WILLIAMSVILLE, N.Y., Aug. 02, 2023 (GLOBE NEWSWIRE) -- National Fuel Gas Company ("National Fuel" or the "Company") (NYSE:NFG) today announced consolidated results for the third quarter of its 2023 fiscal year and for the nine months ended June 30, 2023.

FISCAL 2023 THIRD QUARTER SUMMARY

GAAP net income of $92.6 million, or $1.00 per share, compared to GAAP net income of $108.2 million, or $1.17 per share, in the prior year.
Adjusted operating results of $93.4 million, or $1.01 per share, compared to $141.9 million, or $1.54 per share, in the prior year (see non-GAAP reconciliation on page 2).
E&P segment net Appalachian natural gas production of 94.7 Bcfe, an increase of 5.9 Bcfe, or 7%, compared to the prior year, and a 2% increase when compared to fiscal 2023 second quarter.
Successfully closed on the purchase of three separate upstream assets that total approximately 36,000 net acres with flowing net production of approximately 16 million cubic feet per day in the E&P segment's Eastern Development Area, for total consideration of $138.9 million.
The Pennsylvania Public Utility Commission approved a joint settlement in the Utility segment's Pennsylvania rate case proceeding that, effective August 1, 2023, will increase annual base rate delivery revenues by $23 million and, among other stipulations, includes a newly implemented weather normalization adjustment mechanism.
The Company is narrowing its fiscal 2023 earnings guidance to a range of $5.15 to $5.25 per share, excluding items impacting comparability, and initiating its fiscal 2024 earnings guidance with a range of $5.50 to $6.00 per share, an increase of 11% from fiscal 2023, at the midpoint (see Guidance Summary on page 8).

MANAGEMENT COMMENTS

David P. Bauer, President and Chief Executive Officer of National Fuel Gas Company, stated: "National Fuel achieved strong operational results in the third quarter, but lower natural gas price realizations at Seneca and higher operating expenses across our regulated operations weighed on our financial results. Looking ahead to fiscal 2024, we expect significant earnings growth, driven by our integrated development program coupled with improved earnings at our rate-regulated businesses as a result of rate case outcomes.

"Longer-term, our continued investment in the modernization of our rate-regulated infrastructure, along with a disciplined approach to Seneca's development program and an improved long-term outlook for natural gas prices, positions the Company well to deliver shareholder value through future earnings growth and increasing free cash flow generation."

RECONCILIATION OF GAAP EARNINGS TO ADJUSTED OPERATING RESULTS

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
(in thousands except per share amounts)		2023			2022			2023			2022
Reported GAAP Earnings	$	92,620		$	108,158		$	403,189		$	407,879
Items impacting comparability:
Unrealized (gain) loss on derivative asset (E&P)		1,430			—			3,702			—
Tax impact of unrealized (gain) loss on derivative asset		(392	)		—			(1,015	)		—
Unrealized (gain) loss on other investments (Corporate / All Other)		(355	)		3,434			(1,632	)		10,093
Tax impact of unrealized (gain) loss on other investments		74			(721	)		343			(2,120	)
Items impacting comparability from West Coast asset sale (E&P)⁽¹⁾		—			41,589			—			41,589
Tax impact of items impacting comparability from West Coast asset sale⁽¹⁾		—			(10,533	)		—			(10,533	)
Reduction of other post-retirement regulatory liability (Utility)		—			—			—			(18,533	)
Tax impact of reduction of other post-retirement regulatory liability		—			—			—			3,892
Adjusted Operating Results	$	93,377		$	141,927		$	404,587		$	432,267

Reported GAAP Earnings Per Share	$	1.00		$	1.17		$	4.37		$	4.43
Items impacting comparability:
Unrealized (gain) loss on derivative asset, net of tax (E&P)		0.01			—			0.03			—
Unrealized (gain) loss on other investments, net of tax (Corporate / All Other)		—			0.03			(0.01	)		0.08
Items impacting comparability from West Coast asset sale, net of tax (E&P)⁽¹⁾		—			0.34			—			0.34
Reduction of other post-retirement regulatory liability, net of tax (Utility)		—			—			—			(0.16	)
Rounding		—			—			(0.01	)		—
Adjusted Operating Results Per Share	$	1.01		$	1.54		$	4.38		$	4.69

⁽¹⁾ Refer to non-GAAP reconciliation on page 24 for a separate breakout of items impacting comparability from the West Coast asset sale.

DISCUSSION OF GUIDANCE UPDATE

National Fuel is revising its fiscal 2023 earnings guidance range and is now projecting that earnings, excluding items impacting comparability, will be within the range of $5.15 to $5.25 per share. This updated range reflects the results of the third quarter, along with updated assumptions for the balance of the year, as detailed on page 8.

The Exploration and Production segment's fiscal 2023 net production is now expected to be in the range of 370 to 380 Bcfe, which reflects the impacts of over 5 Bcfe of price-related curtailments and volumes shut-in due to the operational impacts of low in-basin pricing and third-party pipeline system constraints during the third quarter. This guidance range does not incorporate any additional price-related curtailments over the remainder of the fiscal year. Seneca currently has firm sales contracts in place for approximately 95% of its projected remaining fiscal 2023 natural gas production, significantly limiting its exposure to in-basin markets. Approximately 80% of expected remaining production is either matched by a financial hedge or was entered into at a fixed price.

The Company is also initiating preliminary guidance for fiscal 2024 with earnings projected to be within a range of $5.50 to $6.00 per share, or $5.75 per share at the midpoint of the range, an increase of 11% from the midpoint of the revised fiscal 2023 guidance range. Drivers of the expected increase in earnings include anticipated higher natural gas price realizations, further growth in natural gas production and the associated impact on Gathering segment revenues, and substantial growth in earnings from the regulated segments expected as a result of anticipated base rate increases.

Seneca's fiscal 2024 net production forecast is increasing to an expected range of 390 to 410 Bcfe, an increase of 7% versus fiscal 2023 at the midpoint of the guidance range. In addition, the Company is assuming NYMEX natural gas prices of $3.25 per MMBtu for the year, which will drive expected natural gas price realizations after hedging to increase by approximately $0.10 per Mcf from its estimated fiscal 2023 realizations. Overall, Seneca has firm sales contracts in place for approximately 88% of its expected fiscal 2024 natural gas production, significantly limiting its exposure to in-basin markets. Approximately 67% of expected production is supported by financial hedges or fixed price contracts, limiting exposure to potential swings in natural gas prices in fiscal 2024.

The Company's consolidated capital expenditures in fiscal 2024 are expected to be in a range of $865 million to $975 million, which at the midpoint, is generally in line with its fiscal 2023 guidance.

Capital expenditures in the Company's rate-regulated Pipeline and Storage and Utility segments are expected to be in the range of $250 million to $290 million for fiscal 2024, an increase of $25 million from fiscal 2023 at the midpoint. Most of this spending will be focused on ongoing infrastructure modernization programs that are geared toward enhancing the safety, reliability, and resiliency of the Company's critical infrastructure, as well as contributing to the ongoing reduction in the Company's emissions profile. The ability to ramp up growth investments in these businesses provides for the ability to generate stable, predictable, value-accretive returns, and is an efficient means of deploying excess free cash flow generated across the Company to the long-term benefit of shareholders.

In the Exploration and Production segment, Seneca's activity is expected to further moderate as it continues a planned transition that targets a maintenance-to-low single-digit, long-term production growth profile. Capital spending for fiscal 2024 is expected to be in the range of $525 million to $575 million, a decrease of 7% from fiscal 2023 at the midpoint. In addition to moderating long-term capital spending levels, Seneca is shifting the vast majority of its development activity to its highly prolific Eastern Development Area where, as a result of acquisitions over the past three years, it has a significant inventory of well locations that generate superior returns. As part of this transition, costs related to water management will lead to modestly higher capital spending on a per foot basis as the transition is fully executed. Further, Seneca plans to spend more than $35 million of one-time costs in fiscal 2024 related to this transition as it bolsters its seismic inventory, expands its produced water infrastructure, and increases its leasehold position in Lycoming County. In addition, the Gathering segment will continue its multi-year build out of key infrastructure in the Tioga County region and as a result, expects spending to be in the range of $90 million to $110 million, which is generally consistent with the current fiscal year.

Additional details on the Company's updated forecast assumptions and business segment guidance for fiscal 2023 and fiscal 2024 are outlined in the table on page 8.

DISCUSSION OF THIRD QUARTER RESULTS BY SEGMENT

The following earnings discussion of each operating segment for the quarter ended June 30, 2023 is summarized in a tabular form on pages 9 and 10 of this report (earnings drivers for the nine months ended June 30, 2023 are summarized on pages 11 and 12). It may be helpful to refer to those tables while reviewing this discussion.

Note that management defines Adjusted Operating Results as reported GAAP earnings adjusted for items impacting comparability, and Adjusted EBITDA as reported GAAP earnings before the following items: interest expense, income taxes, depreciation, depletion and amortization, other income and deductions, impairments, and other items reflected in operating income that impact comparability.

Upstream Business

Exploration and Production Segment

The Exploration and Production segment operations are carried out by Seneca Resources Company, LLC ("Seneca"). Seneca explores for, develops and produces primarily natural gas reserves in Pennsylvania.

	Three Months Ended
	June 30
(in thousands)		2023		2022		Variance
GAAP Earnings	$	43,329	$	56,497		$	(13,168	)
Unrealized (gain) loss on derivative asset, net of tax		1,038		—			1,038
Gain on sale of West Coast assets, net of tax		—		(9,511	)		9,511
Loss from discontinuance of crude oil cash flow hedges, net of tax		—		33,329			(33,329	)
Transaction and severance costs related to West Coast asset sale, net of tax		—		7,238			(7,238	)
Adjusted Operating Results	$	44,367	$	87,553		$	(43,186	)

Adjusted EBITDA	$	134,236	$	184,622		$	(50,386	)

Seneca's third quarter GAAP earnings decreased $13.2 million versus the prior year. Last year's third quarter earnings included several one-time items impacting comparability shown in the table above related to the divestiture of Seneca's California assets in June 2022 that did not recur this year. Earnings were also impacted by an unrealized loss of $1.4 million ($1.0 million after-tax) recognized during the current-year third quarter from a reduction in the implied fair value of an asset related to the contingent consideration in connection with this divestiture. Excluding these items, Seneca's earnings decreased $43.2 million. Higher natural gas production was more than offset by lower Appalachian realized natural gas prices and the loss of earnings related to the divestiture of Seneca's crude oil production in California.

Seneca produced 94.8 Bcfe during the third quarter, an increase of 2.3 Bcfe, or 3%, from the prior year. Despite the combined impact of approximately 5 Bcfe of price-related curtailments and other volumes shut-in due to the operational impacts of low in-basin pricing and third-party pipeline system constraints, production in Appalachia increased 5.9 Bcfe, or 7%. This increase was partially offset by a 3.5 Bcfe decrease in production related to the aforementioned California sale.

Seneca's average realized natural gas price, after the impact of hedging and transportation costs, was $2.27 per Mcf, a decrease of $0.60 per Mcf from the prior year. Lower natural gas prices, before the impact of hedging, were partially offset by an increase in the weighted average hedge price compared to the prior-year third quarter.

On an absolute basis, lease operating and transportation expense ("LOE") decreased $17.7 million primarily due to the California sale, slightly offset by increases in LOE from higher well repair costs in Appalachia. LOE expense includes $54.3 million in intercompany expense for gathering and compression services used to connect Seneca's production to sales points along interstate pipelines. On a per unit basis, LOE was $0.65 per Mcfe, a decrease of $0.21 per Mcfe from the prior year.

The decrease in Seneca's other operating expense of $6.5 million was primarily due to the prior-year third quarter, non-recurring accrual of plugging and abandonment expenses related to certain formerly owned offshore Gulf of Mexico wells that were sold in prior years, as well as the sale of Seneca's California assets. Other taxes decreased $4.8 million largely attributable to both the impact of the sale of Seneca's California assets as well as lower Impact Fees in Pennsylvania due to the decrease in NYMEX natural gas prices.

Depreciation, depletion and amortization ("DD&A") expense increased $5.4 million due to higher natural gas production and a higher per unit DD&A rate, which was driven by an increase in capitalized costs in Seneca's full cost pool. DD&A expense was $0.64 per Mcfe, an increase of $0.04 per Mcfe from the prior year.

Midstream Businesses

Pipeline and Storage Segment

The Pipeline and Storage segment's operations are carried out by National Fuel Gas Supply Corporation ("Supply Corporation") and Empire Pipeline, Inc. ("Empire"). The Pipeline and Storage segment provides natural gas transportation and storage services to affiliated and non-affiliated companies through an integrated system of pipelines and underground natural gas storage fields in western New York and Pennsylvania.

	Three Months Ended
	June 30
(in thousands)		2023		2022	Variance
GAAP Earnings	$	23,813	$	26,599	$	(2,786	)

Adjusted EBITDA	$	57,636	$	62,565	$	(4,929	)

The Pipeline and Storage segment's third quarter GAAP earnings decreased $2.8 million versus the prior year primarily due to lower operating revenues and higher operation and maintenance ("O&M") expense, partially offset by an increase in other income. The decrease in operating revenues of $3.2 million was primarily attributable to contract expirations, partially offset by an increase in new short-term contracts. O&M expense increased $1.6 million primarily due to higher pipeline integrity and personnel costs. The increase in other income of $1.7 million was primarily attributable to a higher weighted average interest rate on intercompany short-term notes receivables.

Gathering Segment

The Gathering segment's operations are carried out by National Fuel Gas Midstream Company, LLC's limited liability companies. The Gathering segment constructs, owns and operates natural gas gathering pipelines and compression facilities in the Appalachian region, which delivers Seneca and other non-affiliated Appalachian production to the interstate pipeline system.

	Three Months Ended
	June 30
(in thousands)		2023		2022	Variance
GAAP Earnings	$	24,135	$	24,658	$	(523	)

Adjusted EBITDA	$	46,032	$	46,151	$	(119	)

The Gathering segment's third quarter GAAP earnings decreased $0.5 million versus the prior year primarily due to higher O&M expense and higher income tax expense, both of which were almost entirely offset by higher operating revenues. Operating revenues increased $3.0 million, or 5%, which was the result of an 8.9 Bcf increase in gathered volumes due to an increase in natural gas production from both Seneca and non-affiliated parties. The increase in O&M expense of $3.1 million was due to an increase in compressor station preventative maintenance activity and higher compression leasing expenses, as well as increases in personnel expenses and costs for materials. The increase in material costs primarily reflects a higher amount of materials being purchased as a result of the increase in gathered volume, and to a lesser extent, rising costs from inflation. The increase in income tax expense was primarily driven by a higher effective state income tax rate.

Downstream Business

Utility Segment

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

	Three Months Ended
	June 30
(in thousands)		2023		2022	Variance
GAAP Earnings	$	37	$	4,622	$	(4,585	)

Adjusted EBITDA	$	20,912	$	27,042	$	(6,130	)

The Utility segment's third quarter GAAP earnings decreased $4.6 million versus the prior year primarily due to lower customer margins (operating revenues less purchased gas sold), as well as increases in O&M and interest expense, partially offset by a decrease in non-service pension and OPEB costs and higher other income.

The decline in customer margin of $2.9 million was due primarily to a $2.6 million reduction in base rates in New York as a result of a rate proceeding that became effective October 1, 2022 which temporarily reduced the Utility's recovery of pension and other post-employment benefit ("OPEB") expenses to zero. In addition to lowering rates, the proceeding mandated a corresponding decrease in pension and OPEB expense, most of which had been previously recorded in "below the line" non-service pension and OPEB costs. This decrease was partially offset by higher revenues from the Company's system modernization and improvement tracking mechanisms in its New York service territory.

O&M expense increased by $3.7 million due primarily to higher personnel costs and an increase in legal and consulting expenses. An increase in the cost of materials and transportation expenses, primarily as a result of rising costs from inflation, also contributed to higher O&M expense for the quarter. Interest expense increased $2.4 million due primarily to a higher weighted average interest rate on intercompany short-term borrowings. The increase in other income of $1.3 million was primarily attributable to interest earned on deferred gas costs.

Corporate and All Other

The Company's operations that are included in Corporate and All Other generated combined earnings of $1.3 million in the current quarter, which was a $5.5 million increase over the combined net loss of $4.2 million in the prior-year third quarter. The increase in earnings was primarily driven by unrealized gains on investment securities recognized in the current quarter compared to unrealized losses on investment securities recognized in the prior-year third quarter. Also contributing to the increase were changes in cash surrender value of life insurance policies, which increased in value $1.1 million during the current quarter compared to a decrease in value of less than $0.1 million during the prior-year third quarter.

EARNINGS TELECONFERENCE

The Company will host a conference call on Thursday, August 3, 2023, at 10 a.m. Eastern Time to discuss this announcement. To pre-register for this call (recommended), please visit https://conferencingportals.com/event/ygNxHFJo. After registering, you will receive your access details via email. To join by telephone on the day of the call, dial U.S. toll free 1-888–330–2513 and provide Conference ID 47961. The teleconference will be simultaneously webcast online and can be accessed on the NFG Investor Relations website at investor.nationalfuelgas.com. An audio replay of the teleconference call will be available until Thursday, August 10, 2023. To access the telephone replay, dial U.S. toll free 1-800-770-2030 and provide Conference ID 47961.

National Fuel is an integrated energy company reporting financial results for four operating segments: Exploration and Production, Pipeline and Storage, Gathering, and Utility. Additional information about National Fuel is available at www.nationalfuelgas.com.

Analyst Contact:	Brandon J. Haspett	716-857-7697
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: changes in laws, regulations or judicial interpretations to which the Company is subject, including those involving derivatives, taxes, safety, employment, climate change, other environmental matters, real property, and exploration and production activities such as hydraulic fracturing; governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, target rates of return, rate design, retained natural gas and system modernization), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal; the Company's ability to estimate accurately the time and resources necessary to meet emissions targets; governmental/regulatory actions and/or market pressures to reduce or eliminate reliance on natural gas; changes in economic conditions, including inflationary pressures, supply chain issues, liquidity challenges, and global, national or regional recessions, and their effect on the demand for, and customers' ability to pay for, the Company's products and services; changes in the price of natural gas; the creditworthiness or performance of the Company's key suppliers, customers and counterparties; financial and economic conditions, including the availability of credit, and occurrences affecting the Company's ability to obtain financing on acceptable terms for working capital, capital expenditures and other investments, including any downgrades in the Company's credit ratings and changes in interest rates and other capital market conditions; impairments under the SEC's full cost ceiling test for natural gas reserves; increased costs or delays or changes in plans with respect to Company projects or related projects of other companies, as well as difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators; the Company's ability to complete planned strategic transactions; changes in price differentials between similar quantities of natural gas sold at different geographic locations, and the effect of such changes on commodity production, revenues and demand for pipeline transportation capacity to or from such locations; the impact of information technology disruptions, cybersecurity or data security breaches; factors affecting the Company's ability to successfully identify, drill for and produce economically viable natural gas reserves, including among others geology, lease availability and costs, title disputes, weather conditions, shortages, delays or unavailability of equipment and services required in drilling operations, insufficient gathering, processing and transportation capacity, the need to obtain governmental approvals and permits, and compliance with environmental laws and regulations; increasing health care costs and the resulting effect on health insurance premiums and on the obligation to provide other post-retirement benefits; other changes in price differentials between similar quantities of natural gas having different quality, heating value, hydrocarbon mix or delivery date; the cost and effects of legal and administrative claims against the Company or activist shareholder campaigns to effect changes at the Company; negotiations with the collective bargaining units representing the Company's workforce, including potential work stoppages during negotiations; uncertainty of natural gas reserve estimates; significant differences between the Company's projected and actual production levels for natural gas; changes in demographic patterns and weather conditions (including those related to climate change); changes in the availability, price or accounting treatment of derivative financial instruments; changes in laws, actuarial assumptions, the interest rate environment and the return on plan/trust assets related to the Company's pension and other post-retirement benefits, which can affect future funding obligations and costs and plan liabilities; economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities or acts of war, as well as economic and operational disruptions due to third-party outages; significant differences between the Company's projected and actual capital expenditures and operating expenses; or increasing costs of insurance, changes in coverage and the ability to obtain insurance. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date thereof.

NATIONAL FUEL GAS COMPANY

AND SUBSIDIARIES

GUIDANCE SUMMARY

As discussed on page 2, the Company is revising its earnings guidance for fiscal 2023 and initiating guidance for fiscal 2024. Additional details on the Company's forecast assumptions and business segment guidance for fiscal 2023 and fiscal 2024 are outlined in the table below.

The revised earnings guidance range does not include the impact of certain items that impacted the comparability of earnings during the nine months ended June 30, 2023, including: (1) after-tax unrealized losses on a derivative asset, which reduced earnings by $0.03 per share; and (2) after-tax unrealized gains on other investments, which increased earnings by $0.01 per share. While the Company expects to record certain adjustments to unrealized gain or loss on a derivative asset and unrealized gain or loss on investments during the three months ending September 30, 2023, the amounts of these and other potential adjustments are not reasonably determinable at this time. As such, the Company is unable to provide earnings guidance other than on a non-GAAP basis.

	Updated FY 2023 Guidance	Preliminary FY 2024 Guidance
Adjusted Consolidated Earnings per Share, excluding items impacting comparability	$5.15 to $5.25	$5.50 to $6.00
Consolidated Effective Tax Rate	~ 25.5%	~ 25.5 - 26%

Capital Expenditures (Millions)*
Exploration and Production	$575 - $600	$525 - $575
Pipeline and Storage	$110 - $130	$120 - $140
Gathering	$95 - $105	$90 - $110
Utility	$125 - $135	$130 - $150
Consolidated Capital Expenditures	$905 - $970	$865 - $975

Exploration & Production Segment Guidance**

Commodity Price Assumptions
NYMEX natural gas price	$2.60 /MMBtu	$3.25 /MMBtu
Appalachian basin spot price	$1.60 /MMBtu	$2.45 /MMBtu

Production (Bcfe)	370 to 380	390 to 410

E&P Operating Costs ($/Mcfe)
LOE	$0.67 - $0.68	$0.69 - $0.71
G&A	~$0.18	$0.17 - $0.19
DD&A	$0.62 - $0.64	$0.66 - $0.70

Other Business Segment Guidance (Millions)
Gathering Segment Revenues	$225 - $235	$240 - $260
Pipeline and Storage Segment Revenues	$370 - $380	$380 - $420

* Capital expenditures guidance for fiscal 2023 excludes capital related to acquisitions announced during the fiscal year.

** Fiscal 2023 commodity price assumptions are for the remaining three months of the fiscal year.

NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
QUARTER ENDED JUNE 30, 2023
(Unaudited)

	Upstream			Midstream						Downstream

	Exploration &			Pipeline &									Corporate /
(Thousands of Dollars)	Production			Storage			Gathering			Utility			All Other			Consolidated*

Third quarter 2022 GAAP earnings	$	56,497		$	26,599		$	24,658		$	4,622		$	(4,218	)	$	108,158
Items impacting comparability:
Gain on sale of West Coast assets		(12,736	)														(12,736	)
Tax impact of gain on sale of West Coast assets		3,225															3,225
Loss from discontinuance of crude oil cash flow hedges		44,632															44,632
Tax impact of loss from discontinuance of crude oil cash flow hedges		(11,303	)														(11,303	)
Transaction and severance costs related to West Coast asset sale		9,693															9,693
Tax impact of transaction and severance costs related to West Coast asset sale		(2,455	)														(2,455	)
Unrealized (gain) loss on other investments														3,434			3,434
Tax impact of unrealized (gain) loss on other investments														(721	)		(721	)
Third quarter 2022 adjusted operating results		87,553			26,599			24,658			4,622			(1,505	)		141,927
Drivers of adjusted operating results**
Upstream Revenues
Higher (lower) natural gas production		12,371															12,371
Higher (lower) crude oil production		(31,860	)														(31,860	)
Higher (lower) realized natural gas prices, after hedging		(44,649	)														(44,649	)
Midstream Revenues
Higher (lower) operating revenues					(2,491	)		2,350									(141	)
Downstream Margins***
Impact of new rates****											(2,015	)					(2,015	)
System modernization and improvement tracker revenues											866						866
Operating Expenses
Lower (higher) lease operating and transportation expenses		13,994															13,994
Lower (higher) operating expenses		6,138			(1,239	)		(2,432	)		(3,105	)					(638	)
Lower (higher) property, franchise and other taxes		3,807															3,807
Lower (higher) depreciation / depletion		(4,304	)		(324	)		(314	)								(4,942	)
Other Income (Expense)
(Higher) lower other deductions		533			1,292						3,188						5,013
(Higher) lower interest expense		759						435			(2,154	)		2,199			1,239
Income Taxes
Lower (higher) income tax expense / effective tax rate		(370	)		187			(631	)		(884	)		146			(1,552	)
All other / rounding		395			(211	)		69			(481	)		185			(43	)
Third quarter 2023 adjusted operating results		44,367			23,813			24,135			37			1,025			93,377
Items impacting comparability:
Unrealized gain (loss) on derivative asset		(1,430	)														(1,430	)
Tax impact of unrealized gain (loss) on derivative asset		392															392
Unrealized gain (loss) on other investments														355			355
Tax impact of unrealized gain (loss) on other investments														(74	)		(74	)
Third quarter 2023 GAAP earnings	$	43,329		$	23,813		$	24,135		$	37		$	1,306		$	92,620

* Amounts do not reflect intercompany eliminations.
** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate.
*** Downstream margin defined as operating revenues less purchased gas expense.
**** Amount is offset by corresponding decrease in other deductions and will have no earnings impact for the year ended September 30, 2023.

NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
QUARTER ENDED JUNE 30, 2023
(Unaudited)

	Upstream			Midstream						Downstream

	Exploration &			Pipeline &									Corporate /
	Production			Storage			Gathering			Utility			All Other			Consolidated*

Third quarter 2022 GAAP earnings per share	$	0.61		$	0.29		$	0.27		$	0.05		$	(0.05	)	$	1.17
Items impacting comparability:
Gain on sale of West Coast assets, net of tax		(0.10	)														(0.10	)
Loss from discontinuance of crude oil cash flow hedges, net of tax		0.36															0.36
Transaction and severance costs related to West Coast asset sale, net of tax		0.08															0.08
Unrealized (gain) loss on other investments, net of tax														0.03			0.03
Third quarter 2022 adjusted operating results per share		0.95			0.29			0.27			0.05			(0.02	)		1.54
Drivers of adjusted operating results**
Upstream Revenues
Higher (lower) natural gas production		0.13															0.13
Higher (lower) crude oil production		(0.35	)														(0.35	)
Higher (lower) realized natural gas prices, after hedging		(0.48	)														(0.48	)
Midstream Revenues
Higher (lower) operating revenues					(0.03	)		0.03									—
Downstream Margins***
Impact of new rates****											(0.02	)					(0.02	)
System modernization and improvement tracker revenues											0.01						0.01
Operating Expenses
Lower (higher) lease operating and transportation expenses		0.15															0.15
Lower (higher) operating expenses		0.07			(0.01	)		(0.03	)		(0.03	)					—
Lower (higher) property, franchise and other taxes		0.04															0.04
Lower (higher) depreciation / depletion		(0.05	)		—			—									(0.05	)
Other Income (Expense)
(Higher) lower other deductions		0.01			0.01						0.03						0.05
(Higher) lower interest expense		0.01						—			(0.02	)		0.02			0.01
Income Taxes
Lower (higher) income tax expense / effective tax rate		—			—			(0.01	)		(0.01	)		—			(0.02	)
All other / rounding		—			—			—			(0.01	)		0.01			—
Third quarter 2023 adjusted operating results per share		0.48			0.26			0.26			—			0.01			1.01
Items impacting comparability:
Unrealized gain (loss) on derivative asset, net of tax		(0.01	)														(0.01	)
Unrealized gain (loss) on other investments, net of tax														—			—
Third quarter 2023 GAAP earnings per share	$	0.47		$	0.26		$	0.26		$	—		$	0.01		$	1.00

* Amounts do not reflect intercompany eliminations.
** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate.
*** Downstream margin defined as operating revenues less purchased gas expense.
**** Amount is offset by corresponding decrease in other deductions and will have no earnings impact for the year ended September 30, 2023.

NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
NINE MONTHS ENDED JUNE 30, 2023
(Unaudited)

	Upstream			Midstream						Downstream

	Exploration &			Pipeline &									Corporate /
(Thousands of Dollars)	Production			Storage			Gathering			Utility			All Other			Consolidated*

Nine months ended June 30, 2022 GAAP earnings	$	189,987		$	77,236		$	69,887		$	79,800		$	(9,031	)	$	407,879
Items impacting comparability:
Reduction of other post-retirement regulatory liability											(18,533	)					(18,533	)
Tax impact of reduction of other post-retirement regulatory liability											3,892						3,892
Gain on sale of West Coast assets		(12,736	)														(12,736	)
Tax impact of gain on sale of West Coast assets		3,225															3,225
Loss from discontinuance of crude oil cash flow hedges		44,632															44,632
Tax impact of loss from discontinuance of crude oil cash flow hedges		(11,303	)														(11,303	)
Transaction and severance costs related to West Coast asset sale		9,693															9,693
Tax impact of transaction and severance costs related to West Coast asset sale		(2,455	)														(2,455	)
Unrealized (gain) loss on other investments														10,093			10,093
Tax impact of unrealized (gain) loss on other investments														(2,120	)		(2,120	)
Nine months ended June 30, 2022 adjusted operating results		221,043			77,236			69,887			65,159			(1,058	)		432,267
Drivers of adjusted operating results**
Upstream Revenues
Higher (lower) natural gas production		49,567															49,567
Higher (lower) crude oil production		(87,986	)														(87,986	)
Higher (lower) realized natural gas prices, after hedging		(10,815	)														(10,815	)
Higher (lower) other operating revenues		(2,161	)														(2,161	)
Midstream Revenues
Higher (lower) operating revenues					4,629			9,117									13,746
Downstream Margins***
Impact of new rates****											(11,126	)					(11,126	)
System modernization and improvement tracker revenues											3,462						3,462
Operating Expenses
Lower (higher) lease operating and transportation expenses		25,335															25,335
Lower (higher) operating expenses		12,644			(4,939	)		(4,537	)		(7,213	)		(590	)		(4,635	)
Lower (higher) property, franchise and other taxes		4,697															4,697
Lower (higher) depreciation / depletion		(15,450	)		(1,941	)		(1,003	)								(18,394	)
Other Income (Expense)
(Higher) lower other deductions		2,837			2,810			519			12,840			(3,585	)		15,421
(Higher) lower interest expense					(899	)		653			(7,577	)		5,837			(1,986	)
Income Taxes
Lower (higher) income tax expense / effective tax rate		(1,807	)		(64	)		(1,408	)		(144	)		(13	)		(3,436	)
All other / rounding		286			315			(21	)		173			(122	)		631
Nine months ended June 30, 2023 adjusted operating results		198,190			77,147			73,207			55,574			469			404,587
Items impacting comparability:
Unrealized gain (loss) on derivative asset		(3,702	)														(3,702	)
Tax impact of unrealized gain (loss) on derivative asset		1,015															1,015
Unrealized gain (loss) on other investments														1,632			1,632
Tax impact of unrealized gain (loss) on other investments														(343	)		(343	)
Nine months ended June 30, 2023 GAAP earnings	$	195,503		$	77,147		$	73,207		$	55,574		$	1,758		$	403,189

* Amounts do not reflect intercompany eliminations.
** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate.
*** Downstream margin defined as operating revenues less purchased gas expense.
**** Amount is offset by corresponding decrease in other deductions and will have no earnings impact for the year ended September 30, 2023.

NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
NINE MONTHS ENDED JUNE 30, 2023
(Unaudited)

	Upstream			Midstream						Downstream

	Exploration &			Pipeline &									Corporate /
	Production			Storage			Gathering			Utility			All Other			Consolidated*
Nine months ended June 30, 2022 GAAP earnings per share	$	2.06		$	0.84		$	0.76		$	0.87		$	(0.10	)	$	4.43
Items impacting comparability:
Reduction of other post-retirement regulatory liability, net of tax											(0.16	)					(0.16	)
Gain on sale of West Coast assets, net of tax		(0.10	)														(0.10	)
Loss from discontinuance of crude oil cash flow hedges, net of tax		0.36															0.36
Transaction and severance costs related to West Coast asset sale, net of tax		0.08															0.08
Unrealized (gain) loss on other investments, net of tax														0.08			0.08
Nine months ended June 30, 2022 adjusted operating results per share		2.40			0.84			0.76			0.71			(0.02	)		4.69
Drivers of adjusted operating results**
Upstream Revenues
Higher (lower) natural gas production		0.54															0.54
Higher (lower) crude oil production		(0.95	)														(0.95	)
Higher (lower) realized natural gas prices, after hedging		(0.12	)														(0.12	)
Higher (lower) other operating revenues		(0.02	)														(0.02	)
Midstream Revenues
Higher (lower) operating revenues					0.05			0.10									0.15
Downstream Margins***
Impact of new rates****											(0.12	)					(0.12	)
System modernization and improvement tracker revenues											0.04						0.04
Operating Expenses
Lower (higher) lease operating and transportation expenses		0.27															0.27
Lower (higher) operating expenses		0.14			(0.05	)		(0.05	)		(0.08	)		(0.01	)		(0.05	)
Lower (higher) property, franchise and other taxes		0.05															0.05
Lower (higher) depreciation / depletion		(0.17	)		(0.02	)		(0.01	)								(0.20	)
Other Income (Expense)
(Higher) lower other deductions		0.03			0.03			0.01			0.14			(0.04	)		0.17
(Higher) lower interest expense					(0.01	)		0.01			(0.08	)		0.06			(0.02	)
Income Taxes
Lower (higher) income tax expense / effective tax rate		(0.02	)		—			(0.02	)		—			—			(0.04	)
All other / rounding		—			—			(0.01	)		(0.01	)		0.01			(0.01	)
Nine months ended June 30, 2023 adjusted operating results per share		2.15			0.84			0.79			0.60			—			4.38
Items impacting comparability:
Unrealized gain (loss) on derivative asset, net of tax		(0.03	)														(0.03	)
Unrealized gain (loss) on other investments, net of tax														0.01			0.01
Rounding														0.01			0.01
Nine months ended June 30, 2023 GAAP earnings per share	$	2.12		$	0.84		$	0.79		$	0.60		$	0.02		$	4.37

* Amounts do not reflect intercompany eliminations.
** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate.
*** Downstream margin defined as operating revenues less purchased gas expense.
**** Amount is offset by corresponding decrease in other deductions and will have no earnings impact for the year ended September 30, 2023.

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

(Thousands of Dollars, except per share amounts)
	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	(Unaudited)						(Unaudited)
SUMMARY OF OPERATIONS		2023			2022			2023			2022
Operating Revenues:
Utility Revenues	$	144,538		$	179,888		$	862,914		$	785,664
Exploration and Production and Other Revenues		216,581			252,638			738,107			758,594
Pipeline and Storage and Gathering Revenues		67,585			70,098			203,803			206,642
		428,704			502,624			1,804,824			1,750,900
Operating Expenses:
Purchased Gas		35,425			67,948			450,461			369,168
Operation and Maintenance:
Utility		50,080			46,403			156,885			146,523
Exploration and Production and Other		27,659			64,593			86,315			160,016
Pipeline and Storage and Gathering		38,607			33,988			109,347			97,434
Property, Franchise and Other Taxes		20,427			25,874			71,999			78,093
Depreciation, Depletion and Amortization		102,410			95,857			299,973			275,681
		274,608			334,663			1,174,980			1,126,915
Gain on Sale of Assets		—			12,736			—			12,736
Operating Income		154,096			180,697			629,844			636,721

Other Income (Expense):
Other Income (Deductions)		3,551			(5,649	)		12,754			3,291
Interest Expense on Long-Term Debt		(26,311	)		(30,091	)		(83,499	)		(90,300	)
Other Interest Expense		(5,781	)		(3,882	)		(15,485	)		(6,561	)

Income Before Income Taxes		125,555			141,075			543,614			543,151

Income Tax Expense		32,935			32,917			140,425			135,272

Net Income Available for Common Stock	$	92,620		$	108,158		$	403,189		$	407,879

Earnings Per Common Share
Basic	$	1.01		$	1.18		$	4.40		$	4.46
Diluted	$	1.00		$	1.17		$	4.37		$	4.43

Weighted Average Common Shares:
Used in Basic Calculation		91,803,638			91,456,265			91,725,286			91,388,417
Used in Diluted Calculation		92,294,666			92,168,518			92,268,904			92,083,560

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)

	June 30,		September 30,
(Thousands of Dollars)		2023		2022
ASSETS
Property, Plant and Equipment	$	13,326,563	$	12,551,909
Less - Accumulated Depreciation, Depletion and Amortization		6,245,650		5,985,432
Net Property, Plant and Equipment		7,080,913		6,566,477
Current Assets:
Cash and Temporary Cash Investments		53,415		46,048
Hedging Collateral Deposits		—		91,670
Receivables - Net		183,377		361,626
Unbilled Revenue		13,476		30,075
Gas Stored Underground		13,047		32,364
Materials and Supplies - at average cost		48,288		40,637
Unrecovered Purchased Gas Costs		24,098		99,342
Other Current Assets		71,586		59,369
Total Current Assets		407,287		761,131
Other Assets:
Recoverable Future Taxes		104,794		106,247
Unamortized Debt Expense		7,651		8,884
Other Regulatory Assets		63,398		67,101
Deferred Charges		77,886		77,472

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