National Fuel Reports First Quarter Earnings

WILLIAMSVILLE, N.Y., Jan. 29, 2025 (GLOBE NEWSWIRE) -- National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated results for the first quarter of its 2025 fiscal year. FISCAL 2025 FIRST QUARTER SUMMARY GAAP net income of $45.0 million (or $0.49 per share), which includes $104.6 million in non-cash, after-tax impairment charges in the Exploration & Production segment, compared to GAAP net income of $133.0 million (or $1.44 per share) in the prior year.Adjusted operating results of $151.9 million (or $1.66 per share), an increase of 14%, or $16.7 million ($0.20 per share), compared to the prior year. See non-GAAP reconciliation on page 2.Pipeline & Storage segment net income increased $8.4 million, or 35%, compared to the prior year, primarily due to the settlement of the Supply Corporation rate case, which led to increased rates effective February 1, 2024.Utility segment net income increased $5.9 million, or 22%, compared to the prior year driven by a three-year settlement of a rate proceeding in the Company’s New York jurisdiction, which led to increased rates starting October 1, 2024.E&P segment adjusted operating results increased $2.6 million, or 5%, compared to the prior year, supported by hedging-related gains, which more than offset the $0.08 per MMBtu decrease in the weighted average natural gas price compared to the prior year.The Company repurchased $34 million of common stock during the quarter, which brings the total amount repurchased to $99 million, or 1.7 million shares, under the $200 million share buyback program, authorized in March 2024.The Company is increasing its guidance for fiscal 2025 adjusted earnings per share to a range of $6.50 to $7.00 as a result of higher forecasted natural gas prices and ongoing improvements in the outlook for each segment. MANAGEMENT COMMENTS David P. Bauer, President and CEO of National Fuel Gas Company, stated: “Fiscal 2025 is off to a great start for National Fuel, with each business contributing to our strong consolidated adjusted operating results. “In our regulated segments, we are delivering on our long-term growth outlook, with adjusted earnings per share in the quarter increasing approximately 30% compared to the prior year. The recent approval of our rate case settlement in our New York utility jurisdiction, which extends through 2027, combined with the ongoing benefits from ratemaking activity in our Pennsylvania utility territory and at Supply Corporation, gives us further confidence in our 7% to 10% earnings growth projections over the next three years. Furthermore, our integrated upstream and gathering operations in the Eastern Development Area (“EDA”) continue to exceed expectations, with the combination of strong operational execution and our highly-prolific assets. This differentiated ability to drive capital efficiency improvements alongside a rising price outlook for natural gas positions these businesses to deliver strong results in the coming years. We expect that these tailwinds will contribute to rising free cash flow across the system and deliver significant value to National Fuel shareholders.” RECONCILIATION OF GAAP EARNINGS TO ADJUSTED OPERATING RESULTS Three Months Ended December 31,(in thousands except per share amounts)2024 2023Reported GAAP Earnings$44,986 $133,020 Items impacting comparability: Impairment of assets (E&P) 141,802 — Tax impact of impairment of assets (37,169) — Unrealized (gain) loss on derivative asset (E&P) 349 4,198 Tax impact of unrealized (gain) loss on derivative asset (94) (1,151)Unrealized (gain) loss on other investments (Corporate / All Other) 2,617 (1,049)Tax impact of unrealized (gain) loss on other investments (550) 220 Adjusted Operating Results$151,941 $135,238 Reported GAAP Earnings Per Share$0.49 $1.44 Items impacting comparability: Impairment of assets, net of tax (E&P) 1.14 — Unrealized (gain) loss on derivative asset, net of tax (E&P) — 0.03 Unrealized (gain) loss on other investments, net of tax (Corporate / All Other) 0.02 (0.01)Rounding 0.01 — Adjusted Operating Results Per Share$1.66 $1.46 FISCAL 2025 GUIDANCE UPDATE National Fuel is increasing its guidance for fiscal 2025 adjusted earnings per share, which are now expected to be within a range of $6.50 to $7.00. This updated range incorporates better than expected results in the first quarter along with the anticipated impact of higher natural gas prices and higher production in the Exploration and Production segment for the remainder of the fiscal year. The Company is now assuming NYMEX natural gas prices will average $3.50 per MMBtu for the remaining nine months of fiscal 2025, an increase of $0.70 from the $2.80 per MMBtu assumed in previous guidance. This updated natural gas price projection approximates the current NYMEX forward curve at this time, however; given the continued volatility in NYMEX natural gas prices, the Company is providing the following sensitivities to its adjusted operating results guidance range: NYMEX Assumption Remaining 9 months ($/MMBtu)Fiscal 2025 Adjusted Earnings Per Share Sensitivities$3.00$6.15 - $6.65$3.50$6.50 - $7.00$4.00$6.90 - $7.40 The Company’s production guidance for fiscal 2025 is now expected to be in the range of 410 to 425 Bcfe, an increase of 7.5 Bcfe, or 2%, at the midpoint compared to previous guidance. The revised production guidance is principally a result of ongoing improvements in Seneca’s well results and additional operational efficiencies in the highly prolific EDA. This is also expected to result in increased Gathering segment revenue, relative to the Company’s prior projections, and as a result the Company has increased the midpoint of its guidance range by $5 million. While the Company’s guidance does not incorporate any future price-related curtailments, with 87% of its projected fiscal 2025 production linked to firm sales contracts, Seneca has limited exposure to in-basin markets. Further, 71% of expected production for the balance of the fiscal year is either matched by a financial hedge, including a combination of swaps and no-cost collars, or was entered into at a fixed price, both of which provide price certainty for that production. Additionally, as a result of operational improvements, the Company is revising Seneca’s capital expenditure guidance range downward to $495 million to $515 million, or $505 million at the midpoint, which is a $5 million decrease from the midpoint of the Company’s previous guidance. The Company’s other fiscal 2025 guidance assumptions remain largely unchanged and are detailed in the table on page 7. DISCUSSION OF FIRST QUARTER RESULTS BY SEGMENT The following earnings discussion of each operating segment for the quarter ended December 31, 2024 is summarized in a tabular form on pages 8 and 9 of this report. It may be helpful to refer to those tables while reviewing this discussion. Note that management defines adjusted operating results as reported GAAP earnings adjusted for items impacting comparability, and adjusted EBITDA as reported GAAP earnings before the following items: interest expense, income taxes, depreciation, depletion and amortization, other income and deductions, impairments, and other items reflected in operating income that impact comparability. Upstream Business Exploration and Production Segment The Exploration and Production segment operations are carried out by Seneca Resources Company, LLC (“Seneca”). Seneca explores for, develops and produces primarily natural gas reserves in Pennsylvania. Three Months Ended December 31,(in thousands)2024 2023 VarianceGAAP Earnings$(46,777) $52,483 $(99,260)Impairment of assets, net of tax 104,633 — 104,633 Unrealized (gain) loss on derivative asset, net of tax 255 3,047 (2,792)Adjusted Operating Results$58,111 $55,530 $2,581 Adjusted EBITDA$156,645 $159,970 $(3,325) Seneca’s first quarter GAAP earnings decreased $99.3 million versus the prior year. This was driven by non-cash, pre-tax impairment charges of $141.8 million ($104.6 million after-tax), the majority of which is related to a “ceiling test” impairment which required Seneca to write-down the book value of its reserves under the full cost method of accounting. For purposes of the ceiling test, the 12-month average of first day of the month pricing for NYMEX natural gas for the period ended December 31, 2024 was $2.13 per MMBtu. Excluding impairments, as well as the net impact of unrealized losses related to reductions in the fair value of contingent consideration received in connection with the June 2022 divestiture of Seneca’s California assets (see table above), Seneca's adjusted operating results increased $2.6 million primarily due to higher realized natural gas prices after the impact of hedging and lower per unit operating expenses, partially offset by lower natural gas production. During the first quarter, Seneca produced 97.7 Bcf of natural gas, a decrease of 3.0 Bcf, or 3%, from the prior year. Compared to the preceding fourth quarter of fiscal 2024, production in the first quarter is higher by 5.8 Bcf, or 6%. Early in the quarter, Seneca curtailed approximately 1 Bcf of production due to low in-basin pricing. Production in the quarter was lower than the prior year largely due to the timing of turn in line dates for new wells between fiscal years. Seneca’s average realized natural gas price, after the impact of hedging and transportation costs, was $2.53 per Mcf, an increase of $0.02 per Mcf from the prior year. Seneca recorded hedging gains of $29.7 million, or an uplift of $0.30 per Mcf, during the quarter, which more than offset a $0.08 per Mcf decrease in pre-hedge natural gas price realizations versus the prior year. On a per unit basis, first quarter Lease Operating Expense (“LOE”) was $0.67 per Mcf, consistent with the prior year. LOE included $55.0 million ($0.56 per Mcf) for gathering and compression services from the Company’s Gathering segment to connect Seneca’s production to sales points along interstate pipelines. General and Administrative Expense (“G&A”) was $0.20 per Mcf, an increase of $0.02 per Mcf compared to the prior year driven by the combination of higher personnel costs and modestly lower production. Depreciation, Depletion and Amortization Expense (“DD&A”) was $0.65 per Mcf, a decrease of $0.06 per Mcf from the prior year largely due to ceiling test impairments recorded in the third and fourth quarters of fiscal 2024 that lowered Seneca’s full cost pool depletable base. Midstream Businesses Pipeline and Storage Segment The Pipeline and Storage segment’s operations are carried out by National Fuel Gas Supply Corporation (“Supply Corporation”) and Empire Pipeline, Inc. (“Empire”). The Pipeline and Storage segment provides natural gas transportation and storage services to affiliated and non-affiliated companies through an integrated system of pipelines and underground natural gas storage fields in western New York and Pennsylvania. Three Months Ended December 31,(in thousands)2024 2023 VarianceGAAP Earnings$32,454 $24,055 $8,399 Adjusted EBITDA$70,953 $59,142 $11,811 The Pipeline and Storage segment’s first quarter GAAP earnings increased $8.4 million versus the prior year primarily due to higher operating revenues, partly offset by higher operation and maintenance (“O&M”) expense. The increase in operating revenues of $12.2 million, or 13%, was primarily attributable to an increase in Supply Corporation’s transportation and storage rates effective February 1, 2024, in accordance with its rate settlement, which was approved in fiscal 2024. O&M expense increased $1.1 million primarily due to higher pipeline integrity and labor-related costs. Gathering Segment The Gathering segment’s operations are carried out by National Fuel Gas Midstream Company, LLC’s limited liability companies. The Gathering segment constructs, owns and operates natural gas gathering pipelines and compression facilities in the Appalachian region, which delivers Seneca and other non-affiliated Appalachian production to the interstate pipeline system. Three Months Ended December 31,(in thousands)2024 2023 VarianceGAAP Earnings$27,145 $28,825 $(1,680) Adjusted EBITDA$51,936 $53,061 $(1,125) The Gathering segment’s first quarter GAAP earnings decreased $1.7 million versus the prior year due to lower operating revenues and higher DD&A expense. Operating revenues decreased $1.5 million, or 2%, primarily due to a decrease in throughput from Seneca. DD&A expense increased $1.1 million primarily due to higher average depreciable plant in service compared to the prior year. Downstream Business Utility Segment The Utility segment operations are carried out by National Fuel Gas Distribution Corporation (“Distribution Corporation”), which sells or transports natural gas to customers located in western New York and northwestern Pennsylvania. Three Months Ended December 31,(in thousands)2024 2023 VarianceGAAP Earnings$32,499 $26,551 $5,948 Adjusted EBITDA$60,665 $53,366 $7,299 The Utility segment’s first quarter GAAP earnings increased $5.9 million, or 22%, primarily as a result of the implementation of the recent rate case order in the Utility’s New York jurisdiction. For the quarter, customer margin (operating revenues less purchased gas sold) increased $9.1 million, primarily due to the aforementioned rate case in Distribution Corporation’s New York jurisdiction, for which a settlement became effective October 1, 2024. Other income, which was also impacted by the rate settlement, increased $4.0 million. This was in large part due to the recognition of non-service pension and post-retirement benefit income that is offset with a corresponding reduction in new base rates and as a result, has no effect on net income. O&M expense increased by $1.6 million, primarily driven by higher personnel costs, partially offset by a reduction related to amortizations of certain regulatory assets as a result of the New York rate settlement. DD&A expense increased $0.8 million primarily due to higher average depreciable plant in service compared to the prior year. Interest expense increased $2.3 million primarily due to a higher average amount of net borrowings. Corporate and All Other The Company’s operations that are included in Corporate and All Other generated a combined net loss of $0.3 million in the current-year first quarter, which was $1.4 million lower than combined earnings of $1.1 million in the prior-year first quarter. The reduction in earnings during the quarter was primarily driven by unrealized losses recorded on investment securities that fund non-qualified retirement benefit plans. EARNINGS TELECONFERENCE A conference call to discuss the results will be held on Thursday, January 30, 2025, at 9 a.m. ET. All participants must pre-register to join this conference using the Participant Registration link. A webcast link to the conference call will be provided under the Events Calendar on the NFG Investor Relations website at investor.nationalfuelgas.com. A replay will be available following the call through the end of the day, Thursday, February 6, 2025. To access the replay, dial 1-866-813-9403 and provide Access Code 245940. 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.nationalfuel.com. Certain statements contained herein, including statements identified by the use of the words “anticipates,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “predicts,” “projects,” “believes,” “seeks,” “will,” “may” and similar expressions, and statements which are other than statements of historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Company’s expectations, beliefs and projections contained herein are expressed in good faith and are believed to have a reasonable basis, but there can be no assurance that such expectations, beliefs or projections will result or be achieved or accomplished. In addition to other factors, the following are important factors that could cause actual results to differ materially from those discussed in the forward-looking statements: impairments under the SEC’s full cost ceiling test for natural gas reserves; changes in the price of natural gas; 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; governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, target rates of return, rate design, retained natural gas and system modernization), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal; the Company’s ability to estimate accurately the time and resources necessary to meet emissions targets; governmental/regulatory actions and/or market pressures to reduce or eliminate reliance on natural gas; changes in economic conditions, including inflationary pressures, supply chain issues, liquidity challenges, and global, national or regional recessions, and their effect on the demand for, and customers’ ability to pay for, the Company’s products and services; the creditworthiness or performance of the Company’s key suppliers, customers and counterparties; financial and economic conditions, including the availability of credit, and occurrences affecting the Company’s ability to obtain financing on acceptable terms for working capital, capital expenditures and other investments, including any downgrades in the Company’s credit ratings and changes in interest rates and other capital market conditions; changes in price differentials between similar quantities of natural gas sold at different geographic locations, and the effect of such changes on commodity production, revenues and demand for pipeline transportation capacity to or from such locations; the impact of information technology disruptions, cybersecurity or data security breaches; factors affecting the Company’s ability to successfully identify, drill for and produce economically viable natural gas reserves, including among others geology, lease availability and costs, title disputes, weather conditions, water availability and disposal or recycling opportunities of used water, 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; the Company’s ability to complete strategic transactions; increased costs or delays or changes in plans with respect to Company projects or related projects of other companies, as well as difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators; 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 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; negotiations with the collective bargaining units representing the Company’s workforce, including potential work stoppages during negotiations; uncertainty of natural gas reserve estimates; significant differences between the Company’s projected and actual production levels for natural gas; changes in demographic patterns and weather conditions (including those related to climate change); changes in the availability, price or accounting treatment of derivative financial instruments; changes in laws, actuarial assumptions, the interest rate environment and the return on plan/trust assets related to the Company’s pension and other post-retirement benefits, which can affect future funding obligations and costs and plan liabilities; economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities or acts of war, as well as economic and operational disruptions due to third-party outages; significant differences between the Company’s projected and actual capital expenditures and operating expenses; or increasing costs of insurance, changes in coverage and the ability to obtain insurance. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date thereof. NATIONAL FUEL GAS COMPANYAND SUBSIDIARIES GUIDANCE SUMMARY As discussed on page 2, the Company is revising its adjusted earnings per share guidance for fiscal 2025. Additional details on the Company's forecast assumptions and business segment guidance are outlined in the table below. The revised adjusted earnings per share guidance range excludes certain items that impacted the comparability of adjusted operating results during the three months ended December 31, 2024, including: (1) the after tax impairment of assets, which reduced earnings by $1.14 per share; (2) after-tax unrealized losses on a derivative asset, which reduced earnings by less than $0.01 per share; and (3) after-tax unrealized losses on other investments, which reduced earnings by $0.02 per share. While the Company expects to record certain adjustments to unrealized gain or loss on a derivative asset and unrealized gain or loss on investments during the nine months ending September 30, 2025, the amounts of these and other potential adjustments and charges, including ceiling test impairments, are not reasonably determinable at this time. As such, the Company is unable to provide earnings guidance other than on a non-GAAP basis. Previous FY 2025 Guidance Updated FY 2025 Guidance Consolidated Adjusted Earnings per Share$5.50 to $6.00 $6.50 to $7.00Consolidated Effective Tax Rate~ 24.5 - 25% ~ 25% Capital Expenditures(Millions) Exploration and Production$495 - $525 $495 - $515Pipeline and Storage$130 - $150 $130 - $150Gathering$95 - $110 $95 - $110Utility$165 - $185 $165 - $185Consolidated Capital Expenditures$885 - $970 $885 - $960 Exploration and Production Segment Guidance Commodity Price Assumptions* NYMEX natural gas price$2.80 /MMBtu $3.50 /MMBtuAppalachian basin spot price$2.00 /MMBtu $2.90 /MMBtu Realized natural gas prices, after hedging ($/Mcf)$2.47 - $2.51 $2.77 - $2.81 Production (Bcf)400 to 420 410 to 425 E&P Operating Costs($/Mcf) LOE$0.68 - $0.70 $0.68 - $0.70G&A$0.18 - $0.19 $0.18 - $0.19DD&A$0.65 - $0.69 $0.63 - $0.67 Other Business Segment Guidance(Millions) Gathering Segment Revenues$245 - $255 $250 - $260Pipeline and Storage Segment Revenues$415 - $435 $415 - $435 * Commodity price assumptions are for the remaining nine months of the fiscal year. NATIONAL FUEL GAS COMPANYRECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGSQUARTER ENDED DECEMBER 31, 2024(Unaudited) Upstream Midstream Downstream Exploration & Pipeline & Corporate / (Thousands of Dollars)Production Storage Gathering Utility All Other Consolidated* First quarter 2024 GAAP earnings$52,483 $24,055 $28,825 $26,551 $1,106 $133,020 Items impacting comparability: Unrealized (gain) loss on derivative asset 4,198 4,198 Tax impact of unrealized (gain) loss on derivative asset (1,151) (1,151)Unrealized (gain) loss on other investments (1,049) (1,049)Tax impact of unrealized (gain) loss on other investments 220 220 First quarter 2024 adjusted operating results 55,530 24,055 28,825 26,551 277 135,238 Drivers of adjusted operating results** Upstream Revenues Higher (lower) natural gas production (6,016) (6,016)Higher (lower) realized natural gas prices, after hedging 1,885 1,885 Midstream Revenues Higher (lower) operating revenues 9,637 (1,151) 8,486 Downstream Margins*** Impact of usage and weather (325) (325)Impact of new rates in New York 7,865 7,865 Operating Expenses Lower (higher) lease operating and transportation expenses 1,133 1,133 Lower (higher) operating expenses (856) (1,244) (2,100)Lower (higher) depreciation / depletion 6,842 (835) (624) 5,383 Other Income (Expense) Higher (lower) other income (1,680) 3,176 1,686 3,182 (Higher) lower interest expense (1,785) (1,785)Income Taxes Lower (higher) income tax expense / effective tax rate (8) (488) 443 (584) 205 (432)All other / rounding 425 106 (137) (531) (436) (573)First quarter 2025 adjusted operating results 58,111 32,454 27,145 32,499 1,732 151,941 Items impacting comparability: Impairment of assets (141,802) (141,802)Tax impact of impairment of assets 37,169 37,169 Unrealized gain (loss) on derivative asset (349) (349)Tax impact of unrealized gain (loss) on derivative asset 94 94 Unrealized gain (loss) on other investments (2,617) (2,617)Tax impact of unrealized gain (loss) on other investments 550 550 First quarter 2025 GAAP earnings$(46,777) $32,454 $27,145 $32,499 $(335) $44,986 * Amounts do not reflect intercompany eliminations. ** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate.*** Downstream margin defined as operating revenues less purchased gas expense. NATIONAL FUEL GAS COMPANYRECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHAREQUARTER ENDED DECEMBER 31, 2024(Unaudited) Upstream Midstream Downstream Exploration & Pipeline & Corporate / Production Storage Gathering Utility All Other Consolidated* First quarter 2024 GAAP earnings per share$0.57 $0.26 $0.31 $0.29 $0.01 $1.44 Items impacting comparability: Unrealized (gain) loss on derivative asset, net of tax 0.03 0.03 Unrealized (gain) loss on other investments, net of tax (0.01) (0.01)First quarter 2024 adjusted operating results per share 0.60 0.26 0.31 0.29 — 1.46 Drivers of adjusted operating results** Upstream Revenues Higher (lower) natural gas production (0.07) (0.07)Higher (lower) realized natural gas prices, after hedging 0.02 0.02 Midstream Revenues Higher (lower) operating revenues 0.11 (0.01) 0.10 Downstream Margins*** Impact of usage and weather — — Impact of new rates in New York 0.09 0.09 Operating Expenses Lower (higher) lease operating and transportation expenses 0.01 0.01 Lower (higher) operating expenses (0.01) (0.01) (0.02)Lower (higher) depreciation / depletion 0.08 (0.01) (0.01) 0.06 Other Income (Expense) Higher (lower) other income (0.02) 0.03 0.02 0.03 (Higher) lower interest expense (0.02) (0.02)Income Taxes Lower (higher) income tax expense / effective tax rate — (0.01) — (0.01) — (0.02)All other / rounding 0.02 — 0.01 — (0.01) 0.02 First quarter 2025 adjusted operating results per share 0.64 0.35 0.30 0.36 0.01 1.66 Items impacting comparability: Impairment of assets, net of tax (1.14) (1.14)Unrealized gain (loss) on derivative asset, net of tax — — Unrealized gain (loss) on other investments, net of tax (0.02) (0.02)Rounding (0.01) (0.01)First quarter 2025 GAAP earnings per share$(0.51) $0.35 $0.30 $0.36 $(0.01) $0.49 * Amounts do not reflect intercompany eliminations. ** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate.*** Downstream margin defined as operating revenues less purchased gas expense. NATIONAL FUEL GAS COMPANYAND SUBSIDIARIES (Thousands of Dollars, except per share amounts) Three Months Ended December 31, (Unaudited)SUMMARY OF OPERATIONS2024 2023Operating Revenues: Utility Revenues$228,424 $201,920 Exploration and Production and Other Revenues 248,860 254,019 Pipeline and Storage and Gathering Revenues 72,198 69,422 549,482 525,361 Operating Expenses: Purchased Gas 65,337 56,552 Operation and Maintenance: Utility 55,244 53,705 Exploration and Production and Other 33,541 34,826 Pipeline and Storage and Gathering 35,941 34,962 Property, Franchise and Other Taxes 22,056 22,416 Depreciation, Depletion and Amortization 109,370 115,790 Impairment of Assets 141,802 — 463,291 318,251 Operating Income 86,191 207,110 Other Income (Expense): Other Income (Deductions) 7,720 3,732 Interest Expense on Long-Term Debt (33,362) (28,462)Other Interest Expense (4,381) (6,273) Income Before Income Taxes 56,168 176,107 Income Tax Expense 11,182 43,087 Net Income Available for Common Stock$44,986 $133,020 Earnings Per Common Share Basic$0.50 $1.45 Diluted$0.49 $1.44 Weighted Average Common Shares: Used in Basic Calculation 90,777,446 91,910,244 Used in Diluted Calculation 91,434,741 92,442,145 NATIONAL FUEL GAS COMPANYAND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Unaudited) December 31, September 30,(Thousands of Dollars)2024 2024ASSETS Property, Plant and Equipment$14,675,281 $14,524,798 Less - Accumulated Depreciation, Depletion and Amortization 7,393,477 7,185,593 Net Property, Plant and Equipment 7,281,804 7,339,205 Current Assets: Cash and Temporary Cash Investments 48,694 38,222 Receivables - Net 202,821 127,222 Unbilled Revenue 57,117 15,521 Gas Stored Underground 24,725 35,055 Materials and Supplies - at average cost 47,820 47,670 Other Current Assets 83,435 92,229 Total Current Assets 464,612 355,919 Other Assets: Recoverable Future Taxes 83,740 80,084 Unamortized Debt Expense 5,206 5,604 Other Regulatory Assets 106,386 108,022 Deferred Charges 68,952 69,662 Other Investments 71,493 81,705 Goodwill 5,476 5,476 Prepaid Pension and Post-Retirement Benefit Costs 185,224 180,230 Fair Value of Derivative Financial Instruments 20,695 87,905 Other 7,860 5,958 Total Other Assets 555,032 624,646 Total Assets$8,301,448 $8,319,770 CAPITALIZATION AND LIABILITIES Capitalization: Comprehensive Shareholders' Equity Common Stock, $1 Par Value Authorized - 200,000,000 Shares; Issued and Outstanding - 90,612,955 Shares and 91,005,993 Shares, Respectively$90,613 $91,006 Paid in Capital 1,039,705 1,045,487 Earnings Reinvested in the Business 1,698,648 1,727,326 Accumulated Other Comprehensive Loss (76,153) (15,476)Total Comprehensive Shareholders' Equity 2,752,813 2,848,343 Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issuance Costs 2,189,421 2,188,243 Total Capitalization 4,942,234 5,036,586 Current and Accrued Liabilities: Notes Payable to Banks and Commercial Paper 200,000 90,700 Current Portion of Long-Term Debt 500,000 500,000 Accounts Payable 120,991 165,068 Amounts Payable to Customers 42,587 42,720 Dividends Payable 46,671 46,872 Interest Payable on Long-Term Debt 44,376 27,247 Customer Advances 15,295 19,373 Customer Security Deposits 36,091 36,265 Other Accruals and Current Liabilities 172,409 162,903 Fair Value of Derivative Financial Instruments 20,893 4,744 Total Current and Accrued Liabilities 1,199,313 1,095,892 Other Liabilities: Deferred Income Taxes 1,089,394 1,111,165 Taxes Refundable to Customers 303,344 305,645 Cost of Removal Regulatory Liability 296,660 292,477 Other Regulatory Liabilities 147,561 151,452 Other Post-Retirement Liabilities 3,476 3,511 Asset Retirement Obligations 199,310 203,006 Other Liabilities 120,156 120,036 Total Other Liabilities 2,159,901 2,187,292 Commitments and Contingencies — — Total Capitalization and Liabilities$8,301,448 $8,319,770 NATIONAL FUEL GAS COMPANYAND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) Three Months Ended December 31,(Thousands of Dollars)2024 2023 Operating Activities: Net Income Available for Common Stock$44,986 $133,020 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Impairment of Assets 141,802 — Depreciation, Depletion and Amortization 109,370 115,790 Deferred Income Taxes (5,385) 38,362 Stock-Based Compensation 4,705 4,660 Other 7,146 8,041 Change in: Receivables and Unbilled Revenue (115,165) (58,459)Gas Stored Underground and Materials and Supplies 10,180 6,915 Other Current Assets 8,814 892 Accounts Payable 9,703 (3,355)Amounts Payable to Customers (133) 1,013 Customer Advances (4,078) 2,083 Customer Security Deposits (174) 2,079 Other Accruals and Current Liabilities 21,266 28,612 Other Assets (3,892) (6,306)Other Liabilities (9,057) (2,403)Net Cash Provided by Operating Activities$220,088 $270,944 Investing Activities: Capital Expenditures$(240,427) $(246,938)Other 5,878 (920)Net Cash Used in Investing Activities$(234,549) $(247,858) Financing Activities: Changes in Notes Payable to Banks and Commercial Paper 109,300 12,500 Shares Repurchased Under Repurchase Plan (33,524) — Dividends Paid on Common Stock (46,872) (45,451)Net Repurchases of Common Stock Under Stock and Benefit Plans (3,971) (3,897)Net Cash Provided by (Used in) Financing Activities$24,933 $(36,848) Net Increase (Decrease) in Cash and Cash Equivalents 10,472 (13,762)Cash and Cash Equivalents at Beginning of Period 38,222 55,447 Cash and Cash Equivalents at December 31$48,694 $41,685 NATIONAL FUEL GAS COMPANYAND SUBSIDIARIES SEGMENT OPERATING RESULTS AND STATISTICS(UNAUDITED) UPSTREAM BUSINESS Three Months Ended(Thousands of Dollars, except per share amounts)December 31,EXPLORATION AND PRODUCTION SEGMENT2024 2023 VarianceTotal Operating Revenues$248,860 $254,019 $(5,159)Operating Expenses: Operation and Maintenance: General and Administrative Expense 19,326 17,793 1,533 Lease Operating and Transportation Expense 65,640 67,074 (1,434)All Other Operation and Maintenance Expense 3,867 5,544 (1,677)Property, Franchise and Other Taxes 3,382 3,638 (256)Depreciation, Depletion and Amortization 63,304 71,965 (8,661)Impairment of Assets 141,802 — 141,802 297,321 166,014 131,307 Operating Income (Loss) (48,461) 88,005 (136,466) Other Income (Expense): Non-Service Pension and Post-Retirement Benefit Credit 37 100 (63)Interest and Other Income (Deductions) 272 (1,513) 1,785 Interest Expense (15,200) (15,268) 68 Income (Loss) Before Income Taxes (63,352) 71,324 (134,676)Income Tax Expense (Benefit) (16,575) 18,841 (35,416)Net Income (Loss)$(46,777) $52,483 $(99,260)Net Income (Loss) Per Share (Diluted)$(0.51) $0.57 $(1.08) NATIONAL FUEL GAS COMPANYAND SUBSIDIARIES SEGMENT OPERATING RESULTS AND STATISTICS(UNAUDITED) MIDSTREAM BUSINESSES Three Months Ended(Thousands of Dollars, except per share amounts)December 31,PIPELINE AND STORAGE SEGMENT2024 2023 VarianceRevenues from External Customers$68,750 $64,826 $3,924 Intersegment Revenues 37,862 29,587 8,275 Total Operating Revenues 106,612 94,413 12,199 Operating Expenses: Purchased Gas (42) 601 (643)Operation and Maintenance 27,034 25,950 1,084 Property, Franchise and Other Taxes 8,667 8,720 (53)Depreciation, Depletion and Amortization 18,585 18,213 372 54,244 53,484 760 Operating Income 52,368 40,929 11,439 Other Income (Expense): Non-Service Pension and Post-Retirement Benefit Credit 952 1,257 (305)Interest and Other Income 2,040 1,931 109 Interest Expense (11,729) (11,725) (4)Income Before Income Taxes 43,631 32,392 11,239 Income Tax Expense 11,177 8,337 2,840 Net Income$32,454 $24,055 $8,399 Net Income Per Share (Diluted)$0.35 $0.26 $0.09 Three Months Ended December 31,GATHERING SEGMENT2024 2023 VarianceRevenues from External Customers$3,448 $4,596 $(1,148)Intersegment Revenues 57,683 57,992 (309)Total Operating Revenues 61,131 62,588 (1,457)Operating Expenses: Operation and Maintenance 9,429 9,504 (75)Property, Franchise and Other Taxes (234) 23 (257)Depreciation, Depletion and Amortization 10,515 9,458 1,057 19,710 18,985 725 Operating Income 41,421 43,603 (2,182) Other Income (Expense): Non-Service Pension and Post-Retirement Benefit Credit — 9 (9)Interest and Other Income 58 73 (15)Interest Expense (4,210) (3,729) (481)Income Before Income Taxes 37,269 39,956 (2,687)Income Tax Expense 10,124 11,131 (1,007)Net Income$27,145 $28,825 $(1,680)Net Income Per Share (Diluted)$0.30 $0.31 $(0.01) NATIONAL FUEL GAS COMPANYAND SUBSIDIARIES SEGMENT OPERATING RESULTS AND STATISTICS(UNAUDITED) DOWNSTREAM BUSINESS Three Months Ended(Thousands of Dollars, except per share amounts)December 31,UTILITY SEGMENT2024 2023 VarianceRevenues from External Customers$228,424 $201,920 $26,504 Intersegment Revenues 85 87 (2)Total Operating Revenues 228,509 202,007 26,502 Operating Expenses: Purchased Gas 101,473 84,051 17,422 Operation and Maintenance 56,260 54,684 1,576 Property, Franchise and Other Taxes 10,111 9,906 205 Depreciation, Depletion and Amortization 16,827 16,037 790 184,671 164,678 19,993 Operating Income 43,838 37,329 6,509 Other Income (Expense): Non-Service Pension and Post-Retirement Benefit Credit 5,871 470 5,401 Interest and Other Income 528 1,911 (1,383)Interest Expense (10,716) (8,457) (2,259)Income Before Income Taxes 39,521 31,253 8,268 Income Tax Expense 7,022 4,702 2,320 Net Income$32,499 $26,551 $5,948 Net Income Per Share (Diluted)$0.36 $0.29 $0.07 NATIONAL FUEL GAS COMPANYAND SUBSIDIARIES SEGMENT OPERATING RESULTS AND STATISTICS(UNAUDITED) Three Months Ended(Thousands of Dollars, except per share amounts)December 31,ALL OTHER2024 2023 VarianceTotal Operating Revenues$— $— $— Operating Expenses: Operation and Maintenance — — — — — — Operating Income — — — Other Income (Expense): Interest and Other Income (Deductions) (136) (77) (59)Interest Expense (116) (81) (35)Loss before Income Taxes (252) (158) (94)Income Tax Benefit (59) (37) (22)Net Loss$(193) $(121) $(72)Net Loss Per Share (Diluted)$— $— $— Three Months Ended December 31,CORPORATE2024 2023 VarianceRevenues from External Customers$— $— $— Intersegment Revenues 1,341 1,285 56 Total Operating Revenues 1,341 1,285 56 Operating Expenses: Operation and Maintenance 4,047 3,795 252 Property, Franchise and Other Taxes 130 129 1 Depreciation, Depletion and Amortization 139 117 22 4,316 4,041 275 Operating Loss (2,975) (2,756) (219)Other Income (Expense): Non-Service Pension and Post-Retirement Benefit Costs (212) (387) 175 Interest and Other Income 41,061 41,030 31 Interest Expense on Long-Term Debt (33,362) (28,462) (4,900)Other Interest Expense (5,161) (8,085) 2,924 Income (Loss) before Income Taxes (649) 1,340 (1,989)Income Tax Expense (Benefit) (507) 113 (620)Net Income (Loss)$(142) $1,227 $(1,369)Net Income (Loss) Per Share (Diluted)$(0.01) $0.01 $(0.02) Three Months Ended December 31,INTERSEGMENT ELIMINATIONS2024 2023 VarianceIntersegment Revenues$(96,971) $(88,951) $(8,020)Operating Expenses: Purchased Gas (36,094) (28,100) (7,994)Operation and Maintenance (60,877) (60,851) (26) (96,971) (88,951) (8,020)Operating Income — — — Other Income (Expense): Interest and Other Deductions (42,751) (41,072) (1,679)Interest Expense 42,751 41,072 1,679 Net Income$— $— $— Net Income Per Share (Diluted)$— $— $— NATIONAL FUEL GAS COMPANYAND SUBSIDIARIES SEGMENT INFORMATION (Continued)(Thousands of Dollars) Three Months Ended December 31, (Unaudited) Increase 2024 2023 (Decrease) Capital Expenditures: Exploration and Production$122,602(1)(2)$160,957(3)(4)$(38,355)Pipeline and Storage 19,792(1)(2) 24,554(3)(4) (4,762)Gathering 13,027(1)(2) 19,569(3)(4) (6,542)Utility 36,430(1)(2) 30,510(3)(4) 5,920 Total Reportable Segments 191,851 235,590 (43,739)All Other — — — Corporate 204 61 143 Total Capital Expenditures$192,055 $235,651 $(43,596) (1)Capital expenditures for the quarter ended December 31, 2024, include accounts payable and accrued liabilities related to capital expenditures of $56.3 million, $4.4 million, $6.0 million, and $4.9 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at December 31, 2024, since they represent non-cash investing activities at that date. (2)Capital expenditures for the quarter ended December 31, 2024, exclude capital expenditures of $63.3 million, $14.4 million, $21.7 million and $20.6 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, 2024 and paid during the quarter ended December 31, 2024. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2024, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at December 31, 2024. (3)Capital expenditures for the quarter ended December 31, 2023, include accounts payable and accrued liabilities related to capital expenditures of $74.9 million, $5.5 million, $11.1 million, and $6.4 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts were excluded from the Consolidated Statement of Cash Flows at December 31, 2023, since they represented non-cash investing activities at that date. (4)Capital expenditures for the quarter ended December 31, 2023, exclude capital expenditures of $43.2 million, $31.8 million, $20.6 million and $13.6 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, 2023 and paid during the quarter ended December 31, 2023. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2023, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at December 31, 2023. DEGREE DAYS Percent Colder (Warmer) Than:Three Months Ended December 31,Normal 2024 2023 Normal (1) Last Year (1)Buffalo, NY2,253 1,884 1,858 (16.4) 1.4Erie, PA1,894 1,697 1,664 (10.4) 2.0 (1) Percents compare actual 2024 degree days to normal degree days and actual 2024 degree days to actual 2023 degree days. NATIONAL FUEL GAS COMPANYAND SUBSIDIARIES EXPLORATION AND PRODUCTION INFORMATION Three Months Ended December 31, Increase 2024 2023 (Decrease) Gas Production/Prices: Production (MMcf) Appalachia 97,717 100,757 (3,040) Average Prices (Per Mcf) Weighted Average$2.23 $2.31 $(0.08)Weighted Average after Hedging 2.53 2.51 0.02 Selected Operating Performance Statistics: General and Administrative Expense per Mcf (1)$0.20 $0.18 $0.02 Lease Operating and Transportation Expense per Mcf (1)(2)$0.67 $0.67 $— Depreciation, Depletion and Amortization per Mcf (1)$0.65 $0.71 $(0.06) (1) Refer to page 13 for the General and Administrative Expense, Lease Operating and Transportation Expense and Depreciation, Depletion, and Amortization Expense for the Exploration and Production segment. (2) Amounts include transportation expense of $0.57 and $0.56 per Mcf for the three months ended December 31, 2024 and December 31, 2023, respectively. NATIONAL FUEL GAS COMPANYAND SUBSIDIARIES Pipeline and Storage Throughput - (millions of cubic feet - MMcf) Three Months Ended December 31, Increase 2024 2023 (Decrease)Firm Transportation - Affiliated31,870 31,495 375 Firm Transportation - Non-Affiliated171,012 168,606 2,406 Interruptible Transportation62 118 (56) 202,944 200,219 2,725 Gathering Volume - (MMcf) Three Months Ended December 31, Increase 2024 2023 (Decrease)Gathered Volume120,961 124,261 (3,300) Utility Throughput - (MMcf) Three Months Ended December 31, Increase 2024 2023 (Decrease)Retail Sales: Residential Sales18,476 17,982 494 Commercial Sales2,919 2,800 119 Industrial Sales199 138 61 21,594 20,920 674 Transportation16,942 17,528 (586) 38,536 38,448 88 NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES NON-GAAP FINANCIAL MEASURES In addition to financial measures calculated in accordance with generally accepted accounting principles (GAAP), this press release contains information regarding adjusted operating results, adjusted EBITDA and free cash flow, which are non-GAAP financial measures. The Company believes that these non-GAAP financial measures are useful to investors because they provide an alternative method for assessing the Company's ongoing operating results or liquidity and for comparing the Company’s financial performance to other companies. The Company's management uses these non-GAAP financial measures for the same purpose, and for planning and forecasting purposes. The presentation of non-GAAP financial measures is not meant to be a substitute for financial measures in accordance with GAAP. Management defines adjusted operating results as reported GAAP earnings before items impacting comparability. The following table reconciles National Fuel's reported GAAP earnings to adjusted operating results for the three months ended December 31, 2024 and 2023: Three Months Ended December 31,(in thousands except per share amounts)2024 2023Reported GAAP Earnings$44,986 $133,020 Items impacting comparability: Impairment of assets (E&P) 141,802 — Tax impact of impairment of assets (37,169) — Unrealized (gain) loss on derivative asset (E&P) 349 4,198 Tax impact of unrealized (gain) loss on derivative asset (94) (1,151)Unrealized (gain) loss on other investments (Corporate / All Other) 2,617 (1,049)Tax impact of unrealized (gain) loss on other investments (550) 220 Adjusted Operating Results$151,941 $135,238 Reported GAAP Earnings Per Share$0.49 $1.44 Items impacting comparability: Impairment of assets, net of tax (E&P) 1.14 — Unrealized (gain) loss on derivative asset, net of tax (E&P) — 0.03 Unrealized (gain) loss on other investments, net of tax (Corporate / All Other) 0.02 (0.01)Rounding 0.01 — Adjusted Operating Results Per Share$1.66 $1.46 Management defines adjusted EBITDA as reported GAAP earnings before the following items: interest expense, income taxes, depreciation, depletion and amortization, other income and deductions, impairments, and other items reflected in operating income that impact comparability. The following tables reconcile National Fuel's reported GAAP earnings to adjusted EBITDA for the three months ended December 31, 2024 and 2023: Three Months Ended December 31,(in thousands)2024 2023Reported GAAP Earnings$44,986 $133,020 Depreciation, Depletion and Amortization 109,370 115,790 Other (Income) Deductions (7,720) (3,732)Interest Expense 37,743 34,735 Income Taxes 11,182 43,087 Impairment of Assets 141,802 — Adjusted EBITDA$337,363 $322,900 Adjusted EBITDA by Segment Pipeline and Storage Adjusted EBITDA$70,953 $59,142 Gathering Adjusted EBITDA 51,936 53,061 Total Midstream Businesses Adjusted EBITDA 122,889 112,203 Exploration and Production Adjusted EBITDA 156,645 159,970 Utility Adjusted EBITDA 60,665 53,366 Corporate and All Other Adjusted EBITDA (2,836) (2,639)Total Adjusted EBITDA$337,363 $322,900 NATIONAL FUEL GAS COMPANYAND SUBSIDIARIESNON-GAAP FINANCIAL MEASURESSEGMENT ADJUSTED EBITDA Three Months Ended December 31,(in thousands)2024 2023Exploration and Production Segment Reported GAAP Earnings$(46,777) $52,483 Depreciation, Depletion and Amortization 63,304 71,965 Other (Income) Deductions (309) 1,413 Interest Expense 15,200 15,268 Income Taxes (16,575) 18,841 Impairment of Assets 141,802 — Adjusted EBITDA$156,645 $159,970 Pipeline and Storage Segment Reported GAAP Earnings$32,454 $24,055 Depreciation, Depletion and Amortization 18,585 18,213 Other (Income) Deductions (2,992) (3,188)Interest Expense 11,729 11,725 Income Taxes 11,177 8,337 Adjusted EBITDA$70,953 $59,142 Gathering Segment Reported GAAP Earnings$27,145 $28,825 Depreciation, Depletion and Amortization 10,515 9,458 Other (Income) Deductions (58) (82)Interest Expense 4,210 3,729 Income Taxes 10,124 11,131 Adjusted EBITDA$51,936 $53,061 Utility Segment Reported GAAP Earnings$32,499 $26,551 Depreciation, Depletion and Amortization 16,827 16,037 Other (Income) Deductions (6,399) (2,381)Interest Expense 10,716 8,457 Income Taxes 7,022 4,702 Adjusted EBITDA$60,665 $53,366 Corporate and All Other Reported GAAP Earnings$(335) $1,106 Depreciation, Depletion and Amortization 139 117 Other (Income) Deductions 2,038 506 Interest Expense (4,112) (4,444)Income Taxes (566) 76 Adjusted EBITDA$(2,836) $(2,639) Management defines free cash flow as net cash provided by operating activities, less net cash used in investing activities, adjusted for acquisitions and divestitures. The Company is unable to provide a reconciliation of any projected free cash flow measure to its comparable GAAP financial measure without unreasonable efforts. This is due to an inability to calculate the comparable GAAP projected metrics, including operating income and total production costs, given the unknown effect, timing, and potential significance of certain income statement items.

National Fuel Reports First Quarter Earnings

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