-
National Fuel Reports Third Quarter Earnings And Announces Preliminary Guidance For Fiscal 2024
المصدر: Nasdaq GlobeNewswire / 02 أغسطس 2023 15:45:49 America/Chicago
WILLIAMSVILLE, N.Y., Aug. 02, 2023 (GLOBE NEWSWIRE) -- National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated results for the third quarter of its 2023 fiscal year and for the nine months ended June 30, 2023.
FISCAL 2023 THIRD QUARTER SUMMARY
- GAAP net income of $92.6 million, or $1.00 per share, compared to GAAP net income of $108.2 million, or $1.17 per share, in the prior year.
- Adjusted operating results of $93.4 million, or $1.01 per share, compared to $141.9 million, or $1.54 per share, in the prior year (see non-GAAP reconciliation on page 2).
- E&P segment net Appalachian natural gas production of 94.7 Bcfe, an increase of 5.9 Bcfe, or 7%, compared to the prior year, and a 2% increase when compared to fiscal 2023 second quarter.
- Successfully closed on the purchase of three separate upstream assets that total approximately 36,000 net acres with flowing net production of approximately 16 million cubic feet per day in the E&P segment’s Eastern Development Area, for total consideration of $138.9 million.
- The Pennsylvania Public Utility Commission approved a joint settlement in the Utility segment’s Pennsylvania rate case proceeding that, effective August 1, 2023, will increase annual base rate delivery revenues by $23 million and, among other stipulations, includes a newly implemented weather normalization adjustment mechanism.
- The Company is narrowing its fiscal 2023 earnings guidance to a range of $5.15 to $5.25 per share, excluding items impacting comparability, and initiating its fiscal 2024 earnings guidance with a range of $5.50 to $6.00 per share, an increase of 11% from fiscal 2023, at the midpoint (see Guidance Summary on page 8).
MANAGEMENT COMMENTS
David P. Bauer, President and Chief Executive Officer of National Fuel Gas Company, stated: “National Fuel achieved strong operational results in the third quarter, but lower natural gas price realizations at Seneca and higher operating expenses across our regulated operations weighed on our financial results. Looking ahead to fiscal 2024, we expect significant earnings growth, driven by our integrated development program coupled with improved earnings at our rate-regulated businesses as a result of rate case outcomes.
“Longer-term, our continued investment in the modernization of our rate-regulated infrastructure, along with a disciplined approach to Seneca’s development program and an improved long-term outlook for natural gas prices, positions the Company well to deliver shareholder value through future earnings growth and increasing free cash flow generation.”
RECONCILIATION OF GAAP EARNINGS TO ADJUSTED OPERATING RESULTS
Three Months Ended Nine Months Ended June 30, June 30, (in thousands except per share amounts) 2023 2022 2023 2022 Reported GAAP Earnings $ 92,620 $ 108,158 $ 403,189 $ 407,879 Items impacting comparability: Unrealized (gain) loss on derivative asset (E&P) 1,430 — 3,702 — Tax impact of unrealized (gain) loss on derivative asset (392 ) — (1,015 ) — Unrealized (gain) loss on other investments (Corporate / All Other) (355 ) 3,434 (1,632 ) 10,093 Tax impact of unrealized (gain) loss on other investments 74 (721 ) 343 (2,120 ) Items impacting comparability from West Coast asset sale (E&P)(1) — 41,589 — 41,589 Tax impact of items impacting comparability from West Coast asset sale(1) — (10,533 ) — (10,533 ) Reduction of other post-retirement regulatory liability (Utility) — — — (18,533 ) Tax impact of reduction of other post-retirement regulatory liability — — — 3,892 Adjusted Operating Results $ 93,377 $ 141,927 $ 404,587 $ 432,267 Reported GAAP Earnings Per Share $ 1.00 $ 1.17 $ 4.37 $ 4.43 Items impacting comparability: Unrealized (gain) loss on derivative asset, net of tax (E&P) 0.01 — 0.03 — Unrealized (gain) loss on other investments, net of tax (Corporate / All Other) — 0.03 (0.01 ) 0.08 Items impacting comparability from West Coast asset sale, net of tax (E&P)(1) — 0.34 — 0.34 Reduction of other post-retirement regulatory liability, net of tax (Utility) — — — (0.16 ) Rounding — — (0.01 ) — Adjusted Operating Results Per Share $ 1.01 $ 1.54 $ 4.38 $ 4.69 (1) Refer to non-GAAP reconciliation on page 24 for a separate breakout of items impacting comparability from the West Coast asset sale.
DISCUSSION OF GUIDANCE UPDATE
National Fuel is revising its fiscal 2023 earnings guidance range and is now projecting that earnings, excluding items impacting comparability, will be within the range of $5.15 to $5.25 per share. This updated range reflects the results of the third quarter, along with updated assumptions for the balance of the year, as detailed on page 8.
The Exploration and Production segment’s fiscal 2023 net production is now expected to be in the range of 370 to 380 Bcfe, which reflects the impacts of over 5 Bcfe of price-related curtailments and volumes shut-in due to the operational impacts of low in-basin pricing and third-party pipeline system constraints during the third quarter. This guidance range does not incorporate any additional price-related curtailments over the remainder of the fiscal year. Seneca currently has firm sales contracts in place for approximately 95% of its projected remaining fiscal 2023 natural gas production, significantly limiting its exposure to in-basin markets. Approximately 80% of expected remaining production is either matched by a financial hedge or was entered into at a fixed price.
The Company is also initiating preliminary guidance for fiscal 2024 with earnings projected to be within a range of $5.50 to $6.00 per share, or $5.75 per share at the midpoint of the range, an increase of 11% from the midpoint of the revised fiscal 2023 guidance range. Drivers of the expected increase in earnings include anticipated higher natural gas price realizations, further growth in natural gas production and the associated impact on Gathering segment revenues, and substantial growth in earnings from the regulated segments expected as a result of anticipated base rate increases.
Seneca’s fiscal 2024 net production forecast is increasing to an expected range of 390 to 410 Bcfe, an increase of 7% versus fiscal 2023 at the midpoint of the guidance range. In addition, the Company is assuming NYMEX natural gas prices of $3.25 per MMBtu for the year, which will drive expected natural gas price realizations after hedging to increase by approximately $0.10 per Mcf from its estimated fiscal 2023 realizations. Overall, Seneca has firm sales contracts in place for approximately 88% of its expected fiscal 2024 natural gas production, significantly limiting its exposure to in-basin markets. Approximately 67% of expected production is supported by financial hedges or fixed price contracts, limiting exposure to potential swings in natural gas prices in fiscal 2024.
The Company’s consolidated capital expenditures in fiscal 2024 are expected to be in a range of $865 million to $975 million, which at the midpoint, is generally in line with its fiscal 2023 guidance.
Capital expenditures in the Company’s rate-regulated Pipeline and Storage and Utility segments are expected to be in the range of $250 million to $290 million for fiscal 2024, an increase of $25 million from fiscal 2023 at the midpoint. Most of this spending will be focused on ongoing infrastructure modernization programs that are geared toward enhancing the safety, reliability, and resiliency of the Company's critical infrastructure, as well as contributing to the ongoing reduction in the Company’s emissions profile. The ability to ramp up growth investments in these businesses provides for the ability to generate stable, predictable, value-accretive returns, and is an efficient means of deploying excess free cash flow generated across the Company to the long-term benefit of shareholders.
In the Exploration and Production segment, Seneca’s activity is expected to further moderate as it continues a planned transition that targets a maintenance-to-low single-digit, long-term production growth profile. Capital spending for fiscal 2024 is expected to be in the range of $525 million to $575 million, a decrease of 7% from fiscal 2023 at the midpoint. In addition to moderating long-term capital spending levels, Seneca is shifting the vast majority of its development activity to its highly prolific Eastern Development Area where, as a result of acquisitions over the past three years, it has a significant inventory of well locations that generate superior returns. As part of this transition, costs related to water management will lead to modestly higher capital spending on a per foot basis as the transition is fully executed. Further, Seneca plans to spend more than $35 million of one-time costs in fiscal 2024 related to this transition as it bolsters its seismic inventory, expands its produced water infrastructure, and increases its leasehold position in Lycoming County. In addition, the Gathering segment will continue its multi-year build out of key infrastructure in the Tioga County region and as a result, expects spending to be in the range of $90 million to $110 million, which is generally consistent with the current fiscal year.
Additional details on the Company’s updated forecast assumptions and business segment guidance for fiscal 2023 and fiscal 2024 are outlined in the table on page 8.
DISCUSSION OF THIRD QUARTER RESULTS BY SEGMENT
The following earnings discussion of each operating segment for the quarter ended June 30, 2023 is summarized in a tabular form on pages 9 and 10 of this report (earnings drivers for the nine months ended June 30, 2023 are summarized on pages 11 and 12). 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 June 30 (in thousands) 2023 2022 Variance GAAP Earnings $ 43,329 $ 56,497 $ (13,168 ) Unrealized (gain) loss on derivative asset, net of tax 1,038 — 1,038 Gain on sale of West Coast assets, net of tax — (9,511 ) 9,511 Loss from discontinuance of crude oil cash flow hedges, net of tax — 33,329 (33,329 ) Transaction and severance costs related to West Coast asset sale, net of tax — 7,238 (7,238 ) Adjusted Operating Results $ 44,367 $ 87,553 $ (43,186 ) Adjusted EBITDA $ 134,236 $ 184,622 $ (50,386 ) Seneca’s third quarter GAAP earnings decreased $13.2 million versus the prior year. Last year’s third quarter earnings included several one-time items impacting comparability shown in the table above related to the divestiture of Seneca’s California assets in June 2022 that did not recur this year. Earnings were also impacted by an unrealized loss of $1.4 million ($1.0 million after-tax) recognized during the current-year third quarter from a reduction in the implied fair value of an asset related to the contingent consideration in connection with this divestiture. Excluding these items, Seneca’s earnings decreased $43.2 million. Higher natural gas production was more than offset by lower Appalachian realized natural gas prices and the loss of earnings related to the divestiture of Seneca’s crude oil production in California.
Seneca produced 94.8 Bcfe during the third quarter, an increase of 2.3 Bcfe, or 3%, from the prior year. Despite the combined impact of approximately 5 Bcfe of price-related curtailments and other volumes shut-in due to the operational impacts of low in-basin pricing and third-party pipeline system constraints, production in Appalachia increased 5.9 Bcfe, or 7%. This increase was partially offset by a 3.5 Bcfe decrease in production related to the aforementioned California sale.
Seneca’s average realized natural gas price, after the impact of hedging and transportation costs, was $2.27 per Mcf, a decrease of $0.60 per Mcf from the prior year. Lower natural gas prices, before the impact of hedging, were partially offset by an increase in the weighted average hedge price compared to the prior-year third quarter.
On an absolute basis, lease operating and transportation expense (“LOE”) decreased $17.7 million primarily due to the California sale, slightly offset by increases in LOE from higher well repair costs in Appalachia. LOE expense includes $54.3 million in intercompany expense for gathering and compression services used to connect Seneca’s production to sales points along interstate pipelines. On a per unit basis, LOE was $0.65 per Mcfe, a decrease of $0.21 per Mcfe from the prior year.
The decrease in Seneca’s other operating expense of $6.5 million was primarily due to the prior-year third quarter, non-recurring accrual of plugging and abandonment expenses related to certain formerly owned offshore Gulf of Mexico wells that were sold in prior years, as well as the sale of Seneca’s California assets. Other taxes decreased $4.8 million largely attributable to both the impact of the sale of Seneca's California assets as well as lower Impact Fees in Pennsylvania due to the decrease in NYMEX natural gas prices.
Depreciation, depletion and amortization (“DD&A”) expense increased $5.4 million due to higher natural gas production and a higher per unit DD&A rate, which was driven by an increase in capitalized costs in Seneca’s full cost pool. DD&A expense was $0.64 per Mcfe, an increase of $0.04 per Mcfe from the prior year.
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 June 30 (in thousands) 2023 2022 Variance GAAP Earnings $ 23,813 $ 26,599 $ (2,786 ) Adjusted EBITDA $ 57,636 $ 62,565 $ (4,929 ) The Pipeline and Storage segment’s third quarter GAAP earnings decreased $2.8 million versus the prior year primarily due to lower operating revenues and higher operation and maintenance (“O&M”) expense, partially offset by an increase in other income. The decrease in operating revenues of $3.2 million was primarily attributable to contract expirations, partially offset by an increase in new short-term contracts. O&M expense increased $1.6 million primarily due to higher pipeline integrity and personnel costs. The increase in other income of $1.7 million was primarily attributable to a higher weighted average interest rate on intercompany short-term notes receivables.
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 June 30 (in thousands) 2023 2022 Variance GAAP Earnings $ 24,135 $ 24,658 $ (523 ) Adjusted EBITDA $ 46,032 $ 46,151 $ (119 ) The Gathering segment’s third quarter GAAP earnings decreased $0.5 million versus the prior year primarily due to higher O&M expense and higher income tax expense, both of which were almost entirely offset by higher operating revenues. Operating revenues increased $3.0 million, or 5%, which was the result of an 8.9 Bcf increase in gathered volumes due to an increase in natural gas production from both Seneca and non-affiliated parties. The increase in O&M expense of $3.1 million was due to an increase in compressor station preventative maintenance activity and higher compression leasing expenses, as well as increases in personnel expenses and costs for materials. The increase in material costs primarily reflects a higher amount of materials being purchased as a result of the increase in gathered volume, and to a lesser extent, rising costs from inflation. The increase in income tax expense was primarily driven by a higher effective state income tax rate.
Downstream Business
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) 2023 2022 Variance GAAP Earnings $ 37 $ 4,622 $ (4,585 ) Adjusted EBITDA $ 20,912 $ 27,042 $ (6,130 ) The Utility segment’s third quarter GAAP earnings decreased $4.6 million versus the prior year primarily due to lower customer margins (operating revenues less purchased gas sold), as well as increases in O&M and interest expense, partially offset by a decrease in non-service pension and OPEB costs and higher other income.
The decline in customer margin of $2.9 million was due primarily to a $2.6 million reduction in base rates in New York as a result of a rate proceeding that became effective October 1, 2022 which temporarily reduced the Utility’s recovery of pension and other post-employment benefit (“OPEB”) expenses to zero. In addition to lowering rates, the proceeding mandated a corresponding decrease in pension and OPEB expense, most of which had been previously recorded in “below the line” non-service pension and OPEB costs. This decrease was partially offset by higher revenues from the Company’s system modernization and improvement tracking mechanisms in its New York service territory.
O&M expense increased by $3.7 million due primarily to higher personnel costs and an increase in legal and consulting expenses. An increase in the cost of materials and transportation expenses, primarily as a result of rising costs from inflation, also contributed to higher O&M expense for the quarter. Interest expense increased $2.4 million due primarily to a higher weighted average interest rate on intercompany short-term borrowings. The increase in other income of $1.3 million was primarily attributable to interest earned on deferred gas costs.
Corporate and All Other
The Company’s operations that are included in Corporate and All Other generated combined earnings of $1.3 million in the current quarter, which was a $5.5 million increase over the combined net loss of $4.2 million in the prior-year third quarter. The increase in earnings was primarily driven by unrealized gains on investment securities recognized in the current quarter compared to unrealized losses on investment securities recognized in the prior-year third quarter. Also contributing to the increase were changes in cash surrender value of life insurance policies, which increased in value $1.1 million during the current quarter compared to a decrease in value of less than $0.1 million during the prior-year third quarter.
EARNINGS TELECONFERENCE
The Company will host a conference call on Thursday, August 3, 2023, at 10 a.m. Eastern Time to discuss this announcement. To pre-register for this call (recommended), please visit https://conferencingportals.com/event/ygNxHFJo. After registering, you will receive your access details via email. To join by telephone on the day of the call, dial U.S. toll free 1-888–330–2513 and provide Conference ID 47961. The teleconference will be simultaneously webcast online and can be accessed on the NFG Investor Relations website at investor.nationalfuelgas.com. An audio replay of the teleconference call will be available until Thursday, August 10, 2023. To access the telephone replay, dial U.S. toll free 1-800-770-2030 and provide Conference ID 47961.
National Fuel is an integrated energy company reporting financial results for four operating segments: Exploration and Production, Pipeline and Storage, Gathering, and Utility. Additional information about National Fuel is available at www.nationalfuelgas.com.
Analyst Contact: Brandon J. Haspett 716-857-7697 Media Contact: Karen L. Merkel 716-857-7654 Certain statements contained herein, including statements identified by the use of the words “anticipates,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “predicts,” “projects,” “believes,” “seeks,” “will,” “may” and similar expressions, and statements which are other than statements of historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Company’s expectations, beliefs and projections contained herein are expressed in good faith and are believed to have a reasonable basis, but there can be no assurance that such expectations, beliefs or projections will result or be achieved or accomplished. In addition to other factors, the following are important factors that could cause actual results to differ materially from those discussed in the forward-looking statements: 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; changes in the price of natural gas; 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; impairments under the SEC’s full cost ceiling test for natural gas reserves; 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; the Company’s ability to complete planned strategic transactions; 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, 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 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 COMPANY
AND SUBSIDIARIESGUIDANCE SUMMARY
As discussed on page 2, the Company is revising its earnings guidance for fiscal 2023 and initiating guidance for fiscal 2024. Additional details on the Company's forecast assumptions and business segment guidance for fiscal 2023 and fiscal 2024 are outlined in the table below.
The revised earnings guidance range does not include the impact of certain items that impacted the comparability of earnings during the nine months ended June 30, 2023, including: (1) after-tax unrealized losses on a derivative asset, which reduced earnings by $0.03 per share; and (2) after-tax unrealized gains on other investments, which increased earnings by $0.01 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 three months ending September 30, 2023, the amounts of these and other potential adjustments are not reasonably determinable at this time. As such, the Company is unable to provide earnings guidance other than on a non-GAAP basis.
Updated FY 2023
GuidancePreliminary FY 2024 Guidance Adjusted Consolidated Earnings per Share, excluding items impacting comparability $5.15 to $5.25 $5.50 to $6.00 Consolidated Effective Tax Rate ~ 25.5% ~ 25.5 - 26% Capital Expenditures (Millions)* Exploration and Production $575 - $600 $525 - $575 Pipeline and Storage $110 - $130 $120 - $140 Gathering $95 - $105 $90 - $110 Utility $125 - $135 $130 - $150 Consolidated Capital Expenditures $905 - $970 $865 - $975 Exploration & Production Segment Guidance** Commodity Price Assumptions NYMEX natural gas price $2.60 /MMBtu $3.25 /MMBtu Appalachian basin spot price $1.60 /MMBtu $2.45 /MMBtu Production (Bcfe) 370 to 380 390 to 410 E&P Operating Costs ($/Mcfe) LOE $0.67 - $0.68 $0.69 - $0.71 G&A ~$0.18 $0.17 - $0.19 DD&A $0.62 - $0.64 $0.66 - $0.70 Other Business Segment Guidance (Millions) Gathering Segment Revenues $225 - $235 $240 - $260 Pipeline and Storage Segment Revenues $370 - $380 $380 - $420 * Capital expenditures guidance for fiscal 2023 excludes capital related to acquisitions announced during the fiscal year.
** Fiscal 2023 commodity price assumptions are for the remaining three months of the fiscal year.NATIONAL FUEL GAS COMPANY RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS QUARTER ENDED JUNE 30, 2023 (Unaudited) Upstream Midstream Downstream Exploration & Pipeline & Corporate / (Thousands of Dollars) Production Storage Gathering Utility All Other Consolidated* Third quarter 2022 GAAP earnings $ 56,497 $ 26,599 $ 24,658 $ 4,622 $ (4,218 ) $ 108,158 Items impacting comparability: Gain on sale of West Coast assets (12,736 ) (12,736 ) Tax impact of gain on sale of West Coast assets 3,225 3,225 Loss from discontinuance of crude oil cash flow hedges 44,632 44,632 Tax impact of loss from discontinuance of crude oil cash flow hedges (11,303 ) (11,303 ) Transaction and severance costs related to West Coast asset sale 9,693 9,693 Tax impact of transaction and severance costs related to West Coast asset sale (2,455 ) (2,455 ) Unrealized (gain) loss on other investments 3,434 3,434 Tax impact of unrealized (gain) loss on other investments (721 ) (721 ) Third quarter 2022 adjusted operating results 87,553 26,599 24,658 4,622 (1,505 ) 141,927 Drivers of adjusted operating results** Upstream Revenues Higher (lower) natural gas production 12,371 12,371 Higher (lower) crude oil production (31,860 ) (31,860 ) Higher (lower) realized natural gas prices, after hedging (44,649 ) (44,649 ) Midstream Revenues Higher (lower) operating revenues (2,491 ) 2,350 (141 ) Downstream Margins*** Impact of new rates**** (2,015 ) (2,015 ) System modernization and improvement tracker revenues 866 866 Operating Expenses Lower (higher) lease operating and transportation expenses 13,994 13,994 Lower (higher) operating expenses 6,138 (1,239 ) (2,432 ) (3,105 ) (638 ) Lower (higher) property, franchise and other taxes 3,807 3,807 Lower (higher) depreciation / depletion (4,304 ) (324 ) (314 ) (4,942 ) Other Income (Expense) (Higher) lower other deductions 533 1,292 3,188 5,013 (Higher) lower interest expense 759 435 (2,154 ) 2,199 1,239 Income Taxes Lower (higher) income tax expense / effective tax rate (370 ) 187 (631 ) (884 ) 146 (1,552 ) All other / rounding 395 (211 ) 69 (481 ) 185 (43 ) Third quarter 2023 adjusted operating results 44,367 23,813 24,135 37 1,025 93,377 Items impacting comparability: Unrealized gain (loss) on derivative asset (1,430 ) (1,430 ) Tax impact of unrealized gain (loss) on derivative asset 392 392 Unrealized gain (loss) on other investments 355 355 Tax impact of unrealized gain (loss) on other investments (74 ) (74 ) Third quarter 2023 GAAP earnings $ 43,329 $ 23,813 $ 24,135 $ 37 $ 1,306 $ 92,620 * 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. **** Amount is offset by corresponding decrease in other deductions and will have no earnings impact for the year ended September 30, 2023. NATIONAL FUEL GAS COMPANY RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE QUARTER ENDED JUNE 30, 2023 (Unaudited) Upstream Midstream Downstream Exploration & Pipeline & Corporate / Production Storage Gathering Utility All Other Consolidated* Third quarter 2022 GAAP earnings per share $ 0.61 $ 0.29 $ 0.27 $ 0.05 $ (0.05 ) $ 1.17 Items impacting comparability: Gain on sale of West Coast assets, net of tax (0.10 ) (0.10 ) Loss from discontinuance of crude oil cash flow hedges, net of tax 0.36 0.36 Transaction and severance costs related to West Coast asset sale, net of tax 0.08 0.08 Unrealized (gain) loss on other investments, net of tax 0.03 0.03 Third quarter 2022 adjusted operating results per share 0.95 0.29 0.27 0.05 (0.02 ) 1.54 Drivers of adjusted operating results** Upstream Revenues Higher (lower) natural gas production 0.13 0.13 Higher (lower) crude oil production (0.35 ) (0.35 ) Higher (lower) realized natural gas prices, after hedging (0.48 ) (0.48 ) Midstream Revenues Higher (lower) operating revenues (0.03 ) 0.03 — Downstream Margins*** Impact of new rates**** (0.02 ) (0.02 ) System modernization and improvement tracker revenues 0.01 0.01 Operating Expenses Lower (higher) lease operating and transportation expenses 0.15 0.15 Lower (higher) operating expenses 0.07 (0.01 ) (0.03 ) (0.03 ) — Lower (higher) property, franchise and other taxes 0.04 0.04 Lower (higher) depreciation / depletion (0.05 ) — — (0.05 ) Other Income (Expense) (Higher) lower other deductions 0.01 0.01 0.03 0.05 (Higher) lower interest expense 0.01 — (0.02 ) 0.02 0.01 Income Taxes Lower (higher) income tax expense / effective tax rate — — (0.01 ) (0.01 ) — (0.02 ) All other / rounding — — — (0.01 ) 0.01 — Third quarter 2023 adjusted operating results per share 0.48 0.26 0.26 — 0.01 1.01 Items impacting comparability: Unrealized gain (loss) on derivative asset, net of tax (0.01 ) (0.01 ) Unrealized gain (loss) on other investments, net of tax — — Third quarter 2023 GAAP earnings per share $ 0.47 $ 0.26 $ 0.26 $ — $ 0.01 $ 1.00 * 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. **** Amount is offset by corresponding decrease in other deductions and will have no earnings impact for the year ended September 30, 2023. NATIONAL FUEL GAS COMPANY RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS NINE MONTHS ENDED JUNE 30, 2023 (Unaudited) Upstream Midstream Downstream Exploration & Pipeline & Corporate / (Thousands of Dollars) Production Storage Gathering Utility All Other Consolidated* Nine months ended June 30, 2022 GAAP earnings $ 189,987 $ 77,236 $ 69,887 $ 79,800 $ (9,031 ) $ 407,879 Items impacting comparability: Reduction of other post-retirement regulatory liability (18,533 ) (18,533 ) Tax impact of reduction of other post-retirement regulatory liability 3,892 3,892 Gain on sale of West Coast assets (12,736 ) (12,736 ) Tax impact of gain on sale of West Coast assets 3,225 3,225 Loss from discontinuance of crude oil cash flow hedges 44,632 44,632 Tax impact of loss from discontinuance of crude oil cash flow hedges (11,303 ) (11,303 ) Transaction and severance costs related to West Coast asset sale 9,693 9,693 Tax impact of transaction and severance costs related to West Coast asset sale (2,455 ) (2,455 ) Unrealized (gain) loss on other investments 10,093 10,093 Tax impact of unrealized (gain) loss on other investments (2,120 ) (2,120 ) Nine months ended June 30, 2022 adjusted operating results 221,043 77,236 69,887 65,159 (1,058 ) 432,267 Drivers of adjusted operating results** Upstream Revenues Higher (lower) natural gas production 49,567 49,567 Higher (lower) crude oil production (87,986 ) (87,986 ) Higher (lower) realized natural gas prices, after hedging (10,815 ) (10,815 ) Higher (lower) other operating revenues (2,161 ) (2,161 ) Midstream Revenues Higher (lower) operating revenues 4,629 9,117 13,746 Downstream Margins*** Impact of new rates**** (11,126 ) (11,126 ) System modernization and improvement tracker revenues 3,462 3,462 Operating Expenses Lower (higher) lease operating and transportation expenses 25,335 25,335 Lower (higher) operating expenses 12,644 (4,939 ) (4,537 ) (7,213 ) (590 ) (4,635 ) Lower (higher) property, franchise and other taxes 4,697 4,697 Lower (higher) depreciation / depletion (15,450 ) (1,941 ) (1,003 ) (18,394 ) Other Income (Expense) (Higher) lower other deductions 2,837 2,810 519 12,840 (3,585 ) 15,421 (Higher) lower interest expense (899 ) 653 (7,577 ) 5,837 (1,986 ) Income Taxes Lower (higher) income tax expense / effective tax rate (1,807 ) (64 ) (1,408 ) (144 ) (13 ) (3,436 ) All other / rounding 286 315 (21 ) 173 (122 ) 631 Nine months ended June 30, 2023 adjusted operating results 198,190 77,147 73,207 55,574 469 404,587 Items impacting comparability: Unrealized gain (loss) on derivative asset (3,702 ) (3,702 ) Tax impact of unrealized gain (loss) on derivative asset 1,015 1,015 Unrealized gain (loss) on other investments 1,632 1,632 Tax impact of unrealized gain (loss) on other investments (343 ) (343 ) Nine months ended June 30, 2023 GAAP earnings $ 195,503 $ 77,147 $ 73,207 $ 55,574 $ 1,758 $ 403,189 * 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. **** Amount is offset by corresponding decrease in other deductions and will have no earnings impact for the year ended September 30, 2023. NATIONAL FUEL GAS COMPANY RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE NINE MONTHS ENDED JUNE 30, 2023 (Unaudited) Upstream Midstream Downstream Exploration & Pipeline & Corporate / Production Storage Gathering Utility All Other Consolidated* Nine months ended June 30, 2022 GAAP earnings per share $ 2.06 $ 0.84 $ 0.76 $ 0.87 $ (0.10 ) $ 4.43 Items impacting comparability: Reduction of other post-retirement regulatory liability, net of tax (0.16 ) (0.16 ) Gain on sale of West Coast assets, net of tax (0.10 ) (0.10 ) Loss from discontinuance of crude oil cash flow hedges, net of tax 0.36 0.36 Transaction and severance costs related to West Coast asset sale, net of tax 0.08 0.08 Unrealized (gain) loss on other investments, net of tax 0.08 0.08 Nine months ended June 30, 2022 adjusted operating results per share 2.40 0.84 0.76 0.71 (0.02 ) 4.69 Drivers of adjusted operating results** Upstream Revenues Higher (lower) natural gas production 0.54 0.54 Higher (lower) crude oil production (0.95 ) (0.95 ) Higher (lower) realized natural gas prices, after hedging (0.12 ) (0.12 ) Higher (lower) other operating revenues (0.02 ) (0.02 ) Midstream Revenues Higher (lower) operating revenues 0.05 0.10 0.15 Downstream Margins*** Impact of new rates**** (0.12 ) (0.12 ) System modernization and improvement tracker revenues 0.04 0.04 Operating Expenses Lower (higher) lease operating and transportation expenses 0.27 0.27 Lower (higher) operating expenses 0.14 (0.05 ) (0.05 ) (0.08 ) (0.01 ) (0.05 ) Lower (higher) property, franchise and other taxes 0.05 0.05 Lower (higher) depreciation / depletion (0.17 ) (0.02 ) (0.01 ) (0.20 ) Other Income (Expense) (Higher) lower other deductions 0.03 0.03 0.01 0.14 (0.04 ) 0.17 (Higher) lower interest expense (0.01 ) 0.01 (0.08 ) 0.06 (0.02 ) Income Taxes Lower (higher) income tax expense / effective tax rate (0.02 ) — (0.02 ) — — (0.04 ) All other / rounding — — (0.01 ) (0.01 ) 0.01 (0.01 ) Nine months ended June 30, 2023 adjusted operating results per share 2.15 0.84 0.79 0.60 — 4.38 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 Rounding 0.01 0.01 Nine months ended June 30, 2023 GAAP earnings per share $ 2.12 $ 0.84 $ 0.79 $ 0.60 $ 0.02 $ 4.37 * 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. **** Amount is offset by corresponding decrease in other deductions and will have no earnings impact for the year ended September 30, 2023. 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 2023 2022 2023 2022 Operating Revenues: Utility Revenues $ 144,538 $ 179,888 $ 862,914 $ 785,664 Exploration and Production and Other Revenues 216,581 252,638 738,107 758,594 Pipeline and Storage and Gathering Revenues 67,585 70,098 203,803 206,642 428,704 502,624 1,804,824 1,750,900 Operating Expenses: Purchased Gas 35,425 67,948 450,461 369,168 Operation and Maintenance: Utility 50,080 46,403 156,885 146,523 Exploration and Production and Other 27,659 64,593 86,315 160,016 Pipeline and Storage and Gathering 38,607 33,988 109,347 97,434 Property, Franchise and Other Taxes 20,427 25,874 71,999 78,093 Depreciation, Depletion and Amortization 102,410 95,857 299,973 275,681 274,608 334,663 1,174,980 1,126,915 Gain on Sale of Assets — 12,736 — 12,736 Operating Income 154,096 180,697 629,844 636,721 Other Income (Expense): Other Income (Deductions) 3,551 (5,649 ) 12,754 3,291 Interest Expense on Long-Term Debt (26,311 ) (30,091 ) (83,499 ) (90,300 ) Other Interest Expense (5,781 ) (3,882 ) (15,485 ) (6,561 ) Income Before Income Taxes 125,555 141,075 543,614 543,151 Income Tax Expense 32,935 32,917 140,425 135,272 Net Income Available for Common Stock $ 92,620 $ 108,158 $ 403,189 $ 407,879 Earnings Per Common Share Basic $ 1.01 $ 1.18 $ 4.40 $ 4.46 Diluted $ 1.00 $ 1.17 $ 4.37 $ 4.43 Weighted Average Common Shares: Used in Basic Calculation 91,803,638 91,456,265 91,725,286 91,388,417 Used in Diluted Calculation 92,294,666 92,168,518 92,268,904 92,083,560 NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, September 30, (Thousands of Dollars) 2023 2022 ASSETS Property, Plant and Equipment $ 13,326,563 $ 12,551,909 Less - Accumulated Depreciation, Depletion and Amortization 6,245,650 5,985,432 Net Property, Plant and Equipment 7,080,913 6,566,477 Current Assets: Cash and Temporary Cash Investments 53,415 46,048 Hedging Collateral Deposits — 91,670 Receivables - Net 183,377 361,626 Unbilled Revenue 13,476 30,075 Gas Stored Underground 13,047 32,364 Materials and Supplies - at average cost 48,288 40,637 Unrecovered Purchased Gas Costs 24,098 99,342 Other Current Assets 71,586 59,369 Total Current Assets 407,287 761,131 Other Assets: Recoverable Future Taxes 104,794 106,247 Unamortized Debt Expense 7,651 8,884 Other Regulatory Assets 63,398 67,101 Deferred Charges 77,886 77,472 Other Investments 74,777 95,025 Goodwill 5,476 5,476 Prepaid Pension and Post-Retirement Benefit Costs 234,425 196,597 Fair Value of Derivative Financial Instruments 46,280 9,175 Other 3,745 2,677 Total Other Assets 618,432 568,654 Total Assets $ 8,106,632 $ 7,896,262 CAPITALIZATION AND LIABILITIES Capitalization: Comprehensive Shareholders' Equity Common Stock, $1 Par Value Authorized - 200,000,000 Shares; Issued and Outstanding - 91,803,996 Shares and 91,478,064 Shares, Respectively $ 91,804 $ 91,478 Paid in Capital 1,035,852 1,027,066 Earnings Reinvested in the Business 1,857,630 1,587,085 Accumulated Other Comprehensive Loss (49,384 ) (625,733 ) Total Comprehensive Shareholders' Equity 2,935,902 2,079,896 Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issuance Costs 2,383,685 2,083,409 Total Capitalization 5,319,587 4,163,305 Current and Accrued Liabilities: Notes Payable to Banks and Commercial Paper 138,500 60,000 Current Portion of Long-Term Debt — 549,000 Accounts Payable 91,808 178,945 Amounts Payable to Customers 22,391 419 Dividends Payable 45,444 43,452 Interest Payable on Long-Term Debt 40,134 17,376 Customer Advances — 26,108 Customer Security Deposits 34,024 24,283 Other Accruals and Current Liabilities 260,897 257,327 Fair Value of Derivative Financial Instruments 32,502 785,659 Total Current and Accrued Liabilities 665,700 1,942,569 Other Liabilities: Deferred Income Taxes 1,030,526 698,229 Taxes Refundable to Customers 347,066 362,098 Cost of Removal Regulatory Liability 272,740 259,947 Other Regulatory Liabilities 190,907 188,803 Other Post-Retirement Liabilities 2,921 3,065 Asset Retirement Obligations 160,415 161,545 Other Liabilities 116,770 116,701 Total Other Liabilities 2,121,345 1,790,388 Commitments and Contingencies — — Total Capitalization and Liabilities $ 8,106,632 $ 7,896,262 NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended June 30, (Thousands of Dollars) 2023 2022 Operating Activities: Net Income Available for Common Stock $ 403,189 $ 407,879 Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:Gain on Sale of Assets — (12,736 ) Depreciation, Depletion and Amortization 299,973 275,681 Deferred Income Taxes 101,096 121,150 Stock-Based Compensation 15,807 15,178 Reduction of Other Post-Retirement Regulatory Liability — (18,533 ) Other 16,640 27,527 Change in: Receivables and Unbilled Revenue 192,324 (194,832 ) Gas Stored Underground and Materials, Supplies and Emission Allowances 11,757 24,141 Unrecovered Purchased Gas Costs 75,244 716 Other Current Assets (12,230 ) (1,699 ) Accounts Payable (52,340 ) 19,259 Amounts Payable to Customers 21,972 271 Customer Advances (26,108 ) (17,223 ) Customer Security Deposits 9,741 5,908 Other Accruals and Current Liabilities 45,363 61,322 Other Assets (39,367 ) (44,184 ) Other Liabilities (7,949 ) (15,809 ) Net Cash Provided by Operating Activities $ 1,055,112 $ 654,016 Investing Activities: Capital Expenditures $ (727,738 ) $ (592,487 ) Net Proceeds from Sale of Oil and Gas Producing Properties — 254,439 Acquisition of Upstream Assets (124,758 ) — Sale of Fixed Income Mutual Fund Shares in Grantor Trust 10,000 30,000 Other 13,397 13,528 Net Cash Used in Investing Activities $ (829,099 ) $ (294,520 ) Financing Activities: Proceeds from Issuance of Short-Term Note Payable to Bank $ 250,000 $ — Repayment of Short-Term Note Payable to Bank (250,000 ) — Net Change in Other Short-Term Notes Payable to Banks and Commercial Paper 78,500 241,500 Reduction of Long-Term Debt (549,000 ) — Dividends Paid on Common Stock (130,653 ) (124,701 ) Net Proceeds From Issuance of Long-Term Debt 297,533 — Net Repurchases of Common Stock (6,696 ) (9,387 ) Net Cash Provided by (Used in) Financing Activities $ (310,316 ) $ 107,412 Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash (84,303 ) 466,908 Cash, Cash Equivalents, and Restricted Cash at Beginning of Period 137,718 120,138 Cash, Cash Equivalents, and Restricted Cash at June 30 $ 53,415 $ 587,046 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 2023 2022 Variance 2023 2022 Variance Total Operating Revenues $ 216,581 $ 252,638 $ (36,057 ) $ 738,107 $ 758,428 $ (20,321 ) Operating Expenses: Operation and Maintenance: General and Administrative Expense 15,877 26,844 (10,967 ) 48,910 63,396 (14,486 ) Lease Operating and Transportation Expense 61,815 79,529 (17,714 ) 189,144 221,213 (32,069 ) All Other Operation and Maintenance Expense 2,358 8,854 (6,496 ) 6,970 18,183 (11,213 ) Property, Franchise and Other Taxes 2,295 7,114 (4,819 ) 13,943 19,888 (5,945 ) Depreciation, Depletion and Amortization 60,584 55,136 5,448 174,747 155,190 19,557 142,929 177,477 (34,548 ) 433,714 477,870 (44,156 ) Gain on Sale of Assets — 12,736 (12,736 ) — 12,736 (12,736 ) Operating Income 73,652 87,897 (14,245 ) 304,393 293,294 11,099 Other Income (Expense): Non-Service Pension and Post-Retirement Benefit (Costs) Credit 347 (186 ) 533 1,042 (558 ) 1,600 Interest and Other Income (Deductions) (806 ) 482 (1,288 ) (1,098 ) 613 (1,711 ) Interest Expense (13,628 ) (14,589 ) 961 (39,049 ) (38,927 ) (122 ) Income Before Income Taxes 59,565 73,604 (14,039 ) 265,288 254,422 10,866 Income Tax Expense 16,236 17,107 (871 ) 69,785 64,435 5,350 Net Income $ 43,329 $ 56,497 $ (13,168 ) $ 195,503 $ 189,987 $ 5,516 Net Income Per Share (Diluted) $ 0.47 $ 0.61 $ (0.14 ) $ 2.12 $ 2.06 $ 0.06 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 2023 2022 Variance 2023 2022 Variance Revenues from External Customers $ 62,956 $ 67,236 $ (4,280 ) $ 194,800 $ 196,579 $ (1,779 ) Intersegment Revenues 29,439 28,312 1,127 90,354 82,716 7,638 Total Operating Revenues 92,395 95,548 (3,153 ) 285,154 279,295 5,859 Operating Expenses: Purchased Gas 223 (139 ) 362 1,111 1,298 (187 ) Operation and Maintenance 26,207 24,639 1,568 77,501 71,249 6,252 Property, Franchise and Other Taxes 8,329 8,483 (154 ) 25,452 25,664 (212 ) Depreciation, Depletion and Amortization 17,732 17,322 410 52,874 50,417 2,457 52,491 50,305 2,186 156,938 148,628 8,310 Operating Income 39,904 45,243 (5,339 ) 128,216 130,667 (2,451 ) Other Income (Expense): Non-Service Pension and Post-Retirement Benefit Credit 1,330 767 563 3,990 2,302 1,688 Interest and Other Income 1,831 735 1,096 4,653 2,330 2,323 Interest Expense (10,873 ) (10,813 ) (60 ) (32,702 ) (31,564 ) (1,138 ) Income Before Income Taxes 32,192 35,932 (3,740 ) 104,157 103,735 422 Income Tax Expense 8,379 9,333 (954 ) 27,010 26,499 511 Net Income $ 23,813 $ 26,599 $ (2,786 ) $ 77,147 $ 77,236 $ (89 ) Net Income Per Share (Diluted) $ 0.26 $ 0.29 $ (0.03 ) $ 0.84 $ 0.84 $ — Three Months Ended Nine Months Ended June 30, June 30, GATHERING SEGMENT 2023 2022 Variance 2023 2022 Variance Revenues from External Customers $ 4,629 $ 2,862 $ 1,767 $ 9,003 $ 10,063 $ (1,060 ) Intersegment Revenues 54,277 53,069 1,208 163,297 150,696 12,601 Total Operating Revenues 58,906 55,931 2,975 172,300 160,759 11,541 Operating Expenses: Operation and Maintenance 12,849 9,770 3,079 33,252 27,509 5,743 Property, Franchise and Other Taxes 25 10 15 39 12 27 Depreciation, Depletion and Amortization 8,987 8,589 398 26,613 25,343 1,270 21,861 18,369 3,492 59,904 52,864 7,040 Operating Income 37,045 37,562 (517 ) 112,396 107,895 4,501 Other Income (Expense): Non-Service Pension and Post-Retirement Benefit (Costs) Credit 37 (56 ) 93 112 (168 ) 280 Interest and Other Income 63 53 10 458 81 377 Interest Expense (3,613 ) (4,164 ) 551 (11,556 ) (12,383 ) 827 Income Before Income Taxes 33,532 33,395 137 101,410 95,425 5,985 Income Tax Expense 9,397 8,737 660 28,203 25,538 2,665 Net Income $ 24,135 $ 24,658 $ (523 ) $ 73,207 $ 69,887 $ 3,320 Net Income Per Share (Diluted) $ 0.26 $ 0.27 $ (0.01 ) $ 0.79 $ 0.76 $ 0.03 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 2023 2022 Variance 2023 2022 Variance Revenues from External Customers $ 144,538 $ 179,888 $ (35,350 ) $ 862,914 $ 785,664 $ 77,250 Intersegment Revenues 79 60 19 500 245 255 Total Operating Revenues 144,617 179,948 (35,331 ) 863,414 785,909 77,505 Operating Expenses: Purchased Gas 63,151 95,587 (32,436 ) 533,452 448,268 85,184 Operation and Maintenance 50,915 47,176 3,739 159,483 148,885 10,598 Property, Franchise and Other Taxes 9,639 10,143 (504 ) 32,169 32,156 13 Depreciation, Depletion and Amortization 14,997 14,765 232 45,425 44,592 833 138,702 167,671 (28,969 ) 770,529 673,901 96,628 Operating Income 5,915 12,277 (6,362 ) 92,885 112,008 (19,123 ) Other Income (Expense): Non-Service Pension and Post-Retirement Benefit (Costs) Credit 8 (2,678 ) 2,686 (5 ) 6,018 (6,023 ) Interest and Other Income 1,694 349 1,345 4,903 1,162 3,741 Interest Expense (8,441 ) (6,087 ) (2,354 ) (26,193 ) (17,115 ) (9,078 ) Income (Loss) Before Income Taxes (824 ) 3,861 (4,685 ) 71,590 102,073 (30,483 ) Income Tax Expense (Benefit) (861 ) (761 ) (100 ) 16,016 22,273 (6,257 ) Net Income $ 37 $ 4,622 $ (4,585 ) $ 55,574 $ 79,800 $ (24,226 ) Net Income Per Share (Diluted) $ — $ 0.05 $ (0.05 ) $ 0.60 $ 0.87 $ (0.27 ) 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 2023 2022 Variance 2023 2022 Variance Revenues from External Customers $ — $ — $ — $ — $ — $ — Intersegment Revenues — — — — 6 (6 ) Total Operating Revenues — — — — 6 (6 ) Operating Expenses: Purchased Gas — — — — 6 (6 ) Operation and Maintenance — — — 21 5 16 — — — 21 11 10 Operating Loss — — — (21 ) (5 ) (16 ) Other Income (Expense): Interest and Other Income (Deductions) (65 ) — (65 ) (451 ) 2 (453 ) Interest Expense (41 ) — (41 ) (89 ) — (89 ) Loss before Income Taxes (106 ) — (106 ) (561 ) (3 ) (558 ) Income Tax Expense (Benefit) (25 ) — (25 ) (131 ) 4 (135 ) Net Loss $ (81 ) $ — $ (81 ) $ (430 ) $ (7 ) $ (423 ) Net Loss Per Share (Diluted) $ — $ — $ — $ — $ — $ — Three Months Ended Nine Months Ended June 30, June 30, CORPORATE 2023 2022 Variance 2023 2022 Variance Revenues from External Customers $ — $ — $ — $ — $ 166 $ (166 ) Intersegment Revenues 1,152 1,082 70 3,455 3,247 208 Total Operating Revenues 1,152 1,082 70 3,455 3,413 42 Operating Expenses: Operation and Maintenance 3,323 3,195 128 10,770 10,039 731 Property, Franchise and Other Taxes 139 124 15 396 373 23 Depreciation, Depletion and Amortization 110 45 65 314 139 175 3,572 3,364 208 11,480 10,551 929 Operating Loss (2,420 ) (2,282 ) (138 ) (8,025 ) (7,138 ) (887 ) Other Income (Expense): Non-Service Pension and Post-Retirement Benefit Costs (354 ) (1,017 ) 663 (1,063 ) (3,052 ) 1,989 Interest and Other Income 36,312 31,019 5,293 111,598 92,937 18,661 Interest Expense on Long-Term Debt (26,311 ) (30,091 ) 3,780 (83,499 ) (90,300 ) 6,801 Other Interest Expense (6,031 ) (3,346 ) (2,685 ) (17,281 ) (4,948 ) (12,333 ) Income (Loss) before Income Taxes 1,196 (5,717 ) 6,913 1,730 (12,501 ) 14,231 Income Tax Benefit (191 ) (1,499 ) 1,308 (458 ) (3,477 ) 3,019 Net Income (Loss) $ 1,387 $ (4,218 ) $ 5,605 $ 2,188 $ (9,024 ) $ 11,212 Net Income (Loss) Per Share (Diluted) $ 0.01 $ (0.05 ) $ 0.06 $ 0.02 $ (0.10 ) $ 0.12 Three Months Ended Nine Months Ended June 30, June 30, INTERSEGMENT ELIMINATIONS 2023 2022 Variance 2023 2022 Variance Intersegment Revenues $ (84,947 ) $ (82,523 ) $ (2,424 ) $ (257,606 ) $ (236,910 ) $ (20,696 ) Operating Expenses: Purchased Gas (27,949 ) (27,500 ) (449 ) (84,102 ) (80,404 ) (3,698 ) Operation and Maintenance (56,998 ) (55,023 ) (1,975 ) (173,504 ) (156,506 ) (16,998 ) (84,947 ) (82,523 ) (2,424 ) (257,606 ) (236,910 ) (20,696 ) Operating Income — — — — — — Other Income (Expense): Interest and Other Deductions (36,846 ) (35,117 ) (1,729 ) (111,385 ) (98,376 ) (13,009 ) Interest Expense 36,846 35,117 1,729 111,385 98,376 13,009 Net Income $ — $ — $ — $ — $ — $ — Net Income Per Share (Diluted) $ — $ — $ — $ — $ — $ — NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES SEGMENT INFORMATION (Continued) (Thousands of Dollars) Three Months Ended Nine Months Ended June 30, June 30, (Unaudited) (Unaudited) Increase Increase 2023 2022 (Decrease) 2023 2022 (Decrease) Capital Expenditures: Exploration and Production(1) $ 269,171 (2) $ 131,776 (4) $ 137,395 $ 592,787 (2)(3) $ 405,736 (4)(5) $ 187,051 Pipeline and Storage 33,503 (2) 19,778 (4) 13,725 66,767 (2)(3) 58,243 (4)(5) 8,524 Gathering 21,297 (2) 8,614 (4) 12,683 55,379 (2)(3) 28,588 (4)(5) 26,791 Utility 39,446 (2) 27,664 (4) 11,782 88,676 (2)(3) 70,972 (4)(5) 17,704 Total Reportable Segments 363,417 187,832 175,585 803,609 563,539 240,070 All Other — — — — — — Corporate 45 166 (121 ) 449 663 (214 ) Total Capital Expenditures $ 363,462 $ 187,998 $ 175,464 $ 804,058 $ 564,202 $ 239,856 (1) The quarter and nine months ended June 30, 2023 includes $124.8 million related to the acquisition of upstream assets acquired from SWN. The acquisition cost is reported as a component of Acquisition of Upstream Assets on the Consolidated Statement of Cash Flows.
(2) Capital expenditures for the quarter and nine months ended June 30, 2023, include accounts payable and accrued liabilities related to capital expenditures of $52.8 million, $7.7 million, $2.8 million, and $8.5 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at June 30, 2023, since they represent non-cash investing activities at that date.
(3) Capital expenditures for the nine months ended June 30, 2023, exclude capital expenditures of $83.0 million, $15.2 million, $10.7 million and $11.4 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, 2022 and paid during the nine months ended June 30, 2023. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2022, 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, 2023.
(4) Capital expenditures for the quarter and nine months ended June 30, 2022, include accounts payable and accrued liabilities related to capital expenditures of $62.0 million, $5.2 million, $2.5 million, and $4.7 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, 2022, since they represent non-cash investing activities at that date.
(5) Capital expenditures for the nine months ended June 30, 2022, exclude capital expenditures of $47.9 million, $39.4 million, $4.8 million and $10.6 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, 2021 and paid during the nine months ended June 30, 2022. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2021, 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, 2022.
DEGREE DAYS Percent Colder (Warmer) Than: Three Months Ended June 30, Normal 2023 2022 Normal(1) Last Year(1) Buffalo, NY 912 788 797 (13.6 ) (1.1 ) Erie, PA 871 802 741 (7.9 ) 8.2 Nine Months Ended June 30, Buffalo, NY 6,455 5,656 5,662 (12.4 ) (0.1 ) Erie, PA 6,023 5,434 5,274 (9.8 ) 3.0 (1) Percents compare actual 2023 degree days to normal degree days and actual 2023 degree days to actual 2022 degree days.
NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES EXPLORATION AND PRODUCTION INFORMATION Three Months Ended Nine Months Ended June 30, June 30, Increase Increase 2023 2022 (Decrease) 2023 2022 (Decrease) Gas Production/Prices: Production (MMcf) Appalachia 94,747 88,888 5,859 278,562 253,842 24,720 West Coast — 405 (405 ) — 1,210 (1,210 ) Total Production 94,747 89,293 5,454 278,562 255,052 23,510 Average Prices (Per Mcf) Appalachia $ 1.66 $ 5.50 $ (3.84 ) $ 3.05 $ 4.64 $ (1.59 ) West Coast N/M 10.29 N/M N/M 10.04 N/M Weighted Average 1.66 5.52 (3.86 ) 3.05 4.67 (1.62 ) Weighted Average after Hedging 2.27 2.87 (0.60 ) 2.62 2.67 (0.05 ) Oil Production/Prices: Production (Thousands of Barrels) Appalachia 7 7 — 22 8 14 West Coast — 519 (519 ) — 1,589 (1,589 ) Total Production 7 526 (519 ) 22 1,597 (1,575 ) Average Prices (Per Barrel) Appalachia $ 69.66 $ 108.47 $ (38.81 ) $ 75.50 $ 104.83 $ (29.33 ) West Coast N/M 110.79 N/M N/M 94.06 N/M Weighted Average 69.66 110.76 (41.10 ) 75.50 94.11 (18.61 ) Weighted Average after Hedging(1) 69.66 77.65 (7.99 ) 75.50 70.71 4.79 Total Production (MMcfe) 94,789 92,449 2,340 278,694 264,634 14,060 Selected Operating Performance Statistics: General & Administrative Expense per Mcfe(2) $ 0.17 $ 0.19 $ (0.02 ) $ 0.18 $ 0.20 $ (0.02 ) Lease Operating and Transportation Expense per Mcfe(2)(3) $ 0.65 $ 0.86 $ (0.21 ) $ 0.68 $ 0.84 $ (0.16 ) Depreciation, Depletion & Amortization per Mcfe(2) $ 0.64 $ 0.60 $ 0.04 $ 0.63 $ 0.59 $ 0.04 N/M Not Meaningful (as a result of the sale of Seneca's West Coast assets in June 2022)
(1) Weighted average oil price after hedging for the three and nine months ended June 30, 2022 excludes a loss on discontinuance of crude oil cash flow hedges of $44.6 million.
(2) 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. General and Administrative Expense per Mcfe for the three and nine months ended June 30, 2022 excludes transaction and severance costs related to the California asset sale.
(3) Amounts include transportation expense of $0.55 and $0.57 per Mcfe for the three months ended June 30, 2023 and June 30, 2022, respectively. Amounts include transportation expense of $0.57 and $0.56 per Mcfe for the nine months ended June 30, 2023 and June 30, 2022, respectively.
NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES EXPLORATION AND PRODUCTION INFORMATION Hedging Summary for Remaining Three Months of Fiscal 2023 Volume Average Hedge Price Gas Swaps NYMEX 32,820,000 MMBTU $ 2.88 / MMBTU No Cost Collars 23,940,000 MMBTU $ 3.43 / MMBTU (Floor) / $4.13 / MMBTU (Ceiling) Fixed Price Physical Sales 23,006,166 MMBTU $ 2.20 / MMBTU Total 79,766,166 MMBTU Hedging Summary for Fiscal 2024 Volume Average Hedge Price Gas Swaps NYMEX 134,930,000 MMBTU $ 3.34 / MMBTU No Cost Collars 65,280,000 MMBTU $ 3.33 / MMBTU (Floor) / $4.17 / MMBTU (Ceiling) Fixed Price Physical Sales 75,554,510 MMBTU $ 2.44 / MMBTU Total 275,764,510 MMBTU Hedging Summary for Fiscal 2025 Volume Average Hedge Price Gas Swaps NYMEX 80,560,000 MMBTU $ 3.49 / MMBTU No Cost Collars 43,960,000 MMBTU $ 3.49 / MMBTU (Floor) / $4.65 / MMBTU (Ceiling) Fixed Price Physical Sales 73,371,069 MMBTU $ 2.49 / MMBTU Total 197,891,069 MMBTU Hedging Summary for Fiscal 2026 Volume Average Hedge Price Gas Swaps NYMEX 29,020,000 MMBTU $ 3.98 / MMBTU No Cost Collars 42,720,000 MMBTU $ 3.53 / MMBTU (Floor) / $4.76 / MMBTU (Ceiling) Fixed Price Physical Sales 65,847,497 MMBTU $ 2.39 / MMBTU Total 137,587,497 MMBTU Hedging Summary for Fiscal 2027 Volume Average Hedge Price Gas Swaps NYMEX 12,750,000 MMBTU $ 4.27 / MMBTU No Cost Collars 3,560,000 MMBTU $ 3.53 / MMBTU (Floor) / $4.76 / MMBTU (Ceiling) Fixed Price Physical Sales 45,656,079 MMBTU $ 2.39 / MMBTU Total 61,966,079 MMBTU Hedging Summary for Fiscal 2028 Volume Average Hedge Price Gas Swaps NYMEX 1,000,000 MMBTU $ 4.29 / MMBTU Fixed Price Physical Sales 12,081,308 MMBTU $ 2.48 / MMBTU Total 13,081,308 MMBTU Hedging Summary for Fiscal 2029 Volume Average Hedge Price Fixed Price Physical Sales 782,637 MMBTU $ 2.54 / 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 2023 2022 (Decrease) 2023 2022 (Decrease) Firm Transportation - Affiliated 22,295 19,558 2,737 108,911 94,213 14,698 Firm Transportation - Non-Affiliated 159,145 156,310 2,835 528,234 507,278 20,956 Interruptible Transportation 97 206 (109 ) 2,024 1,726 298 181,537 176,074 5,463 639,169 603,217 35,952 Gathering Volume - (MMcf) Three Months Ended Nine Months Ended June 30, June 30, Increase Increase 2023 2022 (Decrease) 2023 2022 (Decrease) Gathered Volume 118,707 109,797 8,910 336,078 314,625 21,453 Utility Throughput - (MMcf) Three Months Ended Nine Months Ended June 30, June 30, Increase Increase 2023 2022 (Decrease) 2023 2022 (Decrease) Retail Sales: Residential Sales 9,600 10,344 (744 ) 57,636 59,865 (2,229 ) Commercial Sales 1,434 1,511 (77 ) 8,812 8,977 (165 ) Industrial Sales 87 74 13 506 466 40 11,121 11,929 (808 ) 66,954 69,308 (2,354 ) Transportation 12,468 12,936 (468 ) 53,567 56,274 (2,707 ) 23,589 24,865 (1,276 ) 120,521 125,582 (5,061 ) NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIESNON-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 and nine months ended June 30, 2023 and 2022:
Three Months Ended Nine Months Ended June 30, June 30, (in thousands except per share amounts) 2023 2022 2023 2022 Reported GAAP Earnings $ 92,620 $ 108,158 $ 403,189 $ 407,879 Items impacting comparability: Items related to West Coast asset sale: Gain on sale of West Coast assets (E&P) — (12,736 ) — (12,736 ) Tax impact of gain on sale of West Coast assets — 3,225 — 3,225 Loss from discontinuance of crude oil cash flow hedges (E&P) — 44,632 — 44,632 Tax impact of loss from discontinuance of crude oil cash flow hedges — (11,303 ) — (11,303 ) Transaction and severance costs (E&P) — 9,693 — 9,693 Tax impact of transaction and severance costs — (2,455 ) — (2,455 ) Total items impacting comparability related to West Coast asset sale — 31,056 — 31,056 Unrealized (gain) loss on derivative asset (E&P) 1,430 — 3,702 — Tax impact of unrealized (gain) loss on derivative asset (392 ) — (1,015 ) — Unrealized (gain) loss on other investments (Corporate / All Other) (355 ) 3,434 (1,632 ) 10,093 Tax impact of unrealized (gain) loss on other investments 74 (721 ) 343 (2,120 ) Reduction of other post-retirement regulatory liability (Utility) — — — (18,533 ) Tax impact of reduction of other post-retirement regulatory liability — — — 3,892 Adjusted Operating Results $ 93,377 $ 141,927 $ 404,587 $ 432,267 Reported GAAP Earnings Per Share $ 1.00 $ 1.17 $ 4.37 $ 4.43 Items impacting comparability: Items related to West Coast asset sale: Gain on sale of West Coast assets, net of tax (E&P) — (0.10 ) — (0.10 ) Loss from discontinuance of crude oil cash flow hedges, net of tax (E&P) — 0.36 — 0.36 Transaction and severance costs, net of tax (E&P) — 0.08 — 0.08 Total items impacting comparability related to West Coast asset sale — 0.34 — 0.34 Unrealized (gain) loss on derivative asset, net of tax (E&P) 0.01 — 0.03 — Unrealized (gain) loss on other investments, net of tax (Corporate / All Other) — 0.03 (0.01 ) 0.08 Reduction of other post-retirement regulatory liability, net of tax (Utility) — — — (0.16 ) Rounding — — (0.01 ) — Adjusted Operating Results Per Share $ 1.01 $ 1.54 $ 4.38 $ 4.69 NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIESNON-GAAP FINANCIAL MEASURES (Continued)
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, 2023 and 2022:
Three Months Ended Nine Months Ended June 30, June 30, (in thousands) 2023 2022 2023 2022 Reported GAAP Earnings $ 92,620 $ 108,158 $ 403,189 $ 407,879 Depreciation, Depletion and Amortization 102,410 95,857 299,973 275,681 Other (Income) Deductions (3,551 ) 5,649 (12,754 ) (3,291 ) Interest Expense 32,092 33,973 98,984 96,861 Income Taxes 32,935 32,917 140,425 135,272 Gain on Sale of Assets — (12,736 ) — (12,736 ) Loss from discontinuance of crude oil cash flow hedges (E&P) — 44,632 — 44,632 Transaction and severance costs related to West Coast asset sale (E&P) — 9,693 — 9,693 Adjusted EBITDA $ 256,506 $ 318,143 $ 929,817 $ 953,991 Adjusted EBITDA by Segment Pipeline and Storage Adjusted EBITDA $ 57,636 $ 62,565 $ 181,090 $ 181,084 Gathering Adjusted EBITDA 46,032 46,151 139,009 133,238 Total Midstream Businesses Adjusted EBITDA 103,668 108,716 320,099 314,322 Exploration and Production Adjusted EBITDA 134,236 184,622 479,140 490,073 Utility Adjusted EBITDA 20,912 27,042 138,310 156,600 Corporate and All Other Adjusted EBITDA (2,310 ) (2,237 ) (7,732 ) (7,004 ) Total Adjusted EBITDA $ 256,506 $ 318,143 $ 929,817 $ 953,991 NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
SEGMENT ADJUSTED EBITDAThree Months Ended Nine Months Ended June 30, June 30, (in thousands) 2023 2022 2023 2022 Exploration and Production Segment Reported GAAP Earnings $ 43,329 $ 56,497 $ 195,503 $ 189,987 Depreciation, Depletion and Amortization 60,584 55,136 174,747 155,190 Other (Income) Deductions 459 (296 ) 56 (55 ) Interest Expense 13,628 14,589 39,049 38,927 Income Taxes 16,236 17,107 69,785 64,435 Gain on Sale of West Coast Assets — (12,736 ) — (12,736 ) Loss from Discontinuance of Crude Oil Cash Flow Hedges — 44,632 — 44,632 Transaction and Severance Costs related to West Coast Asset Sale — 9,693 — 9,693 Adjusted EBITDA $ 134,236 $ 184,622 $ 479,140 $ 490,073 Pipeline and Storage Segment Reported GAAP Earnings $ 23,813 $ 26,599 $ 77,147 $ 77,236 Depreciation, Depletion and Amortization 17,732 17,322 52,874 50,417 Other (Income) Deductions (3,161 ) (1,502 ) (8,643 ) (4,632 ) Interest Expense 10,873 10,813 32,702 31,564 Income Taxes 8,379 9,333 27,010 26,499 Adjusted EBITDA $ 57,636 $ 62,565 $ 181,090 $ 181,084 Gathering Segment Reported GAAP Earnings $ 24,135 $ 24,658 $ 73,207 $ 69,887 Depreciation, Depletion and Amortization 8,987 8,589 26,613 25,343 Other (Income) Deductions (100 ) 3 (570 ) 87 Interest Expense 3,613 4,164 11,556 12,383 Income Taxes 9,397 8,737 28,203 25,538 Adjusted EBITDA $ 46,032 $ 46,151 $ 139,009 $ 133,238 Utility Segment Reported GAAP Earnings $ 37 $ 4,622 $ 55,574 $ 79,800 Depreciation, Depletion and Amortization 14,997 14,765 45,425 44,592 Other (Income) Deductions (1,702 ) 2,329 (4,898 ) (7,180 ) Interest Expense 8,441 6,087 26,193 17,115 Income Taxes (861 ) (761 ) 16,016 22,273 Adjusted EBITDA $ 20,912 $ 27,042 $ 138,310 $ 156,600 Corporate and All Other Reported GAAP Earnings $ 1,306 $ (4,218 ) $ 1,758 $ (9,031 ) Depreciation, Depletion and Amortization 110 45 314 139 Other (Income) Deductions 953 5,115 1,301 8,489 Interest Expense (4,463 ) (1,680 ) (10,516 ) (3,128 ) Income Taxes (216 ) (1,499 ) (589 ) (3,473 ) Adjusted EBITDA $ (2,310 ) $ (2,237 ) $ (7,732 ) $ (7,004 ) Management defines free cash flow as net cash provided by operating activities less capital expenditures. The Company is unable to provide a reconciliation of projected free cash flow as described in this release to its comparable financial measure calculated in accordance with GAAP without unreasonable efforts. This is due to our inability to reliably predict 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.
Brandon J. Haspett Investor Relations 716-857-7697 Timothy J. Silverstein Treasurer 716-857-6987
