EX-99 2 nfg-6302016xexhibit99x8k.htm EXHIBIT 99 Exhibit

Exhibit 99

 
 
 
 
 
 
6363 Main Street/Williamsville, NY 14221
 
 
 
 
Release Date:
Immediate August 4, 2016
Brian M. Welsch
Investor Relations
716-857-7875
David P. Bauer
Treasurer
716-857-7318
 
 
 
 

NATIONAL FUEL REPORTS THIRD QUARTER EARNINGS

WILLIAMSVILLE, N.Y.: National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated results for the third quarter of its 2016 fiscal year and for the nine months ended June 30, 2016.

FISCAL 2016 THIRD QUARTER EARNINGS SUMMARY

•Consolidated net income of $8.3 million or $0.10 per share
•Operating results, excluding items impacting comparability, of $58.1 million or $0.68 per share
•Impairment of oil and gas properties of $82.7 million ($47.9 million after tax)
•
Consolidated adjusted EBITDA of $189.8 million, an increase of $10.4 million versus prior year (see non-GAAP reconciliation on page 25)
•Production of 44.0 Bcfe, a 22% increase from prior year and 12% increase from the second quarter
•Net Appalachian natural gas spot sales of approximately 6.4 Bcf
•Average natural gas and crude oil prices after hedging of $2.86 per Mcf and $58.79 per Bbl, respectively
•Midstream businesses EBITDA of $70.9 million, an increase of $12.0 million or 20% versus prior year
•Raising and tightening fiscal 2016 earnings guidance
•Initiating fiscal 2017 earnings guidance with a range of $2.85 to $3.15 per share


OPERATING RESULTS

 
 
Three Months Ended
 
Nine Months Ended
 
 
June 30,
 
June 30,
(in thousands except per share amounts)
 
2016
 
2015
 
2016
 
2015
Reported GAAP earnings (loss)
 
$
8,286

 
$
(293,134
)
 
$
(328,510
)
 
$
(191,724
)
Items impacting comparability:
 
 
 
 
 
 
 
 
Impairment of oil and gas properties (E&P)
 
82,658

 
588,712

 
915,552

 
709,060

Tax impact of impairment of oil and gas properties
 
(34,716
)
 
(248,863
)
 
(384,531
)
 
(299,738
)
Joint development agreement professional fees (E&P)
 
3,173

 
 
 
7,855

 
 
Tax impact of joint development agreement professional fees
 
(1,333
)
 
 
 
(3,299
)
 
 
Operating Results
 
$
58,068

 
$
46,715

 
$
207,067

 
$
217,598

 
 
 
 
 
 
 
 
 
Reported GAAP earnings (loss) per share
 
$
0.10

 
$
(3.44
)
 
$
(3.87
)
 
$
(2.25
)
Items impacting comparability:
 
 
 
 
 
 
 
 
Impairment of oil and gas properties (E&P)
 
0.97

 
6.91

 
10.80

 
8.32

Tax impact of impairment of oil and gas properties
 
(0.41
)
 
(2.92
)
 
(4.54
)
 
(3.52
)
Joint development agreement professional fees (E&P)
 
0.04

 
 
 
0.09

 
 
Tax impact of joint development agreement professional fees
 
(0.02
)
 
 
 
(0.04
)
 
 
Earnings per share impact of dilutive shares (All segments)
 
 
 
 
 
(0.01
)
 
 
Operating Results per diluted share
 
$
0.68

 
$
0.55

 
$
2.43

 
$
2.55



Page 2.


MANAGEMENT COMMENTS

Ronald J. Tanski, President and Chief Executive Officer of National Fuel Gas Company, stated: "Each of our business segments contributed to a very good quarter of operations for the Company. In our upstream segment, Seneca's Marcellus production grew by an impressive 25 percent due to increased takeaway capacity on National Fuel pipelines and improved pricing in Appalachia. This higher production also contributed to the increased throughput we achieved in our Gathering and Pipeline and Storage segments. While commodity pricing in the Appalachian basin has improved, the methodology imposed under the full-cost accounting rules required us to once again incur a non-cash impairment charge. We expect that the pricing curve will level out and soon bring an end to these impairment charges.

"The steps we have taken in fiscal 2016 have positioned National Fuel well financially and operationally. In fiscal 2017, we plan to execute our integrated strategy to grow our upstream and midstream businesses in Appalachia. We are pleased that IOG elected to continue participating with us in drilling additional Marcellus wells over the next year, allowing us to dedicate capital to our midstream pipeline businesses while maintaining activity levels upstream. We recently received a positive Environmental Assessment from the Federal Energy Regulatory Commission for our Northern Access Project and remain on schedule to obtain the additional regulatory approvals to build the project to meet the anticipated November 2017 in-service date. While we continue to be encouraged by firming natural gas prices, we will maintain the current pace of our drilling program over the next year in order to grow production into the Northern Access capacity as efficiently as possible. This strategy should result in steady, but significant, growth across our upstream and midstream businesses.”


DISCUSSION OF THIRD QUARTER RESULTS BY SEGMENT

The following discussion of the earnings of each segment is summarized in a tabular form on pages 9 through 12 of this report. It may be helpful to refer to those tables while reviewing this discussion.

Upstream Business

Exploration and Production Segment

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

(in thousands except per share amounts)
Quarter Ended
June 30, 2016
 
Quarter Ended
June 30, 2015
 
Variance
Net Income / (Loss)
$
(19,165
)
 
$
(323,113
)
 
$
303,948

Net Income / (Loss) Per Share (Diluted)
$
(0.22
)
 
$
(3.79
)
 
$
3.57

Adjusted EBITDA
$
97,924

 
$
93,662

 
$
4,262


The quarter over quarter variance in the Exploration and Production segment's net loss is mainly due to lower impairment charges that were recorded to write down the value of Seneca’s oil and natural gas reserves under the full cost method of accounting. The non-cash, pre-tax impairment charge recorded in the current year's third quarter was $82.7 million ($47.9 million after-tax) versus $588.7 million ($339.8 million after-tax) in the prior year. 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. Unless oil and gas prices improve, Seneca expects to incur an additional impairment charge in the fourth quarter of the fiscal year ending September 30, 2016.

-more-
2

Page 3.



Seneca also incurred $3.2 million ($1.8 million after tax) of professional and legal expenses during the third quarter relating to the extension of the joint development agreement that Seneca entered into in June 2016. These transaction costs were recorded to general and administrative ("G&A") expense.

Excluding these items, Operating Results in the Exploration and Production segment in the current year’s third quarter were $30.6 million, or $0.36 per share, compared to $16.7 million, or $0.20 per share, in the prior year’s third quarter, an increase of $13.9 million or $0.16 per share. The increase in Operating Results is mainly due to higher natural gas production and lower operating expenses, offset partially by lower realized natural gas and crude oil prices after hedging, lower oil production and higher interest expense.

Seneca's net third quarter fiscal 2016 production was 44.0 billion cubic feet equivalent ("Bcfe"), an increase of 7.8 Bcfe, or 22 percent, from the prior fiscal year's third quarter, and an increase of 4.8 Bcfe, or 12 percent, versus the second quarter of fiscal 2016. Net natural gas production for the quarter was 39.6 Bcf, an increase of 8.0 Bcf, or 25 percent, versus prior year due mainly to new incremental firm transportation capacity that became available to Seneca during the first quarter of fiscal 2016. In addition, improved local spot pricing in Pennsylvania allowed Seneca to sell approximately 6.4 Bcf of net production in local spot markets during the quarter, the first meaningful spot production volumes Seneca has sold since the first quarter of fiscal 2015. Seneca's voluntary production curtailments decreased 7.1 Bcf from the estimated 11.8 Bcf of net production curtailed in the third quarter of fiscal 2015 and 4.4 Bcf from the estimated 9.1 Bcf curtailed during the second quarter of fiscal 2016.

Seneca produced 728 thousand barrels ("Mbbl") of crude oil during the third quarter, a decrease of 31 Mbbl, or 4.1 percent, when compared to the prior year due primarily to a temporary disruption in steam flood operations in North Midway Sunset and lower overall well workover activity in response to the decline in oil market prices.

Seneca's average realized natural gas price, after the impact of hedging, for the third quarter was $2.86 per thousand cubic feet ("Mcf"), a decrease of $0.46 per Mcf versus the prior year third quarter. Seneca's average realized oil price, after the impact of hedging, for the third quarter was $58.79 per barrel ("Bbl"), a decrease of $10.86 per Bbl when compared to the prior year third quarter. Seneca's average realized natural gas and oil prices benefited from a $1.11 per Mcf and $19.75 per Bbl uplift, respectively, from financial hedges settled during the quarter.

Lease operating and transportation ("LOE") expense decreased by $0.5 million versus the prior year third quarter due to lower per unit LOE offset partially by the impact of higher production. On a per unit of production basis, LOE for the third quarter decreased by $0.21 per Mcf equivalent ("Mcfe") to $0.88 per Mcfe. The decrease is largely due to a reduction in well maintenance and steam costs in Seneca's California division and lower salt water disposal and maintenance costs in Seneca's Appalachian division.

G&A expense, excluding the $3.2 million of professional fees related to the joint development agreement discussed above, was $13.4 million for the third quarter, a decrease of $3.7 million versus the prior year due primarily to lower personnel costs at Seneca.

Depreciation, depletion and amortization ("DD&A") expense decreased $24.8 million versus the prior year third quarter due to lower per unit DD&A, offset partially by the impact of higher production. On a per unit of production basis, DD&A decreased $0.84 per Mcfe to $0.71 per Mcfe due primarily to a lower depletable fixed asset balance resulting from the ceiling test impairment charges recorded during the prior four quarters and higher natural gas reserve balances at September 30, 2015.

Property, franchise and other taxes decreased $2.3 million versus the prior year third quarter due primarily to reimbursements received from Seneca's joint development partner for its share of Pennsylvania impact fees and the general decline in oil and natural gas market prices, which have lowered the assessed values of Seneca's California oil properties and impact fee payments in Pennsylvania.


-more-
3

Page 4.


The $2.6 million increase in interest expense is due to the full quarter impact of the long-term debt issuance that occurred at the end of the quarter ended June 30, 2015.

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.

(in thousands except per share amounts)
Quarter Ended
June 30, 2016
 
Quarter Ended
June 30, 2015
 
Variance
Net Income / (Loss)
$
17,323

 
$
17,714

 
$
(391
)
Net Income / (Loss) Per Share (Diluted)
$
0.20

 
$
0.21

 
$
(0.01
)
Adjusted EBITDA
$
48,515

 
$
44,437

 
$
4,078


The Pipeline and Storage segment's third quarter earnings were relatively flat versus the prior year as the increase in operating revenues were offset by increases in Operation and Maintenance ("O&M"), DD&A and interest expenses. Operating revenues increased $6.9 million, or 10 percent, as a result of the three expansion projects - Northern Access 2015, Westside Expansion & Modernization, and Tuscarora Lateral - that were placed in service during the first quarter of fiscal 2016.

O&M expense increased $2.2 million versus prior year's third quarter due primarily to higher post-retirement benefit costs and expenses associated with the operation of new and expanded compression assets. DD&A expense for the quarter increased $1.4 million due to higher gross plant in service, which was largely attributable to the expansion projects that were placed in service within the last year. The $1.9 million increase in interest expense is due to the full quarter impact of the long-term debt issuance that occurred at the end of the quarter ended June 30, 2015, coupled with lower capitalized interest resulting from the decline in pipeline expansion construction work in progress during the current quarter.

Gathering Segment

The Gathering segment’s operations are carried out by National Fuel Gas Midstream Corporation’s subsidiary limited liability companies. The Gathering segment constructs, owns and operates natural gas gathering pipelines and compression facilities in the Appalachian region which currently delivers Seneca’s gross Appalachian production to the interstate pipeline system.

(in thousands except per share amounts)
Quarter Ended
June 30, 2016
 
Quarter Ended
June 30, 2015
 
Variance
Net Income / (Loss)
$
9,473

 
$
6,226

 
$
3,247

Net Income / (Loss) Per Share (Diluted)
$
0.11

 
$
0.07

 
$
0.04

Adjusted EBITDA
$
22,433

 
$
14,527

 
$
7,906

    
The increase in the Gathering segment's third quarter earnings is due primarily to higher gathering revenues, offset partially by higher O&M, DD&A and interest expenses. Operating revenues increased $8.6 million, or 51 percent, versus prior year's third quarter mainly due to a 15.0 Bcf increase in gathered volume on the Clermont Gathering System ("Clermont"), a result of Seneca's increased gross production volumes. O&M expense increased $0.7 million due to higher costs associated with operating various Clermont compression projects placed in service during the current fiscal year. DD&A expense increased $1.4 million due to higher gross plant in service during the quarter.

-more-
4

Page 5.



The $2.0 million increase in interest expense is due to the full quarter impact of the long-term debt issuance that occurred at the end of the quarter ended June 30, 2015, coupled with lower capitalized interest resulting from the Clermont projects being placed in service.

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.

(in thousands except per share amounts)
Quarter Ended
June 30, 2016
 
Quarter Ended
June 30, 2015
 
Variance
Net Income / (Loss)
$
2,179

 
$
5,727

 
$
(3,548
)
Net Income / (Loss) Per Share (Diluted)
$
0.03

 
$
0.07

 
$
(0.04
)
Adjusted EBITDA
$
22,900

 
$
27,059

 
$
(4,159
)

The decrease in the Utility segment's third quarter earnings was largely attributable to the impact of higher O&M expenses, which increased $2.5 million versus the prior year due to higher personnel costs and expenses relating to the implementation of the new customer information system that went in service during the quarter. The Utility segment's earnings were further reduced by higher DD&A expense and lower margins.

Energy Marketing Segment

The Energy Marketing segment's operations are carried out by National Fuel Resources, Inc. (“NFR”). NFR markets natural gas to industrial, wholesale, commercial, public authority and residential customers primarily in western and central New York and northwestern Pennsylvania, offering competitively priced natural gas to its customers.

(in thousands except per share amounts)
Quarter Ended
June 30, 2016
 
Quarter Ended
June 30, 2015
 
Variance
Net Income / (Loss)
$
(590
)
 
$
1,533

 
$
(2,123
)
Net Income / (Loss) Per Share (Diluted)
$
(0.01
)
 
$
0.02

 
$
(0.03
)
Adjusted EBITDA
$
(930
)
 
$
2,327

 
$
(3,257
)

The decrease in the Energy Marketing segment's third quarter earnings is due primarily to lower margins, which were negatively impacted by changes in natural gas prices at local purchase points relative to NYMEX-based customer sales contracts.

Corporate and All Other

The Corporate and All Other category net loss of $0.9 million for the quarter ended June 30, 2016, compares to a net loss of $1.2 million in the prior year’s third quarter. The $0.3 million decrease in the net loss impacted consolidated earnings by less than $0.01 per share.

-more-
5

Page 6.




EARNINGS GUIDANCE

The Company is updating and narrowing earnings guidance for fiscal 2016 to a range of $2.90 to $3.00 per share exclusive of any ceiling test impairment charges. These charges were $531 million after-tax, or $6.26 per share, for the nine months ended June 30, 2016. While the Company expects to incur an additional ceiling test impairment charge in the fourth quarter of fiscal 2016, the amount of this charge 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 amount of the expected ceiling test impairment charges is not reasonably determinable at this time, the Company is unable to provide earnings guidance other than on a non-GAAP basis that excludes those charges.

The Company's updated fiscal 2016 guidance reflects actual third quarter results and the following revised forecast assumptions:

 
Updated FY 2016 Guidance
 
Previous FY 2016 Guidance
Consolidated Earnings per Share (1)
$2.90 to $3.00
 
$2.80 to $2.95

Capital Expenditures (Millions)
 
 
 
    Exploration & Production (2)
$120 - $135
 
$120 - $160
    Pipeline & Storage
$125 - $140
 
$130 - $160
    Gathering
$55 - $65
 
$75 - $85
    Utility
$90 - $100
 
$90 - $100
    Consolidated Capital Expenditures
$390 - $440
 
$415 - $505

Exploration & Production Segment Guidance
    NYMEX Natural Gas Price Assumption
$2.75
 
$2.15
    NYMEX Crude Oil Price Assumption
$45.00
 
$40.00
    Total Production (Bcfe)
160 to 165
 
158 to 175
    E&P Operating Costs ($/Mcfe)
 
 
 
    LOE
$0.95 - $1.00
 
$0.95 - $1.05
    G&A (3)
$0.35 - $0.40
 
$0.35 - $0.40
    DD&A
$0.85 - $0.90
 
$0.85 - $0.95

(1)    Exclusive of ceiling test impairment charges
(2)    Net of up-front and recurring proceeds received from joint development partner
(3)    G&A per unit guidance excludes $7.9 million of joint development professional fees


-more-
6

Page 7.


The Company is also initiating preliminary earnings, capital expenditures, and Exploration and Production segment operations guidance for fiscal 2017.

 
Preliminary FY 2017 Guidance
 
 
Consolidated Earnings per Share (1)
$2.85 to $3.15
 
 
 
 
 
 
Capital Expenditures (Millions)
 
 
 
    Exploration & Production (2)
$160 - $200
 
 
    Pipeline & Storage
$400 - $450
 
 
    Gathering
$75 - $85
 
 
    Utility
$90 - $100
 
 
    Consolidated Capital Expenditures
$725 - $835
 
 
 
 
 
 
Exploration & Production Segment Guidance
 
 
 
    NYMEX Natural Gas Price Assumption
$3.00
 
 
    NYMEX Crude Oil Price Assumption
$50.00
 
 
 
 
 
 
    Production (Bcfe)
 
 
 
    East Division - Appalachia
130 to 153
 
 
    West Division - California
20 to 22
 
 
    Total Production
150 to 175
 
 
 
 
 
 
    Capital Expenditures (Millions)
 
 
 
    East Division - Appalachia
$125 - $155
 
 
    West Division - California
$35 - $45
 
 
    Total E&P Capital Expenditures
$160 - $200
 
 
 
 
 
 
    E&P Operating Costs ($/Mcfe)
 
 
 
    LOE
$0.95 - $1.05
 
 
    G&A
$0.35 - $0.40
 
 
    DD&A
$0.65 - $0.75
 
 
 
 
 
 
Midstream Businesses Guidance
 
 
 
    Pipeline & Storage Segment Revenues (Millions)
$295 - $305
 
 
    Gathering Segment Revenues (Millions)
$95 - $105
 
 

(1)    Assumes no ceiling test impairment charges
(2)    Net of up-front and recurring proceeds received from joint development partner


EARNINGS TELECONFERENCE

The Company will host a conference call on Friday, August 5, 2016, at 11 a.m. Eastern Time to discuss this announcement. There are two ways to access this call. For those with Internet access, visit the NFG Investor Relations News & Events page at National Fuel’s website at investor.nationalfuelgas.com. For those without Internet access, audio access is also provided by dialing (toll-free) 877-706-7579, using conference ID number “46345887.” For those unable to listen to the live conference call, an audio replay will be available at approximately 3 p.m. Eastern Time at the same website link and by phone at (toll-free) 855-859-2056 or 404-537-3406, using conference ID number “46345887.” Both the webcast and telephonic replay will be available until the close of business on Friday, August 12, 2016.


-more-
7

Page 8.


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

 
 
 
 
 
 
Analyst Contact:
Brian M. Welsch
716-857-7875
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; delays or changes in costs or plans with respect to Company projects or related projects of other companies, including difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators; governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, target rates of return, rate design and retained natural gas), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal; factors affecting the Company’s ability to successfully identify, drill for and produce economically viable natural gas and oil reserves, including among others geology, lease availability, title disputes, weather conditions, shortages, delays or unavailability of equipment and services required in drilling operations, insufficient gathering, processing and transportation capacity, the need to obtain governmental approvals and permits, and compliance with environmental laws and regulations; changes in laws, regulations or judicial interpretations to which the Company is subject, including those involving derivatives, taxes, safety, employment, climate change, other environmental matters, real property, and exploration and production activities such as hydraulic fracturing; 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; 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 economic conditions, including global, national or regional recessions, and their effect on the demand for, and customers’ ability to pay for, the Company’s products and services; the creditworthiness or performance of the Company’s key suppliers, customers and counterparties; economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities, acts of war, cyber attacks or pest infestation; significant differences between the Company’s projected and actual capital expenditures and operating expenses; changes in laws, actuarial assumptions, the interest rate environment and the return on plan/trust assets related to the Company’s pension and other post-retirement benefits, which can affect future funding obligations and costs and plan liabilities; increasing health care costs and the resulting effect on health insurance premiums and on the obligation to provide other post-retirement benefits; or increasing costs of insurance, changes in coverage and the ability to obtain insurance. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date thereof.



-more-
8

Page 9.


 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
QUARTER ENDED JUNE 30, 2016
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Upstream
 
Midstream Businesses
 
Downstream Businesses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exploration &
 
Pipeline &
 
 
 
 
 
Energy
 
Corporate /
 
 
(Thousands of Dollars)
Production
 
Storage
 
Gathering
 
Utility
 
Marketing
 
All Other
 
Consolidated*
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Third quarter 2015 GAAP earnings
$
(323,113
)
 
$
17,714

 
$
6,226

 
$
5,727

 
$
1,533

 
$
(1,221
)
 
$
(293,134
)
Items impacting comparability:
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment of oil and gas producing properties
588,712

 
 
 
 
 
 
 
 
 
 
 
588,712

Tax impact of impairment of oil and gas producing properties
(248,863
)
 
 
 
 
 
 
 
 
 
 
 
(248,863
)
Third quarter 2015 operating results
16,736

 
17,714

 
6,226

 
5,727

 
1,533

 
(1,221
)
 
46,715

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Drivers of operating results
 
 
 
 
 
 
 
 
 
 
 
 
 
Higher (lower) crude oil prices
(5,138
)
 
 
 
 
 
 
 
 
 
 
 
(5,138
)
Higher (lower) natural gas prices
(12,005
)
 
 
 
 
 
 
 
 
 
 
 
(12,005
)
Higher (lower) natural gas production
17,216

 
 
 
 
 
 
 
 
 
 
 
17,216

Higher (lower) crude oil production
(1,420
)
 
 
 
 
 
 
 
 
 
 
 
(1,420
)
Lower (higher) depreciation / depletion
16,093

 
(900
)
 
(937
)
 
(479
)
 
 
 
 
 
13,777

 
 
 
 
 
 
 
 
 
 
 
 
 

Higher (lower) transportation revenues
 
 
4,263

 
 
 
 
 
 
 
 
 
4,263

Higher (lower) gathering and processing revenues
 
 
 
 
5,595

 
 
 
 
 
 
 
5,595

Lower (higher) operating expenses
2,614

 
(1,461
)
 
(461
)
 
(1,731
)
 
 
 
447

 
(592
)
Lower (higher) property, franchise and other taxes
1,482

 
 
 
 
 
 
 
 
 
 
 
1,482

 
 
 
 
 
 
 
 
 
 
 
 
 

Higher (lower) margins
 
 
 
 
 
 
(1,013
)
 
(2,209
)
 
568

 
(2,654
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Higher (lower) AFUDC**
 
 
(598
)
 
 
 
 
 
 
 
 
 
(598
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Higher (lower) interest income
(410
)
 
 
 
 
 
 
 
 
 
 
 
(410
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lower (higher) interest expense
(1,667
)
 
(1,265
)
 
(1,307
)
 
 
 
 
 
 
 
(4,239
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lower (higher) income tax expense / effective tax rate
(2,906
)
 
(715
)
 
318

 
 
 
 
 
(894
)
 
(4,197
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
All other / rounding
22

 
285

 
39

 
(325
)
 
86

 
166

 
273

Third quarter 2016 operating results
30,617


17,323


9,473


2,179


(590
)

(934
)

58,068

Items impacting comparability:
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment of oil and gas producing properties
(82,658
)
 
 
 
 
 
 
 
 
 
 
 
(82,658
)
Tax impact of impairment of oil and gas producing properties
34,716

 
 
 
 
 
 
 
 
 
 
 
34,716

Joint development agreement professional fees
(3,173
)
 
 
 
 
 
 
 
 
 
 
 
(3,173
)
Tax impact of joint development agreement professional fees
1,333

 
 
 
 
 
 
 
 
 
 
 
1,333

Third quarter 2016 GAAP earnings
$
(19,165
)
 
$
17,323

 
$
9,473

 
$
2,179

 
$
(590
)
 
$
(934
)
 
$
8,286

 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Amounts do not reflect intercompany eliminations
 
 
 
 
 
 
 
 
 
 
 
 
 
** AFUDC = Allowance for Funds Used During Construction
 
 
 
 
 
 
 
 
 
 
 
 















Page 10.


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
QUARTER ENDED JUNE 30, 2016
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Upstream
 
Midstream Businesses
 
Downstream Businesses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exploration &
 
Pipeline &
 
 
 
 
 
Energy
 
Corporate /
 
 
 
 
Production
 
Storage
 
Gathering
 
Utility
 
Marketing
 
All Other
 
Consolidated*
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Third quarter 2015 GAAP earnings
 
$
(3.79
)
 
$
0.21

 
$
0.07

 
$
0.07

 
$
0.02

 
$
(0.02
)
 
$
(3.44
)
Items impacting comparability:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment of oil and gas producing properties
 
6.91

 
 
 
 
 
 
 
 
 
 
 
6.91

Tax impact of impairment of oil and gas producing properties
 
(2.92
)
 
 
 
 
 
 
 
 
 
 
 
(2.92
)
Third quarter 2015 operating results
 
0.20

 
0.21

 
0.07

 
0.07

 
0.02

 
(0.02
)
 
0.55

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Drivers of operating results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Higher (lower) crude oil prices
 
(0.06
)
 
 
 
 
 
 
 
 
 
 
 
(0.06
)
Higher (lower) natural gas prices
 
(0.14
)
 
 
 
 
 
 
 
 
 
 
 
(0.14
)
Higher (lower) natural gas production
 
0.20

 
 
 
 
 
 
 
 
 
 
 
0.20

Higher (lower) crude oil production
 
(0.02
)
 
 
 
 
 
 
 
 
 
 
 
(0.02
)
Lower (higher) depreciation / depletion
 
0.19

 
(0.01
)
 
(0.01
)
 
(0.01
)
 
 
 
 
 
0.16

 
 
 
 
 
 
 
 
 
 
 
 
 
 

Higher (lower) transportation revenues
 
 
 
0.05

 
 
 
 
 
 
 
 
 
0.05

Higher (lower) gathering and processing revenues
 
 
 
 
 
0.07

 
 
 
 
 
 
 
0.07

Lower (higher) operating expenses
 
0.03

 
(0.02
)
 
(0.01
)
 
(0.02
)
 
 
 
0.01

 
(0.01
)
Lower (higher) property, franchise and other taxes
 
0.02

 
 
 
 
 
 
 
 
 
 
 
0.02

 
 
 
 
 
 
 
 
 
 
 
 
 
 

Higher (lower) margins
 
 
 
 
 
 
 
(0.01
)
 
(0.03
)
 
0.01

 
(0.03
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Higher (lower) AFUDC**
 
 
 
(0.01
)
 
 
 
 
 
 
 
 
 
(0.01
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
High (lower) interest income
 
—

 
 
 
 
 
 
 
 
 
 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lower (higher) interest expense
 
(0.02
)
 
(0.01
)
 
(0.02
)
 
 
 
 
 
 
 
(0.05
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lower (higher) income tax expense / effective tax rate
 
(0.03
)

(0.01
)

—






(0.01
)

(0.05
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 

All other / rounding
 
(0.01
)
 
—

 
0.01

 
—

 
—

 
—

 
—

Third quarter 2016 operating results
 
0.36

 
0.20

 
0.11

 
0.03

 
(0.01
)
 
(0.01
)
 
0.68

Items impacting comparability:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment of oil and gas producing properties
 
(0.97
)
 
 
 
 
 
 
 
 
 
 
 
(0.97
)
Tax impact of impairment of oil and gas producing properties
 
0.41

 
 
 
 
 
 
 
 
 
 
 
0.41

Joint development agreement professional fees
 
(0.04
)
 
 
 
 
 
 
 
 
 
 
 
(0.04
)
Tax impact of joint development agreement professional fees
 
0.02

 
 
 
 
 
 
 
 
 
 
 
0.02

Third quarter 2016 GAAP earnings
 
$
(0.22
)
 
$
0.20

 
$
0.11

 
$
0.03

 
$
(0.01
)
 
$
(0.01
)
 
$
0.10

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Amounts do not reflect intercompany eliminations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
** AFUDC = Allowance for Funds Used During Construction
 
 
 
 
 
 
 
 
 
 
 
 





Page 11.


 
 
 
 
 
 
 
 
 
 
 
 
 
 
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
NINE MONTHS ENDED JUNE 30, 2016
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Upstream
 
Midstream Businesses
 
Downstream Businesses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exploration &
 
Pipeline &
 
 
 
 
 
Energy
 
Corporate /
 
 
(Thousands of Dollars)
Production
 
Storage
 
Gathering
 
Utility
 
Marketing
 
All Other
 
Consolidated*
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended June 30, 2015 GAAP earnings
$
(349,955
)
 
$
61,868

 
$
24,254

 
$
66,558

 
$
7,732

 
$
(2,181
)
 
$
(191,724
)
Items impacting comparability:
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment of oil and gas producing properties
709,060

 
 
 
 
 
 
 
 
 
 
 
709,060

Tax impact of impairment of oil and gas producing properties
(299,738
)
 
 
 
 
 
 
 
 
 
 
 
(299,738
)
Nine months ended June 30, 2015 operating results
59,367

 
61,868

 
24,254

 
66,558

 
7,732

 
(2,181
)
 
217,598

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Drivers of operating results
 
 
 
 
 
 
 
 
 
 
 
 
 
Higher (lower) crude oil prices
(20,727
)
 
 
 
 
 
 
 
 
 
 
 
(20,727
)
Higher (lower) natural gas prices
(27,670
)
 
 
 
 
 
 
 
 
 
 
 
(27,670
)
Higher (lower) natural gas production
3,219

 
 
 
 
 
 
 
 
 
 
 
3,219

Higher (lower) crude oil production
(2,656
)
 
 
 
 
 
 
 
 
 
 
 
(2,656
)
Derivative mark to market adjustments
(1,841
)
 
 
 
 
 
 
 
 
 
 
 
(1,841
)
Lower (higher) lease operating and transportation expenses
7,905

 
 
 
 
 
 
 
 
 
 
 
7,905

Lower (higher) depreciation / depletion
52,621

 
(2,400
)
 
(2,198
)
 
(995
)
 
 
 
 
 
47,028

 
 
 
 
 
 
 
 
 
 
 
 
 

Higher (lower) transportation revenues
 
 
6,655

 
 
 
 
 
 
 
 
 
6,655

Higher (lower) gathering and processing revenues
 
 
 
 
4,552

 
 
 
 
 
 
 
4,552

Lower (higher) operating expenses
2,399

 
(2,194
)
 
(1,137
)
 
1,869

 
 
 
1,160

 
2,097

Lower (higher) property, franchise and other taxes
3,329

 
(592
)
 
 
 
 
 
 
 
 
 
2,737

 
 
 
 
 
 
 
 
 
 
 
 
 

Regulatory true-up adjustments
 
 
 
 
 
 
(3,067
)
 
 
 
 
 
(3,067
)
Warmer weather
 
 
 
 
 
 
(12,861
)
 
 
 
 
 
(12,861
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Higher (lower) margins
 
 
 
 
 
 
 
 
(3,755
)
 
565

 
(3,190
)
 
 
 
 
 
 
 
 
 
 
 
 
 

Higher (lower) AFUDC**
 
 
509

 
 
 
 
 
 
 
 
 
509

 
 
 
 
 
 
 
 
 
 
 
 
 

Higher (lower) interest income
(723
)
 
 
 
 
 
 
 
 
 
 
 
(723
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lower (higher) interest expense
(6,065
)
 
(3,318
)
 
(4,269
)
 
 
 
 
 
 
 
(13,652
)
 
 
 
 
 
 
 
 
 
 
 
 
 

Lower (higher) income tax expense / effective tax rate
(2,786
)
 
(338
)
 
690

 
1,841

 

 
1,247

 
654

 
 
 
 
 
 
 
 
 
 
 
 
 

All other / rounding
(381
)
 
(396
)
 
70

 
(600
)
 
140

 
1,667

 
500

Nine months ended June 30, 2016 operating results
65,991

 
59,794

 
21,962

 
52,745

 
4,117

 
2,458

 
207,067

Items impacting comparability:
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment of oil and gas producing properties
(915,552
)
 
 
 
 
 
 
 
 
 
 
 
(915,552
)
Tax impact of impairment of oil and gas producing properties
384,531

 
 
 
 
 
 
 
 
 
 
 
384,531

Joint development agreement professional fees
(7,855
)
 
 
 
 
 
 
 
 
 
 
 
(7,855
)
Tax impact of joint development agreement professional fees
3,299

 
 
 
 
 
 
 
 
 
 
 
3,299

Nine months ended June 30, 2016 GAAP earnings
$
(469,586
)
 
$
59,794

 
$
21,962

 
$
52,745

 
$
4,117

 
$
2,458

 
$
(328,510
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Amounts do not reflect intercompany eliminations
 
 
 
 
 
 
 
 
 
 
 
 
 
** AFUDC = Allowance for Funds Used During Construction
 
 
 
 
 
 
 
 
 
 
 
 





Page 12.


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
NINE MONTHS ENDED JUNE 30, 2016
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Upstream
 
Midstream Businesses
 
Downstream Businesses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exploration &
 
Pipeline &
 
 
 
 
 
Energy
 
Corporate /
 
 
 
 
Production
 
Storage
 
Gathering
 
Utility
 
Marketing
 
All Other
 
Consolidated*
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended June 30, 2015 GAAP earnings
 
$
(4.11
)
 
$
0.73

 
$
0.28

 
$
0.78

 
$
0.09

 
$
(0.02
)
 
$
(2.25
)
Items impacting comparability:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment of oil and gas producing properties
 
8.32

 
 
 
 
 
 
 
 
 
 
 
8.32

Tax impact of impairment of oil and gas producing properties
 
(3.52
)
 
 
 
 
 
 
 
 
 
 
 
(3.52
)
Nine months ended June 30, 2015 operating results
 
0.69

 
0.73

 
0.28

 
0.78

 
0.09

 
(0.02
)
 
2.55

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Drivers of operating results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Higher (lower) crude oil prices
 
(0.24
)
 
 
 
 
 
 
 
 
 
 
 
(0.24
)
Higher (lower) natural gas prices
 
(0.32
)
 
 
 
 
 
 
 
 
 
 
 
(0.32
)
Higher (lower) natural gas production
 
0.04

 
 
 
 
 
 
 
 
 
 
 
0.04

Higher (lower) crude oil production
 
(0.03
)
 
 
 
 
 
 
 
 
 
 
 
(0.03
)
Derivative mark to market adjustments
 
(0.02
)
 
 
 
 
 
 
 
 
 
 
 
(0.02
)
Lower (higher) lease operating and transportation expenses
 
0.09

 
 
 
 
 
 
 
 
 
 
 
0.09

Lower (higher) depreciation / depletion
 
0.62

 
(0.03
)
 
(0.03
)
 
(0.01
)
 
 
 
 
 
0.55

 
 
 
 
 
 
 
 
 
 
 
 
 
 

Higher (lower) transportation revenues
 
 
 
0.08

 
 
 
 
 
 
 
 
 
0.08

Higher (lower) gathering and processing revenues
 
 
 
 
 
0.05

 
 
 
 
 
 
 
0.05

Lower (higher) operating expenses
 
0.03

 
(0.03
)
 
(0.01
)
 
0.02

 
 
 
0.01

 
0.02

Lower (higher) property, franchise and other taxes
 
0.04

 
(0.01
)
 
 
 
 
 
 
 
 
 
0.03

 
 
 
 
 
 
 
 
 
 
 
 
 
 

Regulatory true-up adjustments
 
 
 
 
 
 
 
(0.04
)
 
 
 
 
 
(0.04
)
Warmer weather
 
 
 
 
 
 
 
(0.15
)
 
 
 
 
 
(0.15
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Higher (lower) margins
 
 
 
 
 
 
 
 
 
(0.04
)
 
0.01

 
(0.03
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Higher (lower) AFUDC**
 
 
 
0.01

 
 
 
 
 
 
 
 
 
0.01

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Higher (lower) interest income
 
(0.01
)
 
 
 
 
 
 
 
 
 
 
 
(0.01
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lower (higher) interest expense
 
(0.07
)
 
(0.04
)
 
(0.05
)
 
 
 
 
 
 
 
(0.16
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lower (higher) income tax expense / effective tax rate
 
(0.03
)
 
—

 
0.01

 
0.02

 
 
 
0.01

 
0.01

 
 

 

 

 

 

 

 

All other / rounding
 
(0.02
)
 
(0.01
)
 
0.01

 
—

 
—

 
0.02

 
—

Nine months ended June 30, 2016 operating results
 
0.77

 
0.70

 
0.26

 
0.62

 
0.05

 
0.03

 
2.43

Items impacting comparability:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment of oil and gas producing properties
 
(10.80
)
 
 
 
 
 
 
 
 
 
 
 
(10.80
)
Tax impact of impairment of oil and gas producing properties
 
4.54

 
 
 
 
 
 
 
 
 
 
 
4.54

Joint development agreement professional fees
 
(0.09
)
 
 
 
 
 
 
 
 
 
 
 
(0.09
)
Tax impact of joint development agreement professional fees
 
0.04

 
 
 
 
 
 
 
 
 
 
 
0.04

Earnings per share impact of diluted shares
 
 
 
0.01

 
 
 
 
 
 
 
 
 
0.01

Nine months ended June 30, 2016 GAAP earnings
 
$
(5.54
)
 
$
0.71

 
$
0.26

 
$
0.62

 
$
0.05

 
$
0.03

 
$
(3.87
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Amounts do not reflect intercompany eliminations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
** AFUDC = Allowance for Funds Used During Construction
 
 
 
 
 
 
 
 
 
 
 
 



Page 13.






 



 



 
 
 
 
 
 



 
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
2016
 
2015
 
2016

2015
 
Operating Revenues:

 
 
 
 

 
 
Utility and Energy Marketing Revenues
$
123,976

 
$
132,422

 
$
540,981

 
$
772,802

 
Exploration and Production and Other Revenues
158,578

 
160,256

 
456,032

 
532,173

 
Pipeline and Storage and Gathering Revenues
53,063

 
47,137

 
162,930

 
154,876

 
 
335,617


339,815

 
1,159,943


1,459,851

 
Operating Expenses:
 
 
 
 





 
Purchased Gas
23,477

 
27,038

 
147,168


344,728

 
Operation and Maintenance:


 


 





 
      Utility and Energy Marketing
46,616

 
44,263

 
151,474

 
156,724

 
      Exploration and Production and Other
35,427

 
46,162

 
123,965

 
140,564

 
      Pipeline and Storage and Gathering
23,215

 
20,272

 
64,324

 
59,237

 
Property, Franchise and Other Taxes
20,261

 
22,717

 
61,923


68,561

 
Depreciation, Depletion and Amortization
58,802

 
79,865

 
193,300


265,298

 
Impairment of Oil and Gas Producing Properties
82,658

 
588,712

 
915,552

 
709,060

 
 
290,456

 
829,029

 
1,657,706


1,744,172

 
 
 
 
 
 





 
Operating Income (Loss)
45,161

 
(489,214
)
 
(497,763
)

(284,321
)
 
 
 
 
 
 





 
Other Income (Expense):
 
 
 
 





 
Interest Income
564

 
327

 
2,640


1,631

 
Other Income
1,519

 
2,066

 
7,173


4,638

 
Interest Expense on Long-Term Debt
(28,897
)
 
(22,213
)
 
(88,263
)

(66,900
)
 
Other Interest Expense
(1,321
)
 
(1,007
)
 
(3,938
)

(3,382
)
 
 
 
 
 
 





 
Income (Loss) Before Income Taxes
17,026

 
(510,041
)
 
(580,151
)

(348,334
)
 
 
 
 
 
 





 
Income Tax Expense (Benefit)
8,740

 
(216,907
)
 
(251,641
)

(156,610
)
 
 
 
 
 
 





 
Net Income (Loss) Available for Common Stock
$
8,286

 
$
(293,134
)
 
$
(328,510
)

$
(191,724
)
 
 
 
 
 
 



 
Earnings (Loss) Per Common Share:
 
 
 
 



 
Basic
$
0.10

 
$
(3.47
)
 
$
(3.87
)

$
(2.27
)
 
Diluted
$
0.10

 
$
(3.44
)
 
$
(3.87
)

$
(2.25
)
 
 
 
 
 
 



 
Weighted Average Common Shares:
 
 
 
 



 
Used in Basic Calculation
84,917,664

 
84,453,602

 
84,791,447


84,326,182

 
Used in Diluted Calculation
85,470,216

 
85,248,281

 
84,791,447


85,237,514

 





Page 14.


NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
 
 
June 30,
 
September 30,
(Thousands of Dollars)
2016
 
2015
 
 
 
 
ASSETS
 
 
 
Property, Plant and Equipment

$9,460,444

 

$9,261,323

Less - Accumulated Depreciation, Depletion and Amortization
5,012,690

 
3,929,428

Net Property, Plant and Equipment
4,447,754

 
5,331,895

 
 
 
 
Current Assets:
 
 
 
Cash and Temporary Cash Investments
105,567

 
113,596

Hedging Collateral Deposits
3,008

 
11,124

Receivables - Net
140,911

 
105,004

Unbilled Revenue
14,604

 
20,746

Gas Stored Underground
15,944

 
34,252

Materials and Supplies - at average cost
33,039

 
30,414

Unrecovered Purchased Gas Costs
933

 
—

Other Current Assets
47,118

 
60,665

Total Current Assets
361,124

 
375,801

 
 
 
 
Other Assets:
 
 
 
Recoverable Future Taxes
172,456

 
168,214

Unamortized Debt Expense
1,821

 
2,218

Other Regulatory Assets
269,343

 
278,227

Deferred Charges
17,968

 
15,129

Other Investments
111,385

 
92,990

Goodwill
5,476

 
5,476

Prepaid Post-Retirement Benefit Costs
27,158

 
24,459

Fair Value of Derivative Financial Instruments
126,596

 
270,363

Other
116

 
167

Total Other Assets
732,319

 
857,243

Total Assets

$5,541,197

 

$6,564,939

 
 
 
 
CAPITALIZATION AND LIABILITIES
 
 
 
Capitalization:
 
 
 
Comprehensive Shareholders' Equity
 
 
 
Common Stock, $1 Par Value Authorized - 200,000,000
 
 
 
Shares; Issued and Outstanding - 84,948,691 Shares
 
 
 
and 84,594,383 Shares, Respectively

$84,949

 

$84,594

Paid in Capital
761,673

 
744,274

Earnings Reinvested in the Business
673,281

 
1,103,200

Accumulated Other Comprehensive Income
7,739

 
93,372

Total Comprehensive Shareholders' Equity
1,527,642

 
2,025,440

Long-Term Debt, Net of Unamortized Discount and Debt Issuance Costs
2,085,686

 
2,084,009

Total Capitalization
3,613,328

 
4,109,449

 
 
 
 
Current and Accrued Liabilities:
 
 
 
Notes Payable to Banks and Commercial Paper
—

 
—

Current Portion of Long-Term Debt
—

 
—

Accounts Payable
86,487

 
180,388

Amounts Payable to Customers
35,441

 
56,778

Dividends Payable
34,404

 
33,415

Interest Payable on Long-Term Debt
28,985

 
36,200

Customer Advances
38

 
16,236

Customer Security Deposits
16,094

 
16,490

Other Accruals and Current Liabilities
72,759

 
96,557

Fair Value of Derivative Financial Instruments
2,133

 
10,076

Total Current and Accrued Liabilities
276,341

 
446,140

 
 
 
 
Deferred Credits:
 
 
 
Deferred Income Taxes
807,955

 
1,137,962

Taxes Refundable to Customers
91,452

 
89,448

Unamortized Investment Tax Credit
470

 
731

Cost of Removal Regulatory Liability
191,217

 
184,907

Other Regulatory Liabilities
102,018

 
108,617

Pension and Other Post-Retirement Liabilities
222,756

 
202,807

Asset Retirement Obligations
114,804

 
156,805

Other Deferred Credits
120,856

 
128,073

Total Deferred Credits
1,651,528

 
2,009,350

Commitments and Contingencies
—

 
—

Total Capitalization and Liabilities

$5,541,197

 

$6,564,939







Page 15.


 
 
 
 
 
 
 
 
 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
Nine Months Ended
 
 
June 30,
(Thousands of Dollars)
 
2016
 
2015
 
 
 
 
 
Operating Activities:
 
 
 
 
Net Loss Available for Common Stock
 
$
(328,510
)
 
$
(191,724
)
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities:
 
 
 
 
Impairment of Oil and Gas Producing Properties
 
915,552

 
709,060

Depreciation, Depletion and Amortization
 
193,300

 
265,298

Deferred Income Taxes
 
(269,248
)
 
(198,116
)
Excess Tax Benefits Associated with Stock-Based Compensation Awards
 
(1,786
)
 
(9,064
)
Stock-Based Compensation
 
3,138

 
8,383

Other
 
9,685

 
7,329

Change in:
 
 
 
 
Hedging Collateral Deposits
 
8,116

 
(8,367
)
Receivables and Unbilled Revenue
 
(7,756
)
 
22,175

Gas Stored Underground and Materials and Supplies
 
15,683

 
20,259

Unrecovered Purchased Gas Costs
 
(933
)
 
—

Other Current Assets
 
15,334

 
14,367

Accounts Payable
 
(53,687
)
 
11,153

Amounts Payable to Customers
 
(21,337
)
 
11,097

Customer Advances
 
(16,198
)
 
(18,961
)
Customer Security Deposits
 
(396
)
 
2,568

Other Accruals and Current Liabilities
 
3,375

 
13,794

Other Assets
 
3,775

 
1,124

Other Liabilities
 
(8,152
)
 
52,261

Net Cash Provided by Operating Activities
 
$
459,955

 
$
712,636

 
 
 
 
 
Investing Activities:
 
 
 
 
Capital Expenditures
 
$
(481,781
)
 
$
(718,965
)
Net Proceeds from Sale of Oil and Gas Producing Properties
 
115,235

 
—

Other
 
(11,163
)
 
(1,065
)
Net Cash Used in Investing Activities
 
$
(377,709
)
 
$
(720,030
)
 
 
 
 
 
Financing Activities:
 
 
 
 
Changes in Notes Payable to Banks and Commercial Paper
 
$
—

 
$
(85,600
)
Excess Tax Benefits Associated with Stock-Based Compensation Awards
 
1,786

 
9,064

Dividends Paid on Common Stock
 
(100,419
)
 
(97,330
)
Net Proceeds From Issuance of Long-Term Debt
 
—

 
445,662

Net Proceeds From Issuance of Common Stock
 
8,358

 
8,743

Net Cash (Used in) Provided by Financing Activities
 
$
(90,275
)
 
$
280,539

 
 
 
 
 
Net Increase (Decrease) in Cash and Temporary Cash Investments
 
(8,029
)
 
273,145

Cash and Temporary Cash Investments at Beginning of Period
 
113,596

 
36,886

Cash and Temporary Cash Investments at June 30
 
$
105,567

 
$
310,031















Page 16.


 

 

 

 



 
 
 
 
 
 
 



NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 
 
 
 
 
 
 



SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
 
 
 
 
 
 
 



UPSTREAM BUSINESS
 
 
 
 
 
 
 



 
 
 
 
 
 
 



 
Three Months Ended
 
Nine Months Ended
(Thousands of Dollars, except per share amounts)
June 30,
 
June 30,
EXPLORATION AND PRODUCTION SEGMENT
2016
 
2015
 
Variance
 
2016
2015
Variance
Total Operating Revenues
$
156,835

 
$
159,404

 
$
(2,569
)
 
$
452,583

$
529,590

$
(77,007
)
 
 
 
 
 
 
 






Operating Expenses:
 
 
 
 
 
 






Operation and Maintenance:
 
 
 
 
 
 






General and Administrative Expense
16,573

 
17,066

 
(493
)
 
55,671

50,793

4,878

Lease Operating and Transportation Expense
38,861

 
39,390

 
(529
)
 
115,451

127,614

(12,163
)
All Other Operation and Maintenance Expense
3,011

 
3,367

 
(356
)
 
10,402

11,115

(713
)
Property, Franchise and Other Taxes
3,639

 
5,919

 
(2,280
)
 
10,241

15,361

(5,120
)
Depreciation, Depletion and Amortization
31,279

 
56,038

 
(24,759
)
 
112,586

193,540

(80,954
)
Impairment of Oil and Gas Producing Properties
82,658

 
588,712

 
(506,054
)
 
915,552

709,060

206,492

 
176,021

 
710,492

 
(534,471
)
 
1,219,903

1,107,483

112,420

 
 
 
 
 
 
 






Operating Loss
(19,186
)
 
(551,088)

 
531,902

 
(767,320
)
(577,893)

(189,427
)
 
 
 
 
 
 
 






Other Income (Expense):
 
 
 
 
 
 






Interest Income
88

 
720

 
(632
)
 
781

1,893

(1,112
)
Interest Expense
(13,753
)
 
(11,190
)
 
(2,563
)
 
(41,882
)
(32,551
)
(9,331
)
 
 
 
 
 
 
 






Loss Before Income Taxes
(32,851
)
 
(561,558
)
 
528,707

 
(808,421
)
(608,551
)
(199,870
)
Income Tax Benefit
(13,686
)
 
(238,445
)
 
224,759

 
(338,835
)
(258,596
)
(80,239
)
Net Loss
$
(19,165
)
 
$
(323,113
)
 
$
303,948

 
$
(469,586
)
$
(349,955
)
$
(119,631
)
 
 
 
 
 
 
 






Net Loss Per Share (Diluted)
$
(0.22
)
 
$
(3.79
)
 
$
3.57

 
$
(5.54
)
$
(4.11
)
$
(1.43
)
 
 
 
 
 
 
 



























































































































































































Page 17.


 
 
 
 
 
 
 
 
 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 
 
 
 
 
 
 
 
 
 
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
 
 
 
 
 
 
 
 
 
 
MIDSTREAM BUSINESSES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
(Thousands of Dollars, except per share amounts)
June 30,
 
June 30,
PIPELINE AND STORAGE SEGMENT
2016
 
2015
 
Variance
 
2016
2015
Variance
Revenues from External Customers
$
52,998

 
$
47,012

 
$
5,986

 
$
162,627

$
154,515

$
8,112

Intersegment Revenues
22,795

 
21,833

 
962

 
68,272

66,347

1,925

Total Operating Revenues
75,793

 
68,845

 
6,948

 
230,899

220,862

10,037

 
 
 
 
 
 
 
 
 
 
Operating Expenses:
 
 
 
 
 
 
 
 
 
Purchased Gas
356

 
(61
)
 
417

 
1,059

492

567

Operation and Maintenance
20,492

 
18,243

 
2,249

 
57,145

53,770

3,375

Property, Franchise and Other Taxes
6,430

 
6,226

 
204

 
19,766

18,855

911

Depreciation, Depletion and Amortization
11,023

 
9,639

 
1,384

 
32,144

28,452

3,692

 
38,301

 
34,047

 
4,254

 
110,114

101,569

8,545

 
 
 
 
 
 
 
 
 
 
Operating Income
37,492

 
34,798

 
2,694

 
120,785

119,293

1,492

 
 
 
 
 
 
 
 
 
 
Other Income (Expense):
 
 
 
 
 
 
 
 
 
Interest Income
237

 
142

 
95

 
527

350

177

Other Income
657

 
1,000

 
(343
)
 
2,651

1,888

763

Interest Expense
(8,528
)
 
(6,581
)
 
(1,947
)
 
(25,017
)
(19,913
)
(5,104
)
 
 
 
 
 
 
 
 
 
 
Income Before Income Taxes
29,858

 
29,359

 
499

 
98,946

101,618

(2,672
)
Income Tax Expense
12,535

 
11,645

 
890

 
39,152

39,750

(598
)
Net Income
$
17,323

 
$
17,714

 
$
(391
)
 
$
59,794

$
61,868

$
(2,074
)
 
 
 
 
 
 
 
 
 
 
Net Income Per Share (Diluted)
$
0.20

 
$
0.21

 
$
(0.01
)
 
$
0.71

$
0.73

$
(0.02
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
June 30,
 
June 30,
GATHERING SEGMENT
2016
 
2015
 
Variance
 
2016
2015
Variance
Revenues from External Customers
$
65

 
$
126

 
$
(61
)
 
$
303

$
361

$
(58
)
Intersegment Revenues
25,417

 
16,748

 
8,669

 
65,601

58,541

7,060

Total Operating Revenues
25,482

 
16,874

 
8,608

 
65,904

58,902

7,002

 
 
 
 
 
 
 
 
 
 
Operating Expenses:
 
 
 
 
 
 
 
 
 
Operation and Maintenance
3,018

 
2,309

 
709

 
8,066

6,317

1,749

Property, Franchise and Other Taxes
31

 
38

 
(7
)
 
116

130

(14
)
Depreciation, Depletion and Amortization
3,608

 
2,166

 
1,442

 
11,407

8,025

3,382

 
6,657

 
4,513

 
2,144

 
19,589

14,472

5,117

 
 
 
 
 
 
 
 
 
 
Operating Income
18,825

 
12,361

 
6,464

 
46,315

44,430

1,885

 
 
 
 
 
 
 
 
 
 
Other Income (Expense):
 
 
 
 

 
 
 

Interest Income
88

 
35

 
53

 
188

94

94

Other Income
1

 
1

 
—

 
3

3

—

Interest Expense
(1,794
)
 
216

 
(2,010
)
 
(6,781
)
(214
)
(6,567
)
 
 
 
 
 
 
 
 
 
 
Income Before Income Taxes
17,120

 
12,613

 
4,507

 
39,725

44,313

(4,588
)
Income Tax Expense
7,647

 
6,387

 
1,260

 
17,763

20,059

(2,296
)
Net Income
$
9,473

 
$
6,226

 
$
3,247

 
$
21,962

$
24,254

$
(2,292
)
 
 
 
 
 
 
 
 
 
 
Net Income Per Share (Diluted)
$
0.11

 
$
0.07

 
$
0.04

 
$
0.26

$
0.28

$
(0.02
)
 
 
 
 
 
 
 
 
 
 



Page 18.


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 
 
 
 
 
 
 
 
 
 
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
 
 
 
 
 
 
 
 
 
 
DOWNSTREAM BUSINESSES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
(Thousands of Dollars, except per share amounts)
June 30,
 
June 30,
UTILITY SEGMENT
2016
 
2015
 
Variance
 
2016
2015
Variance
Revenues from External Customers
$
106,568

 
$
110,002

 
$
(3,434
)
 
$
463,154

$
630,049

$
(166,895
)
Intersegment Revenues
1,729

 
2,614

 
(885
)
 
10,757

13,670

(2,913
)
Total Operating Revenues
108,297

 
112,616

 
(4,319
)
 
473,911

643,719

(169,808
)
 
 
 
 
 
 
 
 
 
 
Operating Expenses:
 
 
 
 
 
 
 
 
 
Purchased Gas
29,514

 
31,812

 
(2,298
)
 
155,764

295,490

(139,726
)
Operation and Maintenance
45,990

 
43,487

 
2,503

 
148,883

154,126

(5,243
)
Property, Franchise and Other Taxes
9,893

 
10,258

 
(365
)
 
30,980

33,380

(2,400
)
Depreciation, Depletion and Amortization
12,234

 
11,498

 
736

 
35,511

33,981

1,530

 
97,631

 
97,055

 
576

 
371,138

516,977

(145,839
)
 
 
 
 
 
 
 
 
 
 
Operating Income
10,666

 
15,561

 
(4,895
)
 
102,773

126,742

(23,969
)
 
 
 
 
 
 
 
 
 
 
Other Income (Expense):
 
 
 
 
 
 
 
 
 
Interest Income
115

 
17

 
98

 
321

42

279

Other Income
345

 
609

 
(264
)
 
1,749

1,604

145

Interest Expense
(7,192
)
 
(6,997
)
 
(195
)
 
(21,684
)
(21,145
)
(539
)
 
 
 
 
 
 
 
 
 
 
Income Before Income Taxes
3,934

 
9,190

 
(5,256
)
 
83,159

107,243

(24,084
)
Income Tax Expense
1,755

 
3,463

 
(1,708
)
 
30,414

40,685

(10,271
)
Net Income
$
2,179

 
$
5,727

 
$
(3,548
)
 
$
52,745

$
66,558

$
(13,813
)
 
 
 
 
 
 
 
 
 
 
Net Income Per Share (Diluted)
$
0.03

 
$
0.07

 
$
(0.04
)
 
$
0.62

$
0.78

$
(0.16
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
June 30,
 
June 30,
ENERGY MARKETING SEGMENT
2016
 
2015
 
Variance
 
2016
2015
Variance
Revenues from External Customers
$
17,408

 
$
22,420

 
$
(5,012
)
 
$
77,827

$
142,753

$
(64,926
)
Intersegment Revenues
231

 
379

 
(148
)
 
855

796

59

Total Operating Revenues
17,639

 
22,799

 
(5,160
)
 
78,682

143,549

(64,867
)
 
 
 
 
 
 
 
 
 
 
Operating Expenses:
 
 
 
 
 
 
 
 
 
Purchased Gas
17,191

 
18,954

 
(1,763
)
 
67,235

126,325

(59,090
)
Operation and Maintenance
1,376

 
1,516

 
(140
)
 
4,872

4,804

68

Property, Franchise and Other Taxes
2

 
2

 
—

 
6

7

(1
)
Depreciation, Depletion and Amortization
70

 
50

 
20

 
208

151

57

 
18,639

 
20,522

 
(1,883
)
 
72,321

131,287

(58,966
)
 
 
 
 
 
 
 
 
 
 
Operating Income (Loss)
(1,000
)
 
2,277

 
(3,277
)
 
6,361

12,262

(5,901
)
 
 
 
 
 
 
 
 
 
 
Other Income (Expense):
 
 
 
 
 
 
 
 
 
Interest Income
145

 
60

 
85

 
286

141

145

Other Income
20

 
28

 
(8
)
 
44

95

(51
)
Interest Expense
(11
)
 
(5
)
 
(6
)
 
(37
)
(20
)
(17
)
 
 
 
 
 
 
 
 
 
 
Income (Loss) Before Income Taxes
(846
)
 
2,360

 
(3,206
)
 
6,654

12,478

(5,824
)
Income Tax Expense (Benefit)
(256
)
 
827

 
(1,083
)
 
2,537

4,746

(2,209
)
Net Income (Loss)
$
(590
)
 
$
1,533

 
$
(2,123
)
 
$
4,117

$
7,732

$
(3,615
)
 
 
 
 
 
 
 
 
 
 
Net Income (Loss) Per Share (Diluted)
$
(0.01
)
 
$
0.02

 
$
(0.03
)
 
$
0.05

$
0.09

$
(0.04
)
 
 
 
 
 
 
 
 
 
 













Page 19.


NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 
 
 
 
 
 
 
 
 
 
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
(Thousands of Dollars, except per share amounts)
June 30,
 
June 30,
ALL OTHER
2016
 
2015
 
Variance
 
2016
2015
Variance
Total Operating Revenues
$
1,508

 
$
634

 
$
874

 
$
2,775

$
1,906

$
869

Operating Expenses:
 
 
 
 
 
 
 
 
 
Operation and Maintenance
256

 
227

 
29

 
495

709

(214
)
Property, Franchise and Other Taxes
144

 
155

 
(11
)
 
449

462

(13
)
Depreciation, Depletion and Amortization
399

 
305

 
94

 
888

645

243

 
799

 
687

 
112

 
1,832

1,816

16

 
 
 
 
 
 
 
 
 
 
Operating Income (Loss)
709

 
(53
)
 
762

 
943

90

853

 
 
 
 
 
 
 
 
 
 
Other Income (Expense):
 
 
 
 
 
 
 
 
 
Interest Income
32

 
19

 
13

 
83

48

35

Other Income
—

 
1

 
(1
)
 
—

4

(4
)
 
 
 
 
 
 
 
 
 
 
Income (Loss) Before Income Taxes
741

 
(33
)
 
774

 
1,026

142

884

Income Tax Expense (Benefit)
311

 
(5
)
 
316

 
431

76

355

Net Income (Loss)
$
430

 
$
(28
)
 
$
458

 
$
595

$
66

$
529

 
 
 
 
 
 
 
 
 
 
Net Income (Loss) Per Share (Diluted)
$
0.01

 
$
—

 
$
0.01

 
$
0.01

$
—

$
0.01

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
June 30,
 
June 30,
CORPORATE
2016
 
2015
 
Variance
 
2016
2015
Variance
Revenues from External Customers
$
235

 
$
217

 
$
18

 
$
674

$
677

$
(3
)
Intersegment Revenues
967

 
953

 
14

 
2,900

2,792

108

Total Operating Revenues
1,202

 
1,170

 
32

 
3,574

3,469

105

Operating Expenses:
 
 
 
 
 
 
 
 
 
Operation and Maintenance
3,236

 
3,952

 
(716
)
 
10,273

11,844

(1,571
)
Property, Franchise and Other Taxes
122

 
119

 
3

 
365

366

(1
)
Depreciation, Depletion and Amortization
189

 
169

 
20

 
556

504

52

 
3,547

 
4,240

 
(693
)
 
11,194

12,714

(1,520
)
 
 
 
 
 
 
 
 
 
 
Operating Loss
(2,345
)
 
(3,070
)
 
725

 
(7,620
)
(9,245
)
1,625

 
 
 
 
 
 
 
 
 
 
Other Income (Expense):
 
 
 
 
 
 
 
 
 
Interest Income
30,684

 
24,990

 
5,694

 
92,767

74,479

18,288

Other Income
496

 
427

 
69

 
2,726

1,044

1,682

Interest Expense on Long-Term Debt
(28,897
)
 
(22,213
)
 
(6,684
)
 
(88,263
)
(66,900
)
(21,363
)
Other Interest Expense
(868
)
 
(2,106
)
 
1,238

 
(850
)
(4,955
)
4,105

 
 
 
 
 
 
 
 
 
 
Loss Before Income Taxes
(930
)
 
(1,972
)
 
1,042

 
(1,240
)
(5,577
)
4,337

Income Tax Expense (Benefit)
434

 
(779
)
 
1,213

 
(3,103
)
(3,330
)
227

Net Income (Loss)
$
(1,364
)
 
$
(1,193
)
 
$
(171
)
 
$
1,863

$
(2,247
)
$
4,110

 
 
 
 
 
 
 
 
 
 
Net Income (Loss) Per Share (Diluted)
$
(0.02
)
 
$
(0.02
)
 
$
—

 
$
0.02

$
(0.02
)
$
0.04

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
June 30,
 
June 30,
INTERSEGMENT ELIMINATIONS
2016
 
2015
 
Variance
 
2016
2015
Variance
Intersegment Revenues
$
(51,139
)
 
$
(42,527
)
 
$
(8,612
)
 
$
(148,385
)
$
(142,146
)
$
(6,239
)
Operating Expenses:
 
 
 
 
 
 
 
 
 
Purchased Gas
(23,584
)
 
(23,667
)
 
83

 
(76,890
)
(77,579
)
689

Operation and Maintenance
(27,555
)
 
(18,860
)
 
(8,695
)
 
(71,495
)
(64,567
)
(6,928
)
 
(51,139
)
 
(42,527
)
 
(8,612
)
 
(148,385
)
(142,146
)
(6,239
)
 
 
 
 
 
 
 
 
 
 
Operating Income
—

 
—

 
—

 
—

—

—

 
 
 
 
 
 
 
 
 
 
Other Income (Expense):
 
 
 
 
 
 
 
 
 
Interest Income
(30,825
)
 
(25,656
)
 
(5,169
)
 
(92,313
)
(75,416
)
(16,897
)
Interest Expense
30,825

 
25,656

 
5,169

 
92,313

75,416

16,897

Net Income
$
—

 
$
—

 
$
—

 
$
—

$
—

$
—

 
 
 
 
 
 
 
 
 
 
Net Income Per Share (Diluted)
$
—

 
$
—

 
$
—

 
$
—

$
—

$
—






Page 20.


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 
 
 
 
 
 
 
 
 
 
 
 
SEGMENT INFORMATION (Continued)
(Thousands of Dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
June 30,
 
June 30,
 
(Unaudited)
 
(Unaudited)
 
 
 
 
 
Increase
 
 
 
 
 
Increase
 
2016
 
2015
 
(Decrease)
 
2016
 
2015
 
(Decrease)
 
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures:
 
 
 
 
 
 
 
 
 
 
 
Exploration and Production 
$
47,269

(1) 
$
136,374

(3) 
$
(89,105
)
 
$
214,923

(1)(2) 
$
437,450

(3)(4) 
$
(222,527
)
Pipeline and Storage
18,325

(1) 
56,993

(3) 
(38,668
)
 
76,020

(1)(2) 
114,664

(3)(4) 
(38,644
)
Gathering
9,192

(1) 
36,665

(3) 
(27,473
)
 
43,715

(1)(2) 
87,214

(3)(4) 
(43,499
)
Utility
26,280

(1) 
23,596

(3) 
2,684

 
72,288

(1)(2) 
65,337

(3)(4) 
6,951

Energy Marketing
19

 
32

 
(13
)
 
28

 
124

 
(96
)
Total Reportable Segments
101,085


253,660


(152,575
)

406,974


704,789


(297,815
)
All Other
—

 
—

 
—

 
37

 
—

 
37

Corporate
36

 
67

 
(31
)
 
191

 
134

 
57

Total Capital Expenditures
$
101,121

 
$
253,727

 
$
(152,606
)
 
$
407,202

 
$
704,923

 
$
(297,721
)







(1) 
Capital expenditures for the quarter and nine months ended June 30, 2016, include accounts payable and accrued liabilities related to capital expenditures of $26.7 million, $7.6 million, $2.8 million, and $7.3 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at June 30, 2016, since they represent non-cash investing activities at that date.

(2) 
Capital expenditures for the nine months ended June 30, 2016, exclude capital expenditures of $46.2 million, $33.9 million, $22.4 million and $16.5 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, 2015 and paid during the nine months ended June 30, 2016. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2015, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at June 30, 2016.

(3) 
Capital expenditures for the quarter and nine months ended June 30, 2015, include accounts payable and accrued liabilities related to capital expenditures of $64.3 million, $28.0 million, $21.4 million, and $8.9 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 June 30, 2015, since they represent non-cash investing activities at that date.

(4) 
Capital expenditures for the nine months ended June 30, 2015, exclude capital expenditures of $80.1 million, $28.1 million, $20.1 million and $8.3 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts were in accounts payable and accrued liabilities at September 30, 2014 and paid during the nine months ended June 30, 2015. These amounts were excluded from the Consolidated Statements of Cash Flows at September 30, 2014, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at June 30, 2015.

 
 
 
 
 
 
 
 
 
 
DEGREE DAYS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percent Colder
 
 
 
 
 
 
 
(Warmer) Than:
Three Months Ended June 30
Normal
 
2016
 
2015
 
  Normal (1)
 
Last Year (1)
 
 
 
 
 
 
 
 
 
 
Buffalo, NY
912
 
927
 
778
 
1.6
 
19.2
Erie, PA
871
 
936
 
729
 
7.5
 
28.4
 
 
 
 
 
 
 
 
 
 
Nine Months Ended June 30
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Buffalo, NY
6,491
 
5,567
 
6,898
 
(14.2)
 
(19.3)
Erie, PA
6,057
 
5,159
 
6,535
 
(14.8)
 
(21.1)
 
 
 
 
 
 
 
 
 
 
(1) 
Percents compare actual 2016 degree days to normal degree days and actual 2016 degree days to actual 2015 degree days.



Page 21.




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 
 
 
 
 
 
 
 
 
 
 
 
 
EXPLORATION AND PRODUCTION INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
June 30,
 
June 30,
 
 
 
 
 
 
Increase
 
 
 
 
 
Increase
 
 
2016
 
2015
 
(Decrease)
 
2016
 
2015
 
(Decrease)
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas Production/Prices:
 
 
 
 
 
 
 
 
 
 
 
 
Production (MMcf)
 
 
 
 
 
 
 
 
 
 
 
 
Appalachia
 
38,846

 
30,830

 
8,016

 
105,747

 
104,221

 
1,526

West Coast
 
763

 
807

 
(44
)
 
2,310

 
2,375

 
(65
)
Total Production
 
39,609

 
31,637

 
7,972

 
108,057

 
106,596

 
1,461

 
 
 
 
 
 
 
 
 
 
 
 
 
Average Prices (Per Mcf)
 
 
 
 
 
 
 
 
 
 
 
 
Appalachia
 
$
1.73

 
$
2.11

 
$
(0.38
)
 
$
1.84

 
$
2.56

 
$
(0.72
)
West Coast
 
2.84

 
3.52

 
(0.68
)
 
3.13

 
4.30

 
(1.17
)
Weighted Average
 
1.75

 
2.15

 
(0.40
)
 
1.87

 
2.60

 
(0.73
)
Weighted Average after Hedging
 
2.86

 
3.32

 
(0.46
)
 
3.00

 
3.39

 
(0.39
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Oil Production/Prices:
 
 
 
 
 
 
 
 
 
 
 
 
Production (Thousands of Barrels)
 
 
 
 
 
 
 
 
 
 
 
 
Appalachia
 
6

 
7

 
(1
)
 
16

 
22

 
(6
)
West Coast
 
722

 
752

 
(30
)
 
2,183

 
2,234

 
(51
)
Total Production
 
728

 
759

 
(31
)
 
2,199

 
2,256

 
(57
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Prices (Per Barrel)
 
 
 
 
 
 
 
 
 
 
 
 
Appalachia
 
$
58.28

 
$
56.54

 
$
1.74

 
$
44.05

 
$
62.29

 
$
(18.24
)
West Coast
 
38.89

 
52.07

 
(13.18
)
 
34.02

 
54.48

 
(20.46
)
Weighted Average
 
39.04

 
52.12

 
(13.08
)
 
34.10

 
54.56

 
(20.46
)
Weighted Average after Hedging
 
58.79

 
69.65

 
(10.86
)
 
57.22

 
71.72

 
(14.50
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Production (Mmcfe)
 
43,977

 
36,191

 
7,786

 
121,251

 
120,132

 
1,119

 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Operating Performance Statistics:
 
 
 
 
 
 
 
 
 
 
 
 
General & Administrative Expense per Mcfe (1)
 
$
0.38

 
$
0.47

 
$
(0.09
)
 
$
0.46

 
$
0.42

 
$
0.04

Lease Operating and Transportation Expense per Mcfe (1)(2)
 
$
0.88

 
$
1.09

 
$
(0.21
)
 
$
0.95

 
$
1.06

 
$
(0.11
)
Depreciation, Depletion & Amortization per Mcfe (1)
 
$
0.71

 
$
1.55

 
$
(0.84
)
 
$
0.93

 
$
1.61

 
$
(0.68
)
 
 
 
 
 
 
 
 
 
 
 
 
 

(1) 
Refer to page 16 for the General and Administrative Expense, Lease Operating Expense and Depreciation, Depletion, and Amortization Expense for the Exploration and Production segment.
 
(2) 
Amounts include transportation expense of $0.53 and $0.50 per Mcfe for the three months ended June 30, 2016 and June 30, 2015, respectively. Amounts include transportation expense of $0.52 and $0.52 per Mcfe for the nine months ended June 30, 2016 and June 30, 2015, respectively.









Page 22.


NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 
 
 
 
 
 
 
EXPLORATION AND PRODUCTION INFORMATION
 
 
 
 
 
 
 
Hedging Summary for the Remaining Three Months of Fiscal 2016
 
 
Volume
 
 
Average Hedge Price
Oil Swaps
 
 
 
 
 
 
Brent
 
51,000

BBL
 
$
94.06 / BBL
NYMEX
 
432,000

BBL
 
$
73.82 / BBL
Total
 
483,000

BBL
 
$
75.96 / BBL
 
 
 
 
 
 
 
Gas Swaps
 
 
 
 
 
 
NYMEX
 
9,930,000

MMBTU
 
$
3.96 / MMBTU
Dominion Transmission Appalachian (DOM)
 
4,260,000

MMBTU
 
$
3.77 / MMBTU
Michigan Consolidated City Gate (Mich Con)
 
3,000,000

MMBTU
 
$
4.10 / MMBTU
   Dawn Ontario (DAWN)
 
4,080,000

MMBTU
 
$
3.82 / MMBTU
Fixed Price Physical Sales
 
14,224,001

MMBTU
 
$
2.40 / MMBTU
Total
 
35,494,001

MMBTU
 
$
3.31 / MMBTU
 
 
 
 
 
 
 
Hedging Summary for Fiscal 2017
 
 
 
 
 
 
 
 
Volume
 
 
Average Hedge Price
Oil Swaps
 
 
 
 
 
 
Brent
 
123,000

BBL
 
$
92.27 / BBL
NYMEX
 
885,000

BBL
 
$
64.17 / BBL
Total
 
1,008,000

BBL
 
$
67.60 / BBL
 
 
 
 
 
 
 
Gas Swaps
 
 
 
 
 
 
NYMEX
 
35,710,000

MMBTU
 
$
4.29 / MMBTU
DOM
 
6,540,000

MMBTU
 
$
3.86 / MMBTU
Mich Con
 
3,000,000

MMBTU
 
$
4.10 / MMBTU
DAWN
 
19,100,000

MMBTU
 
$
3.70 / MMBTU
Fixed Price Physical Sales
 
59,926,010

MMBTU
 
$
2.43 / MMBTU
Total
 
124,276,010

MMBTU
 
$
3.27 / MMBTU
 
 
 
 
 
 
 
Hedging Summary for Fiscal 2018
 
 
 
 
 
 
 
 
Volume
 
 
Average Hedge Price
Oil Swaps
 
 
 
 
 
 
Brent
 
24,000

BBL
 
$
91.00 / BBL
NYMEX
 
207,000

BBL
 
$
62.27 / BBL
Total
 
231,000

BBL
 
$
65.25 / BBL
 
 
 
 
 
 
 
Gas Swaps
 
 
 
 
 
 
NYMEX
 
26,070,000

MMBTU
 
$
3.49 / MMBTU
DAWN
 
8,400,000

MMBTU
 
$
3.08 / MMBTU
Fixed Price Physical Sales
 
14,197,001

MMBTU
 
$
2.56 / MMBTU
Total
 
48,667,001

MMBTU
 
$
3.15 / MMBTU
 
 
 
 
 
 
 
Hedging Summary for Fiscal 2019
 
 
 
 
 
 
 
 
Volume
 
 
Average Hedge Price
Gas Swaps
 
 
 
 
 
 
NYMEX
 
25,560,000

MMBTU
 
$
3.18 / MMBTU
DAWN
 
7,200,000

MMBTU
 
$
3.00 / MMBTU
Fixed Price Physical Sales
 
5,955,000

MMBTU
 
$
3.18 / MMBTU
Total
 
38,715,000

MMBTU
 
$
3.14 / MMBTU
 
 
 
 
 
 
 
Hedging Summary for Fiscal 2020
 
 
 
 
 
 
 
 
Volume
 
 
Average Hedge Price
Gas Swaps
 
 
 
 
 
 
NYMEX
 
16,880,000

MMBTU
 
$
3.07 / MMBTU
   DAWN
 
7,200,000

MMBTU
 
$
3.00 / MMBTU
Fixed Price Physical Sales
 
3,005,000

MMBTU
 
$
3.25 / MMBTU
Total
 
27,085,000

MMBTU
 
$
3.07 / MMBTU
 
 
 
 
 
 
 
Hedging Summary for Fiscal 2021
 
 
 
 
 
 
 
 
Volume
 
 
Average Hedge Price
Gas Swaps
 
 
 
 
 
 
NYMEX
 
4,840,000

MMBTU
 
$
3.01 / MMBTU
   DAWN
 
600,000

MMBTU
 
$
3.00 / MMBTU
Total
 
5,440,000

MMBTU
 
$
3.01 / MMBTU




Page 23.


 
 
 
 
 
 
 
 
 
 
 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 
 
 
 
 
 
EXPLORATION AND PRODUCTION INFORMATION
 
 
 
 
 
 
Gross Wells in Process of Drilling
 
 
 
 
 
Nine Months Ended June 30, 2016
 
 
 
 
 
 
 
 
 
 
Total
 
East
 
West
 
Company
Wells in Process - Beginning of Period
 
 
 
 
 
Exploratory
4.000
(1) 
0.000
 
4.000
Developmental
96.000
(1) 
0.000
 
96.000
Wells Commenced
 
 
 
 

Exploratory
1.000
 
0.000
 
1.000
Developmental
43.000
 
25.000
 
68.000
Wells Completed
 
 
 
 

Exploratory
1.000
 
0.000
 
1.000
Developmental
42.000
 
25.000
 
67.000
Wells Plugged & Abandoned
 
 
 
 

Exploratory
0.000
 
0.000
 
0.000
Developmental
1.000
 
0.000
 
1.000
Wells in Process - End of Period
 
 
 
 
 
Exploratory
4.000
 
0.000
 
4.000
Developmental
96.000
 
0.000
 
96.000

(1) 
Gross exploratory wells were increased by 4 and developmental wells were decreased by 4.


 
 
 
 
 
 
 
 
 
 
 
 
Net Wells in Process of Drilling
 
 
 
 
 
Nine Months Ended June 30, 2016
 
 
 
 
 
 
 
 
 
 
Total
 
East
 
West
 
Company
Wells in Process - Beginning of Period
 
 
 
 
 
Exploratory
4.000
(1) 
0.000
 
4.000
Developmental
81.500
(1) 
0.000
 
81.500
Wells Commenced
 
 
 
 

Exploratory
1.000
 
0.000
 
1.000
Developmental
43.000
 
25.000
 
68.000
Wells Completed
 
 
 
 

Exploratory
1.000
 
0.000
 
1.000
Developmental
28.400
 
25.000
 
53.400
Wells Plugged & Abandoned
 
 
 
 

Exploratory
0.000
 
0.000
 
0.000
Developmental
1.000
 
0.000
 
1.000
Well Interest Sold (2)
 
 
 
 
 
Exploratory
0.000
 
0.000
 
0.000
Developmental
13.600
 
0.000
 
13.600
Wells in Process - End of Period
 
 
 
 

Exploratory
4.000

0.000
 
4.000
Developmental
81.500
(2) 
0.000
 
81.500

(1) 
Net exploratory wells were increased by 4 and developmental wells were decreased by 4.
(2) 
Seneca's East Division sold an 80% working interest in 17 of the existing developmental wells in process to IOG during the nine months ended June 30, 2016.
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



Page 24.


 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pipeline & Storage Throughput - (millions of cubic feet - MMcf)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
June 30,
 
June 30,
 
 
 
 
 
 
Increase
 
 
 
 
 
Increase
 
 
2016
 
2015
 
(Decrease)
 
2016
 
2015
 
(Decrease)
Firm Transportation - Affiliated
 
19,836

 
15,441

 
4,395

 
87,169

 
95,304

 
(8,135
)
Firm Transportation - Non-Affiliated
 
153,543

 
140,378

 
13,165

 
470,991

 
477,149

 
(6,158
)
Interruptible Transportation
 
6,354

 
3,105

 
3,249

 
18,469

 
8,833

 
9,636

 
 
179,733

 
158,924

 
20,809

 
576,629

 
581,286

 
(4,657
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Gathering Volume - (MMcf)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
June 30,
 
June 30,
 
 
 
 
 
 
Increase
 
 
 
 
 
Increase
 
 
2016
 
2015
 
(Decrease)
 
2016
 
2015
 
(Decrease)
Gathered Volume - Affiliated
 
46,360

 
30,648

 
15,712

 
119,355

 
106,695

 
12,660

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Utility Throughput - (MMcf)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
June 30,
 
June 30,
 
 
 
 
 
 
Increase
 
 
 
 
 
Increase
 
 
2016
 
2015
 
(Decrease)
 
2016
 
2015
 
(Decrease)
Retail Sales:
 
 
 
 
 
 
 
 
 
 
 
 
Residential Sales
 
9,196

 
8,287

 
909

 
46,814

 
56,315

 
(9,501
)
Commercial Sales
 
1,251

 
1,142

 
109

 
6,765

 
8,239

 
(1,474
)
Industrial Sales
 
401

 
34

 
367

 
635

 
316

 
319

 
 
10,848

 
9,463

 
1,385

 
54,214

 
64,870

 
(10,656
)
Off-System Sales
 
—

 
—

 
—

 
1,243

 
3,787

 
(2,544
)
Transportation
 
13,864

 
13,993

 
(129
)
 
58,778

 
68,509

 
(9,731
)
 
 
24,712

 
23,456

 
1,256

 
114,235

 
137,166

 
(22,931
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy Marketing Volume
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
June 30,
 
June 30,
 
 
 
 
 
 
Increase
 
 
 
 
 
Increase
 
 
2016
 
2015
 
(Decrease)
 
2016
 
2015
 
(Decrease)
Natural Gas (MMcf)
 
8,537

 
8,289

 
248

 
33,800

 
40,215

 
(6,415
)
 
 
 
 
 
 
 
 
 
 
 
 
 






 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  




Page 25.


NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

NON-GAAP FINANCIAL MEASURES

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

Management defines Operating Results as reported GAAP earnings before items impacting comparability. The table at page 1 of this report reconciles National Fuel's reported GAAP earnings to Operating Results for the three and nine months ended June 30, 2016 and 2015.

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

The following tables reconcile National Fuel's reported GAAP earnings to Adjusted EBITDA for the three and nine months ended June 30, 2016 and 2015:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
June 30,
 
June 30,
 
 
2016
 
2015
 
2016
 
2015
(in thousands)
 
 
 
 
 
 
 
 
Reported GAAP Earnings
 
$
8,286

 
$
(293,134
)
 
$
(328,510
)
 
$
(191,724
)
Depreciation, Depletion and Amortization
 
58,802

 
79,865

 
193,300

 
265,298

Interest and Other Income
 
(2,083
)
 
(2,393
)
 
(9,813
)
 
(6,269
)
Interest Expense
 
30,218

 
23,220

 
92,201

 
70,282

Income Taxes
 
8,740

 
(216,907
)
 
(251,641
)
 
(156,610
)
Impairment of Oil and Gas Producing
  Properties
 
82,658

 
588,712

 
915,552

 
709,060

Joint Development Agreement Professional
  Fees
 
3,173

 
—

 
7,855

 
—

Adjusted EBITDA
 
$
189,794

 
$
179,363

 
$
618,944

 
$
690,037

 
 
 
 
 
 
 
 
 
Adjusted EBITDA by Segment
 
 
 
 
 
 
 
 
Pipeline and Storage Adjusted EBITDA
 
$
48,515

 
$
44,437

 
$
152,929

 
$
147,745

Gathering Adjusted EBITDA
 
22,433

 
14,527

 
57,722

 
52,455

Total Midstream Businesses Adjusted EBITDA
 
70,948

 
58,964


210,651


200,200

Exploration and Production Adjusted EBITDA
 
97,924

 
93,662

 
268,673

 
324,707

Utility Adjusted EBITDA
 
22,900

 
27,059

 
138,284

 
160,723

Energy Marketing Adjusted EBITDA
 
(930
)
 
2,327

 
6,569

 
12,413

Corporate and All Other Adjusted EBITDA
 
(1,048
)
 
(2,649
)
 
(5,233
)
 
(8,006
)
Total Adjusted EBITDA
 
$
189,794

 
$
179,363


$
618,944


$
690,037







Page 26.


NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

NON-GAAP FINANCIAL MEASURES
SEGMENT ADJUSTED EBITDA

 
 
Three Months Ended
 
Nine Months Ended
 
 
June 30,
 
June 30,
(in thousands)
 
2016
 
2015
 
2016
 
2015
Exploration and Production Segment
 
 
 
 
 
 
 
 
Reported GAAP Earnings
 
$
(19,165
)
 
$
(323,113
)
 
$
(469,586
)
 
$
(349,955
)
Depreciation, Depletion and Amortization
 
31,279

 
56,038

 
112,586

 
193,540

Interest and Other Income
 
(88
)
 
(720
)
 
(781
)
 
(1,893
)
Interest Expense
 
13,753

 
11,190

 
41,882

 
32,551

Income Taxes
 
(13,686
)
 
(238,445
)
 
(338,835
)
 
(258,596
)
Impairment of Oil and Gas Producing Properties
 
82,658

 
588,712

 
915,552

 
709,060

Joint Development Agreement Professional Fees
 
3,173

 
—

 
7,855

 
—

Adjusted EBITDA
 
$
97,924

 
$
93,662

 
$
268,673

 
$
324,707

 
 
 
 
 
 
 
 
 
Pipeline and Storage Segment
 
 
 
 
 
 
 
 
Reported GAAP Earnings
 
$
17,323

 
$
17,714

 
$
59,794

 
$
61,868

Depreciation, Depletion and Amortization
 
11,023

 
9,639

 
32,144

 
28,452

Interest and Other Income
 
(894
)
 
(1,142
)
 
(3,178
)
 
(2,238
)
Interest Expense
 
8,528

 
6,581

 
25,017

 
19,913

Income Taxes
 
12,535

 
11,645

 
39,152

 
39,750

Adjusted EBITDA
 
$
48,515

 
$
44,437

 
$
152,929

 
$
147,745

 
 
 
 
 
 
 
 
 
Gathering Segment
 
 
 
 
 
 
 
 
Reported GAAP Earnings
 
$
9,473

 
$
6,226

 
$
21,962

 
$
24,254

Depreciation, Depletion and Amortization
 
3,608

 
2,166

 
11,407

 
8,025

Interest and Other Income
 
(89
)
 
(36
)
 
(191
)
 
(97
)
Interest Expense
 
1,794

 
(216
)
 
6,781

 
214

Income Taxes
 
7,647

 
6,387

 
17,763

 
20,059

Adjusted EBITDA
 
$
22,433

 
$
14,527

 
$
57,722

 
$
52,455

 
 
 
 
 
 
 
 
 
Utility Segment
 
 
 
 
 
 
 
 
Reported GAAP Earnings
 
$
2,179

 
$
5,727

 
$
52,745

 
$
66,558

Depreciation, Depletion and Amortization
 
12,234

 
11,498

 
35,511

 
33,981

Interest and Other Income
 
(460
)
 
(626
)
 
(2,070
)
 
(1,646
)
Interest Expense
 
7,192

 
6,997

 
21,684

 
21,145

Income Taxes
 
1,755

 
3,463

 
30,414

 
40,685

Adjusted EBITDA
 
$
22,900

 
$
27,059

 
$
138,284

 
$
160,723

 
 
 
 
 
 
 
 
 
Energy Marketing Segment
 
 
 
 
 
 
 
 
Reported GAAP Earnings
 
$
(590
)
 
$
1,533

 
$
4,117

 
$
7,732

Depreciation, Depletion and Amortization
 
70

 
50

 
208

 
151

Interest and Other Income
 
(165
)
 
(88
)
 
(330
)
 
(236
)
Interest Expense
 
11

 
5

 
37

 
20

Income Taxes
 
(256
)
 
827

 
2,537

 
4,746

Adjusted EBITDA
 
$
(930
)
 
$
2,327

 
$
6,569

 
$
12,413

 
 
 
 
 
 
 
 
 
Corporate and All Other
 
 
 
 
 
 
 
 
Reported GAAP Earnings
 
$
(934
)
 
$
(1,221
)
 
$
2,458

 
$
(2,181
)
Depreciation, Depletion and Amortization
 
588

 
474

 
1,444

 
1,149

Interest and Other Income
 
(387
)
 
219

 
(3,263
)
 
(159
)
Interest Expense
 
(1,060
)
 
(1,337
)
 
(3,200
)
 
(3,561
)
Income Taxes
 
745

 
(784
)
 
(2,672
)
 
(3,254
)
Adjusted EBITDA
 
$
(1,048
)
 
$
(2,649
)
 
$
(5,233
)
 
$
(8,006
)



Page 27.


 
 
 
 
 
 
 
 
 
 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
 
 
 
 
 
 
 
 
 
 
Quarter Ended June 30 (unaudited)
 
2016
 
2015
 
 
 
 
 
Operating Revenues
 
$
335,617,000

 
$
339,815,000

 
 
 
 
 
Net Income (Loss) Available for Common Stock
 
$
8,286,000

 
$
(293,134,000
)
 
 
 
 
 
Earnings (Loss) Per Common Share:
 
 
 
 
Basic
 
$
0.10

 
$
(3.47
)
Diluted
 
$
0.10

 
$
(3.44
)
 
 
 
 
 
Weighted Average Common Shares:
 
 
 
 
Used in Basic Calculation
 
84,917,664

 
84,453,602

Used in Diluted Calculation
 
85,470,216

 
85,248,281

 
 
 
 
 
Nine Months Ended June 30 (unaudited)
 
 
 
 
 
 
 
 
 
Operating Revenues
 
$
1,159,943,000

 
$
1,459,851,000

 
 
 
 
 
Net Income (Loss) Available for Common Stock
 
$
(328,510,000
)
 
$
(191,724,000
)
 
 
 
 
 
Earnings (Loss) Per Common Share:
 
 
 
 
Basic
 
$
(3.87
)
 
$
(2.27
)
Diluted
 
$
(3.87
)
 
$
(2.25
)
 
 
 
 
 
Weighted Average Common Shares:
 
 
 
 
Used in Basic Calculation
 
84,791,447

 
84,326,182

Used in Diluted Calculation
 
84,791,447

 
85,237,514

 
 
 
 
 
Twelve Months Ended June 30 (unaudited)
 
 
 
 
 
 
 
 
 
Operating Revenues
 
$
1,461,005,000

 
$
1,826,474,000

 
 
 
 
 
Net Income (Loss) Available for Common Stock
 
$
(516,213,000
)
 
$
(134,294,000
)
 
 
 
 
 
Earnings (Loss) Per Common Share:
 
 
 
 
Basic
 
$
(6.09
)
 
$
(1.59
)
Diluted
 
$
(6.09
)
 
$
(1.58
)
 
 
 
 
 
Weighted Average Common Shares:
 
 
 
 
Used in Basic Calculation
 
84,735,887

 
84,275,859

Used in Diluted Calculation
 
84,735,887

 
85,195,855