• National Fuel Reports Third Quarter Earnings And Announces Preliminary Guidance For Fiscal 2024

    المصدر: Nasdaq GlobeNewswire / 02 أغسطس 2023 16:45:49   America/New_York

    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. Haspett716-857-7697
    Media Contact:Karen L. Merkel716-857-7654


     

    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 SUBSIDIARIES

    GUIDANCE 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
    Guidance    		 Preliminary 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, NY912 788 797 (13.6) (1.1)
    Erie, PA871 802 741 (7.9) 8.2 
              
    Nine Months Ended June 30,         
    Buffalo, NY6,455 5,656 5,662 (12.4) (0.1)
    Erie, PA6,023 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 32,820,000MMBTU $2.88 / MMBTU
    No Cost Collars 23,940,000MMBTU $3.43 / MMBTU (Floor) / $4.13 / MMBTU (Ceiling)
    Fixed Price Physical Sales 23,006,166MMBTU $2.20 / MMBTU
    Total 79,766,166MMBTU   
           
    Hedging Summary for Fiscal 2024 Volume  Average Hedge Price
    Gas Swaps      
    NYMEX 134,930,000MMBTU $3.34 / MMBTU
    No Cost Collars 65,280,000MMBTU $3.33 / MMBTU (Floor) / $4.17 / MMBTU (Ceiling)
    Fixed Price Physical Sales 75,554,510MMBTU $2.44 / MMBTU
    Total 275,764,510MMBTU   
           
    Hedging Summary for Fiscal 2025 Volume  Average Hedge Price
    Gas Swaps      
    NYMEX 80,560,000MMBTU $3.49 / MMBTU
    No Cost Collars 43,960,000MMBTU $3.49 / MMBTU (Floor) / $4.65 / MMBTU (Ceiling)
    Fixed Price Physical Sales 73,371,069MMBTU $2.49 / MMBTU
    Total 197,891,069MMBTU   
           
    Hedging Summary for Fiscal 2026 Volume  Average Hedge Price
    Gas Swaps      
    NYMEX 29,020,000MMBTU $3.98 / MMBTU
    No Cost Collars 42,720,000MMBTU $3.53 / MMBTU (Floor) / $4.76 / MMBTU (Ceiling)
    Fixed Price Physical Sales 65,847,497MMBTU $2.39 / MMBTU
    Total 137,587,497MMBTU   
           
    Hedging Summary for Fiscal 2027 Volume  Average Hedge Price
    Gas Swaps      
    NYMEX 12,750,000MMBTU $4.27 / MMBTU
    No Cost Collars 3,560,000MMBTU $3.53 / MMBTU (Floor) / $4.76 / MMBTU (Ceiling)
    Fixed Price Physical Sales 45,656,079MMBTU $2.39 / MMBTU
    Total 61,966,079MMBTU   
           
    Hedging Summary for Fiscal 2028 Volume  Average Hedge Price
    Gas Swaps      
    NYMEX 1,000,000MMBTU $4.29 / MMBTU
    Fixed Price Physical Sales 12,081,308MMBTU $2.48 / MMBTU
    Total 13,081,308MMBTU   
           
    Hedging Summary for Fiscal 2029 Volume  Average Hedge Price
    Fixed Price Physical Sales 782,637MMBTU $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 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 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 SUBSIDIARIES

    NON-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 EBITDA

      Three 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

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