Company News »

National Fuel Reports 2014 Earnings

Business Wire
Share on StockTwits
Published on

National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated earnings for the fourth quarter and fiscal year ended September 30, 2014, of $57.4 million, or $0.68 per share, and $299.4 million, or $3.52 per share, respectively.

HIGHLIGHTS

  • Consolidated earnings before items impacting comparability (“Operating Results”) for the fourth quarter and fiscal year ended September 30, 2014, were $50.4 million, or $0.60 per share, and $291.8 million, or $3.43 per share, respectively.
  • Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) for fiscal 2014, were $953.5 million compared to $852.1 million for the prior year, an increase of 12%.
  • In the Midstream businesses (which consist of the Company’s Pipeline and Storage and Gathering segments), Adjusted EBITDA for fiscal 2014 were $250.1 million, a 31% increase over the prior year.
  • Seneca Resources Corporation’s (“Seneca”) fourth quarter production of natural gas and crude oil was 46.0 billion cubic feet equivalent (“Bcfe”), an increase of 12.7 Bcfe or approximately 38% over the prior year’s fourth quarter. Pricing related curtailments for the quarter were approximately 5 Bcf. Average daily production during the quarter was 500 million cubic feet equivalent (“MMcfe”) per day. Total production for fiscal 2014 increased to 160.5 Bcfe, an increase of 39.8 Bcfe over the prior year.
  • Seneca’s total reserves at September 30, 2014, were 1.9 trillion cubic feet equivalent (“Tcfe”), an increase of 365 Bcfe or 24%. Seneca replaced 327% of fiscal 2014 production.
  • A conference call is scheduled for Friday, November 7, 2014, at 11 a.m. Eastern Time.

MANAGEMENT COMMENTS

Ronald J. Tanski, President and Chief Executive Officer of National Fuel Gas Company, stated: “I am pleased to report the results of another very successful fiscal year. While each of our business segments had a solid operating performance during our 2014 fiscal year, our midstream businesses were the main driver of our increased earnings.

“We continue to capitalize on opportunities to build midstream pipeline infrastructure to move clean-burning natural gas produced from the Marcellus Shale to the market areas.

“The exploration success that producers have enjoyed in the Appalachian Basin in both the Marcellus and Utica shales has outstripped available pipeline capacity and has placed near-term commodity pricing pressure on those producers, including our own Seneca Resources. Those pricing pressures are evidenced by our decrease in earnings guidance for our next fiscal year. Customers of our Utility segment were the primary beneficiaries of increasing production in the basin, where ample supplies of flowing natural gas and gas withdrawn from storage helped to keep heating bills low over this past winter, which was the coldest in 50 years.

“Looking ahead to 2015 and 2016, we will continue our plan to develop and build midstream projects to help alleviate capacity constraints and pricing pressures facing Seneca. In addition, Seneca’s ongoing drilling program will be designed to increase our production and fill the firm pipeline capacity that Seneca has committed to in 2016 and 2017.

“We are in a great position to continue the growth of the Company. Our integrated structure allows the ongoing efficient development of our mineral acreage, which is made more valuable by our investments in pipeline infrastructure that provides access to markets that are becoming more reliant on this abundant and clean burning fuel.”

EXPLORATION AND PRODUCTION SEGMENT OPERATIONS UPDATE

Seneca has continued to focus on the development of its Western Development Area (“WDA”) acreage in the Marcellus Shale, where Seneca is operating two of its three horizontal drilling rigs. The third rig, which is currently drilling a Utica delineation well in Tioga County, Pa., is expected to return to drilling in the WDA during the first quarter of fiscal 2015. Seneca’s Marcellus development in fiscal 2015 will be focused almost exclusively on the WDA in order to develop natural gas production to fill approximately 500 MMcfe per day of pipeline transportation capacity associated with the Northern Access 2015 and Northern Access 2016 expansion projects.

During the fourth quarter, Seneca brought on 15 new Marcellus development wells in the greater Clermont-Rich Valley area. These wells, located on Pad N and Pad H where Seneca pays no royalty and, therefore, has a 100% net working and revenue interest, had a combined average initial 24-hour production rate of 8.1 MMcfe per day. The wells had an average lateral length of 5,710 feet and were completed using a reduced cluster spacing (“RCS”) design, averaging 38 stages per well. The average capital cost to drill and complete each of these wells was approximately $6.1 million. The 9-well Pad N, brought on-line in July 2014, continues to post strong production rates that averaged 4.4 MMcf per well per day over its first 60 days of production, which is consistent with our type curve for that area.

In addition, Seneca began producing from a new 10-well pad at DCNR Tract 100 in Lycoming County, Pa., and a new 5-well pad at DCNR Tract 595 in Tioga County, Pa. On the new DCNR 100 Pad T, Seneca drilled its most successful Marcellus well to date, which produced at a 24-hour peak rate of 25.7 MMcf per day.

During fiscal year 2014, Seneca replaced 327% of production to reach a total of 1.914 Tcfe of proved crude oil and natural gas reserves as of September 30, 2014. Seneca’s success through the drill bit in the Marcellus Shale led to a 383 Bcf, or 30% increase in natural gas reserves, which totaled 1.683 Tcf at fiscal year end. Crude oil reserves, which decreased by 8% largely due to production, totaled 38.5 million barrels (“Bbls”) at September 30, 2014. Consolidated finding and development costs for the year were $1.15 per thousand cubic feet equivalent (“Mcfe”), down from fiscal 2013’s $1.31 per Mcfe.

Of the total reserves, 73% were classified as proved developed reserves. This is an increase from 71% proved developed reserves as of September 30, 2013. Proved undeveloped (“PUD”) reserves totaled 27% of the total reserves at the end of the fiscal year.

SUMMARY OF RESULTS

National Fuel Gas had consolidated earnings for the quarter ended September 30, 2014, of $57.4 million, or $0.68 per share, compared to the prior year’s fourth quarter of $47.8 million, or $0.57 per share, an increase of $9.6 million, or $0.11 per share. The increase is mainly due to higher earnings in the Midstream and Upstream businesses. (Note: All references to earnings per share are to diluted earnings per share, and all amounts used in the discussion of earnings are after tax unless otherwise noted.)

Consolidated earnings for the fiscal year ended September 30, 2014, of $299.4 million, or $3.52 per share, increased $39.4 million, or $0.44 per share, from the same period in the prior year where earnings were $260.0 million or $3.08 per share.

OPERATING RESULTS

Three Months Ended Fiscal Year Ended
September 30, September 30,
2014 2013 2014 2013
(in thousands except per share amounts)
Reported GAAP earnings $ 57,431 $ 47,842 $ 299,413 $ 260,001
Items impacting comparability1:
Deferred state income tax adjustment (7,000 ) (4,000 ) 5,000
Gain on life insurance policies (3,635 )
Regulatory adjustment – Utility segment 4,680 4,875
Operating Results $ 50,431 $ 52,522 $ 291,778 $ 269,876
Reported GAAP earnings per share $ 0.68 $ 0.57 $ 3.52 $ 3.08
Items impacting comparability1:
Deferred state income tax adjustment (0.08 ) (0.05 ) 0.06
Gain on life insurance policies (0.04 )
Regulatory adjustment – Utility segment 0.06 0.06
Operating Results $ 0.60 $ 0.63 $ 3.43 $ 3.20

1 See discussion of these individual items below.

As outlined in the table above, certain items included in GAAP earnings impacted the comparability of the Company’s financial results when comparing the quarter and fiscal year ended September 30, 2014, to the comparable periods in fiscal 2013. Excluding these items, Operating Results for the current quarter of $50.4 million, or $0.60 per share, decreased $2.1 million, or $0.03 per share, from the prior year’s fourth quarter where Operating Results were $52.5 million or $0.63 per share. Excluding these items, Operating Results for the fiscal year ended September 30, 2014, of $291.8 million, or $3.43 per share, increased $21.9 million, or $0.23 per share, from the prior year where Operating Results were $269.9 million or $3.20 per share. Items impacting comparability will be discussed in more detail with the discussion of segment earnings below.

DISCUSSION OF RESULTS BY SEGMENT

The following discussion of the earnings of each segment is summarized in a tabular form at pages 11 through 14 of this report. It may be helpful to refer to those tables while reviewing this discussion.

Upstream Business

Exploration and Production Segment

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

The Exploration and Production segment’s earnings in the fourth quarter of fiscal 2014 of $33.7 million, or $0.40 per share, increased $4.4 million, or $0.05 per share, when compared with the prior year’s fourth quarter. In the current year’s fourth quarter Seneca reduced its state deferred income tax liability by $7.0 million. The decrease in income taxes was largely due to an anticipated increase in firm transportation of natural gas to Canadian delivery points, which decreased the effective tax rate used in the calculation of deferred tax expense. Excluding this adjustment, Operating Results in the Exploration and Production segment of $26.7 million, or $0.32 per share, decreased $2.6 million, or $0.03 per share, when compared to the prior year’s fourth quarter.

Overall production of natural gas and crude oil for the current quarter of 46.0 Bcfe increased approximately 12.7 Bcfe, or 38.3 percent, compared to the prior year’s fourth quarter. Production from Seneca’s Appalachia properties increased approximately 12.3 Bcfe or 43.8 percent. California production of 5.5 Bcfe increased 7.3 percent compared with the prior year’s fourth quarter due to increased development activities, primarily in the East Coalinga and South Midway Sunset fields.

Lower commodity prices realized after hedging reduced Operating Results. The weighted average natural gas price received by Seneca (after hedging) for the quarter ended September 30, 2014, was $3.19 per thousand cubic feet (“Mcf”), a decrease of $0.80 per Mcf compared to the prior year’s fourth quarter. The weighted average crude oil price realized after hedging for the quarter ended September 30, 2014, was $93.70 per Bbl, a decrease of $5.50 per Bbl compared to the prior year’s fourth quarter.

On a per unit basis, quarterly depletion expense of $1.76 per Mcfe, decreased $0.20 per Mcfe due to higher natural gas reserve balances at September 30, 2014, compared to the prior year’s fourth quarter. On a per unit basis, lease operating and transportation expenses (“LOE”) at $1.02 per Mcfe increased $0.06 per Mcfe compared to the prior year’s fourth quarter due to higher intercompany gathering and compression costs associated with production from Tract 100 in Lycoming County, Pa., and the Clermont-Rich Valley area in Seneca’s WDA. Higher well repair and steam fuel costs in California also contributed to the per unit increase. General and administrative expenses (“G&A”) decreased $0.11 per Mcfe compared to the prior year’s fourth quarter, due to higher production. Operating Results were increased by a $4.7 million change in Seneca’s quarterly mark to market adjustment relating to hedging ineffectiveness associated with certain crude oil and natural gas hedges.

The Exploration and Production segment’s earnings were $121.6 million, or $1.43 per share, for the fiscal year ended September 30, 2014, compared to earnings of $115.4 million, or $1.37 per share, for the fiscal year ended September 30, 2013. Including the deferred income tax adjustment described above for the quarter, Seneca had deferred income tax adjustments in both fiscal 2013 and 2014, the sum of which decreased earnings by $5.0 million and increased earnings by $4.0 million, respectively. Excluding these items, Operating Results in the Exploration and Production segment of $117.6 million, or $1.38 per share, decreased $2.8 million, or $0.05 per share, when compared to the prior year.

Overall production of natural gas and crude oil for the fiscal year ended September 30, 2014, of 160.5 Bcfe increased approximately 39.8 Bcfe, or 33.0 percent, compared to the prior year. Production from Seneca’s Appalachia properties increased approximately 38.5 Bcfe or 38.2 percent. California production of 21.2 Bcfe increased 6.9 percent compared with the prior year.

Lower commodity prices realized after hedging in the current fiscal year reduced earnings. The weighted average natural gas price received by Seneca (after hedging) for the fiscal year ended September 30, 2014, was $3.56 per Mcf, a decrease of $0.54 per Mcf compared to the prior year. The weighted average crude oil price realized after hedging for the fiscal year ended September 30, 2014, was $95.55 per Bbl, a decrease of $2.66 per Bbl.

On a per unit basis for the fiscal year ended September 30, 2014, depletion expense of $1.85 per Mcfe decreased $0.17 per Mcfe due to higher natural gas reserve balances at September 30, 2014. LOE of $1.03 per Mcfe increased $0.04 per Mcfe due to higher intercompany transportation costs in Appalachia and higher steam fuel costs in California, and G&A of $0.40 per Mcfe decreased $0.12 per Mcfe compared to the prior year, due to higher production. Operating Results for the fiscal year ended September 30, 2014, were reduced by higher property taxes in California, a higher Pennsylvania impact fee, and higher interest expense due to a higher outstanding debt balance. These factors were partially offset by a net $2.3 million change in the derivative mark to market adjustment associated with certain crude oil and natural gas hedges.

Midstream Businesses

Pipeline and Storage Segment

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

The Pipeline and Storage segment’s earnings of $19.1 million, or $0.22 per share, for the quarter ended September 30, 2014, increased $3.7 million, or $0.04 per share, when compared with the same period in the prior fiscal year. The increase in earnings reflects higher non-affiliated transportation revenues from new transportation contracts. As a result of the ongoing pricing basis differentials in the Marcellus basin, the Pipeline and Storage segment continues to see increased demand for transportation services from producers and marketers. Earnings for the quarter also benefitted from lower pension and other post retirement benefit costs.

The Pipeline and Storage segment’s earnings of $77.6 million, or $0.91 per share, for the fiscal year ended September 30, 2014, increased $14.3 million, or $0.16 per share, when compared with the same period in the prior fiscal year. The increase was mostly due to higher non-affiliated transportation revenues and lower pension and other post retirement benefit costs. The increase in transportation revenues was due to the Company’s recent expansion projects as well as an overall increase in demand for short-term transportation services as a result of the cold winter of 2013-14.

Gathering Segment

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

The Gathering segment’s earnings of $10.5 million, or $0.12 per share, for the quarter ended September 30, 2014, increased $6.6 million, or $0.07 per share, when compared with the same period in the prior fiscal year. Earnings of $32.7 million, or $0.39 per share, for the fiscal year ended September 30, 2014, increased $19.4 million, or $0.23 per share, when compared with the same period in the prior fiscal year. The increase in earnings for the quarter and the fiscal year is mainly due to higher gathering revenues from Midstream’s Trout Run and Clermont gathering systems. That increase in revenue was directly related to the increase in Seneca’s production volumes as described above.

Downstream Businesses

Utility Segment

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

The Utility segment’s loss of $0.5 million, or $0.01 per share, for the quarter ended September 30, 2014, compared to earnings of $0.7 million, or $0.01 per share, in the prior year’s fourth quarter, a decrease in earnings of $1.2 million or $0.02 per share. During the prior year’s fourth quarter, Distribution recorded a reserve of $4.7 million in connection with various issues raised in the recent New York rate proceeding. Excluding this reserve, Operating Results in the Utility segment decreased $5.9 million, or $0.08 per share, primarily as a result of higher operating costs. The increase in operating costs was mostly attributable to higher bad debt, pension and other post retirement benefit expenses. In addition, Distribution’s new rate agreement in New York contains an earnings sharing mechanism under which Distribution shares a portion of its earnings above a 9.5 percent return on equity. During the quarter, Distribution recorded a $0.8 million reserve for earnings sharing.

The Utility segment’s earnings of $64.1 million, or $0.75 per share, for the fiscal year ended September 30, 2014, decreased $1.6 million, or $0.03 per share, when compared with the prior fiscal year. Excluding a total $4.9 million reserve recorded in the prior fiscal year in connection with the New York rate proceeding noted above, Operating Results decreased $6.5 million, or $0.09 per share, due to higher operating expenses, consisting mostly of higher bad debt, pension and other post retirement benefit related costs, and, a reserve for earnings sharing. Higher income taxes which were the result of a non-recurring tax benefit recorded in the prior year also reduced earnings. Colder weather in Pennsylvania increased earnings in the current year. Temperatures in Pennsylvania were 14.5 percent colder during the fiscal year ended September 30, 2014, than in the prior year. In New York, the impact of weather variations on earnings is mitigated by that jurisdiction’s weather normalization clause.

Energy Marketing Segment

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

The Energy Marketing segment’s earnings for the quarter ended September 30, 2014, of $0.7 million increased $1.8 million compared to the prior year’s fourth quarter due to higher per unit margins. Earnings for the fiscal year ended September 30, 2014, of $6.6 million increased $2.0 million due to higher per unit margins and higher volumes sold resulting from weather that was significantly colder than the prior year.

Corporate and All Other

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

The Corporate and All Other category loss of $6.0 million in the quarter ended September 30, 2014, compares to a loss of $0.3 million in the prior year’s fourth quarter. The increase in the loss in the fourth quarter is mainly due to higher income taxes due to an intercompany deferred tax reallocation in the prior year’s fourth quarter.

The Corporate and All Other category loss of $3.1 million, for the fiscal year ended September 30, 2014, compares to a loss of $2.2 million in the prior year. The comparability of the fiscal year results is impacted by a $3.6 million gain recognized on corporate-owned executive life insurance policies. Excluding this item, Operating Results for the fiscal year ended September 30, 2014, a loss of $6.7 million, compares to a loss of $2.2 million in the prior year. The increase in the loss for the in the current fiscal year is mainly due to higher income taxes due to an intercompany deferred tax reallocation in the prior year.

EARNINGS GUIDANCE

The Company is updating its GAAP earnings guidance range for fiscal 2015 to a range of $3.05 to $3.35 per share. The previous earnings guidance had been a range of $3.30 to $3.60 per share. Substantially all of the change is attributable to a decrease in the commodity price assumptions reflected in the forecast. In particular:

  • The Company is now assuming Marcellus spot pricing averages between $2.50 and $2.75 per Mcf, down $0.25 per Mcf from the previous range of $2.75 and $3.00 per Mcf. At the midpoint, this change reduced earnings expectations by approximately $0.14 per share.
  • NYMEX natural gas prices are now assumed to average $4.00 per MMBtu for the fiscal year, down $0.25 from the previous forecast. However, because substantially all of Seneca’s firm sales have been hedged, this change had minimal impact on earnings expectations.
  • The Company is now assuming NYMEX crude oil prices average $85 per Bbl for the fiscal year, down $10.00 from the previous forecast. At the midpoint, this change reduced earnings expectations by approximately $0.10 per share.

The Company’s forecast oil and gas production for fiscal 2015 is unchanged at 180 to 220 Bcfe.

EARNINGS TELECONFERENCE

The Company will host a conference call on Friday, November 7, 2014, at 11 a.m. Eastern Time to discuss this announcement. There are two ways to access this call. For those with Internet access, visit the investor relations page at National Fuel’s website at investor.nationalfuelgas.com. For those without Internet access, access is also provided by dialing (toll-free) 1-866-202-3048, using passcode “36011529.” For those unable to listen to the live conference call, a replay will be available at approximately 3 p.m. Eastern Time at the same website link and by phone at (toll-free) 1-888-286-8010, using passcode “40197121.” Both the webcast and telephonic replay will be available until the close of business on Friday, November 14, 2014.

National Fuel is an integrated energy company with $6.7 billion in assets, including the following five operating segments: Exploration and Production, Pipeline and Storage, Gathering, Utility, and Energy Marketing. Additional information about National Fuel is available at www.nationalfuelgas.com.

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

NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
QUARTER ENDED SEPTEMBER 30, 2014
(Unaudited)
Upstream Midstream Businesses

Downstream
Businesses

Exploration & Pipeline & Energy Corporate /
(Thousands of Dollars) Production Storage Gathering Utility Marketing All Other Consolidated*
Fourth quarter 2013 GAAP earnings $ 29,266 $ 15,442 $ 3,879 $ 662 $ (1,152 ) $ (255 ) $ 47,842
Items impacting comparability:
Regulatory adjustment – Utility segment 4,680 4,680
Fourth quarter 2013 operating results 29,266 15,442 3,879 5,342 (1,152 ) (255 ) 52,522
Drivers of operating results
Higher (lower) crude oil prices (2,796 ) (2,796 )
Higher (lower) natural gas prices (21,374 ) (21,374 )
Higher (lower) natural gas production 31,974 31,974
Higher (lower) crude oil production 4,212 4,212
Derivative mark to market adjustments 4,655 4,655

Lower (higher) lease operating and transportation expenses

(9,565 ) (9,565 )
Lower (higher) depreciation / depletion (10,323 ) (563 ) (264 ) (11,150 )
Higher (lower) transportation revenues 1,230 1,230
Higher (lower) storage revenues (259 ) (259 )
Higher (lower) gathering and processing revenues 7,153 7,153
Lower (higher) operating expenses (1,115 ) 2,272 (3,728 ) 405 (2,166 )
Lower (higher) property, franchise and other taxes (246 ) (1,326 ) (1,572 )
Earnings sharing adjustment (781 ) (781 )
Warmer weather (515 ) (515 )
Higher (lower) margins 1,841 (776 ) 1,065
Higher (lower) AFUDC** 681 681
Lower (higher) income tax expense / effective tax rate 1,422 (4,513 ) (3,091 )
All other / rounding 305 (251 ) 52 (335 ) (28 ) 465 208
Fourth quarter 2014 operating results 26,661 19,115 10,521 (527 ) 661 (6,000 ) 50,431
Items impacting comparability:
Deferred state income tax adjustment 7,000 7,000
Fourth quarter 2014 GAAP earnings $ 33,661 $ 19,115 $ 10,521 $ (527 ) $ 661 $ (6,000 ) $ 57,431
* Amounts do not reflect intercompany eliminations
** AFUDC = Allowance for Funds Used During Construction
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
QUARTER ENDED SEPTEMBER 30, 2014
(Unaudited)
Upstream Midstream Businesses

Downstream
Businesses

Exploration & Pipeline & Energy Corporate /
Production Storage Gathering Utility Marketing All Other Consolidated*
Fourth quarter 2013 GAAP earnings $ 0.35 $ 0.18 $ 0.05 $ 0.01 $ (0.01 ) $ (0.01 ) $ 0.57
Items impacting comparability:
Regulatory adjustment – Utility segment 0.06 0.06
Fourth quarter 2013 operating results 0.35 0.18 0.05 0.07 (0.01 ) (0.01 ) 0.63
Drivers of operating results
Higher (lower) crude oil prices (0.03 ) (0.03 )
Higher (lower) natural gas prices (0.25 ) (0.25 )
Higher (lower) natural gas production 0.38 0.38
Higher (lower) crude oil production 0.05 0.05
Derivative mark to market adjustments 0.05 0.05
Lower (higher) lease operating and transportation expenses (0.11 ) (0.11 )
Lower (higher) depreciation / depletion (0.12 ) (0.01 ) (0.13 )
Higher (lower) transportation revenues 0.01 0.01
Higher (lower) storage revenues
Higher (lower) gathering and processing revenues 0.08 0.08
Lower (higher) operating expenses (0.01 ) 0.03 (0.04 ) (0.02 )
Lower (higher) property, franchise and other taxes (0.02 ) (0.02 )
Earnings sharing adjustment (0.01 ) (0.01 )
Warmer weather (0.01 ) (0.01 )
Higher (lower) margins 0.02 (0.01 ) 0.01
Higher (lower) AFUDC** 0.01 0.01
Lower (higher) income tax expense / effective tax rate 0.02 (0.05 ) (0.03 )
All other / rounding (0.01 ) (0.01 ) (0.02 ) 0.03 (0.01 )
Fourth quarter 2014 operating results 0.32 0.22 0.12 (0.01 ) 0.01 (0.06 ) 0.60
Items impacting comparability:
Deferred state income tax adjustment 0.08 0.08
Fourth quarter 2014 GAAP earnings $ 0.40 $ 0.22 $ 0.12 $ (0.01 ) $ 0.01 $ (0.06 ) $ 0.68
* Amounts do not reflect intercompany eliminations
** AFUDC = Allowance for Funds Used During Construction
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
TWELVE MONTHS ENDED SEPTEMBER 30, 2014
(Unaudited)
Upstream Midstream Businesses

Downstream
Businesses

Exploration & Pipeline & Energy Corporate /
(Thousands of Dollars) Production Storage Gathering Utility Marketing All Other Consolidated*
Fiscal 2013 GAAP earnings $ 115,391 $ 63,245 $ 13,321 $ 65,686 $ 4,589 $ (2,231 ) $ 260,001
Items impacting comparability:
Deferred state income tax adjustment 5,000 5,000
Regulatory adjustment – Utility segment 4,875 4,875
Fiscal 2013 operating results 120,391 63,245 13,321 70,561 4,589 (2,231 ) 269,876
Drivers of operating results
Higher (lower) crude oil prices (5,259 ) (5,259 )
Higher (lower) natural gas prices (49,668 ) (49,668 )
Higher (lower) natural gas production 102,809 102,809
Higher (lower) crude oil production 13,075 13,075
Derivative mark to market adjustments 2,329 2,329
Insurance settlement proceeds adjustment 1,261 1,485 2,746
Lower (higher) lease operating and transportation expenses (30,089 ) (30,089 )
Lower (higher) depreciation / depletion (34,306 ) (966 ) (1,411 ) (36,683 )
Higher (lower) transportation revenues 11,658 11,658
Higher (lower) storage revenues (436 ) (436 )
Higher (lower) gathering and processing revenues 23,289 23,289
Lower (higher) operating expenses (2,738 ) 6,323 (1,076 ) (9,122 ) (6,613 )
Lower (higher) property, franchise and other taxes (2,317 ) (927 ) (801 ) (685 ) (4,730 )
Colder weather 5,785 5,785
Earnings sharing adjustment (1,637 ) (1,637 )
Higher (lower) margins 2,196 2,196
Income (loss) from unconsolidated subsidiaries 391 391
Higher (lower) AFUDC** (393 ) (393 )
Lower (higher) interest expense (1,617 ) 362 899 (356 )
Lower (higher) income tax expense / effective tax rate 2,228 (497 ) (1,892 ) (2,427 ) (4,712 ) (7,300 )
All other / rounding 1,470 (448 ) 116 (684 ) (154 ) 488 788
Fiscal 2014 operating results 117,569 77,559 32,709 64,059 6,631 (6,749 ) 291,778
Items impacting comparability:
Gain on life insurance policies 3,635 3,635
Deferred state income tax adjustment 4,000 4,000
Fiscal 2014 GAAP earnings $ 121,569 $ 77,559 $ 32,709 $ 64,059 $ 6,631 $ (3,114 ) $ 299,413
* Amounts do not reflect intercompany eliminations
** AFUDC = Allowance for Funds Used During Construction
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
TWELVE MONTHS ENDED SEPTEMBER 30, 2014
(Unaudited)
Upstream Midstream Businesses

Downstream
Businesses

Exploration & Pipeline & Energy Corporate /
Production Storage Gathering Utility Marketing All Other Consolidated*
Fiscal 2013 GAAP earnings $ 1.37 $ 0.75 $ 0.16 $ 0.78 $ 0.05 $ (0.03 ) $ 3.08
Items impacting comparability:
Deferred state income tax adjustment 0.06 0.06
Regulatory adjustment – Utility segment 0.06 0.06
Fiscal 2013 operating results 1.43 0.75 0.16 0.84 0.05 (0.03 ) 3.20
Drivers of operating results
Higher (lower) crude oil prices (0.06 ) (0.06 )
Higher (lower) natural gas prices (0.58 ) (0.58 )
Higher (lower) natural gas production 1.21 1.21
Higher (lower) crude oil production 0.15 0.15
Derivative mark to market adjustments 0.03 0.03
Insurance settlement proceeds adjustment 0.01 0.02 0.03
Lower (higher) lease operating and transportation expenses (0.35 ) (0.35 )
Lower (higher) depreciation / depletion (0.40 ) (0.01 ) (0.02 ) (0.43 )
Higher (lower) transportation revenues 0.14 0.14
Higher (lower) storage revenues (0.01 ) (0.01 )
Higher (lower) gathering and processing revenues 0.27 0.27
Lower (higher) operating expenses (0.03 ) 0.07 (0.01 ) (0.11 ) (0.08 )
Lower (higher) property, franchise and other taxes (0.03 ) (0.01 ) (0.01 ) (0.01 ) (0.06 )
Colder weather 0.07 0.07
Earnings sharing adjustment (0.02 ) (0.02 )
Higher (lower) margins 0.03 0.03
Income (loss) from unconsolidated subsidiaries
Higher (lower) AFUDC**
Lower (higher) interest expense (0.02 ) 0.01 (0.01 )
Lower (higher) income tax expense / effective tax rate 0.03 (0.01 ) (0.02 ) (0.03 ) (0.06 ) (0.09 )
All other / rounding (0.01 ) (0.01 ) 0.01 (0.02 ) 0.02 (0.01 )
Fiscal 2014 operating results 1.38 0.91 0.39 0.75 0.08 (0.08 ) 3.43
Items impacting comparability:
Gain on life insurance policies 0.04 0.04
Deferred state income tax adjustment 0.05 0.05
Fiscal 2014 GAAP earnings $ 1.43 $ 0.91 $ 0.39 0.75 $ 0.08 $ (0.04 ) $ 3.52
* Amounts do not reflect intercompany eliminations
** AFUDC = Allowance for Funds Used During Construction
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
(Thousands of Dollars, except per share amounts)
Three Months Ended Twelve Months Ended
September 30, September 30,
(Unaudited) (Unaudited)

SUMMARY OF OPERATIONS

2014 2013 2014 2013
Operating Revenues $ 366,623 $ 338,863 $ 2,113,081 $ 1,829,551
Operating Expenses:
Purchased Gas 28,833 33,532 605,838 460,432
Operation and Maintenance 110,284 103,557 463,078 442,090
Property, Franchise and Other Taxes 21,597 18,881 90,711 82,431
Depreciation, Depletion and Amortization 103,905 86,257 383,781 326,760
264,619 242,227 1,543,408 1,311,713
Operating Income 102,004 96,636 569,673 517,838
Other Income (Expense):
Interest Income 2,849 2,491 4,170 4,335
Other Income 2,615 1,032 9,461 4,697
Interest Expense on Long-Term Debt (22,427 ) (23,042 ) (90,194 ) (90,273 )
Other Interest Expense (623 ) (941 ) (4,083 ) (3,838 )
Income Before Income Taxes 84,418 76,176 489,027 432,759
Income Tax Expense 26,987 28,334 189,614 172,758
Net Income Available for Common Stock $ 57,431 $ 47,842 $ 299,413 $ 260,001
Earnings Per Common Share:
Basic $ 0.68 $ 0.57 $ 3.57 $ 3.11
Diluted $ 0.68 $ 0.57 $ 3.52 $ 3.08
Weighted Average Common Shares:
Used in Basic Calculation 84,126,542 83,628,686 83,929,989 83,518,857
Used in Diluted Calculation 85,062,410 84,502,703 84,952,347 84,341,220
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, September 30,
(Thousands of Dollars) 2014 2013
ASSETS
Property, Plant and Equipment $8,245,791 $7,313,203
Less – Accumulated Depreciation, Depletion and Amortization 2,502,700 2,161,477
Net Property, Plant and Equipment 5,743,091 5,151,726
Current Assets:
Cash and Temporary Cash Investments 36,886 64,858
Hedging Collateral Deposits 2,734 1,094
Receivables – Net 149,735 133,182
Unbilled Revenue 25,663 19,483
Gas Stored Underground 39,422 51,484
Materials and Supplies – at average cost 27,817 29,904
Unrecovered Purchased Gas Costs 12,408
Other Current Assets 54,752 56,905
Deferred Income Taxes 40,323 79,359
Total Current Assets 377,332 448,677
Other Assets:
Recoverable Future Taxes 163,485 163,355
Unamortized Debt Expense 14,304 16,645
Other Regulatory Assets 224,436 252,568
Deferred Charges 14,212 9,382
Other Investments 86,788 96,308
Goodwill 5,476 5,476
Prepaid Post-Retirement Benefit Costs 36,512 22,774
Fair Value of Derivative Financial Instruments 72,606 48,989
Other 1,355 2,447
Total Other Assets 619,174 617,944
Total Assets $6,739,597 $6,218,347
CAPITALIZATION AND LIABILITIES
Capitalization:
Comprehensive Shareholders’ Equity
Common Stock, $1 Par Value Authorized – 200,000,000
Shares; Issued and Outstanding – 84,157,220 Shares
and 83,661,969 Shares, Respectively $84,157 $83,662
Paid in Capital 716,144 687,684
Earnings Reinvested in the Business 1,614,361 1,442,617
Accumulated Other Comprehensive Loss (3,979 ) (19,234 )
Total Comprehensive Shareholders’ Equity 2,410,683 2,194,729
Long-Term Debt, Net of Current Portion 1,649,000 1,649,000
Total Capitalization 4,059,683 3,843,729
Current and Accrued Liabilities:
Notes Payable to Banks and Commercial Paper 85,600
Current Portion of Long-Term Debt
Accounts Payable 136,674 105,283
Amounts Payable to Customers 33,745 12,828
Dividends Payable 32,400 31,373
Interest Payable on Long-Term Debt 29,960 29,960
Customer Advances 19,005 21,959
Customer Security Deposits 15,761 16,183
Other Accruals and Current Liabilities 136,672 83,946
Fair Value of Derivative Financial Instruments 759 639
Total Current and Accrued Liabilities 490,576 302,171
Deferred Credits:
Deferred Income Taxes 1,456,283 1,347,007
Taxes Refundable to Customers 91,736 85,655
Unamortized Investment Tax Credit 1,145 1,579
Cost of Removal Regulatory Liability 173,199 157,622
Other Regulatory Liabilities 81,152 61,549
Pension and Other Post-Retirement Liabilities 134,202 158,014
Asset Retirement Obligations 117,713 119,511
Other Deferred Credits 133,908 141,510
Total Deferred Credits 2,189,338 2,072,447
Commitments and Contingencies
Total Capitalization and Liabilities $6,739,597 $6,218,347
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Twelve Months Ended
September 30,
(Thousands of Dollars) 2014 2013
Operating Activities:
Net Income Available for Common Stock $ 299,413 $ 260,001

Adjustments to Reconcile Net Income to Net Cash

Provided by Operating Activities:

Depreciation, Depletion and Amortization 383,781 326,760
Deferred Income Taxes 142,415 167,887
Excess Tax Benefits Associated with Stock-Based Compensation Awards (4,641 ) (675 )
Stock-Based Compensation 11,763 12,446
Other 14,063 14,965
Change in:
Hedging Collateral Deposits (1,640 ) (730 )
Receivables and Unbilled Revenue (22,781 ) (17,135 )
Gas Stored Underground and Materials and Supplies 13,285 (3,016 )
Unrecovered Purchased Gas Costs 12,408 (12,408 )
Other Current Assets (3,630 ) (109 )
Accounts Payable 15,149 8,303
Amounts Payable to Customers 20,917 (7,136 )
Customer Advances (2,954 ) (2,096 )
Customer Security Deposits (422 ) (1,759 )
Other Accruals and Current Liabilities 6,872 666
Other Assets 18,513 (5,757 )
Other Liabilities 6,879 (1,635 )
Net Cash Provided by Operating Activities $ 909,390 $ 738,572
Investing Activities:
Capital Expenditures $ (914,417 ) $ (703,461 )
Other 5,982 (2,522 )
Net Cash Used in Investing Activities $ (908,435 ) $ (705,983 )
Financing Activities:
Changes in Notes Payable to Banks and Commercial Paper $ 85,600 $ (171,000 )
Excess Tax Benefits Associated with Stock-Based Compensation Awards 4,641 675
Reduction of Long-Term Debt (250,000 )
Net Proceeds From Issuance of Long-Term Debt 495,415
Dividends Paid on Common Stock (126,642 ) (122,710 )
Net Proceeds From Issuance of Common Stock 7,474 5,395
Net Cash Used in Financing Activities $ (28,927 ) $ (42,225 )
Net Decrease in Cash and Temporary Cash Investments (27,972 ) (9,636 )
Cash and Temporary Cash Investments at Beginning of Period 64,858 74,494
Cash and Temporary Cash Investments at September 30 $ 36,886 $ 64,858
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
UPSTREAM BUSINESS

(Thousands of Dollars, except per share amounts)

Three Months Ended

September 30,

Twelve Months Ended

September 30,

EXPLORATION AND PRODUCTION SEGMENT

2014 2013 Variance 2014 2013 Variance
Total Operating Revenues $ 209,967 $ 184,195 $ 25,772 $ 804,096 $ 702,937 $ 101,159
Operating Expenses:
Operation and Maintenance:
General and Administrative Expense 15,783 15,073 710 63,804 62,162 1,642
Lease Operating and Transportation Expense 46,684 31,967 14,717 165,534 119,243 46,291
All Other Operation and Maintenance Expense 3,459 2,454 1,005 14,521 11,950 2,571
Property, Franchise and Other Taxes 5,223 5,295 (72 ) 20,765 17,199 3,566
Depreciation, Depletion and Amortization 81,031 65,150 15,881 296,210 243,431 52,779
152,180 119,939 32,241 560,834 453,985 106,849
Operating Income 57,787 64,256 (6,469 ) 243,262 248,952 (5,690 )
Other Income (Expense):
Interest Income 604 312 292 1,909 1,501 408
Other Interest Expense (10,584 ) (10,566 ) (18) (42,232 ) (39,745 ) (2,487 )
Income Before Income Taxes 47,807 54,002 (6,195 ) 202,939 210,708 (7,769 )
Income Tax Expense 14,146 24,736 (10,590 ) 81,370 95,317 (13,947 )
Net Income $ 33,661 $ 29,266 $ 4,395 $ 121,569 $ 115,391 $ 6,178
Net Income Per Share (Diluted) $ 0.40 $ 0.35 $ 0.05 $ 1.43 $ 1.37 $ 0.06
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
MIDSTREAM BUSINESSES
(Thousands of Dollars, except per share amounts)

Three Months Ended

September 30,

Twelve Months Ended

September 30,

PIPELINE AND STORAGE SEGMENT

2014 2013 Variance 2014 2013 Variance
Revenues from External Customers $ 47,835 $ 45,288 $ 2,547 $ 200,664 $ 178,184 $ 22,480
Intersegment Revenues 20,280 21,207 (927 ) 83,744 89,424 (5,680 )
Total Operating Revenues 68,115 66,495 1,620 284,408 267,608 16,800
Operating Expenses:
Purchased Gas 596 525 71 1,878 1,573 305
Operation and Maintenance 18,714 22,209 (3,495 ) 72,624 82,351 (9,727 )
Property, Franchise and Other Taxes 6,232 5,876 356 23,884 22,458 1,426
Depreciation, Depletion and Amortization 9,469 8,997 472 36,642 35,156 1,486
35,011 37,607 (2,596 ) 135,028 141,538 (6,510 )
Operating Income 33,104 28,888 4,216 149,380 126,070 23,310
Other Income (Expense):
Interest Income 96 37 59 284 193 91
Other Income 988 256 732 1,423 1,856 (433 )
Other Interest Expense (6,414 ) (6,705 ) 291 (26,428 ) (26,248 ) (180 )
Income Before Income Taxes 27,774 22,476 5,298 124,659 101,871 22,788
Income Tax Expense 8,659 7,034 1,625 47,100 38,626 8,474
Net Income $ 19,115 $ 15,442 $ 3,673 $ 77,559 $ 63,245 $ 14,314
Net Income Per Share (Diluted) $ 0.22 $ 0.18 $ 0.04 $ 0.91 $ 0.75 $ 0.16
Three Months Ended Twelve Months Ended
September 30, September 30,

GATHERING SEGMENT

2014 2013 Variance 2014 2013 Variance
Revenues from External Customers $ (100 ) $ 456 $ (556 ) $ 673 $ 1,324 $ (651 )
Intersegment Revenues 21,396 9,835 11,561 69,937 33,457 36,480
Total Operating Revenues 21,296 10,291 11,005 70,610 34,781 35,829
Operating Expenses:
Operation and Maintenance 1,784 1,447 337 6,383 4,727 1,656
Property, Franchise and Other Taxes 43 44 (1 ) 167 277 (110 )
Depreciation, Depletion and Amortization 2,004 1,138 866 6,116 3,945 2,171
3,831 2,629 1,202 12,666 8,949 3,717
Operating Income 17,465 7,662 9,803 57,944 25,832 32,112
Other Income (Expense):
Interest Income 34 22 12 120 55 65
Other Income 2 3 (1 ) 7 4 3
Other Interest Expense (506 ) (589 ) 83 (1,726 ) (2,283 ) 557
Income Before Income Taxes 16,995 7,098 9,897 56,345 23,608 32,737
Income Tax Expense 6,474 3,219 3,255 23,636 10,287 13,349
Net Income $ 10,521 $ 3,879 $ 6,642 $ 32,709 $ 13,321 $ 19,388
Net Income Per Share (Diluted) $ 0.12 $ 0.05 $ 0.07 $ 0.39 $ 0.16 $ 0.23
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
DOWNSTREAM BUSINESSES

(Thousands of Dollars, except per share amounts)

Three Months Ended

September 30,

Twelve Months Ended

September 30,

UTILITY SEGMENT

2014 2013 Variance 2014 2013 Variance
Revenues from External Customers $ 79,295 $ 77,108 $ 2,187 $ 831,156 $ 730,319 $ 100,837
Intersegment Revenues 1,897 2,008 (111 ) 18,462 16,020 2,442
Total Operating Revenues 81,192 79,116 2,076 849,618 746,339 103,279
Operating Expenses:
Purchased Gas 22,893 24,797 (1,904 ) 446,883 362,250 84,633
Operation and Maintenance 40,628 34,940 5,688 193,354 177,597 15,757
Property, Franchise and Other Taxes 9,795 9,400 395 44,738 42,323 2,415
Depreciation, Depletion and Amortization 11,099 10,693 406 43,594 42,729 865
84,415 79,830 4,585 728,569 624,899 103,670
Operating Income (Loss) (3,223 ) (714 ) (2,509 ) 121,049 121,440 (391 )
Other Income (Expense):
Interest Income 2,805 2,423 382 3,010 3,417 (407 )
Other Income 510 270 240 1,611 970 641
Other Interest Expense (6,710 ) (6,782 ) 72 (27,693 ) (29,076 ) 1,383
Income (Loss) Before Income Taxes (6,618 ) (4,803 ) (1,815 ) 97,977 96,751 1,226
Income Tax Expense (Benefit) (6,091 ) (5,465 ) (626 ) 33,918 31,065 2,853
Net Income $ (527 ) $ 662 $ (1,189 ) $ 64,059 $ 65,686 $ (1,627 )
Net Income Per Share (Diluted) $ (0.01 ) $ 0.01 $ (0.02 ) $ 0.75 $ 0.78 $ (0.03 )
Three Months Ended Twelve Months Ended
September 30, September 30,

ENERGY MARKETING SEGMENT

2014 2013 Variance 2014 2013 Variance
Revenues from External Customers $ 28,658 $ 29,707 $ (1,049 ) $ 271,993 $ 211,990 $ 60,003
Intersegment Revenues 221 305 (84 ) 1,159 1,384 (225 )
Total Operating Revenues 28,879 30,012 (1,133 ) 273,152 213,374 59,778
Operating Expenses:
Purchased Gas 26,717 30,683 (3,966 ) 256,625 200,226 56,399
Operation and Maintenance 1,526 1,609 (83 ) 6,176 6,099 77
Property, Franchise and Other Taxes 5 9 (4 ) 16 86 (70 )
Depreciation, Depletion and Amortization 51 47 4 197 123 74
28,299 32,348 (4,049 ) 263,014 206,534 56,480
Operating Income (Loss) 580 (2,336 ) 2,916 10,138 6,840 3,298
Other Income (Expense):
Interest Income 59 34 25 173 169 4
Other Income 26 13 13 112 66 46
Other Interest Expense (8 ) (8 ) 0 (31 ) (36 ) 5
Income (Loss) Before Income Taxes 657 (2,297 ) 2,954 10,392 7,039 3,353
Income Tax Expense (Benefit) (4 ) (1,145 ) 1,141 3,761 2,450 1,311
Net Income (Loss) $ 661 $ (1,152 ) $ 1,813 $ 6,631 $ 4,589 $ 2,042
Net Income (Loss) Per Share (Diluted) $ 0.01 $ (0.01 ) $ 0.02 $ 0.08 $ 0.05 $ 0.03
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)

(Thousands of Dollars, except per share amounts)

Three Months Ended

September 30,

Twelve Months Ended

September 30,

ALL OTHER

2014 2013 Variance 2014 2013 Variance
Total Operating Revenues $ 738 $ 1,880 $ (1,142 ) $ 3,532 $ 3,910 $ (378 )
Operating Expenses:
Operation and Maintenance 223 355 (132 ) 1,098 1,263 (165 )
Property, Franchise and Other Taxes 175 100 75 656 581 75
Depreciation, Depletion and Amortization 84 33 51 344 577 (233 )
482 488 (6 ) 2,098 2,421 (323 )
Operating Income 256 1,392 (1,136 ) 1,434 1,489 (55 )
Other Income (Expense):
Interest Income 26 21 5 106 115 (9 )
Other Income (Loss) 42 (132 ) 174 448 (179 ) 627
Other Interest Expense (4 ) (1 ) (3 ) (6 ) (2 ) (4 )
Income Before Income Taxes 320 1,280 (960 ) 1,982 1,423 559
Income Tax Expense 137 393 (256 ) 822 529 293
Net Income $ 183 $ 887 $ (704 ) $ 1,160 $ 894 $ 266
Net Income Per Share (Diluted) $ 0.01 $ 0.01 $ $ 0.01 $ 0.01 $
Three Months Ended Twelve Months Ended
September 30, September 30,

CORPORATE

2014 2013 Variance 2014 2013 Variance
Revenues from External Customers $ 230 $ 229 $ 1 $ 967 $ 887 $ 80
Intersegment Revenues 946 957 (11 ) 3,799 3,419 380
Total Operating Revenues 1,176 1,186 (10 ) 4,766 4,306 460
Operating Expenses:
Operation and Maintenance 4,850 5,342 (492 ) 17,137 16,785 352
Property, Franchise and Other Taxes 124 (1,843 ) 1,967 485 (493 ) 978
Depreciation, Depletion and Amortization 167 199 (32 ) 678 799 (121 )
5,141 3,698 1,443 18,300 17,091 1,209
Operating Loss (3,965 ) (2,512 ) (1,453 ) (13,534 ) (12,785 ) (749 )
Other Income (Expense):
Interest Income 24,074 23,891 183 96,838 95,141 1,697
Other Income 1,047 622 425 5,860 1,980 3,880
Interest Expense on Long-Term Debt (22,427 ) (23,042 ) 615 (90,194 ) (90,273 ) 79
Other Interest Expense (1,246 ) (539 ) (707 ) (4,237 ) (2,704 ) (1,533 )
Loss Before Income Taxes (2,517 ) (1,580 ) (937 ) (5,267 ) (8,641 ) 3,374
Income Tax Expense (Benefit) 3,666 (438 ) 4,104 (993 ) (5,516 ) 4,523
Net Loss $ (6,183 ) $ (1,142 ) $ (5,041 ) $ (4,274 ) $ (3,125 ) $ (1,149 )
Net Loss Per Share (Diluted) $ (0.07 ) $ (0.02 ) $ (0.05 ) $ (0.05 ) $ (0.04 ) $ (0.01 )
Three Months Ended Twelve Months Ended
September 30, September 30,

INTERSEGMENT ELIMINATIONS

2014 2013 Variance 2014 2013 Variance
Intersegment Revenues $ (44,740 ) $ (34,312 ) $ (10,428 ) $ (177,101 ) $ (143,704 ) $ (33,397 )
Operating Expenses:
Purchased Gas (21,373 ) (22,473 ) 1,100 (99,548 ) (103,617 ) 4,069
Operation and Maintenance (23,367 ) (11,839 ) (11,528 ) (77,553 ) (40,087 ) (37,466 )
(44,740 ) (34,312 ) (10,428 ) (177,101 ) (143,704 ) (33,397 )
Operating Income
Other Income (Expense):
Interest Income (24,849 ) (24,249 ) (600 ) (98,270 ) (96,256 ) (2,014 )
Other Interest Expense 24,849 24,249 600 98,270 96,256 2,014
Net Income $ $ $ $ $ $
Net Income Per Share (Diluted) $ $ $ $ $ $
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
SEGMENT INFORMATION (Continued)
(Thousands of Dollars)
Three Months Ended Twelve Months Ended
September 30, September 30,
(Unaudited) (Unaudited)
Increase Increase
2014 2013 (Decrease) 2014 2013 (Decrease)

Capital Expenditures:

Exploration and Production $ 158,340 (1) $ 148,120 (2) $ 10,220 $ 602,705 (1)(2) $ 533,129 (2)(3) $ 69,576
Pipeline and Storage 74,884 (1) 15,144 (2) 59,740 139,821 (1)(2) 56,144 (2)(3) 83,677
Gathering 44,561 (1) 19,944 (2) 24,617 137,799 (1)(2) 54,792 (2)(3) 83,007
Utility 27,895 (1) 29,002 (2) (1,107 ) 88,810 (1)(2) 71,970 (2)(3) 16,840
Energy Marketing 71 67 4 264 595 (331 )
Total Reportable Segments 305,751 212,277 93,474 969,399 716,630 252,769
All Other 101 215 (114 ) 274 307 (33 )
Corporate 19 76 (57 ) 234 160 74
Total Capital Expenditures $ 305,871 $ 212,568 $ 93,303 $ 969,907 $ 717,097 $ 252,810
(1) Capital expenditures for the quarter and year ended September 30, 2014, include accounts payable and accrued liabilities related to capital expenditures of $80.1 million, $28.1 million, $20.1 million, and $8.3 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at September 30, 2014, since they represent non-cash investing activities at that date.
(2) Capital expenditures for the year ended September 30, 2014, exclude capital expenditures of $58.5 million, $5.6 million, $6.7 million and $10.3 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts were in accounts payable and accrued liabilities at September 30, 2013 and paid during the year ended September 30, 2014. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2013, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at September 30, 2014.
(3) Capital expenditures for the year ended September 30, 2013, exclude capital expenditures of $38.9 million, $12.7 million, $12.7 million and $3.2 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts were in accounts payable and accrued liabilities at September 30, 2012 and paid during the year ended September 30, 2013. These amounts were excluded from the Consolidated Statements of Cash Flows at September 30, 2012, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at September 30, 2013.

DEGREE DAYS

Percent Colder
(Warmer) Than:

Three Months Ended September 30

Normal 2014 2013 Normal (1) Last Year (1)
Buffalo, NY 162 130 168 (19.8) (22.6)
Erie, PA 124 117 132 (5.6) (11.4)

Twelve Months Ended September 30

Buffalo, NY 6,617 7,087 6,139 7.1 15.4
Erie, PA 6,147 6,742 5,888 9.7 14.5

(1) Percents compare actual 2014 degree days to normal degree days and actual 2014 degree days to actual 2013 degree days.

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

EXPLORATION AND PRODUCTION INFORMATION

Three Months Ended Twelve Months Ended
September 30, September 30,
Increase Increase
2014 2013 (Decrease) 2014 2013 (Decrease)

Gas Production/Prices:

Production (MMcf)
Appalachia 40,456 28,116 12,340 139,097 100,633 38,464
West Coast 808 819 (11 ) 3,210 3,060 150
Total Production 41,264 28,935 12,329 142,307 103,693 38,614
Average Prices (Per Mcf)
Appalachia $ 2.84 $ 3.26 $ (0.42 ) $ 3.55 $ 3.49 $ 0.06
West Coast 6.42 6.62 (0.20 ) 6.75 6.61 0.14
Weighted Average 2.91 3.35 (0.44 ) 3.62 3.58 0.04
Weighted Average after Hedging 3.19 3.99 (0.80 ) 3.56 4.10 (0.54 )

Oil Production/Prices:

Production (Thousands of Barrels)
Appalachia 8 7 1 31 28 3
West Coast 774 710 64 3,005 2,803 202
Total Production 782 717 65 3,036 2,831 205
Average Prices (Per Barrel)
Appalachia $ 95.06 $ 105.96 $ (10.90 ) $ 96.34 $ 96.48 $ (0.14 )
West Coast 93.72 105.18 (11.46 ) 98.25 103.14 (4.89 )
Weighted Average 93.73 105.19 (11.46 ) 98.23 103.07 (4.84 )
Weighted Average after Hedging 93.70 99.20 (5.50 ) 95.55 98.21 (2.66 )
Total Production (Mmcfe) 45,956 33,237 12,719 160,523 120,679 39,844

Selected Operating Performance Statistics:

General & Administrative Expense per Mcfe (1) $ 0.34 $ 0.45 $ (0.11 ) $ 0.40 $ 0.52 $ (0.12 )
Lease Operating and Transportation Expense per Mcfe (1)(2) $ 1.02 $ 0.96 $ 0.06 $ 1.03 $ 0.99 $ 0.04
Depreciation, Depletion & Amortization per Mcfe (1) $ 1.76 $ 1.96 $ (0.20 ) $ 1.85 $ 2.02 $ (0.17 )
(1) Refer to page 18 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 $0.49 and $0.34 per Mcfe for the three months ended September 30, 2014 and September 30, 2013, respectively. Amounts include transportation expense of $0.46 and $0.34 per Mcfe for the twelve months ended September 30, 2014 and September 30, 2013, respectively.
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

EXPLORATION AND PRODUCTION INFORMATION

Hedging Summary for Fiscal 2015

Volume

Average Hedge Price

Oil Swaps
Midway Sunset (MWSS) 258,000 BBL $ 92.10 / BBL
Brent 903,000 BBL $ 98.42 / BBL
NYMEX 396,000 BBL $ 90.14 / BBL
Total 1,557,000 BBL $ 95.27 / BBL
Gas Swaps
NYMEX 70,690,000 MMBTU $ 4.16 / MMBTU
Dominion Transmission Appalachian (DOM) 24,840,000 MMBTU $ 3.74 / MMBTU
Southern California City Gate (SoCal) 1,200,000 MMBTU $ 4.35 / MMBTU
Fixed Price Physical Sales 16,700,000 MMBTU $ 3.77 / MMBTU
Total 113,430,000 MMBTU $ 4.01 / MMBTU
Hedging Summary for Fiscal 2016

Volume

Average Hedge Price

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

Volume

Average Hedge Price

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

Volume

Average Hedge Price

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

EXPLORATION AND PRODUCTION INFORMATION

Gross Wells in Process of Drilling

Twelve Months Ended September 30, 2014

Total

East

West

Company

Wells in Process – Beginning of Period
Exploratory 1.000 (1) 0.000 1.000
Developmental 71.000 (1)(2) 0.000 71.000
Wells Commenced
Exploratory 5.000 2.000 7.000
Developmental 63.000 90.000 153.000
Wells Completed
Exploratory 5.000 2.000 7.000
Developmental 53.000 87.000 140.000
Wells Plugged & Abandoned
Exploratory 0.000 0.000 0.000
Developmental 2.000 1.000 3.000
Wells in Process – End of Period
Exploratory 1.000 0.000 1.000
Developmental 79.000 2.000 81.000
(1) Gross exploratory wells were increased by 1 and developmental wells were decreased by 1.
(2) Beginning of year number has been adjusted to remove 4 developmental wells.

Net Wells in Process of Drilling

Twelve Months Ended September 30, 2014

Total

East

West

Company

Wells in Process – Beginning of Period
Exploratory 1.000 (1) 0.000 1.000
Developmental 56.500 (1)(2) 0.000 56.500
Wells Commenced
Exploratory 4.832 1.533 6.365
Developmental 63.000 87.720 150.720
Wells Completed
Exploratory 4.832 1.533 6.365
Developmental 53.000 84.720 137.720
Wells Plugged & Abandoned
Exploratory 0.000 0.000 0.000
Developmental 2.000 1.000 3.000
Wells in Process – End of Period
Exploratory 1.000 0.000 1.000
Developmental 64.500 2.000 66.500
(1) Net exploratory wells were increased by 1 and developmental wells were decreased by 1.
(2) Beginning of year number has been adjusted to remove 4 developmental wells (3.5 net wells).
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

EXPLORATION AND PRODUCTION INFORMATION

Reserve Quantity Information
(Unaudited)
Gas MMcf
U.S.
Appalachian West Coast Total
Region Region Company
Proved Developed and Undeveloped Reserves:
September 30, 2013 1,238,738 60,777 1,299,515
Extensions and Discoveries 446,821 446,821
Revisions of Previous Estimates 43,690 1,358 45,048
Production (139,097 ) (3,210 ) (142,307 )
Purchases of Minerals in Place 33,986 33,986
Sales of Minerals in Place (76 ) (103 ) (179 )
September 30, 2014 1,624,062 58,822 1,682,884
Proved Developed Reserves:
September 30, 2013 807,055 59,862 866,917
September 30, 2014 1,119,901 57,907 1,177,808
Oil Mbbl
U.S.
Appalachian West Coast Total
Region Region Company
Proved Developed and Undeveloped Reserves:
September 30, 2013 283 41,315 41,598
Extensions and Discoveries 18 1,521 1,539
Revisions of Previous Estimates (17 ) (1,677 ) (1,694 )
Production (31 ) (3,005 ) (3,036 )
Purchases of Minerals in Place 83 83
Sales of Minerals in Place (13 ) (13 )
September 30, 2014 253 38,224 38,477
Proved Developed Reserves:
September 30, 2013 283 38,082 38,365
September 30, 2014 253 37,002 37,255
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
Pipeline & Storage Throughput – (millions of cubic feet – MMcf)
Three Months Ended Twelve Months Ended
September 30, September 30,
Increase Increase
2014 2013 (Decrease) 2014 2013 (Decrease)
Firm Transportation – Affiliated 14,362 11,064 3,298 110,327 97,702 12,625
Firm Transportation – Non-Affiliated 141,656 137,533 4,123 620,944 478,103 142,841
Interruptible Transportation 946 1,491 (545 ) 4,724 3,997 727
156,964 150,088 6,876 735,995 579,802 156,193
Gathering Volume – (MMcf)
Three Months Ended Twelve Months Ended
September 30, September 30,
Increase Increase
2014 2013 (Decrease) 2014 2013 (Decrease)
Gathered Volume – Affiliated 41,485 26,678 14,807 138,726 93,449 45,277
Utility Throughput – (MMcf)
Three Months Ended Twelve Months Ended
September 30, September 30,
Increase Increase
2014 2013 (Decrease) 2014 2013 (Decrease)
Retail Sales:
Residential Sales 3,628 3,629 (1 ) 60,101 52,753 7,348
Commercial Sales 476 461 15 8,834 7,486 1,348
Industrial Sales 16 128 (112 ) 393 947 (554 )
4,120 4,218 (98 ) 69,328 61,186 8,142
Off-System Sales 230 230 4,564 6,717 (2,153 )
Transportation 10,761 9,613 1,148 80,949 69,149 11,800
15,111 13,831 1,280 154,841 137,052 17,789
Energy Marketing Volume
Three Months Ended Twelve Months Ended
September 30, September 30,
Increase Increase
2014 2013 (Decrease) 2014 2013 (Decrease)
Natural Gas (MMcf) 6,846 6,608 238 52,694 46,875 5,819
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
FISCAL 2015 EARNINGS GUIDANCE AND SENSITIVITIES
Earnings per share sensitivity to changes
Fiscal 2015 (Diluted earnings per share guidance*) from prices used in guidance* ^
$0.50 change per MMBtu gas $5 change per Bbl oil
Range Increase Decrease Increase Decrease
Consolidated Earnings $ 3.05 $ 3.35 + $ 0.25 $ 0.25 + $ 0.05 $ 0.05
* Please refer to forward looking statement footnote beginning at page 9 of document.
^ This sensitivity table is current as of November 6, 2014 and only considers revenue from the Exploration and Production segment’s crude oil and natural gas sales. This revenue is based upon pricing used in the Company’s earnings forecast. For its fiscal 2015 earnings forecast, the Company is utilizing average NYMEX equivalent commodity pricing, exclusive of basis differential, of $4.00 per MMBtu for natural gas and $85 per Bbl for crude oil. The sensitivities will become obsolete with the passage of time, changes in Seneca’s production forecast, changes in basis differential, as additional hedging contracts are entered into, and with the settling of hedge contracts at their maturity.

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

NON-GAAP FINANCIAL MEASURES

In addition to financial measures calculated in accordance with generally accepted accounting principles (GAAP), this press release contains information regarding Operating Results and Adjusted EBITDA, which are non-GAAP financial measures. The Company believes that these non-GAAP financial measures are useful to investors because they provide an alternative method for assessing the Company’s ongoing operating results, for measuring the Company’s cash flow and liquidity, and for comparing the Company’s financial performance to other companies. The Company’s management uses these non-GAAP financial measures for the same purpose, and for planning and forecasting purposes. The presentation of non-GAAP financial measures is not meant to be a substitute for financial measures in accordance with GAAP.

Management defines Operating Results as reported GAAP earnings before items impacting comparability. The table at page 4 of this report reconciles National Fuel’s reported GAAP earnings to Operating Results for the three and twelve months ended September 30, 2014 and 2013.

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

The following tables reconcile National Fuel’s reported GAAP earnings to Adjusted EBITDA for the three and twelve months ended September 30, 2014 and 2013:

Three Months Ended Twelve Months Ended
September 30, September 30,
2014 2013 2014 2013
(in thousands)
Reported GAAP Earnings $ 57,431 $ 47,842 $ 299,413 $ 260,001
Depreciation, Depletion and Amortization 103,905 86,257 383,781 326,760
Interest and Other Income (5,464 ) (3,523 ) (13,631 ) (9,032 )
Interest Expense 23,050 23,983 94,277 94,111
Income Taxes 26,987 28,334 189,614 172,758
Regulatory adjustment – Utility segment 7,200 7,500
Adjusted EBITDA $ 205,909 $ 190,093 $ 953,454 $ 852,098
Adjusted EBITDA by Segment
Pipeline and Storage Adjusted EBITDA $ 42,573 $ 37,885 $ 186,022 $ 161,226
Gathering Adjusted EBITDA 19,469 8,800 64,060 29,777
Total Midstream Businesses Adjusted EBITDA 62,042 46,685 250,082 191,003
Exploration and Production Adjusted EBITDA 138,818 129,406 539,472 492,383
Utility Adjusted EBITDA 7,876 17,179 164,643 171,669
Energy Marketing Adjusted EBITDA 631 (2,289 ) 10,335 6,963
Corporate and All Other Adjusted EBITDA (3,458 ) (888 ) (11,078 ) (9,920 )
Total Adjusted EBITDA $ 205,909 $ 190,093 $ 953,454 $ 852,098
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

Quarter Ended September 30 (unaudited)

2014 2013
Operating Revenues $ 366,623,000 $ 338,863,000
Net Income Available for Common Stock $ 57,431,000 $ 47,842,000
Earnings Per Common Share:
Basic $ 0.68 $ 0.57
Diluted $ 0.68 $ 0.57
Weighted Average Common Shares:
Used in Basic Calculation 84,126,542 83,628,686
Used in Diluted Calculation 85,062,410 84,502,703

Twelve Months Ended September 30 (unaudited)

Operating Revenues $ 2,113,081,000 $ 1,829,551,000
Net Income Available for Common Stock $ 299,413,000 $ 260,001,000
Earnings Per Common Share:
Basic $ 3.57 $ 3.11
Diluted $ 3.52 $ 3.08
Weighted Average Common Shares:
Used in Basic Calculation 83,929,989 83,518,857
Used in Diluted Calculation 84,952,347 84,341,220

Share on StockTwits