NFG National Fuel Gas Co

National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated earnings for the first quarter of its 2015 fiscal year (the quarter ended December 31, 2014).

HIGHLIGHTS

• Earnings for the first quarter of fiscal 2015 of $84.7 million, or $1.00 per share, increased $2.5 million, or $0.03 per share, compared to the prior year’s first quarter. Adjusted EBITDA for the first quarter was $263.3 million, an increase of $9.6 million over last year. These increases were largely due to continued growth in the Company’s Midstream businesses (which consist of the Company's Pipeline and Storage and Gathering segments), where earnings and Adjusted EBITDA were up $7.1 million and $10.2 million, respectively.
• Seneca Resources Corporation’s (“Seneca”) first quarter production of natural gas and crude oil was 48.2 billion cubic feet equivalent (“Bcfe”), an increase of 11.1 Bcfe or approximately 30% over the prior year’s first quarter. Pricing related curtailments for the quarter were an estimated 6 Bcf. Average daily production during the quarter was 524 million cubic feet equivalent (“MMcfe”) per day.
• A conference call is scheduled for Friday, January 30, 2015, at 11 a.m. Eastern Time.

MANAGEMENT COMMENTS

Ronald J. Tanski, President and Chief Executive Officer of National Fuel Gas Company, stated: “The first quarter was a very good start to our 2015 fiscal year. Our Upstream business continues to develop and highlight the quality of our Marcellus acreage. Our Midstream companies continue the build-out of gathering and transmission pipeline infrastructure in Appalachia, providing more capacity to move Marcellus supplies to market. And once again, our Utility system and employees proved reliable in the face of yet another extreme winter storm that hit our western New York service territory last November.

“Low commodity prices impacted our production for the quarter, and we expect those low prices to continue to tighten the economics of Seneca’s activities in the Marcellus and California over the next 12 to 18 months. As a result, we have reduced our near-term capital spending plans, both at Seneca and in our Gathering segment. Nevertheless, we remain confident in our long-term growth plans in Appalachia, and in our strategy. We designed our integrated model to weather such challenges and we remain in a strong position to create sustainable value for our shareholders.”

SUMMARY OF RESULTS

National Fuel had consolidated earnings for the quarter ended December 31, 2014, of $84.7 million, or $1.00 per share, compared to the prior year’s first quarter of $82.2 million, or $0.97 per share, an increase of $2.5 million, or $0.03 per share. The increase is mainly due to higher earnings in the Midstream businesses. (Note: All references to earnings per share are to diluted earnings per share, and all amounts used in the discussion of earnings are after tax unless otherwise noted.)

DISCUSSION OF RESULTS BY SEGMENT

The following discussion of the earnings of each segment is summarized in a tabular form at pages 7 and 8 of this report. It may be helpful to refer to those tables while reviewing this discussion.

Upstream Business

Exploration and Production Segment

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

The Exploration and Production segment’s earnings in the first quarter of fiscal 2015 of $26.7 million, or $0.32 per share, decreased $4.4 million, or $0.05 per share, when compared with the prior year’s first quarter mainly due to lower commodity prices realized after hedging. The weighted average natural gas price received by Seneca (after hedging) for the quarter ended December 31, 2014, was $3.25 per thousand cubic feet (“Mcf”), a decrease of $0.45 per Mcf compared to the prior year’s first quarter. The weighted average crude oil price realized after hedging for the quarter ended December 31, 2014, was $78.09 per barrel ("Bbl"), a decrease of $15.91 per Bbl compared to the prior year’s first quarter.

Overall production of natural gas and crude oil for the current quarter of 48.2 Bcfe increased approximately 11.1 Bcfe, or 29.8 percent, compared to the prior year’s first quarter. Production from Seneca’s Appalachia properties increased approximately 33.5 percent and accounted for 10.7 Bcfe of the increase, largely because of Seneca’s strong well results in Lycoming County and the Clermont-Rich Valley area in Seneca’s WDA. California production of 5.3 Bcfe increased 6.4 percent compared to the prior year’s first quarter due to development activities primarily in the East Coalinga and South Midway Sunset fields.

On a per unit basis, quarterly depletion expense of $1.66 per Mcfe decreased $0.26 per Mcfe due to higher natural gas reserve balances at December 31, 2014, compared to the prior year’s first quarter. On a per unit basis, lease operating and transportation expenses (“LOE”) at $0.97 per Mcfe increased $0.02 per Mcfe compared to the prior year’s first quarter due to higher intercompany gathering and compression costs associated with production from Tract 100 in Lycoming County and the Clermont-Rich Valley area in Seneca’s WDA. General and administrative expenses (“G&A”) decreased $0.08 per Mcfe compared to the prior year’s first quarter, due to higher production.

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.

The Pipeline and Storage segment’s earnings of $20.8 million, or $0.25 per share, for the quarter ended December 31, 2014, increased $1.6 million, or $0.02 per share, when compared with the same period in the prior fiscal year. The increase in earnings is due to higher non-affiliated revenues from the Mercer Expansion project, which was placed in service in the current year’s first quarter. The increase in earnings also reflects higher transportation revenues from additional new transportation contracts on both pipeline systems. As a result of the ongoing pricing basis differentials in the Marcellus basin, the Pipeline and Storage segment continues to see increased demand for transportation services from producers and marketers to move gas supplies to higher priced markets.

Gathering Segment

The Gathering segment’s operations are carried out by National Fuel Gas Midstream Corporation’s (“Midstream”) subsidiary limited liability companies. The Gathering segment constructs, owns and operates natural gas pipeline gathering and processing facilities in the Appalachian region and currently provides the gathering infrastructure for transporting Seneca’s Marcellus Shale production to the interstate pipeline system.

The Gathering segment’s earnings of $11.6 million, or $0.14 per share, for the quarter ended December 31, 2014, increased $5.5 million, or $0.07 per share, when compared with the same period in the prior fiscal year. The increase in earnings is mainly due to higher gathering revenues from Midstream’s Trout Run and Clermont gathering systems. That increase in revenue is mostly attributable to the overall increase in Seneca’s production volumes as described above. A change in the mix of Seneca’s production among Midstream's three major gathering systems also contributed to the increase.

Downstream Businesses

Utility Segment

The Utility segment operations are carried out by National Fuel Gas Distribution Corporation (“Distribution”), which sells or transports natural gas to customers located in western New York and northwestern Pennsylvania.

The Utility segment’s earnings of $22.6 million, or $0.26 per share, for the quarter ended December 31, 2014, decreased $1.6 million, or $0.02 per share, when compared with the same period in the prior fiscal year. The decrease in earnings was due to higher operating expenses associated with the replacement of Distribution’s customer billing system. In addition, margins in Distribution’s Pennsylvania service territory were reduced by approximately $0.4 million mainly due to weather that was 5.7 percent warmer than last year.

Energy Marketing Segment

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

The Energy Marketing segment’s earnings for the quarter ended December 31, 2014, of $2.8 million increased $1.2 million, or $0.01 per share, compared to the prior year’s first quarter primarily due to higher per unit margins, which benefited from the weak pricing basis in the Northeast.

Corporate and All Other

The Corporate and All Other category primarily includes corporate operations. The category also includes the remaining operations of Seneca’s Northeast division that markets high quality hardwoods from Appalachian land holdings.

The Corporate and All Other category earnings of $0.2 million in the quarter ended December 31, 2014, were largely unchanged compared to the prior year’s first quarter.

EARNINGS AND CAPITAL SPENDING GUIDANCE

The Company is updating its GAAP earnings guidance range for fiscal 2015 to a range of $2.65 to $2.90 per share exclusive of any ceiling test impairment charges. The previous earnings guidance had been a range of $3.05 to $3.35 per share. The change in earnings guidance reflects the following changes in assumptions:

• Seneca's expected production for fiscal 2015 is now a range of 155 to 190 Bcfe. The previous range was 180 to 220 Bcfe. Substantially all of this change is attributable to an increase in the level of pricing related curtailments reflected in Seneca’s forecast.
• The Company is now assuming Marcellus spot pricing averages between $2.00 and $2.25 per Mcf for the remainder of the fiscal year, down $0.50 per Mcf from the previous range of $2.50 and $2.75 per Mcf.
• NYMEX natural gas prices are now assumed to average $3.00 per MMBtu for the remainder of the fiscal year, down $1.00 from the previous forecast. NYMEX crude oil prices average $50.00 per Bbl for the remainder of the fiscal year, down $35.00 from the previous forecast.

In addition, the Company is revising its fiscal 2015 capital spending guidance, as follows (in millions):

            Previous     Updated Exploration and Production $600   -   $700 $525   -   $575 Gathering 150 - 200 125 - 175 Pipeline and Storage 225 - 275 225 - 275 Utility 95   -   105     115   -   130 Total $1,070   -   $1,280     $990   -   $1,155  

EARNINGS TELECONFERENCE

The Company will host a conference call on Friday, January 30, 2015, at 11 a.m. Eastern Time to discuss this announcement. There are two ways to access this call. For those with Internet access, visit the investor relations page at National Fuel’s website at investor.nationalfuelgas.com. For those without Internet access, access is also provided by dialing (toll-free) 1-877-280-4959, using passcode “78316483.” For those unable to listen to the live conference call, a replay will be available at approximately 3 p.m. Eastern Time at the same website link and by phone at (toll-free) 1-888-286-8010, using passcode “80321376.” Both the webcast and telephonic replay will be available until the close of business on Friday, February 6, 2015.

National Fuel is an integrated energy company with $7.1 billion in assets, including the following five operating segments: Exploration and Production, Pipeline and Storage, Gathering, Utility, and Energy Marketing. Additional information about National Fuel is available at www.nationalfuelgas.com.

Certain statements contained herein, including statements identified by the use of the words “anticipates,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “predicts,” “projects,” “believes,” “seeks,” “will,” “may” and similar expressions, and statements which are other than statements of historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Company’s expectations, beliefs and projections contained herein are expressed in good faith and are believed to have a reasonable basis, but there can be no assurance that such expectations, beliefs or projections will result or be achieved or accomplished. In addition to other factors, the following are important factors that could cause actual results to differ materially from those discussed in the forward-looking statements: factors affecting the Company’s ability to successfully identify, drill for and produce economically viable natural gas and oil reserves, including among others geology, lease availability, title disputes, weather conditions, shortages, delays or unavailability of equipment and services required in drilling operations, insufficient gathering, processing and transportation capacity, the need to obtain governmental approvals and permits, and compliance with environmental laws and regulations; changes in laws, regulations or judicial interpretations to which the Company is subject, including those involving derivatives, taxes, safety, employment, climate change, other environmental matters, real property, and exploration and production activities such as hydraulic fracturing; governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, allowed rates of return, rate design and retained natural gas), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal; changes in the price of natural gas or oil; changes in price differential between similar quantities of natural gas or oil sold at different geographic locations, and the effect of such changes on commodity production, revenues and demand for pipeline transportation capacity to or from such locations; other changes in price differentials between similar quantities of natural gas and oil having different quality, heating value, hydrocarbon mix or delivery date; impairments under the SEC’s full cost ceiling test for natural gas and oil reserves; uncertainty of oil and gas reserve estimates; significant differences between the Company’s projected and actual production levels for natural gas or oil; delays or changes in costs or plans with respect to Company projects or related projects of other companies, including difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators; changes in demographic patterns and weather conditions; changes in the availability, price or accounting treatment of derivative financial instruments; financial and economic conditions, including the availability of credit, and occurrences affecting the Company’s ability to obtain financing on acceptable terms for working capital, capital expenditures and other investments, including any downgrades in the Company’s credit ratings and changes in interest rates and other capital market conditions; changes in economic conditions, including global, national or regional recessions, and their effect on the demand for, and customers’ ability to pay for, the Company’s products and services; the creditworthiness or performance of the Company’s key suppliers, customers and counterparties; economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities, acts of war, cyber attacks or pest infestation; significant differences between the Company’s projected and actual capital expenditures and operating expenses; changes in laws, actuarial assumptions, the interest rate environment and the return on plan/trust assets related to the Company’s pension and other post-retirement benefits, which can affect future funding obligations and costs and plan liabilities; the cost and effects of legal and administrative claims against the Company or activist shareholder campaigns to effect changes at the Company; increasing health care costs and the resulting effect on health insurance premiums and on the obligation to provide other post-retirement benefits; or increasing costs of insurance, changes in coverage and the ability to obtain insurance. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date thereof.

                  NATIONAL FUEL GAS COMPANY RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS QUARTER ENDED DECEMBER 31, 2014 (Unaudited)     Upstream Midstream Businesses Downstream Businesses   Exploration & Pipeline & Energy Corporate / (Thousands of Dollars) Production   Storage   Gathering   Utility   Marketing   All Other   Consolidated*   First quarter 2014 GAAP earnings $ 31,097 $ 19,138 $ 6,147 $ 24,215 $ 1,604 $ 51 $ 82,252   Drivers of operating results Higher (lower) crude oil prices (7,972 ) (7,972 ) Higher (lower) natural gas prices (12,810 ) (12,810 ) Higher (lower) natural gas production 25,837 25,837 Higher (lower) crude oil production 3,365 3,365 Insurance settlement proceeds adjustment (1,261 ) (1,261 )   Lower (higher) lease operating and transportation expenses (7,563 ) (7,563 ) Lower (higher) depreciation / depletion (5,822 ) (5,822 )  

Higher (lower) transportation and storage revenues

1,450 1,450 Higher (lower) gathering and processing revenues 6,494 6,494 Lower (higher) operating expenses (649 ) (396 ) (1,216 ) (2,261 )   Higher (lower) margins (421 ) 1,256 835   Higher (lower) AFUDC** 751 751   Lower (higher) income tax expense / effective tax rate 1,372 (698 ) 674   All other / rounding 477     88     76     16     (34 )   148     771   First quarter 2015 GAAP earnings $ 26,720     $ 20,778     $ 11,623     $ 22,594     $ 2,826     $ 199     $ 84,740     * Amounts do not reflect intercompany eliminations ** AFUDC = Allowance for Funds Used During Construction                     NATIONAL FUEL GAS COMPANY RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE QUARTER ENDED DECEMBER 31, 2014 (Unaudited)     Upstream Midstream Businesses Downstream Businesses   Exploration & Pipeline & Energy Corporate / Production   Storage   Gathering   Utility   Marketing   All Other   Consolidated*   First quarter 2014 GAAP earnings $ 0.37 $ 0.23 $ 0.07 $ 0.28 $ 0.02 $ — $ 0.97   Drivers of operating results Higher (lower) crude oil prices (0.09 ) (0.09 ) Higher (lower) natural gas prices (0.15 ) (0.15 ) Higher (lower) natural gas production 0.30 0.30 Higher (lower) crude oil production 0.04 0.04 Insurance settlement proceeds adjustment (0.01 ) (0.01 )   Lower (higher) lease operating and transportation expenses (0.09 ) (0.09 ) Lower (higher) depreciation / depletion (0.07 ) (0.07 )  

Higher (lower) transportation and storage revenues

0.02 0.02 Higher (lower) gathering and processing revenues 0.08 0.08 Lower (higher) operating expenses (0.01 ) — (0.01 ) (0.02 )   Higher (lower) margins (0.01 ) 0.01 —   Higher (lower) AFUDC** 0.01 0.01   Lower (higher) income tax expense / effective tax rate 0.02 (0.01 ) 0.01   All other / rounding —     —     —     —     —     —     0.00   First quarter 2015 GAAP earnings $ 0.32     $ 0.25     $ 0.14     $ 0.26     $ 0.03     $ —     $ 1.00     * Amounts do not reflect intercompany eliminations ** AFUDC = Allowance for Funds Used During Construction             NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES   (Thousands of Dollars, except per share amounts) Three Months Ended December 31, (Unaudited)

SUMMARY OF OPERATIONS

2014   2013 Operating Revenues $ 523,909   $ 550,072     Operating Expenses: Purchased Gas 127,091 167,605 Operation and Maintenance 112,582 107,846 Property, Franchise and Other Taxes 20,929 20,926 Depreciation, Depletion and Amortization 102,747   93,114   363,349 389,491   Operating Income 160,560 160,581   Other Income (Expense): Interest Income 1,258 702 Other Income 1,183 228 Interest Expense on Long-Term Debt (22,311 ) (22,885 ) Other Interest Expense (790 ) (949 )   Income Before Income Taxes 139,900 137,677   Income Tax Expense 55,160   55,425     Net Income Available for Common Stock $ 84,740   $ 82,252     Earnings Per Common Share: Basic $ 1.01   $ 0.98   Diluted $ 1.00   $ 0.97     Weighted Average Common Shares: Used in Basic Calculation 84,208,645   83,707,687   Used in Diluted Calculation 85,118,516   84,659,001       NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)         December 31,   September 30, (Thousands of Dollars)         2014     2014     ASSETS Property, Plant and Equipment $8,452,022 $8,245,791 Less - Accumulated Depreciation, Depletion and Amortization         2,598,291     2,502,700   Net Property, Plant and Equipment         5,853,731     5,743,091     Current Assets: Cash and Temporary Cash Investments 43,924 36,886 Hedging Collateral Deposits 13,468 2,734 Receivables - Net 166,887 149,735 Unbilled Revenue 69,429 25,663 Gas Stored Underground 25,555 39,422 Materials and Supplies - at average cost 28,425 27,817 Other Current Assets 68,053 54,752 Deferred Income Taxes         36,421     40,323   Total Current Assets         452,162     377,332     Other Assets: Recoverable Future Taxes 164,390 163,485 Unamortized Debt Expense 13,716 14,304 Other Regulatory Assets 222,609 224,436 Deferred Charges 12,524 14,212 Other Investments 87,468 86,788 Goodwill 5,476 5,476 Prepaid Post-Retirement Benefit Costs 39,520 36,512 Fair Value of Derivative Financial Instruments 293,314 72,606 Other         184     1,355   Total Other Assets         839,201     619,174   Total Assets         $7,145,094     $6,739,597     CAPITALIZATION AND LIABILITIES Capitalization: Comprehensive Shareholders' Equity Common Stock, $1 Par Value Authorized - 200,000,000 Shares; Issued and Outstanding - 84,264,485 Shares and 84,157,220 Shares, Respectively $84,264 $84,157 Paid in Capital 729,733 716,144 Earnings Reinvested in the Business 1,666,659 1,614,361 Accumulated Other Comprehensive Income (Loss)         122,473     (3,979 ) Total Comprehensive Shareholders' Equity 2,603,129 2,410,683 Long-Term Debt, Net of Current Portion         1,649,000     1,649,000   Total Capitalization         4,252,129     4,059,683     Current and Accrued Liabilities: Notes Payable to Banks and Commercial Paper 172,900 85,600 Current Portion of Long-Term Debt — — Accounts Payable 125,822 136,674 Amounts Payable to Customers 35,994 33,745 Dividends Payable 32,442 32,400 Interest Payable on Long-Term Debt 18,195 29,960 Customer Advances 20,436 19,005 Customer Security Deposits 16,391 15,761 Other Accruals and Current Liabilities 137,285 136,672 Fair Value of Derivative Financial Instruments         11,061     759   Total Current and Accrued Liabilities         570,526     490,576     Deferred Credits: Deferred Income Taxes 1,580,626 1,456,283 Taxes Refundable to Customers 90,303 91,736 Unamortized Investment Tax Credit 1,041 1,145 Cost of Removal Regulatory Liability 175,941 173,199 Other Regulatory Liabilities 96,959 81,152 Pension and Other Post-Retirement Liabilities 126,108 134,202 Asset Retirement Obligations 118,035 117,713 Other Deferred Credits         133,426     133,908   Total Deferred Credits         2,322,439     2,189,338   Commitments and Contingencies         —     —   Total Capitalization and Liabilities         $7,145,094     $6,739,597             NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended December 31, (Thousands of Dollars)       2014     2013     Operating Activities: Net Income Available for Common Stock $ 84,740 $ 82,252 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation, Depletion and Amortization 102,747 93,114 Deferred Income Taxes 33,207 30,093 Excess Tax Benefits Associated with Stock-Based Compensation Awards (7,667 ) (3,149 ) Stock-Based Compensation 3,078 2,960 Other 2,358 (2,095 ) Change in: Hedging Collateral Deposits (10,734 ) 1,094 Receivables and Unbilled Revenue (60,947 ) (92,261 ) Gas Stored Underground and Materials and Supplies 9,386 17,977 Unrecovered Purchased Gas Costs — 3,407 Other Current Assets (5,635 ) 12,764 Accounts Payable 19,378 39,382 Amounts Payable to Customers 2,249 (3,944 ) Customer Advances 1,431 (3,281 ) Customer Security Deposits 630 (493 ) Other Accruals and Current Liabilities (6,416 ) 12,347 Other Assets 2,142 (6,268 ) Other Liabilities       19,132     (7,205 ) Net Cash Provided by Operating Activities       $ 189,079     $ 176,694     Investing Activities: Capital Expenditures $ (244,927 ) $ (194,920 ) Other       (1,229 )   3,615   Net Cash Used in Investing Activities       $ (246,156 )   $ (191,305 )   Financing Activities: Changes in Notes Payable to Banks and Commercial Paper $ 87,300 $ — Excess Tax Benefits Associated with Stock-Based Compensation Awards 7,667 3,149 Dividends Paid on Common Stock (32,400 ) (31,373 ) Net Proceeds From Issuance of Common Stock       1,548     1,857   Net Cash Provided by (Used) in Financing Activities       $ 64,115     $ (26,367 )   Net Increase (Decrease) in Cash and Temporary Cash Investments 7,038 (40,978 ) Cash and Temporary Cash Investments at Beginning of Period       36,886     64,858   Cash and Temporary Cash Investments at December 31       $ 43,924     $ 23,880             NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES   SEGMENT OPERATING RESULTS AND STATISTICS (UNAUDITED)   UPSTREAM BUSINESS     Three Months Ended (Thousands of Dollars, except per share amounts) December 31,

EXPLORATION AND PRODUCTION SEGMENT

2014   2013   Variance Total Operating Revenues $ 204,665   $ 193,046   $ 11,619     Operating Expenses: Operation and Maintenance: General and Administrative Expense 15,685 15,134 551 Lease Operating and Transportation Expense 46,807 35,171 11,636 All Other Operation and Maintenance Expense 2,841 2,782 59 Property, Franchise and Other Taxes 3,901 4,263 (362 ) Depreciation, Depletion and Amortization 80,067   71,110   8,957   149,301   128,460   20,841     Operating Income 55,364 64,586 (9,222 )   Other Income (Expense): Interest Income 510 551 (41 ) Other Interest Expense (10,308 ) (10,726 ) 418     Income Before Income Taxes 45,566 54,411 (8,845 ) Income Tax Expense 18,846   23,314   (4,468 ) Net Income $ 26,720   $ 31,097   $ (4,377 )   Net Income Per Share (Diluted) $ 0.32   $ 0.37   $ (0.05 )           NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES   SEGMENT OPERATING RESULTS AND STATISTICS (UNAUDITED)   MIDSTREAM BUSINESSES     Three Months Ended (Thousands of Dollars, except per share amounts) December 31,

PIPELINE AND STORAGE SEGMENT

2014   2013   Variance Revenues from External Customers $ 51,745 $ 51,212 $ 533 Intersegment Revenues 21,461   20,739   722   Total Operating Revenues 73,206   71,951   1,255     Operating Expenses: Purchased Gas 266 1,262 (996 ) Operation and Maintenance 17,884 16,885 999 Property, Franchise and Other Taxes 6,163 5,688 475 Depreciation, Depletion and Amortization 9,035   9,121   (86 ) 33,348   32,956   392     Operating Income 39,858 38,995 863   Other Income (Expense): Interest Income 85 75 10 Other Income 557 (193 ) 750 Other Interest Expense (6,539 ) (6,800 ) 261     Income Before Income Taxes 33,961 32,077 1,884 Income Tax Expense 13,183   12,939   244   Net Income $ 20,778   $ 19,138   $ 1,640     Net Income Per Share (Diluted) $ 0.25   $ 0.23   $ 0.02       Three Months Ended December 31,

GATHERING SEGMENT

2014   2013   Variance Revenues from External Customers $ 146 $ 235 $ (89 ) Intersegment Revenues 24,428   14,350   10,078   Total Operating Revenues 24,574   14,585   9,989     Operating Expenses: Operation and Maintenance 1,776 1,167 609 Property, Franchise and Other Taxes 35 32 3 Depreciation, Depletion and Amortization 2,061   1,909   152   3,872   3,108   764     Operating Income 20,702 11,477 9,225   Other Income (Expense): Interest Income 27 38 (11 ) Other Income 1 1 — Other Interest Expense (298 ) (583 ) 285     Income Before Income Taxes 20,432 10,933 9,499 Income Tax Expense 8,809   4,786   4,023   Net Income $ 11,623   $ 6,147   $ 5,476     Net Income Per Share (Diluted) $ 0.14   $ 0.07   $ 0.07             NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES   SEGMENT OPERATING RESULTS AND STATISTICS (UNAUDITED)   DOWNSTREAM BUSINESSES     Three Months Ended (Thousands of Dollars, except per share amounts) December 31,

UTILITY SEGMENT

2014   2013   Variance Revenues from External Customers $ 210,073 $ 230,453 $ (20,380 ) Intersegment Revenues 4,534   4,706   (172 ) Total Operating Revenues 214,607   235,159   (20,552 )   Operating Expenses: Purchased Gas 101,711 121,926 (20,215 ) Operation and Maintenance 48,907 47,271 1,636 Property, Franchise and Other Taxes 10,558 10,667 (109 ) Depreciation, Depletion and Amortization 11,151   10,711   440   172,327   190,575   (18,248 )   Operating Income 42,280 44,584 (2,304 )   Other Income (Expense): Interest Income 18 77 (59 ) Other Income 498 370 128 Other Interest Expense (6,943 ) (6,814 ) (129 )   Income Before Income Taxes 35,853 38,217 (2,364 ) Income Tax Expense 13,259   14,002   (743 ) Net Income $ 22,594   $ 24,215   $ (1,621 )   Net Income Per Share (Diluted) $ 0.26   $ 0.28   $ (0.02 )     Three Months Ended December 31,

ENERGY MARKETING SEGMENT

2014   2013   Variance Revenues from External Customers $ 56,166 $ 73,159 $ (16,993 ) Intersegment Revenues 206   255   (49 ) Total Operating Revenues 56,372   73,414   (17,042 )   Operating Expenses: Purchased Gas 50,230 69,204 (18,974 ) Operation and Maintenance 1,499 1,593 (94 ) Property, Franchise and Other Taxes 2 — 2 Depreciation, Depletion and Amortization 51   48   3   51,782   70,845   (19,063 )   Operating Income 4,590 2,569 2,021   Other Income (Expense): Interest Income 39 45 (6 ) Other Income 24 15 9 Other Interest Expense (3 ) (8 ) 5     Income Before Income Taxes 4,650 2,621 2,029 Income Tax Expense 1,824   1,017   807   Net Income $ 2,826   $ 1,604   $ 1,222     Net Income Per Share (Diluted) $ 0.03   $ 0.02   $ 0.01       NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES         SEGMENT OPERATING RESULTS AND STATISTICS (UNAUDITED)   Three Months Ended (Thousands of Dollars, except per share amounts) December 31,

ALL OTHER

2014   2013   Variance Total Operating Revenues $ 884   $ 1,700   $ (816 ) Operating Expenses: Operation and Maintenance 530 353 177 Property, Franchise and Other Taxes 150 157 (7 ) Depreciation, Depletion and Amortization 215   58   157   895   568   327     Operating Income (Loss) (11 ) 1,132 (1,143 )   Other Income (Expense): Interest Income 12 34 (22 ) Other Income 1 21 (20 ) Other Interest Expense —   (1 ) 1     Income Before Income Taxes 2 1,186 (1,184 ) Income Tax Expense 8   511   (503 ) Net Income (Loss) $ (6 ) $ 675   $ (681 )   Net Income (Loss) Per Share (Diluted) $ —   $ 0.01   $ (0.01 )     Three Months Ended December 31,

CORPORATE

2014   2013   Variance Revenues from External Customers $ 230 $ 267 $ (37 ) Intersegment Revenues 886   963   (77 ) Total Operating Revenues 1,116   1,230   (114 ) Operating Expenses: Operation and Maintenance 3,052 3,716 (664 ) Property, Franchise and Other Taxes 120 119 1 Depreciation, Depletion and Amortization 167   157   10   3,339   3,992   (653 )   Operating Loss (2,223 ) (2,762 ) 539   Other Income (Expense): Interest Income 25,300 24,607 693 Other Income 102 14 88 Interest Expense on Long-Term Debt (22,311 ) (22,885 ) 574 Other Interest Expense (1,432 ) (742 ) (690 )   Loss Before Income Taxes (564 ) (1,768 ) 1,204 Income Tax Expense (Benefit) (769 ) (1,144 ) 375   Net Income (Loss) $ 205   $ (624 ) $ 829     Net Income (Loss) Per Share (Diluted) $ —   $ (0.01 ) $ 0.01       Three Months Ended December 31,

INTERSEGMENT ELIMINATIONS

2014   2013   Variance Intersegment Revenues $

(51,515

) $ (41,013 ) $

(10,502

) Operating Expenses:

 

 

Purchased Gas (25,116 ) (24,787 ) (329 ) Operation and Maintenance (26,399 ) (16,226 ) (10,173 ) (51,515 ) (41,013 ) (10,502 )   Operating Income — — —   Other Income (Expense): Interest Income (24,733 ) (24,725 ) (8 ) Other Interest Expense 24,733   24,725   8   Net Income $ —   $ —   $ —     Net Income Per Share (Diluted) $ —   $ —   $ —                     NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES   SEGMENT INFORMATION (Continued) (Thousands of Dollars)     Three Months Ended December 31, (Unaudited) Increase 2014 2013 (Decrease)  

Capital Expenditures:

Exploration and Production $ 157,711 (1)(2) $ 111,341 (3)(4) $ 46,370 Pipeline and Storage 16,027 (1)(2) 9,939 (3)(4) 6,088 Gathering 14,948 (1)(2) 23,463 (3)(4) (8,515 ) Utility 21,175 (1)(2) 21,660 (3)(4) (485 ) Energy Marketing 75   43   32   Total Reportable Segments 209,936 166,446 43,490 All Other — 59 (59 ) Corporate 26   15   11   Total Capital Expenditures $ 209,962   $ 166,520   $ 43,442   (1)   Capital expenditures for the three months ended December 31, 2014, include accounts payable and accrued liabilities related to capital expenditures of $82.3 million, $3.0 million, $11.0 million, and $5.4 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at December 31, 2014, since they represent non-cash investing activities at that date.   (2) Capital expenditures for the three months ended December 31, 2014, exclude capital expenditures of $80.1 million, $28.1 million, $20.1 million and $8.3 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, 2014 and paid during the three months ended December 31, 2014. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2014, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at December 31, 2014.   (3) Capital expenditures for the three months ended December 31, 2013, include accounts payable and accrued liabilities related to capital expenditures of $38.4 million, $0.6 million, $8.8 million, and $4.9 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at December 31, 2013, since they represent non-cash investing activities at that date.   (4) Capital expenditures for the three months ended December 31, 2013, exclude capital expenditures of $58.5 million, $5.6 million, $6.7 million and $10.3 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, 2013 and paid during the three months ended December 31, 2013. These amounts were excluded from the Consolidated Statements of Cash Flows at September 30, 2013, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at December 31, 2013.                

DEGREE DAYS

  Percent Colder (Warmer) Than:

Three Months Ended December 31

Normal 2014 2013 Normal (1) Last Year (1) Buffalo, NY 2,253 2,136 2,290 (5.2) (6.7) Erie, PA 2,044 1,990 2,110 (2.6) (5.7)   (1)   Percents compare actual 2014 degree days to normal degree days and actual 2014 degree days to actual 2013 degree days.             NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES  

EXPLORATION AND PRODUCTION INFORMATION

  Three Months Ended December 31, Increase 2014 2013 (Decrease)  

Gas Production/Prices:

Production (MMcf) Appalachia 42,798 32,052 10,746 West Coast 773   786   (13 ) Total Production 43,571   32,838   10,733     Average Prices (Per Mcf) Appalachia $ 2.95 $ 3.28 $ (0.33 ) West Coast 5.61 5.93 (0.32 ) Weighted Average 3.00 3.35 (0.35 ) Weighted Average after Hedging 3.25 3.70 (0.45 )  

Oil Production/Prices:

Production (Thousands of Barrels) Appalachia 9 9 — West Coast 762   706   56   Total Production 771   715   56     Average Prices (Per Barrel) Appalachia $ 75.56 $ 96.03 $ (20.47 ) West Coast 66.86 97.45 (30.59 ) Weighted Average 66.96 97.43 (30.47 ) Weighted Average after Hedging 78.09 94.00 (15.91 )   Total Production (Mmcfe) 48,197   37,128   11,069    

Selected Operating Performance Statistics:

General & Administrative Expense per Mcfe (1) $ 0.33 $ 0.41 $ (0.08 ) Lease Operating and Transportation Expense per Mcfe (1)(2) $ 0.97 $ 0.95 $ 0.02 Depreciation, Depletion & Amortization per Mcfe (1) $ 1.66 $ 1.92 $ (0.26 ) (1) Refer to page 12 for the General and Administrative Expense, Lease Operating Expense and Depreciation, Depletion, and Amortization Expense for the Exploration and Production segment.   (2) Amounts include transportation expense of $0.53 and $0.41 per Mcfe for the three months ended December 31, 2014 and December 31, 2013, respectively.             NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES  

EXPLORATION AND PRODUCTION INFORMATION

  Hedging Summary for the Remaining Nine Months of Fiscal 2015  

Volume

Average Hedge Price

Oil Swaps Midway Sunset (MWSS) 108,000 BBL $ 92.10 / BBL Brent 765,000 BBL $ 98.32 / BBL NYMEX 297,000 BBL $ 90.14 / BBL Total 1,170,000 BBL $ 95.67 / BBL   Gas Swaps NYMEX 49,130,000 MMBTU $ 4.18 / MMBTU Dominion Transmission Appalachian (DOM) 18,630,000 MMBTU $ 3.74 / MMBTU Southern California City Gate (SoCal) 900,000 MMBTU $ 4.35 / MMBTU Fixed Price Physical Sales 13,650,000 MMBTU $ 3.77 / MMBTU Total 82,310,000 MMBTU $ 4.01 / MMBTU   Hedging Summary for Fiscal 2016  

Volume

Average Hedge Price

Oil Swaps MWSS 36,000 BBL $ 92.10 / BBL Brent 933,000 BBL $ 95.18 / BBL NYMEX 300,000 BBL $ 86.09 / BBL Total 1,269,000 BBL $ 92.95 / BBL   Gas Swaps NYMEX 32,350,000 MMBTU $ 4.24 / MMBTU DOM 18,840,000 MMBTU $ 3.78 / MMBTU Michigan Consolidated City Gate (Mich Con) 9,000,000 MMBTU $ 4.10 / MMBTU Dawn Ontario (Dawn) 5,490,000 MMBTU $ 4.36 / MMBTU Fixed Price Physical Sales 18,300,000 MMBTU $ 3.77 / MMBTU Total 83,980,000 MMBTU $ 4.03 / MMBTU   Hedging Summary for Fiscal 2017  

Volume

Average Hedge Price

Oil Swaps Brent 384,000 BBL $ 92.30 / BBL   Gas Swaps NYMEX 23,130,000 MMBTU $ 4.50 / MMBTU DOM 12,720,000 MMBTU $ 3.87 / MMBTU Mich Con 3,000,000 MMBTU $ 4.10 / MMBTU Dawn 7,950,000 MMBTU $ 4.14 / MMBTU Fixed Price Physical Sales 18,250,000 MMBTU $ 3.77 / MMBTU Total 65,050,000 MMBTU $ 4.11 / MMBTU   Hedging Summary for Fiscal 2018  

Volume

Average Hedge Price

Oil Swaps Brent 75,000 BBL $ 91.00 / BBL   Gas Swaps NYMEX 5,550,000 MMBTU $ 4.59 / MMBTU Fixed Price Physical Sales 1,550,000 MMBTU $ 3.77 / MMBTU Total 7,100,000 MMBTU $ 4.41 / MMBTU               NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES  

EXPLORATION AND PRODUCTION INFORMATION

 

Gross Wells in Process of Drilling

Three Months Ended December 31, 2014

Total

East

West

Company

Wells in Process - Beginning of Period Exploratory 1.000 0.000 1.000 Developmental 79.000 2.000 81.000 Wells Commenced Exploratory 0.000 0.000 0.000 Developmental 17.000 14.000 31.000 Wells Completed Exploratory 1.000 0.000 1.000 Developmental 13.000 15.000 28.000 Wells Plugged & Abandoned Exploratory 0.000 0.000 0.000 Developmental 2.000 1.000 3.000 Wells in Process - End of Period Exploratory 0.000 0.000 0.000 Developmental 81.000 0.000 81.000              

Net Wells in Process of Drilling

Three Months Ended December 31, 2014

Total

East

West

Company

Wells in Process - Beginning of Period Exploratory 1.000 0.000 1.000 Developmental 64.500 2.000 66.500 Wells Commenced Exploratory 0.000 0.000 0.000 Developmental 17.000 14.000 31.000 Wells Completed Exploratory 1.000 0.000 1.000 Developmental 13.000 15.000 28.000 Wells Plugged & Abandoned Exploratory 0.000 0.000 0.000 Developmental 2.000 1.000 3.000 Wells in Process - End of Period Exploratory 0.000 0.000 0.000 Developmental 66.500 0.000 66.500                   NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES     Pipeline & Storage Throughput - (millions of cubic feet - MMcf)   Three Months Ended December 31, Increase 2014   2013   (Decrease) Firm Transportation - Affiliated 29,086 29,686 (600 ) Firm Transportation - Non-Affiliated 157,236 161,970 (4,734 ) Interruptible Transportation 2,102   1,322   780   188,424   192,978   (4,554 )   Gathering Volume - (MMcf) Three Months Ended December 31, Increase 2014   2013   (Decrease) Gathered Volume - Affiliated 44,872   31,014   13,858       Utility Throughput - (MMcf) Three Months Ended December 31, Increase 2014   2013   (Decrease) Retail Sales: Residential Sales 16,467 17,008 (541 ) Commercial Sales 2,284 2,360 (76 ) Industrial Sales 89   91   (2 ) 18,840 19,459 (619 ) Off-System Sales 1,669 1,978 (309 ) Transportation 20,949   21,190   (241 ) 41,458   42,627   (1,169 )   Energy Marketing Volume Three Months Ended December 31, Increase 2014   2013   (Decrease) Natural Gas (MMcf) 12,589   16,008   (3,419 )  

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 EBITDA, which is a non-GAAP financial measure. The Company believes that this non-GAAP financial measure is useful to investors because it provides an alternative method for assessing the Company's ongoing operating results, for measuring the Company’s cash flow and liquidity, and for comparing the Company’s financial performance to other companies. The Company's management uses this non-GAAP financial measure for the same purpose, and for planning and forecasting purposes. The presentation of non-GAAP financial measures is not meant to be a substitute for financial measures in accordance with GAAP.

Management defines Adjusted EBITDA as reported GAAP earnings before the following items: interest expense, depreciation, depletion and amortization, interest and other income, impairments, items impacting comparability and income taxes.

The following tables reconcile National Fuel's reported GAAP earnings to Adjusted EBITDA for the three months ended December 31, 2014 and 2013:

          Three Months Ended December 31, 2014 2013 (in thousands) Reported GAAP Earnings $ 84,740 $ 82,252 Depreciation, Depletion and Amortization 102,747 93,114 Interest and Other Income (2,441 ) (930 ) Interest Expense 23,101 23,834 Income Taxes 55,160   55,425   Adjusted EBITDA $ 263,307   $ 253,695     Adjusted EBITDA by Segment Pipeline and Storage Adjusted EBITDA $ 48,893 $ 48,116 Gathering Adjusted EBITDA 22,763   13,386   Total Midstream Businesses Adjusted EBITDA 71,656 61,502 Exploration and Production Adjusted EBITDA 135,431 135,696 Utility Adjusted EBITDA 53,431 55,295 Energy Marketing Adjusted EBITDA 4,641 2,617 Corporate and All Other Adjusted EBITDA (1,852 ) (1,415 ) Total Adjusted EBITDA $ 263,307   $ 253,695               NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES    

Quarter Ended December 31 (unaudited)

2014 2013   Operating Revenues $ 523,909,000   $ 550,072,000   Net Income Available for Common Stock $ 84,740,000   $ 82,252,000   Earnings Per Common Share: Basic $ 1.01   $ 0.98 Diluted $ 1.00   $ 0.97   Weighted Average Common Shares: Used in Basic Calculation 84,208,645   83,707,687 Used in Diluted Calculation 85,118,516   84,659,001  

Twelve Months Ended December 31 (unaudited)

  Operating Revenues $ 2,086,918,000   $ 1,926,768,000   Net Income Available for Common Stock $ 301,901,000   $ 274,309,000   Earnings Per Common Share: Basic $ 3.59   $ 3.28 Diluted $ 3.55   $ 3.25   Weighted Average Common Shares: Used in Basic Calculation 84,056,263   83,598,868 Used in Diluted Calculation 85,013,301   84,411,007

National Fuel Gas CompanyAnalyst:Brian M. Welsch, 716-857-7875Investor RelationsorDavid P. Bauer, 716-857-7318TreasurerorMedia:Karen L. Merkel, 716-857-7654