National Fuel Gas Company (“National Fuel” or the “Company”) NFG today announced consolidated earnings for the third quarter of fiscal 2014 and for the nine months ended June 30, 2014.
HIGHLIGHTS
- Earnings for the third quarter of fiscal 2014 of $64.5 million, or $0.76 per share, increased $6.0 million, or $0.07 per share, compared to $58.5 million, or $0.69 per share, for the prior year's third quarter. The increase is due to higher earnings in the Midstream businesses.
- Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) for the nine months ended June 30, 2014, were $748.4 million compared to $661.7 million for the prior year's nine-month period, an increase of 13%.
- In the Midstream businesses (which consist of the Company's Pipeline and Storage and Gathering segments), Adjusted EBITDA for the current year's third quarter were $61.7 million, a 28% increase over the prior year's third quarter.
- Seneca Resources Corporation's (“Seneca”) third quarter production of natural gas and crude oil was 40.6 billion cubic feet equivalent (“Bcfe”), an increase of 6.5 Bcfe or approximately 19% over the prior year's third quarter. Average daily production during the quarter was 446 million cubic feet equivalent (“MMcfe”) per day.
- The Company is updating and narrowing its GAAP earnings guidance range for fiscal 2014 to a range of $3.40 to $3.50 per share. The previous earnings guidance had been a range of $3.40 to $3.55 per share. This guidance assumes a flat NYMEX price of $4.00 per Million British Thermal Units ("MMBtu") for natural gas and $95 per barrel ("Bbl") for crude oil for unhedged production for the remainder of the fiscal year. Production for the entire 2014 fiscal year is projected to be between 160 to 168 Bcfe.
- The Company's preliminary GAAP earnings guidance for fiscal 2015 is in the range of $3.30 to $3.60 per share. The 2015 preliminary guidance includes oil and gas production for the Exploration and Production segment in the range of 180 to 220 Bcfe and is based on an assumed flat NYMEX price of $4.25 per MMBtu for natural gas and $95 per Bbl for crude oil.
- A conference call is scheduled for Friday, August 8, 2014, at 11 a.m. Eastern Time.
MANAGEMENT COMMENTS
Ronald J. Tanski, President and Chief Executive Officer of National Fuel Gas Company, stated: “We had another very solid quarter of performance by each of our operating subsidiaries. The operational success in our drilling operations in both Pennsylvania and California, as evidenced by our 19% increase in production, was muted by lower Appalachian natural gas prices. As we have noted in previous quarters, the performance of our utility business during the past heating season, which was one of the coldest in the last 50 years, was exceptional. The level earnings in the Utility segment for the respective nine-month periods reflect the proper workings of rate adjustment mechanisms and our employee's commitment to cost control.
“Our investments in our pipeline businesses continue to generate impressive earnings, and we look to invest in additional gathering and transmission projects that will be designed to move regionally constrained production, including Seneca's, to higher value markets.
“The Company continues to produce strong results across our integrated natural gas value chain. As we look forward, we believe the Company is in a great position to continue capitalizing on our considerable growth opportunities in Appalachia. We are committed to increasing and highlighting the value of the Company through disciplined investments, as well as a keen focus on operational execution and safe, reliable service across our subsidiaries.”
SUMMARY OF RESULTS
National Fuel Gas had consolidated earnings for the quarter ended June 30, 2014, of $64.5 million, or $0.76 per share, compared to the prior year's third quarter of $58.5 million, or $0.69 per share, an increase of $6.0 million, or $0.07 per share. The increase is due to higher earnings in the Midstream and Upstream 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.)
Consolidated earnings for the nine months ended June 30, 2014, of $242.0 million, or $2.85 per share, increased $29.8 million, or $0.33 per share, from the same period in the prior year where earnings were $212.2 million or $2.52 per share.
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OPERATING RESULTS |
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| Three Months Ended | Nine Months Ended | ||||||||||||||
| June 30, | June 30, | ||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||
| (in thousands except per share amounts) | |||||||||||||||
| Reported GAAP earnings | $ | 64,520 | $ | 58,495 | $ | 241,983 | $ | 212,159 | |||||||
| Items impacting comparability1: | |||||||||||||||
| Plugging and abandonment accrual | (2,691 | ) | 560 | ||||||||||||
| Deferred state income tax adjustment | 5,000 | 3,000 | 5,000 | ||||||||||||
| Gain on life insurance policies | (3,635 | ) | |||||||||||||
| Operating Results | $ | 61,829 | $ | 63,495 | $ | 241,908 | $ | 217,159 | |||||||
| Reported GAAP earnings per share | $ | 0.76 | $ | 0.69 | $ | 2.85 | $ | 2.52 | |||||||
| Items impacting comparability1: | |||||||||||||||
| Plugging and abandonment accrual | (0.03 | ) | 0.01 | ||||||||||||
| Deferred state income tax adjustment | 0.06 | 0.04 | 0.06 | ||||||||||||
| Gain on life insurance policies | (0.04 | ) | |||||||||||||
| Operating Results | $ | 0.73 | $ | 0.75 | $ | 2.86 | $ | 2.58 | |||||||
|
1 |
See discussion of these individual items below. |
As outlined in the table above, certain items included in GAAP earnings impacted the comparability of the Company's financial results when comparing the quarter and nine months ended June 30, 2014, to the comparable periods in fiscal 2013. Excluding these items, Operating Results for the current quarter of $61.8 million, or $0.73 per share, decreased $1.7 million, or $0.02 per share, from the prior year's third quarter when Operating Results were $63.5 million or $0.75 per share. Excluding these items, Operating Results for the nine months ended June 30, 2014, of $241.9 million, or $2.86 per share, increased $24.7 million, or $0.28 per share, from the same period in the prior year when Operating Results were $217.2 million or $2.58 per share. Items impacting comparability will be discussed in more detail with the discussion of segment earnings below.
DISCUSSION OF RESULTS BY SEGMENT
The following discussion of the earnings of each segment is summarized in a tabular form at pages 10 through 13 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 third quarter of fiscal 2014 of $32.4 million, or $0.38 per share, increased $0.7 million, or less than $0.01 per share, when compared with the prior year's third quarter. Earnings for the current year's third quarter were increased by a $2.7 million reduction of an accrual for well plugging and abandonment costs. In the first half of fiscal 2014, Seneca recorded an initial accrual of $3.3 million associated with two wells on an offshore Gulf of Mexico mineral lease (High Island 74) that Seneca had farmed out to an operator who subsequently filed for bankruptcy. During the current quarter, it was determined that Seneca was not responsible for the costs to plug and abandon one of those wells. Seneca also increased its state deferred income tax liability by $5.0 million in the third quarter of fiscal 2013 to reflect the net impact of its growing presence in Pennsylvania. Excluding the impact of these third quarter items, Operating Results in the Exploration and Production segment of $29.7 million, or $0.35 per share, decreased $7.0 million, or $0.09 per share, when compared to the prior year's third quarter.
Overall production of natural gas and crude oil for the current quarter of 40.6 Bcfe increased approximately 6.5 Bcfe, or 19.1 percent, compared to the prior year's third quarter. Production from Seneca's Appalachia properties increased approximately 6.0 Bcfe or 20.8 percent. California production of 5.4 Bcfe increased 9.2 percent compared with the prior year's third quarter due to increased development activities, primarily in the East Coalinga and South Midway Sunset fields.
Lower commodity prices realized after hedging reduced Operating Results. The weighted average natural gas price received by Seneca (after hedging) for the quarter ended June 30, 2014, was $3.55 per thousand cubic feet (“Mcf”), a decrease of $0.62 per Mcf compared to the prior year's third quarter. The weighted average crude oil price realized after hedging for the quarter ended June 30, 2014, was $97.54 per Bbl, a decrease of $0.36 per Bbl compared to the prior year's third quarter.
On a per unit basis, depletion expense of $1.84 per thousand cubic feet equivalent (“Mcfe”), decreased $0.13 per Mcfe due to higher natural gas reserve balances at June 30, 2014, compared to the prior year's third quarter. On a per unit basis, lease operating and transportation expenses (“LOE”) at $1.08 per Mcfe increased $0.09 per Mcfe compared to the prior year's third quarter due to higher gathering and compression costs associated with production from Tract 100 in Lycoming County, Pa., and higher steam fuel, electricity and water disposal costs in California. General and administrative expenses (“G&A”) decreased $0.07 per Mcfe compared to the prior year's third quarter, also due to higher production. Operating Results were also reduced by a $2.6 million derivative mark to market adjustment associated with certain crude oil hedges.
The Exploration and Production segment's earnings were $87.9 million, or $1.04 per share, for the nine months ended June 30, 2014, compared to earnings of $86.1 million, or $1.02 per share, for the nine months ended June 30, 2013. In addition to the accrual for well plugging and abandonment costs recorded in the current nine-month period, Seneca had deferred income tax adjustments in both fiscal 2013 and 2014 that decreased earnings by $5 million and $3 million, respectively. Excluding these items, Operating Results in the Exploration and Production segment of $91.5 million, or $1.09 per share, increased $0.3 million, or less than $0.01 per share, when compared to the prior year's nine-month period.
Overall production of natural gas and crude oil for the nine months ended June 30, 2014, of 114.6 Bcfe increased approximately 27.1 Bcfe, or 31.0 percent, compared to the prior year's nine-month period. Production from Seneca's Appalachia properties increased approximately 26.1 Bcfe or 36.0 percent. California production of 15.8 Bcfe increased 6.7 percent compared with the prior year's nine-month period.
Lower commodity prices realized after hedging in the current nine-month period reduced earnings. The weighted average natural gas price received by Seneca (after hedging) for the nine months ended June 30, 2014, was $3.71 per Mcf, a decrease of $0.43 per Mcf compared to the prior year's nine-month period. The weighted average crude oil price realized after hedging for the nine months ended June 30, 2014, was $96.19 per Bbl, a decrease of $1.69 per Bbl.
On a per unit basis for the nine months ended June 30, 2014, depletion expense of $1.88 per Mcfe decreased $0.16 per Mcfe due to higher natural gas reserve balances at June 30, 2014, LOE of $1.04 per Mcfe increased $0.04 per Mcfe due to higher transportation costs in Appalachia and higher steam fuel costs in California, and G&A of $0.42 per Mcfe decreased $0.12 per Mcfe compared to the prior year's nine-month period, due to higher production. Operating Results for the nine months ended June 30, 2014, were reduced by higher property taxes in California, a higher Pennsylvania impact fee, higher interest expense due to a higher outstanding debt balance and a $2.3 million derivative mark to market adjustment associated with certain crude oil hedges.
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 $17.9 million, or $0.21 per share, for the quarter ended June 30, 2014, increased $3.9 million, or $0.04 per share, when compared with the same period in the prior fiscal year. The increase in earnings is mainly due to higher non-affiliated transportation revenues from new transportation contracts. 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. Earnings for the quarter also benefitted from lower pension and other post retirement benefit costs.
The Pipeline and Storage segment's earnings of $58.4 million, or $0.69 per share, for the nine months ended June 30, 2014, increased $10.6 million, or $0.12 per share, when compared with the same period in the prior fiscal year. The increase was mostly due to higher non-affiliated transportation revenues and lower pension and other post retirement benefit costs. The increase in transportation revenues was due to the Company's recent expansion projects as well as an overall increase in demand for short-term transportation services as a result of the cold winter of 2013 - 2014. Earnings for the current nine-month period were reduced by a lower allowance for funds used during construction due to the completion in the prior year of the expansion projects mentioned above.
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 critical gathering infrastructure for transporting Seneca's Marcellus Shale production to the interstate pipeline system.
The Gathering segment's earnings of $8.7 million, or $0.10 per share, for the quarter ended June 30, 2014, increased $4.3 million, or $0.05 per share, when compared with the same period in the prior fiscal year.
The Gathering segment's earnings of $22.2 million, or $0.26 per share, for the nine months ended June 30, 2014, increased $12.7 million, or $0.15 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 gathering system in Lycoming County, Pa. That increase in revenue was directly related to the increase in Seneca's production volumes as described above.
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 $4.8 million, or $0.06 per share, for the quarter ended June 30, 2014, decreased $2.8 million, or $0.03 per share, when compared with the same period in the prior fiscal year. Higher operating expenses, consisting mostly of higher pension related costs, which were primarily the result of the settlement of the rate proceeding in New York, and higher bad debt expense reduced earnings in the current year's third quarter.
The Utility segment's earnings of $64.6 million, or $0.76 per share, for the nine months ended June 30, 2014, decreased $0.4 million, or $0.01 per share, when compared with the same period in the prior fiscal year. Colder weather in Pennsylvania increased earnings in the current year's nine-month period. Temperatures in Pennsylvania were 15.1 percent colder during the nine months ended June 30, 2014, than in the prior year's nine-month period. In New York, the impact of weather variations on earnings is mitigated by that jurisdiction's weather normalization clause. Lower interest expense due to a lower outstanding debt balance also increased earnings. Higher operating expenses, consisting mostly of higher pension related costs, which were primarily the result of the settlement of the rate proceeding in New York, reduced earnings in the current year's nine-month period. Higher income taxes which were the result of a non-recurring tax benefit recorded in the prior year nine-month period, also reduced earnings.
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 and nine months ended June 30, 2014, of $0.6 million and $6.0 million, respectively, were largely unchanged from the equivalent periods in the prior year.
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 improved from a $0.3 million loss in the prior year's third quarter to earnings of less than $0.1 million in the current year's third quarter. The higher earnings were due to lower operating expenses.
The Corporate and All Other category earnings of $2.9 million, for the nine months ended June 30, 2014, compares to a loss of $2.0 million for the prior year's nine-month period. The comparability of the nine month results is impacted by a $3.6 million gain recognized on corporate-owned executive life insurance policies. Excluding this item, Operating Results for the nine-month period, a loss of $0.7 million, compares to a loss of $2.0 million in the prior year's nine-month period. The improved Operating Results were due to higher margins from the Company's timber operations, and lower franchise tax expense, offset by higher operating expenses.
EARNINGS GUIDANCE
The Company is updating and narrowing its GAAP earnings guidance range for fiscal 2014 to a range of $3.40 to $3.50 per share. The previous earnings guidance had been a range of $3.40 to $3.55 per share. This guidance includes forecast oil and gas production for fiscal 2014 in the range between 160 to 168 Bcfe (previous guidance 155 to 165 Bcfe), hedges currently in place and a flat NYMEX price of $4.00 per MMBtu for natural gas and $95 per Bbl for crude oil for unhedged production for the remainder of the fiscal year.
The Company's preliminary GAAP earnings guidance for fiscal 2015 is in the range of $3.30 to $3.60 per share. This includes oil and gas production for the Exploration and Production segment in the range of 180 to 220 Bcfe and is based on an assumed flat NYMEX price of $4.25 per MMBtu for natural gas and $95 per Bbl for crude oil.
EARNINGS TELECONFERENCE
The Company will host a conference call on Friday, August 8, 2014, 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) 1-877-280-4956, using passcode “34799349.” 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 “86485833.” Both the webcast and telephonic replay will be available until the close of business on Friday, August 15, 2014.
National Fuel is an integrated energy company with $6.6 billion in assets comprised of 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 JUNE 30, 2014 | ||||||||||||||||||||||||||||
| Upstream | Midstream Businesses | Downstream Businesses | ||||||||||||||||||||||||||
| Exploration & | Pipeline & | Energy | Corporate / | |||||||||||||||||||||||||
| (Thousands of Dollars) | Production | Storage | Gathering | Utility | Marketing | All Other | Consolidated* | |||||||||||||||||||||
| Third quarter 2013 GAAP earnings | $ | 31,734 | $ | 14,075 | $ | 4,407 | $ | 7,630 | $ | 963 | $ | (314 | ) | $ | 58,495 | |||||||||||||
| Items impacting comparability: | ||||||||||||||||||||||||||||
| Deferred state income tax adjustment | 5,000 | 5,000 | ||||||||||||||||||||||||||
| Third quarter 2013 operating results | 36,734 | 14,075 | 4,407 | 7,630 | 963 | (314 | ) | 63,495 | ||||||||||||||||||||
| Drivers of operating results | ||||||||||||||||||||||||||||
| Higher (lower) crude oil prices | (185 | ) | (185 | ) | ||||||||||||||||||||||||
| Higher (lower) natural gas prices | (14,326 | ) | (14,326 | ) | ||||||||||||||||||||||||
| Higher (lower) natural gas production | 16,408 | 16,408 | ||||||||||||||||||||||||||
| Higher (lower) crude oil production | 4,739 | 4,739 | ||||||||||||||||||||||||||
| Derivative mark to market adjustments | (2,632 | ) | (2,632 | ) | ||||||||||||||||||||||||
| Lower (higher) lease operating and transportation expenses | (6,504 | ) | (6,504 | ) | ||||||||||||||||||||||||
| Lower (higher) depreciation / depletion | (4,957 | ) | (341 | ) | (5,298 | ) | ||||||||||||||||||||||
| Higher (lower) transportation revenues | 2,930 | 2,930 | ||||||||||||||||||||||||||
| Higher (lower) gathering and processing revenues | 5,522 | 5,522 | ||||||||||||||||||||||||||
| Lower (higher) operating expenses | (911 | ) | 1,384 | (384 | ) | (1,680 | ) | 481 | (1,110 | ) | ||||||||||||||||||
| Lower (higher) property, franchise and other taxes | (619 | ) | (254 | ) | 281 | (592 | ) | |||||||||||||||||||||
| Higher (lower) margins | (278 | ) | (256 | ) | (534 | ) | ||||||||||||||||||||||
| Lower (higher) interest expense | 306 | 306 | ||||||||||||||||||||||||||
| Lower (higher) income tax expense / effective tax rate | 1,671 | (799 | ) | (771 | ) | 101 | ||||||||||||||||||||||
| All other / rounding | 312 | (201 | ) | 6 | (353 | ) | (83 | ) | (172 | ) | (491 | ) | ||||||||||||||||
| Third quarter 2014 operating results | 29,730 | 17,934 | 8,717 | 4,826 | 602 | 20 | 61,829 | |||||||||||||||||||||
| Items impacting comparability: | ||||||||||||||||||||||||||||
| Reversal of plugging and abandonment accrual | 2,691 | 2,691 | ||||||||||||||||||||||||||
| Third quarter 2014 GAAP earnings | $ | 32,421 | $ | 17,934 | $ | 8,717 | $ | 4,826 | $ | 602 | $ | 20 | $ | 64,520 | ||||||||||||||
| * Amounts do not reflect intercompany eliminations | ||||||||||||||||||||||||||||
| NATIONAL FUEL GAS COMPANY | ||||||||||||||||||||||||||||
| RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE | ||||||||||||||||||||||||||||
| QUARTER ENDED JUNE 30, 2014 | ||||||||||||||||||||||||||||
| Upstream | Midstream Businesses | Downstream Businesses | ||||||||||||||||||||||||||
| Exploration & | Pipeline & | Energy | Corporate / | |||||||||||||||||||||||||
| Production | Storage | Gathering | Utility | Marketing | All Other | Consolidated* | ||||||||||||||||||||||
| Third quarter 2013 GAAP earnings | $ | 0.38 | $ | 0.17 | $ | 0.05 | $ | 0.09 | $ | 0.01 | $ | (0.01 | ) | $ | 0.69 | |||||||||||||
| Items impacting comparability: | ||||||||||||||||||||||||||||
| Deferred state income tax adjustment | 0.06 | 0.06 | ||||||||||||||||||||||||||
| Third quarter 2013 operating results | 0.44 | 0.17 | 0.05 | 0.09 | 0.01 | (0.01 | ) | 0.75 | ||||||||||||||||||||
| Drivers of operating results | ||||||||||||||||||||||||||||
| Higher (lower) crude oil prices | — | — | ||||||||||||||||||||||||||
| Higher (lower) natural gas prices | (0.17 | ) | (0.17 | ) | ||||||||||||||||||||||||
| Higher (lower) natural gas production | 0.19 | 0.19 | ||||||||||||||||||||||||||
| Higher (lower) crude oil production | 0.06 | 0.06 | ||||||||||||||||||||||||||
| Derivative mark to market adjustments | (0.03 | ) | (0.03 | ) | ||||||||||||||||||||||||
| Lower (higher) lease operating and transportation expenses | (0.08 | ) | (0.08 | ) | ||||||||||||||||||||||||
| Lower (higher) depreciation / depletion | (0.06 | ) | — | (0.06 | ) | |||||||||||||||||||||||
| Higher (lower) transportation revenues | 0.03 | 0.03 | ||||||||||||||||||||||||||
| Higher (lower) gathering and processing revenues | 0.06 | 0.06 | ||||||||||||||||||||||||||
| Lower (higher) operating expenses | (0.01 | ) | 0.02 | — | (0.02 | ) | 0.01 | — | ||||||||||||||||||||
| Lower (higher) property, franchise and other taxes | (0.01 | ) | — | — | (0.01 | ) | ||||||||||||||||||||||
| Higher (lower) margins | — | — | — | |||||||||||||||||||||||||
| Lower (higher) interest expense | — | — | ||||||||||||||||||||||||||
| Lower (higher) income tax expense / effective tax rate | 0.02 | (0.01 | ) | (0.01 | ) | — | ||||||||||||||||||||||
| All other / rounding | — | (0.01 | ) | — | — | — | — | (0.01 | ) | |||||||||||||||||||
| Third quarter 2014 operating results | 0.35 | 0.21 | 0.10 | 0.06 | 0.01 | — | 0.73 | |||||||||||||||||||||
| Items impacting comparability: | ||||||||||||||||||||||||||||
| Reversal of plugging and abandonment accrual | 0.03 | 0.03 | ||||||||||||||||||||||||||
| Third quarter 2014 GAAP earnings | $ | 0.38 | $ | 0.21 | $ | 0.10 | $ | 0.06 | $ | 0.01 | $ | — | $ | 0.76 | ||||||||||||||
| * Amounts do not reflect intercompany eliminations | ||||||||||||||||||||||||||||
| NATIONAL FUEL GAS COMPANY | ||||||||||||||||||||||||||||
| RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS | ||||||||||||||||||||||||||||
| NINE MONTHS ENDED JUNE 30, 2014 | ||||||||||||||||||||||||||||
| Upstream | Midstream Businesses | Downstream Businesses | ||||||||||||||||||||||||||
| Exploration & | Pipeline & | Energy | Corporate / | |||||||||||||||||||||||||
| (Thousands of Dollars) | Production | Storage | Gathering | Utility | Marketing | All Other | Consolidated* | |||||||||||||||||||||
| Nine months ended June 30, 2013 GAAP earnings | $ | 86,125 | $ | 47,803 | $ | 9,442 | $ | 65,024 | $ | 5,741 | $ | (1,976 | ) | $ | 212,159 | |||||||||||||
| Items impacting comparability: | ||||||||||||||||||||||||||||
| Deferred state income tax adjustment | 5,000 | 5,000 | ||||||||||||||||||||||||||
| Nine months ended June 30, 2013 operating results | 91,125 | 47,803 | 9,442 | 65,024 | 5,741 | (1,976 | ) | 217,159 | ||||||||||||||||||||
| Drivers of operating results | ||||||||||||||||||||||||||||
| Higher (lower) crude oil prices | (2,474 | ) | (2,474 | ) | ||||||||||||||||||||||||
| Higher (lower) natural gas prices | (28,144 | ) | (28,144 | ) | ||||||||||||||||||||||||
| Higher (lower) natural gas production | 70,686 | 70,686 | ||||||||||||||||||||||||||
| Higher (lower) crude oil production | 8,875 | 8,875 | ||||||||||||||||||||||||||
| Derivative mark to market adjustments | (2,326 | ) | (2,326 | ) | ||||||||||||||||||||||||
| Insurance settlement proceeds | 1,261 | 342 | 1,603 | |||||||||||||||||||||||||
| Lower (higher) lease operating and transportation expenses | (20,524 | ) | (20,524 | ) | ||||||||||||||||||||||||
| Lower (higher) depreciation / depletion | (23,984 | ) | (659 | ) | (848 | ) | (25,491 | ) | ||||||||||||||||||||
| Higher (lower) transportation revenues | 10,429 | 10,429 | ||||||||||||||||||||||||||
| Higher (lower) gathering and processing revenues | 16,135 | 16,135 | ||||||||||||||||||||||||||
| Lower (higher) operating expenses | (1,064 | ) | 4,051 | (857 | ) | (5,395 | ) | (527 | ) | (3,792 | ) | |||||||||||||||||
| Lower (higher) property, franchise and other taxes | (2,365 | ) | (696 | ) | 642 | (2,419 | ) | |||||||||||||||||||||
| Colder weather | 6,750 | 6,750 | ||||||||||||||||||||||||||
| Higher (lower) margins | 355 | 682 | 1,037 | |||||||||||||||||||||||||
| Income (loss) from unconsolidated subsidiaries | 278 | 278 | ||||||||||||||||||||||||||
| Higher (lower) AFUDC** | (1,073 | ) | (1,073 | ) | ||||||||||||||||||||||||
| Lower (higher) interest expense | (1,605 | ) | (307 | ) | 308 | 852 | (752 | ) | ||||||||||||||||||||
| Lower (higher) income tax expense / effective tax rate | 805 | (727 | ) | (2,101 | ) | (2,418 | ) | (4,441 | ) | |||||||||||||||||||
| All other / rounding | 1,202 | (377 | ) | 109 | (227 | ) | (125 | ) | (190 | ) | 392 | |||||||||||||||||
| Nine months ended June 30, 2014 operating results | 91,468 | 58,444 | 22,188 | 64,586 | 5,971 | (749 | ) | 241,908 | ||||||||||||||||||||
| Items impacting comparability: | ||||||||||||||||||||||||||||
| Deferred state income tax adjustment | (3,000 | ) | (3,000 | ) | ||||||||||||||||||||||||
| Plugging and abandonment accrual | (560 | ) | (560 | ) | ||||||||||||||||||||||||
| Gain on life insurance policies | 3,635 | 3,635 | ||||||||||||||||||||||||||
| Nine months ended June 30, 2014 GAAP earnings | $ | 87,908 | $ | 58,444 | $ | 22,188 | $ | 64,586 | $ | 5,971 | $ | 2,886 | $ | 241,983 | ||||||||||||||
| * 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 | ||||||||||||||||||||||||||||
| NINE MONTHS ENDED JUNE 30, 2014 | ||||||||||||||||||||||||||||
| Upstream | Midstream Businesses | Downstream Businesses | ||||||||||||||||||||||||||
| Exploration & | Pipeline & | Energy | Corporate / | |||||||||||||||||||||||||
| Production | Storage | Gathering | Utility | Marketing | All Other | Consolidated* | ||||||||||||||||||||||
| Nine months ended June 30, 2013 GAAP earnings | $ | 1.02 | $ | 0.57 | $ | 0.11 | $ | 0.77 | $ | 0.07 | $ | (0.02 | ) | $ | 2.52 | |||||||||||||
| Items impacting comparability: | ||||||||||||||||||||||||||||
| Deferred state income tax adjustment | 0.06 | 0.06 | ||||||||||||||||||||||||||
| Nine months ended June 30, 2013 operating results | 1.08 | 0.57 | 0.11 | 0.77 | 0.07 | (0.02 | ) | 2.58 | ||||||||||||||||||||
| Drivers of operating results | ||||||||||||||||||||||||||||
| Higher (lower) crude oil prices | (0.03 | ) | (0.03 | ) | ||||||||||||||||||||||||
| Higher (lower) natural gas prices | (0.33 | ) | (0.33 | ) | ||||||||||||||||||||||||
| Higher (lower) natural gas production | 0.83 | 0.83 | ||||||||||||||||||||||||||
| Higher (lower) crude oil production | 0.10 | 0.10 | ||||||||||||||||||||||||||
| Derivative mark to market adjustments | (0.03 | ) | (0.03 | ) | ||||||||||||||||||||||||
| Insurance settlement proceeds | 0.01 | — | 0.01 | |||||||||||||||||||||||||
| Lower (higher) lease operating and transportation expenses | (0.24 | ) | (0.24 | ) | ||||||||||||||||||||||||
| Lower (higher) depreciation / depletion | (0.28 | ) | (0.01 | ) | (0.01 | ) | (0.30 | ) | ||||||||||||||||||||
| Higher (lower) transportation revenues | 0.12 | 0.12 | ||||||||||||||||||||||||||
| Higher (lower) gathering and processing revenues | 0.19 | 0.19 | ||||||||||||||||||||||||||
| Lower (higher) operating expenses | (0.01 | ) | 0.05 | (0.01 | ) | (0.06 | ) | (0.01 | ) | (0.04 | ) | |||||||||||||||||
| Lower (higher) property, franchise and other taxes | (0.03 | ) | (0.01 | ) | 0.01 | (0.03 | ) | |||||||||||||||||||||
| Colder weather | 0.08 | 0.08 | ||||||||||||||||||||||||||
| Higher (lower) margins | — | 0.01 | 0.01 | |||||||||||||||||||||||||
| Income (loss) from unconsolidated subsidiaries | — | — | ||||||||||||||||||||||||||
| Higher (lower) AFUDC** | (0.01 | ) | (0.01 | ) | ||||||||||||||||||||||||
| Lower (higher) interest expense | (0.02 | ) | — | — | 0.01 | (0.01 | ) | |||||||||||||||||||||
| Lower (higher) income tax expense / effective tax rate | 0.01 | (0.01 | ) | (0.02 | ) | (0.03 | ) | (0.05 | ) | |||||||||||||||||||
| All other / rounding | 0.03 | (0.01 | ) | — | (0.01 | ) | — | — | 0.01 | |||||||||||||||||||
| Nine months ended June 30, 2014 operating results | 1.09 | 0.69 | 0.26 | 0.76 | 0.07 | (0.01 | ) | 2.86 | ||||||||||||||||||||
| Items impacting comparability: | ||||||||||||||||||||||||||||
| Deferred state income tax adjustment | (0.04 | ) | (0.04 | ) | ||||||||||||||||||||||||
| Plugging and abandonment accrual | (0.01 | ) | (0.01 | ) | ||||||||||||||||||||||||
| Gain on life insurance policies | 0.04 | 0.04 | ||||||||||||||||||||||||||
| Nine months ended June 30, 2014 GAAP earnings | $ | 1.04 | $ | 0.69 | $ | 0.26 | 0.76 | $ | 0.07 | $ | 0.03 | $ | 2.85 | |||||||||||||||
| * 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 | Nine Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
|
SUMMARY OF OPERATIONS |
2014 | 2013 | 2014 | 2013 | ||||||||||||
| Operating Revenues | $ | 440,144 | $ | 440,008 | $ | 1,746,458 | $ | 1,490,688 | ||||||||
| Operating Expenses: | ||||||||||||||||
| Purchased Gas | 86,628 | 95,164 | 577,005 | 426,900 | ||||||||||||
| Operation and Maintenance | 107,232 | 108,497 | 352,794 | 338,533 | ||||||||||||
| Property, Franchise and Other Taxes | 22,483 | 21,201 | 69,114 | 63,550 | ||||||||||||
| Depreciation, Depletion and Amortization | 96,788 | 88,142 | 279,876 | 240,503 | ||||||||||||
| 313,131 | 313,004 | 1,278,789 | 1,069,486 | |||||||||||||
| Operating Income | 127,013 | 127,004 | 467,669 | 421,202 | ||||||||||||
| Other Income (Expense): | ||||||||||||||||
| Interest Income | 370 | 317 | 1,321 | 1,844 | ||||||||||||
| Other Income | 1,496 | 1,163 | 6,847 | 3,666 | ||||||||||||
| Interest Expense on Long-Term Debt | (22,116 | ) | (22,998 | ) | (67,767 | ) | (67,232 | ) | ||||||||
| Other Interest Expense | (1,136 | ) | (1,303 | ) | (3,460 | ) | (2,898 | ) | ||||||||
| Income Before Income Taxes | 105,627 | 104,183 | 404,610 | 356,582 | ||||||||||||
| Income Tax Expense | 41,107 | 45,688 | 162,627 | 144,423 | ||||||||||||
| Net Income Available for Common Stock | $ | 64,520 | $ | 58,495 | $ | 241,983 | $ | 212,159 | ||||||||
| Earnings Per Common Share: | ||||||||||||||||
| Basic | $ | 0.77 | $ | 0.70 | $ | 2.89 | $ | 2.54 | ||||||||
| Diluted | $ | 0.76 | $ | 0.69 | $ | 2.85 | $ | 2.52 | ||||||||
| Weighted Average Common Shares: | ||||||||||||||||
| Used in Basic Calculation | 84,029,124 | 83,557,968 | 83,863,764 | 83,481,849 | ||||||||||||
| Used in Diluted Calculation | 84,973,100 | 84,325,465 | 84,892,473 | 84,242,128 | ||||||||||||
|
NATIONAL FUEL GAS COMPANY |
||||||
|
AND SUBSIDIARIES |
||||||
|
CONSOLIDATED BALANCE SHEETS |
||||||
|
(Unaudited) |
||||||
| June 30, | September 30, | |||||
| (Thousands of Dollars) | 2014 | 2013 | ||||
| ASSETS | ||||||
| Property, Plant and Equipment | $7,951,544 | $7,313,203 | ||||
| Less - Accumulated Depreciation, Depletion and Amortization | 2,413,958 | 2,161,477 | ||||
| Net Property, Plant and Equipment | 5,537,586 | 5,151,726 | ||||
| Current Assets: | ||||||
| Cash and Temporary Cash Investments | 102,653 | 64,858 | ||||
| Hedging Collateral Deposits | — | 1,094 | ||||
| Receivables - Net | 202,437 | 133,182 | ||||
| Unbilled Revenue | 22,225 | 19,483 | ||||
| Gas Stored Underground | 20,183 | 51,484 | ||||
| Materials and Supplies - at average cost | 25,620 | 29,904 | ||||
| Unrecovered Purchased Gas Costs | — | 12,408 | ||||
| Other Current Assets | 49,412 | 56,905 | ||||
| Deferred Income Taxes | 47,153 | 79,359 | ||||
| Total Current Assets | 469,683 | 448,677 | ||||
| Other Assets: | ||||||
| Recoverable Future Taxes | 162,138 | 163,355 | ||||
| Unamortized Debt Expense | 14,891 | 16,645 | ||||
| Other Regulatory Assets | 241,640 | 252,568 | ||||
| Deferred Charges | 10,245 | 9,382 | ||||
| Other Investments | 87,855 | 96,308 | ||||
| Goodwill | 5,476 | 5,476 | ||||
| Prepaid Post-Retirement Benefit Costs | 29,532 | 22,774 | ||||
| Fair Value of Derivative Financial Instruments | 28,779 | 48,989 | ||||
| Other | 633 | 2,447 | ||||
| Total Other Assets | 581,189 | 617,944 | ||||
| Total Assets | $6,588,458 | $6,218,347 | ||||
| CAPITALIZATION AND LIABILITIES | ||||||
| Capitalization: | ||||||
| Comprehensive Shareholders' Equity | ||||||
| Common Stock, $1 Par Value Authorized - 200,000,000 | ||||||
| Shares; Issued and Outstanding - 84,086,437 Shares | ||||||
| and 83,661,969 Shares, Respectively | $84,086 | $83,662 | ||||
| Paid in Capital | 710,924 | 687,684 | ||||
| Earnings Reinvested in the Business | 1,589,331 | 1,442,617 | ||||
| Accumulated Other Comprehensive Loss | (43,638 | ) | (19,234 | ) | ||
| Total Comprehensive Shareholders' Equity | 2,340,703 | 2,194,729 | ||||
| Long-Term Debt, Net of Current Portion | 1,649,000 | 1,649,000 | ||||
| Total Capitalization | 3,989,703 | 3,843,729 | ||||
| Current and Accrued Liabilities: | ||||||
| Notes Payable to Banks and Commercial Paper | — | — | ||||
| Current Portion of Long-Term Debt | — | — | ||||
| Accounts Payable | 145,357 | 105,283 | ||||
| Amounts Payable to Customers | 32,805 | 12,828 | ||||
| Dividends Payable | 32,373 | 31,373 | ||||
| Interest Payable on Long-Term Debt | 18,195 | 29,960 | ||||
| Customer Advances | 81 | 21,959 | ||||
| Customer Security Deposits | 16,166 | 16,183 | ||||
| Other Accruals and Current Liabilities | 154,145 | 83,946 | ||||
| Fair Value of Derivative Financial Instruments | 28,683 | 639 | ||||
| Total Current and Accrued Liabilities | 427,805 | 302,171 | ||||
| Deferred Credits: | ||||||
| Deferred Income Taxes | 1,409,997 | 1,347,007 | ||||
| Taxes Refundable to Customers | 90,463 | 85,655 | ||||
| Unamortized Investment Tax Credit | 1,253 | 1,579 | ||||
| Cost of Removal Regulatory Liability | 166,996 | 157,622 | ||||
| Other Regulatory Liabilities | 90,643 | 61,549 | ||||
| Pension and Other Post-Retirement Liabilities | 152,174 | 158,014 | ||||
| Asset Retirement Obligations | 121,760 | 119,511 | ||||
| Other Deferred Credits | 137,664 | 141,510 | ||||
| Total Deferred Credits | 2,170,950 | 2,072,447 | ||||
| Commitments and Contingencies | — | — | ||||
| Total Capitalization and Liabilities | $6,588,458 | $6,218,347 | ||||
| NATIONAL FUEL GAS COMPANY | ||||||||
| AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Unaudited) | ||||||||
| Nine Months Ended | ||||||||
| June 30, | ||||||||
| (Thousands of Dollars) | 2014 | 2013 | ||||||
| Operating Activities: | ||||||||
| Net Income Available for Common Stock | $ | 241,983 | $ | 212,159 | ||||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||||||||
| Depreciation, Depletion and Amortization | 279,876 | 240,503 | ||||||
| Deferred Income Taxes | 119,395 | 141,007 | ||||||
| Excess Tax Benefits Associated with Stock-Based Compensation Awards | (4,641 | ) | (4,314 | ) | ||||
| Stock-Based Compensation | 12,438 | 9,706 | ||||||
| Other | 10,969 | 10,038 | ||||||
| Change in: | ||||||||
| Hedging Collateral Deposits | 1,094 | (330 | ) | |||||
| Receivables and Unbilled Revenue | (72,082 | ) | (43,138 | ) | ||||
| Gas Stored Underground and Materials and Supplies | 35,503 | 24,551 | ||||||
| Unrecovered Purchased Gas Costs | 12,408 | — | ||||||
| Other Current Assets | 5,376 | 14,228 | ||||||
| Accounts Payable | 26,386 | 11,241 | ||||||
| Amounts Payable to Customers | 19,977 | (7,578 | ) | |||||
| Customer Advances | (21,878 | ) | (23,809 | ) | ||||
| Customer Security Deposits | (17 | ) | (1,112 | ) | ||||
| Other Accruals and Current Liabilities | 17,590 | 3,534 | ||||||
| Other Assets | 25,449 | (5,010 | ) | |||||
| Other Liabilities | 15,743 | 5,557 | ||||||
| Net Cash Provided by Operating Activities | $ | 725,569 | $ | 587,233 | ||||
| Investing Activities: | ||||||||
| Capital Expenditures | $ | (609,427 | ) | $ | (513,399 | ) | ||
| Other | 4,696 | (3,885 | ) | |||||
| Net Cash Used in Investing Activities | $ | (604,731 | ) | $ | (517,284 | ) | ||
| Financing Activities: | ||||||||
| Changes in Notes Payable to Banks and Commercial Paper | $ | — | $ | (171,000 | ) | |||
| Excess Tax Benefits Associated with Stock-Based Compensation Awards | 4,641 | 4,314 | ||||||
| Reduction of Long-Term Debt | — | (250,000 | ) | |||||
| Net Proceeds From Issuance of Long-Term Debt | — | 495,415 | ||||||
| Dividends Paid on Common Stock | (94,269 | ) | (91,364 | ) | ||||
| Net Proceeds From Issuance of Common Stock | 6,585 | 2,774 | ||||||
| Net Cash Used in Financing Activities | $ | (83,043 | ) | $ | (9,861 | ) | ||
| Net Increase in Cash and Temporary Cash Investments | 37,795 | 60,088 | ||||||
| Cash and Temporary Cash Investments at Beginning of Period | 64,858 | 74,494 | ||||||
| Cash and Temporary Cash Investments at June 30 | $ | 102,653 | $ | 134,582 | ||||
| NATIONAL FUEL GAS COMPANY | ||||||||||||||||||||
| AND SUBSIDIARIES | ||||||||||||||||||||
| SEGMENT OPERATING RESULTS AND STATISTICS | ||||||||||||||||||||
| (UNAUDITED) | ||||||||||||||||||||
| UPSTREAM BUSINESS | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| (Thousands of Dollars, except per share amounts) | June 30, | June 30, | ||||||||||||||||||
|
EXPLORATION AND PRODUCTION SEGMENT |
2014 | 2013 | Variance | 2014 | 2013 | Variance | ||||||||||||||
| Total Operating Revenues | $ | 201,522 | $ | 195,213 | $ | 6,309 | $ | 594,129 | $ | 518,742 | $ | 75,387 | ||||||||
| Operating Expenses: | ||||||||||||||||||||
| Operation and Maintenance: | ||||||||||||||||||||
| General and Administrative Expense | 15,807 | 15,716 | 91 | 48,021 | 47,089 | 932 | ||||||||||||||
| Lease Operating and Transportation Expense | 43,722 | 33,717 | 10,005 | 118,850 | 87,275 | 31,575 | ||||||||||||||
| All Other Operation and Maintenance Expense | (752 | ) | 2,077 | (2,829 | ) | 11,062 | 9,497 | 1,565 | ||||||||||||
| Property, Franchise and Other Taxes | 5,424 | 4,471 | 953 | 15,542 | 11,904 | 3,638 | ||||||||||||||
| Depreciation, Depletion and Amortization | 74,838 | 67,213 | 7,625 | 215,179 | 178,282 | 36,897 | ||||||||||||||
| 139,039 | 123,194 | 15,845 | 408,654 | 334,047 | 74,607 | |||||||||||||||
| Operating Income | 62,483 | 72,019 | (9,536 | ) | 185,475 | 184,695 | 780 | |||||||||||||
| Other Income (Expense): | ||||||||||||||||||||
| Interest Income | 350 | 315 | 35 | 1,306 | 1,191 | 115 | ||||||||||||||
| Other Interest Expense | (10,148 | ) | (10,443 | ) | 295 | (31,648 | ) | (29,180 | ) | (2,468 | ) | |||||||||
| Income Before Income Taxes | 52,685 | 61,891 | (9,206 | ) | 155,133 | 156,706 | (1,573 | ) | ||||||||||||
| Income Tax Expense | 20,264 | 30,157 | (9,893 | ) | 67,225 | 70,581 | (3,356 | ) | ||||||||||||
| Net Income | $ | 32,421 | $ | 31,734 | $ | 687 | $ | 87,908 | $ | 86,125 | $ | 1,783 | ||||||||
| Net Income Per Share (Diluted) | $ | 0.38 | $ | 0.38 | $ | — | $ | 1.04 | $ | 1.02 | $ | 0.02 | ||||||||
| NATIONAL FUEL GAS COMPANY | ||||||||||||||||||||
| AND SUBSIDIARIES | ||||||||||||||||||||
| SEGMENT OPERATING RESULTS AND STATISTICS | ||||||||||||||||||||
| (UNAUDITED) | ||||||||||||||||||||
| MIDSTREAM BUSINESSES | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| (Thousands of Dollars, except per share amounts) | June 30, | June 30, | ||||||||||||||||||
|
PIPELINE AND STORAGE SEGMENT |
2014 | 2013 | Variance | 2014 | 2013 | Variance | ||||||||||||||
| Revenues from External Customers | $ | 48,046 | $ | 43,055 | $ | 4,991 | $ | 152,829 | $ | 132,897 | $ | 19,932 | ||||||||
| Intersegment Revenues | 20,489 | 21,708 | (1,219 | ) | 63,463 | 68,216 | (4,753 | ) | ||||||||||||
| Total Operating Revenues | 68,535 | 64,763 | 3,772 | 216,292 | 201,113 | 15,179 | ||||||||||||||
| Operating Expenses: | ||||||||||||||||||||
| Purchased Gas | (19 | ) | (47 | ) | 28 | 1,282 | 1,048 | 234 | ||||||||||||
| Operation and Maintenance | 18,141 | 20,269 | (2,128 | ) | 53,910 | 60,142 | (6,232 | ) | ||||||||||||
| Property, Franchise and Other Taxes | 5,857 | 5,464 | 393 | 17,652 | 16,582 | 1,070 | ||||||||||||||
| Depreciation, Depletion and Amortization | 8,983 | 8,810 | 173 | 27,173 | 26,158 | 1,015 | ||||||||||||||
| 32,962 | 34,496 | (1,534 | ) | 100,017 | 103,930 | (3,913 | ) | |||||||||||||
| Operating Income | 35,573 | 30,267 | 5,306 | 116,275 | 97,183 | 19,092 | ||||||||||||||
| Other Income (Expense): | ||||||||||||||||||||
| Interest Income | 56 | 34 | 22 | 188 | 154 | 34 | ||||||||||||||
| Other Income | 437 | 151 | 286 | 436 | 1,601 | (1,165 | ) | |||||||||||||
| Other Interest Expense | (6,569 | ) | (6,707 | ) | 138 | (20,014 | ) | (19,542 | ) | (472 | ) | |||||||||
| Income Before Income Taxes | 29,497 | 23,745 | 5,752 | 96,885 | 79,396 | 17,489 | ||||||||||||||
| Income Tax Expense | 11,563 | 9,670 | 1,893 | 38,441 | 31,593 | 6,848 | ||||||||||||||
| Net Income | $ | 17,934 | $ | 14,075 | $ | 3,859 | $ | 58,444 | $ | 47,803 | $ | 10,641 | ||||||||
| Net Income Per Share (Diluted) | $ | 0.21 | $ | 0.17 | $ | 0.04 | $ | 0.69 | $ | 0.57 | $ | 0.12 | ||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||
|
GATHERING SEGMENT |
2014 | 2013 | Variance | 2014 | 2013 | Variance | ||||||||||||||
| Revenues from External Customers | $ | 343 | $ | 342 | $ | 1 | $ | 772 | $ | 868 | $ | (96 | ) | |||||||
| Intersegment Revenues | 18,740 | 10,244 | 8,496 | 48,541 | 23,622 | 24,919 | ||||||||||||||
| Total Operating Revenues | 19,083 | 10,586 | 8,497 | 49,313 | 24,490 | 24,823 | ||||||||||||||
| Operating Expenses: | ||||||||||||||||||||
| Operation and Maintenance | 1,902 | 1,310 | 592 | 4,599 | 3,280 | 1,319 | ||||||||||||||
| Property, Franchise and Other Taxes | 32 | 41 | (9 | ) | 123 | 233 | (110 | ) | ||||||||||||
| Depreciation, Depletion and Amortization | 1,589 | 1,064 | 525 | 4,112 | 2,807 | 1,305 | ||||||||||||||
| 3,523 | 2,415 | 1,108 | 8,834 | 6,320 | 2,514 | |||||||||||||||
| Operating Income | 15,560 | 8,171 | 7,389 | 40,479 | 18,170 | 22,309 | ||||||||||||||
| Other Income (Expense): | ||||||||||||||||||||
| Interest Income | 21 | 21 | 0 | 85 | 32 | 53 | ||||||||||||||
| Other Income | 1 | — | 1 | 6 | 1 | 5 | ||||||||||||||
| Other Interest Expense | (177 | ) | (647 | ) | 470 | (1,219 | ) | (1,694 | ) | 475 | ||||||||||
| Income Before Income Taxes | 15,405 | 7,545 | 7,860 | 39,351 | 16,509 | 22,842 | ||||||||||||||
| Income Tax Expense | 6,688 | 3,138 | 3,550 | 17,163 | 7,067 | 10,096 | ||||||||||||||
| Net Income | $ | 8,717 | $ | 4,407 | $ | 4,310 | $ | 22,188 | $ | 9,442 | $ | 12,746 | ||||||||
| Net Income Per Share (Diluted) | $ | 0.10 | $ | 0.05 | $ | 0.05 | $ | 0.26 | $ | 0.11 | $ | 0.15 | ||||||||
| NATIONAL FUEL GAS COMPANY | ||||||||||||||||||||
| AND SUBSIDIARIES | ||||||||||||||||||||
| SEGMENT OPERATING RESULTS AND STATISTICS | ||||||||||||||||||||
| (UNAUDITED) | ||||||||||||||||||||
| DOWNSTREAM BUSINESSES | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| (Thousands of Dollars, except per share amounts) | June 30, | June 30, | ||||||||||||||||||
|
UTILITY SEGMENT |
2014 | 2013 | Variance | 2014 | 2013 | Variance | ||||||||||||||
| Revenues from External Customers | $ | 143,760 | $ | 141,257 | $ | 2,503 | $ | 751,861 | $ | 653,211 | $ | 98,650 | ||||||||
| Intersegment Revenues | 3,654 | 3,305 | 349 | 16,565 | 14,012 | 2,553 | ||||||||||||||
| Total Operating Revenues | 147,414 | 144,562 | 2,852 | 768,426 | 667,223 | 101,203 | ||||||||||||||
| Operating Expenses: | ||||||||||||||||||||
| Purchased Gas | 66,281 | 63,369 | 2,912 | 423,990 | 337,453 | 86,537 | ||||||||||||||
| Operation and Maintenance | 43,801 | 41,065 | 2,736 | 152,726 | 142,657 | 10,069 | ||||||||||||||
| Property, Franchise and Other Taxes | 10,905 | 10,515 | 390 | 34,943 | 32,924 | 2,019 | ||||||||||||||
| Depreciation, Depletion and Amortization | 10,986 | 10,791 | 195 | 32,495 | 32,036 | 459 | ||||||||||||||
| 131,973 | 125,740 | 6,233 | 644,154 | 545,070 | 99,084 | |||||||||||||||
| Operating Income | 15,441 | 18,822 | (3,381 | ) | 124,272 | 122,153 | 2,119 | |||||||||||||
| Other Income (Expense): | ||||||||||||||||||||
| Interest Income | 56 | 42 | 14 | 205 | 994 | (789 | ) | |||||||||||||
| Other Income | 414 | 260 | 154 | 1,101 | 701 | 400 | ||||||||||||||
| Other Interest Expense | (7,090 | ) | (7,175 | ) | 85 | (20,983 | ) | (22,294 | ) | 1,311 | ||||||||||
| Income Before Income Taxes | 8,821 | 11,949 | (3,128 | ) | 104,595 | 101,554 | 3,041 | |||||||||||||
| Income Tax Expense | 3,995 | 4,319 | (324 | ) | 40,009 | 36,530 | 3,479 | |||||||||||||
| Net Income | $ | 4,826 | $ | 7,630 | $ | (2,804 | ) | $ | 64,586 | $ | 65,024 | $ | (438 | ) | ||||||
| Net Income Per Share (Diluted) | $ | 0.06 | $ | 0.09 | $ | (0.03 | ) | $ | 0.76 | $ | 0.77 | $ | (0.01 | ) | ||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||
|
ENERGY MARKETING SEGMENT |
2014 | 2013 | Variance | 2014 | 2013 | Variance | ||||||||||||||
| Revenues from External Customers | $ | 45,737 | $ | 59,128 | $ | (13,391 | ) | $ | 243,335 | $ | 182,282 | $ | 61,053 | |||||||
| Intersegment Revenues | 678 | 446 | 232 | 938 | 1,080 | (142 | ) | |||||||||||||
| Total Operating Revenues | 46,415 | 59,574 | (13,159 | ) | 244,273 | 183,362 | 60,911 | |||||||||||||
| Operating Expenses: | ||||||||||||||||||||
| Purchased Gas | 44,090 | 56,821 | (12,731 | ) | 229,908 | 169,543 | 60,365 | |||||||||||||
| Operation and Maintenance | 1,356 | 1,246 | 110 | 4,649 | 4,490 | 159 | ||||||||||||||
| Property, Franchise and Other Taxes | (2 | ) | 10 | (12 | ) | 11 | 77 | (66 | ) | |||||||||||
| Depreciation, Depletion and Amortization | 50 | 31 | 19 | 146 | 76 | 70 | ||||||||||||||
| 45,494 | 58,108 | (12,614 | ) | 234,714 | 174,186 | 60,528 | ||||||||||||||
| Operating Income | 921 | 1,466 | (545 | ) | 9,559 | 9,176 | 383 | |||||||||||||
| Other Income (Expense): | ||||||||||||||||||||
| Interest Income | 37 | 40 | (3 | ) | 114 | 137 | (23 | ) | ||||||||||||
| Other Income | 36 | 24 | 12 | 85 | 52 | 33 | ||||||||||||||
| Other Interest Expense | (5 | ) | (8 | ) | 3 | (22 | ) | (29 | ) | 7 | ||||||||||
| Income Before Income Taxes | 989 | 1,522 | (533 | ) | 9,736 | 9,336 | 400 | |||||||||||||
| Income Tax Expense | 387 | 559 | (172 | ) | 3,765 | 3,595 | 170 | |||||||||||||
| Net Income | $ | 602 | $ | 963 | $ | (361 | ) | $ | 5,971 | $ | 5,741 | $ | 230 | |||||||
| Net Income Per Share (Diluted) | $ | 0.01 | $ | 0.01 | $ | — | $ | 0.07 | $ | 0.07 | $ | — | ||||||||
| NATIONAL FUEL GAS COMPANY | ||||||||||||||||||||
| AND SUBSIDIARIES | ||||||||||||||||||||
| SEGMENT OPERATING RESULTS AND STATISTICS | ||||||||||||||||||||
| (UNAUDITED) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| (Thousands of Dollars, except per share amounts) | June 30, | June 30, | ||||||||||||||||||
|
ALL OTHER |
2014 | 2013 | Variance | 2014 | 2013 | Variance | ||||||||||||||
| Total Operating Revenues | $ | 497 | $ | 779 | $ | (282 | ) | $ | 2,795 | $ | 2,030 | $ | 765 | |||||||
| Operating Expenses: | ||||||||||||||||||||
| Operation and Maintenance | 216 | 296 | (80 | ) | 876 | 909 | (33 | ) | ||||||||||||
| Property, Franchise and Other Taxes | 148 | 158 | (10 | ) | 482 | 480 | 2 | |||||||||||||
| Depreciation, Depletion and Amortization | 145 | 33 | 112 | 259 | 544 | (285 | ) | |||||||||||||
| 509 | 487 | 22 | 1,617 | 1,933 | (316 | ) | ||||||||||||||
| Operating Income (Loss) | (12 | ) | 292 | (304 | ) | 1,178 | 97 | 1,081 | ||||||||||||
| Other Income (Expense): | ||||||||||||||||||||
| Interest Income | 21 | 23 | (2 | ) | 80 | 94 | (14 | ) | ||||||||||||
| Other Income (Loss) | 7 | (10 | ) | 17 | 406 | (48 | ) | 454 | ||||||||||||
| Other Interest Expense | (1 | ) | (1 | ) | 0 | (2 | ) | (1 | ) | (1 | ) | |||||||||
| Income Before Income Taxes | 15 | 304 | (289 | ) | 1,662 | 142 | 1,520 | |||||||||||||
| Income Tax Expense (Benefit) | (9 | ) | 212 | (221 | ) | 684 | 135 | 549 | ||||||||||||
| Net Income | $ | 24 | $ | 92 | $ | (68 | ) | $ | 978 | $ | 7 | $ | 971 | |||||||
| Net Income Per Share (Diluted) | $ | — | $ | — | $ | — | $ | 0.01 | $ | — | $ | 0.01 | ||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||
|
CORPORATE |
2014 | 2013 | Variance | 2014 | 2013 | Variance | ||||||||||||||
| Revenues from External Customers | $ | 239 | $ | 234 | $ | 5 | $ | 737 | $ | 658 | $ | 79 | ||||||||
| Intersegment Revenues | 946 | 957 | (11 | ) | 2,854 | 2,462 | 392 | |||||||||||||
| Total Operating Revenues | 1,185 | 1,191 | (6 | ) | 3,591 | 3,120 | 471 | |||||||||||||
| Operating Expenses: | ||||||||||||||||||||
| Operation and Maintenance | 3,822 | 4,482 | (660 | ) | 12,287 | 11,442 | 845 | |||||||||||||
| Property, Franchise and Other Taxes | 119 | 542 | (423 | ) | 361 | 1,350 | (989 | ) | ||||||||||||
| Depreciation, Depletion and Amortization | 197 | 200 | (3 | ) | 512 | 600 | (88 | ) | ||||||||||||
| 4,138 | 5,224 | (1,086 | ) | 13,160 | 13,392 | (232 | ) | |||||||||||||
| Operating Loss | (2,953 | ) | (4,033 | ) | 1,080 | (9,569 | ) | (10,272 | ) | 703 | ||||||||||
| Other Income (Expense): | ||||||||||||||||||||
| Interest Income | 24,127 | 24,054 | 73 | 72,763 | 71,249 | 1,514 | ||||||||||||||
| Other Income | 601 | 738 | (137 | ) | 4,813 | 1,359 | 3,454 | |||||||||||||
| Interest Expense on Long-Term Debt | (22,116 | ) | (22,998 | ) | 882 | (67,767 | ) | (67,232 | ) | (535 | ) | |||||||||
| Other Interest Expense | (1,444 | ) | (534 | ) | (910 | ) | (2,992 | ) | (2,165 | ) | (827 | ) | ||||||||
| Income (Loss) Before Income Taxes | (1,785 | ) | (2,773 | ) | 988 | (2,752 | ) | (7,061 | ) | 4,309 | ||||||||||
| Income Tax Benefit | (1,781 | ) | (2,367 | ) | 586 | (4,660 | ) | (5,078 | ) | 418 | ||||||||||
| Net Income (Loss) | $ | (4 | ) | $ | (406 | ) | $ | 402 | $ | 1,908 | $ | (1,983 | ) | $ | 3,891 | |||||
| Net Income (Loss) Per Share (Diluted) | $ | — | $ | (0.01 | ) | $ | 0.01 | $ | 0.02 | $ | (0.02 | ) | $ | 0.04 | ||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||
|
INTERSEGMENT ELIMINATIONS |
2014 | 2013 | Variance | 2014 | 2013 | Variance | ||||||||||||||
| Intersegment Revenues | $ | (44,507 | ) | $ | (36,660 | ) | $ | (7,847 | ) | $ | (132,361 | ) | $ | (109,392 | ) | $ | (22,969 | ) | ||
| Operating Expenses: | ||||||||||||||||||||
| Purchased Gas | (23,724 | ) | (24,979 | ) | 1,255 | (78,175 | ) | (81,144 | ) | 2,969 | ||||||||||
| Operation and Maintenance | (20,783 | ) | (11,681 | ) | (9,102 | ) | (54,186 | ) | (28,248 | ) | (25,938 | ) | ||||||||
| (44,507 | ) | (36,660 | ) | (7,847 | ) | (132,361 | ) | (109,392 | ) | (22,969 | ) | |||||||||
| Operating Income | — | — | — | — | — | — | ||||||||||||||
| Other Income (Expense): | ||||||||||||||||||||
| Interest Income | (24,298 | ) | (24,212 | ) | (86 | ) | (73,420 | ) | (72,007 | ) | (1,413 | ) | ||||||||
| Other Interest Expense | 24,298 | 24,212 | 86 | 73,420 | 72,007 | 1,413 | ||||||||||||||
| Net Income | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||
| Net Income Per Share (Diluted) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||
| NATIONAL FUEL GAS COMPANY | ||||||||||||||||||||||||
| AND SUBSIDIARIES | ||||||||||||||||||||||||
| SEGMENT INFORMATION (Continued) | ||||||||||||||||||||||||
| (Thousands of Dollars) | ||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||||||||||
| Increase | Increase | |||||||||||||||||||||||
| 2014 | 2013 | (Decrease) | 2014 | 2013 | (Decrease) | |||||||||||||||||||
|
Capital Expenditures: |
||||||||||||||||||||||||
| Exploration and Production | $ | 168,038 | (1) | $ | 124,471 | (3) | $ | 43,567 | $ | 444,366 | (1)(2) | $ | 385,009 | (3)(4) | $ | 59,357 | ||||||||
| Pipeline and Storage | 35,844 | (1) | 3,635 | (3) | 32,209 | 64,937 | (1)(2) | 41,000 | (3)(4) | 23,937 | ||||||||||||||
| Gathering | 44,953 | (1) | 12,323 | (3) | 32,630 | 93,238 | (1)(2) | 34,848 | (3)(4) | 58,390 | ||||||||||||||
| Utility | 19,334 | (1) | 14,472 | (3) | 4,862 | 60,915 | (1)(2) | 42,968 | (3)(4) | 17,947 | ||||||||||||||
| Energy Marketing | 80 | 224 | (144 | ) | 194 | 528 | (334 | ) | ||||||||||||||||
| Total Reportable Segments | 268,249 | 155,125 | 113,124 | 663,650 | 504,353 | 159,297 | ||||||||||||||||||
| All Other | 33 | — | 33 | 172 | 91 | 81 | ||||||||||||||||||
| Corporate | 145 | 76 | 69 | 214 | 84 | 130 | ||||||||||||||||||
| Total Capital Expenditures | $ | 268,427 | $ | 155,201 | $ | 113,226 | $ | 664,036 | $ | 504,528 | $ | 159,508 | ||||||||||||
|
(1) |
Capital expenditures for the quarter and nine months ended June 30, 2014, include accounts payable and accrued liabilities related to capital expenditures of $101.3 million, $13.4 million, $16.3 million, and $4.7 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at June 30, 2014, since they represent non-cash investing activities at that date. |
|
|
(2) |
Capital expenditures for the nine months ended June 30, 2014, 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 nine months ended June 30, 2014. These amounts were excluded from the Consolidated Statement 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 June 30, 2014. |
|
|
(3) |
Capital expenditures for the quarter and nine months ended June 30, 2013, include accounts payable and accrued liabilities related to capital expenditures of $49.1 million, $6.9 million, $2.4 million, and $0.2 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at June 30, 2013, since they represent non-cash investing activities at that date. |
|
|
(4) |
Capital expenditures for the nine months ended June 30, 2013, exclude capital expenditures of $38.9 million, $12.7 million, $12.7 million and $3.2 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, 2012 and paid during the nine months ended June 30, 2013. These amounts were excluded from the Consolidated Statements of Cash Flows at September 30, 2012, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at June 30, 2013. |
|
DEGREE DAYS |
||||||||||
| Percent Colder | ||||||||||
| (Warmer) Than: | ||||||||||
|
Three Months Ended June 30 |
Normal | 2014 | 2013 | Normal (1) | Last Year (1) | |||||
| Buffalo, NY | 912 | 841 | 790 | (7.8) | 6.5 | |||||
| Erie, PA | 871 | 797 | 791 | (8.5) | 0.8 | |||||
|
Nine Months Ended June 30 |
||||||||||
| Buffalo, NY | 6,455 | 6,957 | 5,971 | 7.8 | 16.5 | |||||
| Erie, PA | 6,023 | 6,625 | 5,756 | 10.0 | 15.1 | |||||
|
(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 | Nine Months Ended | |||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||
| Increase | Increase | |||||||||||||||||||||||
| 2014 | 2013 | (Decrease) | 2014 | 2013 | (Decrease) | |||||||||||||||||||
|
Gas Production/Prices: |
||||||||||||||||||||||||
| Production (MMcf) | ||||||||||||||||||||||||
| Appalachia | 35,098 | 29,038 | 6,060 | 98,640 | 72,518 | 26,122 | ||||||||||||||||||
| West Coast | 776 | 780 | (4) | 2,403 | 2,240 | 163 | ||||||||||||||||||
| Total Production | 35,874 | 29,818 | 6,056 | 101,043 | 74,758 | 26,285 | ||||||||||||||||||
| Average Prices (Per Mcf) | ||||||||||||||||||||||||
| Appalachia | $ | 3.81 | $ | 3.97 | $ | (0.16 | ) | $ | 3.84 | $ | 3.58 | $ | 0.26 | |||||||||||
| West Coast (3) | 7.02 | 6.89 | 0.13 | 6.85 | 6.61 | 0.24 | ||||||||||||||||||
| Weighted Average | 3.88 | 4.04 | (0.16 | ) | 3.91 | 3.67 | 0.24 | |||||||||||||||||
| Weighted Average after Hedging | 3.55 | 4.17 | (0.62 | ) | 3.71 | 4.14 | (0.43 | ) | ||||||||||||||||
|
Oil Production/Prices: |
||||||||||||||||||||||||
| Production (Thousands of Barrels) | ||||||||||||||||||||||||
| Appalachia | 6 | 9 | (3) | 23 | 21 | 2 | ||||||||||||||||||
| West Coast | 777 | 700 | 77 | 2,230 | 2,093 | 137 | ||||||||||||||||||
| Total Production | 783 | 709 | 74 | 2,253 | 2,114 | 139 | ||||||||||||||||||
| Average Prices (Per Barrel) | ||||||||||||||||||||||||
| Appalachia | $ | 100.91 | $ | 95.06 | $ | 5.85 | $ | 96.76 | $ | 93.18 | $ | 3.58 | ||||||||||||
| West Coast | 101.83 | 101.05 | 0.78 | 99.82 | 102.44 | (2.62 | ) | |||||||||||||||||
| Weighted Average | 101.82 | 100.98 | 0.84 | 99.79 | 102.35 | (2.56 | ) | |||||||||||||||||
| Weighted Average after Hedging | 97.54 | 97.90 | (0.36 | ) | 96.19 | 97.88 | (1.69 | ) | ||||||||||||||||
| Total Production (Mmcfe) | 40,572 | 34,072 | 6,500 | 114,561 | 87,442 | 27,119 | ||||||||||||||||||
|
Selected Operating Performance Statistics: |
||||||||||||||||||||||||
| General & Administrative Expense per Mcfe (1) | $ | 0.39 | $ | 0.46 | $ | (0.07 | ) | $ | 0.42 | $ | 0.54 | $ | (0.12 | ) | ||||||||||
| Lease Operating and Transportation Expense per Mcfe (1)(2) | $ | 1.08 | $ | 0.99 | $ | 0.09 | $ | 1.04 | $ | 1.00 | $ | 0.04 | ||||||||||||
| Depreciation, Depletion & Amortization per Mcfe (1) | $ | 1.84 | $ | 1.97 | $ | (0.13 | ) | $ | 1.88 | $ | 2.04 | $ | (0.16 | ) | ||||||||||
|
(1) |
Refer to page 17 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 $0.50 and $0.36 per Mcfe for the three months ended June 30, 2014 and June 30, 2013, respectively. Amounts include transportation expense of $0.45 and $0.35 per Mcfe for the nine months ended June 30, 2014 and June 30, 2013, respectively. |
|
|
(3) |
Prices reflect revenues from gas produced on the West Coast, including natural gas liquids. |
| NATIONAL FUEL GAS COMPANY | |||||||
| AND SUBSIDIARIES | |||||||
|
EXPLORATION AND PRODUCTION INFORMATION |
|||||||
| Hedging Summary for the Remaining Three Months of Fiscal 2014 | |||||||
|
SWAPS |
Volume | Average Hedge Price | |||||
| Oil | |||||||
| Midway Sunset (MWSS) | 156,000 | BBL | $ | 95.68 / BBL | |||
| Brent | 336,000 | BBL | $ | 102.32 / BBL | |||
| Total | 492,000 | BBL | $ | 100.22 / BBL | |||
| Gas | |||||||
| NYMEX | 22,260,000 | MMBTU | $ | 4.07 / MMBTU | |||
| Dominion Transmission Appalachian (DOM) | 7,200,000 | MMBTU | $ | 4.06 / MMBTU | |||
| Southern California City Gate (SoCal) | 300,000 | MMBTU | $ | 4.35 / MMBTU | |||
| Total | 29,760,000 | MMBTU | $ | 4.07 / MMBTU | |||
| Hedging Summary for Fiscal 2015 | |||||||
|
SWAPS |
Volume | Average Hedge Price | |||||
| Oil | |||||||
| MWSS | 258,000 | BBL | $ | 92.10 / BBL | |||
| Brent | 903,000 | BBL | $ | 98.42 / BBL | |||
| NYMEX | 396,000 | BBL | $ | 90.14 / BBL | |||
| Total | 1,557,000 | BBL | $ | 95.27 / BBL | |||
| Gas | |||||||
| NYMEX | 70,690,000 | MMBTU | $ | 4.16 / MMBTU | |||
| DOM | 18,720,000 | MMBTU | $ | 3.88 / MMBTU | |||
| SoCal | 1,200,000 | MMBTU | $ | 4.35 / MMBTU | |||
| Total | 90,610,000 | MMBTU | $ | 4.10 / MMBTU | |||
| Hedging Summary for Fiscal 2016 | |||||||
|
SWAPS |
Volume | Average Hedge Price | |||||
| Oil | |||||||
| 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 | |||||||
| NYMEX | 37,840,000 | MMBTU | $ | 4.25 / MMBTU | |||
| DOM | 18,840,000 | MMBTU | $ | 3.88 / MMBTU | |||
| Michigan Consolidated City Gate (Mich Con) | 9,000,000 | MMBTU | $ | 4.10 / MMBTU | |||
| Total | 65,680,000 | MMBTU | $ | 4.12 / MMBTU | |||
| Hedging Summary for Fiscal 2017 | |||||||
|
SWAPS |
Volume | Average Hedge Price | |||||
| Oil | |||||||
| Brent | 384,000 | BBL | $ | 92.30 / BBL | |||
| Gas | |||||||
| NYMEX | 24,960,000 | MMBTU | $ | 4.49 / MMBTU | |||
| DOM | 18,840,000 | MMBTU | $ | 3.88 / MMBTU | |||
| Mich Con | 3,000,000 | MMBTU | $ | 4.10 / MMBTU | |||
| Total | 46,800,000 | MMBTU | $ | 4.22 / MMBTU | |||
| Hedging Summary for Fiscal 2018 | |||||||
|
SWAPS |
Volume | Average Hedge Price | |||||
| Oil | |||||||
| Brent | 75,000 | BBL | $ | 91.00 / BBL | |||
| Gas | |||||||
| NYMEX | 5,550,000 | MMBTU | $ | 4.59 / MMBTU | |||
| NATIONAL FUEL GAS COMPANY | ||||||
| AND SUBSIDIARIES | ||||||
|
EXPLORATION AND PRODUCTION INFORMATION |
||||||
|
Gross Wells in Process of Drilling |
||||||
|
Nine Months Ended June 30, 2014 |
||||||
| Total | ||||||
| East | West | Company | ||||
| Wells in Process - Beginning of Period | ||||||
| Exploratory | 1.000 | (1) | 0.000 | 1.000 | ||
| Developmental | 71.000 | (1)(2) | 0.000 | 71.000 | ||
| Wells Commenced | ||||||
| Exploratory | 5.000 | 2.000 | 7.000 | |||
| Developmental | 42.000 | 71.000 | 113.000 | |||
| Wells Completed | ||||||
| Exploratory | 2.000 | 2.000 | 4.000 | |||
| Developmental | 37.000 | 66.000 | 103.000 | |||
| Wells Plugged & Abandoned | ||||||
| Exploratory | 0.000 | 0.000 | 0.000 | |||
| Developmental | 2.000 | 1.000 | 3.000 | |||
| Wells in Process - End of Period | ||||||
| Exploratory | 4.000 | 0.000 | 4.000 | |||
| Developmental | 74.000 | 4.000 | 78.000 | |||
|
(1) |
Gross exploratory wells were increased by 1 and developmental wells were decreased by 1. |
|
|
(2) |
Beginning of year number has been adjusted to remove 4 developmental wells. |
|
Net Wells in Process of Drilling |
||||||
|
Nine Months Ended June 30, 2014 |
||||||
| Total | ||||||
| East | West | Company | ||||
| Wells in Process - Beginning of Period | ||||||
| Exploratory | 1.000 | (1) | 0.000 | 1.000 | ||
| Developmental | 56.500 | (1)(2) | 0.000 | 56.500 | ||
| Wells Commenced | ||||||
| Exploratory | 4.832 | 1.533 | 6.365 | |||
| Developmental | 42.000 | 71.000 | 113.000 | |||
| Wells Completed | ||||||
| Exploratory | 2.000 | 1.533 | 3.533 | |||
| Developmental | 37.000 | 66.000 | 103.000 | |||
| Wells Plugged & Abandoned | ||||||
| Exploratory | 0.000 | 0.000 | 0.000 | |||
| Developmental | 2.000 | 1.000 | 3.000 | |||
| Wells in Process - End of Period | ||||||
| Exploratory | 3.832 | 0.000 | 3.832 | |||
| Developmental | 59.500 | 4.000 | 63.500 | |||
|
(1) |
Net exploratory wells were increased by 1 and developmental wells were decreased by 1. |
|
|
(2) |
Beginning of year number has been adjusted to remove 4 developmental wells (3.5 net wells). |
| NATIONAL FUEL GAS COMPANY | ||
| AND SUBSIDIARIES | ||
|
EXPLORATION AND PRODUCTION INFORMATION |
||
| Updated Fiscal 2015 Financial & Operating Guidance | ||
| Guidance | ||
| Total Production (Bcfe) | 180 - 220 | |
| Production by Division (Bcfe) | ||
| East | 159 - 197 | |
| West | 21 - 23 | |
| Cost and Expenses $ per Mcfe | ||
| Lease Operating and Transportation Expenses | $0.95 - $1.05 | |
| Depreciation, Depletion and Amortization | $1.70 - $1.85 | |
| Other Taxes | $0.05 - $0.15 | |
| General and Administrative | $0.35 - $0.40 | |
| Other Operating Expenses | $0.05 - $0.10 | |
| Capital Investment by Division (in millions) | ||
| East Division | $585 - $655 | |
| West Division | $65 - $95 | |
| Exploration & Production Segment Total | $650 - $750 | |
| Updated Pricing Guidance for Fiscal 2015 | ||
| Guidance Based on Average Crude Oil NYMEX Price ($/Bbl) (without hedges) of $95.00 | ||
| Forecast price differentials | ||
|
West (% of NYMEX) |
99% |
|
| Guidance Based on Average Natural Gas NYMEX Price ($/MMBtu) (without hedges) of $4.25 | ||
| Forecast price differentials | ||
| East (excludes firm sales or firm transportation) | -$1.25 to -$1.50 | |
|
West |
+$1.25 to +$1.75 |
|
| Earnings per share sensitivity to changes from prices used in guidance* ^ | |||||||||||||
| $0.50 change per MMBtu gas | $5 change per Bbl oil | ||||||||||||
| Increase | Decrease | Increase | Decrease | ||||||||||
| +$ | 0.28 | -$ | 0.28 | +$ | 0.05 | -$ | 0.05 | ||||||
| * Please refer to forward looking statement footnote beginning at page 8 of document. |
| ^ This sensitivity table is current as of August 7, 2014 and only considers revenue from the Exploration and Production segment's crude oil and natural gas sales. This revenue is based upon pricing used in the Company's earnings forecast. For its fiscal 2014 earnings forecast, the Company is utilizing flat NYMEX equivalent commodity pricing, exclusive of basis differential, of $4.25 per MMBtu for natural gas and $95 per Bbl for crude oil. The sensitivities will become obsolete with the passage of time, changes in Seneca's production forecast, changes in basis differential, as additional hedging contracts are entered into, and with the settling of hedge contracts at their maturity. |
| NATIONAL FUEL GAS COMPANY | ||||||||||||||||||
| AND SUBSIDIARIES | ||||||||||||||||||
| Pipeline & Storage Throughput - (millions of cubic feet - MMcf) | ||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| June 30, | June 30, | |||||||||||||||||
| Increase | Increase | |||||||||||||||||
| 2014 | 2013 | (Decrease) | 2014 | 2013 | (Decrease) | |||||||||||||
| Firm Transportation - Affiliated | 18,116 | 15,177 | 2,939 | 95,966 | 86,638 | 9,328 | ||||||||||||
| Firm Transportation - Non-Affiliated | 140,503 | 113,844 | 26,659 | 479,287 | 340,571 | 138,716 | ||||||||||||
| Interruptible Transportation | 998 | 540 | 458 | 3,778 | 2,506 | 1,272 | ||||||||||||
| 159,617 | 129,561 | 30,056 | 579,031 | 429,715 | 149,316 | |||||||||||||
| Gathering Volume - (MMcf) | ||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| June 30, | June 30, | |||||||||||||||||
| Increase | Increase | |||||||||||||||||
| 2014 | 2013 | (Decrease) | 2014 | 2013 | (Decrease) | |||||||||||||
| Gathered Volume - Affiliated | 35,272 | 28,041 | 7,231 | 97,240 | 66,770 | 30,470 | ||||||||||||
| Utility Throughput - (MMcf) | ||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| June 30, | June 30, | |||||||||||||||||
| Increase | Increase | |||||||||||||||||
| 2014 | 2013 | (Decrease) | 2014 | 2013 | (Decrease) | |||||||||||||
| Retail Sales: | ||||||||||||||||||
| Residential Sales | 8,826 | 8,600 | 226 | 56,473 | 49,124 | 7,349 | ||||||||||||
| Commercial Sales | 1,238 | 1,187 | 51 | 8,357 | 7,025 | 1,332 | ||||||||||||
| Industrial Sales | (12 | ) | 113 | (125 | ) | 377 | 820 | (443 | ) | |||||||||
| 10,052 | 9,900 | 152 | 65,207 | 56,969 | 8,238 | |||||||||||||
| Off-System Sales | 525 | — | 525 | 4,335 | 6,716 | (2,381 | ) | |||||||||||
| Transportation | 14,841 | 13,282 | 1,559 | 70,188 | 59,536 | 10,652 | ||||||||||||
| 25,418 | 23,182 | 2,236 | 139,730 | 123,221 | 16,509 | |||||||||||||
| Energy Marketing Volume | ||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| June 30, | June 30, | |||||||||||||||||
| Increase | Increase | |||||||||||||||||
| 2014 | 2013 | (Decrease) | 2014 | 2013 | (Decrease) | |||||||||||||
| Natural Gas (MMcf) | 8,930 | 12,508 | (3,578 | ) | 45,848 | 40,266 | 5,582 | |||||||||||
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 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, 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 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 3 of this report reconciles National Fuel's reported GAAP earnings to Operating Results for the three and nine months ended June 30, 2014 and 2013.
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 and nine months ended June 30, 2014:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Reported GAAP Earnings | $ | 64,520 | $ | 58,495 | $ | 241,983 | $ | 212,159 | ||||||||
| Depreciation, Depletion and Amortization | 96,788 | 88,142 | 279,876 | 240,503 | ||||||||||||
| Interest and Other Income | (1,866 | ) | (1,480 | ) | (8,168 | ) | (5,510 | ) | ||||||||
| Interest Expense | 23,252 | 24,301 | 71,227 | 70,130 | ||||||||||||
| Income Taxes | 41,107 | 45,688 | 162,627 | 144,423 | ||||||||||||
| Plugging and Abandonment Accrual (Reversal) | (4,140 | ) | — | 862 | — | |||||||||||
| Adjusted EBITDA | $ | 219,661 | $ | 215,146 | $ | 748,407 | $ | 661,705 | ||||||||
| Adjusted EBITDA by Segment | ||||||||||||||||
| Pipeline and Storage Adjusted EBITDA | $ | 44,556 | $ | 39,077 | ||||||||||||
| Gathering Adjusted EBITDA | 17,149 | 9,235 | ||||||||||||||
| Total Midstream Businesses Adjusted EBITDA | 61,705 | 48,312 | ||||||||||||||
| Exploration and Production Adjusted EBITDA | 133,181 | 139,232 | ||||||||||||||
| Utility Adjusted EBITDA | 26,427 | 29,613 | ||||||||||||||
| Energy Marketing Adjusted EBITDA | 971 | 1,497 | ||||||||||||||
| Corporate and All Other Adjusted EBITDA | (2,623 | ) | (3,508 | ) | ||||||||||||
| Total Adjusted EBITDA | $ | 219,661 | $ | 215,146 | ||||||||||||
| NATIONAL FUEL GAS COMPANY | |||||||
| AND SUBSIDIARIES | |||||||
| Quarter Ended June 30 (unaudited) | 2014 | 2013 | |||||
| Operating Revenues | $ | 440,144,000 | $ | 440,008,000 | |||
| Net Income Available for Common Stock | $ | 64,520,000 | $ | 58,495,000 | |||
| Earnings Per Common Share: | |||||||
| Basic | $ | 0.77 | $ | 0.70 | |||
| Diluted | $ | 0.76 | $ | 0.69 | |||
| Weighted Average Common Shares: | |||||||
| Used in Basic Calculation | 84,029,124 | 83,557,968 | |||||
| Used in Diluted Calculation | 84,973,100 | 84,325,465 | |||||
| Nine Months Ended June 30 (unaudited) | |||||||
| Operating Revenues | $ | 1,746,458,000 | $ | 1,490,688,000 | |||
| Net Income Available for Common Stock | $ | 241,983,000 | $ | 212,159,000 | |||
| Earnings Per Common Share: | |||||||
| Basic | $ | 2.89 | $ | 2.54 | |||
| Diluted | $ | 2.85 | $ | 2.52 | |||
| Weighted Average Common Shares: | |||||||
| Used in Basic Calculation | 83,863,764 | 83,481,849 | |||||
| Used in Diluted Calculation | 84,892,473 | 84,242,128 | |||||
| Twelve Months Ended June 30 (unaudited) | |||||||
| Operating Revenues | $ | 2,085,321,000 | $ | 1,803,948,000 | |||
| Net Income Available for Common Stock | $ | 289,825,000 | $ | 260,961,000 | |||
| Earnings Per Common Share: | |||||||
| Basic | $ | 3.46 | $ | 3.13 | |||
| Diluted | $ | 3.42 | $ | 3.10 | |||
| Weighted Average Common Shares: | |||||||
| Used in Basic Calculation | 83,804,516 | 83,437,479 | |||||
| Used in Diluted Calculation | 84,796,613 | 84,147,383 | |||||
National Fuel Gas Company
Analyst:
Timothy J. Silverstein,
716-857-6987
or
Media:
Karen L. Merkel, 716-857-7654
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