UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 30, 2020

NATIONAL FUEL GAS COMPANY
(Exact name of registrant as specified in its charter)

	
			
New Jersey	1-3880	13-1086010	
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)	

	
				
6363 Main Street	 	 	
Williamsville,	New York	 	14221	
(Address of principal executive offices)	 	(Zip Code)	

Registrant’s telephone number, including area code: (716) 857-7000

Former name or former address, if changed since last report: Not Applicable

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

		
 	 	
☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

Securities registered pursuant to Section 12(b) of the Act:

			
Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered	
Common Stock, par value $1.00 per share	NFG	New York Stock Exchange	

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2).

Emerging growth company     ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 2.02    Results of Operations and Financial Condition.

On January 30, 2020, National Fuel Gas Company (the “Company”) issued a press release regarding its earnings for the quarter ended December 31, 2019. A copy of the press release is furnished as part of this Current Report as Exhibit 99.

Neither the furnishing of the press release as an exhibit to this Current Report nor the inclusion in such press release of any reference to the Company’s internet address shall, under any circumstances, be deemed to incorporate the information available at such internet address into this Current Report. The information available at the Company’s internet address is not part of this Current Report or any other report filed or furnished by the Company with the Securities and Exchange Commission.

In addition to financial measures calculated in accordance with generally accepted accounting principles (“GAAP”), the press release furnished as part of this Current Report as Exhibit 99 contains certain non-GAAP financial measures. The Company believes that such non-GAAP financial measures are useful to investors because they provide an alternative method for assessing the Company’s operating results in a manner that is focused on the performance of the Company’s ongoing operations, 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 prepared in accordance with GAAP.

Certain statements contained herein or in the press release furnished as part of this Current Report, including statements regarding estimated future earnings and statements that are identified by the use of the words “anticipates,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “predicts,” “projects,” “believes,” “seeks,” “will” and “may” and similar expressions, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. There can be no assurance that the Company’s projections will in fact be achieved nor do these projections reflect any acquisitions or divestitures that may occur in the future. While the Company’s expectations, beliefs and projections are expressed in good faith and are believed to have a reasonable basis, actual results may differ materially from those projected in forward-looking statements. Furthermore, each forward-looking statement speaks only as of the date on which it is made. 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 the price of natural gas or oil; impairments under the SEC’s full cost ceiling test for natural gas and oil reserves; 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; delays or changes in costs or plans with respect to Company projects or related projects of other companies, including difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators; governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, target rates of return, rate design and retained natural gas), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal; changes in price differentials between similar quantities of natural gas or oil sold at different geographic locations, and the effect of such changes on commodity production, revenues and demand for pipeline transportation capacity to or from such locations; financial and economic conditions, including the availability of credit, and occurrences affecting the Company’s ability to obtain financing on acceptable terms for working capital, capital expenditures and other investments, including any downgrades in the

Company’s credit ratings and changes in interest rates and other capital market conditions; factors affecting the Company’s ability to successfully identify, drill for and produce economically viable natural gas and oil reserves, including among others geology, lease availability, title disputes, weather conditions, shortages, delays or unavailability of equipment and services required in drilling operations, insufficient gathering, processing and transportation capacity, the need to obtain governmental approvals and permits, and compliance with environmental laws and regulations; increasing health care costs and the resulting effect on health insurance premiums and on the obligation to provide other post-retirement benefits; other changes in price differentials between similar quantities of natural gas or oil having different quality, heating value, hydrocarbon mix or delivery date; the cost and effects of legal and administrative claims against the Company or activist shareholder campaigns to effect changes at the Company; uncertainty of oil and gas reserve estimates; significant differences between the Company’s projected and actual production levels for natural gas or oil; changes in demographic patterns and weather conditions; changes in the availability, price or accounting treatment of derivative financial instruments; changes in 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; 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; the impact of information technology, cybersecurity or data security breaches; economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities or acts of war; 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 hereof.

Item 9.01    Financial Statements and Exhibits.

(d)    Exhibits

	
		
Exhibit 99	Press release furnished regarding earnings for the quarter ended December 31, 2019	
 	 	
Exhibit 104	Cover Page Interactive Data File (embedded within the Inline XBRL document)	

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	
		
NATIONAL FUEL GAS COMPANY	

By:	/s/ Sarah J. Mugel	
 	Sarah J. Mugel	
 	Secretary	

Dated: January 31, 2020

Exhibit 99

	

 	 	6363 Main Street/Williamsville, NY 14221	
 	 	 	 	
Release Date:	Immediate January 30, 2020	Kenneth E. Webster
Investor Relations
716-857-7067	Karen M. Camiolo
Treasurer
716-857-7344	

NATIONAL FUEL REPORTS FIRST QUARTER EARNINGS

WILLIAMSVILLE, N.Y.: National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated results for the first quarter of its 2020 fiscal year.

FISCAL 2020 FIRST QUARTER SUMMARY
		
•	GAAP earnings of $86.6 million, or $1.00 per share, compared to $102.7 million, or $1.18 per share, in the prior year	
		
•	Adjusted operating results of $87.4 million, or $1.01 per share, compared to $97.5 million, or $1.12 per share, in the prior year (see non-GAAP reconciliation below)	
		
•	Adjusted EBITDA of $222.9 million, an increase of $3.5 million from $219.4 million in the prior year (non-GAAP reconciliation on page 21)	
		
•	E&P segment net production of 58.4 Bcfe, an increase of 19% from the prior year	
		
•	Average natural gas prices, after the impact of hedging, of $2.32 per Mcf, down $0.29 per Mcf from the prior year	
		
•	Average oil prices, after the impact of hedging, of $62.92 per Bbl, up $1.22 per Bbl from the prior year	
		
•	Gathering revenues of $34.8 million, an increase of $5.1 million, or 17%, on higher throughput from E&P segment	
		
•	Due to low natural gas prices, the Company is reducing drilling activity; E&P segment completed the planned drop of a drilling rig in Appalachia in January and intends to drop an additional drilling rig in the summer of 2020	
		
•	Revising fiscal 2020 earnings guidance to a range of $2.95 to $3.15 per share to reflect lower natural gas prices	

RECONCILIATION OF GAAP EARNINGS TO ADJUSTED OPERATING RESULTS

									
 	 	 	 	 	
 	 	Three Months Ended	
 	 	December 31,	
(in thousands except per share amounts)	 	2019	 	2018	
Reported GAAP Earnings	 	$	86,591		 	$	102,660		
Items impacting comparability	 	 	 	 	
Remeasurement of deferred income taxes under 2017 Tax Reform	 	—		 	(5,000	)	
Mark-to-market adjustments due to hedge ineffectiveness (E&P)	 	—		 	(6,505	)	
Tax impact of mark-to-market adjustments due to hedge ineffectiveness	 	—		 	1,366		
Unrealized loss on other investments (Corporate / All Other)	 	1,019		 	6,347		
Tax impact of unrealized loss on other investments	 	(214	)	 	(1,333	)	
Adjusted Operating Results	 	$	87,396		 	$	97,535		
 	 	 	 	 	
Reported GAAP Earnings per share	 	$	1.00		 	$	1.18		
Items impacting comparability	 	 	 	 	
Remeasurement of deferred income taxes under 2017 Tax Reform	 	—		 	(0.06	)	
Mark-to-market adjustments due to hedge ineffectiveness, net of tax (E&P)	 	—		 	(0.06	)	
Unrealized loss on other investments, net of tax (Corporate / All Other)	 	0.01		 	0.06		
Adjusted Operating Results per share	 	$	1.01		 	$	1.12		

Page 2.

MANAGEMENT COMMENTS

David P. Bauer, President and Chief Executive Officer of National Fuel Gas Company, stated: “Though low natural gas prices weighed on National Fuel’s first quarter earnings, the Company saw strong operational results across our integrated, diversified business that position us well for future success. At the Utility, our ongoing system modernization program continues to enhance the safety and reliability of our distribution system, while at the same time modestly growing rate base and earnings. Our Pipeline and Storage business is focused on the execution of our significant expansion opportunities, including the Line N project placed into service in November and the Empire North project, which is on schedule for a late summer in-service date. Lastly, our Exploration and Production business continues to successfully develop its assets in Pennsylvania and California at a steady pace while navigating the headwinds in the commodity markets.”

FISCAL 2020 GUIDANCE AND BUSINESS UPDATE

National Fuel is revising its fiscal 2020 earnings guidance to reflect the results of the first quarter and updated forecast assumptions and projections. The Company is now projecting that earnings will be within the range of $2.95 to $3.15 per share, or $3.05 per share at the midpoint of the range. Substantially all of the decrease in expected earnings is due to the decline in natural gas prices that has occurred since the Company’s guidance was updated in November 2019, which is expected to lower the price realizations on Seneca’s Appalachian production. The Company’s other earnings guidance assumptions, including production, remain largely unchanged from the previous guidance.

The revised earnings guidance now assumes that NYMEX natural gas prices will average $2.05 per MMBtu for the remaining nine months of fiscal 2020, a decrease of $0.35 per MMBtu from the $2.40 per MMBtu assumed in the previous guidance. The Company is also lowering its Appalachian spot price forecast to $1.70 per MMBtu for the remainder of the fiscal year. These price assumptions are intended to reflect the current NYMEX forward markets for natural gas and oil and consider the impact of local sales point differentials. The Company currently has financial hedges and fixed price physical firm sales contracts in place on approximately 60% of Seneca’s remaining expected fiscal 2020 natural gas production that, on average, lock-in a price realization after the cost of transportation of $2.28 per Mcf.

As planned, the Company dropped a rig in January after completing its latest development pad in Tioga County, Pa. In response to the sustained decline in NYMEX pricing and regional pricing basis, the Company plans to further reduce its development activity level in Appalachia by dropping down to a single drilling rig during the summer of 2020 and deferring some completion activity in the Eastern Development Area to fiscal 2021. Coupled with lower service costs, Seneca’s reduced activity level is expected to result in lower capital expenditures in fiscal 2020 and going forward. The Company now expects Exploration and Production capital expenditures in fiscal 2020 to be in the range of $375 to $410 million, at the midpoint a reduction of $42.5 million from the previous guidance. The reduction in activity level is not expected to have a material impact on Seneca’s production in fiscal 2020.

Mr. Bauer added: “Facing the continued deterioration of natural gas prices, we are slowing down our development pace in Appalachia and intend to move to a single-rig drilling program this summer. This lower activity level will allow us to reduce our capital expenditures at Seneca by approximately $100 million from fiscal 2019 levels, maintaining our focus on the balance sheet. Overall, we remain steadfast in our commitment to the responsible development of our integrated Appalachian asset base, with responsible capital allocation at the heart of our financial decisions.”

Additional details on the Company's updated forecast assumptions and business segment guidance for fiscal 2020 are outlined in the table on page 7.

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DISCUSSION OF FIRST QUARTER RESULTS BY SEGMENT

The following earnings discussion of each operating segment for the quarter ended December 31, 2019, is summarized in a tabular form on pages 8 and 9 of this report. It may be helpful to refer to those tables while reviewing this discussion. As of the quarter ended September 30, 2019, the Company is no longer reporting the Energy Marketing operations as a reportable segment. The Energy Marketing operations have been included in the All Other category in the disclosures and tables that follow below. Prior year segment information has been restated to reflect this change in presentation.

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 natural gas and oil reserves, primarily in Pennsylvania and California.

												
 	Three Months Ended	
 	December 31,	
(in thousands)	2019	 	2018	 	Variance	
GAAP Earnings	$	23,977		 	$	38,214		 	$	(14,237	)	
Remeasurement of deferred taxes under 2017 Tax Reform	—		 	(990	)	 	990		
Mark-to-market adjustments due to hedge ineffectiveness, net of tax	—		 	(5,139	)	 	5,139		
Adjusted Operating Results	$	23,977		 	$	32,085		 	$	(8,108	)	
 	 	 	 	 	 	
Adjusted EBITDA	$	92,100		 	$	89,896		 	$	2,204		

Seneca’s first quarter GAAP earnings decreased $14.2 million versus the prior year, which includes the net impact of non-cash mark-to-market adjustments recorded in the prior year relating to hedge ineffectiveness and the impact of a remeasurement in Seneca’s deferred income taxes under 2017 Tax Reform that lowered income tax expense and benefited earnings in the prior year (see table above). Excluding these items, Seneca’s first quarter earnings decreased $8.1 million as the positive impacts of higher production and better realized crude oil prices were more than offset by the negative impacts of lower realized natural gas prices, higher operating expenses, higher interest expense, and a higher effective tax rate.

Seneca produced 58.4 Bcfe during the first quarter, an increase of 9.1 Bcfe, or 19%, from the prior year. Natural gas production increased 9.0 Bcf, or 20%, due primarily to production from new Marcellus and Utica wells completed and connected to sales in Appalachia. Net production increased 3.8 Bcf to 24.9 Bcf in Seneca’s Western Development Area and increased 5.2 Bcf to 29.3 Bcf in the Eastern Development Area during the first quarter. Oil production for the first quarter increased 29,000 Bbls from the prior year as new production continues to come online from Seneca’s development of the Pioneer and 17N assets in the Midway Sunset area of California.

Seneca's average realized natural gas price, after the impact of hedging and transportation costs, was $2.32 per Mcf, a decrease of $0.29 per Mcf from the prior year. This decline was largely due to lower NYMEX prices and lower spot pricing at local sales points in Pennsylvania. Seneca's average realized oil price, after the impact of hedging, was $62.92 per Bbl, an increase of $1.22 per Bbl over the prior year. The improvement in oil price realizations was due primarily to stronger hedge prices on Brent oil swaps that settled during the quarter when compared to the prior year.

The $16.8 million increase in Seneca’s total operating expenses was largely due to the higher production during the quarter. Lease operating and transportation (“LOE”) expense, which increased $8.2 million, includes the fees paid to the Company’s Gathering segment for gathering and compression services used to connect Seneca’s Marcellus and Utica production to sales points along interstate pipelines. In addition to higher production, the $9.4 million increase in depreciation, depletion and amortization (“DD&A”) expense was also due to a higher DD&A rate, which was driven by an increase in capitalized costs in Seneca’s full cost pool. Other taxes decreased $1.7 million in large part due to lower impact fees in Pennsylvania. The

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Pennsylvania impact fee, which is assessed on a per well basis, increases and decreases along with the changes in historical NYMEX natural gas prices. Additionally, Seneca’s general and administrative (“G&A”) costs have remained relatively flat as it has increased production. On a unit of production basis, G&A expenses during the quarter decreased $0.05 per Mcfe to $0.26 per Mcfe.

The increase in Seneca’s effective tax rate, excluding the impact of the prior year remeasurement of deferred income taxes discussed above, was largely driven by the prior year impact of the Enhanced Oil Recovery tax credit, which was not available in the current 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	
 	December 31,	
(in thousands)	2019	 	2018	 	Variance	
GAAP Earnings	$	18,105		 	$	25,102		 	$	(6,997	)	
 	 	 	 	 	 	
Adjusted EBITDA	$	42,942		 	$	47,824		 	$	(4,882	)	

The Pipeline and Storage segment’s first quarter GAAP earnings decreased $7.0 million versus the prior year as lower operating revenues, higher property taxes, and the impact of a higher effective income tax rate were only partially offset by lower operation and maintenance (“O&M”) expenses. The $4.8 million decrease in operating revenues was due largely to the expiration of a significant firm transportation contract on the Empire system in December 2018. Property, franchise and other taxes increased $1.0 million due primarily to the scheduled phase out of tax incentives in certain jurisdictions along the Empire system. The increase in the effective income tax rate, which lowered first quarter earnings by $2.5 million, was largely due to differences in the book and tax treatment of stock compensation. O&M expense decreased $0.7 million due primarily to lower personnel expenses and lower compressor and facility maintenance costs.

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 currently deliver Seneca’s gross Appalachian production to the interstate pipeline system.

												
 	Three Months Ended	
 	December 31,	
(in thousands)	2019	 	2018	 	Variance	
GAAP Earnings	$	15,944		 	$	14,183		 	$	1,761		
Remeasurement of deferred taxes under 2017 Tax Reform	—		 	(500	)	 	500		
Adjusted Operating Results	$	15,944		 	$	13,683		 	$	2,261		
 	 	 	 	 	 	
Adjusted EBITDA	$	29,431		 	$	25,948		 	$	3,483		

The Gathering segment’s first quarter GAAP earnings increased $1.8 million versus the prior year, which includes the impact of a remeasurement in the Gathering segment’s deferred income taxes under 2017 Tax Reform that lowered income tax expense and benefited earnings in the prior year (see table above). Excluding this item, the Gathering segment’s earnings increased $2.3 million. The increase was driven primarily by higher operating revenues, which were partially offset by higher O&M expense and a modest increase in DD&A expense. Operating revenues increased $5.1 million, or 17%, due primarily to a 9.7 Bcf increase in gathered volumes from Seneca’s Appalachian natural gas production. The $1.6 million increase in O&M expense was due to

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an increase in compressor station operating and preventative maintenance activity during the quarter. The $0.5 million increase in DD&A expense was due primarily to higher average plant assets in-service versus the prior year.

Downstream Businesses

Utility Segment

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

												
 	Three Months Ended	
 	December 31,	
(in thousands)	2019	 	2018	 	Variance	
GAAP Earnings	$	26,583		 	$	25,649		 	$	934		
 	 	 	 	 	 	
Adjusted EBITDA	$	59,463		 	$	57,569		 	$	1,894		

The Utility segment’s first quarter GAAP earnings increased $0.9 million over the prior year as an increase in customer margin (operating revenues less purchased gas sold) was partially offset by the impact of a higher effective income tax rate. The $1.3 million increase in customer margin was due primarily to higher revenues earned through the Company’s system modernization tracking mechanism and the positive impact of adjustments related to regulatory rate and cost recovery mechanisms subject to annual reconciliation. Warmer weather in the Utility segment’s service territories was not a significant driver of customer margin or earnings for the quarter. In New York, which represented 73% of the Utility segment’s residential and commercial customer throughput during the quarter, the impact of weather variations on customer margin and earnings is largely mitigated by that jurisdiction’s weather normalization clause (“WNC”). The modest earnings impact of warmer weather in Pennsylvania, which does not have a WNC, was partially offset by the impact of customer growth in New York. The increase in the effective income tax rate was largely due to differences in the book and tax treatment of stock compensation.

Corporate and All Other

The Company’s operations that are included in Corporate and All Other, which now include the Company’s energy marketing business, generated combined earnings of $2.0 million in the current year first quarter, which was a $2.5 million increase over the combined loss of $0.5 million generated in the prior year first quarter. The increase in earnings was driven primarily by lower unrealized losses coupled with an increase in realized gains on investment securities sold in the current year. These positive items were partially offset by the impact of the prior year remeasurement of deferred income taxes under 2017 Tax Reform that lowered income tax expense.

EARNINGS TELECONFERENCE

The Company will host a conference call on Friday, January 31, 2020, at 11 a.m. Eastern Time to discuss this announcement. There are two ways to access this call. For those with Internet access, visit the NFG Investor Relations News & Events page at National Fuel’s website at investor.nationalfuelgas.com. For those without Internet access, audio access is also provided by dialing (toll-free) 833-287-0795, using conference ID number “8154487”. For those unable to listen to the live conference call, an audio replay will be available approximately two hours following the teleconference at the same website link and by phone at (toll-free) 800-585-8367 using conference ID number “8154487”. Both the webcast and a telephonic replay will be available until the close of business on Friday, February 7, 2020.

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:	Kenneth E. Webster	716-857-7067	
Media Contact:	Karen L. Merkel	716-857-7654	

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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 the price of natural gas or oil; impairments under the SEC’s full cost ceiling test for natural gas and oil reserves; 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; delays or changes in costs or plans with respect to Company projects or related projects of other companies, including difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators; governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, target rates of return, rate design and retained natural gas), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal; changes in price differentials between similar quantities of natural gas or oil sold at different geographic locations, and the effect of such changes on commodity production, revenues and demand for pipeline transportation capacity to or from such locations; financial and economic conditions, including the availability of credit, and occurrences affecting the Company’s ability to obtain financing on acceptable terms for working capital, capital expenditures and other investments, including any downgrades in the Company’s credit ratings and changes in interest rates and other capital market conditions; factors affecting the Company’s ability to successfully identify, drill for and produce economically viable natural gas and oil reserves, including among others geology, lease availability, title disputes, weather conditions, shortages, delays or unavailability of equipment and services required in drilling operations, insufficient gathering, processing and transportation capacity, the need to obtain governmental approvals and permits, and compliance with environmental laws and regulations; increasing health care costs and the resulting effect on health insurance premiums and on the obligation to provide other post-retirement benefits; other changes in price differentials between similar quantities of natural gas or oil having different quality, heating value, hydrocarbon mix or delivery date; the cost and effects of legal and administrative claims against the Company or activist shareholder campaigns to effect changes at the Company; uncertainty of oil and gas reserve estimates; significant differences between the Company’s projected and actual production levels for natural gas or oil; changes in demographic patterns and weather conditions; changes in the availability, price or accounting treatment of derivative financial instruments; changes in 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; 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; the impact of information technology, cybersecurity or data security breaches; economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities or acts of war; 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.

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NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

GUIDANCE SUMMARY

As discussed on page 2, the Company is revising its earnings guidance for fiscal 2020. Additional details on the Company's forecast assumptions and business segment guidance are outlined in the table below.

	
				
 	Updated FY 2020 Guidance	 	Previous FY 2020 Guidance	
Consolidated Earnings per Share	$2.95 to $3.15	 	$3.00 to $3.30	
Consolidated Effective Tax Rate	 ~ 25%	 	~ 25%	
 	 	 	 	
Capital Expenditures (Millions)	 	 	 	
    Exploration and Production	$375 - $410	 	$415 - $455	
    Pipeline and Storage	$180 - $215	 	$180 - $215	
    Gathering	$50 - $60	 	$40 - $50	
    Utility	$90 - $100	 	$90 - $100	
    Consolidated Capital Expenditures	$695 - $785	 	$725 - $820	
 	 	 	 	
Exploration & Production Segment Guidance	 	 	 	
 	 	 	 	
    Commodity Price Assumptions	 	 	 	
    NYMEX natural gas price	$2.05 /MMBtu	 	$2.40 /MMBtu	
    Appalachian basin spot price (winter | summer)	$1.70 /MMBtu | $1.70 /MMBtu	 	$2.20 /MMBtu | $2.00 /MMBtu	
    NYMEX (WTI) crude oil price	$55.00 /Bbl	 	$55.00 /Bbl	
    California oil price premium (% of WTI)	104%	 	106%	
 	 	 	 	
    Production (Bcfe)	 	 	 	
    East Division - Appalachia	219 to 229	 	219 to 229	
    West Division - California	~ 16	 	~ 16	
    Total Production	235 to 245	 	235 to 245	
 	 	 	 	
    E&P Operating Costs ($/Mcfe)	 	 	 	
    LOE	$0.85 - $0.89	 	$0.85 - $0.89	
    G&A	$0.27 - $0.30	 	$0.27 - $0.30	
    DD&A	$0.73 - $0.77	 	$0.73 - $0.77	
 	 	 	 	
Other Business Segment Guidance (Millions)	 	 	 	
    Gathering Segment Revenues	$135 - $145	 	$135 - $145	
    Pipeline and Storage Segment Revenues	$290 - $295	 	$290 - $295	

Page 8.

	
																								
NATIONAL FUEL GAS COMPANY	
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS	
QUARTER ENDED DECEMBER 31, 2019	
(Unaudited)	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Upstream	 	Midstream	 	Downstream	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Exploration &	 	Pipeline &	 	 	 	 	 	Corporate /	 	 	
(Thousands of Dollars)	Production	 	Storage	 	Gathering	 	Utility	 	All Other	 	Consolidated*	
 	 	 	 	 	 	 	 	 	 	 	 	
First quarter 2019 GAAP earnings	$	38,214		 	$	25,102		 	$	14,183		 	$	25,649		 	$	(488	)	 	$	102,660		
 	 	 	 	 	 	 	 	 	 	 	 	
Items impacting comparability:	 	 	 	 	 	 	 	 	 	 	 	
Remeasurement of deferred taxes under 2017 Tax Reform	(990	)	 	 	 	(500	)	 	 	 	(3,510	)	 	(5,000	)	
Mark-to-market adjustments due to hedge ineffectiveness	(6,505	)	 	 	 	 	 	 	 	 	 	(6,505	)	
Tax impact of mark-to-market adjustments due to hedge ineffectiveness	1,366		 	 	 	 	 	 	 	 	 	1,366		
Unrealized (gain) loss on other investments	 	 	 	 	 	 	 	 	6,347		 	6,347		
Tax impact of unrealized (gain) loss on other investments	 	 	 	 	 	 	 	 	(1,333	)	 	(1,333	)	
First quarter 2019 adjusted operating results	32,085		 	25,102		 	13,683		 	25,649		 	1,016		 	97,535		
 	 	 	 	 	 	 	 	 	 	 	 	
Drivers of adjusted operating results**	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Upstream Revenues	 	 	 	 	 	 	 	 	 	 	 	
Higher (lower) natural gas production	18,513		 	 	 	 	 	 	 	 	 	18,513		
Higher (lower) crude oil production	1,454		 	 	 	 	 	 	 	 	 	1,454		
Higher (lower) realized natural gas prices, after hedging	(12,597	)	 	 	 	 	 	 	 	 	 	(12,597	)	
Higher (lower) realized crude oil prices, after hedging	581		 	 	 	 	 	 	 	 	 	581		
 	 	 	 	 	 	 	 	 	 	 	 	
Midstream Revenues	 	 	 	 	 	 	 	 	 	 	 	
Higher (lower) operating revenues	 	 	(3,831	)	 	4,027		 	 	 	 	 	196		
 	 	 	 	 	 	 	 	 	 	 		
Downstream Margins***	 	 	 	 	 	 	 	 	 	 		
System modernization tracker revenues	 	 	 	 	 	 	344		 	 	 	344		
Regulatory revenue adjustments	 	 	 	 	 	 	935		 	 	 	935		
 	 	 	 	 	 	 	 	 	 	 		
Operating Expenses	 	 	 	 	 	 	 	 	 	 		
Lower (higher) lease operating and transportation expenses	(6,508	)	 	 	 	 	 	 	 	 	 	(6,508	)	
Lower (higher) operating expenses	(622	)	 	555		 	(1,288	)	 	 	 	 	 	(1,355	)	
Lower (higher) property, franchise and other taxes	1,312		 	(827	)	 	 	 	 	 	 	 	485		
Lower (higher) depreciation / depletion	(7,464	)	 	 	 	 	 	 	 	 	 	(7,464	)	
 	 	 	 	 	 	 	 	 	 	 	 	
Other Income (Expense)	 	 	 	 	 	 	 	 	 	 		
(Higher) lower other deductions	 	 	 	 	 	 	 	 	1,461		 	1,461		
(Higher) lower interest expense	(706	)	 	 	 	 	 	 	 	 	 	(706	)	
 	 	 	 	 	 	 	 	 	 	 	 	
Income Taxes	 	 	 	 	 	 	 	 	 	 		
Lower (higher) income tax expense / effective tax rate	(1,332	)	 	(2,457	)	 	(216	)	 	(785	)	 	(288	)	 	(5,078	)	
 	 	 	 	 	 	 	 	 	 	 	 	
All other / rounding	(739	)	 	(437	)	 	(262	)	 	440		 	598		 	(400	)	
First quarter 2020 adjusted operating results	23,977			18,105			15,944			26,583			2,787			87,396		
 	 	 	 	 	 	 	 	 	 	 	 	
Items impacting comparability:	 	 	 	 	 	 	 	 	 	 	 	
Unrealized gain (loss) on other investments	 	 	 	 	 	 	 	 	(1,019	)	 	(1,019	)	
Tax impact of unrealized gain (loss) on other investments	 	 	 	 	 	 	 	 	214		 	214		
First quarter 2020 GAAP earnings	$	23,977		 	$	18,105		 	$	15,944		 	$	26,583		 	$	1,982		 	$	86,591		
 	 	 	 	 	 	 	 	 	 	 	 	
* Amounts do not reflect intercompany eliminations	 	 	 	 	 	 	 	 	 	 	 	
** Operating results have been calculated using the 21% federal statutory rate effective for the 2019 fiscal year.	
*** Downstream margin defined as operating revenues less purchased gas expense.	

Page 9.

	
																								
NATIONAL FUEL GAS COMPANY	
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE	
QUARTER ENDED DECEMBER 31, 2019	
(Unaudited)	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Upstream	 	Midstream	 	Downstream	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Exploration &	 	Pipeline &	 	 	 	 	 	Corporate /	 	 	
 	Production	 	Storage	 	Gathering	 	Utility	 	All Other	 	Consolidated*	
 	 	 	 	 	 	 	 	 	 	 	 	
First quarter 2019 GAAP earnings per share	$	0.44		 	$	0.29		 	$	0.16		 	$	0.30		 	$	(0.01	)	 	$	1.18		
Items impacting comparability:	 	 	 	 	 	 	 	 	 	 	 	
Remeasurement of deferred taxes under 2017 Tax Reform	(0.01	)	 	 	 	(0.01	)	 	 	 	(0.04	)	 	(0.06	)	
Mark-to-market adjustments due to hedge ineffectiveness, net of tax	(0.06	)	 	 	 	 	 	 	 	 	 	(0.06	)	
Unrealized (gain) loss on other investments, net of tax	 	 	 	 	 	 	 	 	0.06		 	0.06		
Rounding	 	 	 	 	0.01		 	 	 	(0.01	)	 	—		
First quarter 2019 adjusted operating results per share	0.37			0.29			0.16			0.30			—			1.12		
 	 	 	 	 	 	 	 	 	 	 	 	
Drivers of adjusted operating results**	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Upstream Revenues	 	 	 	 	 	 	 	 	 	 	 	
Higher (lower) natural gas production	0.21		 	 	 	 	 	 	 	 	 	0.21		
Higher (lower) crude oil production	0.02		 	 	 	 	 	 	 	 	 	0.02		
Higher (lower) realized natural gas prices, after hedging	(0.14	)	 	 	 	 	 	 	 	 	 	(0.14	)	
Higher (lower) realized crude oil prices, after hedging	0.01		 	 	 	 	 	 	 	 	 	0.01		
 	 	 	 	 	 	 	 	 	 	 			
Midstream Revenues	 	 	 	 	 	 	 	 	 	 			
Higher (lower) operating revenues	 	 	(0.04	)	 	0.05		 	 	 	 	 	0.01		
 	 	 	 	 	 	 	 	 	 	 			
Downstream Margins***	 	 	 	 	 	 	 	 	 	 			
System modernization tracker revenues	 	 	 	 	 	 	—		 	 	 	—		
Regulatory revenue adjustments	 	 	 	 	 	 	0.01		 	 	 	0.01		
 	 	 	 	 	 	 	 	 	 	 			
Operating Expenses	 	 	 	 	 	 	 	 	 	 			
Lower (higher) lease operating and transportation expenses	(0.07	)	 	 	 	 	 	 	 	 	 	(0.07	)	
Lower (higher) operating expenses	(0.01	)	 	0.01		 	(0.01	)	 	 	 	 	 	(0.01	)	
Lower (higher) property, franchise and other taxes	0.02		 	(0.01	)	 	 	 	 	 	 	 	0.01		
Lower (higher) depreciation / depletion	(0.09	)	 	 	 	 	 	 	 	 	 	(0.09	)	
 	 	 	 	 	 	 	 	 	 	 			
Other Income (Expense)	 	 	 	 	 	 	 	 	 	 			
(Higher) lower other deductions	 	 	 	 	 	 	 	 	0.02		 	0.02		
(Higher) lower interest expense	(0.01	)	 	 	 	 	 	 	 	 	 	(0.01	)	
 	 	 	 	 	 	 	 	 	 	 	 	
Income Taxes	 	 	 	 	 	 	 	 	 	 	 	
Lower (higher) income tax expense / effective tax rate	(0.02	)	 	(0.03	)	 	—		 	(0.01	)	 	—		 	(0.06	)	
 	 	 	 	 	 	 	 	 	 	 		
All other / rounding	(0.01	)	 	(0.01	)	 	(0.02	)	 	0.01		 	0.01		 	(0.02	)	
First quarter 2020 adjusted operating results per share	0.28		 	0.21		 	0.18		 	0.31		 	0.03		 	1.01		
 	 	 	 	 	 	 	 	 	 	 		
Items impacting comparability:	 	 	 	 	 	 	 	 	 	 	 	
Unrealized gain (loss) on other investments, net of tax	 	 	 	 	 	 	 	 	(0.01	)	 	(0.01	)	
First quarter 2020 GAAP earnings per share	$	0.28		 	$	0.21		 	$	0.18		 	$	0.31		 	$	0.02		 	$	1.00		
 	 	 	 	 	 	 	 	 	 	 	 	
* Amounts do not reflect intercompany eliminations	 	 	 	 	 	 	 	 	 	 	 	
** Operating results have been calculated using the 21% federal statutory rate effective for the 2019 fiscal year.	
*** Downstream margin defined as operating revenues less purchased gas expense.	

	

	

Page 10.

	

 	 	 	 	
NATIONAL FUEL GAS COMPANY	
AND SUBSIDIARIES	
 	 	 	 	
(Thousands of Dollars, except per share amounts)	 	 	 	
 	Three Months Ended	
 	December 31,	
 	(Unaudited)	
SUMMARY OF OPERATIONS	2019	 	2018	
Operating Revenues:		 	 	
Utility and Energy Marketing Revenues	$	228,026		 	$	272,092		
Exploration and Production and Other Revenues	167,193		 	163,937		
Pipeline and Storage and Gathering Revenues	48,969		 	54,218		
 	444,188		 	490,247		
Operating Expenses:	 	 	 	
Purchased Gas	92,272		 	138,660		
Operation and Maintenance:	 	 	 	
      Utility and Energy Marketing	43,256		 	43,915		
      Exploration and Production and Other	36,693		 	32,795		
      Pipeline and Storage and Gathering	25,885		 	24,934		
Property, Franchise and Other Taxes	23,144		 	24,005		
Depreciation, Depletion and Amortization	74,918		 	64,255		
 	296,168		 	328,564		
 	 	 	 	
Operating Income	148,020		 	161,683		
 	 	 	 	
Other Income (Expense):	 	 	 	
Other Income (Deductions)	(3,040	)	 	(9,602	)	
Interest Expense on Long-Term Debt	(25,443	)	 	(25,439	)	
Other Interest Expense	(1,551	)	 	(1,073	)	
 	 	 	 	
Income Before Income Taxes	117,986		 	125,569		
 	 	 	 	
Income Tax Expense	31,395		 	22,909		
 	 	 	 	
Net Income Available for Common Stock	$	86,591		 	$	102,660		
 	 	 	 	
Earnings Per Common Share	 	 	 	
Basic	$	1.00		 	$	1.19		
Diluted	$	1.00		 	$	1.18		
 	 	 	 	
Weighted Average Common Shares:	 	 	 	
Used in Basic Calculation	86,378,450		 	86,032,729		
Used in Diluted Calculation	86,883,152		 	86,708,814		

Page 11.

	
								
NATIONAL FUEL GAS COMPANY	
AND SUBSIDIARIES	
CONSOLIDATED BALANCE SHEETS	
(Unaudited)	
 	 	
 	December 31,	 	September 30,	
(Thousands of Dollars)	2019	 	2019	
 	 	 	 	
ASSETS	 	 	 	
Property, Plant and Equipment		$11,402,308		 		$11,204,838		
Less - Accumulated Depreciation, Depletion and Amortization	5,756,084		 	5,695,328		
Net Property, Plant and Equipment	5,646,224		 	5,509,510		
 	 	 	 	
Current Assets:	 	 	 	
Cash and Temporary Cash Investments	34,966		 	20,428		
Hedging Collateral Deposits	9,666		 	6,832		
Receivables - Net	158,944		 	139,956		
Unbilled Revenue	58,306		 	18,758		
Gas Stored Underground	29,991		 	36,632		
Materials and Supplies - at average cost	40,373		 	40,717		
Unrecovered Purchased Gas Costs	1,619		 	2,246		
Other Current Assets	96,831		 	97,054		
Total Current Assets	430,696		 	362,623		
 	 	 	 	
Other Assets:	 	 	 	
Recoverable Future Taxes	116,188		 	115,197		
Unamortized Debt Expense	13,578		 	14,005		
Other Regulatory Assets	165,409		 	167,320		
Deferred Charges	56,936		 	33,843		
Other Investments	141,229		 	144,917		
Goodwill	5,476		 	5,476		
Prepaid Post-Retirement Benefit Costs	64,999		 	60,517		
Fair Value of Derivative Financial Instruments	40,569		 	48,669		
Other	21,354		 	80		
Total Other Assets	625,738		 	590,024		
Total Assets		$6,702,658		 		$6,462,157		
 	 	 	 	
CAPITALIZATION AND LIABILITIES	 	 	 	
Capitalization:	 	 	 	
Comprehensive Shareholders' Equity	 	 	 	
Common Stock, $1 Par Value Authorized - 200,000,000 Shares; Issued and	 	 	 	
Outstanding - 86,551,528 Shares and 86,315,287 Shares, Respectively		$86,552		 		$86,315		
Paid in Capital	831,146		 	832,264		
Earnings Reinvested in the Business	1,320,592		 	1,272,601		
Accumulated Other Comprehensive Loss	(56,150	)	 	(52,155	)	
Total Comprehensive Shareholders' Equity	2,182,140		 	2,139,025		
Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issuance Costs	2,134,339		 	2,133,718		
Total Capitalization	4,316,479		 	4,272,743		
 	 	 	 	
Current and Accrued Liabilities:	 	 	 	
Notes Payable to Banks and Commercial Paper	139,800		 	55,200		
Current Portion of Long-Term Debt	—		 	—		
Accounts Payable	126,985		 	132,208		
Amounts Payable to Customers	3,444		 	4,017		
Dividends Payable	37,650		 	37,547		
Interest Payable on Long-Term Debt	29,461		 	18,508		
Customer Advances	13,727		 	13,044		
Customer Security Deposits	15,510		 	16,210		
Other Accruals and Current Liabilities	173,603		 	139,600		
Fair Value of Derivative Financial Instruments	6,282		 	5,574		
Total Current and Accrued Liabilities	546,462		 	421,908		
 	 	 	 	
Deferred Credits:	 	 	 	
Deferred Income Taxes	708,774		 	653,382		
Taxes Refundable to Customers	361,556		 	366,503		
Cost of Removal Regulatory Liability	222,172		 	221,699		
Other Regulatory Liabilities	148,350		 	142,367		
Pension and Other Post-Retirement Liabilities	129,616		 	133,729		
Asset Retirement Obligations	128,382		 	127,458		
Other Deferred Credits	140,867		 	122,368		
Total Deferred Credits	1,839,717		 	1,767,506		
Commitments and Contingencies	—		 	—		
Total Capitalization and Liabilities		$6,702,658		 		$6,462,157		

Page 12.

	

 	 	 	 	 	
NATIONAL FUEL GAS COMPANY	
AND SUBSIDIARIES	
CONSOLIDATED STATEMENTS OF CASH FLOWS	
(Unaudited)	
 	 	Three Months Ended	
 	 	December 31,	
(Thousands of Dollars)	 	2019	 	2018	
 	 	 	 	 	
Operating Activities:	 	 	 	 	
Net Income Available for Common Stock	 	$	86,591		 	$	102,660		
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:	 	 		 	 		
Depreciation, Depletion and Amortization	 	74,918		 	64,255		
Deferred Income Taxes	 	51,366		 	64,175		
Stock-Based Compensation	 	3,266		 	5,311		
Other	 	1,911		 	2,182		
Change in:	 	 	 	 	
Receivables and Unbilled Revenue	 	(58,655	)	 	(101,541	)	
Gas Stored Underground and Materials and Supplies	 	6,985		 	8,353		
Unrecovered Purchased Gas Costs	 	627		 	(4,496	)	
Other Current Assets	 	14		 	(1,195	)	
Accounts Payable	 	8,280		 	1,502		
Amounts Payable to Customers	 	(573	)	 	(3,394	)	
Customer Advances	 	683		 	(6,258	)	
Customer Security Deposits	 	(700	)	 	(1,861	)	
Other Accruals and Current Liabilities	 	15,438		 	38,412		
Other Assets	 	(28,259	)	 	(42,400	)	
Other Liabilities	 	5,857		 	(21,333	)	
Net Cash Provided by Operating Activities	 	$	167,749		 	$	104,372		
 	 	 	 	 	
Investing Activities:	 	 	 	 	
Capital Expenditures	 	$	(198,495	)	 	$	(177,567	)	
Other	 	5,212		 	(2,549	)	
Net Cash Used in Investing Activities	 	$	(193,283	)	 	$	(180,116	)	
 	 	 	 	 	
Financing Activities:	 	 	 	 	
Changes in Notes Payable to Banks and Commercial Paper	 	$	84,600		 	$	—		
Dividends Paid on Common Stock	 	(37,547	)	 	(36,532	)	
Net Repurchases of Common Stock	 	(4,147	)	 	(8,233	)	
Net Cash Provided by (Used in) Financing Activities	 	$	42,906		 	$	(44,765	)	
 	 	 	 	 	
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash	 	17,372		 	(120,509	)	
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	 	27,260		 	233,047		
Cash, Cash Equivalents, and Restricted Cash at December 31	 	$	44,632		 	$	112,538		

Page 13.

	

 	 	 	 	 	 	
NATIONAL FUEL GAS COMPANY	
AND SUBSIDIARIES	
 	 	 	 	 	 	
SEGMENT OPERATING RESULTS AND STATISTICS	
(UNAUDITED)	
 	 	 	 	 	 	
UPSTREAM BUSINESS	

 	Three Months Ended	
(Thousands of Dollars, except per share amounts)	December 31,	
EXPLORATION AND PRODUCTION SEGMENT	2019	 	2018	 	Variance	
Total Operating Revenues	$	165,939		 	$	162,876		 	$	3,063		
 	 	 	 	 	 	
Operating Expenses:	 	 	 	 	 	
Operation and Maintenance:	 	 	 	 	 	
General and Administrative Expense	15,380		 	15,198		 	182		
Lease Operating and Transportation Expense	50,800		 	42,562		 	8,238		
All Other Operation and Maintenance Expense	2,958		 	2,353		 	605		
Property, Franchise and Other Taxes	4,701		 	6,362		 	(1,661	)	
Depreciation, Depletion and Amortization	44,148		 	34,700		 	9,448		
 	117,987		 	101,175		 	16,812		
 	 	 	 	 	 	
Operating Income	47,952		 	61,701		 	(13,749	)	
 	 	 	 	 	 	
Other Income (Expense):	 	 	 	 	 	
Non-Service Pension and Post-Retirement Benefit Costs	(395	)	 	(4	)	 	(391	)	
Interest and Other Income	234		 	282		 	(48	)	
Interest Expense	(14,057	)	 	(13,163	)	 	(894	)	
 	 	 	 	 	 	
Income Before Income Taxes	33,734		 	48,816		 	(15,082	)	
Income Tax Expense	9,757		 	10,602		 	(845	)	
Net Income	$	23,977		 	$	38,214		 	$	(14,237	)	
 	 	 	 	 	 	
Net Income Per Share (Diluted)	$	0.28		 	$	0.44		 	$	(0.16	)	

Page 14.

	

NATIONAL FUEL GAS COMPANY	
AND SUBSIDIARIES	
 	 	 	 	 	 	
SEGMENT OPERATING RESULTS AND STATISTICS	
(UNAUDITED)	
 	 	 	 	 	 	
MIDSTREAM BUSINESSES	

 	Three Months Ended	
(Thousands of Dollars, except per share amounts)	December 31,	
PIPELINE AND STORAGE SEGMENT	2019	 	2018	 	Variance	
Revenues from External Customers	$	48,969		 	$	54,218		 	$	(5,249	)	
Intersegment Revenues	23,251		 	22,851		 	400		
Total Operating Revenues	72,220		 	77,069		 	(4,849	)	
 	 	 	 	 	 	
Operating Expenses:	 	 	 	 	 	
Purchased Gas	(7	)	 	304		 	(311	)	
Operation and Maintenance	20,930		 	21,633		 	(703	)	
Property, Franchise and Other Taxes	8,355		 	7,308		 	1,047		
Depreciation, Depletion and Amortization	11,605		 	11,114		 	491		
 	40,883		 	40,359		 	524		
 	 	 	 	 	 	
Operating Income	31,337		 	36,710		 	(5,373	)	
 	 	 	 	 	 	
Other Income (Expense):	 	 	 	 	 	
Non-Service Pension and Post-Retirement Benefit (Costs) Credit	(174	)	 	467		 	(641	)	
Interest and Other Income	1,552		 	1,459		 	93		
Interest Expense	(7,112	)	 	(7,286	)	 	174		
 	 	 	 	 	 	
Income Before Income Taxes	25,603		 	31,350		 	(5,747	)	
Income Tax Expense	7,498		 	6,248		 	1,250		
Net Income	$	18,105		 	$	25,102		 	$	(6,997	)	
 	 	 	 	 	 	
Net Income Per Share (Diluted)	$	0.21		 	$	0.29		 	$	(0.08	)	

 	Three Months Ended	
 	December 31,	
GATHERING SEGMENT	2019	 	2018	 	Variance	
Revenues from External Customers	$	—		 	$	—		 	$	—		
Intersegment Revenues	34,788		 	29,690		 	5,098		
Total Operating Revenues	34,788		 	29,690		 	5,098		
 	 	 	 	 	 	
Operating Expenses:	 	 	 	 	 	
Operation and Maintenance	5,342		 	3,711		 	1,631		
Property, Franchise and Other Taxes	15		 	31		 	(16	)	
Depreciation, Depletion and Amortization	5,138		 	4,679		 	459		
 	10,495		 	8,421		 	2,074		
 	 	 	 	 	 	
Operating Income	24,293		 	21,269		 	3,024		
 	 	 	 	 	 	
Other Income (Expense):	 	 	 	 		
Non-Service Pension and Post-Retirement Benefit Costs	(71	)	 	(82	)	 	11		
Interest and Other Income	68		 	125		 	(57	)	
Interest Expense	(2,219	)	 	(2,377	)	 	158		
 	 	 	 	 	 	
Income Before Income Taxes	22,071		 	18,935		 	3,136		
Income Tax Expense	6,127		 	4,752		 	1,375		
Net Income	$	15,944		 	$	14,183		 	$	1,761		
 	 	 	 	 	 	
Net Income Per Share (Diluted)	$	0.18		 	$	0.16		 	$	0.02		

Page 15.

	

 	 	 	 	 	 	
NATIONAL FUEL GAS COMPANY	
AND SUBSIDIARIES	
 	 	 	 	 	 	
SEGMENT OPERATING RESULTS AND STATISTICS	
(UNAUDITED)	
 	 	 	 	 	 	
DOWNSTREAM BUSINESS	

 	Three Months Ended	
(Thousands of Dollars, except per share amounts)	December 31,	
UTILITY SEGMENT	2019	 	2018	 	Variance	
Revenues from External Customers	$	194,910		 	$	220,012		 	$	(25,102	)	
Intersegment Revenues	1,915		 	2,645		 	(730	)	
Total Operating Revenues	196,825		 	222,657		 	(25,832	)	
 	 	 	 	 	 	
Operating Expenses:	 	 	 	 	 	
Purchased Gas	84,705		 	111,880		 	(27,175	)	
Operation and Maintenance	42,843		 	43,155		 	(312	)	
Property, Franchise and Other Taxes	9,814		 	10,053		 	(239	)	
Depreciation, Depletion and Amortization	13,630		 	13,290		 	340		
 	150,992		 	178,378		 	(27,386	)	
 	 	 	 	 	 	
Operating Income	45,833		 	44,279		 	1,554		
 	 	 	 	 	 	
Other Income (Expense):	 	 	 	 	 	
Non-Service Pension and Post-Retirement Benefit Costs	(6,764	)	 	(6,928	)	 	164		
Interest and Other Income	950		 	712		 	238		
Interest Expense	(5,673	)	 	(5,893	)	 	220		
 	 	 	 	 	 	
Income Before Income Taxes	34,346		 	32,170		 	2,176		
Income Tax Expense	7,763		 	6,521		 	1,242		
Net Income	$	26,583		 	$	25,649		 	$	934		
 	 	 	 	 	 	
Net Income Per Share (Diluted)	$	0.31		 	$	0.30		 	$	0.01		

Page 16.

	
												
NATIONAL FUEL GAS COMPANY	
AND SUBSIDIARIES	
 	 	 	 	 	 	
SEGMENT OPERATING RESULTS AND STATISTICS	
(UNAUDITED)	
 	 	 	 	 	 	
 	Three Months Ended	
(Thousands of Dollars, except per share amounts)	December 31,	
ALL OTHER	2019	 	2018	 	Variance	
Revenues from External Customers	$	34,235		 	$	53,087		 	$	(18,852	)	
Intersegment Revenues	177		 	332		 	(155	)	
Total Operating Revenues	34,412		 	53,419		 	(19,007	)	
Operating Expenses:	 	 	 	 	 	
Purchased Gas	32,033		 	51,516		 	(19,483	)	
Operation and Maintenance	1,703		 	1,878		 	(175	)	
Property, Franchise and Other Taxes	142		 	135		 	7		
Depreciation, Depletion and Amortization	203		 	282		 	(79	)	
 	34,081		 	53,811		 	(19,730	)	
 	 	 	 	 	 	
Operating Income (Loss)	331		 	(392	)	 	723		
 	 	 	 	 	 	
Other Income (Expense):	 	 	 	 	 	
Non-Service Pension and Post-Retirement Benefit Costs	(69	)	 	(122	)	 	53		
Interest and Other Income	278		 	305		 	(27	)	
Interest Expense	(18	)	 	(5	)	 	(13	)	
 	 	 	 	 	 	
Income (Loss) Before Income Taxes	522		 	(214	)	 	736		
Income Tax Expense (Benefit)	151		 	(296	)	 	447		
Net Income	$	371		 	$	82		 	$	289		
Net Income Per Share (Diluted)	$	—		 	$	—		 	$	—		
 	 	
 	Three Months Ended	
 	December 31,	
CORPORATE	2019	 	2018	 	Variance	
Revenues from External Customers	$	135		 	$	54		 	$	81		
Intersegment Revenues	1,094		 	1,165		 	(71	)	
Total Operating Revenues	1,229		 	1,219		 	10		
Operating Expenses:	 	 	 	 	 	
Operation and Maintenance	2,644		 	2,797		 	(153	)	
Property, Franchise and Other Taxes	117		 	116		 	1		
Depreciation, Depletion and Amortization	194		 	190		 	4		
 	2,955		 	3,103		 	(148	)	
 	 	 	 	 	 	
Operating Loss	(1,726	)	 	(1,884	)	 	158		
 	 	 	 	 	 	
Other Income (Expense):	 	 	 	 	 	
Non-Service Pension and Post-Retirement Benefit Costs	(775	)	 	(738	)	 	(37	)	
Interest and Other Income	31,073		 	23,617		 	7,456		
Interest Expense on Long-Term Debt	(25,443	)	 	(25,439	)	 	(4	)	
Other Interest Expense	(1,419	)	 	(1,044	)	 	(375	)	
 	 	 	 	 	 	
Income (Loss) before Income Taxes	1,710		 	(5,488	)	 	7,198		
Income Tax Expense (Benefit)	99		 	(4,918	)	 	5,017		
Net Income (Loss)	$	1,611		 	$	(570	)	 	$	2,181		
Net Income (Loss) Per Share (Diluted)	$	0.02		 	$	(0.01	)	 	$	0.03		

 	Three Months Ended	
 	December 31,	
INTERSEGMENT ELIMINATIONS	2019	 	2018	 	Variance	
Intersegment Revenues	$	(61,225	)	 	$	(56,683	)	 	$	(4,542	)	
Operating Expenses:	 	 	 	 	 	
Purchased Gas	(24,459	)	 	(25,040	)	 	581		
Operation and Maintenance	(36,766	)	 	(31,643	)	 	(5,123	)	
 	(61,225	)	 	(56,683	)	 	(4,542	)	
 	 	 	 	 	 	
Operating Income	—		 	—		 	—		
 	 	 	 	 	 	
Other Income (Expense):	 	 	 	 	 	
Interest and Other Deductions	(28,947	)	 	(28,695	)	 	(252	)	
Interest Expense	28,947		 	28,695		 	252		
Net Income (Loss)	$	—		 	$	—		 	$	—		
Net Income (Loss) Per Share (Diluted)	$	—		 	$	—		 	$	—		

Page 17.

	

 	 	 	 	 	 	
NATIONAL FUEL GAS COMPANY	
AND SUBSIDIARIES	
 	 	 	 	 	 	
SEGMENT INFORMATION (Continued)	
(Thousands of Dollars)	

 	Three Months Ended	
 	December 31,	
 	(Unaudited)	
 	 	 	 	 	Increase	
 	2019	 	2018	 	(Decrease)	
 	 	 	 	 	 	
Capital Expenditures:	 	 	 	 	 	
Exploration and Production	$	126,918		(1)(2) 	$	120,214		(3)(4) 	$	6,704		
Pipeline and Storage	57,084		(1)(2) 	29,964		(3)(4) 	27,120		
Gathering	9,838		(1)(2) 	8,790		(3)(4) 	1,048		
Utility	17,165		(1)(2) 	15,923		(3)(4) 	1,242		
Total Reportable Segments	211,005			174,891			36,114		
All Other	22		 	20		 	2		
Corporate	185		 	17		 	168		
Total Capital Expenditures	$	211,212		 	$	174,928		 	$	36,284		

		
(1) 	Capital expenditures for the three months ended December 31, 2019, include accounts payable and accrued liabilities related to capital expenditures of $62.3 million, $22.7 million, $5.3 million, and $3.5 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at December 31, 2019, since they represent non-cash investing activities at that date.	

(2) 	Capital expenditures for the three months ended December 31, 2019, exclude capital expenditures of $38.0 million, $23.8 million, $6.6 million and $12.7 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, 2019 and paid during the three months ended December 31, 2019. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2019, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at December 31, 2019.	

(3) 	Capital expenditures for the three months ended December 31, 2018, include accounts payable and accrued liabilities related to capital expenditures of $66.1 million, $12.9 million, $4.4 million, and $2.8 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at December 31, 2018, since they represent non-cash investing activities at that date.	

(4) 	Capital expenditures for the three months ended December 31, 2018, exclude capital expenditures of $51.3 million, $21.9 million, $6.1 million and $9.5 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts were in accounts payable and accrued liabilities at September 30, 2018 and paid during the three months ended December 31, 2018. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2018, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at December 31, 2018.	

	

DEGREE DAYS	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	Percent Colder	
 	 	 	 	 	 	 	(Warmer) Than:	
Three Months Ended December 31	Normal	 	2019	 	2018	 	  Normal (1)	 	Last Year (1)	
 	 	 	 	 	 	 	 	 	 	
Buffalo, NY	2,253	 	2,232	 	2,325	 	(0.9	)	 	(4.0	)	
Erie, PA	2,044	 	1,906	 	2,030	 	(6.8	)	 	(6.1	)	

(1) 	Percents compare actual 2019 degree days to normal degree days and actual 2019 degree days to actual 2018 degree days.	

Page 18.

	

 	 	 	 	 	 	 	
NATIONAL FUEL GAS COMPANY	
AND SUBSIDIARIES	
 	 	 	 	 	 	 	
EXPLORATION AND PRODUCTION INFORMATION	

 	 	Three Months Ended	
 	 	December 31,	
 	 	 	 	 	 	Increase	
 	 	2019	 	2018	 	(Decrease)	
 	 	 	 	 	 	 	
Gas Production/Prices:	 	 	 	 	 	 	
Production (MMcf)	 	 	 	 	 	 	
Appalachia	 	54,284		 	45,305		 	8,979		
West Coast	 	487		 	502		 	(15	)	
Total Production	 	54,771		 	45,807		 	8,964		
 	 	 	 	 	 	 	
Average Prices (Per Mcf)	 	 	 	 	 	 	
Appalachia	 	$	2.16		 	$	2.93		 	$	(0.77	)	
West Coast	 	4.98		 	6.73		 	(1.75	)	
Weighted Average	 	2.19		 	2.97		 	(0.78	)	
Weighted Average after Hedging	 	2.32		 	2.61		 	(0.29	)	
 	 	 	 	 	 	 	
Oil Production/Prices:	 	 	 	 	 	 	
Production (Thousands of Barrels)	 	 	 	 	 	 	
Appalachia	 	—		 	1		 	(1	)	
West Coast	 	601		 	571		 	30		
Total Production	 	601		 	572		 	29		
 	 	 	 	 	 	 	
Average Prices (Per Barrel)	 	 	 	 	 	 	
Appalachia	 	$	54.49		 	$	66.31		 	$	(11.82	)	
West Coast	 	62.63		 	65.71		 	(3.08	)	
Weighted Average	 	62.63		 	65.71		 	(3.08	)	
Weighted Average after Hedging	 	62.92		 	61.70		 	1.22		
 	 	 	 	 	 	 	
Total Production (MMcfe)	 	58,377		 	49,239		 	9,138		
 	 	 	 	 	 	 	
Selected Operating Performance Statistics:	 	 	 	 	 	 	
General & Administrative Expense per Mcfe (1)	 	$	0.26		 	$	0.31		 	$	(0.05	)	
Lease Operating and Transportation Expense per Mcfe (1)(2)	 	$	0.87		 	$	0.86		 	$	0.01		
Depreciation, Depletion & Amortization per Mcfe (1)	 	$	0.76		 	$	0.70		 	$	0.06		

		
(1) 	Refer to page 13 for the General and Administrative Expense, Lease Operating and Transportation Expense and Depreciation, Depletion, and Amortization Expense for the Exploration and Production segment.	

(2) 	Amounts include transportation expense of $0.57 and $0.54 per Mcfe for the three months ended December 31, 2019 and December 31, 2018, respectively.	

Page 19.

	
								
NATIONAL FUEL GAS COMPANY	
AND SUBSIDIARIES	
 	 	 	 	 	 	 	
EXPLORATION AND PRODUCTION INFORMATION	
 	
Hedging Summary for Remaining Nine Months of Fiscal 2020	 	Volume	 	 	Average Hedge Price	
Oil Swaps	 	 	 	 	 	 	
Brent	 	1,035,000		BBL	 	$	64.55 / BBL	
NYMEX	 	243,000		BBL	 	$	50.52 / BBL	
Total	 	1,278,000		BBL	 	$	61.88 / BBL	
 	 	 	 	 	 	 	
Gas Swaps	 	 	 	 	 	 	
NYMEX	 	66,150,000		MMBTU	 	$	2.69 / MMBTU	
DAWN	 	5,400,000		MMBTU	 	$	3.00 / MMBTU	
Fixed Price Physical Sales	 	33,588,417		MMBTU	 	$	2.35 / MMBTU	
Total	 	105,138,417		MMBTU	 	$	2.60 / MMBTU	
 	 	 	 	 	 	 	
Hedging Summary for Fiscal 2021	 	Volume	 	 	Average Hedge Price	
Oil Swaps	 	 	 	 	 	 	
Brent	 	696,000		BBL	 	$	64.29 / BBL	
NYMEX	 	156,000		BBL	 	$	51.00 / BBL	
Total	 	852,000		BBL	 	$	61.86 / BBL	
 	 	 	 	 	 	 	
Gas Swaps	 	 	 	 	 	 	
NYMEX	 	14,750,000		MMBTU	 	$	2.73 / MMBTU	
   DAWN	 	600,000		MMBTU	 	$	3.00 / MMBTU	
Fixed Price Physical Sales	 	42,052,246		MMBTU	 	$	2.22 / MMBTU	
Total	 	57,402,246		MMBTU	 	$	2.36 / MMBTU	
 	 	 	 	 	 	 	
Hedging Summary for Fiscal 2022	 	Volume	 	 	Average Hedge Price	
Oil Swaps	 	 	 	 	 	 	
Brent	 	300,000		BBL	 	$	60.07 / BBL	
NYMEX	 	156,000		BBL	 	$	51.00 / BBL	
Total	 	456,000		BBL	 	$	56.97 / BBL	
 	 	 	 	 	 	 	
Gas Swaps	 	 	 	 	 	 	
NYMEX	 	200,000		MMBTU	 	$	2.50 / MMBTU	
Fixed Price Physical Sales	 	40,328,564		MMBTU	 	$	2.23 / MMBTU	
Total	 	40,528,564		MMBTU	 	$	2.23 / MMBTU	

Hedging Summary for Fiscal 2023	 	Volume	 	 	Average Hedge Price	
Fixed Price Physical Sales	 	36,961,007		MMBTU	 	$	2.26 / MMBTU	
 	 	 	 	 	 	 	
Hedging Summary for Fiscal 2024	 	Volume	 	 	Average Hedge Price	
Fixed Price Physical Sales	 	20,801,194		MMBTU	 	$	2.25 / MMBTU	
 	 	 	 	 	 	 	
Hedging Summary for Fiscal 2025	 	Volume	 	 	Average Hedge Price	
Fixed Price Physical Sales	 	2,293,200		MMBTU	 	$	2.18 / MMBTU	

	

Page 20.

	

NATIONAL FUEL GAS COMPANY	
AND SUBSIDIARIES	

 	 	 	 	 	 	 	
Pipeline & Storage Throughput - (millions of cubic feet - MMcf)	
 	 	 	 	 	 	 	
 	 	Three Months Ended	
 	 	December 31,	
 	 	 	 	 	 	Increase	
 	 	2019	 	2018	 	(Decrease)	
Firm Transportation - Affiliated	 	34,667		 	35,700		 	(1,033	)	
Firm Transportation - Non-Affiliated	 	173,981		 	156,201		 	17,780		
Interruptible Transportation	 	714		 	916		 	(202	)	
 	 	209,362		 	192,817		 	16,545		
 	 	 	 	 	 	 	
Gathering Volume - (MMcf)	 	 	 	 	 	 	
 	 	Three Months Ended	
 	 	December 31,	
 	 	 	 	 	 	Increase	
 	 	2019	 	2018	 	(Decrease)	
Gathered Volume - Affiliated	 	64,392		 	54,688		 	9,704		

Utility Throughput - (MMcf)	 	 	 	 	 	 	
 	 	Three Months Ended	
 	 	December 31,	
 	 	 	 	 	 	Increase	
 	 	2019	 	2018	 	(Decrease)	
Retail Sales:	 	 	 	 	 	 	
Residential Sales	 	19,476		 	19,780		 	(304	)	
Commercial Sales	 	2,812		 	2,846		 	(34	)	
Industrial Sales	 	217		 	204		 	13		
 	 	22,505		 	22,830		 	(325	)	
Transportation	 	20,556		 	22,270		 	(1,714	)	
 	 	43,061		 	45,100		 	(2,039	)	

	

	

	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

Page 21.

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 Adjusted Operating Results and Adjusted EBITDA, which are non-GAAP financial measures. The Company believes that these non-GAAP financial measures are useful to investors because they provide an alternative method for assessing the Company's ongoing operating results and for comparing the Company’s financial performance to other companies. The Company's management uses these non-GAAP financial measures for the same purpose, and for planning and forecasting purposes. The presentation of non-GAAP financial measures is not meant to be a substitute for financial measures in accordance with GAAP.

Management defines Adjusted Operating Results as reported GAAP earnings before items impacting comparability. The following table reconciles National Fuel's reported GAAP earnings to Adjusted Operating Results for the three months ended December 31, 2019 and 2018:

									
 	 	Three Months Ended	
 	 	December 31,	
(in thousands except per share amounts)	 	2019	 	2018	
Reported GAAP Earnings	 	$	86,591		 	$	102,660		
Items impacting comparability	 	 	 	 	
Remeasurement of deferred income taxes under 2017 Tax Reform	 	—		 	(5,000	)	
Mark-to-market adjustments due to hedge ineffectiveness (E&P)	 	—		 	(6,505	)	
Tax impact of mark-to-market adjustments due to hedge ineffectiveness	 	—		 	1,366		
Unrealized loss on other investments (Corporate/All Other)	 	1,019		 	6,347		
Tax impact of unrealized loss on other investments	 	(214	)	 	(1,333	)	
Adjusted Operating Results	 	$	87,396		 	$	97,535		
 	 	 	 	 	
Reported GAAP Earnings per share	 	$	1.00		 	$	1.18		
Items impacting comparability	 	 	 	 	
Remeasurement of deferred income taxes under 2017 Tax Reform	 	—		 	(0.06	)	
Mark-to-market adjustments due to hedge ineffectiveness, net of tax (E&P)	 	—		 	(0.06	)	
Unrealized loss on other investments, net of tax (Corporate/All Other)	 	0.01		 	0.06		
Adjusted Operating Results per share	 	$	1.01		 	$	1.12		

Management defines 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. The following tables reconcile National Fuel's reported GAAP earnings to Adjusted EBITDA for the three months ended December 31, 2019 and 2018:

									
 	 	Three Months Ended	
 	 	December 31,	
(in thousands)	 	2019	 	2018	
Reported GAAP Earnings	 	$	86,591		 	$	102,660		
Depreciation, Depletion and Amortization	 	74,918		 	64,255		
Other (Income) Deductions	 	3,040		 	9,602		
Interest Expense	 	26,994		 	26,512		
Income Taxes	 	31,395		 	22,909		
Mark-to-Market Adjustments due to Hedge Ineffectiveness	 	—		 	(6,505	)	
Adjusted EBITDA	 	$	222,938		 	$	219,433		
 	 	 	 	 	
Adjusted EBITDA by Segment	 	 	 	 	
Pipeline and Storage Adjusted EBITDA	 	$	42,942		 	$	47,824		
Gathering Adjusted EBITDA	 	29,431		 	25,948		
Total Midstream Businesses Adjusted EBITDA	 	72,373		 	73,772		
Exploration and Production Adjusted EBITDA	 	92,100		 	89,896		
Utility Adjusted EBITDA	 	59,463		 	57,569		
Corporate and All Other Adjusted EBITDA	 	(998	)	 	(1,804	)	
Total Adjusted EBITDA	 	$	222,938		 	$	219,433		

Page 22.

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
SEGMENT ADJUSTED EBITDA

									
 	 	Three Months Ended	
 	 	December 31,	
(in thousands)	 	2019	 	2018	
Exploration and Production Segment	 	 	 	 	
Reported GAAP Earnings	 	$	23,977		 	$	38,214		
Depreciation, Depletion and Amortization	 	44,148		 	34,700		
Other (Income) Deductions	 	161		 	(278	)	
Interest Expense	 	14,057		 	13,163		
Income Taxes	 	9,757		 	10,602		
Mark-to-Market Adjustments due to Hedge Ineffectiveness	 	—		 	(6,505	)	
Adjusted EBITDA	 	$	92,100		 	$	89,896		
 	 	 	 	 	
Pipeline and Storage Segment	 	 	 	 	
Reported GAAP Earnings	 	$	18,105		 	$	25,102		
Depreciation, Depletion and Amortization	 	11,605		 	11,114		
Other (Income) Deductions	 	(1,378	)	 	(1,926	)	
Interest Expense	 	7,112		 	7,286		
Income Taxes	 	7,498		 	6,248		
Adjusted EBITDA	 	$	42,942		 	$	47,824		
 	 	 	 	 	
Gathering Segment	 	 	 	 	
Reported GAAP Earnings	 	$	15,944		 	$	14,183		
Depreciation, Depletion and Amortization	 	5,138		 	4,679		
Other (Income) Deductions	 	3		 	(43	)	
Interest Expense	 	2,219		 	2,377		
Income Taxes	 	6,127		 	4,752		
Adjusted EBITDA	 	$	29,431		 	$	25,948		
 	 	 	 	 	
Utility Segment	 	 	 	 	
Reported GAAP Earnings	 	$	26,583		 	$	25,649		
Depreciation, Depletion and Amortization	 	13,630		 	13,290		
Other (Income) Deductions	 	5,814		 	6,216		
Interest Expense	 	5,673		 	5,893		
Income Taxes	 	7,763		 	6,521		
Adjusted EBITDA	 	$	59,463		 	$	57,569		
 	 	 	 	 	
Corporate and All Other	 	 	 	 	
Reported GAAP Earnings	 	$	1,982		 	$	(488	)	
Depreciation, Depletion and Amortization	 	397		 	472		
Other (Income) Deductions	 	(1,560	)	 	5,633		
Interest Expense	 	(2,067	)	 	(2,207	)	
Income Taxes	 	250		 	(5,214	)	
Adjusted EBITDA	 	$	(998	)	 	$	(1,804	)