as the highly synergistic nature of the Companys Appalachian acquisition, fiscal 2021 Exploration and Production segment operating costs are expected to be reduced by approximately $0.10 per Mcfe based on the midpoint of the respective LOE, G&A, and DD&A guidance ranges.
Based on the Companys current activity level, which includes a single drilling rig and completion crew in Appalachia and reduced activity in California, the Exploration and Production segments fiscal 2021 capital expenditures are expected to be in the range of $290 million to $330 million, a $75 million reduction versus fiscal 2020 at the midpoint. Gathering segment capital expenditures are expected to be $30 million to $40 million in fiscal 2021, a decline of $30 million at the midpoint.
Pipeline and Storage segment capital expenditures are expected to be in the range of $250 million to $300 million. The $100 million increase at the midpoint of the range is due primarily to spending on the recently-certificated $280 million FM100 expansion and modernization project that is expected to add approximately $50 million in annualized revenues and is anticipated to be placed in service in late calendar 2021. Utility segment capital expenditures are expected to be modestly increased as compared to fiscal 2020 at $90 million to $100 million as the Company continues to invest in the modernization of its gas distribution systems, and expects a return to spending levels in fiscal 2021 consistent with those experienced prior to the COVID-19 pandemic.
In total, the Companys consolidated capital expenditures in fiscal 2021 are expected to be in a range of $660 million to $770 million, essentially flat versus fiscal 2020 at the midpoint of the respective ranges.
Additional details on the Company's updated forecast assumptions and business segment guidance for fiscal 2020 and fiscal 2021 are outlined in the table on page 8.
MANAGEMENT COMMENTS ON COMPANYS COVID-19 RESPONSE
Mr. Bauer added: During these unprecedented times, the safety and well-being of our workforce, customers, and communities in which we operate is our top priority. We continue to support our employees through a number of initiatives, including providing a safe work environment, offering flexible work arrangements to meet the child care needs of our employees, and the avoidance of workforce reductions and furloughs. While National Fuel, like so many companies across the globe, has encountered new challenges in connection with the COVID-19 pandemic, I am proud to say that, to date, the Company has not experienced significant operational or financial impacts during this crisis a testament to the diligence and commitment of our approximately 2,100 employees, who continue to meet and exceed the challenges of this new normal'.
Furthermore, with operations that span the entirety of the natural gas value chain, we see firsthand the critical role that our business, and the energy industry, plays in meeting the daily needs of our communities producing, gathering, transporting, and ultimately delivering critical low-cost energy supplies to the homes that have become our offices, schools, and gyms, and the manufacturing facilities that produce our food, supplies, and personal protective equipment.
DISCUSSION OF THIRD QUARTER RESULTS BY SEGMENT
The following earnings discussion of each operating segment for the quarter ended June 30, 2020 is summarized in a tabular form on pages 9 and 10 of this report (earnings drivers for the nine months ended June 30, 2020 are summarized on pages 11 and 12). It may be helpful to refer to those tables while reviewing this discussion. As of the quarter ended September 30, 2019, the Company is no longer reporting the Energy Marketing operations as a reportable segment. The Energy Marketing operations have been included in the All Other category in the disclosures and tables that follow below. Prior year segment information has been restated to reflect this change in presentation.
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 | ||||||||||
| June 30, | ||||||||||
(in thousands) | 2020 |
| 2019 |
| Variance | ||||||
GAAP Earnings | $ | (6,434 | ) |
| $ | 26,512 |
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| $ | (32,946 | ) |
Impairment of oil and gas properties, net of tax | 13,250 |
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| 13,250 |
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Mark-to-market adjustments due to hedge ineffectiveness, net of tax |
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| (806 | ) |
| 806 |
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Adjusted Operating Results | $ | 6,816 |
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| $ | 25,706 |
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| $ | (18,890 | ) |
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Adjusted EBITDA | $ | 64,780 |
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| $ | 88,175 |
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| $ | (23,395 | ) |
Senecas third quarter GAAP earnings decreased $32.9 million versus the prior year, which includes the impact of a non-cash, pre-tax impairment of Senecas oil and natural gas reserves.
During the third quarter, Seneca recorded a non-cash, pre-tax impairment charge of $18.2 million ($13.2 million after-tax) to write-down the value of Senecas oil and natural gas reserves under the full cost method of accounting. The full cost method of accounting requires that Seneca perform a quarterly ceiling test to compare the present value of future 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. It is anticipated that the current low commodity price environment will lead to significant non-cash impairments during the fourth quarter of fiscal 2020 and likely in the first quarter of fiscal 2021 as well.
Excluding this item, as well as the net impact of non-cash mark-to-market adjustments recorded in the prior year relating to hedge ineffectiveness (see table above), Senecas third quarter earnings decreased $18.9 million as the positive impacts of higher production and lower operating expenses were more than offset by the negative impacts of lower realized natural gas and crude oil prices and higher interest expense.
Seneca produced 56.0 Bcfe during the third quarter, an increase of 1.3 Bcfe, or 2%, from the prior year. Despite approximately 7.3 Bcf of price-related curtailments, natural gas production increased 1.3 Bcf, or 2%, due primarily to production from new Marcellus and Utica wells in Appalachia. Net production increased 3.2 Bcf to 27.0 Bcf in Senecas Western Development Area ("WDA"), primarily due to the ongoing development program in the region. Net production decreased 1.9 Bcf to 25.1 Bcf in the Eastern Development Area ("EDA"), primarily due to natural declines in the EDA-Tioga area, partly offset by higher production in the EDA-Lycoming area where increased production from new pads exceeded price-related curtailments. Oil production for the third quarter increased 8,000 Bbls, or 1%, from the prior year as new production continues to come on-line from Senecas development of the Pioneer assets in the Midway Sunset area of California, as well as the Coalinga assets.
Seneca's average realized natural gas price, after the impact of hedging and transportation costs, was $1.92 per Mcf, a decrease of $0.44 per Mcf from the prior year. This decline was largely due to lower NYMEX prices and lower spot pricing at local sales points in Pennsylvania. Seneca's average realized oil price, after the impact of hedging, was $50.70 per Bbl, a decrease of $12.22 per Bbl compared to the prior year. The decline in oil price realizations was due primarily to lower market prices for crude oil during the quarter and reduced price differentials at local sales points in California.
Lease operating and transportation (LOE) expense decreased $1.6 million primarily due to a decline in well repairs, workover activity and steam fuel costs in California, partly offset by higher transportation costs in Appalachia due to increased production. LOE expense includes the fees paid to the Companys Gathering segment for gathering and compression services used to connect Senecas Marcellus and Utica production to sales points along interstate pipelines. Depreciation, depletion and amortization (DD&A) expense decreased $0.7 million due largely to the ceiling test impairment recorded in the second quarter, partially offset by higher production. Senecas general and administrative (G&A) expense decreased $1.7 million despite a modest increase in production primarily due to lower personnel costs. On a unit of production basis, G&A, LOE and DD&A expenses during the quarter collectively decreased $0.11 per Mcfe, or 6% decrease, on combined G&A, LOE and DD&A expenses during the quarter.
Midstream Businesses
Pipeline and Storage Segment
The Pipeline and Storage segments operations are carried out by National Fuel Gas Supply Corporation (Supply Corporation) and Empire Pipeline, Inc. (Empire). The Pipeline and Storage segment provides natural gas transportation and storage services to affiliated and non-affiliated companies through an integrated system of pipelines and underground natural gas storage fields in western New York and Pennsylvania.
| Three Months Ended | |||||||
| June 30, | |||||||
(in thousands) | 2020 |
| 2019 |
| Variance | |||
GAAP Earnings | $ | 22,623 |
| $ | 15,792 |
| $ | 6,831 |
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Adjusted EBITDA | $ | 50,511 |
| $ | 37,328 |
| $ | 13,183 |
The Pipeline and Storage segments third quarter GAAP earnings increased $6.8 million versus the prior year primarily driven by higher operating revenues and lower operation and maintenance (O&M) expenses, partially offset by higher DD&A expense. The increase in operating revenues of $8.8 million, or 13%, 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 Supply Corporation's Line N to Monaca expansion project, which was placed in service on November 1, 2019. O&M expense decreased $4.8 million primarily due to lower compressor and facility maintenance costs, lower pipeline integrity costs and lower personnel costs. The increase in DD&A expense of $3.2 million was primarily attributable to an increase in Supply Corporation's depreciation rates associated with its rate case settlement.
Gathering Segment
The Gathering segments operations are carried out by National Fuel Gas Midstream Company, LLCs limited liability companies. The Gathering segment constructs, owns and operates natural gas gathering pipelines and compression facilities in the Appalachian region, which currently deliver Senecas gross Appalachian production to the interstate pipeline system.
| Three Months Ended | ||||||||
| June 30, | ||||||||
(in thousands) | 2020 |
| 2019 |
| Variance | ||||
GAAP Earnings | $ | 15,239 |
| $ | 14,638 |
| $ | 601 |
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Adjusted EBITDA | $ | 27,844 |
| $ | 27,852 |
| $ | (8 | ) |
The Gathering segments third quarter GAAP earnings increased $0.6 million versus the prior year. The increase was primarily driven by higher operating revenues and the impact of a lower effective income tax rate, which were partially offset by higher O&M expense. Operating revenues increased $0.4 million primarily due to a 0.6 Bcf increase in gathered volumes from Senecas Appalachian natural gas production. The reduction in the Gathering segment's effective tax rate was primarily due to deferred state tax adjustments that reduced income tax expense in the current quarter. The $0.4 million increase in O&M expense was due to an increase in compressor facility and maintenance activity during the current quarter.
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 | ||||||||
| June 30, | ||||||||
(in thousands) | 2020 |
| 2019 |
| Variance | ||||
GAAP Earnings | $ | 6,254 |
| $ | 7,362 |
| $ | (1,108 | ) |
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Adjusted EBITDA | $ | 30,214 |
| $ | 33,163 |
| $ | (2,949 | ) |
The Utility segments third quarter GAAP earnings decreased $1.1 million over the prior year primarily due to higher O&M expense, partially offset by higher customer margin (operating revenues less purchased gas sold). The $4.5 million increase in O&M expense was primarily attributable to two factors. First, the Companys response to COVID-19 increased expenditures on personal protective equipment and led to a higher share of personnel costs allocated to operating expense due to reduced capital expenditure-related activities resulting from governmental pandemic restrictions. Additionally, the Company recorded incremental expense to increase its allowance for uncollectible accounts due to the potential for future customer non-payment resulting from the current economic backdrop. The increase in customer margin was due primarily to colder weather in Distribution's Pennsylvania service territory and higher revenues earned through the Companys system modernization tracking mechanism in New York, which allows for the timely recovery of system modernization investments in Distributions New York service territory. These positive items were partially offset by the impact of adjustments related to regulatory rate and cost recovery mechanisms subject to annual reconciliation. Weather in Distribution's Pennsylvania service territory was 19% colder on average than last year, resulting in an increase in residential and transportation customer throughput and revenues. The impact of weather variations on earnings in Distribution's New York service territory is largely mitigated by that jurisdiction's weather normalization clause.
Corporate and All Other
The Companys operations that are included in Corporate and All Other, which now include the Companys energy marketing business, generated combined earnings of $3.6 million in the current year third quarter, which was a $4.2 million increase from a combined loss of $0.6 million generated in the prior-year third quarter. The increase in earnings was driven primarily by higher unrealized gains on investment securities and higher energy marketing margins quarter over quarter, partially offset by higher interest expense. The increase in interest expense was mainly due to short-term borrowings from the Company's committed credit facility and uncommitted lines of credit during the current year third quarter.
EARNINGS TELECONFERENCE
The Company will host a conference call on Friday, August 7, 2020, 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/9086223 . 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 9086223. Both the webcast and conference call replay will be available until the close of business on Friday, August 14, 2020.
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 .
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 Companys 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 Company's ability to successfully integrate acquired assets, including Shell's upstream assets and midstream gathering assets in Pennsylvania, and achieve expected cost synergies; impairments under the SECs full cost ceiling test for natural gas and oil reserves; changes in the price of natural gas or oil; 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 Companys products and services; the creditworthiness or performance of the Companys key suppliers, customers and counterparties; financial and economic conditions, including the availability of credit, and occurrences affecting the Companys ability to obtain financing on acceptable terms for working capital, capital expenditures and other investments, including any downgrades in the Companys 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; 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 Companys 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 Companys 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 Companys 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 Companys projected and actual capital expenditures and operating expenses; or increasing costs of insurance, changes in coverage and the ability to obtain insurance. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date thereof.
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
GUIDANCE SUMMARY
As discussed on page 2, the Company is revising its earnings guidance for fiscal 2020 and initiating preliminary guidance for fiscal 2021. Additional details on the Company's forecast assumptions and business segment guidance for fiscal 2020 and fiscal 2021 are outlined in the table below.
While the Company expects to incur an additional ceiling test impairment charge in the quarter ended September 30, 2020 and likely in the first quarter of fiscal 2021 as well, the amount of these charges is not reasonably determinable at this time. The amount of any ceiling test charge is determined at the end of the applicable quarter and will depend on many factors, including additions to or subtractions from proved reserves, fluctuations in oil and gas prices, and income tax effects related to the differences between the book and tax basis of the Companys oil and gas properties. Some or all of these factors are likely to be significant. Because the expected ceiling test impairment charges and other potential items impacting comparability are not reasonably determinable at this time, the Company is unable to provide earnings guidance other than on a non-GAAP basis that excludes these items.
| Updated FY 2020 Guidance |
| Preliminary FY 2021 Guidance | ||
Consolidated Earnings per Share, excluding items impacting comparability | $2.75 to $2.85 |
| $3.40 to $3.70 | ||
Consolidated Effective Tax Rate | ~ 26% |
| ~ 26% | ||
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Capital Expenditures (Millions) |
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Exploration and Production | $375 - $395 |
| $290 - $330 | ||
Pipeline and Storage | $165 - $185 |
| $250 - $300 | ||
Gathering | $60 - $70 |
| $30 - $40 | ||
Utility | $80 - $90 |
| $90 - $100 | ||
Consolidated Capital Expenditures | $680 - $740 |
| $660 - $770 | ||
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Exploration & Production Segment Guidance |
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Commodity Price Assumptions |
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NYMEX natural gas price | $1.85 /MMBtu |
| $2.65 /MMBtu | ||
Appalachian basin spot price (winter I summer) (1) |
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| $2.25 /MMBtu | $2.00 /MMBtu | ||
NYMEX (WTI) crude oil price | $40.00 /Bbl |
| $42.50 /Bbl | ||
California oil price premium (% of WTI) | 95 | % |
| 95 | % |
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Production (Bcfe) |
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East Division - Appalachia | 224 to 229 |
| 290 to 320 | ||
West Division - California | ~ 16 |
| ~ 15 | ||
Total Production (1) | 240 to 245 |
| 305 to 335 | ||
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E&P Operating Costs ($/Mcfe) |
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LOE | $0.84 - $0.87 |
| $0.83 - $0.85 | ||
G&A | $0.26 - $0.27 |
| $0.21 - $0.23 | ||
DD&A | $0.70 - $0.74 |
| $0.65 - $0.70 | ||
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| ||
Other Business Segment Guidance (Millions) |
|
|
| ||
Gathering Segment Revenues | $140 - $145 |
| $185 - $200 | ||
Pipeline and Storage Segment Revenues | $305 - $310 |
| $330 - $340 | ||
(1) Fiscal 2020 production assumes certain curtailments of all remaining Appalachian spot production volumes.
| |||||||||||||||||||||||
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS | |||||||||||||||||||||||
QUARTER ENDED JUNE 30, 2020 | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
| Upstream |
| Midstream |
| Downstream |
|
|
|
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
| Exploration & |
| Pipeline & |
|
|
|
|
| Corporate / |
|
| ||||||||||||
(Thousands of Dollars) | Production |
| Storage |
| Gathering |
| Utility |
| All Other |
| Consolidated* | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Third quarter 2019 GAAP earnings | $ | 26,512 |
|
| $ | 15,792 |
|
| $ | 14,638 |
|
| $ | 7,362 |
|
| $ | (551 | ) |
| $ | 63,753 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Items impacting comparability: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Mark-to-market adjustments due to hedge ineffectiveness | (1,020 | ) |
|
|
|
|
|
|
|
|
| (1,020 | ) | ||||||||||
Tax impact of mark-to-market adjustments due to hedge ineffectiveness | 214 |
|
|
|
|
|
|
|
|
|
| 214 |
| ||||||||||
Unrealized (gain) loss on other investments |
|
|
|
|
|
|
|
| (1,420 | ) |
| (1,420 | ) | ||||||||||
Tax impact of unrealized (gain) loss on other investments |
|
|
|
|
|
|
|
| 298 |
|
| 298 |
| ||||||||||
Third quarter 2019 adjusted operating results | 25,706 |
|
| 15,792 |
|
| 14,638 |
|
| 7,362 |
|
| (1,673 | ) |
| 61,825 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Drivers of adjusted operating results** |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Upstream Revenues |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Higher (lower) natural gas production | 2,328 |
|
|
|
|
|
|
|
|
|
| 2,328 |
| ||||||||||
Higher (lower) crude oil production | 419 |
|
|
|
|
|
|
|
|
|
| 419 |
| ||||||||||
Higher (lower) realized natural gas prices, after hedging | (17,957 | ) |
|
|
|
|
|
|
|
|
| (17,957 | ) | ||||||||||
Higher (lower) realized crude oil prices, after hedging | (5,644 | ) |
|
|
|
|
|
|
|
|
| (5,644 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Midstream Revenues |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Higher (lower) operating revenues |
|
| 6,988 |
|
| 335 |
|
|
|
|
|
| 7,323 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Downstream Margins*** |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Impact of usage and weather |
|
|
|
|
|
| 1,193 |
|
|
|
| 1,193 |
| ||||||||||
System modernization tracker revenues |
|
|
|
|
|
| 742 |
|
|
|
| 742 |
| ||||||||||
Regulatory revenue adjustments |
|
|
|
|
|
| (692 | ) |
|
|
| (692 | ) | ||||||||||
Higher (lower) energy marketing margins |
|
|
|
|
|
|
|
| 1,639 |
|
| 1,639 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Lower (higher) lease operating and transportation expenses | 1,230 |
|
|
|
|
|
|
|
|
|
| 1,230 |
| ||||||||||
Lower (higher) operating expenses | 917 |
|
| 3,798 |
|
| (343 | ) |
| (3,609 | ) |
|
|
| 763 |
| |||||||
Lower (higher) property, franchise and other taxes |
|
| (419 | ) |
|
|
|
|
|
|
| (419 | ) | ||||||||||
Lower (higher) depreciation / depletion | 540 |
|
| (2,526 | ) |
|
|
|
|
| 333 |
|
| (1,653 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Other Income (Expense) |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
(Higher) lower other deductions | (412 | ) |
| (678 | ) |
|
|
| 758 |
|
| 324 |
|
| (8 | ) | |||||||
(Higher) lower interest expense | (374 | ) |
| (435 | ) |
|
|
|
|
| (1,177 | ) |
| (1,986 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Income Taxes |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Lower (higher) income tax expense / effective tax rate | (162 | ) |
| 55 |
|
| 646 |
|
| 278 |
|
| (396 | ) |
| 421 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
All other / rounding | 225 |
|
| 48 |
|
| (37 | ) |
| 222 |
|
| 63 |
|
| 521 |
| ||||||
Third quarter 2020 adjusted operating results | 6,816 |
|
| 22,623 |
|
| 15,239 |
|
| 6,254 |
|
| (887 | ) |
| 50,045 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Items impacting comparability: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Impairment of oil and gas properties | (18,236 | ) |
|
|
|
|
|
|
|
|
| (18,236 | ) | ||||||||||
Tax impact of impairment of oil and gas properties | 4,986 |
|
|
|
|
|
|
|
|
|
| 4,986 |
| ||||||||||
Unrealized gain (loss) on other investments |
|
|
|
|
|
|
|
| 5,639 |
|
| 5,639 |
| ||||||||||
Tax impact of unrealized gain (loss) on other investments |
|
|
|
|
|
|
|
| (1,184 | ) |
| (1,184 | ) | ||||||||||
Third quarter 2020 GAAP earnings | $ | (6,434 | ) |
| $ | 22,623 |
|
| $ | 15,239 |
|
| $ | 6,254 |
|
| $ | 3,568 |
|
| $ | 41,250 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
* Amounts do not reflect intercompany eliminations |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
** Operating results have been calculated using the 21% federal statutory rate effective for the 2019 fiscal year. | |||||||||||||||||||||||
*** Downstream margin defined as operating revenues less purchased gas expense. | |||||||||||||||||||||||
NATIONAL FUEL GAS COMPANY | ||||||||||||||||||||||||
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE | ||||||||||||||||||||||||
QUARTER ENDED JUNE 30, 2020 | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| Upstream |
| Midstream |
| Downstream |
|
|
|
| |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| Exploration & |
| Pipeline & |
|
|
|
|
| Corporate / |
|
| |||||||||||||
| Production |
| Storage |
| Gathering |
| Utility |
| All Other |
| Consolidated* | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Third quarter 2019 GAAP earnings per share | $ | 0.31 |
|
|
| $ | 0.18 |
|
| $ | 0.17 |
|
| $ | 0.08 |
|
| $ | (0.01 | ) |
| $ | 0.73 |
|
Items impacting comparability: |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Mark-to-market adjustments due to hedge ineffectiveness, net of tax | (0.01 | ) |
|
|
|
|
|
|
|
|
|
| (0.01 | ) | ||||||||||
Unrealized (gain) loss on other investments, net of tax |
|
|
|
|
|
|
|
| (0.01 | ) |
| (0.01 | ) | |||||||||||
Third quarter 2019 adjusted operating results per share | 0.30 |
|
|
| 0.18 |
|
| 0.17 |
|
| 0.08 |
|
| (0.02 | ) |
| 0.71 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Drivers of adjusted operating results** |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Upstream Revenues |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Higher (lower) natural gas production | 0.03 |
|
|
|
|
|
|
|
|
|
|
| 0.03 |
| ||||||||||
Higher (lower) crude oil production |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Higher (lower) realized natural gas prices, after hedging | (0.20 | ) |
|
|
|
|
|
|
|
|
|
| (0.20 | ) | ||||||||||
Higher (lower) realized crude oil prices, after hedging | (0.06 | ) |
|
|
|
|
|
|
|
|
|
| (0.06 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Midstream Revenues |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Higher (lower) operating revenues |
|
| 0.08 |
|
|
|
|
|
|
|
| 0.08 |
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Downstream Margins*** |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Impact of usage and weather |
|
|
|
|
|
| 0.01 |
|
|
|
| 0.01 |
| |||||||||||
System modernization tracker revenues |
|
|
|
|
|
| 0.01 |
|
|
|
| 0.01 |
| |||||||||||
Regulatory revenue adjustments |
|
|
|
|
|
| (0.01 | ) |
|
|
| (0.01 | ) | |||||||||||
Higher (lower) energy marketing margins |
|
|
|
|
|
|
|
| 0.02 |
|
| 0.02 |
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Lower (higher) lease operating and transportation expenses | 0.01 |
|
|
|
|
|
|
|
|
|
|
| 0.01 |
| ||||||||||
Lower (higher) operating expenses | 0.01 |
|
|
| 0.04 |
|
|
|
| (0.04 | ) |
|
|
| 0.01 |
| ||||||||
Lower (higher) property, franchise and other taxes |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Lower (higher) depreciation / depletion | 0.01 |
|
|
| (0.03 | ) |
|
|
|
|
|
|
| (0.02 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Other Income (Expense) |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(Higher) lower other deductions |
|
|
| (0.01 | ) |
|
|
| 0.01 |
|
|
|
|
| ||||||||||
(Higher) lower interest expense |
|
|
|
|
|
|
|
|
| (0.01 | ) |
| (0.01 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income Taxes |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Lower (higher) income tax expense / effective tax rate |
|
|
|
|
| 0.01 |
|
|
|
|
|
| 0.01 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
All other / rounding | (0.02 | ) |
|
|
|
| (0.01 | ) |
| 0.01 |
|
|
|
| (0.02 | ) | ||||||||
Third quarter 2020 adjusted operating results per share | 0.08 |
|
|
| 0.26 |
|
| 0.17 |
|
| 0.07 |
|
| (0.01 | ) |
| 0.57 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Items impacting comparability: |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Impairment of oil and gas properties, net of tax | (0.15 | ) |
|
|
|
|
|
|
|
|
|
| (0.15 | ) | ||||||||||
Unrealized gain (loss) on other investments, net of tax |
|
|
|
|
|
|
|
| 0.05 |
|
| 0.05 |
| |||||||||||
Third quarter 2020 GAAP earnings per share | $ | (0.07 | ) |
|
| $ | 0.26 |
|
| $ | 0.17 |
|
| $ | 0.07 |
|
| $ | 0.04 |
|
| $ | 0.47 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
* Amounts do not reflect intercompany eliminations |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
** Operating results have been calculated using the 21% federal statutory rate effective for the 2019 fiscal year. | ||||||||||||||||||||||||
*** Downstream margin defined as operating revenues less purchased gas expense. | ||||||||||||||||||||||||
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS | |||||||||||||||||||||||
NINE MONTHS ENDED JUNE 30, 2020 | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| Upstream |
| Midstream |
| Downstream |
|
|
| |||||||||||||||
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| Exploration & |
| Pipeline & |
|
|
|
|
| Corporate / |
| |||||||||||||
(Thousands of Dollars) | Production |
| Storage |
| Gathering |
| Utility |
| All Other | Consolidated* | |||||||||||||
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Nine months ended June 30, 2019 GAAP earnings | $ | 86,599 |
|
| $ | 58,643 |
|
| $ | 41,511 |
|
| $ | 68,600 |
|
| $ | 1,656 |
|
| $ | 257,009 |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Items impacting comparability: |
|
|
|
|
|
|
|
|
|
| |||||||||||||
Remeasurement of deferred taxes under 2017 Tax Reform | (990 | ) |
|
|
| (500 | ) |
|
|
| (3,510 | ) |
| (5,000 | ) | ||||||||
Mark-to-market adjustments due to hedge ineffectiveness | (783 | ) |
|
|
|
|
|
|
|
| (783 | ) | |||||||||||
Tax impact of mark-to-market adjustments due to hedge ineffectiveness | 164 |
|
|
|
|
|
|
|
|
| 164 |
| |||||||||||
Unrealized (gain) loss on other investments |
|
|
|
|
|
|
|
| 1,096 |
|
| 1,096 |
| ||||||||||
Tax impact of unrealized (gain) loss on other investments |
|
|
|
|
|
|
|
| (230 | ) |
| (230 | ) | ||||||||||
Nine months ended June 30, 2019 adjusted operating results | 84,990 |
|
| 58,643 |
|
| 41,011 |
|
| 68,600 |
|
| (988 | ) |
| 252,256 |
| ||||||
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Drivers of adjusted operating results** |
|
|
|
|
|
|
|
|
|
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Upstream Revenues |
|
|
|
|
|
|
|
|
|
| |||||||||||||
Higher (lower) natural gas production | 41,557 |
|
|
|
|
|
|
|
|
| 41,557 |
| |||||||||||
Higher (lower) crude oil production | 3,930 |
|
|
|
|
|
|
|
|
| 3,930 |
| |||||||||||
Higher (lower) realized natural gas prices, after hedging | (49,552 | ) |
|
|
|
|
|
|
|
| (49,552 | ) | |||||||||||
Higher (lower) realized crude oil prices, after hedging | (6,421 | ) |
|
|
|
|
|
|
|
| (6,421 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Midstream Revenues |
|
|
|
|
|
|
|
|
|
| |||||||||||||
Higher (lower) operating revenues |
|
| 8,613 |
|
| 9,023 |
|
|
|
|
| 17,636 |
| ||||||||||
|
|
|
|
|
|
| ... | ||||||||||||||||
NATIONAL FUEL GAS COMPANY | ||||||||||||||||||||||||||||||||||
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE | ||||||||||||||||||||||||||||||||||
NINE MONTHS ENDED JUNE 30, 2020 | ||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||
Upstream | Midstream | Downstream | ||||||||||||||||||||||||||||||||
Exploration & | Pipeline & | Corporate / | ||||||||||||||||||||||||||||||||
Production | Storage | Gathering | Utility | All Other | Consolidated* | |||||||||||||||||||||||||||||
Nine months ended June 30, 2019 GAAP earnings per share | $ | 1.00 | $ | 0.68 | $ | 0.48 | $ | 0.79 | $ | 0.01 | $ | 2.96 | ||||||||||||||||||||||
Items impacting comparability: | ||||||||||||||||||||||||||||||||||
Remeasurement of deferred taxes under 2017 Tax Reform | (0.01 | ) | (0.01 | ) | (0.04 | ) | (0.06 | ) | ||||||||||||||||||||||||||
Mark-to-market adjustments due to hedge ineffectiveness, net of tax | (0.01 | ) | (0.01 | ) | ||||||||||||||||||||||||||||||
Unrealized (gain) loss on other investments, net of tax | 0.01 | 0.01 | ||||||||||||||||||||||||||||||||
Rounding | 0.01 | 0.01 | ||||||||||||||||||||||||||||||||
Nine months ended June 30, 2019 adjusted operating results per share | 0.98 | 0.68 | 0.47 | 0.79 | (0.01 | ) | 2.91 | |||||||||||||||||||||||||||
Drivers of adjusted operating results** | ||||||||||||||||||||||||||||||||||
Upstream Revenues | ||||||||||||||||||||||||||||||||||
Higher (lower) natural gas production | 0.48 | 0.48 | ||||||||||||||||||||||||||||||||
Higher (lower) crude oil production | 0.04 | 0.04 | ||||||||||||||||||||||||||||||||
Higher (lower) realized natural gas prices, after hedging | (0.57 | ) | (0.57 | ) | ||||||||||||||||||||||||||||||
Higher (lower) realized crude oil prices, after hedging | (0.07 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||
Midstream Revenues | ||||||||||||||||||||||||||||||||||
Higher (lower) operating revenues | 0.10 | 0.10 | 0.20 | |||||||||||||||||||||||||||||||
Downstream Margins*** | ||||||||||||||||||||||||||||||||||
Impact of usage and weather | (0.03 | ) | (0.03 | ) | ||||||||||||||||||||||||||||||
System modernization tracker revenues | 0.03 | 0.03 | ||||||||||||||||||||||||||||||||
Regulatory revenue adjustments | 0.01 | 0.01 | ||||||||||||||||||||||||||||||||
Higher (lower) energy marketing margins | 0.03 | 0.03 | ||||||||||||||||||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||||||||
Lower (higher) lease operating and transportation expenses | (0.11 | ) | (0.11 | ) | ||||||||||||||||||||||||||||||
Lower (higher) operating expenses | 0.06 | (0.03 | ) | (0.07 | ) | 0.01 | (0.03 | ) | ||||||||||||||||||||||||||
Lower (higher) property, franchise and other taxes | 0.02 | (0.02 | ) | — | ||||||||||||||||||||||||||||||
Lower (higher) depreciation / depletion | (0.16 | ) | (0.05 | ) | (0.01 | ) | (0.01 | ) | — | (0.23 | ) | |||||||||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||||||||||||
(Higher) lower other deductions | (0.01 | ) | (0.02 | ) | 0.01 | 0.02 | — | |||||||||||||||||||||||||||
(Higher) lower interest expense | (0.02 | ) | 0.01 | (0.02 | ) | (0.03 | ) | |||||||||||||||||||||||||||
Income Taxes | ||||||||||||||||||||||||||||||||||
Lower (higher) income tax expense / effective tax rate | (0.04 | ) | (0.03 | ) | — | — | (0.01 | ) | (0.08 | ) | ||||||||||||||||||||||||
All other / rounding | (0.02 | ) | — | 0.01 | — | — | (0.01 | ) | ||||||||||||||||||||||||||
Nine months ended June 30, 2020 adjusted operating results per share | 0.52 | 0.72 | 0.54 | 0.74 | 0.02 | 2.54 | ||||||||||||||||||||||||||||
Items impacting comparability: | ||||||||||||||||||||||||||||||||||
Impairment of oil and gas properties, net of tax | (1.63 | ) | (1.63 | ) | ||||||||||||||||||||||||||||||
Deferred tax valuation allowance | (0.69 | ) | 0.04 | — | (0.65 | ) | ||||||||||||||||||||||||||||
Unrealized gain (loss) on other investments, net of tax | (0.01 | ) | (0.01 | ) | ||||||||||||||||||||||||||||||
Rounding | (0.01 | ) | 0.01 | — | ||||||||||||||||||||||||||||||
Nine months ended June 30, 2020 GAAP earnings per share | $ | (1.81 | ) | $ | 0.72 | $ | 0.58 | $ | 0.74 | $ | 0.02 | $ | 0.25 | |||||||||||||||||||||
* Amounts do not reflect intercompany eliminations | ||||||||||||||||||||||||||||||||||
** Operating results have been calculated using the 21% federal statutory rate effective for the 2019 fiscal year. | ||||||||||||||||||||||||||||||||||
*** Downstream margin defined as operating revenues less purchased gas expense. | ||||||||||||||||||||||||||||||||||
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||||||
AND SUBSIDIARIES | |||||||||||||||||||||||||||
(Thousands of Dollars, except per share amounts) | |||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||||||||
SUMMARY OF OPERATIONS | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
Operating Revenues: | |||||||||||||||||||||||||||
Utility and Energy Marketing Revenues | $ | 139,661 | $ | 151,312 | $ | 650,320 | $ | 781,059 | |||||||||||||||||||
Exploration and Production and Other Revenues | 132,338 | 159,864 | 456,073 | 470,267 | |||||||||||||||||||||||
Pipeline and Storage and Gathering Revenues | 51,020 | 46,024 | 151,908 | 148,665 | |||||||||||||||||||||||
323,019 | 357,200 | 1,258,301 | 1,399,991 | ||||||||||||||||||||||||
Operating Expenses: | |||||||||||||||||||||||||||
Purchased Gas | 29,121 | 47,839 | 239,663 | 381,537 | |||||||||||||||||||||||
Operation and Maintenance: | |||||||||||||||||||||||||||
Utility and Energy Marketing | 43,950 | 39,607 | 138,931 | 132,082 | |||||||||||||||||||||||
Exploration and Production and Other | 32,404 | 35,674 | 109,056 | 108,610 | |||||||||||||||||||||||
Pipeline and Storage and Gathering | 24,298 | 28,675 | 77,488 | 80,857 | |||||||||||||||||||||||
Property, Franchise and Other Taxes | 21,381 | 21,506 | 67,268 | 68,046 | |||||||||||||||||||||||
Depreciation, Depletion and Amortization | 73,232 | 71,072 | 226,062 | 200,990 | |||||||||||||||||||||||
Impairment of Oil and Gas Producing Properties | 18,236 | — | 195,997 | — | |||||||||||||||||||||||
242,622 | 244,373 | 1,054,465 | 972,122 | ||||||||||||||||||||||||
Operating Income | 80,397 | 112,827 | 203,836 | 427,869 | |||||||||||||||||||||||
Other Income (Expense): | |||||||||||||||||||||||||||
Other Income (Deductions) | 2,547 | (1,456 | ) | (17,971 | ) | (16,977 | ) | ||||||||||||||||||||
Interest Expense on Long-Term Debt | (27,140 | ) | (25,303 | ) | (77,853 | ) | (76,016 | ) | |||||||||||||||||||
Other Interest Expense | (1,420 | ) | (1,202 | ) | (4,863 | ) | (4,061 | ) | |||||||||||||||||||
Income Before Income Taxes | 54,384 | 84,866 | 103,149 | 330,815 | |||||||||||||||||||||||
Income Tax Expense | 13,134 | 21,113 | 81,376 | 73,806 | |||||||||||||||||||||||
Net Income Available for Common Stock | $ | 41,250 | $ | 63,753 | $ | 21,773 | $ | 257,009 | |||||||||||||||||||
Earnings Per Common Share | |||||||||||||||||||||||||||
Basic | $ | 0.47 | $ | 0.74 | $ | 0.25 | $ | 2.98 | |||||||||||||||||||
Diluted | $ | 0.47 | $ | 0.73 | $ | 0.25 | $ | 2.96 | |||||||||||||||||||
Weighted Average Common Shares: | |||||||||||||||||||||||||||
Used in Basic Calculation | 87,966,289 | 86,306,434 | 86,966,448 | 86,208,766 | |||||||||||||||||||||||
Used in Diluted Calculation | 88,323,699 | 86,839,841 | 87,346,362 | 86,765,781 | |||||||||||||||||||||||
NATIONAL FUEL GAS COMPANY | |||||||
AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) | |||||||
June 30, | September 30, | ||||||
(Thousands of Dollars) | 2020 | 2019 | |||||
ASSETS | |||||||
Property, Plant and Equipment | $ | 11,710,155 | $ | 11,204,838 | |||
Less - Accumulated Depreciation, Depletion and Amortization | 6,088,803 | 5,695,328 | |||||
Net Property, Plant and Equipment | 5,621,352 | 5,509,510 | |||||
Current Assets: | |||||||
Cash and Temporary Cash Investments | 556,264 | 20,428 | |||||
Hedging Collateral Deposits | 7,699 | 6,832 | |||||
Receivables - Net | 136,438 | 139,956 | |||||
Unbilled Revenue | 17,903 | 18,758 | |||||
Gas Stored Underground | 14,356 | 36,632 | |||||
Materials and Supplies - at average cost | 51,396 | 40,717 | |||||
Unrecovered Purchased Gas Costs | — | 2,246 | |||||
Other Current Assets | 47,652 | 97,054 | |||||
Total Current Assets | 831,708 | 362,623 | |||||
Other Assets: | |||||||
Recoverable Future Taxes | 116,758 | 115,197 | |||||
Unamortized Debt Expense | 12,724 | 14,005 | |||||
Other Regulatory Assets | 160,294 | 167,320 | |||||
Deferred Charges | 87,956 | 33,843 | |||||
Other Investments | 144,584 | 144,917 | |||||
Goodwill | 5,476 | 5,476 | |||||
Prepaid Post-Retirement Benefit Costs | 75,235 | 60,517 | |||||
Fair Value of Derivative Financial Instruments | 62,817 | 48,669 | |||||
Other | 81 | 80 | |||||
Total Other Assets | 665,925 | 590,024 | |||||
Total Assets | $ | 7,118,985 | $ | 6,462,157 | |||
CAPITALIZATION AND LIABILITIES | |||||||
Capitalization: | |||||||
Comprehensive Shareholders' Equity | |||||||
Common Stock, $1 Par Value Authorized - 200,000,000 Shares; Issued and | |||||||
Outstanding - 90,943,652 Shares and 86,315,287 Shares, Respectively | $ | 90,944 | $ | 86,315 | |||
Paid in Capital | 999,057 | 832,264 | |||||
Earnings Reinvested in the Business | 1,177,650 | 1,272,601 | |||||
Accumulated Other Comprehensive Loss | (41,794 | ) | (52,155 | ) | |||
Total Comprehensive Shareholders' Equity | 2,225,857 | 2,139,025 | |||||
Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issuance Costs | 2,628,782 | 2,133,718 | |||||
Total Capitalization | 4,854,639 | 4,272,743 | |||||
Current and Accrued Liabilities: | |||||||
Notes Payable to Banks and Commercial Paper | — | 55,200 | |||||
Current Portion of Long-Term Debt | — | — | |||||
Accounts Payable | 94,123 | 132,208 | |||||
Amounts Payable to Customers | 18,772 | 4,017 | |||||
Dividends Payable | 40,470 | 37,547 | |||||
Interest Payable on Long-Term Debt | 31,600 | 18,508 | |||||
Customer Advances | 561 | 13,044 | |||||
Customer Security Deposits | 15,226 | 16,210 | |||||
Other Accruals and Current Liabilities | 138,344 | 139,600 | |||||
Fair Value of Derivative Financial Instruments | 3,264 | 5,574 | |||||
Total Current and Accrued Liabilities | 342,360 | 421,908 | |||||
Deferred Credits: | |||||||
Deferred Income Taxes | 783,377 | 653,382 | |||||
Taxes Refundable to Customers | 357,945 | 366,503 | |||||
Cost of Removal Regulatory Liability | 227,043 | 221,699 | |||||
Other Regulatory Liabilities | 160,501 | 142,367 | |||||
Pension and Other Post-Retirement Liabilities | 127,237 | 133,729 | |||||
Asset Retirement Obligations | 128,666 | 127,458 | |||||
Other Deferred Credits | 137,217 | 122,368 | |||||
Total Deferred Credits | 1,921,986 | 1,767,506 | |||||
Commitments and Contingencies | — | — | |||||
Total Capitalization and Liabilities | $ | 7,118,985 | $ | 6,462,157 | |||
NATIONAL FUEL GAS COMPANY | |||||||
AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Unaudited) | |||||||
Nine Months Ended | |||||||
June 30, | |||||||
(Thousands of Dollars) | 2020 | 2019 | |||||
Operating Activities: | |||||||
Net Income Available for Common Stock | $ | 21,773 | $ | 257,009 | |||
Adjustments to Reconcile Net Income to Net Cash | |||||||
Impairment of Oil and Gas Producing Properties | 195,997 | — | |||||
Depreciation, Depletion and Amortization | 226,062 | 200,990 | |||||
Deferred Income Taxes | 116,332 | 111,123 | |||||
Stock-Based Compensation | 9,716 | 16,144 | |||||
Other | 5,645 | 7,964 | |||||
Change in: | |||||||
Receivables and Unbilled Revenue | 4,045 | (31,584 | ) | ||||
Gas Stored Underground and Materials and Supplies | 11,597 | 17,551 | |||||
Unrecovered Purchased Gas Costs | 2,246 | 4,204 | |||||
Other Current Assets | 49,312 | 11,972 | |||||
Accounts Payable | (13,166 | ) | (16,132 | ) | |||
Amounts Payable to Customers | 14,755 | 11,152 | |||||
Customer Advances | (12,483 | ) | (13,443 | ) | |||
Customer Security Deposits | (984 | ) | (8,902 | ) | |||
Other Accruals and Current Liabilities | 6,774 | 36,040 | |||||
Other Assets | (18,215 | ) | (34,594 | ) | |||
Other Liabilities | 4,464 | 1,061 | |||||
Net Cash Provided by Operating Activities | $ | 623,870 | $ | 570,555 | |||
Investing Activities: | |||||||
Capital Expenditures | $ | (551,004 | ) | $ | (587,442 | ) | |
Acquisition of Upstream Assets and Midstream Gathering Assets | (27,050 | ) | — | ||||
Other | 4,126 | (3,071 | ) | ||||
Net Cash Used in Investing Activities | $ | (573,928 | ) | $ | (590,513 | ) | |
Financing Activities: | |||||||
Changes in Notes Payable to Banks and Commercial Paper | $ | (55,200 | ) | $ | — | ||
Dividends Paid on Common Stock | (112,851 | ) | (109,875 | ) | |||
Net Proceeds From Issuance of Long-Term Debt | 493,108 | — | |||||
Net Proceeds from Issuance (Repurchase) of Common Stock | 161,704 | (8,864 | ) | ||||
Net Cash Provided by (Used in) Financing Activities | $ | 486,761 | $ | (118,739 | ) | ||
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | 536,703 | (138,697 | ) | ||||
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 27,260 | 233,047 | |||||
Cash, Cash Equivalents, and Restricted Cash at June 30 | $ | 563,963 | $ | 94,350 | |||
NATIONAL FUEL GAS COMPANY | ||||||||||||||||||||||
AND SUBSIDIARIES | ||||||||||||||||||||||
SEGMENT OPERATING RESULTS AND STATISTICS | ||||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||||
UPSTREAM BUSINESS | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||
(Thousands of Dollars, except per share amounts) | June 30, | June 30, | ||||||||||||||||||||
EXPLORATION AND PRODUCTION SEGMENT | 2020 | 2019 | Variance | 2020 | 2019 | Variance | ||||||||||||||||
Total Operating Revenues | $ | 131,228 | $ | 158,875 | $ | (27,647 | ) | $ | 452,728 | $ | 467,853 | $ | (15,125 | ) | ||||||||
Operating Expenses: | ||||||||||||||||||||||
Operation and Maintenance: | ||||||||||||||||||||||
General and Administrative Expense | 13,968 | 15,628 | (1,660 | ) | 46,777 | 47,940 | (1,163 | ) | ||||||||||||||
Lease Operating and Transportation Expense | 46,157 | 47,714 | (1,557 | ) | 148,687 | 136,217 | 12,470 | |||||||||||||||
All Other Operation and Maintenance Expense | 2,952 | 2,453 | 499 | 8,994 | 7,705 | 1,289 | ||||||||||||||||
Property, Franchise and Other Taxes | 3,371 | 3,885 | (514 | ) | 11,543 | 13,558 | (2,015 | ) | ||||||||||||||
Depreciation, Depletion and Amortization | 39,372 | 40,055 | (683 | ) | 128,656 | 110,643 | 18,013 | |||||||||||||||
Impairment of Oil and Gas Producing Properties | 18,236 | — | 18,236 | 195,997 | — | 195,997 | ||||||||||||||||
124,056 | 109,735 | 14,321 | 540,654 | 316,063 | 224,591 | |||||||||||||||||
Operating Income (Loss) | 7,172 | 49,140 | (41,968 | ) | (87,926 | ) | 151,790 | (239,716 | ) | |||||||||||||
Other Income (Expense): | ||||||||||||||||||||||
Non-Service Pension and Post-Retirement Benefit Costs | (395 | ) | (4 | ) | (391 | ) | (1,185 | ) | (12 | ) | (1,173 | ) | ||||||||||
Interest and Other Income | 142 | 272 | (130 | ) | 583 | 834 | (251 | ) | ||||||||||||||
Interest Expense | (14,323 | ) | (13,850 | ) | (473 | ) | (42,543 | ) | (40,561 | ) | (1,982 | ) | ||||||||||
Income (Loss) Before Income Taxes | (7,404 | ) | 35,558 | (42,962 | ) | (131,071 | ) | 112,051 | (243,122 | ) | ||||||||||||
Income Tax Expense (Benefit) | (970 | ) | 9,046 | (10,016 | ) | 26,662 | 25,452 | 1,210 | ||||||||||||||
Net Income (Loss) | $ | (6,434 | ) | $ | 26,512 | $ | (32,946 | ) | $ | (157,733 | ) | $ | 86,599 | $ | (244,332 | ) | ||||||
Net Income (Loss) Per Share (Diluted) | $ | (0.07 | ) | $ | 0.31 | $ | (0.38 | ) | $ | (1.81 | ) | $ | 1.00 | $ | (2.81 | ) | ||||||
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||||||||||||||
AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||
SEGMENT OPERATING RESULTS AND STATISTICS | |||||||||||||||||||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||||||||||||||||||
MIDSTREAM BUSINESSES | |||||||||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
(Thousands of Dollars, except per share amounts) | June 30, | June 30, | |||||||||||||||||||||||||||||||||
PIPELINE AND STORAGE SEGMENT | 2020 | 2019 | Variance | 2020 | 2019 | Variance | |||||||||||||||||||||||||||||
Revenues from External Customers | $ | 51,020 | $ | 46,024 | $ | 4,996 | $ | 151,908 | $ | 148,663 | $ | 3,245 | |||||||||||||||||||||||
Intersegment Revenues | 26,793 | 22,943 | 3,850 | 77,370 | 69,712 | 7,658 | |||||||||||||||||||||||||||||
Total Operating Revenues | 77,813 | 68,967 | 8,846 | 229,278 | 218,375 | 10,903 | |||||||||||||||||||||||||||||
Operating Expenses: | |||||||||||||||||||||||||||||||||||
Purchased Gas | 11 | 70 | (59 | ) | 1 | 884 | (883 | ) | |||||||||||||||||||||||||||
Operation and Maintenance | 19,262 | 24,070 | (4,808 | ) | 62,207 | 68,610 | (6,403 | ) | |||||||||||||||||||||||||||
Property, Franchise and Other Taxes | 8,029 | 7,499 | 530 | 24,515 | 22,448 | 2,067 | |||||||||||||||||||||||||||||
Depreciation, Depletion and Amortization | 14,352 | 11,154 | 3,198 | 39,313 | 33,561 | 5,752 | |||||||||||||||||||||||||||||
41,654 | 42,793 | (1,139 | ) | 126,036 | 125,503 | 533 | |||||||||||||||||||||||||||||
Operating Income | 36,159 | 26,174 | 9,985 | 103,242 | 92,872 | 10,370 | |||||||||||||||||||||||||||||
Other Income (Expense): | |||||||||||||||||||||||||||||||||||
Non-Service Pension and Post-Retirement Benefit (Costs) Credit | (174 | ) | 930 | (1,104 | ) | (523 | ) | 2,328 | (2,851 | ||||||||||||||||||||||||||
Interest and Other Income | 1,763 | 1,517 | 246 | 4,851 | 4,018 | 833 | |||||||||||||||||||||||||||||
Interest Expense | (7,773 | ) | (7,223 | ) | (550 | ) | (22,037 | ) | (22,009 | ) | (28 | ) | |||||||||||||||||||||||
Income Before Income Taxes | 29,975 | 21,398 | 8,577 | 85,533 | 77,209 | 8,324 | |||||||||||||||||||||||||||||
Income Tax Expense | 7,352 | 5,606 | 1,746 | 22,718 | 18,566 | 4,152 | |||||||||||||||||||||||||||||
Net Income | $ | 22,623 | $ | 15,792 | $ | 6,831 | $ | 62,815 | $ | 58,643 | $ | 4,172 | |||||||||||||||||||||||
Net Income Per Share (Diluted) | $ | 0.26 | $ | 0.18 | $ | 0.08 | $ | 0.72 | $ | 0.68 | $ | 0.04 | |||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||||||||||||
GATHERING SEGMENT | 2020 | 2019 | Variance | 2020 | 2019 | Variance | |||||||||||||||||||||||||||||
Revenues from External Customers | $ | — | $ | — | $ | — | $ | — | $ | 2 | $ | (2 | ) | ||||||||||||||||||||||
Intersegment Revenues | 33,299 | 32,875 | 424 | 103,355 | 91,931 | 11,424 | |||||||||||||||||||||||||||||
Total Operating Revenues | 33,299 | 32,875 | 424 | 103,355 | 91,933 | 11,422 | |||||||||||||||||||||||||||||
Operating Expenses: | |||||||||||||||||||||||||||||||||||
Operation and Maintenance | 5,443 | 5,009 | 434 | 16,487 | 13,473 | 3,014 | |||||||||||||||||||||||||||||
Property, Franchise and Other Taxes | 12 | 14 | (2 | ) | 50 | 62 | (12 | ) | |||||||||||||||||||||||||||
Depreciation, Depletion and Amortization | 5,237 | 5,485 | (248 | ) | 15,655 | 14,836 | 819 | ||||||||||||||||||||||||||||
10,692 | 10,508 | 184 | 32,192 | 28,371 | 3,821 | ||||||||||||||||||||||||||||||
Operating Income | 22,607 | 22,367 | 240 | 71,163 | 63,562 | 7,601 | |||||||||||||||||||||||||||||
Other Income (Expense): | |||||||||||||||||||||||||||||||||||
Non-Service Pension and Post-Retirement Benefit Costs | (71 | ) | (1 | ) | (70 | ) | (214 | ) | (85 | ) | (129 | ) | |||||||||||||||||||||||
Interest and Other Income | 41 | 173 | (132 | ) | 198 | 489 | (291 | ) | |||||||||||||||||||||||||||
Interest Expense | (2,383 | ) | (2,288 | ) | (95 | ) | (6,762 | ) | (7,010 | ) | 248 | ||||||||||||||||||||||||
Income Before Income Taxes | 20,194 | 20,251 | (57 | ) | 64,385 | 56,956 | 7,429 | ||||||||||||||||||||||||||||
Income Tax Expense | 4,955 | 5,613 | (658 | ) | 13,304 | 15,445 | (2,141 | ) | |||||||||||||||||||||||||||
Net Income | $ | 15,239 | $ | 14,638 | $ | 601 | $ | 51,081 | $ | 41,511 | $ | 9,570 | |||||||||||||||||||||||
Net Income Per Share (Diluted) | $ | 0.17 | $ | 0.17 | $ | — | $ | 0.58 | $ | 0.48 | $ | 0.10 | |||||||||||||||||||||||
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||||||||||||||
AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||
SEGMENT OPERATING RESULTS AND STATISTICS | |||||||||||||||||||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||||||||||||||||||
DOWNSTREAM BUSINESS | |||||||||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
(Thousands of Dollars, except per share amounts) | June 30, | June 30, | |||||||||||||||||||||||||||||||||
UTILITY SEGMENT | 2020 | 2019 | Variance | 2020 | 2019 | Variance | |||||||||||||||||||||||||||||
Revenues from External Customers | $ | 124,390 | $ | 129,977 | $ | (5,587 | ) | $ | 569,856 | $ | 648,624 | $ | (78,768 | ) | |||||||||||||||||||||
Intersegment Revenues | 2,647 | 2,944 | (297 | ) | 8,499 | 9,984 | (1,485 | ) | |||||||||||||||||||||||||||
Total Operating Revenues | 127,037 | 132,921 | (5,884 | ) | 578,355 | 658,608 | (80,253 | ) | |||||||||||||||||||||||||||
Operating Expenses: | |||||||||||||||||||||||||||||||||||
Purchased Gas | 43,752 | 51,003 | (7,251 | ) | 247,869 | 328,119 | (80,250 | ) | |||||||||||||||||||||||||||
Operation and Maintenance | 43,410 | 38,890 | 4,520 | 137,323 | 129,839 | 7,484 | |||||||||||||||||||||||||||||
Property, Franchise and Other Taxes | 9,661 | 9,865 | (204 | ) | 30,295 | 31,229 | (934 | ) | |||||||||||||||||||||||||||
Depreciation, Depletion and Amortization | 13,860 | 13,546 | 314 | 41,241 | 40,202 | 1,039 | |||||||||||||||||||||||||||||
110,683 | 113,304 | (2,621 | ) | 456,728 | 529,389 | (72,661 | ) | ||||||||||||||||||||||||||||
Operating Income | 16,354 | 19,617 | (3,263 | ) | 121,627 | 129,219 | (7,592 | ) | |||||||||||||||||||||||||||
Other Income (Expense): | |||||||||||||||||||||||||||||||||||
Non-Service Pension and Post-Retirement Benefit Costs | (5,811 | ) | (5,946 | ) | 135 | (24,962 | ) | (25,560 | ) | 598 | |||||||||||||||||||||||||
Interest and Other Income | 1,749 | 929 | 820 | 2,994 | 2,709 | 285 | |||||||||||||||||||||||||||||
Interest Expense | (5,240 | ) | (5,793 | ) | 553 | (16,430 | ) | (17,950 | ) | 1,520 | |||||||||||||||||||||||||
Income Before Income Taxes | 7,052 | 8,807 | (1,755 | ) | 83,229 | 88,418 | (5,189 | ) | |||||||||||||||||||||||||||
Income Tax Expense | 798 | 1,445 | (647 | ) | 18,894 | 19,818 | (924 | ) | |||||||||||||||||||||||||||
Net Income | $ | 6,254 | $ | 7,362 | $ | (1,108 | ) | $ | 64,335 | $ | 68,600 | $ | (4,265 | ) | |||||||||||||||||||||
Net Income Per Share (Diluted) | $ | 0.07 | $ | 0.08 | $ | (0.01 | ) | $ | 0.74 | $ | 0.79 | $ | (0.05 | ) | |||||||||||||||||||||
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 | 2020 | 2019 | Variance | 2020 | 2019 | Variance | |||||||||||||||||
Revenues from External Customers | $ | 16,286 | $ | 22,189 | $ | (5,903 | ) | $ | 83,445 | $ | 134,605 | $ | (51,160 | ) | |||||||||
Intersegment Revenues | 341 | 681 | (340 | ) | 598 | 1,056 | (458 | ) | |||||||||||||||
Total Operating Revenues | 16,627 | 22,870 | (6,243 | ) | 84,043 | 135,661 | (51,618 | ) | |||||||||||||||
Operating Expenses: | |||||||||||||||||||||||
Purchased Gas | 14,038 | 22,517 | (8,479 | ) | 75,222 | 130,853 | (55,631 | ) | |||||||||||||||
Operation and Maintenance | 2,176 | 1,890 | 286 | 5,754 | 5,713 | 41 | |||||||||||||||||
Property, Franchise and Other Taxes | 202 | 127 | 75 | 522 | 398 | 124 | |||||||||||||||||
Depreciation, Depletion and Amortization | 245 | 640 | (395 | ) | 653 | 1,176 | (523 | ) | |||||||||||||||
16,661 | 25,174 | (8,513 | ) | 82,151 | 138,140 | (55,989 | ) | ||||||||||||||||
Operating Income (Loss) | (34 | ) | (2,304 | ) | 2,270 | 1,892 | (2,479 | ) | 4,371 | ||||||||||||||
Other Income (Expense): | |||||||||||||||||||||||
Non-Service Pension and Post-Retirement Benefit Costs | (69 | ) | (11 | ) | (58 | ) | (207 | ) | (143 | ) | (64 | ) | |||||||||||
Interest and Other Income | 202 | 387 | (185 | ) | 674 | 1,052 | (378 | ) | |||||||||||||||
Interest Expense | (10 | ) | (3 | ) | (7 | ) | (52 | ) | (16 | ) | (36 | ) | |||||||||||
Income (Loss) before Income Taxes | 89 | (1,931 | ) | 2,020 | 2,307 | (1,586 | ) | 3,893 | |||||||||||||||
Income Tax Expense (Benefit) | 98 | (487 | ) | 585 | 775 | (640 | ) | 1,415 | |||||||||||||||
Net Income (Loss) | $ | (9 | ) | $ | (1,444 | ) | $ | 1,435 | $ | 1,532 | $ | (946 | ) | $ | 2,478 | ||||||||
Net Income (Loss) Per Share (Diluted) | $ | — | $ | (0.02 | ) | $ | 0.02 | $ | 0.02 | $ | (0.01 | ) | $ | 0.03 | |||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||
CORPORATE | 2020 | 2019 | Variance | 2020 | 2019 | Variance | |||||||||||||||||
Revenues from External Customers | $ | 95 | $ | 135 | $ | (40 | ) | $ | 364 | $ | 244 | $ | 120 | ||||||||||
Intersegment Revenues | 1,094 | 1,165 | (71 | ) | 3,281 | 3,494 | (213 | ) | |||||||||||||||
Total Operating Revenues | 1,189 | 1,300 | (111 | ) | 3,645 | 3,738 | (93 | ) | |||||||||||||||
Operating Expenses: | |||||||||||||||||||||||
Operation and Maintenance | 2,778 | 3,159 | (381 | ) | 8,920 | 9,910 | (990 | ) | |||||||||||||||
Property, Franchise and Other Taxes | 106 | 116 | (10 | ) | 343 | 351 | (8 | ) | |||||||||||||||
Depreciation, Depletion and Amortization | 166 | 192 | (26 | ) | 544 | 572 | (28 | ) | |||||||||||||||
3,050 | 3,467 | (417 | ) | 9,807 | 10,833 | (1,026 | ) | ||||||||||||||||
Operating Loss | (1,861 | ) | (2,167 | ) | 306 | (6,162 | ) | (7,095 | ) | 933 | |||||||||||||
Other Income (Expense): | |||||||||||||||||||||||
Non-Service Pension and Post-Retirement Benefit Costs | (775 | ) | (647 | ) | (128 | ) | (2,326 | ) | (2,032 | ) | (294 | ) | |||||||||||
Interest and Other Income | 35,919 | 30,235 | 5,684 | 89,795 | 86,612 | 3,183 | |||||||||||||||||
Interest Expense on Long-Term Debt | (27,140 | ) | (25,303 | ) | (1,837 | ) | (77,853 | ) | (76,016 | ) | (1,837 | ) | |||||||||||
Other Interest Expense | (1,665 | ) | (1,335 | ) | (330 | ) | (4,688 | ) | (3,702 | ) | (986 | ) | |||||||||||
Income (Loss) before Income Taxes | 4,478 | 783 | 3,695 | (1,234 | ) | (2,233 | ) | 999 | |||||||||||||||
Income Tax Expense (Benefit) | 901 | (110 | ) | 1,011 | (977 | ) | (4,835 | ) | 3,858 | ||||||||||||||
Net Income (Loss) | $ | 3,577 | $ | 893 | $ | 2,684 | $ | (257 | ) | $ | 2,602 | $ | (2,859 | ) | |||||||||
Net Income (Loss) Per Share (Diluted) | $ | 0.04 | $ | 0.01 | $ | 0.03 | $ | — | $ | 0.02 | $ | (0.02 | ) | ||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||
INTERSEGMENT ELIMINATIONS | 2020 | 2019 | Variance | 2020 | 2019 | Variance | |||||||||||||||||
Intersegment Revenues | $ | (64,174 | ) | $ | (60,608 | ) | $ | (3,566 | ) | $ | (193,103 | ) | $ | (176,177 | ) | $ | (16,926 | ) | |||||
Operating Expenses: | |||||||||||||||||||||||
Purchased Gas | (28,680 | ) | (25,751 | ) | (2,929 | ) | (83,429 | ) | (78,319 | ) | (5,110 | ) | |||||||||||
Operation and Maintenance | (35,494 | ) | (34,857 | ) | (637 | ) | (109,674 | ) | (97,858 | ) | (11,816 | ) | |||||||||||
(64,174 | ) | (60,608 | ) | (3,566 | ) | (193,103 | ) | (176,177 | ) | (16,926 | ) | ||||||||||||
Operating Income | — | — | — | — | — | — | |||||||||||||||||
Other Income (Expense): | |||||||||||||||||||||||
Interest and Other Deductions | (29,974 | ) | (29,290 | ) | (684 | ) | (87,649 | ) | (87,187 | ) | (462 | ) | |||||||||||
Interest Expense | 29,974 | 29,290 | 684 | 87,649 | 87,187 | 462 | |||||||||||||||||
Net Income (Loss) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Net Income (Loss) 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 | ||||||||||||||||||
2020 | 2019 | (Decrease) | 2020 | 2019 | (Decrease) | ||||||||||||||
Capital Expenditures: | |||||||||||||||||||
Exploration and Production | $ | 65,647 | (1) | $ | 128,888 | (3) | $ | (63,241 | ) | $ | 294,990 | (1)(2) | $ | 391,674 | (3)(4) | $ | (96,684 | ) | |
Pipeline and Storage | 41,494 | (1) | 35,489 | (3) | 6,005 | 124,131 | (1)(2) | 88,127 | (3)(4) | 36,004 | |||||||||
Gathering | 21,289 | (1) | 17,926 | (3) | 3,363 | 46,200 | (1)(2) | 39,396 | (3)(4) | 6,804 | |||||||||
Utility | 25,616 | (1) | 22,706 | (3) | 2,910 | 62,238 | (1)(2) | 58,363 | (3)(4) | 3,875 | |||||||||
Total Reportable Segments | 154,046 | 205,009 | (50,963 | ) | 527,559 | 577,560 | (50,001 | ) | |||||||||||
All Other | 16 | 82 | (66 | ) | 38 | 124 | (86 | ) | |||||||||||
Corporate | 100 | 267 | (167 | ) | 420 | 369 | 51 | ||||||||||||
Total Capital Expenditures | $ | 154,162 | $ | 205,358 | $ | (51,196 | ) | $ | 528,017 | $ | 578,053 | $ | (50,036 | ) | |||||
(1) | Capital expenditures for the quarter and nine months ended June 30, 2020, include accounts payable and accrued liabilities related to capital expenditures of $26.5 million, $16.4 million, $6.5 million, and $8.7 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at June 30, 2020, since they represent non-cash investing activities at that date. | |
(2) | Capital expenditures for the nine months ended June 30, 2020, 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 nine months ended June 30, 2020. 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 June 30, 2020. | |
(3) | Capital expenditures for the quarter and nine months ended June 30, 2019, include accounts payable and accrued liabilities related to capital expenditures of $51.0 million, $14.0 million, $8.3 million, and $6.1 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at June 30, 2019, since they represent non-cash investing activities at that date. | |
(4) | Capital expenditures for the nine months ended June 30, 2019, exclude capital expenditures of $51.3 million, $21.9 million, $6.1 million and $9.5 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts were in accounts payable and accrued liabilities at September 30, 2018 and paid during the nine months ended June 30, 2019. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2018, 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, 2019. |
DEGREE DAYS | |||||||||||||
Percent Colder | |||||||||||||
(Warmer) Than: | |||||||||||||
Three Months Ended June 30, | Normal | 2020 | 2019 | Normal (1) | Last Year (1) | ||||||||
Buffalo, NY | 912 | 1,032 | 957 | 13.2 | 7.8 | ||||||||
Erie, PA | 871 | 920 | 773 | 5.6 | 19.0 | ||||||||
Nine Months Ended June 30, | |||||||||||||
Buffalo, NY | 6,491 | 6,002 | 6,654 | (7.5 | ) | (9.8 | ) | ||||||
Erie, PA | 6,057 | 5,381 | 5,899 | (11.2 | ) | (8.8 | ) | ||||||
(1) Percents compare actual 2020 degree days to normal degree days and actual 2020 degree days to actual 2019 degree days.
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||
AND SUBSIDIARIES | |||||||||||||||||||
EXPLORATION AND PRODUCTION INFORMATION | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||
Increase | Increase | ||||||||||||||||||
2020 | 2019 | (Decrease) | 2020 | 2019 | (Decrease) | ||||||||||||||
Gas Production/Prices: | |||||||||||||||||||
Production (MMcf) | |||||||||||||||||||
Appalachia | 52,043 | 50,766 | 1,277 | 161,965 | 140,954 | 21,011 | |||||||||||||
West Coast | 468 | 494 | (26 | ) | 1,434 | 1,483 | (49 | ) | |||||||||||
Total Production | 52,511 | 51,260 | 1,251 | 163,399 | 142,437 | 20,962 | |||||||||||||
Average Prices (Per Mcf) | |||||||||||||||||||
Appalachia | $ | 1.45 | $ | 2.21 | $ | (0.76 | ) | $ | 1.80 | $ | 2.58 | $ | (0.78 | ) | |||||
West Coast | 2.58 | 3.84 | (1.26 | ) | 3.98 | 5.55 | (1.57 | ) | |||||||||||
Weighted Average | 1.46 | 2.22 | (0.76 | ) | 1.82 | 2.61 | (0.79 | ) | |||||||||||
Weighted Average after Hedging | 1.92 | 2.36 | (0.44 | ) | 2.13 | 2.51 | (0.38 | ) | |||||||||||
Oil Production/Prices: | |||||||||||||||||||
Production (Thousands of Barrels) | |||||||||||||||||||
Appalachia | — | 1 | (1 | ) | 2 | 2 | — | ||||||||||||
West Coast | 584 | 575 | 9 | 1,790 | 1,710 | 80 | |||||||||||||
Total Production | 584 | 576 | 8 | 1,792 | 1,712 | 80 | |||||||||||||
Average Prices (Per Barrel) | |||||||||||||||||||
Appalachia | $ | 27.50 | $ | 55.45 | $ | (27.95 | ) | $ | 50.28 | $ | 55.80 | $ | (5.52 | ) | |||||
West Coast | 29.13 | 67.43 | (38.30 | ) | 47.40 | 65.01 | (17.61 | ) | |||||||||||
Weighted Average | 29.12 | 67.41 | (38.29 | ) | 47.41 | 65.00 | (17.59 | ) | |||||||||||
Weighted Average after Hedging | 50.70 | 62.92 | (12.22 | ) | 57.35 | 61.88 | (4.53 | ) | |||||||||||
Total Production (MMcfe) | 56,015 | 54,716 | 1,299 | 174,151 | 152,709 | 21,442 | |||||||||||||
Selected Operating Performance Statistics: | |||||||||||||||||||
General & Administrative Expense per Mcfe (1) | $ | 0.25 | $ | 0.29 | $ | (0.04 | ) | $ | 0.27 | $ | 0.31 | $ | (0.04 | ) | |||||
Lease Operating and Transportation Expense per Mcfe (1)(2) | $ | 0.82 | $ | 0.87 | $ | (0.05 | ) | $ | 0.85 | $ | 0.89 | $ | (0.04 | ) | |||||
Depreciation, Depletion & Amortization per Mcfe (1) | $ | 0.70 | $ | 0.73 | $ | (0.03 | ) | $ | 0.74 | $ | 0.72 | $ | 0.02 | ||||||
(1) | Refer to page 16 for the General and Administrative Expense, Lease Operating and Transportation Expense and Depreciation, Depletion, and Amortization Expense for the Exploration and Production segment. | |
(2) | Amounts include transportation expense of $0.57 and $0.57 per Mcfe for the three months ended June 30, 2020 and June 30, 2019, respectively. Amounts include transportation expense of $0.57 and $0.55 per Mcfe for the nine months ended June 30, 2020 and June 30, 2019, respectively. |
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||||||||||
AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
EXPLORATION AND PRODUCTION INFORMATION | |||||||||||||||||||||||||||||||
Hedging Summary for Remaining Three Months of Fiscal 2020 | Volume | Average Hedge Price | |||||||||||||||||||||||||||||
Oil Swaps | |||||||||||||||||||||||||||||||
Brent | 385,000 | BBL | $ | 62.31 / BBL | |||||||||||||||||||||||||||
NYMEX | 81,000 | BBL | $ | 50.52 / BBL | |||||||||||||||||||||||||||
Total | 466,000 | BBL | $ | 60.26 / BBL | |||||||||||||||||||||||||||
Gas Swaps | |||||||||||||||||||||||||||||||
NYMEX | 23,010,000 | MMBTU | $ | 2.66 / MMBTU | |||||||||||||||||||||||||||
DAWN | 1,800,000 | MMBTU | $ | 3.00 / MMBTU | |||||||||||||||||||||||||||
Fixed Price Physical Sales | 21,571,753 | MMBTU | $ | 2.13 / MMBTU | |||||||||||||||||||||||||||
Total | 46,381,753 | MMBTU | |||||||||||||||||||||||||||||
Hedging Summary for Fiscal 2021 | Volume | Average Hedge Price | |||||||||||||||||||||||||||||
Oil Swaps | |||||||||||||||||||||||||||||||
Brent | 936,000 | BBL | $ | 59.45 / BBL | |||||||||||||||||||||||||||
NYMEX | 156,000 | BBL | $ | 51.00 / BBL | |||||||||||||||||||||||||||
Total | 1,092,000 | BBL | $ | 58.24 / BBL | |||||||||||||||||||||||||||
Gas Swaps | |||||||||||||||||||||||||||||||
NYMEX | 133,540,000 | MMBTU | $ | 2.61/ MMBTU | |||||||||||||||||||||||||||
DAWN | 600,000 | MMBTU | $ | 3.00 / MMBTU | |||||||||||||||||||||||||||
No Cost Collars | 25,850,000 | MMBTU | $ | 2.28 / MMBTU (Floor) / $2.77 / MMBTU (Ceiling) | |||||||||||||||||||||||||||
Fixed Price Physical Sales | 50,040,640 | MMBTU | $ | 2.21 / MMBTU | |||||||||||||||||||||||||||
Total | 210,030,640 | MMBTU | |||||||||||||||||||||||||||||
Hedging Summary for Fiscal 2022 | Volume | Average Hedge Price | |||||||||||||||||||||||||||||
Oil Swaps | |||||||||||||||||||||||||||||||
Brent | 300,000 | BBL | $ | 60.07 / BBL | |||||||||||||||||||||||||||
NYMEX | 156,000 | BBL | $ | 51.00 / BBL | |||||||||||||||||||||||||||
Total | 456,000 | BBL | $ | 56.97 / BBL | |||||||||||||||||||||||||||
Gas Swaps | |||||||||||||||||||||||||||||||
NYMEX | 79,590,000 | MMBTU | $ | 2.55 / MMBTU | |||||||||||||||||||||||||||
No Cost Collars | 2,350,000 | MMBTU | $ | 2.28 / MMBTU (Floor) / $2.77 / MMBTU (Ceiling) | |||||||||||||||||||||||||||
Fixed Price Physical Sales | 40,674,677 | MMBTU | $ | 2.23 / MMBTU | |||||||||||||||||||||||||||
Total | 122,614,677 | MMBTU | |||||||||||||||||||||||||||||
Hedging Summary for Fiscal 2023 | Volume | Average Hedge Price | |||||||||||||||||||||||||||||
Gas Swaps | |||||||||||||||||||||||||||||||
NYMEX | 18,920,000 | MMBTU | $ | 2.48 / MMBTU | |||||||||||||||||||||||||||
Fixed Price Physical Sales | 36,919,798 | MMBTU | $ | 2.25 / MMBTU | |||||||||||||||||||||||||||
Total | 55,839,798 | MMBTU | |||||||||||||||||||||||||||||
Hedging Summary for Fiscal 2024 | Volume | Average Hedge Price | |||||||||||||||||||||||||||||
Gas Swaps | |||||||||||||||||||||||||||||||
NYMEX | 1,150,000 | MMBTU | $ | 2.45 / MMBTU | |||||||||||||||||||||||||||
Fixed Price Physical Sales | 20,954,870 | MMBTU | $ | 2.25 / MMBTU | |||||||||||||||||||||||||||
Total | 22,104,870 | MMBTU | |||||||||||||||||||||||||||||
Hedging Summary for Fiscal 2025 | Volume | Average Hedge Price | |||||||||||||||||||||||||||||
Fixed Price Physical Sales | 2,293,200 | MMBTU | $ | 2.18 / MMBTU | |||||||||||||||||||||||||||
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||||||||||
AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
Pipeline & Storage Throughput - (millions of cubic feet - MMcf) | |||||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||||||||
Increase | Increase | ||||||||||||||||||||||||||||||
2020 | 2019 | (Decrease) | 2020 | 2019 | (Decrease) | ||||||||||||||||||||||||||
Firm Transportation - Affiliated | 20,877 | 20,755 | 122 | 98,145 | 107,423 | (9,278 | ) | ||||||||||||||||||||||||
Firm Transportation - Non-Affiliated | 151,702 | 137,984 | 13,718 | 478,880 | 442,839 | 36,041 | |||||||||||||||||||||||||
Interruptible Transportation | 757 | 309 | 448 | 2,002 | 1,974 | 28 | |||||||||||||||||||||||||
173,336 | 159,048 | 14,288 | 579,027 | 552,236 | 26,791 | ||||||||||||||||||||||||||
Gathering Volume - (MMcf) | |||||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||||||||
Increase | Increase | ||||||||||||||||||||||||||||||
2020 | 2019 | (Decrease) | 2020 | 2019 | (Decrease) | ||||||||||||||||||||||||||
Gathered Volume - Affiliated | 61,338 | 60,745 | 593 | 190,864 | 169,590 | 21,274 | |||||||||||||||||||||||||
Utility Throughput - (MMcf) | |||||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||||||||
Increase | Increase | ||||||||||||||||||||||||||||||
2020 | 2019 | (Decrease) | 2020 | 2019 | (Decrease) | ||||||||||||||||||||||||||
Retail Sales: | |||||||||||||||||||||||||||||||
Residential Sales | 11,312 | 9,895 | 1,417 | 56,943 | 60,581 | (3,638 | ) | ||||||||||||||||||||||||
Commercial Sales | 1,450 | 1,441 | 9 | 8,295 | 8,999 | (704 | ) | ||||||||||||||||||||||||
Industrial Sales | 106 | 151 | (45 | ) | 506 | 639 | (133 | ) | |||||||||||||||||||||||
12,868 | 11,487 | 1,381 | 65,744 | 70,219 | (4,475 | ) | |||||||||||||||||||||||||
Transportation | 13,520 | 14,716 | (1,196 | ) | 59,233 | 65,914 | (6,681 | ) | |||||||||||||||||||||||
26,388 | 26,203 | 185 | 124,977 | 136,133 | (11,156 | ) | |||||||||||||||||||||||||
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 and Adjusted EBITDA, which are non-GAAP financial measures. The Company believes that these non-GAAP financial measures are useful to investors because they provide an alternative method for assessing the Company's ongoing operating results and for comparing the Company’s financial performance to other companies. The Company's management uses these non-GAAP financial measures for the same purpose, and for planning and forecasting purposes. The presentation of non-GAAP financial measures is not meant to be a substitute for financial measures in accordance with GAAP.
Management defines Adjusted Operating Results as reported GAAP earnings before items impacting comparability. The following table reconciles National Fuel's reported GAAP earnings to Adjusted Operating Results for the three and nine months ended June 30, 2020 and 2019:
Three Months Ended | Nine Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(in thousands except per share amounts) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Reported GAAP Earnings | $ | 41,250 | $ | 63,753 | $ | 21,773 | $ | 257,009 | |||||||
Items impacting comparability: | |||||||||||||||
Impairment of oil and gas properties (E&P) | 18,236 | — | 195,997 | — | |||||||||||
Tax impact of impairment of oil and gas properties | (4,986 | ) | — | (53,489 | ) | — | |||||||||
Deferred tax valuation allowance as of March 31, 2020 | — | — | 56,770 | — | |||||||||||
Remeasurement of deferred income taxes under 2017 Tax Reform | — | — | — | (5,000 | ) | ||||||||||
Mark-to-market adjustments due to hedge ineffectiveness (E&P) | — | (1,020 | ) | — | (783 | ) | |||||||||
Tax impact of mark-to-market adjustments due to hedge ineffectiveness | — | 214 | — | 164 | |||||||||||
Unrealized (gain) loss on other investments (Corporate/All Other) | (5,639 | ) | (1,420 | ) | 794 | 1,096 | |||||||||
Tax impact of unrealized (gain) loss on other investments | 1,184 | 298 | (167 | ) | (230 | ) | |||||||||
Adjusted Operating Results | $ | 50,045 | $ | 61,825 | $ | 221,678 | $ | 252,256 | |||||||
Reported GAAP Earnings per share | $ | 0.47 | $ | 0.73 | $ | 0.25 | $ | 2.96 | |||||||
Items impacting comparability: | |||||||||||||||
Impairment of oil and gas properties, net of tax (E&P) | 0.15 | — | 1.63 | — | |||||||||||
Deferred tax valuation allowance as of March 31, 2020 | — | — | 0.65 | — | |||||||||||
Remeasurement of deferred income taxes under 2017 Tax Reform | — | — | — | (0.06 | ) | ||||||||||
Mark-to-market adjustments due to hedge ineffectiveness, net of tax (E&P) | — | (0.01 | ) | — | (0.01 | ) | |||||||||
Unrealized (gain) loss on other investments, net of tax (Corporate/All Other) | (0.05 | ) | (0.01 | ) | 0.01 | 0.01 | |||||||||
Rounding | — | — | — | 0.01 | |||||||||||
Adjusted Operating Results Per Share | $ | 0.57 | $ | 0.71 | $ | 2.54 | $ | 2.91 | |||||||
Management defines Adjusted EBITDA as reported GAAP earnings before the following items: interest expense, income taxes, depreciation, depletion and amortization, other income and deductions, impairments, and other items reflected in operating income that impact comparability. The following tables reconcile National Fuel's reported GAAP earnings to Adjusted EBITDA for the three and nine months ended June 30, 2020 and 2019:
Three Months Ended | Nine Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Reported GAAP Earnings | $ | 41,250 | $ | 63,753 | $ | 21,773 | $ | 257,009 | |||||||
Depreciation, Depletion and Amortization | 73,232 | 71,072 | 226,062 | 200,990 | |||||||||||
Other (Income) Deductions | (2,547 | ) | 1,456 | 17,971 | 16,977 | ||||||||||
Interest Expense | 28,560 | 26,505 | 82,716 | 80,077 | |||||||||||
Income Taxes | 13,134 | 21,113 | 81,376 | 73,806 | |||||||||||
Mark-to-Market Adjustments due to Hedge Ineffectiveness | — | (1,020 | ) | — | (783 | ) | |||||||||
Impairment of Oil and Gas Producing Properties | 18,236 | — | 195,997 | — | |||||||||||
Adjusted EBITDA | $ | 171,865 | $ | 182,879 | $ | 625,895 | $ | 628,076 | |||||||
Adjusted EBITDA by Segment | |||||||||||||||
Pipeline and Storage Adjusted EBITDA | $ | 50,511 | $ | 37,328 | $ | 142,555 | $ | 126,433 | |||||||
Gathering Adjusted EBITDA | 27,844 | 27,852 | 86,818 | 78,398 | |||||||||||
Total Midstream Businesses Adjusted EBITDA | 78,355 | 65,180 | 229,373 | 204,831 | |||||||||||
Exploration and Production Adjusted EBITDA | 64,780 | 88,175 | 236,727 | 261,650 | |||||||||||
Utility Adjusted EBITDA | 30,214 | 33,163 | 162,868 | 169,421 | |||||||||||
Corporate and All Other Adjusted EBITDA | (1,484 | ) | (3,639 | ) | (3,073 | ) | (7,826 | ) | |||||||
Total Adjusted EBITDA | $ | 171,865 | $ | 182,879 | $ | 625,895 | $ | 628,076 | |||||||
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
SEGMENT ADJUSTED EBITDA
Three Months Ended | Nine Months Ended | ||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||
(in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
Exploration and Production Segment | |||||||||||||||||||
Reported GAAP Earnings | $ | (6,434 | ) | $ | 26,512 | $ | (157,733 | ) | $ | 86,599 | |||||||||
Depreciation, Depletion and Amortization | 39,372 | 40,055 | 128,656 | 110,643 | |||||||||||||||
Other (Income) Deductions | 253 | (268 | ) | 602 | (822 | ) | |||||||||||||
Interest Expense | 14,323 | 13,850 | 42,543 | 40,561 | |||||||||||||||
Income Taxes | (970 | ) | 9,046 | 26,662 | 25,452 | ||||||||||||||
Mark-to-Market Adjustments due to Hedge Ineffectiveness | — | (1,020 | ) | — | (783 | ) | |||||||||||||
Impairment of Oil and Gas Producing Properties | 18,236 | — | 195,997 | — | |||||||||||||||
Adjusted EBITDA | $ | 64,780 | $ | 88,175 | $ | 236,727 | $ | 261,650 | |||||||||||
Pipeline and Storage Segment | |||||||||||||||||||
Reported GAAP Earnings | $ | 22,623 | $ | 15,792 | $ | 62,815 | $ | 58,643 | |||||||||||
Depreciation, Depletion and Amortization | 14,352 | 11,154 | 39,313 | 33,561 | |||||||||||||||
Other (Income) Deductions | (1,589 | ) | (2,447 | ) | (4,328 | ) | (6,346 | ) | |||||||||||
Interest Expense | 7,773 | 7,223 | 22,037 | 22,009 | |||||||||||||||
Income Taxes | 7,352 | 5,606 | 22,718 | 18,566 | |||||||||||||||
Adjusted EBITDA | $ | 50,511 | $ | 37,328 | $ | 142,555 | $ | 126,433 | |||||||||||
Gathering Segment | |||||||||||||||||||
Reported GAAP Earnings | $ | 15,239 | $ | 14,638 | $ | 51,081 | $ | 41,511 | |||||||||||
Depreciation, Depletion and Amortization | 5,237 | 5,485 | 15,655 | 14,836 | |||||||||||||||
Other (Income) Deductions | 30 | (172 | ) | 16 | (404 | ) | |||||||||||||
Interest Expense | 2,383 | 2,288 | 6,762 | 7,010 | |||||||||||||||
Income Taxes | 4,955 | 5,613 | 13,304 | 15,445 | |||||||||||||||
Adjusted EBITDA | $ | 27,844 | $ | 27,852 | $ | 86,818 | $ | 78,398 | |||||||||||
Utility Segment | |||||||||||||||||||
Reported GAAP Earnings | $ | 6,254 | $ | 7,362 | $ | 64,335 | $ | 68,600 | |||||||||||
Depreciation, Depletion and Amortization | 13,860 | 13,546 | 41,241 | 40,202 | |||||||||||||||
Other (Income) Deductions | 4,062 | 5,017 | 21,968 | 22,851 | |||||||||||||||
Interest Expense | 5,240 | 5,793 | 16,430 | 17,950 | |||||||||||||||
Income Taxes | 798 | 1,445 | 18,894 | 19,818 | |||||||||||||||
Adjusted EBITDA | $ | 30,214 | $ | 33,163 | $ | 162,868 | $ | 169,421 | |||||||||||
Corporate and All Other | |||||||||||||||||||
Reported GAAP Earnings | $ | 3,568 | $ | (551 | ) | $ | 1,275 | $ | 1,656 | ||||||||||
Depreciation, Depletion and Amortization | 411 | 832 | 1,197 | 1,748 | |||||||||||||||
Other (Income) Deductions | (5,303 | ) | (674 | ) | (287 | ) | 1,698 | ||||||||||||
Interest Expense | (1,159 | ) | (2,649 | ) | (5,056 | ) | (7,453 | ) | |||||||||||
Income Taxes | 999 | (597 | ) | (202 | ) | (5,475 | ) | ||||||||||||
Adjusted EBITDA | $ | (1,484 | ) | $ | (3,639 | ) | $ | (3,073 | ) | $ | (7,826 | ) | |||||||
CONTACT: Analyst Contact: Kenneth E. Webster 716-857-7067 Media Contact: Karen L. Merkel 716-857-7654
