WILLIAMSVILLE, N.Y., August 2 /CNW/ - National Fuel Gas Company ("National Fuel" or the "Company") (NYSE:NFG) today announced consolidated earnings for the quarter ended June 30, 2007.
HIGHLIGHTS
-- Reported GAAP earnings for the third quarter were $46.8 million or $0.55 per share. This is an increase of $46.7 million or $0.55 per share from the prior year's quarter. With the exception of the Timber segment, earnings for the quarter increased in all segments compared to the prior year.
-- Quarterly operating results before items impacting comparability were $42.0 million or $0.49 per share, an increase of $8.5 million or $0.10 per share from the prior year's third quarter.
-- The Company is increasing and narrowing its GAAP guidance range for fiscal 2007 earnings to a range of $2.38 to $2.46 per share.(x) This guidance excludes any effects from a sale by the Company's Exploration and Production segment of its Canadian operations. The Company's preliminary GAAP guidance for fiscal 2008 is in the range of $2.45 to $2.65 per share.(x) This includes oil and gas production for the Exploration and Production segment in the range of 38 to 44 billion cubic feet equivalent ("Bcfe") but excludes any Canadian production.(x)
-- A conference call is scheduled for Friday, August 3, 2007 at 11:00 am Eastern Time.
MANAGEMENT COMMENTS
Philip C. Ackerman, Chairman and Chief Executive Officer of National Fuel Gas Company stated: "This was another solid quarter and a record third quarter for the Company. Our GAAP earnings increased in all segments, with the exception of the Timber segment. Both our GAAP earnings of $0.55 per share and operating results of $0.49 per share exceed market estimates, and are the highest achieved in the third quarter in our history. Our business model of participating in all areas of the natural gas industry, coupled with our employees' continued dedication to operating our assets in an efficient and safe manner, made these results attainable."
"We are also pleased to announce significant milestones toward achieving an in-service date of November 2008 for the Empire Connector pipeline.(x) At this time, all major regulatory approvals have been received, a service agreement has been signed with KeySpan Gas East Corporation, our anchor shipper, and we have finalized the contracts for two crucial components of the project; at present the pipe and compression equipment is being manufactured. In an effort to accelerate our construction schedule, we will begin contacting landowners next week to coordinate construction activities for at least 20 miles of the pipeline by calendar-year end.(x) This project demonstrates our strong commitment to the Pipeline and Storage segment, and our pursuit of projects that add critical infrastructure to serve the growing markets in the New England and the Mid-Atlantic regions."(x)
SUMMARY OF RESULTS
National Fuel had consolidated earnings for the quarter ended June 30, 2007, of $46.8 million, an increase of $46.7 million, or $0.55 per share, from the prior year's third quarter of $0.1 million or less than $0.01 per share (note: all references to earnings per share are to diluted earnings per share, all amounts are stated in U.S. dollars and all amounts used in the earnings and operating results discussions are after tax unless otherwise noted).
Consolidated earnings for the nine months ended June 30, 2007, of $179.8 million, or $2.11 per share, increased $43.6 million, or $0.53 per share, from the same period in the prior year, where earnings were $136.1 million, or $1.58 per share.
Three Months Nine Months
Ended June 30, Ended June 30,
2007 2006 2007 2006
-------- -------- --------- ---------
(in thousands except per share
amounts)
Reported GAAP earnings $46,798 $ 111 $179,765 $136,123
Items impacting
comparability(1):
Reversal of reserve for
preliminary project
costs (4,787) (4,787)
Resolution of purchased
gas contingency (2,344)
Discontinuation of
hedge accounting (1,888)
Impairment of Canadian
oil and gas producing
properties 39,502 39,502
Income tax adjustments (6,122) (11,202)
Out-of-period
symmetrical sharing
adjustment (2,551)
-------- -------- --------- ---------
Operating results $42,011 $33,491 $170,746 $161,872
-------- -------- --------- ---------
Reported GAAP earnings per
share $ 0.55 $ 0.00 $ 2.11 $ 1.58
Items impacting
comparability(1):
Reversal of reserve for
preliminary project
costs (0.06) (0.06)
Resolution of purchased
gas contingency (0.03)
Discontinuation of
hedge accounting (0.02)
Impairment of Canadian
oil and gas producing
properties 0.46 0.46
Income tax adjustments (0.07) (0.13)
Out-of-period
symmetrical sharing
adjustment (0.03)
-------- -------- --------- ---------
Earnings excluding these items $ 0.49 $ 0.39 $ 2.00 $ 1.88
-------- -------- --------- ---------
(1) See discussion of these individual items below.
As outlined in the table above, certain items included in GAAP earnings impacted the comparability of the Company's operating results when comparing the third quarter and nine months ended June 30, 2007 to the comparable periods in fiscal 2006. Excluding these items, operating results for the current third quarter of $42.0 million or $0.49 per share increased $8.5 million or $0.10 per share. Excluding these items, operating results for the nine months ended June 30, 2007 of $170.7 million or $2.00 per share increased $8.9 million or $0.12 per share. Items impacting comparability will be discussed in more detail within the discussion of segment earnings below.
DISCUSSION OF RESULTS BY SEGMENT
(The following discussion of earnings for each segment is summarized in this report. It may be helpful to refer to those tables while reviewing this discussion.)
Utility Segment
The Utility segment operations are carried out by National Fuel Gas Distribution Corporation ("Distribution"), which sells or transports natural gas to customers located in western New York and northwestern Pennsylvania. The Utility segment's earnings of approximately $3.7 million, or $0.04 per share for the quarter ended June 30, 2007, increased $2.9 million, or $0.03 per share, compared to the prior year's third quarter. In the New York Division, earnings increased $0.9 million mainly due to higher customer usage per account, partially offset by higher operating expenses, a higher effective tax rate and higher interest expense. In the Pennsylvania division, earnings increased $1.9 million compared to the prior year's third quarter, mainly due to the impact of an increase in base rates. On January 1, 2007, Distribution implemented the Settlement Agreement approved by the Pennsylvania Public Utility Commission, which, among other things, provided for a $14.3 million (before tax) annual base rate increase. Colder weather in April and higher customer usage per account also contributed to the increase. The increase was partially offset by slightly higher operating expenses and interest expense.
The Utility segment's earnings of $54.3 million, or $0.64 per share, for the nine months ended June 30, 2007, increased $3.1 million, or $0.05 per share, compared to the nine months ended June 30, 2006. Earnings in Distribution's New York Division for the nine months ended June 30, 2007, of $36.0 million decreased $4.7 million compared to the prior year. The comparability of the nine month results is impacted by a $2.6 million out-of-period adjustment recorded in the first quarter of fiscal 2006 to correct Distribution's calculation of the symmetrical sharing component of the New York Division's gas adjustment rate. Excluding this item, operating results in the New York Division decreased $2.1 million, or $0.03 per share. This decrease is mainly due to higher bad debt and other operating expenses and higher property taxes. Increased customer usage per account partially offset the decrease.
For the nine months ended June 30, 2007, earnings in Distribution's Pennsylvania Division of $18.3 million, or $0.22 per share, increased $7.8 million, or $0.09 per share, compared to the prior year. Earnings increased primarily due to the impact of weather that was 6.6 percent colder than the prior year and the annual $14.3 million (before tax) increase in base rates described above. A lower effective tax rate also contributed to the increase. Partially offsetting the increase was higher interest expense.
Pipeline and Storage Segment
The Pipeline and Storage segment operations are carried out by National Fuel Gas Supply Corporation ("Supply Corporation") and Empire State Pipeline ("Empire"). These companies provide 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 western Pennsylvania.
The Pipeline and Storage segment's earnings of $15.5 million, or $0.18 per share, for the quarter ended June 30, 2007, increased $2.8 million, or $0.03 per share, when compared with the same period in the prior fiscal year. The comparability of the quarterly results is impacted by the reversal of a $4.8 million reserve for preliminary project costs on the Empire Connector project. Empire recorded a reserve against any project development costs until such time that it was probable that the project was likely to be built and placed in service. In June 2007, Empire and KeySpan Gas East Corporation signed a firm transportation service agreement that obligates Empire to perform transportation services, requiring Empire to construct and operate the Empire Connector. Excluding this item, operating results for the Pipeline and Storage segment decreased $2.0 million. The decrease is primarily due to lower efficiency gas revenue resulting from lower retained volumes compared to the prior year's third quarter. The lower volumes of efficiency gas result from a FERC-approved settlement of a complaint filed by various parties against Supply Corporation under Sections 5(a) and 13 of the Natural Gas Act (the "FERC settlement") that was generally effective as of December 1, 2006. The FERC settlement also increased Supply Corporation's expense for post-retirement benefits, which resulted in higher operating expenses for the quarter. Partially offsetting these items, the FERC settlement lowered Supply Corporation's depreciation rates, which resulted in lower depreciation expense for the quarter. Higher interest expense and a higher effective tax rate in the quarter also contributed to the decrease in operating results for the quarter.
Earnings of $43.1 million, or $0.51 per share, for the nine months ended June 30, 2007, decreased $2.3 million, or $0.02 per share, when compared with the nine months ended June 30, 2006. The comparability of the results for the nine months ended June 30, 2007, is impacted by the $4.8 million reversal of the reserve for preliminary project costs on the Empire Connector project described above, and a $1.9 million gain associated with the prepayment in the first quarter of 2007 of the project financing debt for the Empire State Pipeline. Upon the payment of that debt, the corresponding interest rate collar no longer qualified for hedge accounting, and gains and losses could no longer be deferred. Excluding these items, operating results decreased $9.0 million, or $0.10 per share, for the nine months ended June 30, 2007, mainly due to lower efficiency gas revenue resulting from lower natural gas prices and lower retained volumes due to the FERC settlement discussed above, as well as a gain on sales of efficiency gas that was recorded in the nine months ended June 30, 2006, that did not recur in the nine months ended June 30, 2007. An increase in post-retirement benefits expense, also due to the FERC settlement, and higher interest expense, contributed to the decline in operating results. The decrease was partially offset by lower depreciation expense, resulting from the FERC settlement.
Exploration and Production Segment
The Exploration and Production segment operations are carried out by Seneca Resources Corporation ("Seneca"). Seneca explores for, develops and purchases natural gas and oil reserves in California, the Appalachian region, and in the Gulf Coast regions of Texas, Louisiana and Alabama. Seneca is currently negotiating the sale of its assets in the western provinces of Canada and expects that it may complete a sale by September 30, 2007.(x)
The Exploration and Production segment's earnings in the third quarter of fiscal 2007 of $24.4 million or $0.29 per share increased $39.6 million or $0.47 per share when compared with the prior year's third quarter. The comparability of the quarterly results is impacted by a non-cash charge of $39.5 million recorded in the third quarter of fiscal 2006 to write down the value of Seneca's Canadian oil and natural gas producing properties that did not recur this year. Seneca uses the full cost method of accounting for determining the book value of its oil and natural gas properties. This method requires that Seneca perform a quarterly "ceiling test" to compare, on a country-by-country basis, the present value of future revenues from its oil and natural gas reserves based on current market prices ("the ceiling") with the book value of those reserves at the balance sheet date. If the book value of the reserves in any country exceeds the ceiling, a non-cash charge must be recorded to reduce the book value of the reserves to the calculated ceiling. In addition, in the third quarter of fiscal 2006, Seneca recognized a $6.1 million benefit to earnings related to income taxes. The Company reversed a valuation allowance associated with the capital loss carryforward that resulted from the 2003 sale of certain Seneca oil properties and also recognized a tax benefit related to the favorable resolution of certain open tax issues.
Excluding these items, operating results in the Exploration and Production segment increased $6.2 million, or $0.08 per share, for the third quarter of fiscal 2007. The increase was mainly due to higher crude oil and natural gas prices realized after hedging. For the quarter ended June 30, 2007, the weighted average oil price received by Seneca (after hedging) was $53.40 per barrel ("Bbl"), an increase of $8.27 per Bbl, or 18.3 percent from the prior year's quarter. The weighted average natural gas price received by Seneca (after hedging) for the quarter ended June 30, 2007, was $7.33 per thousand cubic feet ("Mcf"), an increase of $0.76 per Mcf, or 11.6 percent from the prior year's quarter. The increase in commodity prices more than offset a 0.6 Bcfe decrease in production. Operating expenses for the quarter, were up slightly compared to the prior year quarter. Lower depletion expense, which on a per unit basis, decreased $0.25 per thousand cubic feet equivalent ("Mcfe") to $1.92 per Mcfe was offset by higher lease operating expenses ("LOE"). The decrease in depletion expense is mainly due to the lower book value of the Canadian oil and gas properties as a result of the write down described above. The increase in LOE is due primarily to escalating service costs. A lower effective tax rate also contributed to the increase in operating results.
The Exploration and Productions segment's earnings of $65.0 million, or $0.76 per share, for the nine months ended June 30, 2007, increased $36.8 million, or $0.43 per share, when compared with the nine months ended June 30, 2006. The comparability of the nine-month results is impacted by the charge to write down the value of Seneca's Canadian oil and natural gas producing properties and the tax adjustment described above. Also impacting comparability is an adjustment to the deferred income tax balance recorded in the second quarter of fiscal 2006.
Excluding these items, operating results for the nine months ended June 30, 2007, in the Exploration and Production segment increased $8.5 million, or $0.10 per share, from the prior year. This increase is mainly due to higher crude oil prices realized after hedging, combined with a 0.3 Bcfe increase in production. A decrease in oil production was offset by an increase in gas production, while a drop in gas prices realized after hedging was more than offset by an increase in oil prices realized after hedging. For the nine months ended June 30, 2007, the weighted average oil price received by Seneca (after hedging) was $48.37 per Bbl, an increase of $8.81 per Bbl, or 22.3 percent, from the prior year. The weighted average natural gas price received by Seneca (after hedging) was $7.04 per Mcf, a decrease of $0.39 per Mcf, or 5.2 percent, from the prior year. Operating expenses for the nine months ended June 30, 2007 were slightly higher than the prior year. Lower depletion expense was more than offset by the increase in LOE. The increase in LOE was mostly in the Gulf of Mexico due to the hurricane related shut-ins experienced in fiscal year 2006 and new producing fields coming on line in fiscal 2007. Operating results were also impacted by a higher effective tax rate.
Energy Marketing
National Fuel Resources, Inc. ("NFR") comprises the Company's Energy Marketing segment. NFR markets natural gas to industrial, commercial, public authority and residential customers in western and central New York and northwestern Pennsylvania, offering competitively priced energy and energy management services to its customers.
The Energy Marketing segment's net income for the third quarter of fiscal 2007 of $1.2 million or $0.01 per share, increased $0.2 million compared to the third quarter last year. Earnings for the nine months ended June 30, 2007, of $8.4 million, or $0.10 per share, increased $2.5 million, or $0.03 per share, compared to the nine months ended June 30, 2006. The comparability of the nine month results is impacted by a $2.3 million reversal of an accrual for purchased gas expense for which a contingency was resolved during the second quarter. Excluding this item, operating results for the Energy Marketing segment for the nine month ended June 30, 2007 were flat compared to the nine months ended June 30, 2006.
Timber Segment
The Timber segment operations are carried out by Highland Forest Resources, Inc. ("Highland") and Seneca's Northeast Division. This segment markets high quality hardwoods from its New York and Pennsylvania land holdings, and owns two sawmill/dry kiln operations in northwestern Pennsylvania.
The Timber segment's net loss for the quarter ended June 30, 2007, of $0.4 million or less than $0.01 per share, is a decrease of $1.9 million from earnings of $1.5 million in the prior year's third quarter. The decrease is due to lower margins primarily on logs, green lumber and kiln-dried lumber. The decreased margins are due to a combination of lower sales volumes and prices received mainly for kiln-dried cherry lumber and soft and hard maple green lumber.
Earnings for the nine months ended June 30, 2007, of $3.1 million decreased $2.2 million from the prior year's earnings. The decrease is due to lower margins on logs, green lumber and kiln-dried lumber. The decreased margins are due to a combination of lower sales volumes and prices. The wet weather early in the year resulted in lower harvest volumes. This, combined with lower unit prices, resulted in lower revenues for kiln-dried cherry lumber and soft and hard maple green lumber. The mix of lumber grades also contributed to the decrease.
Corporate and All Other
Other direct, wholly-owned subsidiaries of the Company include: Horizon Energy Development, Inc., a corporation formerly engaged in the development of international power projects; Horizon LFG, Inc., a corporation engaged through subsidiaries in the purchase, processing, transportation and sale of landfill gas; and Horizon Power, Inc., a corporation that develops and owns independent electric generation facilities which are fueled with natural gas or landfill gas.
Earnings in the Corporate and All Other category for the quarter ended June 30, 2007, were $2.3 million, an increase of $3.1 million when compared to the prior year's third quarter loss of $0.8 million. The increase is due to higher margins in Horizon LFG, Inc., higher income from unconsolidated subsidiaries in Horizon Power Inc., higher intercompany interest income, lower operating costs and a lower effective tax rate.
Earnings in the Corporate and All Other category for the nine months ended June 30, 2007, were $5.9 million, an increase of $5.7 million when compared to the prior year's earnings. The increase is mainly due to higher margins in Horizon LFG, Inc., higher income from unconsolidated subsidiaries in Horizon Power, Inc., higher intercompany interest income and a lower effective tax rate.
EARNINGS GUIDANCE
The Company is increasing and narrowing its GAAP guidance range for fiscal 2007 earnings to a range of $2.38 to $2.46 per share.(x) This guidance excludes any effects from a sale by Seneca of its Canadian operations. The Company's preliminary GAAP guidance for fiscal 2008 is in the range of $2.45 to $2.65 per share.(x) This includes oil and gas production for the Exploration and Production segment in the range of 38 to 44 Bcfe.(x) The Company is not including any forecast with respect to production volumes in Canada. Further details regarding the production guidance are included in this document.
EARNINGS TELECONFERENCE
The Company will host a conference call on Friday, August 3, 2007 at 11 a.m. (Eastern Time) to discuss this announcement. There are two ways to access this call. For those with Internet access, visit National Fuel's Web site at nationalfuelgas.com and click on the "For Investors" link at the top of the homepage. For those without Internet access, access is also provided by dialing (toll-free) 1-800-237-9752, and using the passcode "86158770." For those unable to listen to the live conference call, a replay will be available approximately one hour after the conclusion of the call at the same Web site link and by phone at (toll free) 888-286-8010 using passcode "27159393." Both the webcast and telephonic replay will be available until the close of business on Friday, August 10, 2007.
National Fuel is an integrated energy company with $3.8 billion in assets comprised of the following five operating segments: Utility, Pipeline and Storage, Exploration and Production, Energy Marketing, and Timber. Additional information about National Fuel is available on its Internet Web site: http://www.nationalfuelgas.com or through its investor information service at 1-800-334-2188.
(x)Certain statements contained herein, including those which are designated with an asterisk ("(x)") and those which use words such as "anticipates," "estimates," "expects," "intends," "plans," "predicts," "projects," and similar expressions, are "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Company's expectations, beliefs and projections contained herein are expressed in good faith and are believed to have a reasonable basis, but there can be no assurance that such expectations, beliefs or projections will result or be achieved or accomplished. In addition to other factors, the following are important factors that could cause actual results to differ materially from those discussed in the forward-looking statements: changes in laws and regulations to which the Company is subject, including changes in tax, environmental, safety and employment laws and regulations; changes in economic conditions, including economic disruptions caused by terrorist activities, acts of war or major accidents; changes in demographic patterns and weather conditions, including the occurrence of severe weather, such as hurricanes; changes in the availability and/or price of natural gas or oil and the effect of such changes on the accounting treatment or valuation of derivative financial instruments or the Company's natural gas and oil reserves; impairments under the Securities and Exchange Commission's full cost ceiling test for natural gas and oil reserves; changes in the availability and/or price of derivative financial instruments; changes in the price differentials between various types of oil; inability to obtain new customers or retain existing ones; significant changes in competitive factors affecting the Company; governmental/regulatory actions, initiatives and proceedings, including those involving acquisitions, financings, rate cases (which address, among other things, allowed rates of return, rate design and retained gas), affiliate relationships, industry structure, franchise renewal, and environmental/safety requirements; unanticipated impacts of restructuring initiatives in the natural gas and electric industries; significant changes from expectations in actual capital expenditures and operating expenses and unanticipated project delays or changes in project costs or plans, including changes in the plans of the sponsors of the proposed Millennium Pipeline with respect to that project; the nature and projected profitability of pending and potential projects and other investments, and the ability to obtain necessary governmental approvals and permits; occurrences affecting the Company's ability to obtain funds from operations or from issuances of short-term notes or debt or equity securities to finance needed capital expenditures and other investments, including any downgrades in the Company's credit ratings; uncertainty of oil and gas reserve estimates; ability to successfully identify and finance acquisitions or other investments and ability to operate and integrate existing and any subsequently acquired business or properties; ability to successfully identify, drill for and produce economically viable natural gas and oil reserves; significant changes from expectations in the Company's actual production levels for natural gas or oil; regarding foreign operations, changes in trade and monetary policies, inflation and exchange rates, taxes, operating conditions, laws and regulations related to foreign operations, and political and governmental changes; significant changes in tax rates or policies or in rates of inflation or interest; significant changes in the Company's relationship with its employees or contractors and the potential adverse effects if labor disputes, grievances or shortages were to occur; changes in accounting principles or the application of such principles to the Company; the cost and effects of legal and administrative claims against the Company; changes in actuarial assumptions and the return on assets with respect to the Company's retirement plan and post-retirement benefit plans; increasing health care costs and the resulting effect on health insurance premiums and on the obligation to provide post-retirement benefits; or increasing costs of insurance, changes in coverage and the ability to obtain insurance. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
QUARTER ENDED JUNE 30, 2007
Pipeline Exploration Energy
& &
(Thousands of Dollars) Utility Storage Production Marketing
---------------------------------------
Third quarter 2006 GAAP
earnings $ 827 $12,642 $(15,127) $1,045
Items impacting comparability:
Income tax adjustments (6,122)
Impairment of oil and gas
properties 39,502
---------------------------------------
Third quarter 2006 operating
results 827 12,642 18,253 1,045
Drivers of operating results
Base rate increase in
Pennsylvania 1,826
Usage 2,855
Lower efficiency gas revenues (1,175)
Lower (higher) operating costs (674) (794)
Lower depreciation / depletion 844 2,707
Higher crude oil prices 4,588
Higher natural gas prices 3,110
Lower natural gas production (1,177)
Lower crude oil production (1,792)
Higher lease operating
expenses (2,598)
Lower (higher) effective tax
rate (556) (486) 1,575
Income from unconsolidated
subsidiaries
Higher (lower) margins
Higher interest income
(expense) (590) (1,007)
All other / rounding 17 640 (231) 188
---------------------------------------
Third quarter 2007 operating
results 3,705 10,664 24,435 1,233
Items impacting comparability:
Reversal of reserve for
preliminary project costs 4,787
---------------------------------------
Third quarter 2007 GAAP
earnings $3,705 $15,451 $ 24,435 $1,233
---------------------------------------
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
QUARTER ENDED JUNE 30, 2007
Corporate/
(Thousands of Dollars) Timber All Other Consolidated
--------------------------------
Third quarter 2006 GAAP earnings $ 1,529 $ (805) $ 111
Items impacting comparability:
Income tax adjustments (6,122)
Impairment of oil and gas
properties 39,502
----------------------------------
Third quarter 2006 operating
results 1,529 (805) 33,491
Drivers of operating results
Base rate increase in Pennsylvania 1,826
Usage 2,855
Lower efficiency gas revenues (1,175)
Lower (higher) operating costs 326 (1,142)
Lower depreciation / depletion 281 3,832
Higher crude oil prices 4,588
Higher natural gas prices 3,110
Lower natural gas production (1,177)
Lower crude oil production (1,792)
Higher lease operating expenses (2,598)
Lower (higher) effective tax rate 620 1,153
Income from unconsolidated
subsidiaries 462 462
Higher (lower) margins (2,047) 209 (1,838)
Higher interest income (expense) 1,351 (246)
All other / rounding (127) 175 662
----------------------------------
Third quarter 2007 operating
results (364) 2,338 42,011
Items impacting comparability:
Reversal of reserve for preliminary
project costs 4,787
----------------------------------
Third quarter 2007 GAAP earnings $ (364) $2,338 $46,798
----------------------------------
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
QUARTER ENDED JUNE 30, 2007
Pipeline Exploration Energy
& &
Utility Storage Production Marketing
----------------------------------------
Third quarter 2006 GAAP
earnings $ 0.01 $ 0.15 $(0.18) $0.01
Items impacting
comparability:
Income tax adjustment (0.07)
Impairment of oil and gas
properties 0.46
----------------------------------------
Third quarter 2006 operating
results 0.01 0.15 0.21 0.01
Drivers of operating results
Base rate increase in
Pennsylvania 0.02
Usage 0.03
Lower efficiency gas revenues (0.01)
Lower (higher) operating
costs (0.01) (0.01)
Lower depreciation /
depletion 0.01 0.03
Higher crude oil prices 0.05
Higher natural gas prices 0.04
Lower natural gas production (0.01)
Lower crude oil production (0.02)
Higher lease operating
expenses (0.03)
Lower (higher) effective tax
rate (0.01) (0.01) 0.02
Income from unconsolidated
subsidiaries
Higher (lower) margins
Higher interest income
(expense) (0.01) (0.01)
All other / rounding 0.01 - - -
----------------------------------------
Third quarter 2007 operating
results 0.04 0.12 0.29 0.01
Items impacting
comparability:
Reversal of reserve for
preliminary project costs 0.06
----------------------------------------
Third quarter 2007 GAAP
earnings $ 0.04 $ 0.18 $ 0.29 $0.01
----------------------------------------
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
QUARTER ENDED JUNE 30, 2007
Corporate/
Timber All Other Consolidated
--------------------------------
Third quarter 2006 GAAP earnings $ 0.02 $(0.01) $ -
Items impacting comparability:
Income tax adjustment (0.07)
Impairment of oil and gas properties 0.46
--------------------------------
Third quarter 2006 operating results 0.02 (0.01) 0.39
Drivers of operating results
Base rate increase in Pennsylvania 0.02
Usage 0.03
Lower efficiency gas revenues (0.01)
Lower (higher) operating costs - (0.02)
Lower depreciation / depletion - 0.04
Higher crude oil prices 0.05
Higher natural gas prices 0.04
Lower natural gas production (0.01)
Lower crude oil production (0.02)
Higher lease operating expenses (0.03)
Lower (higher) effective tax rate 0.01 0.01
Income from unconsolidated
subsidiaries 0.01 0.01
Higher (lower) margins (0.02) - (0.02)
Higher interest income (expense) 0.02 -
All other / rounding - - 0.01
--------------------------------
Third quarter 2007 operating results - 0.03 0.49
Items impacting comparability:
Reversal of reserve for preliminary
project costs 0.06
--------------------------------
Third quarter 2007 GAAP earnings $ - $ 0.03 $ 0.55
--------------------------------
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
NINE MONTHS ENDED JUNE 30, 2007
Pipeline Exploration Energy
& &
(Thousands of Dollars) Utility Storage Production Marketing
----------------------------------------
Nine months ended June 30,
2006 GAAP earnings $51,234 $45,384 $28,152 $5,909
Items impacting
comparability:
Out-of-period adjustment to
symmetrical sharing (2,551)
Income tax adjustments (11,202)
Impairment of oil and gas
properties 39,502
----------------------------------------
Nine months ended June 30,
2006 operating results 48,683 45,384 56,452 5,909
Drivers of operating results
Colder weather in
Pennsylvania 2,272
Base rate increase in
Pennsylvania 4,859
Lower (higher) operating
costs (3,073) (1,041)
Higher property taxes (863)
Usage 2,575
Lower efficiency gas revenues (6,998)
Lower depreciation /
depletion 1,830 2,536
Higher crude oil prices 14,866
Lower natural gas prices (5,108)
Higher natural gas production 4,699
Lower crude oil production (2,796)
Higher lease operating
expenses (3,483)
Lower (higher) effective tax
rate 1,342 (2,527)
Income from unconsolidated
subsidiaries
Higher (lower) margins 264
Higher interest income
(expense) (1,268) (2,376)
All other / rounding (205) (399) 319 (86)
----------------------------------------
Nine months ended June 30,
2007 operating results 54,322 36,400 64,958 6,087
Items impacting
comparability:
Reversal of reserve for
preliminary project costs 4,787
Resolution of a purchased gas
contingency 2,344
Discontinuance of hedge
accounting 1,888
----------------------------------------
Nine months ended June 30,
2007 GAAP earnings $54,322 $43,075 $64,958 $8,431
----------------------------------------
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
NINE MONTHS ENDED JUNE 30, 2007
Corporate/
(Thousands of Dollars) Timber All Other Consolidated
--------------------------------
Nine months ended June 30, 2006 GAAP
earnings $5,235 $209 $136,123
Items impacting comparability:
Out-of-period adjustment to
symmetrical sharing (2,551)
Income tax adjustments (11,202)
Impairment of oil and gas properties 39,502
--------------------------------
Nine months ended June 30, 2006
operating results 5,235 209 161,872
Drivers of operating results
Colder weather in Pennsylvania 2,272
Base rate increase in Pennsylvania 4,859
Lower (higher) operating costs (260) (4,374)
Higher property taxes (863)
Usage 2,575
Lower efficiency gas revenues (6,998)
Lower depreciation / depletion 1,183 5,549
Higher crude oil prices 14,866
Lower natural gas prices (5,108)
Higher natural gas production 4,699
Lower crude oil production (2,796)
Higher lease operating expenses (3,483)
Lower (higher) effective tax rate 1,282 97
Income from unconsolidated
subsidiaries 585 585
Higher (lower) margins (3,080) 936 (1,880)
Higher interest income (expense) 3,369 (275)
All other / rounding (285) (195) (851)
--------------------------------
Nine months ended June 30, 2007
operating results 3,053 5,926 170,746
Items impacting comparability:
Reversal of reserve for preliminary
project costs 4,787
Resolution of a purchased gas
contingency 2,344
Discontinuance of hedge accounting 1,888
--------------------------------
Nine months ended June 30, 2007 GAAP
earnings $3,053 $5,926 $179,765
--------------------------------
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
NINE MONTHS ENDED JUNE 30, 2007
Pipeline Exploration Energy
& &
Utility Storage Production Marketing
----------------------------------------
Nine months ended June 30,
2006 GAAP earnings $ 0.59 $ 0.53 $ 0.33 $0.07
Items impacting
comparability:
Out-of-period adjustment to
symmetrical sharing (0.03)
Income tax adjustments (0.13)
Impairment of oil and gas
properties 0.46
----------------------------------------
Nine months ended June 30,
2006 operating results 0.56 0.53 0.66 0.07
Drivers of operating results
Colder weather in
Pennsylvania 0.03
Base rate increase in
Pennsylvania 0.06
Lower (higher) operating
costs (0.04) (0.01)
Higher property taxes (0.01)
Usage 0.03
Lower efficiency gas revenues (0.08)
Lower depreciation /
depletion 0.02 0.03
Higher crude oil prices 0.17
Lower natural gas prices (0.06)
Higher natural gas production 0.06
Lower crude oil production (0.03)
Higher lease operating
expenses (0.04)
Lower (higher) effective tax
rate 0.02 (0.03)
Income from unconsolidated
subsidiaries
Higher (lower) margins
Higher interest income
(expense) (0.01) (0.03)
All other / rounding - - - -
----------------------------------------
Nine months ended June 30,
2007 operating results 0.64 0.43 0.76 0.07
Items impacting
comparability:
Reversal of reserve for
preliminary project costs 0.06
Resolution of a purchased gas
contingency 0.03
Discontinuance of hedge
accounting 0.02
----------------------------------------
Nine months ended June 30,
2007 GAAP earnings $ 0.64 $ 0.51 $ 0.76 $0.10
----------------------------------------
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
NINE MONTHS ENDED JUNE 30, 2007
Corporate/
Timber All Other Consolidated
--------------------------------
Nine months ended June 30, 2006 GAAP
earnings $ 0.06 $ - $ 1.58
Items impacting comparability:
Out-of-period adjustment to
symmetrical sharing (0.03)
Income tax adjustments (0.13)
Impairment of oil and gas properties 0.46
--------------------------------
Nine months ended June 30, 2006
operating results 0.06 - 1.88
Drivers of operating results
Colder weather in Pennsylvania 0.03
Base rate increase in Pennsylvania 0.06
Lower (higher) operating costs - (0.05)
Higher property taxes (0.01)
Usage 0.03
Lower efficiency gas revenues (0.08)
Lower depreciation / depletion 0.01 0.06
Higher crude oil prices 0.17
Lower natural gas prices (0.06)
Higher natural gas production 0.06
Lower crude oil production (0.03)
Higher lease operating expenses (0.04)
Lower (higher) effective tax rate 0.01 -
Income from unconsolidated
subsidiaries 0.01 0.01
Higher (lower) margins (0.04) 0.01 (0.03)
Higher interest income (expense) 0.04 -
All other / rounding 0.01 (0.01) -
--------------------------------
Nine months ended June 30, 2007
operating results 0.04 0.06 2.00
Items impacting comparability:
Reversal of reserve for preliminary
project costs 0.06
Resolution of a purchased gas
contingency 0.03
Discontinuance of hedge accounting 0.02
--------------------------------
Nine months ended June 30, 2007 GAAP
earnings $ 0.04 $ 0.06 $ 2.11
--------------------------------
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
(Thousands of Dollars, except per share amounts)
Three Months Ended Nine Months Ended
June 30, June 30,
(Unaudited) (Unaudited)
------------------------- -------------------------
SUMMARY OF
OPERATIONS 2007 2006 2007 2006
------------------ ------------ ------------ ------------ ------------
Operating Revenues $ 463,145 $ 415,452 $ 1,779,541 $ 2,017,189
------------ ------------ ------------ ------------
Operating
Expenses:
Purchased Gas 219,075 184,635 938,918 1,187,952
Operation and
Maintenance 96,782 96,117 321,695 320,821
Property,
Franchise and
Other Taxes 17,804 16,845 55,149 54,147
Depreciation,
Depletion and
Amortization 41,100 46,943 125,986 134,267
Impairment of
Oil and Gas
Producing
Properties - 62,371 - 62,371
------------ ------------ ------------ ------------
374,761 406,911 1,441,748 1,759,558
Operating Income 88,384 8,541 337,793 257,631
Other Income
(Expense):
Income from
Unconsolidated
Subsidiaries 926 215 3,099 2,199
Interest Income 1,649 2,203 3,897 4,301
Other Income 787 546 4,028 1,535
Interest Expense
on Long-Term Debt (18,226) (18,135) (52,158) (54,502)
Other Interest
Expense (1,512) (1,026) (4,877) (4,266)
------------ ------------ ------------ ------------
Income (Loss)
Before Income
Taxes 72,008 (7,656) 291,782 206,898
Income Tax Expense
(Benefit) 25,210 (7,767) 112,017 70,775
------------ ------------ ------------ ------------
Net Income
Available for
Common Stock $ 46,798 $ 111 $ 179,765 $ 136,123
------------ ------------ ------------ ------------
Earnings Per
Common Share:
Basic $ 0.56 $ - $ 2.17 $ 1.62
------------ ------------ ------------ ------------
Diluted $ 0.55 $ - $ 2.11 $ 1.58
------------ ------------ ------------ ------------
Weighted Average
Common Shares:
Used in Basic
Calculation 83,483,718 84,013,556 83,018,583 84,231,490
------------ ------------ ------------ ------------
Used in Diluted
Calculation 85,668,055 86,016,131 85,192,777 86,150,927
------------ ------------ ------------ ------------
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, September
30,
(Thousands of Dollars) 2007 2006
----------------------------------------------------------------------
ASSETS
Property, Plant and Equipment $4,928,627 $4,703,040
Less - Accumulated Depreciation, Depletion and
Amortization 1,960,265 1,825,314
------------------------------------------------ ---------------------
Net Property, Plant and Equipment 2,968,362 2,877,726
------------------------------------------------ ---------------------
Current Assets:
Cash and Temporary Cash Investments 62,530 69,611
Hedging Collateral Deposits 3,400 19,676
Receivables - Net 222,249 144,254
Unbilled Utility Revenue 20,569 25,538
Gas Stored Underground 30,829 59,461
Materials and Supplies - at average cost 30,621 36,693
Unrecovered Purchased Gas Costs - 12,970
Prepaid Pension and Post-Retirement Benefit
Costs 70,858 64,125
Other Current Assets 26,324 63,723
Deferred Income Taxes 21,271 23,402
------------------------------------------------ ---------------------
Total Current Assets 488,651 519,453
------------------------------------------------ ---------------------
Other Assets:
Recoverable Future Taxes 79,010 79,511
Unamortized Debt Expense 12,555 15,492
Other Regulatory Assets 84,325 76,917
Deferred Charges 5,861 3,558
Other Investments 83,444 88,414
Investments in Unconsolidated Subsidiaries 16,377 11,590
Goodwill 5,476 5,476
Intangible Assets 29,757 31,498
Fair Value of Derivative Financial Instruments 6,170 11,305
Deferred Income Taxes 5,421 9,003
Other 7,716 4,388
------------------------------------------------ ---------------------
Total Other Assets 336,112 337,152
------------------------------------------------ ---------------------
Total Assets $3,793,125 $3,734,331
------------------------------------------------ ---------------------
CAPITALIZATION AND LIABILITIES
Capitalization:
Comprehensive Shareholders' Equity
Common Stock, $1 Par Value Authorized -
200,000,000
Shares; Issued and Outstanding - 83,536,549
Shares
and 83,402,670 Shares, Respectively $ 83,537 $ 83,403
Paid in Capital 568,537 543,730
Earnings Reinvested in the Business 855,803 786,013
------------------------------------------------ ---------------------
Total Common Shareholder Equity Before
Items of Other Comprehensive Income 1,507,877 1,413,146
Accumulated Other Comprehensive Income 43,984 30,416
------------------------------------------------ ---------------------
Total Comprehensive Shareholders' Equity 1,551,861 1,443,562
Long-Term Debt, Net of Current Portion 799,000 1,095,675
------------------------------------------------ ---------------------
Total Capitalization 2,350,861 2,539,237
------------------------------------------------ ---------------------
Current and Accrued Liabilities:
Notes Payable to Banks and Commercial Paper - -
Current Portion of Long-Term Debt 200,050 22,925
Accounts Payable 120,978 133,034
Amounts Payable to Customers 19,197 23,935
Dividends Payable 25,897 25,008
Interest Payable on Long-Term Debt 13,541 18,420
Other Accruals and Current Liabilities 96,587 27,040
Fair Value of Derivative Financial Instruments 17,133 39,983
------------------------------------------------ ---------------------
Total Current and Accrued Liabilities 493,383 290,345
------------------------------------------------ ---------------------
Deferred Credits:
Deferred Income Taxes 566,133 544,502
Taxes Refundable to Customers 10,437 10,426
Unamortized Investment Tax Credit 5,568 6,094
Cost of Removal Regulatory Liability 88,949 85,076
Other Regulatory Liabilities 73,212 75,456
Post-Retirement Liabilities 24,310 32,918
Asset Retirement Obligations 80,739 77,392
Other Deferred Credits 99,533 72,885
------------------------------------------------ ---------------------
Total Deferred Credits 948,881 904,749
------------------------------------------------ ---------------------
Commitments and Contingencies - -
------------------------------------------------ ---------------------
Total Capitalization and Liabilities $3,793,125 $3,734,331
------------------------------------------------ ---------------------
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
June 30,
(Thousands of Dollars) 2007 2006
----------------------------------------------------------------------
Operating Activities:
Net Income Available for Common Stock $ 179,765 $ 136,123
Adjustments to Reconcile Net Income to Net
Cash
Provided by Operating Activities:
Impairment of Oil and Gas Producing
Properties - 62,371
Depreciation, Depletion and
Amortization 125,986 134,267
Deferred Income Taxes 27,107 (17,430)
Income from Unconsolidated
Subsidiaries, Net of Cash
Distributions (1,486) 2,452
Excess Tax Benefits Associated with
Stock-Based Compensation Awards (13,689) (6,515)
Other 4,722 (6,493)
Change in:
Hedging Collateral Deposits 16,276 63,100
Receivables and Unbilled Utility
Revenue (73,150) (72,496)
Gas Stored Underground and Materials
and
Supplies 34,725 21,098
Unrecovered Purchased Gas Costs 12,970 14,817
Prepayments and Other Current Assets 30,685 21,800
Accounts Payable (12,560) (24,650)
Amounts Payable to Customers (4,738) 30,418
Other Accruals and Current
Liabilities 77,842 49,950
Other Assets 918 (15,753)
Other Liabilities (821) 16,855
----------------------------------------------------------------------
Net Cash Provided by Operating
Activities $ 404,552 $ 409,914
----------------------------------------------------------------------
Investing Activities:
Capital Expenditures ($206,509) ($218,658)
Investment in Partnership (3,300) -
Net Proceeds from Sale of Oil and Gas
Producing Properties 5,137 4
Other (1,072) (1,578)
----------------------------------------------------------------------
Net Cash Used in Investing
Activities ($205,744) ($220,232)
----------------------------------------------------------------------
Financing Activities:
Excess Tax Benefits Associated with Stock-
Based Compensation Awards $ 13,689 $ 6,515
Shares Repurchased under Repurchase Plan (43,344) (76,540)
Reduction of Long-Term Debt (119,550) (7,157)
Dividends Paid on Common Stock (74,748) (73,275)
Proceeds From Issuance of Common Stock 16,819 23,399
----------------------------------------------------------------------
Net Cash Used In Financing
Activities ($207,134) ($127,058)
----------------------------------------------------------------------
Effect of Exchange Rates on Cash 1,245 1,395
----------------------------------------------------------------------
Net Increase (Decrease) in Cash and Temporary
Cash Investments (7,081) 64,019
Cash and Temporary Cash Investments
at Beginning of Period 69,611 57,607
----------------------------------------------------------------------
Cash and Temporary Cash Investments
at June 30 $ 62,530 $ 121,626
----------------------------------------------------------------------
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
Three Months Ended
(Thousands of Dollars, except per share June 30,
amounts)
----------------------------
UTILITY SEGMENT 2007 2006 Variance
--------------------------------------- ----------------------------
Revenues from External Customers $210,604 $186,661 $23,943
Intersegment Revenues 2,586 2,514 72
----------------------------
Total Operating Revenues 213,190 189,175 24,015
----------------------------
Operating Expenses:
Purchased Gas 131,469 115,463 16,006
Operation and Maintenance 47,231 45,889 1,342
Property, Franchise and Other Taxes 11,688 11,106 582
Depreciation, Depletion and
Amortization 10,053 10,054 (1)
----------------------------
200,441 182,512 17,929
----------------------------
Operating Income 12,749 6,663 6,086
Other Income (Expense):
Interest Income 100 162 (62)
Other Income 273 205 68
Other Interest Expense (6,697) (5,789) (908)
----------------------------
Income Before Income Taxes 6,425 1,241 5,184
Income Tax Expense 2,720 414 2,306
----------------------------
Net Income $ 3,705 $ 827 $ 2,878
----------------------------
Net Income Per Share (Diluted) $ 0.04 $ 0.01 $ 0.03
----------------------------
Three Months Ended
June 30,
----------------------------
PIPELINE AND STORAGE SEGMENT 2007 2006 Variance
--------------------------------------- ----------------------------
Revenues from External Customers $ 30,128 $ 30,750 $ (622)
Intersegment Revenues 20,332 20,298 34
----------------------------
Total Operating Revenues 50,460 51,048 (588)
----------------------------
Operating Expenses:
Purchased Gas - (80) 80
Operation and Maintenance 9,471 15,613 (6,142)
Property, Franchise and Other Taxes 4,182 4,012 170
Depreciation, Depletion and
Amortization 7,995 9,290 (1,295)
----------------------------
21,648 28,835 (7,187)
----------------------------
Operating Income 28,812 22,213 6,599
Other Income (Expense):
Interest Income 100 120 (20)
Other Income 154 116 38
Interest Expense on Long-Term Debt (21) (245) 224
Other Interest Expense (3,112) (1,339) (1,773)
----------------------------
Income Before Income Taxes 25,933 20,865 5,068
Income Tax Expense 10,482 8,223 2,259
----------------------------
Net Income $ 15,451 $ 12,642 $ 2,809
----------------------------
Net Income Per Share (Diluted) $ 0.18 $ 0.15 $ 0.03
----------------------------
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
Nine Months Ended
(Thousands of Dollars, except per June 30,
share amounts)
-----------------------------------
UTILITY SEGMENT 2007 2006 Variance
---------------------------------- -----------------------------------
Revenues from External Customers $1,000,860 $1,154,375 $(153,515)
Intersegment Revenues 12,556 12,317 239
-----------------------------------
Total Operating Revenues 1,013,416 1,166,692 (153,276)
-----------------------------------
Operating Expenses:
Purchased Gas 670,694 830,823 (160,129)
Operation and Maintenance 165,446 163,098 2,348
Property, Franchise and Other
Taxes 36,986 36,878 108
Depreciation, Depletion and
Amortization 30,153 30,058 95
-----------------------------------
903,279 1,060,857 (157,578)
-----------------------------------
Operating Income 110,137 105,835 4,302
Other Income (Expense):
Interest Income 562 542 20
Other Income 926 609 317
Other Interest Expense (21,343) (19,392) (1,951)
-----------------------------------
Income Before Income Taxes 90,282 87,594 2,688
Income Tax Expense 35,960 36,360 (400)
-----------------------------------
Net Income $ 54,322 $ 51,234 $ 3,088
-----------------------------------
Net Income Per Share (Diluted) $ 0.64 $ 0.59 $ 0.05
-----------------------------------
Nine Months Ended
June 30,
-----------------------------------
PIPELINE AND STORAGE SEGMENT 2007 2006 Variance
---------------------------------- -----------------------------------
Revenues from External Customers $ 94,889 $ 104,835 $ (9,946)
Intersegment Revenues 61,585 61,304 281
-----------------------------------
Total Operating Revenues 156,474 166,139 (9,665)
-----------------------------------
Operating Expenses:
Purchased Gas (11) (18) 7
Operation and Maintenance 42,118 47,878 (5,760)
Property, Franchise and Other
Taxes 12,795 11,979 816
Depreciation, Depletion and
Amortization 24,851 27,649 (2,798)
-----------------------------------
79,753 87,488 (7,735)
-----------------------------------
Operating Income 76,721 78,651 (1,930)
Other Income (Expense):
Interest Income 224 316 (92)
Other Income 418 384 34
Interest Expense on Long-Term
Debt 1,807 (837) 2,644
Other Interest Expense (8,140) (3,728) (4,412)
-----------------------------------
Income Before Income Taxes 71,030 74,786 (3,756)
Income Tax Expense 27,955 29,402 (1,447)
-----------------------------------
Net Income $ 43,075 $ 45,384 $ (2,309)
-----------------------------------
Net Income Per Share (Diluted) $ 0.51 $ 0.53 $ (0.02)
-----------------------------------
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
Three Months Ended
(Thousands of Dollars, except per June 30,
share amounts)
-----------------------------
EXPLORATION AND PRODUCTION SEGMENT 2007 2006 Variance
-------------------------------------- -----------------------------
Operating Revenues $ 94,394 $ 86,600 $ 7,794
-----------------------------
Operating Expenses:
Purchased Gas - - -
Operation and Maintenance:
General and Administrative
Expense 6,860 5,783 1,077
Lease Operating Expense 15,248 11,485 3,763
All Other Operation and
Maintenance Expense 2,397 1,976 421
Property, Franchise and Other Taxes
(Lease Operating Expense) 1,470 1,236 234
Depreciation, Depletion and
Amortization 21,832 25,997 (4,165)
Impairment of Oil and Gas Producing
Properties - 62,371 (62,371)
-----------------------------
47,807 108,848 (61,041)
-----------------------------
Operating Income (Loss) 46,587 (22,248) 68,835
Other Income (Expense):
Interest Income 2,383 2,332 51
Interest Expense on Long-Term Debt (1,188) - (1,188)
Other Interest Expense (12,510) (12,671) 161
-----------------------------
Income (Loss) Before Income Taxes 35,272 (32,587) 67,859
Income Tax Expense (Benefit) 10,837 (17,460) 28,297
-----------------------------
Net Income (Loss) $ 24,435 $(15,127) $ 39,562
-----------------------------
Net Income (Loss) Per Share (Diluted) $ 0.29 $ (0.18) $ 0.47
-----------------------------
Three Months Ended
June 30,
-----------------------------
ENERGY MARKETING SEGMENT 2007 2006 Variance
-------------------------------------- -----------------------------
Operating Revenues $113,380 $ 94,747 $ 18,633
-----------------------------
Operating Expenses:
Purchased Gas 110,765 91,920 18,845
Operation and Maintenance 1,199 1,404 (205)
Property, Franchise and Other Taxes 11 8 3
Depreciation, Depletion and
Amortization 9 10 (1)
-----------------------------
111,984 93,342 18,642
-----------------------------
Operating Income 1,396 1,405 (9)
Other Income (Expense):
Interest Income 359 132 227
Other Income 273 143 130
Other Interest Expense (2) (16) 14
-----------------------------
Income Before Income Taxes 2,026 1,664 362
Income Tax Expense 793 619 174
-----------------------------
Net Income $ 1,233 $ 1,045 $ 188
-----------------------------
Net Income Per Share (Diluted) $ 0.01 $ 0.01 $ -
-----------------------------
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
Nine Months Ended
(Thousands of Dollars, except per share June 30,
amounts)
------------------------------
EXPLORATION AND PRODUCTION SEGMENT 2007 2006 Variance
--------------------------------------- ------------------------------
Operating Revenues $275,712 $257,406 $ 18,306
------------------------------
Operating Expenses:
Purchased Gas - 98 (98)
Operation and Maintenance:
General and Administrative
Expense 18,379 18,465 (86)
Lease Operating Expense 43,649 38,179 5,470
All Other Operation and
Maintenance Expense 7,108 5,968 1,140
Property, Franchise and Other Taxes
(Lease Operating Expense) 3,861 3,972 (111)
Depreciation, Depletion and
Amortization 66,755 70,655 (3,900)
Impairment of Oil and Gas Producing
Properties - 62,371 (62,371)
------------------------------
139,752 199,708 (59,956)
------------------------------
Operating Income (Loss) 135,960 57,698 78,262
Other Income (Expense):
Interest Income 7,570 6,113 1,457
Interest Expense on Long-Term Debt (1,188) - (1,188)
Other Interest Expense (38,406) (37,622) (784)
------------------------------
Income (Loss) Before Income Taxes 103,936 26,189 77,747
Income Tax Expense (Benefit) 38,978 (1,963) 40,941
------------------------------
Net Income (Loss) $ 64,958 $ 28,152 $ 36,806
---------- --------- ---------
Net Income (Loss) Per Share (Diluted) $ 0.76 $ 0.33 $ 0.43
------------------------------
Nine Months Ended
June 30,
------------------------------
ENERGY MARKETING SEGMENT 2007 2006 Variance
--------------------------------------- ------------------------------
Operating Revenues $360,036 $446,367 $(86,331)
------------------------------
Operating Expenses:
Purchased Gas 343,047 433,311 (90,264)
Operation and Maintenance 3,711 3,894 (183)
Property, Franchise and Other Taxes 46 (232) 278
Depreciation, Depletion and
Amortization 23 46 (23)
------------------------------
346,827 437,019 (90,192)
------------------------------
Operating Income 13,209 9,348 3,861
Other Income (Expense):
Interest Income 498 301 197
Other Income 590 363 227
Other Interest Expense (253) (207) (46)
------------------------------
Income Before Income Taxes 14,044 9,805 4,239
Income Tax Expense 5,613 3,896 1,717
------------------------------
Net Income $ 8,431 $ 5,909 $ 2,522
------------------------------
Net Income Per Share (Diluted) $ 0.10 $ 0.07 $ 0.03
------------------------------
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
Three Months Ended
(Thousands of Dollars, except per share June 30,
amounts)
--------------------------
TIMBER SEGMENT 2007 2006 Variance
----------------------------------------- --------------------------
Revenues from External Customers $13,131 $15,311 $(2,180)
Intersegment Revenues - 4 (4)
--------------------------
Total Operating Revenues 13,131 15,315 (2,184)
--------------------------
Operating Expenses:
Operation and Maintenance 11,919 10,898 1,021
Property, Franchise and Other Taxes 363 382 (19)
Depreciation, Depletion and
Amortization 843 1,275 (432)
--------------------------
13,125 12,555 570
--------------------------
Operating Income 6 2,760 (2,754)
Other Income (Expense):
Interest Income 310 217 93
Other Income - - -
Other Interest Expense (808) (778) (30)
--------------------------
Income (Loss) Before Income Taxes (492) 2,199 (2,691)
Income Tax Expense (Benefit) (128) 670 (798)
--------------------------
Net Income (Loss) $ (364) $ 1,529 $(1,893)
--------------------------
Net Income (Loss) Per Share (Diluted) $ - $ 0.02 $ (0.02)
--------------------------
Three Months Ended
June 30,
--------------------------
ALL OTHER 2007 2006 Variance
----------------------------------------- --------------------------
Revenues from External Customers $ 1,308 $ 1,192 $ 116
Intersegment Revenues 2,253 1,354 899
--------------------------
Total Operating Revenues 3,561 2,546 1,015
--------------------------
Operating Expenses:
Purchased Gas 1,910 1,395 515
Operation and Maintenance 1,007 803 204
Property, Franchise and Other Taxes 22 33 (11)
Depreciation, Depletion and
Amortization 196 196 -
--------------------------
3,135 2,427 708
--------------------------
Operating Income 426 119 307
Other Income (Expense):
Income from Unconsolidated
Subsidiaries 926 215 711
Interest Income 4 7 (3)
Other Income 12 27 (15)
Other Interest Expense (662) (668) 6
--------------------------
Income (Loss) Before Income Taxes 706 (300) 1,006
Income Tax Expense (Benefit) 248 (88) 336
--------------------------
Net Income (Loss) $ 458 $ (212) $ 670
--------------------------
Net Income (Loss) Per Share (Diluted) $ 0.01 $ - $ 0.01
--------------------------
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
Nine Months Ended
(Thousands of Dollars, except per share June 30,
amounts)
---------------------------
TIMBER SEGMENT 2007 2006 Variance
------------------------------------------ ---------------------------
Revenues from External Customers $43,079 $51,377 $(8,298)
Intersegment Revenues - 4 (4)
---------------------------
Total Operating Revenues 43,079 51,381 (8,302)
---------------------------
Operating Expenses:
Operation and Maintenance 32,031 35,328 (3,297)
Property, Franchise and Other Taxes 1,183 1,241 (58)
Depreciation, Depletion and
Amortization 3,093 4,913 (1,820)
---------------------------
36,307 41,482 (5,175)
---------------------------
Operating Income 6,772 9,899 (3,127)
Other Income (Expense):
Interest Income 923 518 405
Other Income 21 52 (31)
Other Interest Expense (2,403) (2,299) (104)
---------------------------
Income (Loss) Before Income Taxes 5,313 8,170 (2,857)
Income Tax Expense (Benefit) 2,260 2,935 (675)
---------------------------
Net Income (Loss) $ 3,053 $ 5,235 $(2,182)
---------------------------
Net Income (Loss) Per Share (Diluted) $ 0.04 $ 0.06 $ (0.02)
---------------------------
Nine Months Ended
June 30,
---------------------------
ALL OTHER 2007 2006 Variance
------------------------------------------ ---------------------------
Revenues from External Customers $ 4,387 $ 2,250 $ 2,137
Intersegment Revenues 6,540 7,938 (1,398)
---------------------------
Total Operating Revenues 10,927 10,188 739
---------------------------
Operating Expenses:
Purchased Gas 5,560 6,366 (806)
Operation and Maintenance 2,763 2,598 165
Property, Franchise and Other Taxes 69 75 (6)
Depreciation, Depletion and
Amortization 589 593 (4)
---------------------------
8,981 9,632 (651)
---------------------------
Operating Income 1,946 556 1,390
Other Income (Expense):
Income from Unconsolidated Subsidiaries 3,099 2,199 900
Interest Income 11 20 (9)
Other Income 37 42 (5)
Other Interest Expense (1,999) (1,874) (125)
---------------------------
Income (Loss) Before Income Taxes 3,094 943 2,151
Income Tax Expense (Benefit) 1,183 539 644
---------------------------
Net Income (Loss) $ 1,911 $ 404 $ 1,507
---------------------------
Net Income (Loss) Per Share (Diluted) $ 0.02 $ - $ 0.02
---------------------------
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
Three Months Ended
(Thousands of Dollars, except per share June 30,
amounts)
----------------------------
CORPORATE 2007 2006 Variance
--------------------------------------- ----------------------------
Revenues from External Customers $ 200 $ 191 $ 9
Intersegment Revenues 853 737 116
----------------------------
Total Operating Revenues 1,053 928 125
----------------------------
Operating Expenses:
Operation and Maintenance 2,405 3,110 (705)
Property, Franchise and Other Taxes 68 68 -
Depreciation, Depletion and
Amortization 172 121 51
----------------------------
2,645 3,299 (654)
----------------------------
Operating Income (Loss) (1,592) (2,371) 779
Other Income (Expense):
Interest Income 21,711 20,424 1,287
Other Income 75 55 20
Interest Expense on Long-Term Debt (17,017) (17,890) 873
Other Interest Expense (1,039) (956) (83)
----------------------------
Income (Loss) Before Income Taxes 2,138 (738) 2,876
Income Tax Expense (Benefit) 258 (145) 403
----------------------------
Net Income (Loss) $ 1,880 $ (593) $ 2,473
----------------------------
Net Income (Loss) Per Share (Diluted) $ 0.02 $ (0.01) $ 0.03
----------------------------
Three Months Ended
June 30,
----------------------------
INTERSEGMENT ELIMINATIONS 2007 2006 Variance
--------------------------------------- ----------------------------
Intersegment Revenues $(26,024) $(24,907) $(1,117)
----------------------------
Operating Expenses:
Purchased Gas (25,069) (24,063) (1,006)
Operation and Maintenance (955) (844) (111)
----------------------------
(26,024) (24,907) (1,117)
----------------------------
Operating Income - - -
Other Income (Expense):
Interest Income (23,318) (21,191) (2,127)
Other Interest Expense 23,318 21,191 2,127
----------------------------
Net Income $ - $ - $ -
----------------------------
Net Income Per Share (Diluted) $ - $ - $ -
----------------------------
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
Nine Months Ended
(Thousands of Dollars, except per share June 30,
amounts)
-----------------------------
CORPORATE 2007 2006 Variance
---------------------------------------- -----------------------------
Revenues from External Customers $ 578 $ 579 $ (1)
Intersegment Revenues 2,616 2,212 404
-----------------------------
Total Operating Revenues 3,194 2,791 403
-----------------------------
Operating Expenses:
Operation and Maintenance 9,415 6,560 2,855
Property, Franchise and Other Taxes 209 234 (25)
Depreciation, Depletion and
Amortization 522 353 169
-----------------------------
10,146 7,147 2,999
-----------------------------
Operating Income (Loss) (6,952) (4,356) (2,596)
Other Income (Expense):
Interest Income 65,778 60,127 5,651
Other Income 2,036 85 1,951
Interest Expense on Long-Term Debt (52,777) (53,665) 888
Other Interest Expense (4,002) (2,780) (1,222)
-----------------------------
Income (Loss) Before Income Taxes 4,083 (589) 4,672
Income Tax Expense (Benefit) 68 (394) 462
-----------------------------
Net Income (Loss) $ 4,015 $ (195) $ 4,210
-----------------------------
Net Income (Loss) Per Share (Diluted) $ 0.04 $ - $ 0.04
-----------------------------
Nine Months Ended
June 30,
-----------------------------
INTERSEGMENT ELIMINATIONS 2007 2006 Variance
---------------------------------------- -----------------------------
Intersegment Revenues $(83,297) $(83,775) $ 478
-----------------------------
Operating Expenses:
Purchased Gas (80,372) (82,628) 2,256
Operation and Maintenance (2,925) (1,147) (1,778)
-----------------------------
(83,297) (83,775) 478
-----------------------------
Operating Income - - -
Other Income (Expense):
Interest Income (71,669) (63,636) (8,033)
Other Interest Expense 71,669 63,636 8,033
-----------------------------
Net Income $ - $ - $ -
-----------------------------
Net Income Per Share (Diluted) $ - $ - $ -
-----------------------------
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
SEGMENT INFORMATION (Continued)
(Thousands of Dollars)
Three Months Ended
June 30,
(Unaudited)
--------------------------
Increase
2007 2006 (Decrease)
------- ------- ----------
Capital Expenditures:
-----------------------------------------
Utility $14,387 $14,012 $ 375
Pipeline and Storage 16,255 5,033 11,222
Exploration and Production 42,421 63,999 (21,578)
Energy Marketing 41 - 41
Timber 1,056 378 678
------- ------- ----------
Total Reportable Segments 74,160 83,422 (9,262)
All Other 3 22 (19)
Corporate 33 253 (220)
------- ------- ----------
Total Consolidated $74,196 $83,697 $ (9,501)
------- ------- ----------
DEGREE DAYS
-----------------------------------------
Three Months Ended June 30 Normal 2007
----------------------------------------- ------- ----------
Buffalo, NY 927 921
Erie, PA 885 900
Nine Months Ended June 30
-----------------------------------------
Buffalo, NY 6,514 6,195
Erie, PA 6,108 5,930
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
SEGMENT INFORMATION (Continued)
(Thousands of Dollars)
Nine Months Ended
June 30,
(Unaudited)
-------------------------------
Increase
2007 2006 (Decrease)
---------- --------- ----------
Capital Expenditures:
---------------------------------------
Utility $ 39,945 $ 39,372 $ 573
Pipeline and Storage 26,408 15,361 11,047
Exploration and Production 138,287 160,323 (22,036)
Energy Marketing 57 6 51
Timber 2,263 1,130 1,133
---------- --------- ----------
Total Reportable Segments 206,960 216,192 (9,232)
All Other 87 78 9
Corporate (538) 2,388 (2,926)
---------- --------- ----------
Total Consolidated $206,509 $218,658 $(12,149)
---------- --------- ----------
DEGREE DAYS
---------------------------------------
Percent Colder
(Warmer) Than:
Three Months Ended June 30 2006 Normal Last Year
------------------------------------------------- --------- ----------
Buffalo, NY 731 (0.6) 26.0
Erie, PA 812 1.7 10.8
Nine Months Ended June 30
---------------------------------------
Buffalo, NY 5,816 (4.9) 6.5
Erie, PA 5,565 (2.9) 6.6
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
EXPLORATION AND PRODUCTION INFORMATION
----------------------------------------------------------------------
Three Months Ended
June 30,
--------------------------
Increase
2007 2006 (Decrease)
------- ------- ----------
Gas Production/Prices:
-----------------------------------------
Production (MMcf)
Gulf Coast 2,317 2,109 208
West Coast 1,019 983 36
Appalachia 1,266 1,267 (1)
Canada 1,639 2,158 (519)
------- ------- ----------
6,241 6,517 (276)
------- ------- ----------
Average Prices (Per Mcf)
Gulf Coast $ 7.37 $ 6.97 $ 0.40
West Coast 7.20 6.06 1.14
Appalachia 8.59 7.26 1.33
Canada 6.82 5.54 1.28
Weighted Average 7.45 6.41 1.04
Weighted Average after Hedging 7.33 6.57 0.76
Oil Production/Prices:
-----------------------------------------
Production (Thousands of Barrels)
Gulf Coast 165 192 (27)
West Coast 599 638 (39)
Appalachia 32 19 13
Canada 58 66 (8)
------- ------- ----------
854 915 (61)
------- ------- ----------
Average Prices (Per Barrel)
Gulf Coast $ 65.17 $ 67.52 $(2.35)
West Coast 57.77 61.51 (3.74)
Appalachia 60.43 63.15 (2.72)
Canada 51.58 57.88 (6.30)
Weighted Average 58.87 62.54 (3.67)
Weighted Average after Hedging 53.40 45.13 8.27
Total Production (Mmcfe) 11,365 12,007 (642)
----------------------------------------- ------- ------- ----------
Selected Operating Performance
Statistics:
-----------------------------------------
General & Administrative Expense per Mcfe
(1) $ 0.60 $ 0.48 $ 0.12
Lease Operating Expense per Mcfe (1) $ 1.47 $ 1.06 $ 0.41
Depreciation, Depletion & Amortization
per Mcfe (1) $ 1.92 $ 2.17 $(0.25)
(1) Refer to page 17 for the General and Administrative Expense, Lease
Operating Expense and Depreciation, Depletion, and Amortization
Expense for the Exploration and Production segment.
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
EXPLORATION AND PRODUCTION INFORMATION
----------------------------------------------------------------------
Nine Months Ended
June 30,
---------------------------
Increase
2007 2006 (Decrease)
-------- ------- ----------
Gas Production/Prices:
------------------------------------------
Production (MMcf)
Gulf Coast 7,934 6,529 1,405
West Coast 2,883 2,933 (50)
Appalachia 3,998 3,766 232
Canada 5,216 5,830 (614)
-------- ------- ----------
20,031 19,058 973
-------- ------- ----------
Average Prices (Per Mcf)
Gulf Coast $ 6.74 $ 8.56 $(1.82)
West Coast 6.76 8.42 (1.66)
Appalachia 7.71 10.29 (2.58)
Canada 6.34 7.75 (1.41)
Weighted Average 6.83 8.64 (1.81)
Weighted Average after Hedging 7.04 7.43 (0.39)
Oil Production/Prices:
------------------------------------------
Production (Thousands of Barrels)
Gulf Coast 540 479 61
West Coast 1,789 1,962 (173)
Appalachia 91 41 50
Canada 175 221 (46)
-------- ------- ----------
2,595 2,703 (108)
-------- ------- ----------
Average Prices (Per Barrel)
Gulf Coast $ 59.37 $ 62.04 $(2.67)
West Coast 52.96 55.40 (2.44)
Appalachia 59.35 61.92 (2.57)
Canada 48.16 49.25 (1.09)
Weighted Average 54.20 56.17 (1.97)
Weighted Average after Hedging 48.37 39.56 8.81
Total Production (Mmcfe) 35,601 35,276 325
------------------------------------------ -------- ------- ----------
Selected Operating Performance Statistics:
------------------------------------------
General & Administrative Expense per Mcfe
(1) $ 0.52 $ 0.52 $ -
Lease Operating Expense per Mcfe (1) $ 1.33 $ 1.19 $ 0.14
Depreciation, Depletion & Amortization per
Mcfe (1) $ 1.88 $ 2.00 $(0.12)
(1) Refer to page 17 for the General and Administrative Expense, Lease
Operating Expense and Depreciation, Depletion, and Amortization
Expense for the Exploration and Production segment.
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
EXPLORATION AND PRODUCTION INFORMATION
Hedging Summary for the Remaining Three Months of Fiscal 2007
SWAPS Volume Average Hedge Price
---------------------------- ------- ----------------------
Oil 0.2 $37.86
MMBBL / BBL
Gas 3.3 $7.41
BCF / MCF
No-cost Collars Volume Floor Ceiling
Price Price
---------------------------- ------- ------ -------
Gas 1.3 $7.42 $16.42
BCF / MCF / MCF
Hedging Summary for Fiscal
2008
SWAPS Volume Average Hedge Price
---------------------------- ------- ----------------------
Oil 0.8 $54.27
MMBBL / BBL
Gas 7.9 $8.38
BCF / MCF
No-cost Collars Volume Floor Ceiling
Price Price
---------------------------- ------- ------ -------
Gas 1.4 $8.83 $16.45
BCF / MCF / MCF
Hedging Summary for Fiscal
2009
SWAPS Volume Average Hedge
Price
---------------------------- ------- --------------
Oil 0.2 $54.70
MMBBL / BBL
Gross Wells in Process of
Drilling
----------------------------
Nine Months Ended June 30,
2007
----------------------------
Total Total
Gulf West East U.S. Canada Company
---- ----- ------- ------ ------- -------
Wells in Process - Beginning
Period
Exploratory 4.00 1.00 10.00 15.00 5.00 20.00
Developmental 1.00 5.00 44.00 50.00 0.00 50.00
Wells Commenced
Exploratory 5.00 0.00 15.00 20.00 8.00 28.00
Developmental 2.00 60.00 127.00 189.00 3.00 192.00
Wells Completed
Exploratory 3.00 1.00 3.00 7.00 10.00 17.00
Developmental 2.00 59.00 115.00 176.00 3.00 179.00
Wells Plugged & Abandoned
Exploratory 3.00 0.00 0.00 3.00 0.00 3.00
Developmental 0.00 2.00 2.00 4.00 0.00 4.00
Wells in Process - End of
Period
Exploratory 3.00 0.00 22.00 25.00 3.00 28.00
Developmental 1.00 4.00 54.00 59.00 0.00 59.00
Net Wells in Process of
Drilling
----------------------------
Nine Months Ended June 30,
2007
----------------------------
Total Total
Gulf West East U.S. Canada Company
---- ----- ------- ------ ------- -------
Wells in Process - Beginning
Period
Exploratory 2.02 0.50 10.00 12.52 2.13 14.65
Developmental 0.67 5.00 44.00 49.67 0.00 49.67
Wells Commenced
Exploratory 2.01 0.00 13.60 15.61 4.54 20.15
Developmental 1.00 59.99 124.00 184.99 1.80 186.79
Wells Completed
Exploratory 1.20 0.50 2.60 4.30 5.88 10.18
Developmental 1.00 58.99 113.00 172.99 1.80 174.79
Wells Plugged & Abandoned
Exploratory 1.42 0.00 0.00 1.42 0.00 1.42
Developmental 0.00 2.00 2.00 4.00 0.00 4.00
Wells in Process - End of
Period
Exploratory 1.41 0.00 21.00 22.41 0.79 23.20
Developmental 0.67 4.00 53.00 57.67 0.00 57.67
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
EXPLORATION AND PRODUCTION INFORMATION
-------------------------------------------------------------
Fiscal 2008 Financial & Operating Guidance
Total Production (Bcfe) 38 - 44
Production by Division (Bcfe)
Gulf 14.5 - 17.5
East 6.5 - 7.5
West 17 - 19
Crude Oil Average 2008 NYMEX ($/Bbl) as
of July 24, 2007 (without hedges): $72.69
Forecast price differentials
Gulf -$2.00 to -$5.00
East -$3.00 to -$5.00
West -$9.00 to -$13.00
Natural Gas Average 2008 NYMEX ($/Mmbtu)
as of July 24, 2007 (without hedges): $7.79
Forecast price differentials
Gulf -$0.25 to -$0.75
East -$0.25 to +$0.25
West -$1.00 to -$1.50
Cost and Expenses $ per Mcfe
Lease Operating Expenses $1.10 - $1.25
Depreciation, Depletion and
Amortization $2.20 - $2.30
Other Taxes (% of Revenue) $0.20 - $0.25
Other Operating Expenses $6M - $7M
General and Administrative $20M - $22M
Capital Investment by Division Number of Wells to
be Drilled
Gulf $50M - $52M 4 - 8
East $57M - $60M 230 - 270
West $44M - $47M 75 - 90
Total $151M - $159M
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
Utility Throughput - (millions of cubic
feet - MMcf)
Three Months Ended
June 30,
------------------------
Increase
2007 2006 (Decrease)
------ ------ ----------
Retail Sales:
Residential Sales 10,679 8,740 1,939
Commercial Sales 1,836 1,459 377
Industrial Sales 113 114 (1)
------ ------ ----------
12,628 10,313 2,315
Off-System Sales 467 - 467
Transportation 12,981 12,185 796
------ ------ ----------
26,076 22,498 3,578
------ ------ ----------
Pipeline & Storage Throughput- (MMcf)
Three Months Ended
June 30,
------------------------
Increase
2007 2006 (Decrease)
------ ------ ----------
Firm Transportation - Affiliated 19,817 15,753 4,064
Firm Transportation - Non-Affiliated 58,638 54,867 3,771
Interruptible Transportation 1,670 2,220 (550)
------ ------ ----------
80,125 72,840 7,285
------ ------ ----------
Energy Marketing Volumes
Three Months Ended
June 30,
------------------------
Increase
2007 2006 (Decrease)
------ ------ ----------
Natural Gas (MMcf) 13,014 11,190 1,824
------ ------ ----------
Timber Board Feet (Thousands)
Three Months Ended
June 30,
------------------------
Increase
2007 2006 (Decrease)
------ ------ ----------
Log Sales 1,724 1,767 (43)
Green Lumber Sales 2,709 3,126 (417)
Kiln-dried Lumber Sales 4,001 4,240 (239)
------ ------ ----------
8,434 9,133 (699)
------ ------ ----------
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
Utility Throughput - (millions of cubic
feet - MMcf)
Nine Months Ended
June 30,
---------------------------
Increase
2007 2006 (Decrease)
-------- ------- ----------
Retail Sales:
Residential Sales 56,729 55,071 1,658
Commercial Sales 10,132 9,940 192
Industrial Sales 628 900 (272)
-------- ------- ----------
67,489 65,911 1,578
Off-System Sales 467 - 467
Transportation 53,556 48,646 4,910
-------- ------- ----------
121,512 114,557 6,955
-------- ------- ----------
Pipeline & Storage Throughput- (MMcf)
Nine Months Ended
June 30,
---------------------------
Increase
2007 2006 (Decrease)
-------- ------- ----------
Firm Transportation - Affiliated 100,563 92,615 7,948
Firm Transportation - Non-Affiliated 172,950 195,655 (22,705)
Interruptible Transportation 3,597 7,774 (4,177)
-------- ------- ----------
277,110 296,044 (18,934)
-------- ------- ----------
Energy Marketing Volumes
Nine Months Ended
June 30,
---------------------------
Increase
2007 2006 (Decrease)
-------- ------- ----------
Natural Gas (MMcf) 44,063 38,496 5,567
-------- ------- ----------
Timber Board Feet (Thousands)
Nine Months Ended
June 30,
---------------------------
Increase
2007 2006 (Decrease)
-------- ------- ----------
Log Sales 6,458 7,540 (1,082)
Green Lumber Sales 6,619 8,082 (1,463)
Kiln-dried Lumber Sales 10,953 13,239 (2,286)
-------- ------- ----------
24,030 28,861 (4,831)
-------- ------- ----------
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
FISCAL 2008 EARNINGS GUIDANCE AND SENSITIVITY
Fiscal 2008 (Diluted earnings per Earnings per share sensitivity to
share guidance(x)) changes from NYMEX prices used in
guidance(x)(1)
---------------------------------- -----------------------------------
$1 change per $5 change per Bbl
MMBtu gas oil
----------------- -----------------
Range Increase Decrease Increase Decrease
--------------- -------- -------- -------- --------
Consolidated
Earnings $2.45- $2.65 + $0.09 - $0.09 + $0.08 - $0.08
NYMEX Settlement Prices at July
24, 2007
----------------------------------
Natural Oil
Gas
($ per ($ per
MMBtu) Bbl)
------- -------
Oct-07 $6.128 $73.39
Nov-07 $7.078 $73.25
Dec-07 $8.028 $73.10
Jan-08 $8.468 $72.95
Feb-08 $8.488 $72.82
Mar-08 $8.338 $72.70
Apr-08 $7.713 $72.59
May-08 $7.678 $72.48
Jun-08 $7.768 $72.39
Jul-08 $7.866 $72.29
Aug-08 $7.939 $72.19
Sep-08 $7.994 $72.09
Average $7.791 $72.69
(x) Please refer to forward looking statement footnote at page 8 of this
document.
(1) This sensitivity table is current as of August 1, 2007 and only
considers revenue from the Exploration and Production segment's crude
oil and natural gas sales. The sensitivities will become obsolete
with the passage of time, changes in Seneca's production forecast,
changes in basis differential, as additional hedging contracts are
entered into, and with the settling of NYMEX hedge contracts at their
maturity.
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
Quarter Ended June 30 (unaudited) 2007 2006
---------------------------------------- -------------- --------------
Operating Revenues $ 463,145,000 $ 415,452,000
-------------- --------------
Net Income Available for Common Stock $ 46,798,000 $ 111,000
-------------- --------------
Earnings Per Common Share:
Basic $ 0.56 $ -
-------------- --------------
Diluted $ 0.55 $ -
-------------- --------------
Weighted Average Common Shares:
Used in Basic Calculation 83,483,718 84,013,556
-------------- --------------
Used in Diluted Calculation 85,668,055 86,016,131
-------------- --------------
Nine Months Ended June 30 (unaudited)
----------------------------------------
Operating Revenues $1,779,541,000 $2,017,189,000
-------------- --------------
Net Income Available for Common Stock $ 179,765,000 $ 136,123,000
-------------- --------------
Earnings Per Common Share:
Basic $ 2.17 $ 1.62
-------------- --------------
Diluted $ 2.11 $ 1.58
-------------- --------------
Weighted Average Common Shares:
Used in Basic Calculation 83,018,583 84,231,490
-------------- --------------
Used in Diluted Calculation 85,192,777 86,150,927
-------------- --------------
Twelve Months Ended June 30 (unaudited)
----------------------------------------
Operating Revenues $2,074,010,000 $2,304,253,000
-------------- --------------
Income from Continuing Operations $ 181,733,000 $ 154,435,000
Income from Discontinued Operations,
Net of Tax - 30,900,000
-------------- --------------
Net Income Available for Common Stock $ 181,733,000 $ 185,335,000
-------------- --------------
Earnings Per Common Share:
Basic:
Income from Continuing
Operations $ 2.19 $ 1.83
Income from Discontinued
Operations - 0.37
-------------- --------------
Net Income Available for
Common Stock $ 2.19 $ 2.20
-------------- --------------
Diluted:
Income from Continuing
Operations $ 2.13 $ 1.79
Income from Discontinued
Operations - 0.36
-------------- --------------
Net Income Available for
Common Stock $ 2.13 $ 2.15
-------------- --------------
Weighted Average Common Shares:
Used in Basic Calculation 83,122,932 84,205,652
-------------- --------------
Used in Diluted Calculation 85,290,812 86,063,076
-------------- --------------