Note E — Capitalization and Short-Term Borrowings

Summary of Changes in Common Stock Equity

				Earnings	Accumulated
				Reinvested	Other
	Common Stock		Paid	in	Comprehensive
			In	the	Income
	Shares	Amount	Capital	Business	(Loss)
	(Thousands, except per share amounts)
Balance at September 30, 2009............................................................	80,500	$ 80,500	$ 602,839	$ 948,293	$ (42,396)
Net Income Available for Common Stock.......................................				225,913
Dividends Declared on Common Stock ($1.36 Per Share)......				(110,944)
Other Comprehensive Loss, Net of Tax...........................................					(2,589)
Share-Based Payment Expense(2)......................................................			4,435
Common Stock Issued Under Stock and Benefit Plans(1)......	1,575	1,575	38,345
Balance at September 30, 2010............................................................	82,075	82,075	645,619	1,063,262	(44,985)
Net Income Available for Common Stock.......................................				258,402
Dividends Declared on Common Stock ($1.40 Per Share)......				(115,642)
Other Comprehensive Loss, Net of Tax...........................................					(2,714)
Share-Based Payment Expense(2)......................................................			6,656
Common Stock Issued (Repurchased) Under Stock and Benefit Plans(1)	738	738	(1,526)
Balance at September 30, 2011.............................................................	82,813	82,813	650,749	1,206,022	(47,699)
Net Income Available for Common Stock.......................................				220,077
Dividends Declared on Common Stock ($1.44 Per Share)......				(119,815)
Other Comprehensive Loss, Net of Tax...........................................					(51,321)
Share-Based Payment Expense(2)......................................................			7,156
Common Stock Issued Under Stock and Benefit Plans(1)......	517	517	11,596
Balance at September 30, 2012............................................................	83,330	$ 83,330	$ 669,501	$1,306,284(3)	$ (99,020)

(1)	Paid in Capital includes tax benefits of $1.0 million for September 30, 2012, tax costs of $1.2 million for September 30, 2011 and tax benefits of $13.2 million for September 30, 2010 associated with the exercise of stock options and/or performance based SARs.

(2)	Paid in Capital includes compensation costs associated with stock option, SARs and/or restricted stock awards. The expense is included within Net Income Available For Common Stock, net of tax benefits.

(3)	The availability of consolidated earnings reinvested in the business for dividends payable in cash is limited under terms of the indentures covering long-term debt. At September 30, 2012, $1.2 billion of accumulated earnings was free of such limitations.

Common Stock

The Company has various plans which allow shareholders, employees and others to purchase shares of the Company common stock. The National Fuel Gas Company Direct Stock Purchase and Dividend Reinvestment Plan allows shareholders to reinvest cash dividends and make cash investments in the Company’s common stock and provides investors the opportunity to acquire shares of the Company common stock without the payment of any brokerage commissions in connection with such acquisitions. The 401(k) Plans allow employees the opportunity to invest in the Company common stock, in addition to a variety of other investment alternatives. Generally, at the discretion of the Company, shares purchased under these plans are either original issue shares purchased directly from the Company or shares purchased on the open market by an independent agent. During 2012, the Company issued 155,310 original issue shares of common stock for the Direct Stock Purchase and Dividend Reinvestment Plan.

During 2012, the Company issued 465,894 original issue shares of common stock as a result of stock option and SARs exercises and 41,525 original issue shares for restricted stock awards (non-vested stock as defined by the current accounting literature for stock-based compensation). Holders of stock options, SARs or restricted stock will often tender shares of common stock to the Company for payment of option exercise prices and/or applicable withholding taxes. During 2012, 161,021 shares of common stock were tendered to the Company for such purposes. The Company considers all shares tendered as cancelled shares restored to the status of authorized but unissued shares, in accordance with New Jersey law.

The Company also has a director stock program under which it issues shares of Company common stock to the non-employee directors of the Company who receive compensation under the Company’s 2009 Non-Employee Director Equity Compensation Plan, as partial consideration for the directors’ services during the fiscal year. Under this program, the Company issued 15,755 original issue shares of common stock during 2012.

Shareholder Rights Plan

In 1996, the Company’s Board of Directors adopted a shareholder rights plan (Plan). The Plan has been amended several times since it was adopted and is now embodied in an Amended and Restated Rights Agreement effective December 4, 2008, a copy of which was included as an exhibit to the Form 8-K filed by the Company on December 4, 2008.

Pursuant to the Plan, the holders of the Company’s common stock have one right (Right) for each of their shares. Each Right is initially evidenced by the Company’s common stock certificates representing the outstanding shares of common stock.

The Rights have anti-takeover effects because they will cause substantial dilution of the Company’s common stock if a person (an Acquiring Person) attempts to acquire the Company on terms not approved by the Board of Directors.

The Rights become exercisable upon the occurrence of a Distribution Date as described below, but after a Distribution Date Rights that are owned by an Acquiring Person will be null and void. At any time following a Distribution Date, each holder of a Right may exercise its right to receive, upon payment of an amount calculated under the Rights Agreement, common stock of the Company (or, under certain circumstances, other securities or assets of the Company) having a value equal to two times the amount paid to exercise the Right. However, the Rights are subject to redemption or exchange by the Company prior to their exercise as described below.

A Distribution Date would occur upon the earlier of (i) ten days after the public announcement that a person or group has acquired, or obtained the right to acquire, beneficial ownership of the Company’s common stock or other voting stock (including Synthetic Long Positions as defined in the Plan) having 10% or more of the total voting power of the Company’s common stock and other voting stock and (ii) ten days after the commencement or announcement by a person or group of an intention to make a tender or exchange offer that would result in that person acquiring, or obtaining the right to acquire, beneficial ownership of the Company’s common stock or other voting stock having 10% or more of the total voting power of the Company’s common stock and other voting stock.

In certain situations after a person or group has acquired beneficial ownership of 10% or more of the total voting power of the Company’s stock as described above, each holder of a Right will have the right to exercise its Rights to receive, upon exercise of the right, common stock of the acquiring company having a value equal to two times the amount paid to exercise the right. These situations would arise if the Company is acquired in a merger or other business combination or if 50% or more of the Company’s assets or earning power are sold or transferred.

At any time prior to the end of the business day on the tenth day following the Distribution Date, the Company may redeem the Rights in whole, but not in part, at a price of $0.005 per Right, payable in cash or stock. A decision to redeem the Rights requires the vote of 75% of the Company’s full Board of Directors. Also, at any time following the Distribution Date, 75% of the Company’s full Board of Directors may vote to exchange the Rights, in whole or in part, at an exchange rate of one share of common stock, or other property deemed to have the same value, per Right, subject to certain adjustments.

Upon exercise of the Rights, the Company may need additional regulatory approvals to satisfy the requirements of the Rights Agreement. The Rights will expire on July 31, 2018, unless earlier than that date, they are exchanged or redeemed or the Plan is amended to extend the expiration date.

Stock Option and Stock Award Plans

Transactions involving option shares for all plans are summarized as follows:

	Number of Shares Subject to Option	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
	(In thousands)
Outstanding at September 30, 2011.........................................................................	1,758,961	$ 31.38
Granted in 2012.................................................................................................................	—	$—
Exercised in 2012.............................................................................................................	(476,243)	$ 25.28
Forfeited in 2012...............................................................................................................	—	$ —
Outstanding at September 30, 2012........................................................................	1,282,718	$ 33.64	2.65	$ 26,166
Option shares exercisable at September 30, 2012...........................................	1,282,718	$ 33.64	2.65	$ 26,166
Option shares available for future grant at September 30, 2012(1).........	2,097,214

(1)	Includes shares available for SARs and restricted stock grants.

Transactions involving non-performance based SARs for all plans are summarized as follows:

	Number of Shares Subject To Option	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
	(In thousands)
Outstanding at September 30, 2011.........................................................................	245,000	$ 58.79
Granted in 2012.................................................................................................................	166,000	$ 55.09
Exercised in 2012.............................................................................................................	—	$—
Forfeited in 2012...............................................................................................................	—	$—
Outstanding at September 30, 2012........................................................................	411,000	$ 57.30	8.20	$ (1,339)
SARs exercisable at September 30, 2012............................................................	109,990	$ 53.56	6.51	$ 53

Transactions involving performance based SARs for all plans are summarized as follows:

	Number of Shares Subject To Option	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
	(In thousands)
Outstanding at September 30, 2011.........................................................................	1,225,153	$ 40.85
Granted in 2012.................................................................................................................	—	$—
Exercised in 2012.............................................................................................................	(2,000)	$ 29.88
Forfeited in 2012...............................................................................................................	—	$ —
Canceled in 2012(1).........................................................................................................	(6,000)	$ 58.99
Outstanding at September 30, 2012........................................................................	1,217,153	$ 40.78	6.68	$ 16,140
SARs exercisable at September 30, 2012............................................................	1,039,309	$ 38.80	6.56	$ 15,837

(1)	Shares were canceled during 2012 due to performance condition not being met.

Restricted Share Awards

Transactions involving restricted shares for all plans are summarized as follows:

	Number of Restricted Share Awards	Weighted Average Fair Value per Award
Restricted Share Awards Outstanding at September 30, 2011.........................................................................	139,250	$ 53.37
Granted in 2012.......................................................................................................................................................................	41,525	$ 55.09
Vested in 2012.........................................................................................................................................................................	(18,740)	$ 59.74
Forfeited in 2012....................................................................................................................................................................	—	$—
Restricted Share Awards Outstanding at September 30, 2012.........................................................................	162,035	$ 53.07

Vesting restrictions for the outstanding shares of non-vested restricted stock at September 30, 2012 will lapse as follows: 2013 — 34,582 shares; 2014 — 34,601 shares; 2015 — 32,852 shares; 2016 — 5,000 shares; 2018 — 35,000 shares; and 2021 —20,000 shares.

Restricted Stock Units

Transactions involving restricted stock units for all plans are summarized as follows:

	Number of Restricted Share Awards	Weighted Average Fair Value per Award
Restricted Stock Units Outstanding at September 30, 2011.............................................................................	39,400	$ 59.20
Granted in 2012.......................................................................................................................................................................	68,450	$ 47.10
Vested in 2012.........................................................................................................................................................................	—	$ —
Forfeited in 2012....................................................................................................................................................................	(1,950)	$ 46.96
Restricted Stock Units Outstanding at September 30, 2012.............................................................................	105,900	$ 51.61

Vesting restrictions for the outstanding shares of non-vested restricted stock units at September 30, 2012 will lapse as follows: 2014 — 12,932 shares; 2015 — 35,300 shares; 2016 — 35,301 shares; and 2017 — 22,367 shares.

Redeemable Preferred Stock

As of September 30, 2012, there were 10,000,000 shares of $1 par value Preferred Stock authorized but unissued.

Long-Term Debt

The outstanding long-term debt is as follows:

	At September 30
	2012	2011
	(Thousands)
Medium-Term Notes(1):
7.4% due March 2023 to June 2025......................................................................................................................................	$ 99,000	$ 249,000
Notes(1):
4.90% to 8.75% due March 2013 to December 2021....................................................................................................	1,300,000	800,000
Total Long-Term Debt....................................................................................................................................................................	1,399,000	1,049,000
Less Current Portion(2)...............................................................................................................................................................	250,000	150,000
	$ 1,149,000	$ 899,000

(1)	The Medium-Term Notes and Notes are unsecured.
(2)	Current Portion of Long-Term Debt at September 30, 2012 consists of $250.0 million of 5.25% notes that mature in March 2013. Current Portion of Long-Term Debt at September 30, 2011 consisted of $150.0 million of 6.70% medium-term notes that matured in November 2011.

On December 1, 2011, the Company issued $500.0 million of 4.90% notes due December 1, 2021. After deducting underwriting discounts and commissions, the net proceeds to the Company amounted to $496.1 million. The holders of the notes may require the Company to repurchase their notes at a price equal to 101% of the principal amount in the event of a change in control and a ratings downgrade to a rating below investment grade. The proceeds of this debt issuance were used for general corporate purposes, including refinancing short-term debt that was used to pay the $150.0 million due at the maturity of the Company’s 6.70% notes in November 2011.

In addition, the Company has $300.0 million of 6.50% notes that mature in April 2018 and $250.0 million of 8.75% notes that mature in May 2019. The holders of these notes may require the Company to repurchase their notes at a price equal to 101% of the principal amount in the event of both a change in control and a ratings downgrade to a rating below investment grade.

As of September 30, 2012, the aggregate principal amounts of long-term debt maturing during the next five years and thereafter are as follows: $250.0 million in 2013, zero for 2014 through 2017, and $1,149.0 million thereafter.

Short-Term Borrowings

The Company historically has obtained short-term funds either through bank loans or the issuance of commercial paper. As for the former, the Company maintains a number of individual uncommitted or discretionary lines of credit with certain financial institutions for general corporate purposes. Borrowings under these lines of credit are made at competitive market rates. These credit lines, which totaled $335.0 million, are revocable at the option of the financial institutions and are reviewed on an annual basis. The Company anticipates that its uncommitted lines of credit generally will be renewed at amounts near current levels, or substantially replaced by similar lines. The total amount available to be issued under the Company’s commercial paper program is $300.0 million. The commercial paper program is backed by a syndicated committed credit facility totaling $750.0 million, which commitment extends through January 6, 2017.

At September 30, 2012, the Company had outstanding commercial paper and short-term notes payable to banks of $165.0 million and $6.0 million, respectively. The weighted average interest rate on the commercial paper was 0.50% and the weighted average interest rate on the short-term notes payable to banks was 0.60%. At September 30, 2011, the Company had $40.0 million in outstanding commercial paper, which had a weighted average interest rate of 0.43%.

Debt Restrictions

Under the committed credit facility, the Company agreed that its debt to capitalization ratio will not exceed .65 at the last day of any fiscal quarter through January 6, 2017. At September 30, 2012, the Company’s debt to capitalization ratio (as calculated under the facility) was .44. The constraints specified in the committed credit facility would have permitted an additional $2.07 billion in short-term and/or long-term debt to be outstanding (further limited by the indenture covenants discussed below) before the Company’s debt to capitalization ratio exceeded .65.

If a downgrade in any of the Company’s credit ratings were to occur, access to the commercial paper markets might not be possible. However, the Company expects that it could borrow under its committed credit facility, uncommitted bank lines of credit or rely upon other liquidity sources, including cash provided by operations.

Under the Company’s existing indenture covenants, at September 30, 2012, the Company would have been permitted to issue up to a maximum of $1.51 billion in additional long-term unsecured indebtedness at then current market interest rates in addition to being able to issue new indebtedness to replace maturing debt. The Company’s present liquidity position is believed to be adequate to satisfy known demands. However, if the Company were to experience a significant loss in the future (for example, as a result of an impairment of oil and gas properties), it is possible, depending on factors including the magnitude of the loss, that these indenture covenants would restrict the Company’s ability to issue additional long-term unsecured indebtedness for a period of up to nine calendar months, beginning with the fourth calendar month following the loss. This would not at any time preclude the Company from issuing new indebtedness to replace maturing debt.

The Company’s 1974 indenture pursuant to which $99.0 million (or 7.1%) of the Company’s long-term debt (as of September 30, 2012) was issued, contains a cross-default provision whereby the failure by the Company to perform certain obligations under other borrowing arrangements could trigger an obligation to repay the debt outstanding under the indenture. In particular, a repayment obligation could be triggered if the Company fails (i) to pay any scheduled principal or interest on any debt under any other indenture or agreement, or (ii) to perform any other term in any other such indenture or agreement, and the effect of the failure causes, or would permit the holders of the debt to cause, the debt under such indenture or agreement to become due prior to its stated maturity, unless cured or waived.

The Company’s $750.0 million committed credit facility also contains a cross-default provision whereby the failure by the Company or its significant subsidiaries to make payments under other borrowing arrangements, or the occurrence of certain events affecting those other borrowing arrangements, could trigger an obligation to repay any amounts outstanding under the committed credit facility. In particular, a repayment obligation could be triggered if (i) the Company or any of its significant subsidiaries fails to make a payment when due of any principal or interest on any other indebtedness aggregating $40.0 million or more, or (ii) an event occurs that causes, or would permit the holders of any other indebtedness aggregating $40.0 million or more to cause, such indebtedness to become due prior to its stated maturity. As of September 30, 2012, the Company had no debt outstanding under the committed credit facility.