![]() | Financial News | |
6363 Main Street/Williamsville, NY 14221 | ||
James C. Welch | ||
Investor Relations | ||
716-857-6987 | ||
Release Date:Immediate August 2, 2007 | ||
Ronald J. Tanski | ||
Treasurer | ||
716-857-6981 |
NATIONAL FUEL REPORTS THIRD QUARTER EARNINGS
Williamsville, New York: National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated earnings for the quarter ended June 30, 2007.
HIGHLIGHTS
• | Reported GAAP earnings for the third quarter were $46.8 million or $0.55 per share. This is an increase of $46.7 million or $0.55 per share from the prior year’s quarter. With the exception of the Timber segment, earnings for the quarter increased in all segments compared to the prior year. |
• | Quarterly operating results before items impacting comparability were $42.0 million or $0.49 per share, an increase of $8.5 million or $0.10 per share from the prior year’s third quarter. |
• | The Company is increasing and narrowing its GAAP guidance range for fiscal 2007 earnings to a range of $2.38 to $2.46 per share.* This guidance excludes any effects from a sale by the Company’s Exploration and Production segment of its Canadian operations. The Company’s preliminary GAAP guidance for fiscal 2008 is in the range of $2.45 to $2.65 per share.* This includes oil and gas production for the Exploration and Production segment in the range of 38 to 44 billion cubic feet equivalent (“Bcfe”) but excludes any Canadian production.* |
• | A conference call is scheduled for Friday, August 3, 2007 at 11:00 am Eastern Time. |
MANAGEMENT COMMENTS
Philip C. Ackerman, Chairman and Chief Executive Officer of National Fuel Gas Company stated: “This was another solid quarter and a record third quarter for the Company. Our GAAP earnings increased in all segments, with the exception of the Timber segment. Both our GAAP earnings of $0.55 per share and operating results of $0.49 per share exceed market estimates, and are the highest achieved in the third quarter in our history. Our business model of participating in all areas of the natural gas industry, coupled with our employees’ continued dedication to operating our assets in an efficient and safe manner, made these results attainable.”
“We are also pleased to announce significant milestones toward achieving an in-service date of November 2008 for the Empire Connector pipeline.* At this time, all major regulatory approvals have been received, a service agreement has been signed with KeySpan Gas East
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Corporation, our anchor shipper, and we have finalized the contracts for two crucial components of the project; at present the pipe and compression equipment is being manufactured. In an effort to accelerate our construction schedule, we will begin contacting landowners next week to coordinate construction activities for at least 20 miles of the pipeline by calendar-year end.* This project demonstrates our strong commitment to the Pipeline and Storage segment, and our pursuit of projects that add critical infrastructure to serve the growing markets in the New England and the Mid-Atlantic regions.”*
SUMMARY OF RESULTS
National Fuel had consolidated earnings for the quarter ended June 30, 2007, of $46.8 million, an increase of $46.7 million, or $0.55 per share, from the prior year’s third quarter of $0.1 million or less than $0.01 per share (note: all references to earnings per share are to diluted earnings per share, all amounts are stated in U.S. dollars and all amounts used in the earnings and operating results discussions are after tax unless otherwise noted).
Consolidated earnings for the nine months ended June 30, 2007, of $179.8 million, or $2.11 per share, increased $43.6 million, or $0.53 per share, from the same period in the prior year, where earnings were $136.1 million, or $1.58 per share.
Three Months | Nine Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
(in thousands except per share amounts) | 2007 | 2006 | 2007 | 2006 | ||||||||||||
Reported GAAP earnings | $ | 46,798 | $ | 111 | $ | 179,765 | $ | 136,123 | ||||||||
Items impacting comparability1: | ||||||||||||||||
Reversal of reserve for preliminary project costs | (4,787 | ) | (4,787 | ) | ||||||||||||
Resolution of purchased gas contingency | (2,344 | ) | ||||||||||||||
Discontinuation of hedge accounting | (1,888 | ) | ||||||||||||||
Impairment of Canadian oil and gas producing properties | 39,502 | 39,502 | ||||||||||||||
Income tax adjustments | (6,122 | ) | (11,202 | ) | ||||||||||||
Out-of-period symmetrical sharing adjustment | (2,551 | ) | ||||||||||||||
Operating results | $ | 42,011 | $ | 33,491 | $ | 170,746 | $ | 161,872 | ||||||||
Reported GAAP earnings per share | $ | 0.55 | $ | 0.00 | $ | 2.11 | $ | 1.58 | ||||||||
Items impacting comparability1: | ||||||||||||||||
Reversal of reserve for preliminary project costs | (0.06 | ) | (0.06 | ) | ||||||||||||
Resolution of purchased gas contingency | (0.03 | ) | ||||||||||||||
Discontinuation of hedge accounting | (0.02 | ) | ||||||||||||||
Impairment of Canadian oil and gas producing properties | 0.46 | 0.46 | ||||||||||||||
Income tax adjustments | (0.07 | ) | (0.13 | ) | ||||||||||||
Out-of-period symmetrical sharing adjustment | (0.03 | ) | ||||||||||||||
Earnings excluding these items | $ | 0.49 | $ | 0.39 | $ | 2.00 | $ | 1.88 | ||||||||
1 | See discussion of these individual items below. |
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As outlined in the table above, certain items included in GAAP earnings impacted the comparability of the Company’s operating results when comparing the third quarter and nine months ended June 30, 2007 to the comparable periods in fiscal 2006. Excluding these items, operating results for the current third quarter of $42.0 million or $0.49 per share increased $8.5 million or $0.10 per share. Excluding these items, operating results for the nine months ended June 30, 2007 of $170.7 million or $2.00 per share increased $8.9 million or $0.12 per share. Items impacting comparability will be discussed in more detail within the discussion of segment earnings below.
DISCUSSION OF RESULTS BY SEGMENT
(The following discussion of earnings for each segment is summarized in a tabular form at pages 9 through 12 of this report. It may be helpful to refer to those tables while reviewing this discussion.)
Utility Segment
The Utility segment operations are carried out by National Fuel Gas Distribution Corporation (“Distribution”), which sells or transports natural gas to customers located in western New York and northwestern Pennsylvania. The Utility segment’s earnings of approximately $3.7 million, or $0.04 per share for the quarter ended June 30, 2007, increased $2.9 million, or $0.03 per share, compared to the prior year’s third quarter. In the New York Division, earnings increased $0.9 million mainly due to higher customer usage per account, partially offset by higher operating expenses, a higher effective tax rate and higher interest expense. In the Pennsylvania division, earnings increased $1.9 million compared to the prior year’s third quarter, mainly due to the impact of an increase in base rates. On January 1, 2007, Distribution implemented the Settlement Agreement approved by the Pennsylvania Public Utility Commission, which, among other things, provided for a $14.3 million (before tax) annual base rate increase. Colder weather in April and higher customer usage per account also contributed to the increase. The increase was partially offset by slightly higher operating expenses and interest expense.
The Utility segment’s earnings of $54.3 million, or $0.64 per share, for the nine months ended June 30, 2007, increased $3.1 million, or $0.05 per share, compared to the nine months ended June 30, 2006. Earnings in Distribution’s New York Division for the nine months ended June 30, 2007, of $36.0 million decreased $4.7 million compared to the prior year. The comparability of the nine month results is impacted by a $2.6 million out-of-period adjustment recorded in the first quarter of fiscal 2006 to correct Distribution’s calculation of the symmetrical sharing component of the New York Division’s gas adjustment rate. Excluding this item, operating results in the New York Division decreased $2.1 million, or $0.03 per share. This decrease is mainly due to higher bad debt and other operating expenses and higher property taxes. Increased customer usage per account partially offset the decrease.
For the nine months ended June 30, 2007, earnings in Distribution’s Pennsylvania Division of $18.3 million, or $0.22 per share, increased $7.8 million, or $0.09 per share, compared to the prior year. Earnings increased primarily due to the impact of weather that was 6.6 percent colder than the prior year and the annual $14.3 million (before tax) increase in base rates described above. A lower effective tax rate also contributed to the increase. Partially offsetting the increase was higher interest expense.
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Pipeline and Storage Segment
The Pipeline and Storage segment operations are carried out by National Fuel Gas Supply Corporation (“Supply Corporation”) and Empire State Pipeline (“Empire”). These companies provide natural gas transportation and storage services to affiliated and non-affiliated companies through an integrated system of pipelines and underground natural gas storage fields in western New York and western Pennsylvania.
The Pipeline and Storage segment’s earnings of $15.5 million, or $0.18 per share, for the quarter ended June 30, 2007, increased $2.8 million, or $0.03 per share, when compared with the same period in the prior fiscal year. The comparability of the quarterly results is impacted by the reversal of a $4.8 million reserve for preliminary project costs on the Empire Connector project. Empire recorded a reserve against any project development costs until such time that it was probable that the project was likely to be built and placed in service. In June 2007, Empire and KeySpan Gas East Corporation signed a firm transportation service agreement that obligates Empire to perform transportation services, requiring Empire to construct and operate the Empire Connector. Excluding this item, operating results for the Pipeline and Storage segment decreased $2.0 million. The decrease is primarily due to lower efficiency gas revenue resulting from lower retained volumes compared to the prior year’s third quarter. The lower volumes of efficiency gas result from a FERC-approved settlement of a complaint filed by various parties against Supply Corporation under Sections 5(a) and 13 of the Natural Gas Act (the “FERC settlement”) that was generally effective as of December 1, 2006. The FERC settlement also increased Supply Corporation’s expense for post-retirement benefits, which resulted in higher operating expenses for the quarter. Partially offsetting these items, the FERC settlement lowered Supply Corporation’s depreciation rates, which resulted in lower depreciation expense for the quarter. Higher interest expense and a higher effective tax rate in the quarter also contributed to the decrease in operating results for the quarter.
Earnings of $43.1 million, or $0.51 per share, for the nine months ended June 30, 2007, decreased $2.3 million, or $0.02 per share, when compared with the nine months ended June 30, 2006. The comparability of the results for the nine months ended June 30, 2007, is impacted by the $4.8 million reversal of the reserve for preliminary project costs on the Empire Connector project described above, and a $1.9 million gain associated with the prepayment in the first quarter of 2007 of the project financing debt for the Empire State Pipeline. Upon the payment of that debt, the corresponding interest rate collar no longer qualified for hedge accounting, and gains and losses could no longer be deferred. Excluding these items, operating results decreased $9.0 million, or $0.10 per share, for the nine months ended June 30, 2007, mainly due to lower efficiency gas revenue resulting from lower natural gas prices and lower retained volumes due to the FERC settlement discussed above, as well as a gain on sales of efficiency gas that was recorded in the nine months ended June 30, 2006, that did not recur in the nine months ended June 30, 2007. An increase in post-retirement benefits expense, also due to the FERC settlement, and higher interest expense, contributed to the decline in operating results. The decrease was partially offset by lower depreciation expense, resulting from the FERC settlement.
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Exploration and Production Segment
The Exploration and Production segment operations are carried out by Seneca Resources Corporation (“Seneca”). Seneca explores for, develops and purchases natural gas and oil reserves in California, the Appalachian region, and in the Gulf Coast regions of Texas, Louisiana and Alabama. Seneca is currently negotiating the sale of its assets in the western provinces of Canada and expects that it may complete a sale by September 30, 2007.*
The Exploration and Production segment’s earnings in the third quarter of fiscal 2007 of $24.4 million or $0.29 per share increased $39.6 million or $0.47 per share when compared with the prior year’s third quarter. The comparability of the quarterly results is impacted by a non-cash charge of $39.5 million recorded in the third quarter of fiscal 2006 to write down the value of Seneca’s Canadian oil and natural gas producing properties that did not recur this year. Seneca uses the full cost method of accounting for determining the book value of its oil and natural gas properties. This method requires that Seneca perform a quarterly “ceiling test” to compare, on a country-by-country basis, the present value of future revenues from its oil and natural gas reserves based on current market prices (“the ceiling”) with the book value of those reserves at the balance sheet date. If the book value of the reserves in any country exceeds the ceiling, a non-cash charge must be recorded to reduce the book value of the reserves to the calculated ceiling. In addition, in the third quarter of fiscal 2006, Seneca recognized a $6.1 million benefit to earnings related to income taxes. The Company reversed a valuation allowance associated with the capital loss carryforward that resulted from the 2003 sale of certain Seneca oil properties and also recognized a tax benefit related to the favorable resolution of certain open tax issues.
Excluding these items, operating results in the Exploration and Production segment increased $6.2 million, or $0.08 per share, for the third quarter of fiscal 2007. The increase was mainly due to higher crude oil and natural gas prices realized after hedging. For the quarter ended June 30, 2007, the weighted average oil price received by Seneca (after hedging) was $53.40 per barrel (“Bbl”), an increase of $8.27 per Bbl, or 18.3 percent from the prior year’s quarter. The weighted average natural gas price received by Seneca (after hedging) for the quarter ended June 30, 2007, was $7.33 per thousand cubic feet (“Mcf”), an increase of $0.76 per Mcf, or 11.6 percent from the prior year’s quarter. The increase in commodity prices more than offset a 0.6 Bcfe decrease in production. Operating expenses for the quarter, were up slightly compared to the prior year quarter. Lower depletion expense, which on a per unit basis, decreased $0.25 per thousand cubic feet equivalent (“Mcfe”) to $1.92 per Mcfe was offset by higher lease operating expenses (“LOE”). The decrease in depletion expense is mainly due to the lower book value of the Canadian oil and gas properties as a result of the write down described above. The increase in LOE is due primarily to escalating service costs. A lower effective tax rate also contributed to the increase in operating results.
The Exploration and Productions segment’s earnings of $65.0 million, or $0.76 per share, for the nine months ended June 30, 2007, increased $36.8 million, or $0.43 per share, when compared with the nine months ended June 30, 2006. The comparability of the nine-month results is impacted by the charge to write down the value of Seneca’s Canadian oil and natural gas producing properties and the tax adjustment described above. Also impacting comparability is an adjustment to the deferred income tax balance recorded in the second quarter of fiscal 2006.
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Excluding these items, operating results for the nine months ended June 30, 2007, in the Exploration and Production segment increased $8.5 million, or $0.10 per share, from the prior year. This increase is mainly due to higher crude oil prices realized after hedging, combined with a 0.3 Bcfe increase in production. A decrease in oil production was offset by an increase in gas production, while a drop in gas prices realized after hedging was more than offset by an increase in oil prices realized after hedging. For the nine months ended June 30, 2007, the weighted average oil price received by Seneca (after hedging) was $48.37 per Bbl, an increase of $8.81 per Bbl, or 22.3 percent, from the prior year. The weighted average natural gas price received by Seneca (after hedging) was $7.04 per Mcf, a decrease of $0.39 per Mcf, or 5.2 percent, from the prior year. Operating expenses for the nine months ended June 30, 2007 were slightly higher than the prior year. Lower depletion expense was more than offset by the increase in LOE. The increase in LOE was mostly in the Gulf of Mexico due to the hurricane related shut-ins experienced in fiscal year 2006 and new producing fields coming on line in fiscal 2007. Operating results were also impacted by a higher effective tax rate.
Energy Marketing
National Fuel Resources, Inc. (“NFR”) comprises the Company’s Energy Marketing segment. NFR markets natural gas to industrial, commercial, public authority and residential customers in western and central New York and northwestern Pennsylvania, offering competitively priced energy and energy management services to its customers.
The Energy Marketing segment’s net income for the third quarter of fiscal 2007 of $1.2 million or $0.01 per share, increased $0.2 million compared to the third quarter last year. Earnings for the nine months ended June 30, 2007, of $8.4 million, or $0.10 per share, increased $2.5 million, or $0.03 per share, compared to the nine months ended June 30, 2006. The comparability of the nine month results is impacted by a $2.3 million reversal of an accrual for purchased gas expense for which a contingency was resolved during the second quarter. Excluding this item, operating results for the Energy Marketing segment for the nine month ended June 30, 2007 were flat compared to the nine months ended June 30, 2006.
Timber Segment
The Timber segment operations are carried out by Highland Forest Resources, Inc. (“Highland”) and Seneca’s Northeast Division. This segment markets high quality hardwoods from its New York and Pennsylvania land holdings, and owns two sawmill/dry kiln operations in northwestern Pennsylvania.
The Timber segment’s net loss for the quarter ended June 30, 2007, of $0.4 million or less than $0.01 per share, is a decrease of $1.9 million from earnings of $1.5 million in the prior year’s third quarter. The decrease is due to lower margins primarily on logs, green lumber and kiln-dried lumber. The decreased margins are due to a combination of lower sales volumes and prices received mainly for kiln-dried cherry lumber and soft and hard maple green lumber.
Earnings for the nine months ended June 30, 2007, of $3.1 million decreased $2.2 million from the prior year’s earnings. The decrease is due to lower margins on logs, green lumber and kiln-dried lumber. The decreased margins are due to a combination of lower sales volumes and prices. The wet weather early in the year resulted in lower harvest volumes. This, combined
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with lower unit prices, resulted in lower revenues for kiln-dried cherry lumber and soft and hard maple green lumber. The mix of lumber grades also contributed to the decrease.
Corporate and All Other
Other direct, wholly-owned subsidiaries of the Company include: Horizon Energy Development, Inc., a corporation formerly engaged in the development of international power projects; Horizon LFG, Inc., a corporation engaged through subsidiaries in the purchase, processing, transportation and sale of landfill gas; and Horizon Power, Inc., a corporation that develops and owns independent electric generation facilities which are fueled with natural gas or landfill gas.
Earnings in the Corporate and All Other category for the quarter ended June 30, 2007, were $2.3 million, an increase of $3.1 million when compared to the prior year’s third quarter loss of $0.8 million. The increase is due to higher margins in Horizon LFG, Inc., higher income from unconsolidated subsidiaries in Horizon Power Inc., higher intercompany interest income, lower operating costs and a lower effective tax rate.
Earnings in the Corporate and All Other category for the nine months ended June 30, 2007, were $5.9 million, an increase of $5.7 million when compared to the prior year’s earnings. The increase is mainly due to higher margins in Horizon LFG, Inc., higher income from unconsolidated subsidiaries in Horizon Power, Inc., higher intercompany interest income and a lower effective tax rate.
EARNINGS GUIDANCE
The Company is increasing and narrowing its GAAP guidance range for fiscal 2007 earnings to a range of $2.38 to $2.46 per share.* This guidance excludes any effects from a sale by Seneca of its Canadian operations. The Company’s preliminary GAAP guidance for fiscal 2008 is in the range of $2.45 to $2.65 per share.* This includes oil and gas production for the Exploration and Production segment in the range of 38 to 44 Bcfe.* The Company is not including any forecast with respect to production volumes in Canada. Further details regarding the production guidance are included on page 23 of this document.
EARNINGS TELECONFERENCE
The Company will host a conference call on Friday, August 3, 2007 at 11 a.m. (Eastern Time) to discuss this announcement. There are two ways to access this call. For those with Internet access, visit National Fuel’s Web site atnationalfuelgas.com and click on the “For Investors” link at the top of the homepage. For those without Internet access, access is also provided by dialing (toll-free) 1-800-237-9752, and using the passcode “86158770.” For those unable to listen to the live conference call, a replay will be available approximately one hour after the conclusion of the call at the same Web site link and by phone at (toll free) 888-286-8010 using passcode “27159393.” Both the webcast and telephonic replay will be available until the close of business on Friday, August 10, 2007.
National Fuel is an integrated energy company with $3.8 billion in assets comprised of the following five operating segments: Utility, Pipeline and Storage, Exploration and Production,
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Energy Marketing, and Timber. Additional information about National Fuel is available on its Internet Web site:http://www.nationalfuelgas.com or through its investor information service at 1-800-334-2188.
Analyst Contact: | James C. Welch | (716) 857-6987 | ||
Media Contact: | Julie Coppola Cox | (716) 857-7079 |
* | Certain statements contained herein, including those which are designated with an asterisk (“*”) and those which use words such as “anticipates,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” and similar expressions, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Company’s expectations, beliefs and projections contained herein are expressed in good faith and are believed to have a reasonable basis, but there can be no assurance that such expectations, beliefs or projections will result or be achieved or accomplished. In addition to other factors, the following are important factors that could cause actual results to differ materially from those discussed in the forward-looking statements: changes in laws and regulations to which the Company is subject, including changes in tax, environmental, safety and employment laws and regulations; changes in economic conditions, including economic disruptions caused by terrorist activities, acts of war or major accidents; changes in demographic patterns and weather conditions, including the occurrence of severe weather, such as hurricanes; changes in the availability and/or price of natural gas or oil and the effect of such changes on the accounting treatment or valuation of derivative financial instruments or the Company’s natural gas and oil reserves; impairments under the Securities and Exchange Commission’s full cost ceiling test for natural gas and oil reserves; changes in the availability and/or price of derivative financial instruments; changes in the price differentials between various types of oil; inability to obtain new customers or retain existing ones; significant changes in competitive factors affecting the Company; governmental/regulatory actions, initiatives and proceedings, including those involving acquisitions, financings, rate cases (which address, among other things, allowed rates of return, rate design and retained gas), affiliate relationships, industry structure, franchise renewal, and environmental/safety requirements; unanticipated impacts of restructuring initiatives in the natural gas and electric industries; significant changes from expectations in actual capital expenditures and operating expenses and unanticipated project delays or changes in project costs or plans, including changes in the plans of the sponsors of the proposed Millennium Pipeline with respect to that project; the nature and projected profitability of pending and potential projects and other investments, and the ability to obtain necessary governmental approvals and permits; occurrences affecting the Company’s ability to obtain funds from operations or from issuances of short-term notes or debt or equity securities to finance needed capital expenditures and other investments, including any downgrades in the Company’s credit ratings; uncertainty of oil and gas reserve estimates; ability to successfully identify and finance acquisitions or other investments and ability to operate and integrate existing and any subsequently acquired business or properties; ability to successfully identify, drill for and produce economically viable natural gas and oil reserves; significant changes from expectations in the Company’s actual production levels for natural gas or oil; regarding foreign operations, changes in trade and monetary policies, inflation and exchange rates, taxes, operating conditions, laws and regulations related to foreign operations, and political and governmental changes; significant changes in tax rates or policies or in rates of inflation or interest; significant changes in the Company’s relationship with its employees or contractors and the potential adverse effects if labor disputes, grievances or shortages were to occur; changes in accounting principles or the application of such principles to the Company; the cost and effects of legal and administrative claims against the Company; changes in actuarial assumptions and the return on assets with respect to the Company’s retirement plan and post-retirement benefit plans; increasing health care costs and the resulting effect on health insurance premiums and on the obligation to provide post-retirement benefits; or increasing costs of insurance, changes in coverage and the ability to obtain insurance. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. |
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NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
QUARTER ENDED JUNE 30, 2007
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
QUARTER ENDED JUNE 30, 2007
Pipeline & | Exploration & | Energy | Corporate / | |||||||||||||||||||||||||
(Thousands of Dollars) | Utility | Storage | Production | Marketing | Timber | All Other | Consolidated | |||||||||||||||||||||
Third quarter 2006 GAAP earnings | $ | 827 | $ | 12,642 | $ | (15,127 | ) | $ | 1,045 | $ | 1,529 | $ | (805 | ) | $ | 111 | ||||||||||||
Items impacting comparability: | ||||||||||||||||||||||||||||
Income tax adjustments | (6,122 | ) | (6,122 | ) | ||||||||||||||||||||||||
Impairment of oil and gas properties | 39,502 | 39,502 | ||||||||||||||||||||||||||
Third quarter 2006 operating results | 827 | 12,642 | 18,253 | 1,045 | 1,529 | (805 | ) | 33,491 | ||||||||||||||||||||
Drivers of operating results | ||||||||||||||||||||||||||||
Base rate increase in Pennsylvania | 1,826 | 1,826 | ||||||||||||||||||||||||||
Usage | 2,855 | 2,855 | ||||||||||||||||||||||||||
Lower efficiency gas revenues | (1,175 | ) | (1,175 | ) | ||||||||||||||||||||||||
Lower (higher) operating costs | (674 | ) | (794 | ) | 326 | (1,142 | ) | |||||||||||||||||||||
Lower depreciation / depletion | 844 | 2,707 | 281 | 3,832 | ||||||||||||||||||||||||
Higher crude oil prices | 4,588 | 4,588 | ||||||||||||||||||||||||||
Higher natural gas prices | 3,110 | 3,110 | ||||||||||||||||||||||||||
Lower natural gas production | (1,177 | ) | (1,177 | ) | ||||||||||||||||||||||||
Lower crude oil production | (1,792 | ) | (1,792 | ) | ||||||||||||||||||||||||
Higher lease operating expenses | (2,598 | ) | (2,598 | ) | ||||||||||||||||||||||||
Lower (higher) effective tax rate | (556 | ) | (486 | ) | 1,575 | 620 | 1,153 | |||||||||||||||||||||
Income from unconsolidated subsidiaries | 462 | 462 | ||||||||||||||||||||||||||
Higher (lower) margins | (2,047 | ) | 209 | (1,838 | ) | |||||||||||||||||||||||
Higher interest income (expense) | (590 | ) | (1,007 | ) | 1,351 | (246 | ) | |||||||||||||||||||||
All other / rounding | 17 | 640 | (231 | ) | 188 | (127 | ) | 175 | 662 | |||||||||||||||||||
Third quarter 2007 operating results | 3,705 | 10,664 | 24,435 | 1,233 | (364 | ) | 2,338 | 42,011 | ||||||||||||||||||||
Items impacting comparability: | ||||||||||||||||||||||||||||
Reversal of reserve for preliminary project costs | 4,787 | 4,787 | ||||||||||||||||||||||||||
Third quarter 2007 GAAP earnings | $ | 3,705 | $ | 15,451 | $ | 24,435 | $ | 1,233 | $ | (364 | ) | $ | 2,338 | $ | 46,798 | |||||||||||||
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NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
QUARTER ENDED JUNE 30, 2007
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
QUARTER ENDED JUNE 30, 2007
Pipeline & | Exploration & | Energy | Corporate / | |||||||||||||||||||||||||
Utility | Storage | Production | Marketing | Timber | All Other | Consolidated | ||||||||||||||||||||||
Third quarter 2006 GAAP earnings | $ | 0.01 | $ | 0.15 | $ | (0.18 | ) | $ | 0.01 | $ | 0.02 | $ | (0.01 | ) | $ | — | ||||||||||||
Items impacting comparability: | ||||||||||||||||||||||||||||
Income tax adjustment | (0.07 | ) | (0.07 | ) | ||||||||||||||||||||||||
Impairment of oil and gas properties | 0.46 | 0.46 | ||||||||||||||||||||||||||
Third quarter 2006 operating results | 0.01 | 0.15 | 0.21 | 0.01 | 0.02 | (0.01 | ) | 0.39 | ||||||||||||||||||||
Drivers of operating results | ||||||||||||||||||||||||||||
Base rate increase in Pennsylvania | 0.02 | 0.02 | ||||||||||||||||||||||||||
Usage | 0.03 | 0.03 | ||||||||||||||||||||||||||
Lower efficiency gas revenues | (0.01 | ) | (0.01 | ) | ||||||||||||||||||||||||
Lower (higher) operating costs | (0.01 | ) | (0.01 | ) | — | (0.02 | ) | |||||||||||||||||||||
Lower depreciation / depletion | 0.01 | 0.03 | — | 0.04 | ||||||||||||||||||||||||
Higher crude oil prices | 0.05 | 0.05 | ||||||||||||||||||||||||||
Higher natural gas prices | 0.04 | 0.04 | ||||||||||||||||||||||||||
Lower natural gas production | (0.01 | ) | (0.01 | ) | ||||||||||||||||||||||||
Lower crude oil production | (0.02 | ) | (0.02 | ) | ||||||||||||||||||||||||
Higher lease operating expenses | (0.03 | ) | (0.03 | ) | ||||||||||||||||||||||||
Lower (higher) effective tax rate | (0.01 | ) | (0.01 | ) | 0.02 | 0.01 | 0.01 | |||||||||||||||||||||
Income from unconsolidated subsidiaries | 0.01 | 0.01 | ||||||||||||||||||||||||||
Higher (lower) margins | (0.02 | ) | — | (0.02 | ) | |||||||||||||||||||||||
Higher interest income (expense) | (0.01 | ) | (0.01 | ) | 0.02 | — | ||||||||||||||||||||||
All other / rounding | 0.01 | — | — | — | — | — | 0.01 | |||||||||||||||||||||
Third quarter 2007 operating results | 0.04 | 0.12 | 0.29 | 0.01 | — | 0.03 | 0.49 | |||||||||||||||||||||
Items impacting comparability: | ||||||||||||||||||||||||||||
Reversal of reserve for preliminary project costs | 0.06 | 0.06 | ||||||||||||||||||||||||||
Third quarter 2007 GAAP earnings | $ | 0.04 | $ | 0.18 | $ | 0.29 | $ | 0.01 | $ | — | $ | 0.03 | $ | 0.55 | ||||||||||||||
Page 11
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
NINE MONTHS ENDED JUNE 30, 2007
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
NINE MONTHS ENDED JUNE 30, 2007
Pipeline & | Exploration & | Energy | Corporate / | |||||||||||||||||||||||||
(Thousands of Dollars) | Utility | Storage | Production | Marketing | Timber | All Other | Consolidated | |||||||||||||||||||||
Nine months ended June 30, 2006 GAAP earnings | $ | 51,234 | $ | 45,384 | $ | 28,152 | $ | 5,909 | $ | 5,235 | $ | 209 | $ | 136,123 | ||||||||||||||
Items impacting comparability: | ||||||||||||||||||||||||||||
Out-of-period adjustment to symmetrical sharing | (2,551 | ) | (2,551 | ) | ||||||||||||||||||||||||
Income tax adjustments | (11,202 | ) | (11,202 | ) | ||||||||||||||||||||||||
Impairment of oil and gas properties | 39,502 | 39,502 | ||||||||||||||||||||||||||
Nine months ended June 30, 2006 operating results | 48,683 | 45,384 | 56,452 | 5,909 | 5,235 | 209 | 161,872 | |||||||||||||||||||||
Drivers of operating results | ||||||||||||||||||||||||||||
Colder weather in Pennsylvania | 2,272 | 2,272 | ||||||||||||||||||||||||||
Base rate increase in Pennsylvania | 4,859 | 4,859 | ||||||||||||||||||||||||||
Lower (higher) operating costs | (3,073 | ) | (1,041 | ) | (260 | ) | (4,374 | ) | ||||||||||||||||||||
Higher property taxes | (863 | ) | (863 | ) | ||||||||||||||||||||||||
Usage | 2,575 | 2,575 | ||||||||||||||||||||||||||
Lower efficiency gas revenues | (6,998 | ) | (6,998 | ) | ||||||||||||||||||||||||
Lower depreciation / depletion | 1,830 | 2,536 | 1,183 | 5,549 | ||||||||||||||||||||||||
Higher crude oil prices | 14,866 | 14,866 | ||||||||||||||||||||||||||
Lower natural gas prices | (5,108 | ) | (5,108 | ) | ||||||||||||||||||||||||
Higher natural gas production | 4,699 | 4,699 | ||||||||||||||||||||||||||
Lower crude oil production | (2,796 | ) | (2,796 | ) | ||||||||||||||||||||||||
Higher lease operating expenses | (3,483 | ) | (3,483 | ) | ||||||||||||||||||||||||
Lower (higher) effective tax rate | 1,342 | (2,527 | ) | 1,282 | 97 | |||||||||||||||||||||||
Income from unconsolidated subsidiaries | 585 | 585 | ||||||||||||||||||||||||||
Higher (lower) margins | 264 | (3,080 | ) | 936 | (1,880 | ) | ||||||||||||||||||||||
Higher interest income (expense) | (1,268 | ) | (2,376 | ) | 3,369 | (275 | ) | |||||||||||||||||||||
All other / rounding | (205 | ) | (399 | ) | 319 | (86 | ) | (285 | ) | (195 | ) | (851 | ) | |||||||||||||||
Nine months ended June 30, 2007 operating results | 54,322 | 36,400 | 64,958 | 6,087 | 3,053 | 5,926 | 170,746 | |||||||||||||||||||||
Items impacting comparability: | ||||||||||||||||||||||||||||
Reversal of reserve for preliminary project costs | 4,787 | 4,787 | ||||||||||||||||||||||||||
Resolution of a purchased gas contingency | 2,344 | 2,344 | ||||||||||||||||||||||||||
Discontinuance of hedge accounting | 1,888 | 1,888 | ||||||||||||||||||||||||||
Nine months ended June 30, 2007 GAAP earnings | $ | 54,322 | $ | 43,075 | $ | 64,958 | $ | 8,431 | $ | 3,053 | $ | 5,926 | $ | 179,765 | ||||||||||||||
Page 12
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
NINE MONTHS ENDED JUNE 30, 2007
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
NINE MONTHS ENDED JUNE 30, 2007
Pipeline & | Exploration & | Energy | Corporate / | |||||||||||||||||||||||||
Utility | Storage | Production | Marketing | Timber | All Other | Consolidated | ||||||||||||||||||||||
Nine months ended June 30, 2006 GAAP earnings | $ | 0.59 | $ | 0.53 | $ | 0.33 | $ | 0.07 | $ | 0.06 | $ | — | $ | 1.58 | ||||||||||||||
Items impacting comparability: | ||||||||||||||||||||||||||||
Out-of-period adjustment to symmetrical sharing | (0.03 | ) | (0.03 | ) | ||||||||||||||||||||||||
Income tax adjustments | (0.13 | ) | (0.13 | ) | ||||||||||||||||||||||||
Impairment of oil and gas properties | 0.46 | 0.46 | ||||||||||||||||||||||||||
Nine months ended June 30, 2006 operating results | 0.56 | 0.53 | 0.66 | 0.07 | 0.06 | — | 1.88 | |||||||||||||||||||||
Drivers of operating results | ||||||||||||||||||||||||||||
Colder weather in Pennsylvania | 0.03 | 0.03 | ||||||||||||||||||||||||||
Base rate increase in Pennsylvania | 0.06 | 0.06 | ||||||||||||||||||||||||||
Lower (higher) operating costs | (0.04 | ) | (0.01 | ) | — | (0.05 | ) | |||||||||||||||||||||
Higher property taxes | (0.01 | ) | (0.01 | ) | ||||||||||||||||||||||||
Usage | 0.03 | 0.03 | ||||||||||||||||||||||||||
Lower efficiency gas revenues | (0.08 | ) | (0.08 | ) | ||||||||||||||||||||||||
Lower depreciation / depletion | 0.02 | 0.03 | 0.01 | 0.06 | ||||||||||||||||||||||||
Higher crude oil prices | 0.17 | 0.17 | ||||||||||||||||||||||||||
Lower natural gas prices | (0.06 | ) | (0.06 | ) | ||||||||||||||||||||||||
Higher natural gas production | 0.06 | 0.06 | ||||||||||||||||||||||||||
Lower crude oil production | (0.03 | ) | (0.03 | ) | ||||||||||||||||||||||||
Higher lease operating expenses | (0.04 | ) | (0.04 | ) | ||||||||||||||||||||||||
Lower (higher) effective tax rate | 0.02 | (0.03 | ) | 0.01 | — | |||||||||||||||||||||||
Income from unconsolidated subsidiaries | 0.01 | 0.01 | ||||||||||||||||||||||||||
Higher (lower) margins | (0.04 | ) | 0.01 | (0.03 | ) | |||||||||||||||||||||||
Higher interest income (expense) | (0.01 | ) | (0.03 | ) | 0.04 | — | ||||||||||||||||||||||
All other / rounding | — | — | — | — | 0.01 | (0.01 | ) | — | ||||||||||||||||||||
Nine months ended June 30, 2007 operating results | 0.64 | 0.43 | 0.76 | 0.07 | 0.04 | 0.06 | 2.00 | |||||||||||||||||||||
Items impacting comparability: | ||||||||||||||||||||||||||||
Reversal of reserve for preliminary project costs | 0.06 | 0.06 | ||||||||||||||||||||||||||
Resolution of a purchased gas contingency | 0.03 | 0.03 | ||||||||||||||||||||||||||
Discontinuance of hedge accounting | 0.02 | 0.02 | ||||||||||||||||||||||||||
Nine months ended June 30, 2007 GAAP earnings | $ | 0.64 | $ | 0.51 | $ | 0.76 | $ | 0.10 | $ | 0.04 | $ | 0.06 | $ | 2.11 | ||||||||||||||
Page 13
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
AND SUBSIDIARIES
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
(Thousands of Dollars, except per share amounts) | 2007 | 2006 | 2007 | 2006 | ||||||||||||
SUMMARY OF OPERATIONS | ||||||||||||||||
Operating Revenues | $ | 463,145 | $ | 415,452 | $ | 1,779,541 | $ | 2,017,189 | ||||||||
Operating Expenses: | ||||||||||||||||
Purchased Gas | 219,075 | 184,635 | 938,918 | 1,187,952 | ||||||||||||
Operation and Maintenance | 96,782 | 96,117 | 321,695 | 320,821 | ||||||||||||
Property, Franchise and Other Taxes | 17,804 | 16,845 | 55,149 | 54,147 | ||||||||||||
Depreciation, Depletion and Amortization | 41,100 | 46,943 | 125,986 | 134,267 | ||||||||||||
Impairment of Oil and Gas Producing Properties | — | 62,371 | — | 62,371 | ||||||||||||
374,761 | 406,911 | 1,441,748 | 1,759,558 | |||||||||||||
Operating Income | 88,384 | 8,541 | 337,793 | 257,631 | ||||||||||||
Other Income (Expense): | ||||||||||||||||
Income from Unconsolidated Subsidiaries | 926 | 215 | 3,099 | 2,199 | ||||||||||||
Interest Income | 1,649 | 2,203 | 3,897 | 4,301 | ||||||||||||
Other Income | 787 | 546 | 4,028 | 1,535 | ||||||||||||
Interest Expense on Long-Term Debt | (18,226 | ) | (18,135 | ) | (52,158 | ) | (54,502 | ) | ||||||||
Other Interest Expense | (1,512 | ) | (1,026 | ) | (4,877 | ) | (4,266 | ) | ||||||||
Income (Loss) Before Income Taxes | 72,008 | (7,656 | ) | 291,782 | 206,898 | |||||||||||
Income Tax Expense (Benefit) | 25,210 | (7,767 | ) | 112,017 | 70,775 | |||||||||||
Net Income Available for Common Stock | $ | 46,798 | $ | 111 | $ | 179,765 | $ | 136,123 | ||||||||
Earnings Per Common Share: | ||||||||||||||||
Basic | $ | 0.56 | $ | — | $ | 2.17 | $ | 1.62 | ||||||||
Diluted | $ | 0.55 | $ | — | $ | 2.11 | $ | 1.58 | ||||||||
Weighted Average Common Shares: | ||||||||||||||||
Used in Basic Calculation | 83,483,718 | 84,013,556 | 83,018,583 | 84,231,490 | ||||||||||||
Used in Diluted Calculation | 85,668,055 | 86,016,131 | 85,192,777 | 86,150,927 | ||||||||||||
Page 14
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, | September 30, | ||||||||
(Thousands of Dollars) | 2007 | 2006 | |||||||
ASSETS | |||||||||
Property, Plant and Equipment | $ | 4,928,627 | $ | 4,703,040 | |||||
Less - Accumulated Depreciation, Depletion and Amortization | 1,960,265 | 1,825,314 | |||||||
Net Property, Plant and Equipment | 2,968,362 | 2,877,726 | |||||||
Current Assets: | |||||||||
Cash and Temporary Cash Investments | 62,530 | 69,611 | |||||||
Hedging Collateral Deposits | 3,400 | 19,676 | |||||||
Receivables - Net | 222,249 | 144,254 | |||||||
Unbilled Utility Revenue | 20,569 | 25,538 | |||||||
Gas Stored Underground | 30,829 | 59,461 | |||||||
Materials and Supplies — at average cost | 30,621 | 36,693 | |||||||
Unrecovered Purchased Gas Costs | — | 12,970 | |||||||
Prepaid Pension and Post-Retirement Benefit Costs | 70,858 | 64,125 | |||||||
Other Current Assets | 26,324 | 63,723 | |||||||
Deferred Income Taxes | 21,271 | 23,402 | |||||||
Total Current Assets | 488,651 | 519,453 | |||||||
Other Assets: | |||||||||
Recoverable Future Taxes | 79,010 | 79,511 | |||||||
Unamortized Debt Expense | 12,555 | 15,492 | |||||||
Other Regulatory Assets | 84,325 | 76,917 | |||||||
Deferred Charges | 5,861 | 3,558 | |||||||
Other Investments | 83,444 | 88,414 | |||||||
Investments in Unconsolidated Subsidiaries | 16,377 | 11,590 | |||||||
Goodwill | 5,476 | 5,476 | |||||||
Intangible Assets | 29,757 | 31,498 | |||||||
Fair Value of Derivative Financial Instruments | 6,170 | 11,305 | |||||||
Deferred Income Taxes | 5,421 | 9,003 | |||||||
Other | 7,716 | 4,388 | |||||||
Total Other Assets | 336,112 | 337,152 | |||||||
Total Assets | $ | 3,793,125 | $ | 3,734,331 | |||||
CAPITALIZATION AND LIABILITIES | |||||||||
Capitalization: | |||||||||
Comprehensive Shareholders’ Equity | |||||||||
Common Stock, $1 Par Value Authorized - 200,000,000 Shares; Issued and Outstanding - 83,536,549 Shares and 83,402,670 Shares, Respectively | $ | 83,537 | $ | 83,403 | |||||
Paid in Capital | 568,537 | 543,730 | |||||||
Earnings Reinvested in the Business | 855,803 | 786,013 | |||||||
Total Common Shareholder Equity Before Items of Other Comprehensive Income | 1,507,877 | 1,413,146 | |||||||
Accumulated Other Comprehensive Income | 43,984 | 30,416 | |||||||
Total Comprehensive Shareholders’ Equity | 1,551,861 | 1,443,562 | |||||||
Long-Term Debt, Net of Current Portion | 799,000 | 1,095,675 | |||||||
Total Capitalization | 2,350,861 | 2,539,237 | |||||||
Current and Accrued Liabilities: | |||||||||
Notes Payable to Banks and Commercial Paper | — | — | |||||||
Current Portion of Long-Term Debt | 200,050 | 22,925 | |||||||
Accounts Payable | 120,978 | 133,034 | |||||||
Amounts Payable to Customers | 19,197 | 23,935 | |||||||
Dividends Payable | 25,897 | 25,008 | |||||||
Interest Payable on Long-Term Debt | 13,541 | 18,420 | |||||||
Other Accruals and Current Liabilities | 96,587 | 27,040 | |||||||
Fair Value of Derivative Financial Instruments | 17,133 | 39,983 | |||||||
Total Current and Accrued Liabilities | 493,383 | 290,345 | |||||||
Deferred Credits: | |||||||||
Deferred Income Taxes | 566,133 | 544,502 | |||||||
Taxes Refundable to Customers | 10,437 | 10,426 | |||||||
Unamortized Investment Tax Credit | 5,568 | 6,094 | |||||||
Cost of Removal Regulatory Liability | 88,949 | 85,076 | |||||||
Other Regulatory Liabilities | 73,212 | 75,456 | |||||||
Post-Retirement Liabilities | 24,310 | 32,918 | |||||||
Asset Retirement Obligations | 80,739 | 77,392 | |||||||
Other Deferred Credits | 99,533 | 72,885 | |||||||
Total Deferred Credits | 948,881 | 904,749 | |||||||
Commitments and Contingencies | — | — | |||||||
Total Capitalization and Liabilities | $ | 3,793,125 | $ | 3,734,331 | |||||
Page 15
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended | ||||||||
June 30, | ||||||||
(Thousands of Dollars) | 2007 | 2006 | ||||||
Operating Activities: | ||||||||
Net Income Available for Common Stock | $ | 179,765 | $ | 136,123 | ||||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||||||||
Impairment of Oil and Gas Producing Properties | — | 62,371 | ||||||
Depreciation, Depletion and Amortization | 125,986 | 134,267 | ||||||
Deferred Income Taxes | 27,107 | (17,430 | ) | |||||
Income from Unconsolidated Subsidiaries, Net of Cash Distributions | (1,486 | ) | 2,452 | |||||
Excess Tax Benefits Associated with Stock-Based Compensation Awards | (13,689 | ) | (6,515 | ) | ||||
Other | 4,722 | (6,493 | ) | |||||
Change in: | ||||||||
Hedging Collateral Deposits | 16,276 | 63,100 | ||||||
Receivables and Unbilled Utility Revenue | (73,150 | ) | (72,496 | ) | ||||
Gas Stored Underground and Materials and Supplies | 34,725 | 21,098 | ||||||
Unrecovered Purchased Gas Costs | 12,970 | 14,817 | ||||||
Prepayments and Other Current Assets | 30,685 | 21,800 | ||||||
Accounts Payable | (12,560 | ) | (24,650 | ) | ||||
Amounts Payable to Customers | (4,738 | ) | 30,418 | |||||
Other Accruals and Current Liabilities | 77,842 | 49,950 | ||||||
Other Assets | 918 | (15,753 | ) | |||||
Other Liabilities | (821 | ) | 16,855 | |||||
Net Cash Provided by Operating Activities | $ | 404,552 | $ | 409,914 | ||||
Investing Activities: | ||||||||
Capital Expenditures | ($206,509 | ) | ($218,658 | ) | ||||
Investment in Partnership | (3,300 | ) | — | |||||
Net Proceeds from Sale of Oil and Gas Producing Properties | 5,137 | 4 | ||||||
Other | (1,072 | ) | (1,578 | ) | ||||
Net Cash Used in Investing Activities | ($205,744 | ) | ($220,232 | ) | ||||
Financing Activities: | ||||||||
Excess Tax Benefits Associated with Stock-Based Compensation Awards | $ | 13,689 | $ | 6,515 | ||||
Shares Repurchased under Repurchase Plan | (43,344 | ) | (76,540 | ) | ||||
Reduction of Long-Term Debt | (119,550 | ) | (7,157 | ) | ||||
Dividends Paid on Common Stock | (74,748 | ) | (73,275 | ) | ||||
Proceeds From Issuance of Common Stock | 16,819 | 23,399 | ||||||
Net Cash Used In Financing Activities | ($207,134 | ) | ($127,058 | ) | ||||
Effect of Exchange Rates on Cash | 1,245 | 1,395 | ||||||
Net Increase (Decrease) in Cash and Temporary Cash Investments | (7,081 | ) | 64,019 | |||||
Cash and Temporary Cash Investments at Beginning of Period | 69,611 | 57,607 | ||||||
Cash and Temporary Cash Investments at June 30 | $ | 62,530 | $ | 121,626 | ||||
Page 16
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
AND SUBSIDIARIES
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
(UNAUDITED)
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
(Thousands of Dollars, except per share amounts) | 2007 | 2006 | Variance | 2007 | 2006 | Variance | ||||||||||||||||||
UTILITY SEGMENT | ||||||||||||||||||||||||
Revenues from External Customers | $ | 210,604 | $ | 186,661 | $ | 23,943 | $ | 1,000,860 | $ | 1,154,375 | $ | (153,515 | ) | |||||||||||
Intersegment Revenues | 2,586 | 2,514 | 72 | 12,556 | 12,317 | 239 | ||||||||||||||||||
Total Operating Revenues | 213,190 | 189,175 | 24,015 | 1,013,416 | 1,166,692 | (153,276 | ) | |||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||
Purchased Gas | 131,469 | 115,463 | 16,006 | 670,694 | 830,823 | (160,129 | ) | |||||||||||||||||
Operation and Maintenance | 47,231 | 45,889 | 1,342 | 165,446 | 163,098 | 2,348 | ||||||||||||||||||
Property, Franchise and Other Taxes | 11,688 | 11,106 | 582 | 36,986 | 36,878 | 108 | ||||||||||||||||||
Depreciation, Depletion and Amortization | 10,053 | 10,054 | (1 | ) | 30,153 | 30,058 | 95 | |||||||||||||||||
200,441 | 182,512 | 17,929 | 903,279 | 1,060,857 | (157,578 | ) | ||||||||||||||||||
Operating Income | 12,749 | 6,663 | 6,086 | 110,137 | 105,835 | 4,302 | ||||||||||||||||||
Other Income (Expense): | ||||||||||||||||||||||||
Interest Income | 100 | 162 | (62 | ) | 562 | 542 | 20 | |||||||||||||||||
Other Income | 273 | 205 | 68 | 926 | 609 | 317 | ||||||||||||||||||
Other Interest Expense | (6,697 | ) | (5,789 | ) | (908 | ) | (21,343 | ) | (19,392 | ) | (1,951 | ) | ||||||||||||
Income Before Income Taxes | 6,425 | 1,241 | 5,184 | 90,282 | 87,594 | 2,688 | ||||||||||||||||||
Income Tax Expense | 2,720 | 414 | 2,306 | 35,960 | 36,360 | (400 | ) | |||||||||||||||||
Net Income | $ | 3,705 | $ | 827 | $ | 2,878 | $ | 54,322 | $ | 51,234 | $ | 3,088 | ||||||||||||
- | ||||||||||||||||||||||||
Net Income Per Share (Diluted) | $ | 0.04 | $ | 0.01 | $ | 0.03 | $ | 0.64 | $ | 0.59 | $ | 0.05 | ||||||||||||
- |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
2007 | 2006 | Variance | 2007 | 2006 | Variance | |||||||||||||||||||
PIPELINE AND STORAGE SEGMENT | ||||||||||||||||||||||||
Revenues from External Customers | $ | 30,128 | $ | 30,750 | $ | (622 | ) | $ | 94,889 | $ | 104,835 | $ | (9,946 | ) | ||||||||||
Intersegment Revenues | 20,332 | 20,298 | 34 | 61,585 | 61,304 | 281 | ||||||||||||||||||
Total Operating Revenues | 50,460 | 51,048 | (588 | ) | 156,474 | 166,139 | (9,665 | ) | ||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||
Purchased Gas | — | (80 | ) | 80 | (11 | ) | (18 | ) | 7 | |||||||||||||||
Operation and Maintenance | 9,471 | 15,613 | (6,142 | ) | 42,118 | 47,878 | (5,760 | ) | ||||||||||||||||
Property, Franchise and Other Taxes | 4,182 | 4,012 | 170 | 12,795 | 11,979 | 816 | ||||||||||||||||||
Depreciation, Depletion and Amortization | 7,995 | 9,290 | (1,295 | ) | 24,851 | 27,649 | (2,798 | ) | ||||||||||||||||
21,648 | 28,835 | (7,187 | ) | 79,753 | 87,488 | (7,735 | ) | |||||||||||||||||
Operating Income | 28,812 | 22,213 | 6,599 | 76,721 | 78,651 | (1,930 | ) | |||||||||||||||||
Other Income (Expense): | ||||||||||||||||||||||||
Interest Income | 100 | 120 | (20 | ) | 224 | 316 | (92 | ) | ||||||||||||||||
Other Income | 154 | 116 | 38 | 418 | 384 | 34 | ||||||||||||||||||
Interest Expense on Long-Term Debt | (21 | ) | (245 | ) | 224 | 1,807 | (837 | ) | 2,644 | |||||||||||||||
Other Interest Expense | (3,112 | ) | (1,339 | ) | (1,773 | ) | (8,140 | ) | (3,728 | ) | (4,412 | ) | ||||||||||||
Income Before Income Taxes | 25,933 | 20,865 | 5,068 | 71,030 | 74,786 | (3,756 | ) | |||||||||||||||||
Income Tax Expense | 10,482 | 8,223 | 2,259 | 27,955 | 29,402 | (1,447 | ) | |||||||||||||||||
Net Income | $ | 15,451 | $ | 12,642 | $ | 2,809 | $ | 43,075 | $ | 45,384 | $ | (2,309 | ) | |||||||||||
Net Income Per Share (Diluted) | $ | 0.18 | $ | 0.15 | $ | 0.03 | $ | 0.51 | $ | 0.53 | $ | (0.02 | ) | |||||||||||
Page 17
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
AND SUBSIDIARIES
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
(UNAUDITED)
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
(Thousands of Dollars, except per share amounts) | 2007 | 2006 | Variance | 2007 | 2006 | Variance | ||||||||||||||||||
EXPLORATION AND PRODUCTION SEGMENT | ||||||||||||||||||||||||
Operating Revenues | $ | 94,394 | $ | 86,600 | $ | 7,794 | $ | 275,712 | $ | 257,406 | $ | 18,306 | ||||||||||||
Operating Expenses: | ||||||||||||||||||||||||
Purchased Gas | — | — | — | — | 98 | (98 | ) | |||||||||||||||||
Operation and Maintenance: | ||||||||||||||||||||||||
General and Administrative Expense | 6,860 | 5,783 | 1,077 | 18,379 | 18,465 | (86 | ) | |||||||||||||||||
Lease Operating Expense | 15,248 | 11,485 | 3,763 | 43,649 | 38,179 | 5,470 | ||||||||||||||||||
All Other Operation and Maintenance Expense | 2,397 | 1,976 | 421 | 7,108 | 5,968 | 1,140 | ||||||||||||||||||
Property, Franchise and Other Taxes (Lease Operating Expense) | 1,470 | 1,236 | 234 | 3,861 | 3,972 | (111 | ) | |||||||||||||||||
Depreciation, Depletion and Amortization | 21,832 | 25,997 | (4,165 | ) | 66,755 | 70,655 | (3,900 | ) | ||||||||||||||||
Impairment of Oil and Gas Producing Properties | — | 62,371 | (62,371 | ) | — | 62,371 | (62,371 | ) | ||||||||||||||||
47,807 | 108,848 | (61,041 | ) | 139,752 | 199,708 | (59,956 | ) | |||||||||||||||||
Operating Income (Loss) | 46,587 | (22,248 | ) | 68,835 | 135,960 | 57,698 | 78,262 | |||||||||||||||||
Other Income (Expense): | ||||||||||||||||||||||||
Interest Income | 2,383 | 2,332 | 51 | 7,570 | 6,113 | 1,457 | ||||||||||||||||||
Interest Expense on Long-Term Debt | (1,188 | ) | — | (1,188 | ) | (1,188 | ) | — | (1,188 | ) | ||||||||||||||
Other Interest Expense | (12,510 | ) | (12,671 | ) | 161 | (38,406 | ) | (37,622 | ) | (784 | ) | |||||||||||||
Income (Loss) Before Income Taxes | 35,272 | (32,587 | ) | 67,859 | 103,936 | 26,189 | 77,747 | |||||||||||||||||
Income Tax Expense (Benefit) | 10,837 | (17,460 | ) | 28,297 | 38,978 | (1,963 | ) | 40,941 | ||||||||||||||||
Net Income (Loss) | $ | 24,435 | $ | (15,127 | ) | $ | 39,562 | $ | 64,958 | $ | 28,152 | $ | 36,806 | |||||||||||
Net Income (Loss) Per Share (Diluted) | $ | 0.29 | $ | (0.18 | ) | $ | 0.47 | $ | 0.76 | $ | 0.33 | $ | 0.43 | |||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
2007 | 2006 | Variance | 2007 | 2006 | Variance | |||||||||||||||||||
ENERGY MARKETING SEGMENT | ||||||||||||||||||||||||
Operating Revenues | $ | 113,380 | $ | 94,747 | $ | 18,633 | $ | 360,036 | $ | 446,367 | $ | (86,331 | ) | |||||||||||
Operating Expenses: | ||||||||||||||||||||||||
Purchased Gas | 110,765 | 91,920 | 18,845 | 343,047 | 433,311 | (90,264 | ) | |||||||||||||||||
Operation and Maintenance | 1,199 | 1,404 | (205 | ) | 3,711 | 3,894 | (183 | ) | ||||||||||||||||
Property, Franchise and Other Taxes | 11 | 8 | 3 | 46 | (232 | ) | 278 | |||||||||||||||||
Depreciation, Depletion and Amortization | 9 | 10 | (1 | ) | 23 | 46 | (23 | ) | ||||||||||||||||
111,984 | 93,342 | 18,642 | 346,827 | 437,019 | (90,192 | ) | ||||||||||||||||||
Operating Income | 1,396 | 1,405 | (9 | ) | 13,209 | 9,348 | 3,861 | |||||||||||||||||
Other Income (Expense): | ||||||||||||||||||||||||
Interest Income | 359 | 132 | 227 | 498 | 301 | 197 | ||||||||||||||||||
Other Income | 273 | 143 | 130 | 590 | 363 | 227 | ||||||||||||||||||
Other Interest Expense | (2 | ) | (16 | ) | 14 | (253 | ) | (207 | ) | (46 | ) | |||||||||||||
Income Before Income Taxes | 2,026 | 1,664 | 362 | 14,044 | 9,805 | 4,239 | ||||||||||||||||||
Income Tax Expense | 793 | 619 | 174 | 5,613 | 3,896 | 1,717 | ||||||||||||||||||
Net Income | $ | 1,233 | $ | 1,045 | $ | 188 | $ | 8,431 | $ | 5,909 | $ | 2,522 | ||||||||||||
Net Income Per Share (Diluted) | $ | 0.01 | $ | 0.01 | $ | — | $ | 0.10 | $ | 0.07 | $ | 0.03 | ||||||||||||
Page 18
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
AND SUBSIDIARIES
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
(UNAUDITED)
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
(Thousands of Dollars, except per share amounts) | 2007 | 2006 | Variance | 2007 | 2006 | Variance | ||||||||||||||||||
TIMBER SEGMENT | ||||||||||||||||||||||||
Revenues from External Customers | $ | 13,131 | $ | 15,311 | $ | (2,180 | ) | $ | 43,079 | $ | 51,377 | $ | (8,298 | ) | ||||||||||
Intersegment Revenues | — | 4 | (4 | ) | — | 4 | (4 | ) | ||||||||||||||||
Total Operating Revenues | 13,131 | 15,315 | (2,184 | ) | 43,079 | 51,381 | (8,302 | ) | ||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||
Operation and Maintenance | 11,919 | 10,898 | 1,021 | 32,031 | 35,328 | (3,297 | ) | |||||||||||||||||
Property, Franchise and Other Taxes | 363 | 382 | (19 | ) | 1,183 | 1,241 | (58 | ) | ||||||||||||||||
Depreciation, Depletion and Amortization | 843 | 1,275 | (432 | ) | 3,093 | 4,913 | (1,820 | ) | ||||||||||||||||
13,125 | 12,555 | 570 | 36,307 | 41,482 | (5,175 | ) | ||||||||||||||||||
Operating Income | 6 | 2,760 | (2,754 | ) | 6,772 | 9,899 | (3,127 | ) | ||||||||||||||||
Other Income (Expense): | ||||||||||||||||||||||||
Interest Income | 310 | 217 | 93 | 923 | 518 | 405 | ||||||||||||||||||
Other Income | — | — | — | 21 | 52 | (31 | ) | |||||||||||||||||
Other Interest Expense | (808 | ) | (778 | ) | (30 | ) | (2,403 | ) | (2,299 | ) | (104 | ) | ||||||||||||
Income (Loss) Before Income Taxes | (492 | ) | 2,199 | (2,691 | ) | 5,313 | 8,170 | (2,857 | ) | |||||||||||||||
Income Tax Expense (Benefit) | (128 | ) | 670 | (798 | ) | 2,260 | 2,935 | (675 | ) | |||||||||||||||
Net Income (Loss) | $ | (364 | ) | $ | 1,529 | $ | (1,893 | ) | $ | 3,053 | $ | 5,235 | $ | (2,182 | ) | |||||||||
Net Income (Loss) Per Share (Diluted) | $ | — | $ | 0.02 | $ | (0.02 | ) | $ | 0.04 | $ | 0.06 | $ | (0.02 | ) | ||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
2007 | 2006 | Variance | 2007 | 2006 | Variance | |||||||||||||||||||
ALL OTHER | ||||||||||||||||||||||||
Revenues from External Customers | $ | 1,308 | $ | 1,192 | $ | 116 | $ | 4,387 | $ | 2,250 | $ | 2,137 | ||||||||||||
Intersegment Revenues | 2,253 | 1,354 | 899 | 6,540 | 7,938 | (1,398 | ) | |||||||||||||||||
Total Operating Revenues | 3,561 | 2,546 | 1,015 | 10,927 | 10,188 | 739 | ||||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||
Purchased Gas | 1,910 | 1,395 | 515 | 5,560 | 6,366 | (806 | ) | |||||||||||||||||
Operation and Maintenance | 1,007 | 803 | 204 | 2,763 | 2,598 | 165 | ||||||||||||||||||
Property, Franchise and Other Taxes | 22 | 33 | (11 | ) | 69 | 75 | (6 | ) | ||||||||||||||||
Depreciation, Depletion and Amortization | 196 | 196 | — | 589 | 593 | (4 | ) | |||||||||||||||||
3,135 | 2,427 | 708 | 8,981 | 9,632 | (651 | ) | ||||||||||||||||||
Operating Income | 426 | 119 | 307 | 1,946 | 556 | 1,390 | ||||||||||||||||||
Other Income (Expense): | ||||||||||||||||||||||||
Income from Unconsolidated Subsidiaries | 926 | 215 | 711 | 3,099 | 2,199 | 900 | ||||||||||||||||||
Interest Income | 4 | 7 | (3 | ) | 11 | 20 | (9 | ) | ||||||||||||||||
Other Income | 12 | 27 | (15 | ) | 37 | 42 | (5 | ) | ||||||||||||||||
Other Interest Expense | (662 | ) | (668 | ) | 6 | (1,999 | ) | (1,874 | ) | (125 | ) | |||||||||||||
Income (Loss) Before Income Taxes | 706 | (300 | ) | 1,006 | 3,094 | 943 | 2,151 | |||||||||||||||||
Income Tax Expense (Benefit) | 248 | (88 | ) | 336 | 1,183 | 539 | 644 | |||||||||||||||||
Net Income (Loss) | $ | 458 | $ | (212 | ) | $ | 670 | $ | 1,911 | $ | 404 | $ | 1,507 | |||||||||||
Net Income (Loss) Per Share (Diluted) | $ | 0.01 | $ | — | $ | 0.01 | $ | 0.02 | $ | — | $ | 0.02 | ||||||||||||
Page 19
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
AND SUBSIDIARIES
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
(UNAUDITED)
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
(Thousands of Dollars, except per share amounts) | June 30, | June 30, | ||||||||||||||||||||||
CORPORATE | 2007 | 2006 | Variance | 2007 | 2006 | Variance | ||||||||||||||||||
Revenues from External Customers | $ | 200 | $ | 191 | $ | 9 | $ | 578 | $ | 579 | $ | (1 | ) | |||||||||||
Intersegment Revenues | 853 | 737 | 116 | 2,616 | 2,212 | 404 | ||||||||||||||||||
Total Operating Revenues | 1,053 | 928 | 125 | 3,194 | 2,791 | 403 | ||||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||
Operation and Maintenance | 2,405 | 3,110 | (705 | ) | 9,415 | 6,560 | 2,855 | |||||||||||||||||
Property, Franchise and Other Taxes | 68 | 68 | — | 209 | 234 | (25 | ) | |||||||||||||||||
Depreciation, Depletion and Amortization | 172 | 121 | 51 | 522 | 353 | 169 | ||||||||||||||||||
2,645 | 3,299 | (654 | ) | 10,146 | 7,147 | 2,999 | ||||||||||||||||||
Operating Income (Loss) | (1,592 | ) | (2,371 | ) | 779 | (6,952 | ) | (4,356 | ) | (2,596 | ) | |||||||||||||
Other Income (Expense): | ||||||||||||||||||||||||
Interest Income | 21,711 | 20,424 | 1,287 | 65,778 | 60,127 | 5,651 | ||||||||||||||||||
Other Income | 75 | 55 | 20 | 2,036 | 85 | 1,951 | ||||||||||||||||||
Interest Expense on Long-Term Debt | (17,017 | ) | (17,890 | ) | 873 | (52,777 | ) | (53,665 | ) | 888 | ||||||||||||||
Other Interest Expense | (1,039 | ) | (956 | ) | (83 | ) | (4,002 | ) | (2,780 | ) | (1,222 | ) | ||||||||||||
Income (Loss) Before Income Taxes | 2,138 | (738 | ) | 2,876 | 4,083 | (589 | ) | 4,672 | ||||||||||||||||
Income Tax Expense (Benefit) | 258 | (145 | ) | 403 | 68 | (394 | ) | 462 | ||||||||||||||||
Net Income (Loss) | $ | 1,880 | $ | (593 | ) | $ | 2,473 | $ | 4,015 | $ | (195 | ) | $ | 4,210 | ||||||||||
Net Income (Loss) Per Share (Diluted) | $ | 0.02 | $ | (0.01 | ) | $ | 0.03 | $ | 0.04 | $ | — | $ | 0.04 | |||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
INTERSEGMENT ELIMINATIONS | 2007 | 2006 | Variance | 2007 | 2006 | Variance | ||||||||||||||||||
Intersegment Revenues | $ | (26,024 | ) | $ | (24,907 | ) | $ | (1,117 | ) | $ | (83,297 | ) | $ | (83,775 | ) | $ | 478 | |||||||
Operating Expenses: | ||||||||||||||||||||||||
Purchased Gas | (25,069 | ) | (24,063 | ) | (1,006 | ) | (80,372 | ) | (82,628 | ) | 2,256 | |||||||||||||
Operation and Maintenance | (955 | ) | (844 | ) | (111 | ) | (2,925 | ) | (1,147 | ) | (1,778 | ) | ||||||||||||
(26,024 | ) | (24,907 | ) | (1,117 | ) | (83,297 | ) | (83,775 | ) | 478 | ||||||||||||||
Operating Income | — | — | — | — | — | — | ||||||||||||||||||
Other Income (Expense): | ||||||||||||||||||||||||
Interest Income | (23,318 | ) | (21,191 | ) | (2,127 | ) | (71,669 | ) | (63,636 | ) | (8,033 | ) | ||||||||||||
Other Interest Expense | 23,318 | 21,191 | 2,127 | 71,669 | 63,636 | 8,033 | ||||||||||||||||||
Net Income | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Net Income Per Share (Diluted) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Page 20
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
AND SUBSIDIARIES
SEGMENT INFORMATION (Continued)
(Thousands of Dollars)
(Thousands of Dollars)
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||
Increase | Increase | |||||||||||||||||||||||
2007 | 2006 | (Decrease) | 2007 | 2006 | (Decrease) | |||||||||||||||||||
Capital Expenditures: | ||||||||||||||||||||||||
Utility | $ | 14,387 | $ | 14,012 | $ | 375 | $ | 39,945 | $ | 39,372 | $ | 573 | ||||||||||||
Pipeline and Storage | 16,255 | 5,033 | 11,222 | 26,408 | 15,361 | 11,047 | ||||||||||||||||||
Exploration and Production | 42,421 | 63,999 | (21,578 | ) | 138,287 | 160,323 | (22,036 | ) | ||||||||||||||||
Energy Marketing | 41 | — | 41 | 57 | 6 | 51 | ||||||||||||||||||
Timber | 1,056 | 378 | 678 | 2,263 | 1,130 | 1,133 | ||||||||||||||||||
Total Reportable Segments | 74,160 | 83,422 | (9,262 | ) | 206,960 | 216,192 | (9,232 | ) | ||||||||||||||||
All Other | 3 | 22 | (19 | ) | 87 | 78 | 9 | |||||||||||||||||
Corporate | 33 | 253 | (220 | ) | (538 | ) | 2,388 | (2,926 | ) | |||||||||||||||
Total Consolidated | $ | 74,196 | $ | 83,697 | $ | (9,501 | ) | $ | 206,509 | $ | 218,658 | $ | (12,149 | ) | ||||||||||
DEGREE DAYS
Percent Colder | ||||||||||||||||||||
(Warmer) Than: | ||||||||||||||||||||
Normal | 2007 | 2006 | Normal | Last Year | ||||||||||||||||
Three Months Ended June 30 | ||||||||||||||||||||
Buffalo, NY | 927 | 921 | 731 | (0.6 | ) | 26.0 | ||||||||||||||
Erie, PA | 885 | 900 | 812 | 1.7 | 10.8 | |||||||||||||||
Nine Months Ended June 30 | ||||||||||||||||||||
Buffalo, NY | 6,514 | 6,195 | 5,816 | (4.9 | ) | 6.5 | ||||||||||||||
Erie, PA | 6,108 | 5,930 | 5,565 | (2.9 | ) | 6.6 |
Page 21
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
AND SUBSIDIARIES
EXPLORATION AND PRODUCTION INFORMATION
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
Increase | Increase | |||||||||||||||||||||||
2007 | 2006 | (Decrease) | 2007 | 2006 | (Decrease) | |||||||||||||||||||
Gas Production/Prices: | ||||||||||||||||||||||||
Production (MMcf) | ||||||||||||||||||||||||
Gulf Coast | 2,317 | 2,109 | 208 | 7,934 | 6,529 | 1,405 | ||||||||||||||||||
West Coast | 1,019 | 983 | 36 | 2,883 | 2,933 | (50 | ) | |||||||||||||||||
Appalachia | 1,266 | 1,267 | (1 | ) | 3,998 | 3,766 | 232 | |||||||||||||||||
Canada | 1,639 | 2,158 | (519 | ) | 5,216 | 5,830 | (614 | ) | ||||||||||||||||
6,241 | 6,517 | (276 | ) | 20,031 | 19,058 | 973 | ||||||||||||||||||
Average Prices (Per Mcf) | ||||||||||||||||||||||||
Gulf Coast | $ | 7.37 | $ | 6.97 | $ | 0.40 | $ | 6.74 | $ | 8.56 | $ | (1.82 | ) | |||||||||||
West Coast | 7.20 | 6.06 | 1.14 | 6.76 | 8.42 | (1.66 | ) | |||||||||||||||||
Appalachia | 8.59 | 7.26 | 1.33 | 7.71 | 10.29 | (2.58 | ) | |||||||||||||||||
Canada | 6.82 | 5.54 | 1.28 | 6.34 | 7.75 | (1.41 | ) | |||||||||||||||||
Weighted Average | 7.45 | 6.41 | 1.04 | 6.83 | 8.64 | (1.81 | ) | |||||||||||||||||
Weighted Average after Hedging | 7.33 | 6.57 | 0.76 | 7.04 | 7.43 | (0.39 | ) | |||||||||||||||||
Oil Production/Prices: | ||||||||||||||||||||||||
Production (Thousands of Barrels) | ||||||||||||||||||||||||
Gulf Coast | 165 | 192 | (27 | ) | 540 | 479 | 61 | |||||||||||||||||
West Coast | 599 | 638 | (39 | ) | 1,789 | 1,962 | (173 | ) | ||||||||||||||||
Appalachia | 32 | 19 | 13 | 91 | 41 | 50 | ||||||||||||||||||
Canada | 58 | 66 | (8 | ) | 175 | 221 | (46 | ) | ||||||||||||||||
854 | 915 | (61 | ) | 2,595 | 2,703 | (108 | ) | |||||||||||||||||
Average Prices (Per Barrel) | ||||||||||||||||||||||||
Gulf Coast | $ | 65.17 | $ | 67.52 | $ | (2.35 | ) | $ | 59.37 | $ | 62.04 | $ | (2.67 | ) | ||||||||||
West Coast | 57.77 | 61.51 | (3.74 | ) | 52.96 | 55.40 | (2.44 | ) | ||||||||||||||||
Appalachia | 60.43 | 63.15 | (2.72 | ) | 59.35 | 61.92 | (2.57 | ) | ||||||||||||||||
Canada | 51.58 | 57.88 | (6.30 | ) | 48.16 | 49.25 | (1.09 | ) | ||||||||||||||||
Weighted Average | 58.87 | 62.54 | (3.67 | ) | 54.20 | 56.17 | (1.97 | ) | ||||||||||||||||
Weighted Average after Hedging | 53.40 | 45.13 | 8.27 | 48.37 | 39.56 | 8.81 | ||||||||||||||||||
Total Production (Mmcfe) | 11,365 | 12,007 | (642 | ) | 35,601 | 35,276 | 325 | |||||||||||||||||
Selected Operating Performance Statistics: | ||||||||||||||||||||||||
General & Administrative Expense per Mcfe(1) | $ | 0.60 | $ | 0.48 | $ | 0.12 | $ | 0.52 | $ | 0.52 | $ | — | ||||||||||||
Lease Operating Expense per Mcfe(1) | $ | 1.47 | $ | 1.06 | $ | 0.41 | $ | 1.33 | $ | 1.19 | $ | 0.14 | ||||||||||||
Depreciation, Depletion & Amortization per Mcfe(1) | $ | 1.92 | $ | 2.17 | $ | (0.25 | ) | $ | 1.88 | $ | 2.00 | $ | (0.12 | ) |
(1) | Refer to page 17 for the General and Administrative Expense, Lease Operating Expense and Depreciation, Depletion, and Amortization Expense for the Exploration and Production segment. |
Page 22
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
AND SUBSIDIARIES
EXPLORATION AND PRODUCTION INFORMATION
Hedging Summary for the Remaining Three Months of Fiscal 2007
SWAPS | Volume | Average Hedge Price | ||
Oil | 0.2 MMBBL | $37.86 / BBL | ||
Gas | 3.3 BCF | $7.41 / MCF |
No-cost Collars | Volume | Floor Price | Ceiling Price | |||
Gas | 1.3 BCF | $7.42 / MCF | $16.42 / MCF |
Hedging Summary for Fiscal 2008
SWAPS | Volume | Average Hedge Price | ||
Oil Gas | 0.8 MMBBL 7.9 BCF | $54.27 / BBL $8.38 / MCF |
No-cost Collars | Volume | Floor Price | Ceiling Price | |||
Gas | 1.4 BCF | $8.83/MCF | $16.45/MCF |
Hedging Summary for Fiscal 2009
SWAPS | Volume | Average Hedge Price | ||
Oil | 0.2 MMBBL | $54.70 / BBL |
Gross Wells in Process of Drilling
Nine Months Ended June 30, 2007
Nine Months Ended June 30, 2007
Total | Total | |||||||||||||||||||||||
Gulf | West | East | U.S. | Canada | Company | |||||||||||||||||||
Wells in Process - Beginning Period | ||||||||||||||||||||||||
Exploratory | 4.00 | 1.00 | 10.00 | 15.00 | 5.00 | 20.00 | ||||||||||||||||||
Developmental | 1.00 | 5.00 | 44.00 | 50.00 | 0.00 | 50.00 | ||||||||||||||||||
Wells Commenced | ||||||||||||||||||||||||
Exploratory | 5.00 | 0.00 | 15.00 | 20.00 | 8.00 | 28.00 | ||||||||||||||||||
Developmental | 2.00 | 60.00 | 127.00 | 189.00 | 3.00 | 192.00 | ||||||||||||||||||
Wells Completed | ||||||||||||||||||||||||
Exploratory | 3.00 | 1.00 | 3.00 | 7.00 | 10.00 | 17.00 | ||||||||||||||||||
Developmental | 2.00 | 59.00 | 115.00 | 176.00 | 3.00 | 179.00 | ||||||||||||||||||
Wells Plugged & Abandoned | ||||||||||||||||||||||||
Exploratory | 3.00 | 0.00 | 0.00 | 3.00 | 0.00 | 3.00 | ||||||||||||||||||
Developmental | 0.00 | 2.00 | 2.00 | 4.00 | 0.00 | 4.00 | ||||||||||||||||||
Wells in Process - End of Period | ||||||||||||||||||||||||
Exploratory | 3.00 | 0.00 | 22.00 | 25.00 | 3.00 | 28.00 | ||||||||||||||||||
Developmental | 1.00 | 4.00 | 54.00 | 59.00 | 0.00 | 59.00 |
Net Wells in Process of Drilling
Nine Months Ended June 30, 2007
Nine Months Ended June 30, 2007
Total | Total | |||||||||||||||||||||||
Gulf | West | East | U.S. | Canada | Company | |||||||||||||||||||
Wells in Process - Beginning Period | ||||||||||||||||||||||||
Exploratory | 2.02 | 0.50 | 10.00 | 12.52 | 2.13 | 14.65 | ||||||||||||||||||
Developmental | 0.67 | 5.00 | 44.00 | 49.67 | 0.00 | 49.67 | ||||||||||||||||||
Wells Commenced | ||||||||||||||||||||||||
Exploratory | 2.01 | 0.00 | 13.60 | 15.61 | 4.54 | 20.15 | ||||||||||||||||||
Developmental | 1.00 | 59.99 | 124.00 | 184.99 | 1.80 | 186.79 | ||||||||||||||||||
Wells Completed | ||||||||||||||||||||||||
Exploratory | 1.20 | 0.50 | 2.60 | 4.30 | 5.88 | 10.18 | ||||||||||||||||||
Developmental | 1.00 | 58.99 | 113.00 | 172.99 | 1.80 | 174.79 | ||||||||||||||||||
Wells Plugged & Abandoned | ||||||||||||||||||||||||
Exploratory | 1.42 | 0.00 | 0.00 | 1.42 | 0.00 | 1.42 | ||||||||||||||||||
Developmental | 0.00 | 2.00 | 2.00 | 4.00 | 0.00 | 4.00 | ||||||||||||||||||
Wells in Process - End of Period | ||||||||||||||||||||||||
Exploratory | 1.41 | 0.00 | 21.00 | 22.41 | 0.79 | 23.20 | ||||||||||||||||||
Developmental | 0.67 | 4.00 | 53.00 | 57.67 | 0.00 | 57.67 |
Page 23
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
AND SUBSIDIARIES
EXPLORATION AND PRODUCTION INFORMATION
Fiscal 2008 Financial & Operating Guidance
Total Production (Bcfe) | 38 - 44 | |||||||
Production by Division (Bcfe) | ||||||||
Gulf | 14.5 - 17.5 | |||||||
East | 6.5 - 7.5 | |||||||
West | 17 - 19 | |||||||
Crude Oil Average 2008 NYMEX ($/Bbl) as of July 24, 2007 (without hedges): | $ | 72.69 | ||||||
Forecast price differentials | ||||||||
Gulf | -$2.00 to -$5.00 | |||||||
East | -$3.00 to -$5.00 | |||||||
West | -$9.00 to -$13.00 | |||||||
Natural Gas Average 2008 NYMEX ($/Mmbtu) as of July 24, 2007 (without hedges): | $ | 7.79 | ||||||
Forecast price differentials | ||||||||
Gulf | -$0.25 to -$0.75 | |||||||
East | -$0.25 to +$0.25 | |||||||
West | -$1.00 to -$1.50 | |||||||
Cost and Expenses $ per Mcfe | ||||||||
Lease Operating Expenses | $ | 1.10 - $1.25 | ||||||
Depreciation, Depletion and Amortization | $ | 2.20 - $2.30 | ||||||
Other Taxes (% of Revenue) | $ | 0.20 - $0.25 | ||||||
Other Operating Expenses | $ | 6M - $7M | ||||||
General and Administrative | $ | 20M - $22M |
Capital Investment by Division | Number of Wells to be Drilled | |||
Gulf | $50M — $52M | 4 — 8 | ||
East | $57M — $60M | 230 — 270 | ||
West | $44M — $47M | 75 — 90 | ||
Total | $151M — $159M |
Page 24
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
AND SUBSIDIARIES
Utility Throughput — (millions of cubic feet — MMcf)
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
Increase | Increase | |||||||||||||||||||||||
2007 | 2006 | (Decrease) | 2007 | 2006 | (Decrease) | |||||||||||||||||||
Retail Sales: | ||||||||||||||||||||||||
Residential Sales | 10,679 | 8,740 | 1,939 | 56,729 | 55,071 | 1,658 | ||||||||||||||||||
Commercial Sales | 1,836 | 1,459 | 377 | 10,132 | 9,940 | 192 | ||||||||||||||||||
Industrial Sales | 113 | 114 | (1 | ) | 628 | 900 | (272 | ) | ||||||||||||||||
12,628 | 10,313 | 2,315 | 67,489 | 65,911 | 1,578 | |||||||||||||||||||
Off-System Sales | 467 | — | 467 | 467 | — | 467 | ||||||||||||||||||
Transportation | 12,981 | 12,185 | 796 | 53,556 | 48,646 | 4,910 | ||||||||||||||||||
26,076 | 22,498 | 3,578 | 121,512 | 114,557 | 6,955 | |||||||||||||||||||
Pipeline & Storage Throughput- (MMcf)
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
Increase | Increase | |||||||||||||||||||||||
2007 | 2006 | (Decrease) | 2007 | 2006 | (Decrease) | |||||||||||||||||||
Firm Transportation - Affiliated | 19,817 | 15,753 | 4,064 | 100,563 | 92,615 | 7,948 | ||||||||||||||||||
Firm Transportation - Non-Affiliated | 58,638 | 54,867 | 3,771 | 172,950 | 195,655 | (22,705 | ) | |||||||||||||||||
Interruptible Transportation | 1,670 | 2,220 | (550 | ) | 3,597 | 7,774 | (4,177 | ) | ||||||||||||||||
80,125 | 72,840 | 7,285 | 277,110 | 296,044 | (18,934 | ) | ||||||||||||||||||
Energy Marketing Volumes
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
Increase | Increase | |||||||||||||||||||||||
2007 | 2006 | (Decrease) | 2007 | 2006 | (Decrease) | |||||||||||||||||||
Natural Gas (MMcf) | 13,014 | 11,190 | 1,824 | 44,063 | 38,496 | 5,567 | ||||||||||||||||||
Timber Board Feet (Thousands)
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
Increase | Increase | |||||||||||||||||||||||
2007 | 2006 | (Decrease) | 2007 | 2006 | (Decrease) | |||||||||||||||||||
Log Sales | 1,724 | 1,767 | (43 | ) | 6,458 | 7,540 | (1,082 | ) | ||||||||||||||||
Green Lumber Sales | 2,709 | 3,126 | (417 | ) | 6,619 | 8,082 | (1,463 | ) | ||||||||||||||||
Kiln-dried Lumber Sales | 4,001 | 4,240 | (239 | ) | 10,953 | 13,239 | (2,286 | ) | ||||||||||||||||
8,434 | 9,133 | (699 | ) | 24,030 | 28,861 | (4,831 | ) | |||||||||||||||||
Page 25
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
FISCAL 2008 EARNINGS GUIDANCE AND SENSITIVITY
AND SUBSIDIARIES
FISCAL 2008 EARNINGS GUIDANCE AND SENSITIVITY
Earnings per share sensitivity to changes | ||||||||||||||||||||||||||||
Fiscal 2008 (Diluted earnings per share guidance*) | from NYMEX prices used in guidance* ^ | |||||||||||||||||||||||||||
$1 change per MMBtu gas | $5 change per Bbl oil | |||||||||||||||||||||||||||
Range | Increase | Decrease | Increase | Decrease | ||||||||||||||||||||||||
Consolidated Earnings | $ | 2.45 | - | $ | 2.65 | + $0.09 | - $0.09 | + $0.08 | - $0.08 |
NYMEX Settlement Prices at July 24, 2007 | ||||||||
Natural Gas | Oil | |||||||
($ per MMBtu) | ($ per Bbl) | |||||||
Oct-07 | $ | 6.128 | $ | 73.39 | ||||
Nov-07 | $ | 7.078 | $ | 73.25 | ||||
Dec-07 | $ | 8.028 | $ | 73.10 | ||||
Jan-08 | $ | 8.468 | $ | 72.95 | ||||
Feb-08 | $ | 8.488 | $ | 72.82 | ||||
Mar-08 | $ | 8.338 | $ | 72.70 | ||||
Apr-08 | $ | 7.713 | $ | 72.59 | ||||
May-08 | $ | 7.678 | $ | 72.48 | ||||
Jun-08 | $ | 7.768 | $ | 72.39 | ||||
Jul-08 | $ | 7.866 | $ | 72.29 | ||||
Aug-08 | $ | 7.939 | $ | 72.19 | ||||
Sep-08 | $ | 7.994 | $ | 72.09 | ||||
Average | $ | 7.791 | $ | 72.69 |
* | Please refer to forward looking statement footnote at page 8 of this document. | |
^ | This sensitivity table is current as of August 1, 2007 and only considers revenue from the Exploration and Production segment’s crude oil and natural gas sales. The sensitivities will become obsolete with the passage of time, changes in Seneca’s production forecast, changes in basis differential, as additional hedging contracts are entered into, and with the settling of NYMEX hedge contracts at their maturity. |
Page 26
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
AND SUBSIDIARIES
Quarter Ended June 30 (unaudited) | 2007 | 2006 | ||||||
Operating Revenues | $ | 463,145,000 | $ | 415,452,000 | ||||
Net Income Available for Common Stock | $ | 46,798,000 | $ | 111,000 | ||||
Earnings Per Common Share: | ||||||||
Basic | $ | 0.56 | $ | — | ||||
Diluted | $ | 0.55 | $ | — | ||||
Weighted Average Common Shares: | ||||||||
Used in Basic Calculation | 83,483,718 | 84,013,556 | ||||||
Used in Diluted Calculation | 85,668,055 | 86,016,131 | ||||||
Nine Months Ended June 30 (unaudited) | ||||||||
Operating Revenues | $ | 1,779,541,000 | $ | 2,017,189,000 | ||||
Net Income Available for Common Stock | $ | 179,765,000 | $ | 136,123,000 | ||||
Earnings Per Common Share: | ||||||||
Basic | $ | 2.17 | $ | 1.62 | ||||
Diluted | $ | 2.11 | $ | 1.58 | ||||
Weighted Average Common Shares: | ||||||||
Used in Basic Calculation | 83,018,583 | 84,231,490 | ||||||
Used in Diluted Calculation | 85,192,777 | 86,150,927 | ||||||
Twelve Months Ended June 30 (unaudited) | ||||||||
Operating Revenues | $ | 2,074,010,000 | $ | 2,304,253,000 | ||||
Income from Continuing Operations | $ | 181,733,000 | $ | 154,435,000 | ||||
Income from Discontinued Operations, Net of Tax | — | 30,900,000 | ||||||
Net Income Available for Common Stock | $ | 181,733,000 | $ | 185,335,000 | ||||
Earnings Per Common Share: | ||||||||
Basic: | ||||||||
Income from Continuing Operations | $ | 2.19 | $ | 1.83 | ||||
Income from Discontinued Operations | — | 0.37 | ||||||
Net Income Available for Common Stock | $ | 2.19 | $ | 2.20 | ||||
Diluted: | ||||||||
Income from Continuing Operations | $ | 2.13 | $ | 1.79 | ||||
Income from Discontinued Operations | — | 0.36 | ||||||
Net Income Available for Common Stock | $ | 2.13 | $ | 2.15 | ||||
Weighted Average Common Shares: | ||||||||
Used in Basic Calculation | 83,122,932 | 84,205,652 | ||||||
Used in Diluted Calculation | 85,290,812 | 86,063,076 | ||||||