National Fuel Gas Company (“National Fuel” or the “Company”)
(NYSE:NFG) today announced consolidated results for the fiscal
first quarter ended December 31, 2016.
FISCAL 2017 FIRST QUARTER SUMMARY
- Consolidated net income of $88.9
million or $1.04 per share compared to a consolidated net loss of
$189.1 million or $2.23 per share in the prior year
- Adjusted EBITDA of $228.3 million, up
from $204.8 million in the prior year (non-GAAP reconciliation on
page 21)
- Net production of 44.9 Bcfe, an 18%
increase from prior year and 13% increase from the fiscal 2016
fourth quarter
- Seneca lease operating and
transportation expense of $0.88 per Mcfe, down $0.15 per Mcfe or
15% from the prior year
- Seneca G&A expense of $0.29 per
Mcfe, down $0.23 per Mcfe or 44% from prior year
- Seneca DD&A expense of $0.65 per
Mcfe, down $0.51 per Mcfe or 44% from the prior year
- Gathering revenues of $27.9 million on
50.6 Bcf of throughput, up $9.1 million from the prior year
- Utility net income up $2.6 million or
$0.03 per share on weather that was more than 17% colder than last
year
- Company is raising and tightening
fiscal 2017 earnings guidance to a range of $3.10 to $3.30 per
share
OPERATING RESULTS
Three Months Ended December 31, (in thousands except per
share amounts) 2016 2015
Reported GAAP earnings
(loss) $ 88,908 $ (189,109 )
Items impacting
comparability: Impairment of oil and gas properties (E&P)
435,451 Tax impact of impairment of oil and gas properties (182,889
) Joint development agreement professional fees (E&P) 4,682 Tax
impact of joint development agreement professional fees
(1,966 )
Operating Results $ 88,908 $ 66,169
Reported GAAP earnings (loss) per share $ 1.04 $
(2.23 )
Items impacting comparability: Impairment of oil and
gas properties (E&P) 5.12 Tax impact of impairment of oil and
gas properties (2.15 ) Joint development agreement professional
fees (E&P) 0.06 Tax impact of joint development agreement
professional fees (0.02 )
Operating Results per diluted
share $ 1.04 $ 0.78
MANAGEMENT COMMENTS
Ronald J. Tanski, President and Chief Executive Officer of
National Fuel Gas Company, stated: “Our 2017 fiscal year is off to
a great start. Aside from our pipeline and storage segment, where
earnings were down modestly, each of the other segments improved
its financial performance over the prior year. We are particularly
pleased that natural gas prices increased to levels that allowed
Seneca to return wells to production. Seneca’s increased
production, and the associated throughput on our gathering systems,
were the main drivers that allowed us to exceed our guidance.
“We expect to keep moving forward with our plans to build our
Northern Access pipeline by the middle of next fiscal year. In the
meantime, our efforts will remain focused on the efficient
development of our Marcellus acreage to prepare for the Northern
Access capacity while continuing to evaluate our opportunities in
the Utica Shale on the very same acreage. Together, these stacked
formations provide plenty of running room on our acreage and will
fuel our growth for an extended period."
DISCUSSION OF RESULTS BY SEGMENT
The following discussion of the earnings of each segment is
summarized in a tabular form on pages 7 and 8 of this report. It
may be helpful to refer to those tables while reviewing this
discussion. Note that management defines Operating Results as
reported GAAP earnings before items impacting comparability and
Adjusted EBITDA as reported GAAP earnings before the following
items: interest expense, depreciation and amortization, interest
and other income, impairments, items impacting comparability, and
income taxes.
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.
Three Months Ended December 31, (in thousands
except per share amounts)
2016 2015
Variance Net Income / (Loss) $ 35,080 $ (237,086 )
$ 272,166 Net Income / (Loss) Per Share (Diluted) $ 0.41 $
(2.80 ) $ 3.21 Adjusted EBITDA $ 102,476 $ 91,140 $ 11,336
Net income in the Exploration and Production segment in the
first quarter was $35.1 million or $0.41 per share, compared to a
net loss of $237.1 million or $2.80 per share in the prior year
first quarter, an increase of $272.2 million, or $3.21 per share.
Excluding the impact of last year's impairment charge, the increase
in the Exploration and Production segment's first quarter earnings
is mainly due to higher natural gas production and lower operating
expenses, offset partially by a decrease in oil production and
lower realized oil and natural gas prices after the impact of
hedging. In the prior year first quarter, Seneca recorded a $435.5
million ($252.6 million after-tax) ceiling test impairment charge
to reduce the value of Seneca’s oil and gas properties. There were
no ceiling test impairment charges in this year’s first
quarter.
The full cost method of accounting requires that Seneca perform
a quarterly “ceiling test” to compare the present value of future
revenues from its oil and natural gas reserves based on an
unweighted arithmetic average of the first day of the month oil and
gas prices for each month within the 12-month period prior to the
end of the reporting period (“the ceiling”) with the book value of
those reserves at the balance sheet date. If the book value of the
reserves exceeds the ceiling, a non-cash impairment charge must be
recorded in order to reduce the book value of the reserves to the
calculated ceiling. At December 31, 2016, the ceiling exceeded the
book value of the oil and gas properties by approximately $71.5
million. While possible, Seneca does not expect to incur any
impairment charges in fiscal 2017 due to the improvement in oil and
gas prices and lower lease operating expenses and development
costs.
Seneca's first quarter net production was 44.9 billion cubic
feet equivalent ("Bcfe"), an increase of 6.9 Bcfe or 18 percent
versus the prior year first quarter, and 5.1 Bcfe or 13 percent
versus the fourth quarter of fiscal 2016. Net natural gas
production increased 7.0 Bcf or 21 percent versus the prior year
due mainly to higher natural gas production in Appalachia. An
improvement in local natural gas pricing in Pennsylvania allowed
Seneca to produce most of its available production volumes since
November 1, 2016, selling 8.6 Bcf (net) in the daily spot markets
and under new seasonal firm sales agreements during the quarter.
Seneca voluntarily curtailed a modest 3.5 Bcf (net) of natural gas
production during the quarter, which was a decrease from the 14.6
Bcf (net) in the prior year first quarter. For the remainder of
fiscal 2017, Seneca has entered into an additional 6.0 Bcf (net) of
seasonal firm sales agreements that will further reduce its daily
local spot market exposure.
Seneca’s crude oil production decreased 27 thousand barrels
("Mbbl") or 4 percent due mainly to the lingering impact of a
disruption in steam flood operations in the North Midway Sunset
field in early fiscal 2016. Field production at North Midway Sunset
is expected to return to pre-disruption levels in the second
quarter of fiscal 2017.
Seneca's average realized natural gas price, after the impact of
hedging, for the first quarter was $2.97 per thousand cubic feet
("Mcf"), a decrease of $0.19 per Mcf versus the prior year.
Seneca's average realized oil price, after the impact of hedging,
was $54.71 per barrel ("Bbl"), a decrease of $5.05 per Bbl.
Seneca's average realized natural gas and oil prices benefited from
an uplift of $0.58 per Mcf and $10.89 per Bbl, respectively, from
financial hedges settled during the quarter. At the midpoint of
Seneca’s fiscal 2017 production guidance range, Seneca is 82
percent and 55 percent hedged on projected natural gas and oil
production, respectively, for the remainder of fiscal 2017 (see
page 5 for earnings guidance update).
Depreciation, depletion and amortization ("DD&A") expense
decreased $15.0 million due to lower per unit DD&A, offset
partially by the impact of higher production. Seneca’s per unit
DD&A decreased by $0.51 per Mcf equivalent ("Mcfe") to $0.65
per Mcfe due to a lower depletable fixed asset balance resulting
mainly from the ceiling test impairment charges recorded during the
prior four quarters.
Seneca’s General & Administrative (“G&A”) expense
decreased $7.0 million due to lower personnel costs and
nonrecurring professional fees recorded in the prior year. In the
prior year first quarter, Seneca incurred $4.7 million of
professional and legal expenses relating to the joint development
agreement that Seneca entered into in December 2015. Seneca’s per
unit of production G&A expense for the quarter was $0.29 per
Mcfe, a decrease of $0.23 per Mcfe or 44 percent from the prior
year.
Lease operating and transportation expense ("LOE") increased
$0.7 million due mainly to higher production, which was partially
offset by lower per unit LOE expense. Per unit LOE expense
decreased from $1.03 per Mcfe to $0.88 per Mcfe. The $0.15 per Mcfe
improvement is largely the result of higher Appalachian natural gas
production, which carries lower LOE costs relative to Seneca’s
California oil production, as well as a general reduction in well
repair and maintenance costs across Seneca's California and
Appalachia divisions.
Midstream Businesses
Pipeline and Storage Segment
The Pipeline and Storage segment’s operations are carried out by
National Fuel Gas Supply Corporation (“Supply Corporation”) and
Empire Pipeline, Inc. (“Empire”). The Pipeline and Storage segment
provides natural gas transportation and storage services to
affiliated and non-affiliated companies through an integrated
system of pipelines and underground natural gas storage fields in
western New York and Pennsylvania.
Three Months Ended December 31, (in
thousands except per share amounts)
2016 2015
Variance Net Income / (Loss) $ 19,368 $ 21,276
$ (1,908 ) Net Income / (Loss) Per Share (Diluted) $ 0.23 $
0.25 $ (0.02 ) Adjusted EBITDA $ 48,014 $ 50,741 $ (2,727 )
The Pipeline and Storage segment's first quarter earnings
decreased from the prior year due primarily to higher Operation and
Maintenance ("O&M") expense and lower Other Income. O&M
expense increased $2.6 million due to higher personnel costs and an
increase in expenses associated with the operation of the segment’s
expanded compressor facilities. Other Income decreased $0.9 million
as the Company recorded lower allowance for funds used during
construction (“AFUDC”) following the completion of the expansion
projects that were placed in-service during the prior year first
quarter.
Operating revenues for the Pipeline & Storage segment were
relatively flat when compared to the prior year first quarter. The
increase in revenues resulting from a full quarter of revenue from
Supply Corporation’s Northern Access 2015 project and Empire’s
Tuscarora Lateral Project, which were placed in-service during the
prior year first quarter, were more than offset by a reduction in
Supply Corporation and Empire’s rates that went into effect
following recent rate case settlements.
Gathering Segment
The Gathering segment’s operations are carried out by National
Fuel Gas Midstream Corporation’s subsidiary limited liability
companies. The Gathering segment constructs, owns and operates
natural gas gathering pipelines and compression facilities in the
Appalachian region which currently delivers Seneca’s gross
Appalachian production to the interstate pipeline system.
Three Months Ended December 31, (in
thousands except per share amounts)
2016 2015
Variance Net Income / (Loss) $ 10,981 $ 4,921
$ 6,060 Net Income / (Loss) Per Share (Diluted) $ 0.13 $
0.06 $ 0.07 Adjusted EBITDA $ 25,101 $ 16,458 $ 8,643
The Gathering segment’s first quarter earnings increased $6.1
million or 123 percent versus the prior year on higher revenues.
Operating revenues increased $9.1 million as the increase in
Seneca’s gross Appalachian natural gas production, which includes
production from joint development wells, helped drive higher
volumes across the Company’s gathering systems. The Gathering
segment transported 50.6 Bcf on its systems in the first quarter,
up 16.8 Bcf or 50 percent from the prior year. While operating
revenues were up 48 percent for the quarter, operating expenses
increased only 2 percent versus the prior year.
Downstream Businesses
Utility Segment
The Utility segment operations are carried out by National Fuel
Gas Distribution Corporation (“Distribution”), which sells or
transports natural gas to customers located in western New York and
northwestern Pennsylvania.
Three Months Ended December 31, (in
thousands except per share amounts)
2016 2015
Variance Net Income / (Loss) $ 21,175 $ 18,606
$ 2,569 Net Income / (Loss) Per Share (Diluted) $ 0.25 $
0.22 $ 0.03 Adjusted EBITDA $ 52,331 $ 45,918 $ 6,413
The Utility segment’s earnings increased $2.6 million or 14
percent due mainly to colder weather, higher customer usage and the
positive impact of routine regulatory adjustments, offset partially
by higher O&M and DD&A expenses. Weather in Distribution’s
Pennsylvania service territory was 17.9 percent colder on average
than last year, resulting in higher retail residential and
transportation customer throughput and revenues. In New York, the
impact of weather variations on earnings is largely mitigated by
that jurisdiction’s weather normalization clause. O&M expense
increased $2.9 million versus the prior year due mainly to higher
personnel costs.
Energy Marketing Segment
The Energy Marketing segment's operations are carried out by
National Fuel Resources, Inc. (“NFR”). 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.
Three Months Ended December 31, (in
thousands except per share amounts)
2016 2015
Variance Net Income / (Loss) $ 1,782 $ 1,223
$ 559 Net Income / (Loss) Per Share (Diluted) $ 0.02 $ 0.01
$ 0.01 Adjusted EBITDA $ 2,846 $ 1,846 $ 1,000
The Energy Marketing segment's first quarter earnings increased
$0.6 million or 46 percent due to higher margins. NFR’s margins
were positively impacted by colder weather, which increased retail
customer usage.
Corporate and All Other
The Corporate and All Other category earnings of $0.5 million or
$0.00 per share for the quarter ended December 31, 2016, compares
to earnings of $2.0 million or $0.03 per share in the prior year
first quarter. The decrease is due to higher corporate operating
expenses and higher income taxes.
EARNINGS GUIDANCE
The Company is revising its earnings guidance for fiscal 2017 to
a range of $3.10 to $3.30 per share. The Company is also updating
fiscal 2017 capital expenditure and production guidance and
revising some of its Exploration & Production forecast
assumptions.
Updated FY 2017 Guidance Previous FY 2017
Guidance Consolidated Earnings per Share $3.10 to
$3.30 $2.85 to $3.15 Capital Expenditures
(Millions) Exploration & Production (1) $180 - $220 $180 - $220
Pipeline & Storage $200 - $250 $390 - $440 Gathering $65 - $75
$65 - $75 Utility $90 - $100 $90 - $100
Consolidated Capital
Expenditures $535 - $645 $725 - $835
Exploration & Production Segment Guidance NYMEX Natural
Gas Price Assumption $3.25 $3.25 NYMEX Crude Oil Price Assumption
$55.00 $53.00
Production (Bcfe) East Division -
Appalachia 135 to 153 125 to 148 West Division - California 20 to
22 20 to 22
Total Production 155 to 175 145 to
170 E&P Operating Costs ($/Mcfe) LOE $0.95 -
$1.05 $0.95 - $1.05 G&A $0.35 - $0.40 $0.35 - $0.40 DD&A
$0.65 - $0.70 $0.65 - $0.75 (1) Net of initial conveyance
proceeds received from joint development partner for working
interest in joint development wells
EARNINGS TELECONFERENCE
The Company will host a conference call on Friday, February 3,
2017, 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 NFG Investor Relations News & Events page at National
Fuel’s website at investor.nationalfuelgas.com. For those without
Internet access, audio access is also provided by dialing
(toll-free) 877-201-0168, using conference ID number “47888632.”
For those unable to listen to the live conference call, an audio
replay will be available approximately two hours following the
teleconference at the same website link and by phone at (toll-free)
855-859-2056 or 404-537-3406, using conference ID number
“47888632.” Both the webcast and telephonic replay will be
available until the close of business on Friday, February 10,
2017.
National Fuel is an integrated energy company reporting
financial results for 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: 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; governmental/regulatory
actions, initiatives and proceedings, including those involving
rate cases (which address, among other things, target rates of
return, rate design and retained natural gas), environmental/safety
requirements, affiliate relationships, industry structure, and
franchise renewal; changes in 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; impairments
under the SEC’s full cost ceiling test for natural gas and oil
reserves; changes in the price of natural gas or oil; 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; 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; increasing
health care costs and the resulting effect on health insurance
premiums and on the obligation to provide other post-retirement
benefits; changes in price differentials between similar quantities
of natural gas or oil sold at different geographic locations, and
the effect of such changes on commodity production, revenues and
demand for pipeline transportation capacity to or from such
locations; other changes in price differentials between similar
quantities of natural gas or oil having different quality, heating
value, hydrocarbon mix or delivery date; the cost and effects of
legal and administrative claims against the Company or activist
shareholder campaigns to effect changes at the Company; uncertainty
of oil and gas reserve estimates; significant differences between
the Company’s projected and actual production levels for natural
gas or oil; changes in demographic patterns and weather conditions;
changes in the availability, price or accounting treatment of
derivative financial instruments; changes in 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; 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, 2016
(Unaudited) Upstream
MidstreamBusinesses
DownstreamBusinesses
Exploration & Pipeline & Energy Corporate /
(Thousands of Dollars) Production Storage Gathering
Utility Marketing All Other
Consolidated*
First quarter 2016 GAAP earnings $
(237,086 ) $ 21,276 $ 4,921 $ 18,606 $ 1,223 $ 1,951 $ (189,109 )
Items impacting comparability: Impairment of oil and gas
producing properties 435,451 435,451 Tax impact of impairment of
oil and gas producing properties (182,889 ) (182,889 ) Joint
development agreement professional fees 4,682 4,682 Tax impact of
joint development agreement professional fees (1,966 )
(1,966 )
First quarter 2016 operating results 18,192
21,276 4,921 18,606 1,223 1,951 66,169
Drivers of
operating results Higher (lower) crude oil prices (2,367 )
(2,367 ) Higher (lower) natural gas prices (5,063 ) (5,063 ) Higher
(lower) natural gas production 14,417 14,417 Higher (lower) crude
oil production (1,061 ) (1,061 ) Lower (higher) lease operating and
transportation expenses (446 ) (446 ) Lower (higher) depreciation /
depletion 9,737 386 (965 ) 9,158 Higher (lower) gathering
and processing revenues 5,916 5,916 Lower (higher) other operating
expenses 1,880 (1,722 ) (313 ) (1,872 ) (611 ) (2,638 )
Colder weather 3,327 3,327 Higher usage 1,480 1,480 Regulatory
true-up adjustments 1,314 1,314 Higher (lower) margins 596
596 Higher (lower) AFUDC** (895 ) (895 ) Lower
(higher) interest expense 688 635 1,323 Lower (higher)
income tax expense / effective tax rate (529 ) (1,148 ) (1,677 )
All other / rounding (368 ) 323 (178 )
(715 ) (37 ) 330 (645 )
First
quarter 2017 GAAP earnings $ 35,080 $ 19,368
$ 10,981 $ 21,175 $ 1,782
$ 522 $ 88,908 * 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, 2016 (Unaudited)
Upstream
MidstreamBusinesses
DownstreamBusinesses
Exploration & Pipeline & Energy Corporate /
Production Storage Gathering Utility
Marketing All Other Consolidated*
First
quarter 2016 GAAP earnings $ (2.80 ) $ 0.25 $ 0.06 $ 0.22 $
0.01 $ 0.03 $ (2.23 )
Items impacting comparability:
Impairment of oil and gas producing properties 5.12 5.12 Tax impact
of impairment of oil and gas producing properties (2.15 ) (2.15 )
Joint development agreement professional fees 0.06 0.06 Tax impact
of joint development agreement professional fees (0.02 )
(0.02 )
First quarter 2016 operating results 0.21
0.25 0.06 0.22 0.01 0.03 0.78
Drivers of operating
results Higher (lower) crude oil prices (0.03 ) (0.03 ) Higher
(lower) natural gas prices (0.06 ) (0.06 ) Higher (lower) natural
gas production 0.17 0.17 Higher (lower) crude oil production (0.01
) (0.01 ) Lower (higher) lease operating and transportation
expenses (0.01 ) (0.01 ) Lower (higher) depreciation / depletion
0.11 — (0.01 ) 0.10 Higher (lower) gathering and processing
revenues 0.07 0.07 Lower (higher) other operating expenses 0.02
(0.02 ) — (0.02 ) (0.01 ) (0.03 ) Colder weather 0.04 0.04
Higher usage 0.02 0.02 Regulatory true-up adjustments 0.02 0.02
Higher (lower) margins 0.01 0.01 Higher (lower)
AFUDC** (0.01 ) (0.01 ) Lower (higher) interest expense 0.01
0.01 0.02 Lower (higher) income tax expense / effective tax
rate (0.01 ) (0.01 ) (0.02 ) All other / rounding 0.01
0.01 (0.01 ) (0.02 ) —
(0.01 ) (0.02 )
First quarter 2017 GAAP
earnings $ 0.41 $ 0.23 $ 0.13
$ 0.25 $ 0.02 $ —
$ 1.04 * 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
2016 2015 Operating Revenues: Utility and Energy Marketing
Revenues $ 207,780 $ 168,832 Exploration and Production and Other
Revenues 161,694 152,884 Pipeline and Storage and Gathering
Revenues 53,026 53,479 422,500 375,195 Operating
Expenses: Purchased Gas 70,243 42,068 Operation and Maintenance:
Utility and Energy Marketing 50,422 47,549 Exploration and
Production and Other 30,461 45,575 Pipeline and Storage and
Gathering 22,660 19,568 Property, Franchise and Other Taxes 20,379
20,357 Depreciation, Depletion and Amortization 56,196 70,551
Impairment of Oil and Gas Producing Properties — 435,451
250,361 681,119 Operating Income (Loss) 172,139
(305,924 ) Other Income (Expense): Interest Income 1,600
1,799 Other Income 1,614 2,418 Interest Expense on Long-Term Debt
(29,103 ) (30,372 ) Other Interest Expense (910 ) (1,380 )
Income (Loss) Before Income Taxes 145,340 (333,459 ) Income
Tax Expense (Benefit) 56,432 (144,350 )
Net Income
(Loss) Available for Common Stock $ 88,908 $ (189,109 )
Earnings (Loss) Per Common Share: Basic $ 1.04
$ (2.23 ) Diluted $ 1.04 $ (2.23 )
Weighted
Average Common Shares: Used in Basic Calculation 85,189,851
84,651,233 Used in Diluted Calculation 85,797,989 84,651,233
NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (Unaudited) December 31, September 30,
(Thousands of Dollars) 2016 2016
ASSETS
Property, Plant and Equipment $9,620,006 $9,539,581 Less -
Accumulated Depreciation, Depletion and Amortization
5,133,877 5,085,099 Net Property, Plant and
Equipment 4,486,129 4,454,482
Current Assets: Cash and Temporary Cash Investments 136,493 129,972
Hedging Collateral Deposits — 1,484 Receivables - Net 161,025
133,201 Unbilled Revenue 59,121 18,382 Gas Stored Underground
23,431 34,332 Materials and Supplies - at average cost 34,170
33,866 Unrecovered Purchased Gas Costs 3,697 2,440 Other Current
Assets 49,778 59,354 Total Current
Assets 467,715 413,031 Other
Assets: Recoverable Future Taxes 179,941 177,261 Unamortized Debt
Expense 1,556 1,688 Other Regulatory Assets 323,448 320,750
Deferred Charges 22,215 20,978 Other Investments 114,721 110,664
Goodwill 5,476 5,476 Prepaid Post-Retirement Benefit Costs 17,960
17,649 Fair Value of Derivative Financial Instruments 42,065
113,804 Other 491 604 Total Other
Assets 707,873 768,874 Total Assets
$5,661,717 $5,636,387
CAPITALIZATION AND LIABILITIES Capitalization: Comprehensive
Shareholders' Equity Common Stock, $1 Par Value Authorized -
200,000,000 Shares; Issued and Outstanding - 85,292,570 Shares and
85,118,886 Shares, Respectively $85,293 $85,119 Paid in Capital
775,868 771,164 Earnings Reinvested in the Business 762,641 676,361
Accumulated Other Comprehensive Loss (54,859 ) (5,640
) Total Comprehensive Shareholders' Equity 1,568,943 1,527,004
Long-Term Debt, Net of Unamortized Discount and Debt Issuance Costs
2,086,817 2,086,252 Total
Capitalization 3,655,760 3,613,256
Current and Accrued Liabilities: Notes Payable to Banks and
Commercial Paper — — Current Portion of Long-Term Debt — — Accounts
Payable 113,136 108,056 Amounts Payable to Customers 3,231 19,537
Dividends Payable 34,544 34,473 Interest Payable on Long-Term Debt
28,985 34,900 Customer Advances 13,779 14,762 Customer Security
Deposits 16,692 16,019 Other Accruals and Current Liabilities
88,519 74,430 Fair Value of Derivative Financial Instruments
7,312 1,560 Total Current and Accrued
Liabilities 306,198 303,737
Deferred Credits: Deferred Income Taxes 803,166 823,795 Taxes
Refundable to Customers 93,940 93,318 Unamortized Investment Tax
Credit 340 383 Cost of Removal Regulatory Liability 195,544 193,424
Other Regulatory Liabilities 104,054 99,789 Pension and Other
Post-Retirement Liabilities 272,672 277,113 Asset Retirement
Obligations 113,194 112,330 Other Deferred Credits 116,849
119,242 Total Deferred Credits
1,699,759 1,719,394 Commitments and
Contingencies — — Total Capitalization
and Liabilities $5,661,717 $5,636,387
NATIONAL FUEL GAS COMPANY AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) Three Months Ended December 31, (Thousands of
Dollars) 2016 2015 Operating Activities: Net
Income (Loss) Available for Common Stock $ 88,908 $ (189,109 )
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by
Operating Activities: Impairment of Oil and Gas Producing
Properties — 435,451 Depreciation, Depletion and Amortization
56,196 70,551 Deferred Income Taxes 44,852 (140,013 ) Excess Tax
Benefits Associated with Stock-Based Compensation Awards — (226 )
Stock-Based Compensation 2,482 960 Other 3,607 3,418 Change in:
Hedging Collateral Deposits 1,484 1,573 Receivables and Unbilled
Revenue (67,395 ) (31,150 ) Gas Stored Underground and Materials
and Supplies 10,597 3,466 Unrecovered Purchased Gas Costs (1,257 )
— Other Current Assets 9,576 (5,254 ) Accounts Payable 18,805
(20,784 ) Amounts Payable to Customers (16,306 ) (11,702 ) Customer
Advances (983 ) 7,189 Customer Security Deposits 673 267 Other
Accruals and Current Liabilities 5,919 (14,353 ) Other Assets
(8,389 ) 885 Other Liabilities (4,122 ) 2,904
Net Cash Provided by Operating Activities $ 144,647
$ 114,073 Investing Activities: Capital
Expenditures $ (106,053 ) $ (186,437 ) Net Proceeds from Sale of
Oil and Gas Producing Properties 5,759 10,574 Other (4,297 )
(15,756 ) Net Cash Used in Investing Activities $
(104,591 ) $ (191,619 ) Financing Activities: Changes
in Notes Payable to Banks and Commercial Paper $ — $ 31,400 Excess
Tax Benefits Associated with Stock-Based Compensation Awards — 226
Dividends Paid on Common Stock (34,473 ) (33,415 ) Net Proceeds
From Issuance of Common Stock 938 2,068
Net Cash (Used in) Provided by Financing Activities $
(33,535 ) $ 279 Net Increase (Decrease) in
Cash and Temporary Cash Investments 6,521 (77,267 ) Cash and
Temporary Cash Investments at Beginning of Period 129,972
113,596 Cash and Temporary Cash Investments at
December 31 $ 136,493 $ 36,329
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
2016 2015 Variance Total Operating Revenues $ 160,932
$ 151,965 $ 8,967
Operating Expenses: Operation and Maintenance: General and
Administrative Expense 12,974 19,955 (6,981 ) Lease Operating and
Transportation Expense 39,708 39,022 686 All Other Operation and
Maintenance Expense 2,552 3,145 (593 ) Property, Franchise and
Other Taxes 3,222 3,385 (163 ) Depreciation, Depletion and
Amortization 29,053 44,033 (14,980 ) Impairment of Oil and Gas
Producing Properties — 435,451 (435,451
) 87,509 544,991 (457,482 )
Operating Income (Loss) 73,423 (393,026) 466,449 Other
Income (Expense): Interest Income 86 667 (581 ) Interest Expense
(13,523 ) (14,582 ) 1,059 Income (Loss)
Before Income Taxes 59,986 (406,941 ) 466,927 Income Tax Expense
(Benefit) 24,906 (169,855 ) 194,761 Net
Income (Loss) $ 35,080 $ (237,086 ) $ 272,166
Net Income (Loss) Per Share (Diluted) $ 0.41
$ (2.80 ) $ 3.21
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
2016 2015 Variance Revenues from External
Customers $ 53,000 $ 53,354 $ (354 ) Intersegment Revenues 22,155
22,183 (28 ) Total Operating Revenues
75,155 75,537 (382 ) Operating
Expenses: Purchased Gas 222 458 (236 ) Operation and Maintenance
20,242 17,593 2,649 Property, Franchise and Other Taxes 6,677 6,745
(68 ) Depreciation, Depletion and Amortization 9,662
10,256 (594 ) 36,803 35,052
1,751 Operating Income 38,352 40,485 (2,133 )
Other Income (Expense): Interest Income 273 111 162 Other
Income 686 1,582 (896 ) Interest Expense (8,347 ) (8,038 )
(309 ) Income Before Income Taxes 30,964 34,140
(3,176 ) Income Tax Expense 11,596 12,864
(1,268 ) Net Income $ 19,368 $ 21,276
$ (1,908 ) Net Income Per Share (Diluted) $ 0.23
$ 0.25 $ (0.02 ) Three
Months Ended December 31,
GATHERING
SEGMENT
2016 2015 Variance Revenues from External Customers $
26 $ 125 $ (99 ) Intersegment Revenues 27,840 18,640
9,200 Total Operating Revenues 27,866
18,765 9,101 Operating Expenses:
Operation and Maintenance 2,754 2,273 481 Property, Franchise and
Other Taxes 11 34 (23 ) Depreciation, Depletion and Amortization
3,880 4,210 (330 ) 6,645
6,517 128 Operating Income 21,221
12,248 8,973 Other Income (Expense): Interest Income 146 34
112 Other Income 1 1 — Interest Expense (2,093 ) (3,070 )
977 Income Before Income Taxes 19,275 9,213
10,062 Income Tax Expense 8,294 4,292
4,002 Net Income $ 10,981 $ 4,921
$ 6,060 Net Income Per Share (Diluted) $ 0.13
$ 0.06 $ 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
2016 2015 Variance Revenues from External Customers $
170,971 $ 143,848 $ 27,123 Intersegment Revenues 1,826
3,664 (1,838 ) Total Operating Revenues
172,797 147,512 25,285
Operating Expenses: Purchased Gas 60,732 45,068 15,664 Operation
and Maintenance 49,529 46,599 2,930 Property, Franchise and Other
Taxes 10,205 9,927 278 Depreciation, Depletion and Amortization
13,102 11,618 1,484 133,568
113,212 20,356 Operating
Income 39,229 34,300 4,929 Other Income (Expense): Interest
Income 134 85 49 Other Income 92 697 (605 ) Interest Expense (7,198
) (7,334 ) 136 Income Before Income
Taxes 32,257 27,748 4,509 Income Tax Expense 11,082
9,142 1,940 Net Income $ 21,175
$ 18,606 $ 2,569 Net Income Per Share
(Diluted) $ 0.25 $ 0.22 $ 0.03
Three Months Ended December 31,
ENERGY MARKETING
SEGMENT
2016 2015 Variance Revenues from External Customers $
36,809 $ 24,984 $ 11,825 Intersegment Revenues 19 311
(292 ) Total Operating Revenues 36,828
25,295 11,533 Operating Expenses:
Purchased Gas 32,339 21,723 10,616 Operation and Maintenance 1,643
1,723 (80 ) Property, Franchise and Other Taxes — 3 (3 )
Depreciation, Depletion and Amortization 70 70
— 34,052 23,519 10,533
Operating Income 2,776 1,776 1,000 Other
Income (Expense): Interest Income 134 50 84 Other Income 3 10 (7 )
Interest Expense (13 ) (19 ) 6 Income
Before Income Taxes 2,900 1,817 1,083 Income Tax Expense 1,118
594 524 Net Income $ 1,782
$ 1,223 $ 559 Net Income
Per Share (Diluted) $ 0.02 $ 0.01 $
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
2016 2015 Variance Total Operating Revenues $ 554
$ 706 $ (152 ) Operating Expenses:
Operation and Maintenance 516 75 441 Property, Franchise and Other
Taxes 143 143 — Depreciation, Depletion and Amortization 241
182 59 900 400
500 Operating Income (Loss) (346 ) 306 (652 )
Other Income (Expense): Interest Income 39 19
20 Income (Loss) Before Income Taxes (307 )
325 (632 ) Income Tax Expense (Benefit) (128 ) 136
(264 ) Net Income (Loss) $ (179 ) $ 189
$ (368 ) Net Income (Loss) Per Share (Diluted) $ —
$ — $ — Three Months
Ended December 31,
CORPORATE
2016 2015 Variance Revenues from External Customers $
208 $ 213 $ (5 ) Intersegment Revenues 976 967
9 Total Operating Revenues 1,184 1,180
4 Operating Expenses: Operation and
Maintenance 3,391 2,891 500 Property, Franchise and Other Taxes 121
120 1 Depreciation, Depletion and Amortization 188
182 6 3,700 3,193
507 Operating Loss (2,516 ) (2,013 ) (503 )
Other Income (Expense): Interest Income 31,805 31,743 62 Other
Income 832 128 704 Interest Expense on Long-Term Debt (29,103 )
(30,372 ) 1,269 Other Interest Expense (753 ) 753
(1,506 ) Income (Loss) Before Income Taxes 265 239 26
Income Tax Expense (Benefit) (436 ) (1,523 ) 1,087
Net Income $ 701 $ 1,762 $
(1,061 ) Net Income Per Share (Diluted) $ — $
0.03 $ (0.03 ) Three Months Ended
December 31,
INTERSEGMENT
ELIMINATIONS
2016 2015 Variance Intersegment Revenues $ (52,816 )
$ (45,765 ) $ (7,051 ) Operating Expenses: Purchased
Gas (23,050 ) (25,181 ) 2,131 Operation and Maintenance (29,766 )
(20,584 ) (9,182 ) (52,816 ) (45,765 )
(7,051 ) Operating Income — — — Other Income
(Expense): Interest Income (31,017 ) (30,910 ) (107 ) Interest
Expense 31,017 30,910 107 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 2016 2015
(Decrease)
Capital
Expenditures:
Exploration and Production $ 40,689
(1)(2)
$ 88,125 (3)(4) $ (47,436 ) Pipeline and Storage 25,392 (1)(2)
31,621 (3)(4) (6,229 ) Gathering 11,344 (1)(2) 21,744 (3)(4)
(10,400 ) Utility 17,052 (1)(2) 19,917 (3)(4) (2,865 ) Energy
Marketing 7 7 — Total Reportable Segments
94,484 161,414 (66,930 ) All Other 39 — 39 Corporate 60 48
12 Total Capital Expenditures $ 94,583 $
161,462 $ (66,879 ) (1)
Capital expenditures for the three months
ended December 31, 2016, include accounts payable and accrued
liabilities related to capital expenditures of $25.3 million, $8.7
million, $7.9 million, and $7.1 million in the Exploration and
Production segment, Pipeline and Storage segment, Gathering segment
and Utility segment, respectively. These amounts have been excluded
from the Consolidated Statement of Cash Flows at December 31, 2016,
since they represent non-cash investing activities at that
date.
(2)
Capital expenditures for the three months
ended December 31, 2016, exclude capital expenditures of $25.2
million, $18.7 million, $5.3 million and $11.2 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,
2016 and paid during the three months ended December 31, 2016.
These amounts were excluded from the Consolidated Statement of Cash
Flows at September 30, 2016, 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,
2016.
(3)
Capital expenditures for the three months
ended December 31, 2015, include accounts payable and accrued
liabilities related to capital expenditures of $43.7 million, $19.0
million, $18.8 million, and $12.5 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 December 31, 2015,
since they represent non-cash investing activities at that
date.
(4)
Capital expenditures for the three months
ended December 31, 2015, exclude capital expenditures of $46.2
million, $33.9 million, $22.4 million and $16.5 million in the
Exploration and Production segment, Pipeline and Storage segment,
Gathering segment and Utility segment, respectively. These amounts
were in accounts payable and accrued liabilities at September 30,
2015 and paid during the three months ended December 31, 2015.
These amounts were excluded from the Consolidated Statement of Cash
Flows at September 30, 2015, 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,
2015.
DEGREE
DAYS
Percent Colder (Warmer) Than:
Three Months Ended
December 31
Normal 2016 2015 Normal (1) Last Year (1) Buffalo, NY 2,253
1,966 1,677 (12.7) 17.2 Erie, PA 2,044 1,750 1,484 (14.4) 17.9 (1)
Percents compare actual 2016 degree days to normal degree
days and actual 2016 degree days to actual 2015 degree days.
NATIONAL FUEL GAS COMPANY AND
SUBSIDIARIES EXPLORATION AND PRODUCTION
INFORMATION Three Months Ended December
31, Increase 2016 2015 (Decrease)
Gas
Production/Prices:
Production (MMcf) Appalachia 39,807 32,788 7,019 West Coast 776
783 (7 ) Total Production 40,583 33,571
7,012 Average Prices (Per Mcf) Appalachia $ 2.35 $
1.98 $ 0.37 West Coast 4.24 3.65 0.59 Weighted Average 2.39 2.02
0.37 Weighted Average after Hedging 2.97 3.16 (0.19 )
Oil
Production/Prices:
Production (Thousands of Barrels) Appalachia — 6 (6 ) West Coast
721 742 (21 ) Total Production 721 748
(27 ) Average Prices (Per Barrel) Appalachia N/M $ 39.78 N/M
West Coast $ 43.69 36.05 $ 7.64 Weighted Average 43.82 36.08 7.74
Weighted Average after Hedging 54.71 59.76 (5.05 ) Total
Production (Mmcfe) 44,909 38,059 6,850
Selected
Operating Performance Statistics:
General & Administrative Expense per Mcfe (1) $ 0.29 $ 0.52 $
(0.23 ) Lease Operating and Transportation Expense per Mcfe (1)(2)
$ 0.88 $ 1.03 $ (0.15 ) Depreciation, Depletion & Amortization
per Mcfe (1) $ 0.65 $ 1.16 $ (0.51 ) N/M - Not Meaningful
(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 $0.51 per
Mcfe for the three months ended December 31, 2016 and December 31,
2015, respectively.
NATIONAL FUEL GAS COMPANY AND
SUBSIDIARIES
EXPLORATION AND
PRODUCTION INFORMATION
Hedging Summary for the Remaining Nine Months of Fiscal
2017
Volume
Average Hedge
Price
Oil Swaps Brent 72,000 BBL $ 91.00 / BBL NYMEX 1,163,000 BBL $
58.40 / BBL
Total 1,235,000 BBL $
60.30 / BBL Gas Swaps NYMEX 27,780,000 MMBTU $ 4.32 /
MMBTU Dominion Transmission Appalachian (DOM) 3,630,000 MMBTU $
3.85 / MMBTU Dawn Ontario (DAWN) 12,990,000 MMBTU $ 3.63 / MMBTU
Fixed Price Physical Sales 45,029,281 MMBTU $ 2.60 / MMBTU
Total 89,429,281 MMBTU $ 3.33 /
MMBTU Hedging Summary for Fiscal 2018
Volume
Average Hedge
Price
Oil Swaps Brent 24,000 BBL $ 91.00 / BBL NYMEX 1,119,000 BBL $
55.38 / BBL
Total 1,143,000 BBL $
56.13 / BBL Gas Swaps NYMEX 42,570,000 MMBTU $ 3.34 /
MMBTU DOM 180,000 MMBTU $ 3.82 / MMBTU DAWN 8,400,000 MMBTU $ 3.08
/ MMBTU Fixed Price Physical Sales 32,927,835 MMBTU $ 2.43 / MMBTU
Total 84,077,835 MMBTU $ 2.96 /
MMBTU Hedging Summary for Fiscal 2019
Volume
Average Hedge
Price
Oil Swaps NYMEX 756,000 BBL $ 54.60 / BBL
Total
756,000 BBL $ 54.60 / BBL Gas
Swaps NYMEX 27,060,000 MMBTU $ 3.17 / MMBTU DAWN 7,200,000 MMBTU $
3.00 / MMBTU Fixed Price Physical Sales 11,947,289 MMBTU $ 3.09 /
MMBTU
Total 46,207,289 MMBTU $ 3.13
/ MMBTU Hedging Summary for Fiscal 2020
Volume
Average Hedge
Price
Gas Swaps NYMEX 16,880,000 MMBTU $ 3.07 / MMBTU DAWN 7,200,000
MMBTU $ 3.00 / MMBTU Fixed Price Physical Sales 3,566,558 MMBTU $
3.24 / MMBTU
Total 27,646,558 MMBTU $
3.07 / MMBTU Hedging Summary for Fiscal 2021
Volume
Average Hedge
Price
Gas Swaps NYMEX 4,840,000 MMBTU $ 3.01 / MMBTU DAWN 600,000 MMBTU $
3.00 / MMBTU
Total 5,440,000 MMBTU $
3.01 / MMBTU NATIONAL FUEL GAS COMPANY AND
SUBSIDIARIES EXPLORATION AND PRODUCTION
INFORMATION
Gross Wells in
Process of Drilling
Three Months
Ended December 31, 2016
Total
East
West
Company
Wells in Process - Beginning of Period Exploratory 6.000
0.000 6.000 Developmental 87.000 0.000 87.000
Wells
Commenced Exploratory 4.000 0.000 4.000 Developmental 12.000
7.000 19.000
Wells Completed Exploratory 1.000 0.000 1.000
Developmental 12.000 6.000 18.000
Wells Plugged &
Abandoned Exploratory 0.000 0.000 0.000 Developmental 0.000
0.000 0.000
Wells in Process - End of Period Exploratory
9.000 0.000 9.000 Developmental 87.000 1.000 88.000
Net Wells in
Process of Drilling
Three Months
Ended December 31, 2016
Total
East
West
Company
Wells in Process - Beginning of Period Exploratory 6.000
0.000 6.000 Developmental 62.900 0.000 62.900
Wells
Commenced Exploratory 4.000 0.000 4.000 Developmental 12.000
7.000 19.000
Wells Completed Exploratory 1.000 0.000 1.000
Developmental 2.400 6.000 8.400
Wells Plugged &
Abandoned Exploratory 0.000 0.000 0.000 Developmental 0.000
0.000 0.000
Well Interest Sold (1) Exploratory 0.000 0.000
0.000 Developmental 4.000 0.000 4.000
Wells in Process - End of
Period Exploratory 9.000 0.000 9.000 Developmental 68.500 (1)
1.000 69.500 (1) Seneca's East Division sold an 80% working
interest in 5 of the existing developmental wells in process to IOG
during the three months ended December 31, 2016.
NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES
Pipeline & Storage Throughput -
(millions of cubic feet - MMcf) Three Months Ended
December 31, Increase 2016 2015 (Decrease) Firm Transportation -
Affiliated 31,607 24,709 6,898 Firm Transportation - Non-Affiliated
159,174 151,123 8,051 Interruptible Transportation 3,046
5,631 (2,585 ) 193,827 181,463 12,364
Gathering Volume - (MMcf) Three Months Ended December
31, Increase 2016 2015 (Decrease) Gathered Volume - Affiliated
50,569 33,800 16,769
Utility
Throughput - (MMcf) Three Months Ended December 31, Increase
2016 2015 (Decrease) Retail Sales: Residential Sales 15,764 13,133
2,631 Commercial Sales 2,299 1,827 472 Industrial Sales 77
66 11 18,140 15,026 3,114 Off-System Sales 173 — 173
Transportation 19,565 17,615 1,950 37,878
32,641 5,237
Energy Marketing
Volume Three Months Ended December 31, Increase 2016 2015
(Decrease) Natural Gas (MMcf) 11,127 10,098 1,029
NATIONAL FUEL GAS COMPANYAND
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 Operating Results and Adjusted
EBITDA, which are non-GAAP financial measures. The Company believes
that these non-GAAP financial measures are useful to investors
because they provide an alternative method for assessing the
Company's ongoing operating results and for comparing the Company’s
financial performance to other companies. The Company's management
uses these non-GAAP financial measures for the same purpose, and
for planning and forecasting purposes. The presentation of non-GAAP
financial measures is not meant to be a substitute for financial
measures in accordance with GAAP.
Management defines Operating Results as reported GAAP earnings
before items impacting comparability. The table at page 1 of this
report reconciles National Fuel's reported GAAP earnings to
Operating Results for the three months ended December 31, 2016 and
2015.
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,
2016 and 2015:
Three Months Ended December 31, 2016 2015 (in
thousands)
Reported GAAP Earnings $ 88,908 $ (189,109 )
Depreciation, Depletion and Amortization 56,196 70,551 Interest and
Other Income (3,214 ) (4,217 ) Interest Expense 30,013 31,752
Income Taxes 56,432 (144,350 ) Impairment of Oil and Gas Producing
Properties
— 435,451 Joint Development Agreement Professional
Fees
— 4,682
Adjusted EBITDA $ 228,335 $
204,760
Adjusted EBITDA by Segment Pipeline
and Storage Adjusted EBITDA $ 48,014 $ 50,741 Gathering Adjusted
EBITDA 25,101 16,458 Total Midstream Businesses
Adjusted EBITDA 73,115 67,199 Exploration and Production Adjusted
EBITDA 102,476 91,140 Utility Adjusted EBITDA 52,331 45,918 Energy
Marketing Adjusted EBITDA 2,846 1,846 Corporate and All Other
Adjusted EBITDA (2,433 ) (1,343 )
Total Adjusted EBITDA $
228,335 $ 204,760
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
SEGMENT ADJUSTED EBITDA
Three Months Ended December 31, (in thousands) 2016
2015
Exploration and
Production Segment
Reported GAAP Earnings $ 35,080 $ (237,086 ) Depreciation,
Depletion and Amortization 29,053 44,033 Interest and Other Income
(86 ) (667 ) Interest Expense 13,523 14,582 Income Taxes 24,906
(169,855 ) Impairment of Oil and Gas Producing Properties — 435,451
Joint Development Agreement Professional Fees — 4,682
Adjusted EBITDA $ 102,476 $ 91,140
Pipeline and
Storage Segment
Reported GAAP Earnings $ 19,368 $ 21,276 Depreciation, Depletion
and Amortization 9,662 10,256 Interest and Other Income (959 )
(1,693 ) Interest Expense 8,347 8,038 Income Taxes 11,596
12,864 Adjusted EBITDA $ 48,014 $ 50,741
Gathering
Segment
Reported GAAP Earnings $ 10,981 $ 4,921 Depreciation, Depletion and
Amortization 3,880 4,210 Interest and Other Income (147 ) (35 )
Interest Expense 2,093 3,070 Income Taxes 8,294 4,292
Adjusted EBITDA $ 25,101 $ 16,458
Utility
Segment
Reported GAAP Earnings $ 21,175 $ 18,606 Depreciation, Depletion
and Amortization 13,102 11,618 Interest and Other Income (226 )
(782 ) Interest Expense 7,198 7,334 Income Taxes 11,082
9,142 Adjusted EBITDA $ 52,331 $ 45,918
Energy Marketing
Segment
Reported GAAP Earnings $ 1,782 $ 1,223 Depreciation, Depletion and
Amortization 70 70 Interest and Other Income (137 ) (60 ) Interest
Expense 13 19 Income Taxes 1,118 594 Adjusted EBITDA
$ 2,846 $ 1,846
Corporate and All
Other
Reported GAAP Earnings $ 522 $ 1,951 Depreciation, Depletion and
Amortization 429 364 Interest and Other Income (1,659 ) (980 )
Interest Expense (1,161 ) (1,291 ) Income Taxes (564 ) (1,387 )
Adjusted EBITDA $ (2,433 ) $ (1,343 )
NATIONAL
FUEL GAS COMPANY AND SUBSIDIARIES
Quarter Ended
December 31 (unaudited)
2016 2015 Operating Revenues $ 422,500,000 $
375,195,000 Net Income (Loss) Available for Common
Stock $ 88,908,000 $ (189,109,000 ) Earnings (Loss)
Per Common Share: Basic $ 1.04 $ (2.23 ) Diluted $ 1.04
$ (2.23 ) Weighted Average Common Shares: Used in
Basic Calculation 85,189,851 84,651,233 Used in
Diluted Calculation 85,797,989 84,651,233
Twelve Months
Ended December 31 (unaudited)
Operating Revenues $ 1,499,721,000 $ 1,612,199,000
Net Income (Loss) Available for Common Stock $
(12,941,000 ) $ (653,276,000 ) Earnings (Loss) Per Common
Share: Basic $ (0.15 ) $ (7.73 ) Diluted $ (0.15 ) $ (7.73 )
Weighted Average Common Shares: Used in Basic Calculation
84,983,380 84,499,299 Used in Diluted Calculation
84,983,380 84,499,299
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170202006285/en/
National Fuel Gas CompanyAnalyst:Brian M.
Welsch, 716-857-7875orMedia:Karen L. Merkel,
716-857-7654
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