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): April 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 April 30, 2020, National Fuel Gas Company (the “Company”) issued a press release regarding its earnings for the quarter and six months ended March 31, 2020. 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: impairments under the SEC’s full cost ceiling test for natural gas and oil reserves; changes in the price of natural gas or oil; financial and economic conditions, including the availability of credit, and occurrences affecting the Company’s ability to obtain financing on acceptable terms for working capital, capital expenditures and other investments, including any downgrades in the Company’s credit ratings and changes in interest rates and other capital market conditions; the length and severity of the recent COVID-19 pandemic, including its impacts across our businesses on demand, operations, global supply chains and liquidity; 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; 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 disruptions due to COVID-19, as well as 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; the impact of information technology disruptions, cybersecurity or data security breaches; factors affecting the Company’s ability to successfully identify, drill for and produce economically viable natural gas 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; 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 and six months ended March 31, 2020	
 	 	
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	
 	General Counsel and Secretary	

Dated: May 1, 2020

Exhibit 99

	

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

NATIONAL FUEL REPORTS SECOND QUARTER EARNINGS

WILLIAMSVILLE, N.Y.: National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated results for the second quarter of its 2020 fiscal year and for the six months ended March 31, 2020.

FISCAL 2020 SECOND QUARTER SUMMARY
		
•	GAAP net loss of $106.1 million, or $1.23 per share, compared to GAAP net income of $90.6 million, or $1.04 per share, in the prior year, which includes a $129.3 million after-tax impairment of oil and gas properties and a $56.8 million deferred tax valuation allowance described in further detail in this release	
		
•	Adjusted operating results of $84.2 million, or $0.97 per share, compared to $92.9 million, or $1.07 per share, in the prior year (see non-GAAP reconciliation on page 2)	
		
•	Adjusted EBITDA of $231.1 million, an increase of $5.3 million from $225.8 million in the prior year (non-GAAP reconciliation on page 24)	
		
•	E&P segment net production of 59.8 Bcfe, an increase of 11 Bcfe, or 23% from the prior year, including the impact of approximately 2.7 Bcf of curtailments due to sustained low natural gas prices in Appalachia	
		
•	Average natural gas prices, after the impact of hedging, of $2.12 per Mcf, down $0.46 per Mcf from the prior year	
		
•	Average oil prices, after the impact of hedging, of $58.23 per Bbl, down $2.78 per Bbl from the prior year	
		
•	Gathering revenues of $35.3 million, an increase of $5.9 million, or 20%, on higher throughput from the E&P segment	
		
•	Pipeline & Storage revenues of $79.2 million, an increase of $6.9 million, or 10%, from the prior year, largely driven by the successful resolution of a National Fuel Gas Supply Corporation rate proceeding	
		
•	Reducing fiscal 2020 consolidated capital expenditure guidance to a range of $680 to $740 million, a decrease of $30 million from the midpoint of the Company's previous guidance range	

MANAGEMENT COMMENTS ON COMPANY’S COVID-19 RESPONSE

David P. Bauer, President and Chief Executive Officer of National Fuel Gas Company, stated: “As we confront the challenges of the COVID-19 pandemic, I am proud to say that National Fuel has continued to safely and reliably provide natural gas service to our over 743,000 utility customers in western New York and northwestern Pennsylvania, operate our extensive network of transportation, compression and gathering infrastructure, and produce essential natural gas supplies.

The continuity of our operations is a direct result of the dedication and hard work of our over 2,000 employees. During this unprecedented situation, National Fuel has remained committed to our workforce - the bedrock of our Company - and has not instituted any furloughs or workforce reductions. With a large portion of our employees now working remotely, we have implemented a number of initiatives to provide the flexibility needed to address this new normal, including additional paid time off to address child care needs, and encouraging the use of alternative work schedules.

With respect to our in-field workforce and customer service representatives, all of whom provide essential services to our communities each and every day, we have adopted appropriate social distancing measures and have provided necessary personal protective equipment in line with directives from federal, state, and local agencies. As this public health crisis evolves, the health and well-being of our employees and our communities will remain our number one priority, and National Fuel will continue to monitor developments affecting our stakeholders in order to take appropriate steps to mitigate the impacts of the COVID-19 virus.”

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RECONCILIATION OF GAAP EARNINGS TO ADJUSTED OPERATING RESULTS

																	
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended	 	Six Months Ended	
 	 	 March 31,	 	 March 31,	
(in thousands except per share amounts)	 	2020	 	2019	 	2020	 	2019	
Reported GAAP Earnings	 	$	(106,068	)	 	$	90,595		 	$	(19,477	)	 	$	193,256		
Items impacting comparability:	 	 	 	 	 	 	 	 	
Impairment of oil and gas properties (E&P)	 	177,761		 	—		 	177,761		 	—		
Tax impact of impairment of oil and gas properties	 	(48,503	)	 	—		 	(48,503	)	 	—		
Deferred tax valuation allowance	 	56,770		 	—		 	56,770		 	—		
Remeasurement of deferred income taxes under 2017 Tax Reform	 	—		 	—		 	—		 	(5,000	)	
Mark-to-market adjustments due to hedge ineffectiveness (E&P)	 	—		 	6,742		 	—		 	237		
Tax impact of mark-to-market adjustments due to hedge ineffectiveness	 	—		 	(1,416	)	 	—		 	(50	)	
Unrealized (gain) loss on other investments (Corporate / All Other)	 	5,414		 	(3,831	)	 	6,433		 	2,516		
Tax impact of unrealized (gain) loss on other investments	 	(1,137	)	 	805		 	(1,351	)	 	(528	)	
Adjusted Operating Results	 	$	84,237		 	$	92,895		 	$	171,633		 	$	190,431		
 	 	 	 	 	 	 	 	 	
Reported GAAP Earnings Per Share	 	$	(1.23	)	 	$	1.04		 	$	(0.23	)	 	$	2.23		
Items impacting comparability:	 	 	 	 	 	 	 	 	
Impairment of oil and gas properties, net of tax (E&P)	 	1.49		 	—		 	1.49		 	—		
Deferred tax valuation allowance	 	0.66		 	—		 	0.66		 	—		
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 (gain) loss on other investments, net of tax (Corporate / All Other)	 	0.05		 	(0.03	)	 	0.06		 	0.02		
Rounding	 	—		 	—		 	—		 	0.01		
Adjusted Operating Results Per Share	 	$	0.97		 	$	1.07		 	$	1.98		 	$	2.20		

MANAGEMENT COMMENTS ON SECOND QUARTER RESULTS

Mr. Bauer added: “Low commodity prices continued to serve as a headwind during the quarter, weighing on our results and requiring the Company to write down the value of its oil and gas reserves in our Exploration and Production segment. Operationally, however, our results were in line with our expectations, driven by the strong performance of our Pipeline and Storage and Gathering businesses, both of which saw significant earnings growth. In these uncertain times, our diversified business model continues to function as designed, providing National Fuel with stability through a consistent, predictable base of cash flows and a strong balance sheet.”

FISCAL 2020 GUIDANCE AND BUSINESS UPDATE

National Fuel is revising its fiscal 2020 earnings guidance to reflect revised commodity price assumptions for the balance of the fiscal year, and the results of the fiscal second quarter. The Company is now projecting that earnings, excluding items impacting comparability, will be within the range of $2.75 to $2.95 per share, or $2.85 per share at the midpoint of the range.

The Company is assuming that NYMEX natural gas prices will average $2.05 per MMBtu for the remainder of fiscal 2020, unchanged from the previous guidance, while also lowering its Appalachian spot price forecast to $1.65 per MMBtu. Additionally, the Company is now assuming that WTI oil prices will average $22.50 per barrel (Bbl) for the remainder of fiscal 2020, a decrease of $32.50 per Bbl from the $55.00 assumed in the previous guidance. 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 Exploration and Production segment is lowering its fiscal 2020 net production guidance to a range of 230 to 240 Bcfe, which reflects the impacts of curtailments during the second quarter and estimated curtailments for the month of April. During the second quarter, Seneca executed approximately 12.6 Bcf of new NYMEX swap contracts and fixed price physical firm sales for fiscal 2020. The Company currently has financial hedges and fixed price physical firm sales contracts in place on approximately 72% of Seneca’s remaining expected fiscal 2020 natural gas production that, on average, lock-in a price realization after the cost of transportation of $2.16 per Mcf.

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In addition, the Company is lowering its consolidated capital expenditure guidance to a range of $680 to $740 million, a $30 million decrease from the midpoint of the Company’s prior guidance range. The Company’s other guidance assumptions remain largely unchanged from the previous guidance.

Additional details on the Company's updated forecast assumptions and business segment guidance for fiscal 2020 are outlined in the table on page 8.

DISCUSSION OF SECOND QUARTER RESULTS BY SEGMENT

The following earnings discussion of each operating segment for the quarter ended March 31, 2020 is summarized in a tabular form on pages 9 and 10 of this report (earnings drivers for the six months ended March 31, 2020 are summarized on pages 11 and 12). 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	
 	March 31,	
(in thousands)	2020	 	2019	 	Variance	
GAAP Earnings	$	(175,275	)	 	$	21,873		 	$	(197,148	)	
Impairment of oil and gas properties, net of tax	129,258		 	—		 	129,258		
Deferred tax valuation allowance	60,463		 	—		 	60,463		
Mark-to-market adjustments due to hedge ineffectiveness, net of tax	—		 	5,326		 	(5,326	)	
Adjusted Operating Results	$	14,446		 	$	27,199		 	$	(12,753	)	
 	 	 	 	 	 	
Adjusted EBITDA	$	79,846		 	$	83,580		 	$	(3,734	)	

Seneca’s second quarter GAAP earnings decreased $197.1 million versus the prior year, which includes the impact of a non-cash, pre-tax impairment of Seneca’s oil and natural gas reserves, and the recognition of a valuation allowance that reduced the deferred tax asset related to certain state-level net operating loss and credit carryforwards that may not be realized.

During the second quarter, Seneca recorded a non-cash, pre-tax impairment charge of $177.8 million ($129.3 million after-tax) to write-down the value of Seneca’s oil and natural gas reserves under the full cost method of accounting. The full cost method of accounting requires that Seneca perform a quarterly “ceiling test” to compare the present value of future revenues from its oil and natural gas reserves based on an unweighted arithmetic average of the first day of the month oil and gas prices for each month within the 12-month period prior to the end of the reporting period (“the ceiling”) with the book value of those reserves at the balance sheet date. If the book value of the reserves exceeds the ceiling, a non-cash impairment charge must be recorded in order to reduce the book value of the reserves to the calculated ceiling. It is anticipated that the current low commodity price environment will lead to impairments during the remainder of fiscal 2020 and likely in the first quarter of fiscal 2021 as well.

During the quarter ended March 31, 2020, the Company recorded a full valuation allowance in the amount of $60.5 million against certain state deferred tax assets based on its conclusion, considering all available evidence (both positive and negative),

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that it was more likely than not that these deferred tax assets would not be realized. A significant item of objective negative evidence considered was a projected three-year cumulative pre-tax loss primarily due to the non-cash impairments of Seneca’s oil and gas reserves noted above. Changes in judgment regarding future realization of these deferred tax assets may result in a reversal of all or a portion of the valuation allowance.

Excluding these items noted above, as well as the net impact of non-cash mark-to-market adjustments recorded in the prior year relating to hedge ineffectiveness (see table above), Seneca’s second quarter earnings decreased $12.8 million as the positive impact of higher production was more than offset by the negative impacts of lower realized natural gas and crude oil prices, higher operating expenses, higher interest expense, and a higher effective tax rate.

Seneca produced 59.8 Bcfe during the second quarter, an increase of 11.0 Bcfe, or 23%, from the prior year. Natural gas production increased 10.7 Bcf, or 24%, due primarily to production from new Marcellus and Utica wells completed and connected to sales in Appalachia. Net production increased 5.4 Bcf to 26.6 Bcf in Seneca’s Western Development Area and 5.4 Bcf to 29.0 Bcf in the Eastern Development Area. Seneca curtailed an estimated 2.7 Bcf of net natural gas production during the second quarter due to lower spot pricing at local sales points in Pennsylvania. Oil production for the second quarter increased 42,000 Bbls from the prior year as new production continues to come on-line from Seneca’s development of the Pioneer and 17N assets in the Midway Sunset area of California, as well as the Coalinga assets.

Seneca's average realized natural gas price, after the impact of hedging and transportation costs, was $2.12 per Mcf, a decrease of $0.46 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 $58.23 per Bbl, a decrease of $2.78 per Bbl compared to the prior year. The decline in oil price realizations was due primarily to lower market prices for crude oil during the quarter and reduced price differentials at local sales points in California.

The increase in Seneca’s operating expenses was largely due to higher production during the quarter. Lease operating and transportation (“LOE”) expense, which increased $5.8 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 $9.2 million increase in depreciation, depletion and amortization (“DD&A”) expense was also due to a higher DD&A rate. Seneca’s general and administrative (“G&A”) costs were relatively flat despite the increased production. On a unit of production basis, G&A expenses during the quarter decreased $0.06 per Mcfe to $0.29 per Mcfe.

The increase in Seneca’s effective tax rate, excluding the impact of the valuation allowance recorded at March 31, 2020 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	
 	March 31,	
(in thousands)	2020	 	2019	 	Variance	
GAAP Earnings	$	22,087		 	$	17,749		 	$	4,338		
 	 	 	 	 	 	
Adjusted EBITDA	$	49,102		 	$	41,281		 	$	7,821		

The Pipeline and Storage segment’s second quarter GAAP earnings increased $4.3 million versus the prior year primarily driven by higher operating revenues and lower operation and maintenance (“O&M”) expenses, partially offset by higher DD&A expense. The increase in operating revenues of $6.9 million, or 10%, was largely due to an increase in Supply Corporation's transportation and storage rates effective February 1, 2020, in accordance with Supply Corporation's rate case settlement in principle coupled with new demand charges for transportation service from Supply Corporation's Line N to Monaca expansion

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project, which was placed in service on November 1, 2019. O&M expense decreased $0.9 million primarily due to lower compressor and facility maintenance costs, partially offset by an increase in pipeline integrity costs. The increase in DD&A expense of $2.1 million was primarily attributable to an increase in Supply Corporation's depreciation rates associated with its rate case settlement in principle.

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	
 	March 31,	
(in thousands)	2020	 	2019	 	Variance	
GAAP Earnings	$	19,898		 	$	12,690		 	$	7,208		
Deferred tax valuation allowance	(3,769	)	 	—		 	(3,769	)	
Adjusted Operating Results	$	16,129		 	$	12,690		 	$	3,439		
 	 	 	 	 	 	
Adjusted EBITDA	$	29,541		 	$	24,598		 	$	4,943		

The Gathering segment’s second quarter GAAP earnings increased $7.2 million versus the prior year. Earnings were positively impacted by $3.8 million as a result of the Gathering segment's recognition of an income tax benefit that was recorded as an offset to the valuation allowance described above in the Exploration and Production segment. This offset is a result of the Gathering and Exploration and Production segments’ subsidiaries filing a combined state tax return. Taxable income generated in the Gathering segment is used to offset taxable losses in the Exploration and Production segment, which provided the opportunity to reduce the valuation allowance recorded in the Exploration and Production segment. Excluding this item, the Gathering segment’s earnings increased $3.4 million. The increase was primarily driven by higher operating revenues, which were partially offset by higher O&M expense and a modest increase in DD&A expense. Operating revenues increased $5.9 million, or 20%, primarily due to an 11.0 Bcf increase in gathered volumes from Seneca’s Appalachian natural gas production. The $1.0 million increase in O&M expense was due to an increase in compressor station operating and preventative maintenance activity during the current quarter. The $0.6 million increase in DD&A expense was due primarily to a higher average total value of 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	
 	March 31,	
(in thousands)	2020	 	2019	 	Variance	
GAAP Earnings	$	31,499		 	$	35,589		 	$	(4,090	)	
 	 	 	 	 	 	
Adjusted EBITDA	$	73,192		 	$	78,688		 	$	(5,496	)	

The Utility segment’s second quarter GAAP earnings decreased $4.1 million over the prior year primarily driven by a decline in customer margin (operating revenues less purchased gas sold) and higher O&M expense. The $1.5 million decrease in customer margin was due primarily to warmer weather in Distribution's Pennsylvania service territory, partially offset by 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. Weather in Distribution's Pennsylvania service territory was 17.5% warmer on average than last year, resulting in a decrease in residential and transportation customer throughput and revenues. The impact of weather variations on earnings in Distribution's New York service territory is largely mitigated by that jurisdiction's weather normalization clause. The $3.3 million increase in O&M expense was primarily attributable to higher personnel costs as well as a higher accrual for bad debt expense given the economic backdrop in the Company's service territory.

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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 a combined loss of $4.3 million in the current year second quarter, which was a $7.0 million decrease from the combined earnings of $2.7 million generated in the prior-year second quarter. The decrease in earnings was driven primarily by higher unrealized losses on investment securities in the current quarter compared to unrealized gains on investment securities in the prior year second quarter.

EARNINGS TELECONFERENCE

The Company will host a conference call on Friday, May 1, 2020, at 8:30 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 “9349819”. 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 “9349819”. Both the webcast and a telephonic replay will be available until the close of business on Friday, May 8, 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	

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: impairments under the SEC’s full cost ceiling test for natural gas and oil reserves; changes in the price of natural gas or oil; financial and economic conditions, including the availability of credit, and occurrences affecting the Company’s ability to obtain financing on acceptable terms for working capital, capital expenditures and other investments, including any downgrades in the Company’s credit ratings and changes in interest rates and other capital market conditions; the length and severity of the recent COVID-19 pandemic, including its impacts across our businesses on demand, operations, global supply chains and liquidity; 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; 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 disruptions due to COVID-19, as well as 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; the impact of information technology disruptions, cybersecurity or data security breaches; factors affecting the Company’s ability to successfully identify, drill for and produce economically viable natural gas 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

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Page 7.

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; 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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Page 8.

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.

While the Company expects to incur additional ceiling test impairment charges in the remaining quarters of fiscal 2020 and likely in the first quarter of fiscal 2021 as well, the amount of these charges is not reasonably determinable at this time. The amount of any ceiling test charge is determined at the end of the applicable quarter and will depend on many factors, including additions to or subtractions from proved reserves, fluctuations in oil and gas prices, and income tax effects related to the differences between the book and tax basis of the Company’s oil and gas properties. Some or all of these factors are likely to be significant. Because the expected ceiling test impairment charges and other potential items impacting comparability are not reasonably determinable at this time, the Company is unable to provide earnings guidance other than on a non-GAAP basis that excludes these items.

				
 	Updated FY 2020 Guidance	 	Previous FY 2020 Guidance	
Consolidated Earnings per Share, excluding items impacting comparability	$2.75 to $2.95	 	$2.95 to $3.15	
Consolidated Effective Tax Rate	~ 26%	 	 ~ 25%	
 	 	 	 	
Capital Expenditures (Millions)	 	 	 	
    Exploration and Production	$375 - $395	 	$375 - $410	
    Pipeline and Storage	$175 - $195	 	$180 - $215	
    Gathering	$50 - $60	 	$50 - $60	
    Utility	$80 - $90	 	$90 - $100	
    Consolidated Capital Expenditures	$680 - $740	 	$695 - $785	
 	 	 	 	
Exploration & Production Segment Guidance	 	 	 	
 	 	 	 	
    Commodity Price Assumptions	 	 	 	
    NYMEX natural gas price	$2.05 /MMBtu	 	$2.05 /MMBtu	
    Appalachian basin spot price	$1.65 /MMBtu	 	$1.70 /MMBtu	
    NYMEX (WTI) crude oil price	$22.50 /Bbl	 	$55.00 /Bbl	
    California oil price premium (% of WTI)	90%	 	104%	
 	 	 	 	
    Production (Bcfe)	 	 	 	
    East Division - Appalachia	214 to 224	 	219 to 229	
    West Division - California	~ 16	 	~ 16	
    Total Production	230 to 240	 	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	$0.70 - $0.74	 	$0.73 - $0.77	
 	 	 	 	
Other Business Segment Guidance (Millions)	 	 	 	
    Gathering Segment Revenues	$135 - $140	 	$135 - $145	
    Pipeline and Storage Segment Revenues	~ $305	 	$290 - $295	

Page 9.

	
																								
NATIONAL FUEL GAS COMPANY	
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS	
QUARTER ENDED MARCH 31, 2020	
(Unaudited)	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Upstream	 	Midstream	 	Downstream	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Exploration &	 	Pipeline &	 	 	 	 	 	Corporate /	 	 	
(Thousands of Dollars)	Production	 	Storage	 	Gathering	 	Utility	 	All Other	 	Consolidated*	
 	 	 	 	 	 	 	 	 	 	 	 	
Second quarter 2019 GAAP earnings	$	21,873		 	$	17,749		 	$	12,690		 	$	35,589		 	$	2,694		 	$	90,595		
 	 	 	 	 	 	 	 	 	 	 	 	
Items impacting comparability:	 	 	 	 	 	 	 	 	 	 	 	
Mark-to-market adjustments due to hedge ineffectiveness	6,742		 	 	 	 	 	 	 		 	6,742		
Tax impact of mark-to-market adjustments due to hedge ineffectiveness	(1,416	)	 	 	 	 	 	 	 	 	 	(1,416	)	
Unrealized (gain) loss on other investments	 	 	 	 	 	 	 	 	(3,831	)	 	(3,831	)	
Tax impact of unrealized (gain) loss on other investments	 	 	 	 	 	 	 	 	805		 	805		
Second quarter 2019 adjusted operating results	27,199		 	17,749		 	12,690		 	35,589		 	(332	)	 	92,895		
 	 	 	 	 	 	 	 	 	 	 	 	
Drivers of adjusted operating results**	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Upstream Revenues	 	 	 	 	 	 	 	 	 	 	 	
Higher (lower) natural gas production	21,887		 	 	 	 	 	 	 	 	 	21,887		
Higher (lower) crude oil production	2,030		 	 	 	 	 	 	 	 	 	2,030		
Higher (lower) realized natural gas prices, after hedging	(20,168	)	 	 	 	 	 	 	 	 	 	(20,168	)	
Higher (lower) realized crude oil prices, after hedging	(1,332	)	 	 	 	 	 	 	 	 	 	(1,332	)	
 	 	 	 	 	 	 	 	 	 	 	 	
Midstream Revenues	 	 	 	 	 	 	 	 	 	 	 	
Higher (lower) operating revenues	 	 	5,456		 	4,660		 	 	 	 	 	10,116		
 	 	 	 	 	 	 	 	 	 	 		
Downstream Margins***	 	 	 	 	 	 	 	 	 	 		
Impact of usage and weather	 	 	 	 	 	 	(3,814	)	 	 	 	(3,814	)	
System modernization tracker revenues	 	 	 	 	 	 	1,689		 	 	 	1,689		
Regulatory revenue adjustments	 	 	 	 	 	 	615		 	 	 	615		
Higher (lower) energy marketing margins	 	 	 	 	 	 	 	 	604		 	604		
 	 	 	 	 	 	 	 	 	 	 		
Operating Expenses	 	 	 	 	 	 	 	 	 	 		
Lower (higher) lease operating and transportation expenses	(4,573	)	 	 	 	 	 	 	 	 	 	(4,573	)	
Lower (higher) operating expenses	(395	)	 	705		 	(751	)	 	(2,880	)	 	415		 	(2,906	)	
Lower (higher) depreciation / depletion	(7,306	)	 	(1,630	)	 	(479	)	 	 	 	 	 	(9,415	)	
 	 	 	 	 	 	 	 	 	 	 	 	
Other Income (Expense)	 	 	 	 	 	 	 	 	 	 		
(Higher) lower other deductions	(365	)	 	(483	)	 	 	 	 	 	 	 	(848	)	
(Higher) lower interest expense	(486	)	 	 	 	 	 	 	 	(608	)	 	(1,094	)	
 	 	 	 	 	 	 	 	 	 	 	 	
Income Taxes	 	 	 	 	 	 	 	 	 	 		
Lower (higher) income tax expense / effective tax rate	(1,646	)	 	(2	)	 	2		 	343		 	24		 	(1,279	)	
 	 	 	 	 	 	 	 	 	 	 	 	
All other / rounding	(399	)	 	292		 	7		 	(43	)	 	(27	)	 	(170	)	
Second quarter 2020 adjusted operating results	14,446			22,087			16,129			31,499			76			84,237		
 	 	 	 	 	 	 	 	 	 	 	 	
Items impacting comparability:	 	 	 	 	 	 	 	 	 	 	 	
Impairment of oil and gas properties	(177,761	)	 	 	 	 	 	 	 	 	 	(177,761	)	
Tax impact of impairment of oil and gas properties	48,503		 	 	 	 	 	 	 	 	 	48,503		
Deferred tax valuation allowance	(60,463	)	 	 	 	3,769		 	 	 	(76	)	 	(56,770	)	
Unrealized gain (loss) on other investments	 	 	 	 	 	 	 	 	(5,414	)	 	(5,414	)	
Tax impact of unrealized gain (loss) on other investments	 	 	 	 	 	 	 	 	1,137		 	1,137		
Second quarter 2020 GAAP earnings	$	(175,275	)	 	$	22,087		 	$	19,898		 	$	31,499		 	$	(4,277	)	 	$	(106,068	)	
 	 	 	 	 	 	 	 	 	 	 	 	
* 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	
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE	
QUARTER ENDED MARCH 31, 2020	
(Unaudited)	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Upstream	 	Midstream	 	Downstream	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Exploration &	 	Pipeline &	 	 	 	 	 	Corporate /	 	 	
 	Production	 	Storage	 	Gathering	 	Utility	 	All Other	 	Consolidated*	
 	 	 	 	 	 	 	 	 	 	 	 	
Second quarter 2019 GAAP earnings per share	$	0.25		 	$	0.20		 	$	0.15		 	$	0.41		 	$	0.03		 	$	1.04		
Items impacting comparability:	 	 	 	 	 	 	 	 	 	 	 	
Mark-to-market adjustments due to hedge ineffectiveness, net of tax	0.06		 	 	 	 	 	 	 	 	 	0.06		
Unrealized (gain) loss on other investments, net of tax	 	 	 	 	 	 	 	 	(0.03	)	 	(0.03	)	
Second quarter 2019 adjusted operating results per share	0.31			0.20			0.15			0.41			—			1.07		
 	 	 	 	 	 	 	 	 	 	 	 	
Drivers of adjusted operating results**	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Upstream Revenues	 	 	 	 	 	 	 	 	 	 	 	
Higher (lower) natural gas production	0.25		 	 	 	 	 	 	 	 	 	0.25		
Higher (lower) crude oil production	0.02		 	 	 	 	 	 	 	 	 	0.02		
Higher (lower) realized natural gas prices, after hedging	(0.23	)	 	 	 	 	 	 	 	 	 	(0.23	)	
Higher (lower) realized crude oil prices, after hedging	(0.02	)	 	 	 	 	 	 	 	 	 	(0.02	)	
 	 	 	 	 	 	 	 	 	 	 			
Midstream Revenues	 	 	 	 	 	 	 	 	 	 			
Higher (lower) operating revenues	 	 	0.06		 	0.05		 	 	 	 	 	0.11		
 	 	 	 	 	 	 	 	 	 	 			
Downstream Margins***	 	 	 	 	 	 	 	 	 	 			
Impact of usage and weather	 	 	 	 	 	 	(0.04	)	 	 	 	(0.04	)	
System modernization tracker revenues	 	 	 	 	 	 	0.02		 	 	 	0.02		
Regulatory revenue adjustments	 	 	 	 	 	 	0.01		 	 	 	0.01		
Higher (lower) energy marketing margins	 	 	 	 	 	 	 	 	0.01		 	0.01		
 	 	 	 	 	 	 	 	 	 	 			
Operating Expenses	 	 	 	 	 	 	 	 	 	 			
Lower (higher) lease operating and transportation expenses	(0.05	)	 	 	 	 	 	 	 	 	 	(0.05	)	
Lower (higher) operating expenses	—		 	0.01		 	(0.01	)	 	(0.03	)	 	—		 	(0.03	)	
Lower (higher) depreciation / depletion	(0.08	)	 	(0.02	)	 	(0.01	)	 	 	 	 	 	(0.11	)	
 	 	 	 	 	 	 	 	 	 	 			
Other Income (Expense)	 	 	 	 	 	 	 	 	 	 			
(Higher) lower other deductions	—		 	(0.01	)	 	 	 	 	 	 	 	(0.01	)	
(Higher) lower interest expense	(0.01	)	 	 	 	 	 	 	 	(0.01	)	 	(0.02	)	
 	 	 	 	 	 	 	 	 	 	 	 	
Income Taxes	 	 	 	 	 	 	 	 	 	 	 	
Lower (higher) income tax expense / effective tax rate	(0.02	)	 	—		 	—		 	—		 	—		 	(0.02	)	
 	 	 	 	 	 	 	 	 	 	 		
All other / rounding	—		 	0.01		 	0.01		 	(0.01	)	 	—		 	0.01		
Second quarter 2020 adjusted operating results per share	0.17		 	0.25		 	0.19		 	0.36		 	—		 	0.97		
 	 	 	 	 	 	 	 	 	 	 		
Items impacting comparability:	 	 	 	 	 	 	 	 	 	 	 	
Impairment of oil and gas properties, net of tax	(1.49	)	 	 	 	 	 	 	 	 	 	(1.49	)	
Deferred tax valuation allowance	(0.70	)	 	 	 	0.04		 	 	 	—		 	(0.66	)	
Unrealized gain (loss) on other investments, net of tax	 	 	 	 	 	 	 	 	(0.05	)	 	(0.05	)	
Earnings per share impact of diluted shares	(0.01	)	 	0.01		 	 	 	 	 	 	 	—		
Second quarter 2020 GAAP earnings per share	$	(2.03	)	 	$	0.26		 	$	0.23		 	$	0.36		 	$	(0.05	)	 	$	(1.23	)	
 	 	 	 	 	 	 	 	 	 	 	 	
* 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 11.

	
																								
NATIONAL FUEL GAS COMPANY	
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS	
SIX MONTHS ENDED MARCH 31, 2020	
(Unaudited)	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Upstream	 	Midstream	 	Downstream	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Exploration &	 	Pipeline &	 	 	 	 	 	Corporate /	 	 	
(Thousands of Dollars)	Production	 	Storage	 	Gathering	 	Utility	 	All Other	 	Consolidated*	
 	 	 	 	 	 	 	 	 	 	 	 	
Six months ended March 31, 2019 GAAP earnings	$	60,087		 	$	42,851		 	$	26,872		 	$	61,237		 	$	2,209		 	$	193,256		
 	 	 	 	 	 	 	 	 	 	 	 	
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	237		 	 	 	 	 	 	 	 	 	237		
Tax impact of mark-to-market adjustments due to hedge ineffectiveness	(50	)	 	 	 	 	 	 	 	 	 	(50	)	
Unrealized (gain) loss on other investments	 	 	 	 	 	 	 	 	2,516		 	2,516		
Tax impact of unrealized (gain) loss on other investments	 	 	 	 	 	 	 	 	(528	)	 	(528	)	
Six months ended March 31, 2019 adjusted operating results	59,284		 	42,851		 	26,372		 	61,237		 	687		 	190,431		
 	 	 	 	 	 	 	 	 	 	 	 	
Drivers of adjusted operating results**	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Upstream Revenues	 	 	 	 	 	 	 	 	 	 	 	
Higher (lower) natural gas production	40,427		 	 	 	 	 	 	 	 	 	40,427		
Higher (lower) crude oil production	3,487		 	 	 	 	 	 	 	 	 	3,487		
Higher (lower) realized natural gas prices, after hedging	(32,792	)	 	 	 	 	 	 	 	 	 	(32,792	)	
Higher (lower) realized crude oil prices, after hedging	(754	)	 	 	 	 	 	 	 	 	 	(754	)	
 	 	 	 	 	 	 	 	 	 	 	 	
Midstream Revenues	 	 	 	 	 	 	 	 	 	 	 	
Higher (lower) operating revenues	 	 	1,625		 	8,688		 	 	 	 	 	10,313		
 	 	 	 	 	 	 	 	 	 	 	 	
Downstream Margins***	 	 	 	 	 	 	 	 	 	 	 	
Impact of usage and weather	 	 	 	 	 	 	(3,678	)	 	 	 	(3,678	)	
System modernization tracker revenues	 	 	 	 	 	 	2,033		 	 	 	2,033		
Regulatory revenue adjustments	 	 	 	 	 	 	1,550		 	 	 	1,550		
Higher (lower) energy marketing margins	 	 	 	 	 	 	 	 	891		 	891		
 	 	 	 	 	 	 	 	 	 	 	 	
Operating Expenses	 	 	 	 	 	 	 	 	 	 	 	
Lower (higher) lease operating and transportation expenses	(11,082	)	 	 	 	 	 	 	 	 	 	(11,082	)	
Lower (higher) operating expenses	(1,016	)	 	1,260		 	(2,038	)	 	(2,707	)	 	674		 	(3,827	)	
Lower (higher) property, franchise and other taxes	1,187		 	(1,215	)	 	 	 	 	 	 	 	(28	)	
Lower (higher) depreciation / depletion	(14,770	)	 	(2,017	)	 	(843	)	 	 	 	 	 	(17,630	)	
 	 	 	 	 	 	 	 	 	 	 	 	
Other Income (Expense)	 	 	 	 	 	 	 	 	 	 	 	
(Higher) lower other deductions	(713	)	 	(916	)	 	 	 	 	 	1,004		 	(625	)	
(Higher) lower interest expense	(1,192	)	 	412		 	272		 	 	 	(717	)	 	(1,225	)	
 	 	 	 	 	 	 	 	 	 	 	 	
Income Taxes	 	 	 	 	 	 	 	 	 	 	 	
Lower (higher) income tax expense / effective tax rate	(2,980	)	 	(2,458	)	 	(213	)	 	(443	)	 	(266	)	 	(6,360	)	
 	 	 	 	 	 	 	 	 	 	 	 	
All other / rounding	(664	)	 	650		 	(165	)	 	90		 	591		 	502		
Six months ended March 31, 2020 adjusted operating results	38,422		 	40,192		 	32,073		 	58,082		 	2,864		 	171,633		
 	 	 	 	 	 	 	 	 	 	 	 	
Items impacting comparability:	 	 	 	 	 	 	 	 	 	 	 	
Impairment of oil and gas properties	(177,761	)	 	 	 	 	 	 	 	 	 	(177,761	)	
Tax impact of impairment of oil and gas properties	48,503		 	 	 	 	 	 	 	 	 	48,503		
Deferred tax valuation allowance	(60,463	)	 	 	 	3,769		 	 	 	(76	)	 	(56,770	)	
Unrealized gain (loss) on other investments	 	 	 	 	 	 	 	 	(6,433	)	 	(6,433	)	
Tax impact of unrealized gain (loss) on other investments	 	 	 	 	 	 	 	 	1,351		 	1,351		
Six months ended March 31, 2020 GAAP earnings	$	(151,299	)	 	$	40,192		 	$	35,842		 	$	58,082		 	$	(2,294	)	 	$	(19,477	)	
 	 	 	 	 	 	 	 	 	 	 	 	
* 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 12.

	
																								
NATIONAL FUEL GAS COMPANY	
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE	
SIX MONTHS ENDED MARCH 31, 2020	
(Unaudited)	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Upstream	 	Midstream	 	Downstream	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Exploration &	 	Pipeline &	 	 	 	 	 	Corporate /	 	 	
 	Production	 	Storage	 	Gathering	 	Utility	 	All Other	 	Consolidated*	
Six months ended March 31, 2019 GAAP earnings per share	$	0.69		 	$	0.49		 	$	0.31		 	$	0.71		 	$	0.03		 	$	2.23		
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	—		 	 	 	 	 	 	 	 	 	—		
Unrealized (gain) loss on other investments, net of tax	 	 	 	 	 	 	 	 	0.02		 	0.02		
Rounding		 		 		 		 	0.01		 	0.01		
Six months ended March 31, 2019 adjusted operating results per share	0.68		 	0.49		 	0.30		 	0.71		 	0.02		 	2.20		
 	 	 	 	 	 	 	 	 	 	 	 	
Drivers of adjusted operating results**	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Upstream Revenues	 	 	 	 	 	 	 	 	 	 	 	
Higher (lower) natural gas production	0.47		 	 	 	 	 	 	 	 	 	0.47		
Higher (lower) crude oil production	0.04		 	 	 	 	 	 	 	 	 	0.04		
Higher (lower) realized natural gas prices, after hedging	(0.38	)	 	 	 	 	 	 	 	 	 	(0.38	)	
Higher (lower) realized crude oil prices, after hedging	(0.01	)	 	 	 	 	 	 	 	 	 	(0.01	)	
 	 	 	 	 	 	 	 	 	 	 	 	
Midstream Revenues	 	 	 	 	 	 	 	 	 	 			
Higher (lower) operating revenues	 	 	0.02		 	0.10		 	 	 	 	 	0.12		
 	 	 	 	 	 	 	 	 	 	 	 	
Downstream Margins***	 	 	 	 	 	 	 	 	 	 			
Impact of usage and weather	 	 	 	 	 	 	(0.04	)	 	 	 	(0.04	)	
System modernization tracker revenues	 	 	 	 	 	 	0.02		 	 	 	0.02		
Regulatory revenue adjustments	 	 	 	 	 	 	0.02		 	 	 	0.02		
Higher (lower) energy marketing margins	 	 	 	 	 	 	 	 	0.01		 	0.01		
 	 	 	 	 	 	 	 	 	 	 	 	
Operating Expenses	 	 	 	 	 	 	 	 	 	 			
Lower (higher) lease operating and transportation expenses	(0.13	)	 	 	 	 	 	 	 	 	 	(0.13	)	
Lower (higher) operating expenses	(0.01	)	 	0.01		 	(0.02	)	 	(0.03	)	 	0.01		 	(0.04	)	
Lower (higher) property, franchise and other taxes	0.01		 	(0.01	)	 	 	 	 	 	 	 	—		
Lower (higher) depreciation / depletion	(0.17	)	 	(0.02	)	 	(0.01	)	 	 	 	 	 	(0.20	)	
 	 	 	 	 	 	 	 	 	 	 	 	
Other Income (Expense)	 	 	 	 	 	 	 	 	 	 			
(Higher) lower other deductions	(0.01	)	 	(0.01	)	 	 	 	 	 	0.01		 	(0.01	)	
(Higher) lower interest expense	(0.01	)	 	—		 	—		 	 	 	(0.01	)	 	(0.02	)	
 	 	 	 	 	 	 	 	 	 	 	 	
Income Taxes	 	 	 	 	 	 	 	 	 	 			
Lower (higher) income tax expense / effective tax rate	(0.03	)	 	(0.03	)	 	—		 	(0.01	)	 	—		 	(0.07	)	
 	 	 	 	 	 	 	 	 	 	 		
All other / rounding	(0.01	)	 	0.01		 	—		 	—		 	—		 	—		
Six months ended March 31, 2020 adjusted operating results per share	0.44		 	0.46		 	0.37		 	0.67		 	0.04		 	1.98		
 	 	 	 	 	 	 	 	 	 	 	 	
Items impacting comparability:	 	 	 	 	 	 	 	 	 	 		
Impairment of oil and gas properties, net of tax	(1.49	)	 	 	 	 	 	 	 	 	 	(1.49	)	
Deferred tax valuation allowance	(0.70	)	 	 	 	0.04		 	 	 	—		 	(0.66	)	
Unrealized gain (loss) on other investments, net of tax	 	 	 	 	 	 	 	 	(0.06	)	 	(0.06	)	
Earnings per share impact of diluted shares	 	 	 	 	0.01		 	 	 	(0.01	)	 	—		
Six months ended March 31, 2020 GAAP earnings per share	$	(1.75	)	 	$	0.46		 	$	0.42		 	$	0.67		 	$	(0.03	)	 	$	(0.23	)	
 	 	 	 	 	 	 	 	 	 	 	 	
* 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 13.

	

 	 	 	 	 				
NATIONAL FUEL GAS COMPANY	
AND SUBSIDIARIES	
 	 	 	 	 				
(Thousands of Dollars, except per share amounts)	 	 	 	 				
 	Three Months Ended	 	Six Months Ended	
 	March 31,	 	March 31,	
 	(Unaudited)	 	(Unaudited)	
SUMMARY OF OPERATIONS	2020	 	2019	 	2020		2019	
Operating Revenues:		 	 	 	 		 	
Utility and Energy Marketing Revenues	$	282,634		 	$	357,654		 	$	510,660		 	$	629,747		
Exploration and Production and Other Revenues	156,542		 	146,467		 	323,735		 	310,403		
Pipeline and Storage and Gathering Revenues	51,919		 	48,423		 	100,888		 	102,641		
 	491,095		 	552,544		 	935,283			1,042,791		
Operating Expenses:	 	 	 	 						
Purchased Gas	118,270		 	195,037		 	210,542			333,697		
Operation and Maintenance:	 	 	 	 						
      Utility and Energy Marketing	51,725		 	48,559		 	94,981		 	92,475		
      Exploration and Production and Other	39,959		 	40,141		 	76,652		 	72,936		
      Pipeline and Storage and Gathering	27,305		 	27,249		 	53,190		 	52,182		
Property, Franchise and Other Taxes	22,743		 	22,535		 	45,887			46,540		
Depreciation, Depletion and Amortization	77,912		 	65,664		 	152,830			129,918		
Impairment of Oil and Gas Producing Properties	177,761		 	—		 	177,761		 	—		
 	515,675		 	399,185		 	811,843			727,748		
 	 	 	 	 						
Operating Income (Loss)	(24,580	)	 	153,359		 	123,440			315,043		
 	 	 	 	 						
Other Income (Expense):	 	 	 	 						
Other Income (Deductions)	(17,480	)	 	(5,919	)	 	(20,520	)		(15,521	)	
Interest Expense on Long-Term Debt	(25,270	)	 	(25,273	)	 	(50,713	)		(50,713	)	
Other Interest Expense	(1,892	)	 	(1,787	)	 	(3,443	)		(2,860	)	
 	 	 	 	 						
Income (Loss) Before Income Taxes	(69,222	)	 	120,380		 	48,764			245,949		
 	 	 	 	 						
Income Tax Expense	36,846		 	29,785		 	68,241			52,693		
 	 	 	 	 						
Net Income (Loss) Available for Common Stock	$	(106,068	)	 	$	90,595		 	$	(19,477	)		$	193,256		
 	 	 	 	 				
Earnings (Loss) Per Common Share	 	 	 	 				
Basic	$	(1.23	)	 	$	1.05		 	$	(0.23	)		$	2.24		
Diluted	$	(1.23	)	 	$	1.04		 	$	(0.23	)		$	2.23		
 	 	 	 	 				
Weighted Average Common Shares:	 	 	 	 				
Used in Basic Calculation	86,561,066		 	86,290,047		 	86,469,258			86,159,932		
Used in Diluted Calculation	86,561,066		 	86,767,673		 	86,469,258			86,738,809		

Page 14.

	
								
NATIONAL FUEL GAS COMPANY	
AND SUBSIDIARIES	
CONSOLIDATED BALANCE SHEETS	
(Unaudited)	
 	 	
 	March 31,	 	September 30,	
(Thousands of Dollars)	2020	 	2019	
 	 	 	 	
ASSETS	 	 	 	
Property, Plant and Equipment		$11,559,528		 		$11,204,838		
Less - Accumulated Depreciation, Depletion and Amortization	6,003,658		 	5,695,328		
Net Property, Plant and Equipment	5,555,870		 	5,509,510		
 	 	 	 	
Current Assets:	 	 	 	
Cash and Temporary Cash Investments	111,655		 	20,428		
Hedging Collateral Deposits	10,728		 	6,832		
Receivables - Net	172,011		 	139,956		
Unbilled Revenue	44,715		 	18,758		
Gas Stored Underground	8,860		 	36,632		
Materials and Supplies - at average cost	48,113		 	40,717		
Unrecovered Purchased Gas Costs	—		 	2,246		
Other Current Assets	100,188		 	97,054		
Total Current Assets	496,270		 	362,623		
 	 	 	 	
Other Assets:	 	 	 	
Recoverable Future Taxes	115,934		 	115,197		
Unamortized Debt Expense	13,151		 	14,005		
Other Regulatory Assets	161,800		 	167,320		
Deferred Charges	56,855		 	33,843		
Other Investments	137,044		 	144,917		
Goodwill	5,476		 	5,476		
Prepaid Post-Retirement Benefit Costs	71,381		 	60,517		
Fair Value of Derivative Financial Instruments	94,797		 	48,669		
Other	81		 	80		
Total Other Assets	656,519		 	590,024		
Total Assets		$6,708,659		 		$6,462,157		
 	 	 	 	
CAPITALIZATION AND LIABILITIES	 	 	 	
Capitalization:	 	 	 	
Comprehensive Shareholders' Equity	 	 	 	
Common Stock, $1 Par Value Authorized - 200,000,000 Shares; Issued and	 	 	 	
Outstanding - 86,561,532 Shares and 86,315,287 Shares, Respectively		$86,562		 		$86,315		
Paid in Capital	835,444		 	832,264		
Earnings Reinvested in the Business	1,176,870		 	1,272,601		
Accumulated Other Comprehensive Loss	(18,917	)	 	(52,155	)	
Total Comprehensive Shareholders' Equity	2,079,959		 	2,139,025		
Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issuance Costs	2,134,964		 	2,133,718		
Total Capitalization	4,214,923		 	4,272,743		
 	 	 	 	
Current and Accrued Liabilities:	 	 	 	
Notes Payable to Banks and Commercial Paper	230,000		 	55,200		
Current Portion of Long-Term Debt	—		 	—		
Accounts Payable	106,938		 	132,208		
Amounts Payable to Customers	17,213		 	4,017		
Dividends Payable	37,654		 	37,547		
Interest Payable on Long-Term Debt	18,508		 	18,508		
Customer Advances	615		 	13,044		
Customer Security Deposits	14,999		 	16,210		
Other Accruals and Current Liabilities	150,239		 	139,600		
Fair Value of Derivative Financial Instruments	7,652		 	5,574		
Total Current and Accrued Liabilities	583,818		 	421,908		
 	 	 	 	
Deferred Credits:	 	 	 	
Deferred Income Taxes	777,299		 	653,382		
Taxes Refundable to Customers	360,331		 	366,503		
Cost of Removal Regulatory Liability	224,546		 	221,699		
Other Regulatory Liabilities	157,371		 	142,367		
Pension and Other Post-Retirement Liabilities	126,959		 	133,729		
Asset Retirement Obligations	128,779		 	127,458		
Other Deferred Credits	134,633		 	122,368		
Total Deferred Credits	1,909,918		 	1,767,506		
Commitments and Contingencies	—		 	—		
Total Capitalization and Liabilities		$6,708,659		 		$6,462,157		

Page 15.

	

 	 	 	 	 	
NATIONAL FUEL GAS COMPANY	
AND SUBSIDIARIES	
CONSOLIDATED STATEMENTS OF CASH FLOWS	
(Unaudited)	
 	 	Six Months Ended	
 	 	March 31,	
(Thousands of Dollars)	 	2020	 	2019	
 	 	 	 	 	
Operating Activities:	 	 	 	 	
Net Income (Loss) Available for Common Stock	 	$	(19,477	)	 	$	193,256		
Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided by Operating Activities:	 	 		 	 		
Impairment of Oil and Gas Producing Properties	 	177,761		 	—		
Depreciation, Depletion and Amortization	 	152,830		 	129,918		
Deferred Income Taxes	 	104,883		 	90,468		
Stock-Based Compensation	 	7,580		 	10,731		
Other	 	9,800		 	7,997		
Change in:	 	 	 	 	
Receivables and Unbilled Revenue	 	(58,248	)	 	(130,377	)	
Gas Stored Underground and Materials and Supplies	 	20,086		 	29,093		
Unrecovered Purchased Gas Costs	 	2,246		 	(1,556	)	
Other Current Assets	 	(3,134	)	 	10,438		
Accounts Payable	 	(5,465	)	 	10,226		
Amounts Payable to Customers	 	13,196		 	12,069		
Customer Advances	 	(12,429	)	 	(13,176	)	
Customer Security Deposits	 	(1,211	)	 	(7,184	)	
Other Accruals and Current Liabilities	 	9,076		 	48,028		
Other Assets	 	(10,359	)	 	(38,686	)	
Other Liabilities	 	3,857		 	(10,410	)	
Net Cash Provided by Operating Activities	 	$	390,992		 	$	340,835		
 	 	 	 	 	
Investing Activities:	 	 	 	 	
Capital Expenditures	 	$	(395,486	)	 	$	(386,579	)	
Other	 	4,167		 	(2,616	)	
Net Cash Used in Investing Activities	 	$	(391,319	)	 	$	(389,195	)	
 	 	 	 	 	
Financing Activities:	 	 	 	 	
Changes in Notes Payable to Banks and Commercial Paper	 	$	174,800		 	$	—		
Dividends Paid on Common Stock	 	(75,197	)	 	(73,197	)	
Net Repurchases of Common Stock	 	(4,153	)	 	(8,864	)	
Net Cash Provided by (Used in) Financing Activities	 	$	95,450		 	$	(82,061	)	
 	 	 	 	 	
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash	 	95,123		 	(130,421	)	
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	 	27,260		 	233,047		
Cash, Cash Equivalents, and Restricted Cash at March 31	 	$	122,383		 	$	102,626		

Page 16.

	

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

 	Three Months Ended	 	Six Months Ended	
(Thousands of Dollars, except per share amounts)	March 31,	 	March 31,	
EXPLORATION AND PRODUCTION SEGMENT	2020	 	2019	 	Variance	 	2020	2019	Variance	
Total Operating Revenues	$	155,560		 	$	146,102		 	$	9,458		 	$	321,499		$	308,978		$	12,521		
 	 	 	 	 	 	 	 	 	 	
Operating Expenses:	 	 	 	 	 	 	 	 	 	
Operation and Maintenance:	 	 	 	 	 	 	 	 	 	
General and Administrative Expense	17,429		 	17,113		 	316		 	32,809		32,312		497		
Lease Operating and Transportation Expense	51,730		 	45,941		 	5,789		 	102,531		88,503		14,028		
All Other Operation and Maintenance Expense	3,084		 	2,900		 	184		 	6,041		5,252		789		
Property, Franchise and Other Taxes	3,471		 	3,310		 	161		 	8,171		9,673		(1,502	)	
Depreciation, Depletion and Amortization	45,136		 	35,888		 	9,248		 	89,284		70,588		18,696		
Impairment of Oil and Gas Producing Properties	177,761		 	—		 	177,761		 	177,761		—		177,761		
 	298,611		 	105,152		 	193,459		 	416,597		206,328		210,269		
 	 	 	 	 	 	 	 	 	 	
Operating Income (Loss)	(143,051	)	 	40,950		 	(184,001	)	 	(95,098	)	102,650		(197,748	)	
 	 	 	 	 	 	 	 	 	 	
Other Income (Expense):	 	 	 	 	 	 	 	 	 	
Non-Service Pension and Post-Retirement Benefit Costs	(395	)	 	(4	)	 	(391	)	 	(790	)	(8	)	(782	)	
Interest and Other Income	208		 	279		 	(71	)	 	441		562		(121	)	
Interest Expense	(14,163	)	 	(13,548	)	 	(615	)	 	(28,220	)	(26,711	)	(1,509	)	
 	 	 	 	 	 	 	 	 	 	
Income (Loss) Before Income Taxes	(157,401	)	 	27,677		 	(185,078	)	 	(123,667	)	76,493		(200,160	)	
Income Tax Expense	17,874		 	5,804		 	12,070		 	27,632		16,406		11,226		
Net Income (Loss)	$	(175,275	)	 	$	21,873		 	$	(197,148	)	 	$	(151,299	)	$	60,087		$	(211,386	)	
 	 	 	 	 	 	 	 	 	 	
Net Income (Loss) Per Share (Diluted)	$	(2.03	)	 	$	0.25		 	$	(2.28	)	 	$	(1.75	)	$	0.69		$	(2.44	)	

Page 17.

	

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

 	Three Months Ended	 	Six Months Ended	
(Thousands of Dollars, except per share amounts)	March 31,	 	March 31,	
PIPELINE AND STORAGE SEGMENT	2020	 	2019	 	Variance	 	2020	2019	Variance	
Revenues from External Customers	$	51,919		 	$	48,421		 	$	3,498		 	$	100,888		$	102,639		$	(1,751	)	
Intersegment Revenues	27,326		 	23,918		 	3,408		 	50,577		46,769		3,808		
Total Operating Revenues	79,245		 	72,339		 	6,906		 	151,465		149,408		2,057		
 	 	 	 	 	 	 	 	 	 	
Operating Expenses:	 	 	 	 	 	 	 	 	 	
Purchased Gas	(3	)	 	510		 	(513	)	 	(10	)	813		(823	)	
Operation and Maintenance	22,014		 	22,907		 	(893	)	 	42,945		44,540		(1,595	)	
Property, Franchise and Other Taxes	8,132		 	7,641		 	491		 	16,487		14,949		1,538		
Depreciation, Depletion and Amortization	13,356		 	11,293		 	2,063		 	24,960		22,407		2,553		
 	43,499		 	42,351		 	1,148		 	84,382		82,709		1,673		
 	 	 	 	 	 	 	 	 	 	
Operating Income	35,746		 	29,988		 	5,758		 	67,083		66,699		384		
 	 	 	 	 	 	 	 	 	 	
Other Income (Expense):	 	 	 	 	 	 	 	 	 	
Non-Service Pension and Post-Retirement Benefit (Costs) Credit	(174	)	 	930		 	(1,104	)	 	(349	)	1,397		(1,746	)	
Interest and Other Income	1,535		 	1,043		 	492		 	3,088		2,502		586		
Interest Expense	(7,152	)	 	(7,500	)	 	348		 	(14,264	)	(14,786	)	522		
 	 	 	 	 	 	 	 	 	 	
Income Before Income Taxes	29,955		 	24,461		 	5,494		 	55,558		55,812		(254	)	
Income Tax Expense	7,868		 	6,712		 	1,156		 	15,366		12,961		2,405		
Net Income	$	22,087		 	$	17,749		 	$	4,338		 	$	40,192		$	42,851		$	(2,659	)	
 	 	 	 	 	 	 	 	 	 	
Net Income Per Share (Diluted)	$	0.26		 	$	0.20		 	$	0.06		 	$	0.46		$	0.49		$	(0.03	)	

 	Three Months Ended	 	Six Months Ended	
 	March 31,	 	March 31,	
GATHERING SEGMENT	2020	 	2019	 	Variance	 	2020	2019	Variance	
Revenues from External Customers	$	—		 	$	2		 	$	(2	)	 	$	—		$	2		$	(2	)	
Intersegment Revenues	35,267		 	29,366		 	5,901		 	70,055		59,056		10,999		
Total Operating Revenues	35,267		 	29,368		 	5,899		 	70,055		59,058		10,997		
 	 	 	 	 	 	 	 	 	 	
Operating Expenses:	 	 	 	 	 	 	 	 	 	
Operation and Maintenance	5,702		 	4,752		 	950		 	11,044		8,464		2,580		
Property, Franchise and Other Taxes	24		 	18		 	6		 	38		48		(10	)	
Depreciation, Depletion and Amortization	5,279		 	4,673		 	606		 	10,418		9,351		1,067		
 	11,005		 	9,443		 	1,562		 	21,500		17,863		3,637		
 	 	 	 	 	 	 	 	 	 	
Operating Income	24,262		 	19,925		 	4,337		 	48,555		41,195		7,360		
 	 	 	 	 	 	 	 	 	 	
Other Income (Expense):	 	 	 	 		 	 	 	 	
Non-Service Pension and Post-Retirement Benefit Costs	(71	)	 	(1	)	 	(70	)	 	(143	)	(83	)	(60	)	
Interest and Other Income	89		 	190		 	(101	)	 	157		315		(158	)	
Interest Expense	(2,160	)	 	(2,345	)	 	185		 	(4,379	)	(4,723	)	344		
 	 	 	 	 	 	 	 	 	 	
Income Before Income Taxes	22,120		 	17,769		 	4,351		 	44,190		36,704		7,486		
Income Tax Expense	2,222		 	5,079		 	(2,857	)	 	8,348		9,832		(1,484	)	
Net Income	$	19,898		 	$	12,690		 	$	7,208		 	$	35,842		$	26,872		$	8,970		
 	 	 	 	 	 	 	 	 	 	
Net Income Per Share (Diluted)	$	0.23		 	$	0.15		 	$	0.08		 	$	0.42		$	0.31		$	0.11		

Page 18.

	

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

 	Three Months Ended	 	Six Months Ended	
(Thousands of Dollars, except per share amounts)	March 31,	 	March 31,	
UTILITY SEGMENT	2020	 	2019	 	Variance	 	2020	2019	Variance	
Revenues from External Customers	$	250,556		 	$	298,636		 	$	(48,080	)	 	$	445,465		$	518,647		$	(73,182	)	
Intersegment Revenues	3,937		 	4,394		 	(457	)	 	5,853		7,040		(1,187	)	
Total Operating Revenues	254,493		 	303,030		 	(48,537	)	 	451,318		525,687		(74,369	)	
 	 	 	 	 	 	 	 	 	 	
Operating Expenses:	 	 	 	 	 	 	 	 	 	
Purchased Gas	119,411		 	165,235		 	(45,824	)	 	204,116		277,115		(72,999	)	
Operation and Maintenance	51,070		 	47,795		 	3,275		 	93,913		90,950		2,963		
Property, Franchise and Other Taxes	10,820		 	11,312		 	(492	)	 	20,634		21,365		(731	)	
Depreciation, Depletion and Amortization	13,751		 	13,365		 	386		 	27,382		26,656		726		
 	195,052		 	237,707		 	(42,655	)	 	346,045		416,086		(70,041	)	
 	 	 	 	 	 	 	 	 	 	
Operating Income	59,441		 	65,323		 	(5,882	)	 	105,273		109,601		(4,328	)	
 	 	 	 	 	 	 	 	 	 	
Other Income (Expense):	 	 	 	 	 	 	 	 	 	
Non-Service Pension and Post-Retirement Benefit Costs	(12,388	)	 	(12,686	)	 	298		 	(19,151	)	(19,614	)	463		
Interest and Other Income	294		 	1,068		 	(774	)	 	1,245		1,780		(535	)	
Interest Expense	(5,516	)	 	(6,263	)	 	747		 	(11,190	)	(12,157	)	967		
 	 	 	 	 	 	 	 	 	 	
Income Before Income Taxes	41,831		 	47,442		 	(5,611	)	 	76,177		79,610		(3,433	)	
Income Tax Expense	10,332		 	11,853		 	(1,521	)	 	18,095		18,373		(278	)	
Net Income	$	31,499		 	$	35,589		 	$	(4,090	)	 	$	58,082		$	61,237		$	(3,155	)	
 	 	 	 	 	 	 	 	 	 	
Net Income Per Share (Diluted)	$	0.36		 	$	0.41		 	$	(0.05	)	 	$	0.67		$	0.71		$	(0.04	)	

Page 19.

	
																						
NATIONAL FUEL GAS COMPANY	
AND SUBSIDIARIES	
 	 	 	 	 	 	 	 	 	 	
SEGMENT OPERATING RESULTS AND STATISTICS	
(UNAUDITED)	
 	 	 	 	 	 	 	 	 	 	
 	Three Months Ended	 	Six Months Ended	
(Thousands of Dollars, except per share amounts)	March 31,	 	March 31	
ALL OTHER	2020	 	2019	 	Variance	 	2020	2019	Variance	
Revenues from External Customers	$	32,925		 	$	59,328		 	$	(26,403	)	 	$	67,161		$	112,416		$	(45,255	)	
Intersegment Revenues	79		 	43		 	36		 	256		375		(119	)	
Total Operating Revenues	33,004		 	59,371		 	(26,367	)	 	67,417		112,791		(45,374	)	
Operating Expenses:	 	 	 	 	 	 	 	 	 	
Purchased Gas	29,151		 	56,820		 	(27,669	)	 	61,184		108,337		(47,153	)	
Operation and Maintenance	1,875		 	1,944		 	(69	)	 	3,578		3,822		(244	)	
Property, Franchise and Other Taxes	176		 	134		 	42		 	320		270		50		
Depreciation, Depletion and Amortization	206		 	254		 	(48	)	 	408		536		(128	)	
 	31,408		 	59,152		 	(27,744	)	 	65,490		112,965		(47,475	)	
 	 	 	 	 	 	 	 	 	 	
Operating Income (Loss)	1,596		 	219		 	1,377		 	1,927		(174	)	2,101		
 	 	 	 	 	 	 	 	 	 	
Other Income (Expense):	 	 	 	 	 	 	 	 	 	
Non-Service Pension and Post-Retirement Benefit Costs	(69	)	 	(11	)	 	(58	)	 	(138	)	(133	)	(5	)	
Interest and Other Income	193		 	360		 	(167	)	 	471		666		(195	)	
Interest Expense	(24	)	 	(8	)	 	(16	)	 	(42	)	(13	)	(29	)	
 	 	 	 	 	 	 	 	 	 	
Income Before Income Taxes	1,696		 	560		 	1,136		 	2,218		346		1,872		
Income Tax Expense (Benefit)	527		 	144		 	383		 	678		(153	)	831		
Net Income	$	1,169		 	$	416		 	$	753		 	$	1,540		$	499		$	1,041		
Net Income Per Share (Diluted)	$	0.01		 	$	0.01		 	$	—		 	$	0.02		$	0.01		$	0.01		
 	 	 	 	 	 	
 	Three Months Ended	 	Six Months Ended	
 	March 31,	 	March 31,	
CORPORATE	2020	 	2019	 	Variance	 	2020	2019	Variance	
Revenues from External Customers	$	135		 	$	55		 	$	80		 	$	270		$	109		$	161		
Intersegment Revenues	1,094		 	1,165		 	(71	)	 	2,187		2,329		(142	)	
Total Operating Revenues	1,229		 	1,220		 	9		 	2,457		2,438		19		
Operating Expenses:	 	 	 	 	 	 	 	 	 	
Operation and Maintenance	3,499		 	3,955		 	(456	)	 	6,142		6,751		(609	)	
Property, Franchise and Other Taxes	120		 	120		 	—		 	237		235		2		
Depreciation, Depletion and Amortization	184		 	191		 	(7	)	 	378		380		(2	)	
 	3,803		 	4,266		 	(463	)	 	6,757		7,366		(609	)	
 	 	 	 	 	 	 	 	 	 	
Operating Loss	(2,574	)	 	(3,046	)	 	472		 	(4,300	)	(4,928	)	628		
 	 	 	 	 	 	 	 	 	 	
Other Income (Expense):	 	 	 	 	 	 	 	 	 	
Non-Service Pension and Post-Retirement Benefit Costs	(775	)	 	(647	)	 	(128	)	 	(1,550	)	(1,385	)	(165	)	
Interest and Other Income	22,801		 	32,761		 	(9,960	)	 	53,874		56,377		(2,503	)	
Interest Expense on Long-Term Debt	(25,270	)	 	(25,273	)	 	3		 	(50,713	)	(50,713	)	—		
Other Interest Expense	(1,605	)	 	(1,324	)	 	(281	)	 	(3,023	)	(2,367	)	(656	)	
 	 	 	 	 	 	 	 	 	 	
Income (Loss) before Income Taxes	(7,423	)	 	2,471		 	(9,894	)	 	(5,712	)	(3,016	)	(2,696	)	
Income Tax Expense (Benefit)	(1,977	)	 	193		 	(2,170	)	 	(1,878	)	(4,726	)	2,848		
Net Income (Loss)	$	(5,446	)	 	$	2,278		 	$	(7,724	)	 	$	(3,834	)	$	1,710		$	(5,544	)	
Net Income (Loss) Per Share (Diluted)	$	(0.06	)	 	$	0.02		 	$	(0.08	)	 	$	(0.05	)	$	0.02		$	(0.07	)	

 	Three Months Ended	 	Six Months Ended	
 	March 31,	 	March 31,	
INTERSEGMENT ELIMINATIONS	2020	 	2019	 	Variance	 	2020	2019	Variance	
Intersegment Revenues	$	(67,703	)	 	$	(58,886	)	 	$	(8,817	)	 	$	(128,928	)	$	(115,569	)	$	(13,359	)	
Operating Expenses:	 	 	 	 	 	 	 	 	 	
Purchased Gas	(30,289	)	 	(27,528	)	 	(2,761	)	 	(54,748	)	(52,568	)	(2,180	)	
Operation and Maintenance	(37,414	)	 	(31,358	)	 	(6,056	)	 	(74,180	)	(63,001	)	(11,179	)	
 	(67,703	)	 	(58,886	)	 	(8,817	)	 	(128,928	)	(115,569	)	(13,359	)	
 	 	 	 	 	 	 	 	 	 	
Operating Income	—		 	—		 	—		 	—		—		—		
 	 	 	 	 	 	 	 	 	 	
Other Income (Expense):	 	 	 	 	 	 	 	 	 	
Interest and Other Deductions	(28,728	)	 	(29,201	)	 	473		 	(57,675	)	(57,897	)	222		
Interest Expense	28,728		 	29,201		 	(473	)	 	57,675		57,897		(222	)	
Net Income (Loss)	$	—		 	$	—		 	$	—		 	$	—		$	—		$	—		
Net Income (Loss) Per Share (Diluted)	$	—		 	$	—		 	$	—		 	$	—		$	—		$	—		

Page 20.

	

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

 	Three Months Ended	 	Six Months Ended	
 	March 31,	 	March 31,	
 	(Unaudited)	 	(Unaudited)	
 	 	 	 	 	Increase	 	 	 	 	 	Increase	
 	2020	 	2019	 	(Decrease)	 	2020	 	2019	 	(Decrease)	
 	 	 	 	 	 	 	 	 	 	 	 	
Capital Expenditures:	 	 	 	 	 	 	 	 	 	 	 	
Exploration and Production	$	102,424		(1) 	$	142,571		(3) 	$	(40,147	)	 	$	229,343		(1)(2) 	$	262,786		(3)(4) 	$	(33,443	)	
Pipeline and Storage	25,554		(1) 	22,674		(3) 	2,880		 	82,638		(1)(2) 	52,638		(3)(4) 	30,000		
Gathering	15,072		(1) 	12,680		(3) 	2,392		 	24,910		(1)(2) 	21,470		(3)(4) 	3,440		
Utility	19,457		(1) 	19,735		(3) 	(278	)	 	36,622		(1)(2) 	35,657		(3)(4) 	965		
Total Reportable Segments	162,507			197,660			(35,153	)		373,513			372,551			962		
All Other	1		 	22		 	(21	)	 	22		 	41		 	(19	)	
Corporate	134		 	85		 	49		 	320		 	103		 	217		
Total Capital Expenditures	$	162,642		 	$	197,767		 	$	(35,125	)	 	$	373,855		 	$	372,695		 	$	1,160		

		
(1) 	Capital expenditures for the quarter and six months ended March 31, 2020, include accounts payable and accrued liabilities related to capital expenditures of $41.2 million, $9.7 million, $4.4 million, and $4.2 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at March 31, 2020, since they represent non-cash investing activities at that date.	

(2) 	Capital expenditures for the six months ended March 31, 2020, 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 six months ended March 31, 2020. 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 March 31, 2020.	

(3) 	Capital expenditures for the quarter and six months ended March 31, 2019, include accounts payable and accrued liabilities related to capital expenditures of $53.4 million, $10.7 million, $7.4 million, and $3.4 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at March 31, 2019, since they represent non-cash investing activities at that date.	

(4) 	Capital expenditures for the six months ended March 31, 2019, 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 six months ended March 31, 2019. 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 March 31, 2019.	

	

DEGREE DAYS	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	Percent Colder	
 	 	 	 	 	 	 	(Warmer) Than:	
Three Months Ended March 31	Normal	 	2020	 	2019	 	  Normal (1)	 	Last Year (1)	
 	 	 	 	 	 	 	 	 	 	
Buffalo, NY	3,326	 	2,738	 	3,372	 	(17.7	)	 	(18.8	)	
Erie, PA	3,142	 	2,555	 	3,096	 	(18.7	)	 	(17.5	)	
 	 	 	 	 	 	 	 	 	 	
Six Months Ended March 31	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	
Buffalo, NY	5,579	 	4,970	 	5,697	 	(10.9	)	 	(12.8	)	
Erie, PA	5,186	 	4,461	 	5,126	 	(14.0	)	 	(13.0	)	

(1) 	Percents compare actual 2020 degree days to normal degree days and actual 2020 degree days to actual 2019 degree days.	

Page 21.

	

 	 	 	 	 	 	 	 	 	 	 	 	 	
NATIONAL FUEL GAS COMPANY	
AND SUBSIDIARIES	
 	 	 	 	 	 	 	 	 	 	 	 	 	
EXPLORATION AND PRODUCTION INFORMATION	

 	 	Three Months Ended	 	Six Months Ended	
 	 	March 31,	 	March 31,	
 	 	 	 	 	 	Increase	 	 	 	 	 	Increase	
 	 	2020	 	2019	 	(Decrease)	 	2020	 	2019	 	(Decrease)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Gas Production/Prices:	 	 	 	 	 	 	 	 	 	 	 	 	
Production (MMcf)	 	 	 	 	 	 	 	 	 	 	 	 	
Appalachia	 	55,638		 	44,883		 	10,755		 	109,922		 	90,188		 	19,734		
West Coast	 	479		 	487		 	(8	)	 	966		 	989		 	(23	)	
Total Production	 	56,117		 	45,370		 	10,747		 	110,888		 	91,177		 	19,711		
 	 	 	 	 	 	 	 	 	 	 	 	 	
Average Prices (Per Mcf)	 	 	 	 	 	 	 	 	 	 	 	 	
Appalachia	 	$	1.77		 	$	2.65		 	$	(0.88	)	 	$	1.97		 	$	2.79		 	$	(0.82	)	
West Coast	 	4.34		 	6.06		 	(1.72	)	 	4.67		 	6.40		 	(1.73	)	
Weighted Average	 	1.80		 	2.69		 	(0.89	)	 	1.99		 	2.83		 	(0.84	)	
Weighted Average after Hedging	 	2.12		 	2.58		 	(0.46	)	 	2.22		 	2.60		 	(0.38	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Oil Production/Prices:	 	 	 	 	 	 	 	 	 	 	 	 	
Production (Thousands of Barrels)	 	 	 	 	 	 	 	 	 	 	 	 	
Appalachia	 	1		 	1		 	—		 	2		 	2		 	—		
West Coast	 	605		 	563		 	42		 	1,206		 	1,134		 	72		
Total Production	 	606		 	564		 	42		 	1,208		 	1,136		 	72		
 	 	 	 	 	 	 	 	 	 	 	 	 	
Average Prices (Per Barrel)	 	 	 	 	 	 	 	 	 	 	 	 	
Appalachia	 	$	55.90		 	$	47.54		 	$	8.36		 	$	55.48		 	$	55.93		 	$	(0.45	)	
West Coast	 	49.91		 	61.85		 	(11.94	)	 	56.25		 	63.79		 	(7.54	)	
Weighted Average	 	49.92		 	61.82		 	(11.90	)	 	56.25		 	63.78		 	(7.53	)	
Weighted Average after Hedging	 	58.23		 	61.01		 	(2.78	)	 	60.57		 	61.36		 	(0.79	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Production (MMcfe)	 	59,753		 	48,754		 	10,999		 	118,136		 	97,993		 	20,143		
 	 	 	 	 	 	 	 	 	 	 	 	 	
Selected Operating Performance Statistics:	 	 	 	 	 	 	 	 	 	 	 	 	
General & Administrative Expense per Mcfe (1)	 	$	0.29		 	$	0.35		 	$	(0.06	)	 	$	0.28		 	$	0.33		 	$	(0.05	)	
Lease Operating and Transportation Expense per Mcfe (1)(2)	 	$	0.87		 	$	0.94		 	$	(0.07	)	 	$	0.87		 	$	0.90		 	$	(0.03	)	
Depreciation, Depletion & Amortization per Mcfe (1)	 	$	0.76		 	$	0.74		 	$	0.02		 	$	0.76		 	$	0.72		 	$	0.04		

		
(1) 	Refer to page 16 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 $0.56 and $0.56 per Mcfe for the three months ended March 31, 2020 and March 31, 2019, respectively. Amounts include transportation expense of $0.57 and $0.55 per Mcfe for the six months ended March 31, 2020 and March 31, 2019, respectively.	

Page 22.

	
								
NATIONAL FUEL GAS COMPANY	
AND SUBSIDIARIES	
 	 	 	 	 	 	 	
EXPLORATION AND PRODUCTION INFORMATION	
 	
Hedging Summary for Remaining Six Months of Fiscal 2020	 	Volume	 	 	Average Hedge Price	
Oil Swaps	 	 	 	 	 	 	
Brent	 	690,000		BBL	 	$	64.55 / BBL	
NYMEX	 	162,000		BBL	 	$	50.52 / BBL	
Total	 	852,000		BBL	 	$	61.88 / BBL	
 	 	 	 	 	 	 	
Gas Swaps	 	 	 	 	 	 	
NYMEX	 	45,700,000		MMBTU	 	$	2.67 / MMBTU	
DAWN	 	3,600,000		MMBTU	 	$	3.00 / MMBTU	
Fixed Price Physical Sales	 	29,608,125		MMBTU	 	$	2.18 / MMBTU	
Total	 	78,908,125		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	 	117,920,000		MMBTU	 	$	2.61/ MMBTU	
   DAWN	 	600,000		MMBTU	 	$	3.00 / MMBTU	
No Cost Collars	 	25,850,000		MMBTU	 	$	2.28 / MMBTU (Floor) / $2.77 / MMBTU (Ceiling)	
Fixed Price Physical Sales	 	46,810,846		MMBTU	 	$	2.22 / MMBTU	
Total	 	191,180,846		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	 	62,550,000		MMBTU	 	$	2.52 / MMBTU	
No Cost Collars	 	2,350,000		MMBTU	 	$	2.28 / MMBTU (Floor) / $2.77 / MMBTU (Ceiling)	
Fixed Price Physical Sales	 	40,588,964		MMBTU	 	$	2.23 / MMBTU	
Total	 	105,488,964		MMBTU	 	 	 	

Hedging Summary for Fiscal 2023	 	Volume	 	 	Average Hedge Price	
Gas Swaps	 	 	 	 	 	 	
NYMEX	 	17,500,000		MMBTU	 	$	2.47 / MMBTU	
Fixed Price Physical Sales	 	36,961,007		MMBTU	 	$	2.26 / MMBTU	
Total	 	54,461,007		MMBTU	 	 	 	
 	 	 	 	 	 	 	
Hedging Summary for Fiscal 2024	 	Volume	 	 	Average Hedge Price	
Gas Swaps	 	 	 	 	 	 	
NYMEX	 	1,150,000		MMBTU	 	$	2.45 / MMBTU	
Fixed Price Physical Sales	 	20,801,194		MMBTU	 	$	2.25 / MMBTU	
Total	 	21,951,194		MMBTU	 	 	 	
 	 	 	 	 	 	 	
Hedging Summary for Fiscal 2025	 	Volume	 	 	Average Hedge Price	
Fixed Price Physical Sales	 	2,293,200		MMBTU	 	$	2.18 / MMBTU	

	

Page 23.

	

NATIONAL FUEL GAS COMPANY	
AND SUBSIDIARIES	

 	 	 	 	 	 	 	 	 	 	 	 	 	
Pipeline & Storage Throughput - (millions of cubic feet - MMcf)	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended	 	Six Months Ended	
 	 	March 31,	 	March 31,	
 	 	 	 	 	 	Increase	 	 	 	 	 	Increase	
 	 	2020	 	2019	 	(Decrease)	 	2020	 	2019	 	(Decrease)	
Firm Transportation - Affiliated	 	42,602		 	50,967		 	(8,365	)	 	77,269		 	86,668		 	(9,399	)	
Firm Transportation - Non-Affiliated	 	153,197		 	148,653		 	4,544		 	327,178		 	304,855		 	22,323		
Interruptible Transportation	 	531		 	750		 	(219	)	 	1,244		 	1,665		 	(421	)	
 	 	196,330		 	200,370		 	(4,040	)	 	405,691		 	393,188		 	12,503		
 	 	 	 	 	 	 	 	 	 	 	 	 	
Gathering Volume - (MMcf)	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended	 	Six Months Ended	
 	 	March 31,	 	March 31,	
 	 	 	 	 	 	Increase	 	 	 	 	 	Increase	
 	 	2020	 	2019	 	(Decrease)	 	2020	 	2019	 	(Decrease)	
Gathered Volume - Affiliated	 	65,134		 	54,157		 	10,977		 	129,526		 	108,845		 	20,681		

Utility Throughput - (MMcf)	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended	 	Six Months Ended	
 	 	March 31,	 	March 31,	
 	 	 	 	 	 	Increase	 	 	 	 	 	Increase	
 	 	2020	 	2019	 	(Decrease)	 	2020	 	2019	 	(Decrease)	
Retail Sales:	 	 	 	 	 	 	 	 	 	 	 	 	
Residential Sales	 	26,155		 	30,906		 	(4,751	)	 	45,631		 	50,686		 	(5,055	)	
Commercial Sales	 	4,033		 	4,712		 	(679	)	 	6,846		 	7,558		 	(712	)	
Industrial Sales	 	183		 	284		 	(101	)	 	400		 	488		 	(88	)	
 	 	30,371		 	35,902		 	(5,531	)	 	52,877		 	58,732		 	(5,855	)	
Transportation	 	25,157		 	28,928		 	(3,771	)	 	45,712		 	51,198		 	(5,486	)	
 	 	55,528		 	64,830		 	(9,302	)	 	98,589		 	109,930		 	(11,341	)	

	

	

	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

Page 24.

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 and six months ended March 31, 2020 and 2019:

																	
 	 	Three Months Ended	 	Six Months Ended	
 	 	March 31,	 	March 31,	
(in thousands except per share amounts)	 	2020	 	2019	 	2020	 	2019	
Reported GAAP Earnings	 	$	(106,068	)	 	$	90,595		 	$	(19,477	)	 	$	193,256		
Items impacting comparability	 	 	 	 	 	 	 	 	
Impairment of oil and gas properties (E&P)	 	177,761		 	—		 	177,761		 	—		
Tax impact of impairment of oil and gas properties	 	(48,503	)	 	—		 	(48,503	)	 	—		
Deferred tax valuation allowance	 	56,770		 	—		 	56,770		 	—		
Remeasurement of deferred income taxes under 2017 Tax Reform	 	—		 	—		 	—		 	(5,000	)	
Mark-to-market adjustments due to hedge ineffectiveness (E&P)	 	—		 	6,742		 	—		 	237		
Tax impact of mark-to-market adjustments due to hedge ineffectiveness	 	—		 	(1,416	)	 	—		 	(50	)	
Unrealized (gain) loss on other investments (Corporate/All Other)	 	5,414		 	(3,831	)	 	6,433		 	2,516		
Tax impact of unrealized (gain) loss on other investments	 	(1,137	)	 	805		 	(1,351	)	 	(528	)	
Adjusted Operating Results	 	$	84,237		 	$	92,895		 	$	171,633		 	$	190,431		
 	 	 	 	 	 	 	 	 	
Reported GAAP Earnings per share	 	$	(1.23	)	 	$	1.04		 	$	(0.23	)	 	$	2.23		
Items impacting comparability	 	 	 	 	 	 	 	 	
Impairment of oil and gas properties, net of tax (E&P)	 	1.49		 	—		 	1.49		 	—		
Deferred tax valuation allowance	 	0.66		 	—		 	0.66		 	—		
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 (gain) loss on other investments, net of tax (Corporate/All Other)	 	0.05		 	(0.03	)	 	0.06		 	0.02		
Rounding	 	—		 	—		 	—		 	0.01		
Adjusted Operating Results per share	 	$	0.97		 	$	1.07		 	$	1.98		 	$	2.20		

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 and six months ended March 31, 2020 and 2019:

																	
 	 	Three Months Ended	 	Six Months Ended	
 	 	March 31,	 	March 31,	
(in thousands)	 	2020	 	2019	 	2020	 	2019	
Reported GAAP Earnings	 	$	(106,068	)	 	$	90,595		 	$	(19,477	)	 	$	193,256		
Depreciation, Depletion and Amortization	 	77,912		 	65,664		 	152,830		 	129,918		
Other (Income) Deductions	 	17,480		 	5,919		 	20,520		 	15,521		
Interest Expense	 	27,162		 	27,060		 	54,156		 	53,573		
Income Taxes	 	36,846		 	29,785		 	68,241		 	52,693		
Mark-to-Market Adjustments due to Hedge Ineffectiveness	 	—		 	6,742		 	—		 	237		
Impairment of Oil and Gas Producing Properties	 	177,761		 	—		 	177,761		 	—		
Adjusted EBITDA	 	$	231,093		 	$	225,765		 	$	454,031		 	$	445,198		
 	 	 	 	 	 	 	 	 	
Adjusted EBITDA by Segment	 	 	 	 	 	 	 	 	
Pipeline and Storage Adjusted EBITDA	 	$	49,102		 	$	41,281		 	$	92,043		 	$	89,106		
Gathering Adjusted EBITDA	 	29,541		 	24,598		 	58,973		 	50,546		
Total Midstream Businesses Adjusted EBITDA	 	78,643		 	65,879			151,016			139,652		
Exploration and Production Adjusted EBITDA	 	79,846		 	83,580		 	171,947		 	173,475		
Utility Adjusted EBITDA	 	73,192		 	78,688		 	132,655		 	136,257		
Corporate and All Other Adjusted EBITDA	 	(588	)	 	(2,382	)	 	(1,587	)	 	(4,186	)	
Total Adjusted EBITDA	 	$	231,093		 	$	225,765			$	454,031			$	445,198		

Page 25.

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

																	
 	 	Three Months Ended	 	Six Months Ended	
 	 	March 31,	 	March 31,	
(in thousands)	 	2020	 	2019	 	2020	 	2019	
Exploration and Production Segment	 	 	 	 	 	 	 	 	
Reported GAAP Earnings	 	$	(175,275	)	 	$	21,873		 	$	(151,299	)	 	$	60,087		
Depreciation, Depletion and Amortization	 	45,136		 	35,888		 	89,284		 	70,588		
Other (Income) Deductions	 	187		 	(275	)	 	349		 	(554	)	
Interest Expense	 	14,163		 	13,548		 	28,220		 	26,711		
Income Taxes	 	17,874		 	5,804		 	27,632		 	16,406		
Mark-to-Market Adjustments due to Hedge Ineffectiveness	 	—		 	6,742		 	—		 	237		
Impairment of Oil and Gas Producing Properties	 	177,761		 	—		 	177,761		 	—		
Adjusted EBITDA	 	$	79,846		 	$	83,580		 	$	171,947		 	$	173,475		
 	 	 	 	 	 	 	 	 	
Pipeline and Storage Segment	 	 	 	 	 	 	 	 	
Reported GAAP Earnings	 	$	22,087		 	$	17,749		 	$	40,192		 	$	42,851		
Depreciation, Depletion and Amortization	 	13,356		 	11,293		 	24,960		 	22,407		
Other (Income) Deductions	 	(1,361	)	 	(1,973	)	 	(2,739	)	 	(3,899	)	
Interest Expense	 	7,152		 	7,500		 	14,264		 	14,786		
Income Taxes	 	7,868		 	6,712		 	15,366		 	12,961		
Adjusted EBITDA	 	$	49,102		 	$	41,281		 	$	92,043		 	$	89,106		
 	 	 	 	 	 	 	 	 	
Gathering Segment	 	 	 	 	 	 	 	 	
Reported GAAP Earnings	 	$	19,898		 	$	12,690		 	$	35,842		 	$	26,872		
Depreciation, Depletion and Amortization	 	5,279		 	4,673		 	10,418		 	9,351		
Other (Income) Deductions	 	(18	)	 	(189	)	 	(14	)	 	(232	)	
Interest Expense	 	2,160		 	2,345		 	4,379		 	4,723		
Income Taxes	 	2,222		 	5,079		 	8,348		 	9,832		
Adjusted EBITDA	 	$	29,541		 	$	24,598		 	$	58,973		 	$	50,546		
 	 	 	 	 	 	 	 	 	
Utility Segment	 	 	 	 	 	 	 	 	
Reported GAAP Earnings	 	$	31,499		 	$	35,589		 	$	58,082		 	$	61,237		
Depreciation, Depletion and Amortization	 	13,751		 	13,365		 	27,382		 	26,656		
Other (Income) Deductions	 	12,094		 	11,618		 	17,906		 	17,834		
Interest Expense	 	5,516		 	6,263		 	11,190		 	12,157		
Income Taxes	 	10,332		 	11,853		 	18,095		 	18,373		
Adjusted EBITDA	 	$	73,192		 	$	78,688		 	$	132,655		 	$	136,257		
 	 	 	 	 	 	 	 	 	
Corporate and All Other	 	 	 	 	 	 	 	 	
Reported GAAP Earnings	 	$	(4,277	)	 	$	2,694		 	$	(2,294	)	 	$	2,209		
Depreciation, Depletion and Amortization	 	390		 	445		 	786		 	916		
Other (Income) Deductions	 	6,578		 	(3,262	)	 	5,018		 	2,372		
Interest Expense	 	(1,829	)	 	(2,596	)	 	(3,897	)	 	(4,804	)	
Income Taxes	 	(1,450	)	 	337		 	(1,200	)	 	(4,879	)	
Adjusted EBITDA	 	$	(588	)	 	$	(2,382	)	 	$	(1,587	)	 	$	(4,186	)