Attached files
| file | filename |
|---|---|
| 8-K - 8-K - NATIONAL FUEL GAS CO | nfg-542017x8k.htm |
Exhibit 99
6363 Main Street/Williamsville, NY 14221 | |||
Release Date: | Immediate May 4, 2017 | Brian M. Welsch Investor Relations 716-857-7875 | David P. Bauer Treasurer 716-857-7318 |
NATIONAL FUEL REPORTS SECOND QUARTER EARNINGS
WILLIAMSVILLE, N.Y.: National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated results for the second quarter of its 2017 fiscal year and for the six months ended March 31, 2017.
FISCAL 2017 SECOND QUARTER SUMMARY
• | Consolidated net income of $89.3 million or $1.04 per share compared to a consolidated net loss of $147.7 million or $1.74 per share in the prior year |
• | Adjusted EBITDA of $227.0 million, up from $224.4 million in the prior year (non-GAAP reconciliation on page 22) |
• | Net production of 45.6 Bcfe, a 16% increase from prior year |
• | Seneca combined LOE, G&A and DD&A expenses of $1.92 per Mcfe, a $0.48 per Mcfe decrease from the prior year |
• | Gathering revenues of $28.0 million on 50.6 Bcf of system throughput, a 29% increase from the prior year |
• | Weather in Utility's Pennsylvania service territory 4.1% warmer than prior year and 15.5% warmer than normal |
• | Raising and tightening fiscal 2017 earnings guidance to a range of $3.20 to $3.35 per share |
• | Raising and tightening fiscal 2017 production guidance to a range of 165 to 180 Bcfe |
OPERATING RESULTS
Three Months Ended | Six Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
(in thousands except per share amounts) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Reported GAAP earnings (loss) | $ | 89,284 | $ | (147,687 | ) | $ | 178,191 | $ | (336,796 | ) | ||||||
Items impacting comparability: | ||||||||||||||||
Impairment of oil and gas properties (E&P) | 397,443 | 832,894 | ||||||||||||||
Tax impact of impairment of oil and gas properties | (166,926 | ) | (349,814 | ) | ||||||||||||
Joint development agreement professional fees (E&P) | 4,682 | |||||||||||||||
Tax impact of joint development agreement professional fees | (1,966 | ) | ||||||||||||||
Operating Results | $ | 89,284 | $ | 82,830 | $ | 178,191 | $ | 149,000 | ||||||||
Reported GAAP earnings (loss) per share | $ | 1.04 | $ | (1.74 | ) | $ | 2.07 | $ | (3.97 | ) | ||||||
Items impacting comparability: | ||||||||||||||||
Impairment of oil and gas properties (E&P) | 4.69 | 9.83 | ||||||||||||||
Tax impact of impairment of oil and gas properties | (1.97 | ) | (4.13 | ) | ||||||||||||
Joint development agreement professional fees (E&P) | 0.06 | |||||||||||||||
Tax impact of joint development agreement professional fees | (0.02 | ) | ||||||||||||||
Earnings per share impact of diluted shares | (0.01 | ) | (0.02 | ) | ||||||||||||
Operating Results per diluted share | $ | 1.04 | $ | 0.97 | $ | 2.07 | $ | 1.75 | ||||||||
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MANAGEMENT COMMENTS
Ronald J. Tanski, President and Chief Executive Officer of National Fuel Gas Company, stated: “Strong performance in our Exploration & Production and Gathering segments over each of our last two quarters bodes well for our whole fiscal year. These segments continue to benefit from improving natural gas prices in the Appalachian basin. Given the relative near-term strength we are seeing in local pricing, we are positioning our near-term development and marketing plans to target a 10-plus percent annual growth rate in our Appalachian production over the next three years and lock-in attractive returns on our low-cost drilling program and gathering investments. Seneca is in the process of adding a second rig to prepare for the start of its Atlantic Sunrise capacity and eventually begin Utica Shale development in Tioga County, Pa., in fiscal 2018, providing opportunities for further growth.
“The higher earnings in our unregulated segments more than offset the decline in earnings in our regulated Pipeline & Storage and Utility segments, where a number of minor factors drove earnings modestly lower than the previous year. Since most of the daily operational activities of the regulated companies remain fairly routine from year to year, these minor variances are not uncommon. However, the increasingly difficult regulatory policies in New York are impacting our ability to make reasoned decisions with respect to additional investments in these segments in the state. Nonetheless, our dedicated employees continue to execute our operational plan to ensure safe and reliable natural gas service for our customers in New York and Pennsylvania.
“While we sort through the delay of our Northern Access pipeline project, we will concentrate on our investment opportunities outside the state of New York. As we focus on our Exploration & Production and Gathering segments, along with ongoing investment in the expansion and modernization of our pipeline systems where possible, I am confident that we can continue to grow our integrated businesses.”
DISCUSSION OF RESULTS BY SEGMENT
The following discussion of the earnings of each segment is summarized in a tabular form on pages 7 through 10 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 | Six Months Ended | ||||||||||||||||||||||
March 31, | March 31, | ||||||||||||||||||||||
(in thousands except per share amounts) | 2017 | 2016 | Variance | 2017 | 2016 | Variance | |||||||||||||||||
Net Income / (Loss) | $ | 33,769 | $ | (213,335 | ) | $ | 247,104 | $ | 68,849 | $ | (450,421 | ) | $ | 519,270 | |||||||||
Net Income / (Loss) Per Share (Diluted) | $ | 0.39 | $ | (2.52 | ) | $ | 2.91 | $ | 0.80 | $ | (5.32 | ) | $ | 6.12 | |||||||||
Adjusted EBITDA | $ | 93,970 | $ | 79,608 | $ | 14,362 | $ | 196,447 | $ | 170,749 | $ | 25,698 | |||||||||||
Net income in the Exploration and Production segment in the second quarter was $33.8 million or $0.39 per share, compared to a net loss of $213.3 million or $2.52 per share in the prior year second quarter, an increase of $247.1 million or $2.91 per share. Excluding the impact of last year's impairment charge, the increase in the Exploration and Production segment's second quarter earnings is mainly due to higher natural gas production, lower operating expenses and a lower effective income tax rate, offset partially by a decrease in oil production and lower realized natural gas prices after the impact of hedging. In the prior year second quarter, Seneca recorded a $397.4 million ($230.5 million after-tax) ceiling test impairment charge to reduce the value of Seneca’s oil and gas properties. There was no ceiling test impairment charge in the current year’s second 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
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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 March 31, 2017, the ceiling exceeded the book value of the oil and gas properties by approximately $201.0 million. Seneca does not expect to incur any impairment charges in fiscal 2017 due to the improvement in oil and gas prices and lower expected operating and well development costs.
Seneca's net production was 45.6 billion cubic feet equivalent ("Bcfe"), an increase of 6.4 Bcfe or 16 percent versus the prior year second quarter, and 0.7 Bcfe or 2 percent versus the first quarter of fiscal 2017. Net natural gas production increased 6.7 Bcf or 19 percent versus the prior year due to higher natural gas production in Appalachia. An improvement in local natural gas pricing in Pennsylvania allowed Seneca to produce all of its available production volumes during the second quarter. Seneca voluntarily curtailed approximately 9.1 Bcf (net) of natural gas production in the prior year second quarter. Seneca’s crude oil production decreased 49 thousand barrels ("Mbbl") or 7 percent due mainly to changes in steam operations and a reduction in well workover activity at its North Midway Sunset field.
Seneca's average realized natural gas price, after the impact of hedging, for the second quarter was $2.96 per thousand cubic feet ("Mcf"), a decrease of $0.03 per Mcf versus the prior year. Seneca's average realized oil price, after the impact of hedging, was $52.92 per barrel ("Bbl"), a decrease of $0.09 per Bbl. Seneca's average realized natural gas and oil prices benefited from an uplift of $0.21 per Mcf and $4.96 per Bbl, respectively, from financial hedges settled during the quarter.
Lease operating and transportation expense ("LOE") increased $5.0 million due mainly to higher production. However, LOE expense on a per unit of production basis decreased from $0.96 per Mcfe to $0.93 per Mcfe. The $0.03 per Mcfe improvement is largely the result of higher Appalachian natural gas production, which carries a lower per unit LOE cost relative to Seneca’s California oil operations, as well as a general reduction in well repair and maintenance costs across Seneca's California and Appalachia divisions.
Seneca’s General & Administrative (“G&A”) expense decreased $2.6 million due to lower personnel costs. Seneca’s per unit of production G&A expense for the quarter was $0.36 per Mcfe, a decrease of $0.13 per Mcfe or 27 percent from the prior year.
Depreciation, depletion and amortization ("DD&A") expense decreased $8.4 million due to lower per unit DD&A, offset partially by the impact of higher production. Seneca’s per unit DD&A decreased by $0.32 per Mcf equivalent ("Mcfe") to $0.63 per Mcfe due to a lower depletable fixed asset balance resulting mainly from the ceiling test impairment charges recorded during the past year.
Seneca’s effective income tax rate decreased in the second quarter due primarily to an enhanced oil recovery tax credit related to Seneca’s California properties. This credit was applicable this year as a result of relatively low domestic crude oil prices.
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 | Six Months Ended | ||||||||||||||||||||||
March 31, | March 31, | ||||||||||||||||||||||
(in thousands except per share amounts) | 2017 | 2016 | Variance | 2017 | 2016 | Variance | |||||||||||||||||
Net Income / (Loss) | $ | 19,256 | $ | 21,194 | $ | (1,938 | ) | $ | 38,624 | $ | 42,470 | $ | (3,846 | ) | |||||||||
Net Income / (Loss) Per Share (Diluted) | $ | 0.22 | $ | 0.25 | $ | (0.03 | ) | $ | 0.45 | $ | 0.50 | $ | (0.05 | ) | |||||||||
Adjusted EBITDA | $ | 49,103 | $ | 53,672 | $ | (4,569 | ) | $ | 97,116 | $ | 104,415 | $ | (7,299 | ) | |||||||||
The Pipeline and Storage segment's second quarter earnings decreased from the prior year due primarily to a $3.8 million decline in operating revenues. The decrease in revenues was the result of the reduction in Supply Corporation and Empire’s rates related to their rate case settlements that went into effect in 2016, as well as a decline in short-term transportation contracts in the current quarter.
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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 | Six Months Ended | ||||||||||||||||||||||
March 31, | March 31, | ||||||||||||||||||||||
(in thousands except per share amounts) | 2017 | 2016 | Variance | 2017 | 2016 | Variance | |||||||||||||||||
Net Income / (Loss) | $ | 10,285 | $ | 7,568 | $ | 2,717 | $ | 21,266 | $ | 12,490 | $ | 8,776 | |||||||||||
Net Income / (Loss) Per Share (Diluted) | $ | 0.12 | $ | 0.09 | $ | 0.03 | $ | 0.25 | $ | 0.15 | $ | 0.10 | |||||||||||
Adjusted EBITDA | $ | 24,172 | $ | 18,831 | $ | 5,341 | $ | 49,273 | $ | 35,290 | $ | 13,983 | |||||||||||
The Gathering segment’s second quarter earnings increased $2.7 million or 36 percent versus the prior year on higher revenues offset slightly by higher operating expenses. Operating revenues increased $6.3 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 second quarter, up 11.4 Bcf or 29 percent from the prior year. Operation and Maintenance (“O&M”) expenses were up $1.0 million versus the prior year due to higher costs associated with operating new compression and dehydration facilities at the segment’s Clermont gathering system.
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 | Six Months Ended | ||||||||||||||||||||||
March 31, | March 31, | ||||||||||||||||||||||
(in thousands except per share amounts) | 2017 | 2016 | Variance | 2017 | 2016 | Variance | |||||||||||||||||
Net Income / (Loss) | $ | 25,581 | $ | 31,960 | $ | (6,379 | ) | $ | 46,755 | $ | 50,566 | $ | (3,811 | ) | |||||||||
Net Income / (Loss) Per Share (Diluted) | $ | 0.30 | $ | 0.38 | $ | (0.08 | ) | $ | 0.54 | $ | 0.60 | $ | (0.06 | ) | |||||||||
Adjusted EBITDA | $ | 61,580 | $ | 69,467 | $ | (7,887 | ) | $ | 113,909 | $ | 115,382 | $ | (1,473 | ) | |||||||||
The Utility segment’s second quarter earnings decreased $6.4 million or 20 percent due primarily to higher O&M and DD&A expenses and warmer weather. O&M expense increased $6.5 million versus the prior year due mainly to higher pension and benefits costs and uncollectible accounts. DD&A expense increased $1.7 million due to higher plant balances at March 31, 2017, which was primarily driven by the replacement of Distribution’s legacy customer information system that was placed in service in May 2016.
The weather was 4.1 percent warmer than last year and 15.5 percent warmer than normal in Distribution’s Pennsylvania service territory, resulting in lower retail residential and transportation customer throughput and revenues when compared to both the prior year and Company projections for earnings guidance purposes, which assumes normal weather. In New York, the impact of weather variations on earnings is largely mitigated by that jurisdiction’s weather normalization clause.
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.
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Three Months Ended | Six Months Ended | ||||||||||||||||||||||
March 31, | March 31, | ||||||||||||||||||||||
(in thousands except per share amounts) | 2017 | 2016 | Variance | 2017 | 2016 | Variance | |||||||||||||||||
Net Income / (Loss) | $ | 905 | $ | 3,484 | $ | (2,579 | ) | $ | 2,687 | $ | 4,707 | $ | (2,020 | ) | |||||||||
Net Income / (Loss) Per Share (Diluted) | $ | 0.01 | $ | 0.04 | $ | (0.03 | ) | $ | 0.03 | $ | 0.06 | $ | (0.03 | ) | |||||||||
Adjusted EBITDA | $ | 1,382 | $ | 5,653 | $ | (4,271 | ) | $ | 4,230 | $ | 7,500 | $ | (3,270 | ) | |||||||||
The Energy Marketing segment's second quarter earnings decreased $2.6 million due to lower margin. NFR’s customer margins were negatively impacted by stronger natural gas prices at local pricing points relative to NYMEX-based sales contracts and lower volumes as a result of warmer weather during the period.
Corporate and All Other
The Corporate and All Other category had a loss of $0.5 million or $0.00 per share for the second quarter compared to earnings of $1.4 million or $0.02 per share in the prior year. The $1.9 million decrease is primarily attributable to the non-recurrence of a death benefit gain on life insurance proceeds and related tax benefits that were recognized in the prior year.
GUIDANCE
The Company is raising and tightening its earnings guidance for fiscal 2017 to a range of $3.20 to $3.35 per share to reflect the impact of actual results for the six months ended March 31, 2017, and updates to key forecast assumptions, including positive revisions to the Exploration & Production segment’s forecasted production and operating expense assumptions, as outlined in the table below.
The Company is also updating fiscal 2017 capital expenditure guidance to a range of $450 to $530 million, a decrease of $100 million at the midpoint. Expected capital expenditures for the Pipeline & Storage segment were reduced by $115 million at the midpoint to reflect the delay in the Northern Access pipeline project. Changes to Exploration & Production, up $30 million at the midpoint of the range, and Gathering, down $15 million at the midpoint, were the result of changes in the timing of Seneca’s Appalachian development activities between fiscal 2017 and fiscal 2018. There were no changes to the Utility segment’s capital expenditure budget.
Updated FY 2017 Guidance | Previous FY 2017 Guidance | ||
Consolidated Earnings per Share | $3.20 to $3.35 | $3.10 to $3.30 | |
Capital Expenditures (Millions) | |||
Exploration & Production (1) | $210 - $250 | $180 - $220 | |
Pipeline & Storage | $100 - $120 | $200 - $250 | |
Gathering | $50 - $60 | $65 - $75 | |
Utility | $90 - $100 | $90 - $100 | |
Consolidated Capital Expenditures | $450 - $530 | $535 - $645 | |
Exploration & Production Segment Guidance | |||
NYMEX Natural Gas Price Assumption | $3.25 | $3.25 | |
NYMEX Crude Oil Price Assumption | $55.00 | $55.00 | |
Production (Bcfe) | |||
East Division - Appalachia | 145 to 160 | 135 to 153 | |
West Division - California | ~ 20 | 20 to 22 | |
Total Production | 165 to 180 | 155 to 175 | |
E&P Operating Costs ($/Mcfe) | |||
LOE | $0.95 - $1.00 | $0.95 - $1.05 | |
G&A | $0.35 - $0.40 | $0.35 - $0.40 | |
DD&A | $0.60 - $0.65 | $0.65 - $0.70 | |
(1) Net of initial conveyance proceeds received from joint development partner for working interest in joint development wells
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EARNINGS TELECONFERENCE
The Company will host a conference call on Friday, May 5, 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 “4568855.” 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) 800-585-8367 using conference ID number “4568855.” Both the webcast and a telephonic replay will be available until the close of business on Friday, May 12, 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.
Analyst Contact: | Brian M. Welsch | 716-857-7875 |
Media Contact: | Karen L. Merkel | 716-857-7654 |
Certain statements contained herein, including statements identified by the use of the words “anticipates,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “predicts,” “projects,” “believes,” “seeks,” “will,” “may” and similar expressions, and statements which are other than statements of historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Company’s expectations, beliefs and projections contained herein are expressed in good faith and are believed to have a reasonable basis, but there can be no assurance that such expectations, beliefs or projections will result or be achieved or accomplished. In addition to other factors, the following are important factors that could cause actual results to differ materially from those discussed in the forward-looking statements: 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.
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NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||||||
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS | |||||||||||||||||||||||||||
QUARTER ENDED MARCH 31, 2017 | |||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||
Upstream | Midstream Businesses | Downstream Businesses | |||||||||||||||||||||||||
Exploration & | Pipeline & | Energy | Corporate / | ||||||||||||||||||||||||
(Thousands of Dollars) | Production | Storage | Gathering | Utility | Marketing | All Other | Consolidated* | ||||||||||||||||||||
Second quarter 2016 GAAP earnings | $ | (213,335 | ) | $ | 21,194 | $ | 7,568 | $ | 31,960 | $ | 3,484 | $ | 1,442 | $ | (147,687 | ) | |||||||||||
Items impacting comparability: | |||||||||||||||||||||||||||
Impairment of oil and gas producing properties | 397,443 | 397,443 | |||||||||||||||||||||||||
Tax impact of impairment of oil and gas producing properties | (166,926 | ) | (166,926 | ) | |||||||||||||||||||||||
Second quarter 2016 operating results | 17,182 | 21,194 | 7,568 | 31,960 | 3,484 | 1,442 | 82,830 | ||||||||||||||||||||
Drivers of operating results | |||||||||||||||||||||||||||
Higher (lower) crude oil prices | (39 | ) | (39 | ) | |||||||||||||||||||||||
Higher (lower) natural gas prices | (962 | ) | (962 | ) | |||||||||||||||||||||||
Higher (lower) natural gas production | 12,963 | 12,963 | |||||||||||||||||||||||||
Higher (lower) crude oil production | (1,680 | ) | (1,680 | ) | |||||||||||||||||||||||
Lower (higher) lease operating and transportation expenses | (3,234 | ) | (3,234 | ) | |||||||||||||||||||||||
Lower (higher) depreciation / depletion | 5,475 | 252 | (265 | ) | (1,076 | ) | 4,386 | ||||||||||||||||||||
Higher (lower) transportation and storage revenues | (2,288 | ) | (2,288 | ) | |||||||||||||||||||||||
Higher (lower) gathering and processing revenues | 4,098 | 4,098 | |||||||||||||||||||||||||
Lower (higher) other operating expenses | 2,651 | (395 | ) | (647 | ) | (3,775 | ) | (2,166 | ) | ||||||||||||||||||
Regulatory true-up adjustments | (341 | ) | (341 | ) | |||||||||||||||||||||||
Warmer weather | (733 | ) | (733 | ) | |||||||||||||||||||||||
Higher (lower) margins | (2,686 | ) | (223 | ) | (2,909 | ) | |||||||||||||||||||||
Higher (lower) AFUDC** | 395 | (582 | ) | (187 | ) | ||||||||||||||||||||||
Lower (higher) interest expense | (206 | ) | (206 | ) | |||||||||||||||||||||||
Lower (higher) income tax expense / effective tax rate | 1,539 | (1,037 | ) | 502 | |||||||||||||||||||||||
All other / rounding | (126 | ) | 98 | (263 | ) | 128 | 107 | (694 | ) | (750 | ) | ||||||||||||||||
Second quarter 2017 GAAP earnings and operating results | $ | 33,769 | $ | 19,256 | $ | 10,285 | $ | 25,581 | $ | 905 | $ | (512 | ) | $ | 89,284 | ||||||||||||
* Amounts do not reflect intercompany eliminations | |||||||||||||||||||||||||||
** AFUDC = Allowance for Funds Used During Construction | |||||||||||||||||||||||||||
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NATIONAL FUEL GAS COMPANY | ||||||||||||||||||||||||||||
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE | ||||||||||||||||||||||||||||
QUARTER ENDED MARCH 31, 2017 | ||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
Upstream | Midstream Businesses | Downstream Businesses | ||||||||||||||||||||||||||
Exploration & | Pipeline & | Energy | Corporate / | |||||||||||||||||||||||||
Production | Storage | Gathering | Utility | Marketing | All Other | Consolidated* | ||||||||||||||||||||||
Second quarter 2016 GAAP earnings | $ | (2.52 | ) | $ | 0.25 | $ | 0.09 | $ | 0.38 | $ | 0.04 | $ | 0.02 | $ | (1.74 | ) | ||||||||||||
Items impacting comparability: | ||||||||||||||||||||||||||||
Impairment of oil and gas producing properties | 4.69 | 4.69 | ||||||||||||||||||||||||||
Tax impact of impairment of oil and gas producing properties | (1.97 | ) | (1.97 | ) | ||||||||||||||||||||||||
Earnings per share impact of diluted shares | (0.01 | ) | (0.01 | ) | ||||||||||||||||||||||||
Second quarter 2016 operating results | 0.20 | 0.25 | 0.09 | 0.38 | 0.04 | 0.01 | 0.97 | |||||||||||||||||||||
Drivers of operating results | ||||||||||||||||||||||||||||
Higher (lower) crude oil prices | — | — | ||||||||||||||||||||||||||
Higher (lower) natural gas prices | (0.01 | ) | (0.01 | ) | ||||||||||||||||||||||||
Higher (lower) natural gas production | 0.15 | 0.15 | ||||||||||||||||||||||||||
Higher (lower) crude oil production | (0.02 | ) | (0.02 | ) | ||||||||||||||||||||||||
Lower (higher) lease operating and transportation expenses | (0.04 | ) | (0.04 | ) | ||||||||||||||||||||||||
Lower (higher) depreciation / depletion | 0.06 | — | — | (0.01 | ) | 0.05 | ||||||||||||||||||||||
Higher (lower) transportation and storage revenues | (0.03 | ) | (0.03 | ) | ||||||||||||||||||||||||
Higher (lower) gathering and processing revenues | 0.05 | 0.05 | ||||||||||||||||||||||||||
Lower (higher) other operating expenses | 0.03 | — | (0.01 | ) | (0.04 | ) | (0.02 | ) | ||||||||||||||||||||
Regulatory true-up adjustments | — | — | ||||||||||||||||||||||||||
Warmer weather | (0.01 | ) | (0.01 | ) | ||||||||||||||||||||||||
Higher (lower) margins | (0.03 | ) | — | (0.03 | ) | |||||||||||||||||||||||
Higher (lower) AFUDC** | — | (0.01 | ) | (0.01 | ) | |||||||||||||||||||||||
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 | ) | — | — | (0.02 | ) | ||||||||||||||||||
Second quarter 2017 GAAP earnings and operating results | $ | 0.39 | $ | 0.22 | $ | 0.12 | $ | 0.30 | $ | 0.01 | $ | — | $ | 1.04 | ||||||||||||||
* Amounts do not reflect intercompany eliminations | ||||||||||||||||||||||||||||
** AFUDC = Allowance for Funds Used During Construction | ||||||||||||||||||||||||||||
Page 9.
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||||||
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS | |||||||||||||||||||||||||||
SIX MONTHS ENDED MARCH 31, 2017 | |||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||
Upstream | Midstream Businesses | Downstream Businesses | |||||||||||||||||||||||||
Exploration & | Pipeline & | Energy | Corporate / | ||||||||||||||||||||||||
(Thousands of Dollars) | Production | Storage | Gathering | Utility | Marketing | All Other | Consolidated* | ||||||||||||||||||||
Six months ended March 31, 2016 GAAP earnings | $ | (450,421 | ) | $ | 42,470 | $ | 12,490 | $ | 50,566 | $ | 4,707 | $ | 3,392 | $ | (336,796 | ) | |||||||||||
Items impacting comparability: | |||||||||||||||||||||||||||
Impairment of oil and gas producing properties | 832,894 | 832,894 | |||||||||||||||||||||||||
Tax impact of impairment of oil and gas producing properties | (349,814 | ) | (349,814 | ) | |||||||||||||||||||||||
Joint development agreement professional fees | 4,682 | 4,682 | |||||||||||||||||||||||||
Tax impact of joint development agreement professional fees | (1,966 | ) | (1,966 | ) | |||||||||||||||||||||||
Six months ended March 31, 2016 operating results | 35,375 | 42,470 | 12,490 | 50,566 | 4,707 | 3,392 | 149,000 | ||||||||||||||||||||
Drivers of operating results | |||||||||||||||||||||||||||
Higher (lower) crude oil prices | (2,356 | ) | (2,356 | ) | |||||||||||||||||||||||
Higher (lower) natural gas prices | (5,992 | ) | (5,992 | ) | |||||||||||||||||||||||
Higher (lower) natural gas production | 27,346 | 27,346 | |||||||||||||||||||||||||
Higher (lower) crude oil production | (2,791 | ) | (2,791 | ) | |||||||||||||||||||||||
Lower (higher) lease operating and transportation expenses | (3,680 | ) | (3,680 | ) | |||||||||||||||||||||||
Lower (higher) depreciation / depletion | 15,212 | 639 | (2,040 | ) | 13,811 | ||||||||||||||||||||||
Higher (lower) transportation and storage revenues | (2,373 | ) | (2,373 | ) | |||||||||||||||||||||||
Higher (lower) gathering and processing revenues | 10,014 | 10,014 | |||||||||||||||||||||||||
Lower (higher) other operating expenses | 4,531 | (2,116 | ) | (959 | ) | (5,647 | ) | (667 | ) | (4,858 | ) | ||||||||||||||||
Regulatory true-up adjustments | 961 | 961 | |||||||||||||||||||||||||
Colder weather | 2,249 | 2,249 | |||||||||||||||||||||||||
Higher (lower) usage | 1,395 | 1,395 | |||||||||||||||||||||||||
Higher (lower) margins | (2,090 | ) | (321 | ) | (2,411 | ) | |||||||||||||||||||||
Higher (lower) AFUDC** | (500 | ) | (1,060 | ) | (1,560 | ) | |||||||||||||||||||||
Lower (higher) interest expense | 846 | 428 | 1,274 | ||||||||||||||||||||||||
Lower (higher) income tax expense / effective tax rate | 1,012 | 517 | (854 | ) | (2,072 | ) | (1,397 | ) | |||||||||||||||||||
All other / rounding | (654 | ) | (13 | ) | 147 | 331 | 70 | (322 | ) | (441 | ) | ||||||||||||||||
Six months ended March 31, 2017 GAAP earnings and operating results | $ | 68,849 | $ | 38,624 | $ | 21,266 | $ | 46,755 | $ | 2,687 | $ | 10 | $ | 178,191 | |||||||||||||
* Amounts do not reflect intercompany eliminations | |||||||||||||||||||||||||||
** AFUDC = Allowance for Funds Used During Construction | |||||||||||||||||||||||||||
Page 10.
NATIONAL FUEL GAS COMPANY | ||||||||||||||||||||||||||||
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE | ||||||||||||||||||||||||||||
SIX MONTHS ENDED MARCH 31, 2017 | ||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
Upstream | Midstream Businesses | Downstream Businesses | ||||||||||||||||||||||||||
Exploration & | Pipeline & | Energy | Corporate / | |||||||||||||||||||||||||
Production | Storage | Gathering | Utility | Marketing | All Other | Consolidated* | ||||||||||||||||||||||
Six months ended March 31, 2016 GAAP earnings | $ | (5.32 | ) | $ | 0.50 | $ | 0.15 | $ | 0.60 | $ | 0.06 | $ | 0.04 | $ | (3.97 | ) | ||||||||||||
Items impacting comparability: | ||||||||||||||||||||||||||||
Impairment of oil and gas producing properties | 9.83 | 9.83 | ||||||||||||||||||||||||||
Tax impact of impairment of oil and gas producing properties | (4.13 | ) | (4.13 | ) | ||||||||||||||||||||||||
Joint development agreement professional fees | 0.06 | 0.06 | ||||||||||||||||||||||||||
Tax impact of joint development agreement professional fees | (0.02 | ) | (0.02 | ) | ||||||||||||||||||||||||
Earnings per share impact of diluted shares | (0.01 | ) | (0.01 | ) | (0.02 | ) | ||||||||||||||||||||||
Six months ended March 31, 2016 operating results | 0.42 | 0.50 | 0.15 | 0.59 | 0.05 | 0.04 | 1.75 | |||||||||||||||||||||
Drivers of operating results | ||||||||||||||||||||||||||||
Higher (lower) crude oil prices | (0.03 | ) | (0.03 | ) | ||||||||||||||||||||||||
Higher (lower) natural gas prices | (0.07 | ) | (0.07 | ) | ||||||||||||||||||||||||
Higher (lower) natural gas production | 0.32 | 0.32 | ||||||||||||||||||||||||||
Higher (lower) crude oil production | (0.03 | ) | (0.03 | ) | ||||||||||||||||||||||||
Lower (higher) lease operating and transportation expenses | (0.04 | ) | (0.04 | ) | ||||||||||||||||||||||||
Lower (higher) depreciation / depletion | 0.18 | 0.01 | (0.02 | ) | 0.17 | |||||||||||||||||||||||
Higher (lower) transportation and storage revenues | (0.03 | ) | (0.03 | ) | ||||||||||||||||||||||||
Higher (lower) gathering and processing revenues | 0.12 | 0.12 | ||||||||||||||||||||||||||
Lower (higher) other operating expenses | 0.05 | (0.02 | ) | (0.01 | ) | (0.07 | ) | (0.01 | ) | (0.06 | ) | |||||||||||||||||
Regulatory true-up adjustments | 0.01 | 0.01 | ||||||||||||||||||||||||||
Colder weather | 0.03 | 0.03 | ||||||||||||||||||||||||||
Higher (lower) usage | 0.02 | 0.02 | ||||||||||||||||||||||||||
Higher (lower) margins | (0.02 | ) | — | (0.02 | ) | |||||||||||||||||||||||
Higher (lower) AFUDC** | (0.01 | ) | (0.01 | ) | (0.02 | ) | ||||||||||||||||||||||
Lower (higher) interest expense | 0.01 | — | 0.01 | |||||||||||||||||||||||||
Lower (higher) income tax expense / effective tax rate | 0.01 | 0.01 | (0.01 | ) | (0.02 | ) | (0.01 | ) | ||||||||||||||||||||
All other / rounding | (0.02 | ) | (0.01 | ) | — | (0.01 | ) | — | (0.01 | ) | (0.05 | ) | ||||||||||||||||
Six months ended March 31, 2017 GAAP earnings and operating results | $ | 0.80 | $ | 0.45 | $ | 0.25 | $ | 0.54 | $ | 0.03 | $ | — | $ | 2.07 | ||||||||||||||
* Amounts do not reflect intercompany eliminations | ||||||||||||||||||||||||||||
** AFUDC = Allowance for Funds Used During Construction | ||||||||||||||||||||||||||||
Page 11.
NATIONAL FUEL GAS COMPANY | ||||||||||||||||
AND SUBSIDIARIES | ||||||||||||||||
(Thousands of Dollars, except per share amounts) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
SUMMARY OF OPERATIONS | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Operating Revenues: | ||||||||||||||||
Utility and Energy Marketing Revenues | $ | 308,889 | $ | 248,173 | $ | 516,669 | $ | 417,005 | ||||||||
Exploration and Production and Other Revenues | 159,997 | 144,570 | 321,691 | 297,454 | ||||||||||||
Pipeline and Storage and Gathering Revenues | 53,189 | 56,389 | 106,216 | 109,868 | ||||||||||||
522,075 | 449,132 | 944,576 | 824,327 | |||||||||||||
Operating Expenses: | ||||||||||||||||
Purchased Gas | 147,971 | 81,623 | 218,214 | 123,691 | ||||||||||||
Operation and Maintenance: | ||||||||||||||||
Utility and Energy Marketing | 63,907 | 57,309 | 114,329 | 104,858 | ||||||||||||
Exploration and Production and Other | 37,593 | 42,964 | 68,055 | 88,539 | ||||||||||||
Pipeline and Storage and Gathering | 23,106 | 21,541 | 45,766 | 41,109 | ||||||||||||
Property, Franchise and Other Taxes | 22,542 | 21,305 | 42,921 | 41,662 | ||||||||||||
Depreciation, Depletion and Amortization | 56,999 | 63,947 | 113,194 | 134,498 | ||||||||||||
Impairment of Oil and Gas Producing Properties | — | 397,443 | — | 832,894 | ||||||||||||
352,118 | 686,132 | 602,479 | 1,367,251 | |||||||||||||
Operating Income (Loss) | 169,957 | (237,000 | ) | 342,097 | (542,924 | ) | ||||||||||
Other Income (Expense): | ||||||||||||||||
Interest Income | 391 | 278 | 1,991 | 2,077 | ||||||||||||
Other Income | 1,744 | 3,236 | 3,356 | 5,654 | ||||||||||||
Interest Expense on Long-Term Debt | (28,913 | ) | (28,994 | ) | (58,016 | ) | (59,366 | ) | ||||||||
Other Interest Expense | (924 | ) | (1,237 | ) | (1,834 | ) | (2,617 | ) | ||||||||
Income (Loss) Before Income Taxes | 142,255 | (263,717 | ) | 287,594 | (597,176 | ) | ||||||||||
Income Tax Expense (Benefit) | 52,971 | (116,030 | ) | 109,403 | (260,380 | ) | ||||||||||
Net Income (Loss) Available for Common Stock | $ | 89,284 | $ | (147,687 | ) | $ | 178,191 | $ | (336,796 | ) | ||||||
Earnings (Loss) Per Common Share: | ||||||||||||||||
Basic | $ | 1.05 | $ | (1.74 | ) | $ | 2.09 | $ | (3.97 | ) | ||||||
Diluted | $ | 1.04 | $ | (1.74 | ) | $ | 2.07 | $ | (3.97 | ) | ||||||
Weighted Average Common Shares: | ||||||||||||||||
Used in Basic Calculation | 85,334,887 | 84,806,982 | 85,261,575 | 84,728,680 | ||||||||||||
Used in Diluted Calculation | 86,006,614 | 84,806,982 | 85,897,282 | 84,728,680 | ||||||||||||
Page 12.
NATIONAL FUEL GAS COMPANY | |||||||
AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) | |||||||
March 31, | September 30, | ||||||
(Thousands of Dollars) | 2017 | 2016 | |||||
ASSETS | |||||||
Property, Plant and Equipment | $9,704,134 | $9,539,581 | |||||
Less - Accumulated Depreciation, Depletion and Amortization | 5,185,077 | 5,085,099 | |||||
Net Property, Plant and Equipment | 4,519,057 | 4,454,482 | |||||
Current Assets: | |||||||
Cash and Temporary Cash Investments | 231,173 | 129,972 | |||||
Hedging Collateral Deposits | 1,771 | 1,484 | |||||
Receivables - Net | 171,162 | 133,201 | |||||
Unbilled Revenue | 52,852 | 18,382 | |||||
Gas Stored Underground | 9,027 | 34,332 | |||||
Materials and Supplies - at average cost | 34,695 | 33,866 | |||||
Unrecovered Purchased Gas Costs | 4,681 | 2,440 | |||||
Other Current Assets | 51,585 | 59,354 | |||||
Total Current Assets | 556,946 | 413,031 | |||||
Other Assets: | |||||||
Recoverable Future Taxes | 179,928 | 177,261 | |||||
Unamortized Debt Expense | 1,424 | 1,688 | |||||
Other Regulatory Assets | 314,903 | 320,750 | |||||
Deferred Charges | 26,128 | 20,978 | |||||
Other Investments | 117,284 | 110,664 | |||||
Goodwill | 5,476 | 5,476 | |||||
Prepaid Post-Retirement Benefit Costs | 18,315 | 17,649 | |||||
Fair Value of Derivative Financial Instruments | 64,729 | 113,804 | |||||
Other | 485 | 604 | |||||
Total Other Assets | 728,672 | 768,874 | |||||
Total Assets | $5,804,675 | $5,636,387 | |||||
CAPITALIZATION AND LIABILITIES | |||||||
Capitalization: | |||||||
Comprehensive Shareholders' Equity | |||||||
Common Stock, $1 Par Value Authorized - 200,000,000 | |||||||
Shares; Issued and Outstanding - 85,375,068 Shares | |||||||
and 85,118,886 Shares, Respectively | $85,375 | $85,119 | |||||
Paid in Capital | 782,688 | 771,164 | |||||
Earnings Reinvested in the Business | 817,348 | 676,361 | |||||
Accumulated Other Comprehensive Loss | (34,091 | ) | (5,640 | ) | |||
Total Comprehensive Shareholders' Equity | 1,651,320 | 1,527,004 | |||||
Long-Term Debt, Net of Unamortized Discount and Debt Issuance Costs | 2,087,385 | 2,086,252 | |||||
Total Capitalization | 3,738,705 | 3,613,256 | |||||
Current and Accrued Liabilities: | |||||||
Notes Payable to Banks and Commercial Paper | — | — | |||||
Current Portion of Long-Term Debt | — | — | |||||
Accounts Payable | 111,382 | 108,056 | |||||
Amounts Payable to Customers | 19,466 | 19,537 | |||||
Dividends Payable | 34,577 | 34,473 | |||||
Interest Payable on Long-Term Debt | 34,900 | 34,900 | |||||
Customer Advances | 300 | 14,762 | |||||
Customer Security Deposits | 17,512 | 16,019 | |||||
Other Accruals and Current Liabilities | 106,287 | 74,430 | |||||
Fair Value of Derivative Financial Instruments | 1,471 | 1,560 | |||||
Total Current and Accrued Liabilities | 325,895 | 303,737 | |||||
Deferred Credits: | |||||||
Deferred Income Taxes | 837,098 | 823,795 | |||||
Taxes Refundable to Customers | 93,506 | 93,318 | |||||
Cost of Removal Regulatory Liability | 196,901 | 193,424 | |||||
Other Regulatory Liabilities | 91,661 | 99,789 | |||||
Pension and Other Post-Retirement Liabilities | 291,259 | 277,113 | |||||
Asset Retirement Obligations | 114,014 | 112,330 | |||||
Other Deferred Credits | 115,636 | 119,625 | |||||
Total Deferred Credits | 1,740,075 | 1,719,394 | |||||
Commitments and Contingencies | — | — | |||||
Total Capitalization and Liabilities | $5,804,675 | $5,636,387 | |||||
Page 13.
NATIONAL FUEL GAS COMPANY | ||||||||
AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited) | ||||||||
Six Months Ended | ||||||||
March 31, | ||||||||
(Thousands of Dollars) | 2017 | 2016 | ||||||
Operating Activities: | ||||||||
Net Income (Loss) Available for Common Stock | $ | 178,191 | $ | (336,796 | ) | |||
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities: | ||||||||
Impairment of Oil and Gas Producing Properties | — | 832,894 | ||||||
Depreciation, Depletion and Amortization | 113,194 | 134,498 | ||||||
Deferred Income Taxes | 63,781 | (283,912 | ) | |||||
Excess Tax Benefits Associated with Stock-Based Compensation Awards | — | (226 | ) | |||||
Stock-Based Compensation | 5,632 | 2,518 | ||||||
Other | 7,713 | 6,106 | ||||||
Change in: | ||||||||
Hedging Collateral Deposits | (287 | ) | 1,161 | |||||
Receivables and Unbilled Revenue | (92,155 | ) | (28,211 | ) | ||||
Gas Stored Underground and Materials and Supplies | 24,476 | 22,637 | ||||||
Unrecovered Purchased Gas Costs | (2,241 | ) | (1,245 | ) | ||||
Other Current Assets | 7,769 | 4,177 | ||||||
Accounts Payable | 13,997 | (31,786 | ) | |||||
Amounts Payable to Customers | (71 | ) | (14,561 | ) | ||||
Customer Advances | (14,462 | ) | (16,203 | ) | ||||
Customer Security Deposits | 1,493 | (389 | ) | |||||
Other Accruals and Current Liabilities | 44,690 | 22,420 | ||||||
Other Assets | (32 | ) | 3,754 | |||||
Other Liabilities | 202 | (4,073 | ) | |||||
Net Cash Provided by Operating Activities | $ | 351,890 | $ | 312,763 | ||||
Investing Activities: | ||||||||
Capital Expenditures | $ | (208,231 | ) | $ | (358,981 | ) | ||
Net Proceeds from Sale of Oil and Gas Producing Properties | 26,554 | 104,938 | ||||||
Other | (3,225 | ) | (18,249 | ) | ||||
Net Cash Used in Investing Activities | $ | (184,902 | ) | $ | (272,292 | ) | ||
Financing Activities: | ||||||||
Excess Tax Benefits Associated with Stock-Based Compensation Awards | $ | — | $ | 226 | ||||
Dividends Paid on Common Stock | (69,017 | ) | (66,887 | ) | ||||
Net Proceeds From Issuance of Common Stock | 3,230 | 6,294 | ||||||
Net Cash Used in Financing Activities | $ | (65,787 | ) | $ | (60,367 | ) | ||
Net Increase (Decrease) in Cash and Temporary Cash Investments | 101,201 | (19,896 | ) | |||||
Cash and Temporary Cash Investments at Beginning of Period | 129,972 | 113,596 | ||||||
Cash and Temporary Cash Investments at March 31 | $ | 231,173 | $ | 93,700 | ||||
Page 14.
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||
AND SUBSIDIARIES | |||||||||||||||||||||
SEGMENT OPERATING RESULTS AND STATISTICS | |||||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||||
UPSTREAM BUSINESS | |||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
(Thousands of Dollars, except per share amounts) | March 31, | March 31, | |||||||||||||||||||
EXPLORATION AND PRODUCTION SEGMENT | 2017 | 2016 | Variance | 2017 | 2016 | Variance | |||||||||||||||
Total Operating Revenues | $ | 159,553 | $ | 143,783 | $ | 15,770 | $ | 320,485 | $ | 295,749 | $ | 24,736 | |||||||||
Operating Expenses: | |||||||||||||||||||||
Operation and Maintenance: | |||||||||||||||||||||
General and Administrative Expense | 16,530 | 19,143 | (2,613 | ) | 29,504 | 39,099 | (9,595 | ) | |||||||||||||
Lease Operating and Transportation Expense | 42,543 | 37,568 | 4,975 | 82,251 | 76,590 | 5,661 | |||||||||||||||
All Other Operation and Maintenance Expense | 2,781 | 4,247 | (1,466 | ) | 5,332 | 7,391 | (2,059 | ) | |||||||||||||
Property, Franchise and Other Taxes | 3,729 | 3,217 | 512 | 6,951 | 6,602 | 349 | |||||||||||||||
Depreciation, Depletion and Amortization | 28,851 | 37,274 | (8,423 | ) | 57,905 | 81,307 | (23,402 | ) | |||||||||||||
Impairment of Oil and Gas Producing Properties | — | 397,443 | (397,443 | ) | — | 832,894 | (832,894 | ) | |||||||||||||
94,434 | 498,892 | (404,458 | ) | 181,943 | 1,043,883 | (861,940 | ) | ||||||||||||||
Operating Income (Loss) | 65,119 | (355,109) | 420,228 | 138,542 | (748,134) | 886,676 | |||||||||||||||
Other Income (Expense): | |||||||||||||||||||||
Interest Income | 147 | 27 | 120 | 233 | 693 | (460 | ) | ||||||||||||||
Interest Expense | (13,303 | ) | (13,546 | ) | 243 | (26,826 | ) | (28,128 | ) | 1,302 | |||||||||||
Income (Loss) Before Income Taxes | 51,963 | (368,628 | ) | 420,591 | 111,949 | (775,569 | ) | 887,518 | |||||||||||||
Income Tax Expense (Benefit) | 18,194 | (155,293 | ) | 173,487 | 43,100 | (325,148 | ) | 368,248 | |||||||||||||
Net Income (Loss) | $ | 33,769 | $ | (213,335 | ) | $ | 247,104 | $ | 68,849 | $ | (450,421 | ) | $ | 519,270 | |||||||
Net Income (Loss) Per Share (Diluted) | $ | 0.39 | $ | (2.52 | ) | $ | 2.91 | $ | 0.80 | $ | (5.32 | ) | $ | 6.12 | |||||||
Page 15.
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||
AND SUBSIDIARIES | |||||||||||||||||||||
SEGMENT OPERATING RESULTS AND STATISTICS | |||||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||||
MIDSTREAM BUSINESSES | |||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
(Thousands of Dollars, except per share amounts) | March 31, | March 31, | |||||||||||||||||||
PIPELINE AND STORAGE SEGMENT | 2017 | 2016 | Variance | 2017 | 2016 | Variance | |||||||||||||||
Revenues from External Customers | $ | 53,163 | $ | 56,276 | $ | (3,113 | ) | $ | 106,164 | $ | 109,630 | $ | (3,466 | ) | |||||||
Intersegment Revenues | 22,592 | 23,292 | (700 | ) | 44,746 | 45,477 | (731 | ) | |||||||||||||
Total Operating Revenues | 75,755 | 79,568 | (3,813 | ) | 150,910 | 155,107 | (4,197 | ) | |||||||||||||
Operating Expenses: | |||||||||||||||||||||
Purchased Gas | (28 | ) | 245 | (273 | ) | 194 | 703 | (509 | ) | ||||||||||||
Operation and Maintenance | 19,668 | 19,060 | 608 | 39,911 | 36,653 | 3,258 | |||||||||||||||
Property, Franchise and Other Taxes | 7,012 | 6,591 | 421 | 13,689 | 13,336 | 353 | |||||||||||||||
Depreciation, Depletion and Amortization | 10,476 | 10,865 | (389 | ) | 20,138 | 21,121 | (983 | ) | |||||||||||||
37,128 | 36,761 | 367 | 73,932 | 71,813 | 2,119 | ||||||||||||||||
Operating Income | 38,627 | 42,807 | (4,180 | ) | 76,978 | 83,294 | (6,316 | ) | |||||||||||||
Other Income (Expense): | |||||||||||||||||||||
Interest Income | 319 | 179 | 140 | 591 | 290 | 301 | |||||||||||||||
Other Income | 807 | 413 | 394 | 1,494 | 1,994 | (500 | ) | ||||||||||||||
Interest Expense | (8,342 | ) | (8,453 | ) | 111 | (16,688 | ) | (16,491 | ) | (197 | ) | ||||||||||
Income Before Income Taxes | 31,411 | 34,946 | (3,535 | ) | 62,375 | 69,087 | (6,712 | ) | |||||||||||||
Income Tax Expense | 12,155 | 13,752 | (1,597 | ) | 23,751 | 26,617 | (2,866 | ) | |||||||||||||
Net Income | $ | 19,256 | $ | 21,194 | $ | (1,938 | ) | $ | 38,624 | $ | 42,470 | $ | (3,846 | ) | |||||||
Net Income Per Share (Diluted) | $ | 0.22 | $ | 0.25 | $ | (0.03 | ) | $ | 0.45 | $ | 0.50 | $ | (0.05 | ) | |||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
March 31, | March 31, | ||||||||||||||||||||
GATHERING SEGMENT | 2017 | 2016 | Variance | 2017 | 2016 | Variance | |||||||||||||||
Revenues from External Customers | $ | 26 | $ | 113 | $ | (87 | ) | $ | 52 | $ | 238 | $ | (186 | ) | |||||||
Intersegment Revenues | 27,936 | 21,545 | 6,391 | 55,776 | 40,184 | 15,592 | |||||||||||||||
Total Operating Revenues | 27,962 | 21,658 | 6,304 | 55,828 | 40,422 | 15,406 | |||||||||||||||
Operating Expenses: | |||||||||||||||||||||
Operation and Maintenance | 3,769 | 2,775 | 994 | 6,523 | 5,047 | 1,476 | |||||||||||||||
Property, Franchise and Other Taxes | 21 | 52 | (31 | ) | 32 | 85 | (53 | ) | |||||||||||||
Depreciation, Depletion and Amortization | 3,997 | 3,589 | 408 | 7,877 | 7,799 | 78 | |||||||||||||||
7,787 | 6,416 | 1,371 | 14,432 | 12,931 | 1,501 | ||||||||||||||||
Operating Income | 20,175 | 15,242 | 4,933 | 41,396 | 27,491 | 13,905 | |||||||||||||||
Other Income (Expense): | |||||||||||||||||||||
Interest Income | 207 | 68 | 139 | 353 | 101 | 252 | |||||||||||||||
Other Income | — | 1 | (1 | ) | 1 | 2 | (1 | ) | |||||||||||||
Interest Expense | (2,235 | ) | (1,918 | ) | (317 | ) | (4,328 | ) | (4,987 | ) | 659 | ||||||||||
Income Before Income Taxes | 18,147 | 13,393 | 4,754 | 37,422 | 22,607 | 14,815 | |||||||||||||||
Income Tax Expense | 7,862 | 5,825 | 2,037 | 16,156 | 10,117 | 6,039 | |||||||||||||||
Net Income | $ | 10,285 | $ | 7,568 | $ | 2,717 | $ | 21,266 | $ | 12,490 | $ | 8,776 | |||||||||
Net Income Per Share (Diluted) | $ | 0.12 | $ | 0.09 | $ | 0.03 | $ | 0.25 | $ | 0.15 | $ | 0.10 | |||||||||
Page 16.
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||
AND SUBSIDIARIES | |||||||||||||||||||||
SEGMENT OPERATING RESULTS AND STATISTICS | |||||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||||
DOWNSTREAM BUSINESSES | |||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
(Thousands of Dollars, except per share amounts) | March 31, | March 31, | |||||||||||||||||||
UTILITY SEGMENT | 2017 | 2016 | Variance | 2017 | 2016 | Variance | |||||||||||||||
Revenues from External Customers | $ | 257,949 | $ | 212,737 | $ | 45,212 | $ | 428,919 | $ | 356,585 | $ | 72,334 | |||||||||
Intersegment Revenues | 6,096 | 5,364 | 732 | 7,922 | 9,028 | (1,106 | ) | ||||||||||||||
Total Operating Revenues | 264,045 | 218,101 | 45,944 | 436,841 | 365,613 | 71,228 | |||||||||||||||
Operating Expenses: | |||||||||||||||||||||
Purchased Gas | 128,212 | 81,181 | 47,031 | 188,945 | 126,250 | 62,695 | |||||||||||||||
Operation and Maintenance | 62,748 | 56,293 | 6,455 | 112,277 | 102,893 | 9,384 | |||||||||||||||
Property, Franchise and Other Taxes | 11,505 | 11,160 | 345 | 21,710 | 21,088 | 622 | |||||||||||||||
Depreciation, Depletion and Amortization | 13,314 | 11,659 | 1,655 | 26,415 | 23,277 | 3,138 | |||||||||||||||
215,779 | 160,293 | 55,486 | 349,347 | 273,508 | 75,839 | ||||||||||||||||
Operating Income | 48,266 | 57,808 | (9,542 | ) | 87,494 | 92,105 | (4,611 | ) | |||||||||||||
Other Income (Expense): | |||||||||||||||||||||
Interest Income | 144 | 122 | 22 | 278 | 207 | 71 | |||||||||||||||
Other Income | 45 | 706 | (661 | ) | 137 | 1,404 | (1,267 | ) | |||||||||||||
Interest Expense | (7,194 | ) | (7,158 | ) | (36 | ) | (14,392 | ) | (14,491 | ) | 99 | ||||||||||
Income Before Income Taxes | 41,261 | 51,478 | (10,217 | ) | 73,517 | 79,225 | (5,708 | ) | |||||||||||||
Income Tax Expense | 15,680 | 19,518 | (3,838 | ) | 26,762 | 28,659 | (1,897 | ) | |||||||||||||
Net Income | $ | 25,581 | $ | 31,960 | $ | (6,379 | ) | $ | 46,755 | $ | 50,566 | $ | (3,811 | ) | |||||||
Net Income Per Share (Diluted) | $ | 0.30 | $ | 0.38 | $ | (0.08 | ) | $ | 0.54 | $ | 0.60 | $ | (0.06 | ) | |||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
March 31, | March 31, | ||||||||||||||||||||
ENERGY MARKETING SEGMENT | 2017 | 2016 | Variance | 2017 | 2016 | Variance | |||||||||||||||
Revenues from External Customers | $ | 50,940 | $ | 35,436 | $ | 15,504 | $ | 87,750 | $ | 60,420 | $ | 27,330 | |||||||||
Intersegment Revenues | 16 | 312 | (296 | ) | 35 | 624 | (589 | ) | |||||||||||||
Total Operating Revenues | 50,956 | 35,748 | 15,208 | 87,785 | 61,044 | 26,741 | |||||||||||||||
Operating Expenses: | |||||||||||||||||||||
Purchased Gas | 47,661 | 28,321 | 19,340 | 79,999 | 50,044 | 29,955 | |||||||||||||||
Operation and Maintenance | 1,913 | 1,773 | 140 | 3,556 | 3,496 | 60 | |||||||||||||||
Property, Franchise and Other Taxes | — | 1 | (1 | ) | — | 4 | (4 | ) | |||||||||||||
Depreciation, Depletion and Amortization | 70 | 69 | 1 | 140 | 139 | 1 | |||||||||||||||
49,644 | 30,164 | 19,480 | 83,695 | 53,683 | 30,012 | ||||||||||||||||
Operating Income | 1,312 | 5,584 | (4,272 | ) | 4,090 | 7,361 | (3,271 | ) | |||||||||||||
Other Income (Expense): | |||||||||||||||||||||
Interest Income | 138 | 91 | 47 | 271 | 141 | 130 | |||||||||||||||
Other Income | 33 | 15 | 18 | 35 | 24 | 11 | |||||||||||||||
Interest Expense | (11 | ) | (7 | ) | (4 | ) | (24 | ) | (25 | ) | 1 | ||||||||||
Income Before Income Taxes | 1,472 | 5,683 | (4,211 | ) | 4,372 | 7,501 | (3,129 | ) | |||||||||||||
Income Tax Expense | 567 | 2,199 | (1,632 | ) | 1,685 | 2,794 | (1,109 | ) | |||||||||||||
Net Income | $ | 905 | $ | 3,484 | $ | (2,579 | ) | $ | 2,687 | $ | 4,707 | $ | (2,020 | ) | |||||||
Net Income Per Share (Diluted) | $ | 0.01 | $ | 0.04 | $ | (0.03 | ) | $ | 0.03 | $ | 0.06 | $ | (0.03 | ) | |||||||
Page 17.
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||
AND SUBSIDIARIES | |||||||||||||||||||||
SEGMENT OPERATING RESULTS AND STATISTICS | |||||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
(Thousands of Dollars, except per share amounts) | March 31, | March 31, | |||||||||||||||||||
ALL OTHER | 2017 | 2016 | Variance | 2017 | 2016 | Variance | |||||||||||||||
Total Operating Revenues | $ | 218 | $ | 561 | $ | (343 | ) | $ | 772 | $ | 1,266 | $ | (494 | ) | |||||||
Operating Expenses: | |||||||||||||||||||||
Operation and Maintenance | 394 | 164 | 230 | 909 | 239 | 670 | |||||||||||||||
Property, Franchise and Other Taxes | 150 | 161 | (11 | ) | 294 | 304 | (10 | ) | |||||||||||||
Depreciation, Depletion and Amortization | 102 | 306 | (204 | ) | 343 | 488 | (145 | ) | |||||||||||||
646 | 631 | 15 | 1,546 | 1,031 | 515 | ||||||||||||||||
Operating Income (Loss) | (428 | ) | (70 | ) | (358 | ) | (774 | ) | 235 | (1,009 | ) | ||||||||||
Other Income (Expense): | |||||||||||||||||||||
Interest Income | 49 | 31 | 18 | 89 | 50 | 39 | |||||||||||||||
Income (Loss) Before Income Taxes | (379 | ) | (39 | ) | (340 | ) | (685 | ) | 285 | (970 | ) | ||||||||||
Income Tax Expense (Benefit) | (158 | ) | (16 | ) | (142 | ) | (285 | ) | 119 | (404 | ) | ||||||||||
Net Income (Loss) | $ | (221 | ) | $ | (23 | ) | $ | (198 | ) | $ | (400 | ) | $ | 166 | $ | (566 | ) | ||||
Net Income (Loss) Per Share (Diluted) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
March 31, | March 31, | ||||||||||||||||||||
CORPORATE | 2017 | 2016 | Variance | 2017 | 2016 | Variance | |||||||||||||||
Revenues from External Customers | $ | 226 | $ | 226 | $ | — | $ | 434 | $ | 439 | $ | (5 | ) | ||||||||
Intersegment Revenues | 977 | 967 | 10 | 1,953 | 1,933 | 20 | |||||||||||||||
Total Operating Revenues | 1,203 | 1,193 | 10 | 2,387 | 2,372 | 15 | |||||||||||||||
Operating Expenses: | |||||||||||||||||||||
Operation and Maintenance | 4,003 | 4,147 | (144 | ) | 7,395 | 7,038 | 357 | ||||||||||||||
Property, Franchise and Other Taxes | 125 | 123 | 2 | 245 | 243 | 2 | |||||||||||||||
Depreciation, Depletion and Amortization | 189 | 185 | 4 | 376 | 367 | 9 | |||||||||||||||
4,317 | 4,455 | (138 | ) | 8,016 | 7,648 | 368 | |||||||||||||||
Operating Loss | (3,114 | ) | (3,262 | ) | 148 | (5,629 | ) | (5,276 | ) | (353 | ) | ||||||||||
Other Income (Expense): | |||||||||||||||||||||
Interest Income | 30,693 | 30,339 | 354 | 62,498 | 62,083 | 415 | |||||||||||||||
Other Income | 859 | 2,101 | (1,242 | ) | 1,689 | 2,230 | (541 | ) | |||||||||||||
Interest Expense on Long-Term Debt | (28,913 | ) | (28,994 | ) | 81 | (58,016 | ) | (59,366 | ) | 1,350 | |||||||||||
Other Interest Expense | (1,145 | ) | (734 | ) | (411 | ) | (1,898 | ) | 17 | (1,915 | ) | ||||||||||
Loss Before Income Taxes | (1,620 | ) | (550 | ) | (1,070 | ) | (1,356 | ) | (312 | ) | (1,044 | ) | |||||||||
Income Tax Benefit | (1,329 | ) | (2,015 | ) | 686 | (1,766 | ) | (3,538 | ) | 1,772 | |||||||||||
Net Income (Loss) | $ | (291 | ) | $ | 1,465 | $ | (1,756 | ) | $ | 410 | $ | 3,226 | $ | (2,816 | ) | ||||||
Net Income (Loss) Per Share (Diluted) | $ | — | $ | 0.02 | $ | (0.02 | ) | $ | — | $ | 0.04 | $ | (0.04 | ) | |||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
March 31, | March 31, | ||||||||||||||||||||
INTERSEGMENT ELIMINATIONS | 2017 | 2016 | Variance | 2017 | 2016 | Variance | |||||||||||||||
Intersegment Revenues | $ | (57,617 | ) | $ | (51,480 | ) | $ | (6,137 | ) | $ | (110,432 | ) | $ | (97,246 | ) | $ | (13,186 | ) | |||
Operating Expenses: | |||||||||||||||||||||
Purchased Gas | (27,874 | ) | (28,124 | ) | 250 | (50,924 | ) | (53,306 | ) | 2,382 | |||||||||||
Operation and Maintenance | (29,743 | ) | (23,356 | ) | (6,387 | ) | (59,508 | ) | (43,940 | ) | (15,568 | ) | |||||||||
(57,617 | ) | (51,480 | ) | (6,137 | ) | (110,432 | ) | (97,246 | ) | (13,186 | ) | ||||||||||
Operating Income | — | — | — | — | — | — | |||||||||||||||
Other Income (Expense): | |||||||||||||||||||||
Interest Income | (31,306 | ) | (30,579 | ) | (727 | ) | (62,322 | ) | (61,488 | ) | (834 | ) | |||||||||
Interest Expense | 31,306 | 30,579 | 727 | 62,322 | 61,488 | 834 | |||||||||||||||
Net Income | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Net Income Per Share (Diluted) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Page 18.
NATIONAL FUEL GAS COMPANY | |||||||||||||||||||||||
AND SUBSIDIARIES | |||||||||||||||||||||||
SEGMENT INFORMATION (Continued) | |||||||||||||||||||||||
(Thousands of Dollars) | |||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
March 31, | March 31, | ||||||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||||
Increase | Increase | ||||||||||||||||||||||
2017 | 2016 | (Decrease) | 2017 | 2016 | (Decrease) | ||||||||||||||||||
Capital Expenditures: | |||||||||||||||||||||||
Exploration and Production | $ | 57,137 | (1)(2) | $ | 79,530 | (3) | $ | (22,393 | ) | $ | 97,826 | (1)(2) | $ | 167,654 | (3)(4) | $ | (69,828 | ) | |||||
Pipeline and Storage | 11,386 | (1)(2) | 26,075 | (3) | (14,689 | ) | 36,778 | (1)(2) | 57,695 | (3)(4) | (20,917 | ) | |||||||||||
Gathering | 3,147 | (1)(2) | 12,778 | (3) | (9,631 | ) | 14,491 | (1)(2) | 34,523 | (3)(4) | (20,032 | ) | |||||||||||
Utility | 19,244 | (1)(2) | 26,091 | (3) | (6,847 | ) | 36,296 | (1)(2) | 46,008 | (3)(4) | (9,712 | ) | |||||||||||
Energy Marketing | 5 | 2 | 3 | 11 | 9 | 2 | |||||||||||||||||
Total Reportable Segments | 90,919 | 144,476 | (53,557 | ) | 185,402 | 305,889 | (120,487 | ) | |||||||||||||||
All Other | — | 37 | (37 | ) | 39 | 37 | 2 | ||||||||||||||||
Corporate | 3 | 106 | (103 | ) | 64 | 155 | (91 | ) | |||||||||||||||
Eliminations | (777 | ) | — | (777 | ) | (777 | ) | — | (777 | ) | |||||||||||||
Total Capital Expenditures | $ | 90,145 | $ | 144,619 | $ | (54,474 | ) | $ | 184,728 | $ | 306,081 | $ | (121,353 | ) | |||||||||
(1) | Capital expenditures for the quarter and six months ended March 31, 2017, include accounts payable and accrued liabilities related to capital expenditures of $23.2 million, $5.8 million, $2.2 million, and $5.7 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 March 31, 2017, since they represent non-cash investing activities at that date. |
(2) | Capital expenditures for the six months ended March 31, 2017, 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 six months ended March 31, 2017. 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 March 31, 2017. |
(3) | Capital expenditures for the quarter and six months ended March 31, 2016, include accounts payable and accrued liabilities related to capital expenditures of $34.0 million, $10.2 million, $12.6 million, and $9.3 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 March 31, 2016, since they represent non-cash investing activities at that date. |
(4) | Capital expenditures for the six months ended March 31, 2016, 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 six months ended March 31, 2016. 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 March 31, 2016. |
DEGREE DAYS | |||||||||
Percent Colder | |||||||||
(Warmer) Than: | |||||||||
Three Months Ended March 31 | Normal | 2017 | 2016 | Normal (1) | Last Year (1) | ||||
Buffalo, NY | 3,290 | 2,866 | 2,963 | (12.9) | (3.3) | ||||
Erie, PA | 3,108 | 2,627 | 2,739 | (15.5) | (4.1) | ||||
Six Months Ended March 31 | |||||||||
Buffalo, NY | 5,543 | 4,832 | 4,640 | (12.8) | 4.1 | ||||
Erie, PA | 5,152 | 4,377 | 4,223 | (15.0) | 3.6 | ||||
(1) | Percents compare actual 2017 degree days to normal degree days and actual 2017 degree days to actual 2016 degree days. |
Page 19.
NATIONAL FUEL GAS COMPANY | ||||||||||||||||||||||||
AND SUBSIDIARIES | ||||||||||||||||||||||||
EXPLORATION AND PRODUCTION INFORMATION | ||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
March 31, | March 31, | |||||||||||||||||||||||
Increase | Increase | |||||||||||||||||||||||
2017 | 2016 | (Decrease) | 2017 | 2016 | (Decrease) | |||||||||||||||||||
Gas Production/Prices: | ||||||||||||||||||||||||
Production (MMcf) | ||||||||||||||||||||||||
Appalachia | 40,805 | 34,113 | 6,692 | 80,612 | 66,900 | 13,712 | ||||||||||||||||||
West Coast | 737 | 764 | (27 | ) | 1,513 | 1,547 | (34 | ) | ||||||||||||||||
Total Production | 41,542 | 34,877 | 6,665 | 82,125 | 68,447 | 13,678 | ||||||||||||||||||
Average Prices (Per Mcf) | ||||||||||||||||||||||||
Appalachia | $ | 2.71 | $ | 1.85 | $ | 0.86 | $ | 2.54 | $ | 1.91 | $ | 0.63 | ||||||||||||
West Coast | 4.57 | 2.87 | 1.70 | 4.40 | 3.27 | 1.13 | ||||||||||||||||||
Weighted Average | 2.75 | 1.87 | 0.88 | 2.57 | 1.94 | 0.63 | ||||||||||||||||||
Weighted Average after Hedging | 2.96 | 2.99 | (0.03 | ) | 2.96 | 3.08 | (0.12 | ) | ||||||||||||||||
Oil Production/Prices: | ||||||||||||||||||||||||
Production (Thousands of Barrels) | ||||||||||||||||||||||||
Appalachia | 2 | 5 | (3 | ) | 2 | 11 | (9 | ) | ||||||||||||||||
West Coast | 672 | 718 | (46 | ) | 1,393 | 1,460 | (67 | ) | ||||||||||||||||
Total Production | 674 | 723 | (49 | ) | 1,395 | 1,471 | (76 | ) | ||||||||||||||||
Average Prices (Per Barrel) | ||||||||||||||||||||||||
Appalachia | $ | 49.87 | $ | 32.81 | $ | 17.06 | $ | 49.04 | $ | 36.74 | $ | 12.30 | ||||||||||||
West Coast | 47.96 | 27.02 | 20.94 | 45.75 | 31.61 | 14.14 | ||||||||||||||||||
Weighted Average | 47.96 | 27.06 | 20.90 | 45.82 | 31.65 | 14.17 | ||||||||||||||||||
Weighted Average after Hedging | 52.92 | 53.01 | (0.09 | ) | 53.85 | 56.45 | (2.60 | ) | ||||||||||||||||
Total Production (Mmcfe) | 45,586 | 39,215 | 6,371 | 90,495 | 77,273 | 13,222 | ||||||||||||||||||
Selected Operating Performance Statistics: | ||||||||||||||||||||||||
General & Administrative Expense per Mcfe (1) | $ | 0.36 | $ | 0.49 | $ | (0.13 | ) | $ | 0.33 | $ | 0.51 | $ | (0.18 | ) | ||||||||||
Lease Operating and Transportation Expense per Mcfe (1)(2) | $ | 0.93 | $ | 0.96 | $ | (0.03 | ) | $ | 0.91 | $ | 0.99 | $ | (0.08 | ) | ||||||||||
Depreciation, Depletion & Amortization per Mcfe (1) | $ | 0.63 | $ | 0.95 | $ | (0.32 | ) | $ | 0.64 | $ | 1.05 | $ | (0.41 | ) | ||||||||||
(1) | Refer to page 14 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 $0.54 and $0.51 per Mcfe for the three months ended March 31, 2017 and March 31, 2016, respectively. Amounts include transportation expense of $0.54 and $0.51 per Mcfe for the six months ended March 31, 2017 and March 31, 2016, respectively. |
Page 20.
NATIONAL FUEL GAS COMPANY | |||||||
AND SUBSIDIARIES | |||||||
EXPLORATION AND PRODUCTION INFORMATION | |||||||
Hedging Summary for the Remaining Six Months of Fiscal 2017 | |||||||
Volume | Average Hedge Price | ||||||
Oil Swaps | |||||||
Brent | 48,000 | BBL | $ | 91.00 / BBL | |||
NYMEX | 792,000 | BBL | $ | 58.34 / BBL | |||
Total | 840,000 | BBL | $ | 60.21 / BBL | |||
Gas Swaps | |||||||
NYMEX | 19,980,000 | MMBTU | $ | 4.35 / MMBTU | |||
Dominion Transmission Appalachian (DOM) | 900,000 | MMBTU | $ | 3.82 / MMBTU | |||
Dawn Ontario (DAWN) | 6,660,000 | MMBTU | $ | 3.71 / MMBTU | |||
Fixed Price Physical Sales | 31,359,518 | MMBTU | $ | 2.54 / MMBTU | |||
Total | 58,899,518 | MMBTU | $ | 3.30 / MMBTU | |||
Hedging Summary for Fiscal 2018 | |||||||
Volume | Average Hedge Price | ||||||
Oil Swaps | |||||||
Brent | 24,000 | BBL | $ | 91.00 / BBL | |||
NYMEX | 1,275,000 | BBL | $ | 54.79 / BBL | |||
Total | 1,299,000 | BBL | $ | 55.46 / 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 | 35,260,266 | MMBTU | $ | 2.39 / MMBTU | |||
Total | 86,410,266 | MMBTU | $ | 2.93 / MMBTU | |||
Hedging Summary for Fiscal 2019 | |||||||
Volume | Average Hedge Price | ||||||
Oil Swaps | |||||||
NYMEX | 912,000 | BBL | $ | 53.84 / BBL | |||
Total | 912,000 | BBL | $ | 53.84 / BBL | |||
Gas Swaps | |||||||
NYMEX | 27,060,000 | MMBTU | $ | 3.17 / MMBTU | |||
DAWN | 7,200,000 | MMBTU | $ | 3.00 / MMBTU | |||
Fixed Price Physical Sales | 15,806,706 | MMBTU | $ | 2.83 / MMBTU | |||
Total | 50,066,706 | MMBTU | $ | 3.04 / 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 | 11,277,025 | MMBTU | $ | 2.42 / MMBTU | |||
Total | 35,357,025 | MMBTU | $ | 2.85 / 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 | |||
Fixed Price Physical Sales | 7,665,000 | MMBTU | $ | 2.03 / MMBTU | |||
Total | 13,105,000 | MMBTU | $ | 2.44 / MMBTU | |||
Hedging Summary for Fiscal 2022 | |||||||
Volume | Average Hedge Price | ||||||
Fixed Price Physical Sales | 3,822,000 | MMBTU | $ | 2.03 / MMBTU | |||
Total | 3,822,000 | MMBTU | $ | 2.03 / MMBTU | |||
Page 21.
NATIONAL FUEL GAS COMPANY | ||||||||||||||||||
AND SUBSIDIARIES | ||||||||||||||||||
Pipeline & Storage Throughput - (millions of cubic feet - MMcf) | ||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
March 31, | March 31, | |||||||||||||||||
Increase | Increase | |||||||||||||||||
2017 | 2016 | (Decrease) | 2017 | 2016 | (Decrease) | |||||||||||||
Firm Transportation - Affiliated | 43,243 | 42,624 | 619 | 74,850 | 67,333 | 7,517 | ||||||||||||
Firm Transportation - Non-Affiliated | 170,124 | 166,326 | 3,798 | 329,298 | 317,448 | 11,850 | ||||||||||||
Interruptible Transportation | 971 | 6,483 | (5,512 | ) | 4,017 | 12,115 | (8,098 | ) | ||||||||||
214,338 | 215,433 | (1,095 | ) | 408,165 | 396,896 | 11,269 | ||||||||||||
Gathering Volume - (MMcf) | ||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
March 31, | March 31, | |||||||||||||||||
Increase | Increase | |||||||||||||||||
2017 | 2016 | (Decrease) | 2017 | 2016 | (Decrease) | |||||||||||||
Gathered Volume - Affiliated | 50,598 | 39,195 | 11,403 | 101,167 | 72,995 | 28,172 | ||||||||||||
Utility Throughput - (MMcf) | ||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
March 31, | March 31, | |||||||||||||||||
Increase | Increase | |||||||||||||||||
2017 | 2016 | (Decrease) | 2017 | 2016 | (Decrease) | |||||||||||||
Retail Sales: | ||||||||||||||||||
Residential Sales | 24,949 | 24,486 | 463 | 40,713 | 37,619 | 3,094 | ||||||||||||
Commercial Sales | 3,903 | 3,688 | 215 | 6,202 | 5,515 | 687 | ||||||||||||
Industrial Sales | 157 | 167 | (10 | ) | 234 | 233 | 1 | |||||||||||
29,009 | 28,341 | 668 | 47,149 | 43,367 | 3,782 | |||||||||||||
Off-System Sales | 1,122 | 1,243 | (121 | ) | 1,295 | 1,243 | 52 | |||||||||||
Transportation | 27,089 | 27,297 | (208 | ) | 46,654 | 44,913 | 1,741 | |||||||||||
57,220 | 56,881 | 339 | 95,098 | 89,523 | 5,575 | |||||||||||||
Energy Marketing Volume | ||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
March 31, | March 31, | |||||||||||||||||
Increase | Increase | |||||||||||||||||
2017 | 2016 | (Decrease) | 2017 | 2016 | (Decrease) | |||||||||||||
Natural Gas (MMcf) | 14,120 | 15,165 | (1,045 | ) | 25,248 | 25,263 | (15 | ) | ||||||||||
Page 22.
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 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 and six months ended March 31, 2017 and 2016.
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 six months ended March 31, 2017 and 2016:
Three Months Ended | Six Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(in thousands) | ||||||||||||||||
Reported GAAP Earnings | $ | 89,284 | $ | (147,687 | ) | $ | 178,191 | $ | (336,796 | ) | ||||||
Depreciation, Depletion and Amortization | 56,999 | 63,947 | 113,194 | 134,498 | ||||||||||||
Interest and Other Income | (2,135 | ) | (3,514 | ) | (5,347 | ) | (7,731 | ) | ||||||||
Interest Expense | 29,837 | 30,231 | 59,850 | 61,983 | ||||||||||||
Income Taxes | 52,971 | (116,030 | ) | 109,403 | (260,380 | ) | ||||||||||
Impairment of Oil and Gas Producing Properties | — | 397,443 | — | 832,894 | ||||||||||||
Joint Development Agreement Professional Fees | — | — | — | 4,682 | ||||||||||||
Adjusted EBITDA | $ | 226,956 | $ | 224,390 | $ | 455,291 | $ | 429,150 | ||||||||
Adjusted EBITDA by Segment | ||||||||||||||||
Pipeline and Storage Adjusted EBITDA | $ | 49,103 | $ | 53,672 | $ | 97,116 | $ | 104,415 | ||||||||
Gathering Adjusted EBITDA | 24,172 | 18,831 | 49,273 | 35,290 | ||||||||||||
Total Midstream Businesses Adjusted EBITDA | 73,275 | 72,503 | 146,389 | 139,705 | ||||||||||||
Exploration and Production Adjusted EBITDA | 93,970 | 79,608 | 196,447 | 170,749 | ||||||||||||
Utility Adjusted EBITDA | 61,580 | 69,467 | 113,909 | 115,382 | ||||||||||||
Energy Marketing Adjusted EBITDA | 1,382 | 5,653 | 4,230 | 7,500 | ||||||||||||
Corporate and All Other Adjusted EBITDA | (3,251 | ) | (2,841 | ) | (5,684 | ) | (4,186 | ) | ||||||||
Total Adjusted EBITDA | $ | 226,956 | $ | 224,390 | $ | 455,291 | $ | 429,150 | ||||||||
Page 23.
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
SEGMENT ADJUSTED EBITDA
Three Months Ended | Six Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Exploration and Production Segment | ||||||||||||||||
Reported GAAP Earnings | $ | 33,769 | $ | (213,335 | ) | $ | 68,849 | $ | (450,421 | ) | ||||||
Depreciation, Depletion and Amortization | 28,851 | 37,274 | 57,905 | 81,307 | ||||||||||||
Interest and Other Income | (147 | ) | (27 | ) | (233 | ) | (693 | ) | ||||||||
Interest Expense | 13,303 | 13,546 | 26,826 | 28,128 | ||||||||||||
Income Taxes | 18,194 | (155,293 | ) | 43,100 | (325,148 | ) | ||||||||||
Impairment of Oil and Gas Producing Properties | — | 397,443 | — | 832,894 | ||||||||||||
Joint Development Agreement Professional Fees | — | — | — | 4,682 | ||||||||||||
Adjusted EBITDA | $ | 93,970 | $ | 79,608 | $ | 196,447 | $ | 170,749 | ||||||||
Pipeline and Storage Segment | ||||||||||||||||
Reported GAAP Earnings | $ | 19,256 | $ | 21,194 | $ | 38,624 | $ | 42,470 | ||||||||
Depreciation, Depletion and Amortization | 10,476 | 10,865 | 20,138 | 21,121 | ||||||||||||
Interest and Other Income | (1,126 | ) | (592 | ) | (2,085 | ) | (2,284 | ) | ||||||||
Interest Expense | 8,342 | 8,453 | 16,688 | 16,491 | ||||||||||||
Income Taxes | 12,155 | 13,752 | 23,751 | 26,617 | ||||||||||||
Adjusted EBITDA | $ | 49,103 | $ | 53,672 | $ | 97,116 | $ | 104,415 | ||||||||
Gathering Segment | ||||||||||||||||
Reported GAAP Earnings | $ | 10,285 | $ | 7,568 | $ | 21,266 | $ | 12,490 | ||||||||
Depreciation, Depletion and Amortization | 3,997 | 3,589 | 7,877 | 7,799 | ||||||||||||
Interest and Other Income | (207 | ) | (69 | ) | (354 | ) | (103 | ) | ||||||||
Interest Expense | 2,235 | 1,918 | 4,328 | 4,987 | ||||||||||||
Income Taxes | 7,862 | 5,825 | 16,156 | 10,117 | ||||||||||||
Adjusted EBITDA | $ | 24,172 | $ | 18,831 | $ | 49,273 | $ | 35,290 | ||||||||
Utility Segment | ||||||||||||||||
Reported GAAP Earnings | $ | 25,581 | $ | 31,960 | $ | 46,755 | $ | 50,566 | ||||||||
Depreciation, Depletion and Amortization | 13,314 | 11,659 | 26,415 | 23,277 | ||||||||||||
Interest and Other Income | (189 | ) | (828 | ) | (415 | ) | (1,611 | ) | ||||||||
Interest Expense | 7,194 | 7,158 | 14,392 | 14,491 | ||||||||||||
Income Taxes | 15,680 | 19,518 | 26,762 | 28,659 | ||||||||||||
Adjusted EBITDA | $ | 61,580 | $ | 69,467 | $ | 113,909 | $ | 115,382 | ||||||||
Energy Marketing Segment | ||||||||||||||||
Reported GAAP Earnings | $ | 905 | $ | 3,484 | $ | 2,687 | $ | 4,707 | ||||||||
Depreciation, Depletion and Amortization | 70 | 69 | 140 | 139 | ||||||||||||
Interest and Other Income | (171 | ) | (106 | ) | (306 | ) | (165 | ) | ||||||||
Interest Expense | 11 | 7 | 24 | 25 | ||||||||||||
Income Taxes | 567 | 2,199 | 1,685 | 2,794 | ||||||||||||
Adjusted EBITDA | $ | 1,382 | $ | 5,653 | $ | 4,230 | $ | 7,500 | ||||||||
Corporate and All Other | ||||||||||||||||
Reported GAAP Earnings | $ | (512 | ) | $ | 1,442 | $ | 10 | $ | 3,392 | |||||||
Depreciation, Depletion and Amortization | 291 | 491 | 719 | 855 | ||||||||||||
Interest and Other Income | (295 | ) | (1,892 | ) | (1,954 | ) | (2,875 | ) | ||||||||
Interest Expense | (1,248 | ) | (851 | ) | (2,408 | ) | (2,139 | ) | ||||||||
Income Taxes | (1,487 | ) | (2,031 | ) | (2,051 | ) | (3,419 | ) | ||||||||
Adjusted EBITDA | $ | (3,251 | ) | $ | (2,841 | ) | $ | (5,684 | ) | $ | (4,186 | ) | ||||
Page 24.
NATIONAL FUEL GAS COMPANY | ||||||||
AND SUBSIDIARIES | ||||||||
Quarter Ended March 31 (unaudited) | 2017 | 2016 | ||||||
Operating Revenues | $ | 522,075,000 | $ | 449,132,000 | ||||
Net Income (Loss) Available for Common Stock | $ | 89,284,000 | $ | (147,687,000 | ) | |||
Earnings (Loss) Per Common Share: | ||||||||
Basic | $ | 1.05 | $ | (1.74 | ) | |||
Diluted | $ | 1.04 | $ | (1.74 | ) | |||
Weighted Average Common Shares: | ||||||||
Used in Basic Calculation | 85,334,887 | 84,806,982 | ||||||
Used in Diluted Calculation | 86,006,614 | 84,806,982 | ||||||
Six Months Ended March 31 (unaudited) | ||||||||
Operating Revenues | $ | 944,576,000 | $ | 824,327,000 | ||||
Net Income (Loss) Available for Common Stock | $ | 178,191,000 | $ | (336,796,000 | ) | |||
Earnings (Loss) Per Common Share: | ||||||||
Basic | $ | 2.09 | $ | (3.97 | ) | |||
Diluted | $ | 2.07 | $ | (3.97 | ) | |||
Weighted Average Common Shares: | ||||||||
Used in Basic Calculation | 85,261,575 | 84,728,680 | ||||||
Used in Diluted Calculation | 85,897,282 | 84,728,680 | ||||||
Twelve Months Ended March 31 (unaudited) | ||||||||
Operating Revenues | $ | 1,572,665,000 | $ | 1,465,204,000 | ||||
Net Income (Loss) Available for Common Stock | $ | 224,030,000 | $ | (817,633,000 | ) | |||
Earnings (Loss) Per Common Share: | ||||||||
Basic | $ | 2.63 | $ | (9.66 | ) | |||
Diluted | $ | 2.61 | $ | (9.66 | ) | |||
Weighted Average Common Shares: | ||||||||
Used in Basic Calculation | 85,114,029 | 84,620,502 | ||||||
Used in Diluted Calculation | 85,738,474 | 84,620,502 | ||||||