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National Fuel Reports Fourth Quarter and Full Year Fiscal 2021 Earnings
ソース: Nasdaq GlobeNewswire / 04 11 2021 16:45:02 America/New_York
WILLIAMSVILLE, N.Y., Nov. 04, 2021 (GLOBE NEWSWIRE) -- National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated results for the three months and fiscal year ended September 30, 2021.
FISCAL 2021 FOURTH QUARTER SUMMARY
- GAAP net income of $87.0 million, or $0.95 per share, compared to GAAP net loss of $145.5 million, or $1.60 per share, in the prior year.
- Adjusted operating results of $87.3 million, or $0.95 per share, an increase of 138%, compared to $0.40 per share in the prior year (see non-GAAP reconciliation on page 2).
- Adjusted EBITDA of $215.9 million, an increase of 35%, compared to $159.6 million in the prior year (see non-GAAP reconciliation on page 25).
- E&P segment Adjusted EBITDA of $120.6 million, an increase of 60% from the prior year.
- E&P segment net production of 79.6 Bcfe, an increase of 12.3 Bcfe, or 18%, from the prior year.
- Gathering segment Adjusted EBITDA of $37.9 million, an increase of 15% from the prior year.
- Pipeline & Storage segment Adjusted EBITDA of $49.1 million, an increase of 5% from the prior year.
FISCAL 2021 HIGHLIGHTS
- GAAP net income of $363.6 million, or $3.97 per share, compared to GAAP net loss of $123.8 million, or $1.41 per share, in the prior year.
- Adjusted operating results of $393.1 million, or $4.29 per share, an increase of 47%, compared to $2.92 per share in the prior year (see non-GAAP reconciliation on page 2).
- Successfully integrated the Company's fiscal 2020 Appalachian acquisition, with E&P segment net production of 327.4 Bcfe, an increase of 85.9 Bcfe, or 36%, from the prior year, and a corresponding 38% increase in Gathering segment throughput.
- Reduced E&P segment cash operating costs (combined G&A expense, LOE expense, other operation and maintenance expense, and property, franchise, and other taxes) to $1.14 per Mcfe, a decrease of approximately $0.09 per Mcfe, or 7%, from the prior year.
- Continued growth of Pipeline & Storage segment, with revenues of $343.6 million, an increase of $34.0 million, or 11%, from the prior year, driven largely by the Company's Empire North expansion project.
- Invested $79.7 million in Utility system modernization and reliability, replacing over 150 miles of older vintage mains and services, and bringing 5-year total to over $358 million.
- Increased shareholder dividend for the 51st consecutive year to an annual rate of $1.82 per share.
- Published second annual Corporate Responsibility Report in September 2021, which includes additional climate-related information under the Task Force on Climate-Related Financial Disclosures framework, enhanced disclosure of scope 1 and scope 2 emissions, and methane intensity and greenhouse gas emission reduction targets.
MANAGEMENT COMMENTS
David P. Bauer, President and Chief Executive Officer of National Fuel Gas Company, stated: “National Fuel closed out an excellent fiscal 2021, with a 47% increase in our adjusted operating results compared to last year. The successful integration of our fiscal 2020 Appalachian acquisition, continued growth of our FERC-regulated pipeline business, and higher commodity prices all contributed to the strong results and position National Fuel for success in the coming years.
“As we move into fiscal 2022, the expected December 1, 2021 in-service of our FM100 expansion and modernization project will drive further growth for National Fuel. Once complete, this project is expected to deliver approximately $50 million in incremental annual revenues for the Pipeline and Storage segment, and will provide desirable pipeline takeaway capacity to higher value Mid-Atlantic markets, allowing for further growth in both our Exploration and Production and Gathering segments.
“Overall, the FM100 Project serves as a key example of the value of our integrated business model. Coupled with the Company’s commitment to reducing our emissions footprint in all segments, as evidenced by our targets set out in our recently published Corporate Responsibility Report, we believe we can generate strong, sustainable returns in the years ahead and deliver long-term value for our shareholders.”
RECONCILIATION OF GAAP EARNINGS TO ADJUSTED OPERATING RESULTS
Three Months Ended Fiscal Year Ended September 30, September 30, (in thousands except per share amounts) 2021 2020 2021 2020 Reported GAAP Earnings $ 86,962 $ (145,545 ) $ 363,647 $ (123,772 ) Items impacting comparability: Impairment of oil and gas properties (E&P) — 253,441 76,152 449,438 Tax impact of impairment of oil and gas properties — (69,698 ) (20,980 ) (123,187 ) Gain on sale of timber properties (Corporate / All Other) — — (51,066 ) — Tax impact of gain on sale of timber properties — — 14,069 — Premium paid on early redemption of debt — — 15,715 — Tax impact of premium paid on early redemption of debt — — (4,321 ) — Deferred tax valuation allowance — — — 56,770 Unrealized (gain) loss on other investments (Corporate / All Other) 395 (2,439 ) (181 ) (1,645 ) Tax impact of unrealized (gain) loss on other investments (83 ) 512 38 345 Adjusted Operating Results $ 87,274 $ 36,271 $ 393,073 $ 257,949 Reported GAAP Earnings Per Share $ 0.95 $ (1.60 ) $ 3.97 $ (1.41 ) Items impacting comparability: Impairment of oil and gas properties, net of tax (E&P) — 2.02 0.60 3.71 Gain on sale of timber properties, net of tax (Corporate / All Other) — — (0.40 ) — Premium paid on early redemption of debt, net of tax — — 0.12 — Deferred tax valuation allowance — — — 0.65 Unrealized (gain) loss on other investments, net of tax (Corporate / All Other) — (0.02 ) — (0.01 ) Earnings per share impact of diluted shares — — — (0.02 ) Adjusted Operating Results Per Share $ 0.95 $ 0.40 $ 4.29 $ 2.92 FISCAL 2022 GUIDANCE UPDATE
National Fuel is revising its fiscal 2022 earnings guidance to reflect updated forecast assumptions and projections, including the impact of increased natural gas price expectations since the Company’s preliminary guidance was announced in August 2021. The Company is now projecting that earnings will be within the range of $5.05 to $5.45 per share, an increase of 22% from the Company’s 2021 adjusted operating results at the midpoint of the updated guidance range.
Due to the meaningful difference between current winter and summer NYMEX forward natural gas prices for fiscal 2022, the Company is revising its guidance to reflect projections for both the first half and second half of this fiscal year. The Company is now assuming that NYMEX natural gas prices will average $5.50 per MMBtu for the first six months of fiscal 2022 (October-March) and $3.75 per MMBtu for the second half of fiscal 2022 (April-September). Additionally, the Company is now assuming that WTI oil prices will average $75.00 per Bbl in fiscal 2022, a $10.00 increase from the $65.00 per Bbl assumed in the previous guidance. For guidance purposes, the Company’s updated projections approximate the current NYMEX forward markets for natural gas and oil and consider the impact of local sales point differentials and new physical firm sales, transportation, and financial hedge contracts.
Consistent with preliminary guidance, the Exploration and Production segment’s fiscal 2022 net production remains unchanged, which is expected to be in the range of 335 to 365 Bcfe. Seneca currently has firm sales contracts in place for approximately 93% of its projected fiscal 2022 Appalachian production, limiting its exposure to in-basin markets. Approximately 76% of Seneca’s expected Appalachian production is either matched by a financial hedge, including a combination of swaps and no-cost collars, or were entered into at a fixed price. The Company’s consolidated and individual segment capital expenditures guidance also remain unchanged from the preliminary guidance.
The Company's other guidance assumptions remain largely unchanged from the previous guidance. Additional details on the Company's updated forecast assumptions and business segment guidance for fiscal 2022 are outlined in the table on page 8.
DISCUSSION OF FOURTH QUARTER RESULTS BY SEGMENT
The following earnings discussion of each operating segment for the quarter ended September 30, 2021 is summarized in a tabular form on pages 9 and 10 of this report (earnings drivers for the fiscal year ended September 30, 2021 are summarized on pages 11 and 12). It may be helpful to refer to those tables while reviewing this discussion.
Note that management defines Adjusted Operating Results as reported GAAP earnings adjusted for items impacting comparability, and Adjusted EBITDA as reported GAAP earnings before the following items: interest expense, income taxes, depreciation, depletion and amortization, other income and deductions, impairments, and other items reflected in operating income that impact comparability.
Upstream Business
Exploration and Production Segment
The Exploration and Production segment operations are carried out by Seneca Resources Company, LLC ("Seneca"). Seneca explores for, develops and produces natural gas and oil reserves, primarily in Pennsylvania and California.
Three Months Ended September 30, (in thousands) 2021 2020 Variance GAAP Earnings $ 55,703 $ (169,171 ) $ 224,874 Impairment of oil and gas properties, net of tax — 183,743 (183,743 ) Adjusted Operating Results $ 55,703 $ 14,572 $ 41,131 Adjusted EBITDA $ 120,588 $ 75,439 $ 45,149 Seneca’s fourth quarter GAAP earnings increased $224.9 million versus the prior year, primarily due to the prior-year fourth quarter impact of a non-cash ceiling test impairment charge of $183.7 million (after-tax). Excluding this item, Seneca’s fourth quarter earnings increased $41.1 million primarily due to higher natural gas production and higher realized natural gas and crude oil prices, as well as lower interest expense and a lower effective income tax rate, partially offset by higher operating expenses.
Seneca produced 79.6 Bcfe during the fourth quarter, an increase of 12.3 Bcfe, or 18%, from the prior year. The improvement was due to an increase in natural gas production, primarily due to the Company's fourth quarter fiscal 2020 Appalachian acquisition coupled with production growth from Seneca's other core development areas. Approximately 6.7 Bcf of the natural gas production increase came from the Eastern Development Area ("EDA"), while the remaining increase of 5.6 Bcf was attributable to Seneca’s Western Development Area ("WDA"). Seneca's crude oil production in California decreased 4 MBbls, or 1%, versus the prior year.
Seneca's average realized natural gas price, after the impact of hedging and transportation costs, was $2.37 per Mcf, an increase of $0.45 per Mcf from the prior year. This increase was primarily due to higher NYMEX prices and higher spot prices at local sales points in Pennsylvania. Seneca's average realized oil price, after the impact of hedging, was $60.04 per Bbl, an increase of $4.34 per Bbl compared to the prior year. The improvement in oil price realizations was primarily due to stronger commodity pricing.
Lease operating and transportation (“LOE”) expense increased $13.0 million primarily due to higher transportation costs in Appalachia from increased production, as well as higher well repairs, workover activity and steam fuel costs in California. LOE expense includes $45.8 million in intercompany expense for gathering and compression services used to connect Seneca’s Appalachian production to sales points along interstate pipelines. DD&A expense increased $1.7 million due largely to higher natural gas production, partially offset by the impact of ceiling test impairments recorded during fiscal 2020. Other taxes increased $2.2 million primarily due to higher impact fee accruals in Pennsylvania, driven by higher expected NYMEX natural gas prices for calendar 2021.
Interest expense decreased $3.6 million due primarily to lower weighted average interest rates as a result of the Company's issuance of a 2.95% coupon 10-year note in February 2021, which replaced a 4.9% coupon 10-year note that was retired in March 2021. The reduction in Seneca's effective income tax rate was primarily driven by a decrease to a valuation allowance for deferred tax assets that was initially established in the second quarter of fiscal 2020, partially offset by a higher effective state income tax rate as a result of the Company's Appalachian acquisition that caused a change in the mix of earnings between state jurisdictions.
Proved Reserves Year-End Update
Seneca’s total proved natural gas and crude oil reserves at September 30, 2021 were 3,853 Bcfe, an increase of 395 Bcfe, or 11%, from September 30, 2020. Seneca’s proved developed reserves at the end of fiscal 2021 were 3,217 Bcfe, representing 84% of total proved reserves, which is consistent with the prior year. The proved reserves base is approximately 97% natural gas and 3% oil. In fiscal 2021, Seneca recorded 696 Bcfe of proved reserve extensions and discoveries, due primarily to Utica and Marcellus locations, and 27 Bcfe of net positive revisions due primarily to certain price-related revisions, improvements in well performance and changes in development plans. As a result, Seneca replaced 221% of its fiscal 2021 production.
Midstream Businesses
Pipeline and Storage Segment
The Pipeline and Storage segment’s operations are carried out by National Fuel Gas Supply Corporation (“Supply Corporation”) and Empire Pipeline, Inc. (“Empire”). The Pipeline and Storage segment provides natural gas transportation and storage services to affiliated and non-affiliated companies through an integrated system of pipelines and underground natural gas storage fields in western New York and Pennsylvania.
Three Months Ended September 30, (in thousands) 2021 2020 Variance GAAP Earnings $ 21,482 $ 16,045 $ 5,437 Adjusted EBITDA $ 49,131 $ 46,966 $ 2,165 The Pipeline and Storage segment’s fourth quarter GAAP earnings increased $5.4 million versus the prior year primarily due to higher operating revenues and an increase in other income, as well as a lower effective income tax rate, partially offset by higher O&M expense and higher DD&A expense. The increase in operating revenues of $4.7 million, or 6%, was largely due to new demand charges for transportation service from the Company's Empire North expansion project, which was placed in service near the end of the fourth quarter of fiscal 2020, combined with an increase in revenues from a surcharge for pipeline safety and greenhouse gas regulatory costs, which went into effect in November 2020 in accordance with Supply Corporation's fiscal 2020 rate case settlement. Additionally, the Company recognized increased revenue from a surcharge mechanism for power costs related to electric motor drive compression on the Empire North project, for which offsetting O&M expense was recognized during the quarter. These positive items were partially offset by a modest decrease in transportation revenue from miscellaneous contract revisions. The increase in other income of $2.0 million was primarily due to an increase in allowance for funds used during construction (AFUDC) related to Supply Corporation's FM100 project. The reduction in the Pipeline and Storage segment's effective income tax rate was primarily due to timing differences in book and tax deductions. O&M expense increased $1.5 million primarily due to higher pipeline integrity costs, higher vehicle fuel costs and higher personnel costs, as well as the aforementioned Empire power costs. The increase in DD&A expense of $1.0 million was primarily attributable to incremental depreciation from the Empire North expansion project.
Gathering Segment
The Gathering segment’s operations are carried out by National Fuel Gas Midstream Company, LLC’s limited liability companies. The Gathering segment constructs, owns and operates natural gas gathering pipelines and compression facilities in the Appalachian region, which primarily delivers Seneca’s gross Appalachian production to the interstate pipeline system.
Three Months Ended September 30, (in thousands) 2021 2020 Variance GAAP Earnings $ 18,597 $ 17,550 $ 1,047 Adjusted EBITDA $ 37,858 $ 33,062 $ 4,796 The Gathering segment’s fourth quarter GAAP earnings increased $1.0 million versus the prior year. The earnings increase was primarily driven by higher operating revenues, which was partially offset by higher DD&A expense, higher O&M expense and a higher effective income tax rate. Operating revenues increased $7.8 million, or 20%, primarily due to new Marcellus and Utica wells that were brought online, as well as from increased gathering throughput resulting from the Company's Appalachian acquisition in August 2020. Compression leasing expenses associated with the Appalachian acquisition were partially responsible for the $3.0 million increase in O&M expense, with the remainder of the increase due to higher compression facility and maintenance costs, as well as higher fuel costs. The increase in DD&A expense of $1.4 million was primarily attributable to incremental depreciation expense related to the Company's Appalachian acquisition, as well as higher average depreciable plant in service compared to the prior year. The increase in the Gathering segment's effective income tax rate was primarily driven by a higher effective state income tax rate as a result of the Company's Appalachian acquisition that caused a change in the mix of earnings between state jurisdictions.
Downstream Businesses
Utility Segment
The Utility segment operations are carried out by National Fuel Gas Distribution Corporation (“Distribution”), which sells or transports natural gas to customers located in western New York and northwestern Pennsylvania.
Three Months Ended September 30, (in thousands) 2021 2020 Variance GAAP Earnings $ (5,587 ) $ (6,969 ) $ 1,382 Adjusted EBITDA $ 11,093 $ 8,550 $ 2,543 The Utility segment’s fourth quarter net loss was $1.4 million lower than the prior-year fourth quarter primarily due to higher customer margins (operating revenues less purchased gas sold) and lower O&M expense, partially offset by higher DD&A expense. The increase in customer margin was due primarily to the positive impact of adjustments related to certain regulatory rate and cost recovery mechanisms subject to annual reconciliation, as well as higher revenues from the Company's system modernization tracking mechanism in its New York service territory. O&M expense decreased $0.7 million primarily due to lower mandated regulatory compliance fees as well as lower accruals for the allowance for uncollectible accounts, which were higher in the prior-year fourth quarter from the economic backdrop brought on by COVID-19, partially offset by an increase in vehicle fuel costs. The $0.6 million increase in DD&A expense was primarily attributable to higher average depreciable plant in service compared to the prior year.
Corporate and All Other
The Company’s operations that are included in Corporate and All Other generated a combined net loss of $3.2 million in the current year fourth quarter, generally consistent with the combined net loss of $3.0 million generated in the prior-year fourth quarter.
EARNINGS TELECONFERENCE
The Company will host a conference call on Friday, November 5, 2021, at 11 a.m. Eastern Time to discuss this announcement. Pre-registration is required to access the teleconference by phone in a listen-only mode by following this link: http://www.directeventreg.com/registration/event/1909399. To access the webcast, visit the Events Calendar under the News & Events page on the NFG Investor Relations website at investor.nationalfuelgas.com. A replay of the conference call will be available approximately two hours following the teleconference at the same website link and by phone (toll-free) at 800-585-8367 using conference ID number “1909399”. Both the webcast and conference call replay will be available until the close of business on Friday, November 12, 2021.
National Fuel is an integrated energy company reporting financial results for four operating segments: Exploration and Production, Pipeline and Storage, Gathering, and Utility. Additional information about National Fuel is available at www.nationalfuelgas.com.
Certain statements contained herein, including statements identified by the use of the words “anticipates,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “predicts,” “projects,” “believes,” “seeks,” “will,” “may” and similar expressions, and statements which are other than statements of historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Company’s expectations, beliefs and projections contained herein are expressed in good faith and are believed to have a reasonable basis, but there can be no assurance that such expectations, beliefs or projections will result or be achieved or accomplished. In addition to other factors, the following are important factors that could cause actual results to differ materially from those discussed in the forward-looking statements: changes in laws, regulations or judicial interpretations to which the Company is subject, including those involving derivatives, taxes, safety, employment, climate change, other environmental matters, real property, and exploration and production activities such as hydraulic fracturing; governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, target rates of return, rate design, retained natural gas and system modernization), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal; the Company’s ability to estimate accurately the time and resources necessary to meet emissions targets; governmental/regulatory actions and/or market pressures to reduce or eliminate reliance on natural gas; the length and severity of the ongoing COVID-19 pandemic, including its impacts across our businesses on demand, operations, global supply chains and liquidity; changes in economic conditions, including global, national or regional recessions, and their effect on the demand for, and customers’ ability to pay for, the Company’s products and services; changes in the price of natural gas or oil; the creditworthiness or performance of the Company’s key suppliers, customers and counterparties; financial and economic conditions, including the availability of credit, and occurrences affecting the Company’s ability to obtain financing on acceptable terms for working capital, capital expenditures and other investments, including any downgrades in the Company’s credit ratings and changes in interest rates and other capital market conditions; impairments under the SEC’s full cost ceiling test for natural gas and oil reserves; delays or changes in costs or plans with respect to Company projects or related projects of other companies, including disruptions due to the COVID-19 pandemic, as well as difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators; the Company's ability to complete planned strategic transactions; the Company's ability to successfully integrate acquired assets and achieve expected cost synergies; changes in price differentials between similar quantities of natural gas or oil sold at different geographic locations, and the effect of such changes on commodity production, revenues and demand for pipeline transportation capacity to or from such locations; the impact of information technology disruptions, cybersecurity or data security breaches; factors affecting the Company’s ability to successfully identify, drill for and produce economically viable natural gas and oil reserves, including among others geology, lease availability, title disputes, weather conditions, shortages, delays or unavailability of equipment and services required in drilling operations, insufficient gathering, processing and transportation capacity, the need to obtain governmental approvals and permits, and compliance with environmental laws and regulations; increasing health care costs and the resulting effect on health insurance premiums and on the obligation to provide other post-retirement benefits; other changes in price differentials between similar quantities of natural gas or oil having different quality, heating value, hydrocarbon mix or delivery date; the cost and effects of legal and administrative claims against the Company or activist shareholder campaigns to effect changes at the Company; uncertainty of oil and gas reserve estimates; significant differences between the Company’s projected and actual production levels for natural gas or oil; changes in demographic patterns and weather conditions; changes in the availability, price or accounting treatment of derivative financial instruments; changes in laws, actuarial assumptions, the interest rate environment and the return on plan/trust assets related to the Company’s pension and other post-retirement benefits, which can affect future funding obligations and costs and plan liabilities; economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities or acts of war; significant differences between the Company’s projected and actual capital expenditures and operating expenses; or increasing costs of insurance, changes in coverage and the ability to obtain insurance. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date thereof.
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIESGUIDANCE SUMMARY
As discussed on page 2, the Company is revising its earnings guidance for fiscal 2022. Additional details on the Company's forecast assumptions and business segment guidance are outlined in the table below.
While the Company expects to record certain adjustments to unrealized gain or loss on investments during the fiscal year ending September 30, 2022, the amounts of these and other potential adjustments are not reasonably determinable at this time. As such, the Company is unable to provide earnings guidance other than on a non-GAAP basis.
Preliminary FY 2022 Guidance Updated FY 2022 Guidance Consolidated Earnings per Share, excluding items impacting comparability $4.40 to $4.80 $5.05 to $5.45 Consolidated Effective Tax Rate ~ 25-26% ~ 25-26% Capital Expenditures (Millions) Exploration and Production $400 - $450 $400 - $450 Pipeline and Storage $100 - $150 $100 - $150 Gathering $50 - $60 $50 - $60 Utility $90 - $100 $90 - $100 Consolidated Capital Expenditures $640 - $760 $640 - $760 Exploration & Production Segment Guidance Commodity Price Assumptions NYMEX natural gas price (Oct - Mar | Apr - Sep) $3.50 /MMBtu $5.50 /MMBtu | $3.75 /MMBtu Appalachian basin spot price (Oct - Mar | Apr - Sep) $2.85 /MMBtu | $2.25 /MMBtu $4.80 /MMBtu | $2.75 /MMBtu NYMEX (WTI) crude oil price $65.00 /Bbl $75.00 /Bbl California oil price premium (% of WTI) 96% 97% Production (Bcfe) 335 to 365 335 to 365 E&P Operating Costs ($/Mcfe) LOE $0.82 - $0.85 $0.83 - $0.86 G&A $0.19 - $0.21 $0.19 - $0.21 DD&A $0.59 - $0.62 $0.59 - $0.62 Other Business Segment Guidance (Millions) Gathering Segment Revenues $200 - $225 $200 - $225 Pipeline and Storage Segment Revenues $360 - $380 $360 - $380 NATIONAL FUEL GAS COMPANY RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS QUARTER ENDED SEPTEMBER 30, 2021 (Unaudited) Upstream Midstream Downstream Exploration & Pipeline & Corporate / (Thousands of Dollars) Production Storage Gathering Utility All Other Consolidated* Fourth quarter 2020 GAAP earnings $ (169,171 ) $ 16,045 $ 17,550 $ (6,969 ) $ (3,000 ) $ (145,545 ) Items impacting comparability: Impairment of oil and gas properties 253,441 253,441 Tax impact of impairment of oil and gas properties (69,698 ) (69,698 ) Unrealized (gain) loss on other investments (2,439 ) (2,439 ) Tax impact of unrealized (gain) loss on other investments 512 512 Fourth quarter 2020 adjusted operating results 14,572 16,045 17,550 (6,969 ) (4,927 ) 36,271 Drivers of adjusted operating results** Upstream Revenues Higher (lower) natural gas production 18,648 18,648 Higher (lower) crude oil production (179 ) (179 ) Higher (lower) realized natural gas prices, after hedging 27,146 27,146 Higher (lower) realized crude oil prices, after hedging 1,893 1,893 Midstream and All Other Revenues Higher (lower) operating revenues 3,712 6,160 (768 ) 9,104 Downstream Margins*** Impact of usage and weather (591 ) (591 ) System modernization tracker revenues 829 829 Regulatory revenue adjustments 1,439 1,439 Operating Expenses Lower (higher) lease operating and transportation expenses (10,298 ) (10,298 ) Lower (higher) operating expenses (1,178 ) (2,371 ) 615 2,199 (735 ) Lower (higher) property, franchise and other taxes (1,737 ) (279 ) (2,016 ) Lower (higher) depreciation / depletion (1,318 ) (781 ) (1,133 ) (505 ) 912 (2,825 ) Other Income (Expense) (Higher) lower other deductions 1,998 528 2,526 (Higher) lower interest expense 2,854 847 273 (916 ) 3,058 Income Taxes Lower (higher) income tax expense / effective tax rate 3,906 1,662 (1,360 ) (551 ) 114 3,771 All other / rounding 216 (544 ) (249 ) (127 ) (63 ) (767 ) Fourth quarter 2021 adjusted operating results 55,703 21,482 18,597 (5,587 ) (2,921 ) 87,274 Items impacting comparability: Unrealized gain (loss) on other investments (395 ) (395 ) Tax impact of unrealized gain (loss) on other investments 83 83 Fourth quarter 2021 GAAP earnings $ 55,703 $ 21,482 $ 18,597 $ (5,587 ) $ (3,233 ) $ 86,962 * Amounts do not reflect intercompany eliminations. ** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate. *** Downstream margin defined as operating revenues less purchased gas expense. NATIONAL FUEL GAS COMPANY RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE QUARTER ENDED SEPTEMBER 30, 2021 (Unaudited) Upstream Midstream Downstream Exploration & Pipeline & Corporate / Production Storage Gathering Utility All Other Consolidated* Fourth quarter 2020 GAAP earnings per share $ (1.86 ) $ 0.18 $ 0.19 $ (0.08 ) $ (0.03 ) $ (1.60 ) Items impacting comparability: Impairment of oil and gas properties, net of tax 2.02 2.02 Unrealized (gain) loss on other investments, net of tax (0.02 ) (0.02 ) Fourth quarter 2020 adjusted operating results per share 0.16 0.18 0.19 (0.08 ) (0.05 ) 0.40 Drivers of adjusted operating results** Upstream Revenues Higher (lower) natural gas production 0.20 0.20 Higher (lower) crude oil production — — Higher (lower) realized natural gas prices, after hedging 0.30 0.30 Higher (lower) realized crude oil prices, after hedging 0.02 0.02 Midstream and All Other Revenues Higher (lower) operating revenues 0.04 0.07 (0.01 ) 0.10 Downstream Margins*** Impact of usage and weather (0.01 ) (0.01 ) System modernization tracker revenues 0.01 0.01 Regulatory revenue adjustments 0.02 0.02 Operating Expenses Lower (higher) lease operating and transportation expenses (0.11 ) (0.11 ) Lower (higher) operating expenses (0.01 ) (0.03 ) 0.01 0.02 (0.01 ) Lower (higher) property, franchise and other taxes (0.02 ) — (0.02 ) Lower (higher) depreciation / depletion (0.01 ) (0.01 ) (0.01 ) (0.01 ) 0.01 (0.03 ) Other Income (Expense) (Higher) lower other deductions 0.02 0.01 0.03 (Higher) lower interest expense 0.03 0.01 — (0.01 ) 0.03 Income Taxes Lower (higher) income tax expense / effective tax rate 0.04 0.02 (0.01 ) (0.01 ) — 0.04 All other / rounding — (0.02 ) (0.01 ) 0.01 — (0.02 ) Fourth quarter 2021 adjusted operating results per share 0.61 0.23 0.20 (0.06 ) (0.03 ) 0.95 Items impacting comparability: Unrealized gain (loss) on other investments, net of tax — — Fourth quarter 2021 GAAP earnings per share $ 0.61 $ 0.23 $ 0.20 $ (0.06 ) $ (0.03 ) $ 0.95 * Amounts do not reflect intercompany eliminations. ** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate. *** Downstream margin defined as operating revenues less purchased gas expense. NATIONAL FUEL GAS COMPANY RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS TWELVE MONTHS ENDED SEPTEMBER 30, 2021 (Unaudited) Upstream Midstream Downstream Exploration & Pipeline & Corporate / (Thousands of Dollars) Production Storage Gathering Utility All Other Consolidated* Fiscal 2020 GAAP earnings $ (326,904 ) $ 78,860 $ 68,631 $ 57,366 $ (1,725 ) $ (123,772 ) Items impacting comparability: Impairment of oil and gas properties 449,438 449,438 Tax impact of impairment of oil and gas properties (123,187 ) (123,187 ) Deferred tax valuation allowance 60,463 (3,769 ) 76 56,770 Unrealized (gain) loss on other investments (1,645 ) (1,645 ) Tax impact of unrealized (gain) loss on other investments 345 345 Fiscal 2020 adjusted operating results 59,810 78,860 64,862 57,366 (2,949 ) 257,949 Drivers of adjusted operating results** Upstream Revenues Higher (lower) natural gas production 141,512 141,512 Higher (lower) crude oil production (5,073 ) (5,073 ) Higher (lower) realized natural gas prices, after hedging 44,183 44,183 Higher (lower) realized crude oil prices, after hedging (727 ) (727 ) Midstream and All Other Revenues Higher (lower) operating revenues 26,823 39,793 (2,693 ) 63,923 Downstream Margins*** Impact of usage and weather (1,069 ) (1,069 ) System modernization tracker revenues 3,732 3,732 Regulatory revenue adjustments 273 273 Higher (lower) energy marketing margins (5,893 ) (5,893 ) Operating Expenses Lower (higher) lease operating and transportation expenses (50,280 ) (50,280 ) Lower (higher) operating expenses (5,262 ) (2,443 ) (8,899 ) (2,585 ) 4,101 (15,088 ) Lower (higher) property, franchise and other taxes (5,193 ) (435 ) (5,628 ) Lower (higher) depreciation / depletion (8,191 ) (6,699 ) (7,829 ) (1,745 ) 1,439 (23,025 ) Other Income (Expense) (Higher) lower other deductions 960 (323 ) 2,818 3,455 (Higher) lower interest expense 2,534 (6,514 ) (4,464 ) (2,536 ) (10,980 ) Income Taxes Lower (higher) income tax expense / effective tax rate (6,679 ) 2,716 (2,288 ) (1,216 ) 3,401 (4,066 ) All other / rounding 1,164 (726 ) (217 ) (98 ) (248 ) (125 ) Fiscal 2021 adjusted operating results 167,798 92,542 80,958 54,335 (2,560 ) 393,073 Items impacting comparability: Impairment of oil and gas properties (76,152 ) (76,152 ) Tax impact of impairment of oil and gas properties 20,980 20,980 Gain on sale of timber properties 51,066 51,066 Tax impact of gain on sale of timber properties (14,069 ) (14,069 ) Premium paid on early redemption of debt (14,772 ) (943 ) (15,715 ) Tax impact of premium paid on early redemption of debt 4,062 259 4,321 Unrealized gain (loss) on other investments 181 181 Tax impact of unrealized gain (loss) on other investments (38 ) (38 ) Fiscal 2021 GAAP earnings $ 101,916 $ 92,542 $ 80,274 $ 54,335 $ 34,580 $ 363,647 * Amounts do not reflect intercompany eliminations. ** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate. *** Downstream margin defined as operating revenues less purchased gas expense. NATIONAL FUEL GAS COMPANY RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE TWELVE MONTHS ENDED SEPTEMBER 30, 2021 (Unaudited) Upstream Midstream Downstream Exploration & Pipeline & Corporate / Production Storage Gathering Utility All Other Consolidated* Fiscal 2020 GAAP earnings per share $ (3.72 ) $ 0.90 $ 0.78 $ 0.65 $ (0.02 ) $ (1.41 ) Items impacting comparability: Impairment of oil and gas properties, net of tax 3.71 3.71 Deferred tax valuation allowance 0.69 (0.04 ) — 0.65 Unrealized (gain) loss on other investments, net of tax (0.01 ) (0.01 ) Earnings per share impact of diluted shares (0.01 ) (0.01 ) (0.02 ) Fiscal 2020 adjusted operating results per share 0.68 0.89 0.73 0.65 (0.03 ) 2.92 Drivers of adjusted operating results** Upstream Revenues Higher (lower) natural gas production 1.54 1.54 Higher (lower) crude oil production (0.06 ) (0.06 ) Higher (lower) realized natural gas prices, after hedging 0.48 0.48 Higher (lower) realized crude oil prices, after hedging (0.01 ) (0.01 ) Midstream and All Other Revenues Higher (lower) operating revenues 0.29 0.43 (0.03 ) 0.69 Downstream Margins*** Impact of usage and weather (0.01 ) (0.01 ) System modernization tracker revenues 0.04 0.04 Regulatory revenue adjustments — — Higher (lower) energy marketing margins (0.06 ) (0.06 ) Operating Expenses Lower (higher) lease operating and transportation expenses (0.55 ) (0.55 ) Lower (higher) operating expenses (0.06 ) (0.03 ) (0.10 ) (0.03 ) 0.04 (0.18 ) Lower (higher) property, franchise and other taxes (0.06 ) — (0.06 ) Lower (higher) depreciation / depletion (0.09 ) (0.07 ) (0.09 ) (0.02 ) 0.02 (0.25 ) Other Income (Expense) (Higher) lower other deductions 0.01 — 0.03 0.04 (Higher) lower interest expense 0.03 (0.07 ) (0.05 ) (0.03 ) (0.12 ) Income Taxes Lower (higher) income tax expense / effective tax rate (0.07 ) 0.03 (0.02 ) (0.01 ) 0.04 (0.03 ) Impact of additional shares (0.02 ) (0.03 ) (0.03 ) (0.03 ) — (0.11 ) All other / rounding 0.02 (0.01 ) 0.01 — — 0.02 Fiscal 2021 adjusted operating results per share 1.83 1.01 0.88 0.59 (0.02 ) 4.29 Items impacting comparability: Impairment of oil and gas properties, net of tax (0.60 ) (0.60 ) Gain on sale of timber properties, net of tax 0.40 0.40 Premium paid on early redemption of debt, net of tax (0.12 ) — (0.12 ) Unrealized gain (loss) on other investments, net of tax — — Fiscal 2021 GAAP earnings per share $ 1.11 $ 1.01 $ 0.88 $ 0.59 $ 0.38 $ 3.97 * Amounts do not reflect intercompany eliminations. ** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate. *** Downstream margin defined as operating revenues less purchased gas expense. NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES (Thousands of Dollars, except per share amounts) Three Months Ended Twelve Months Ended September 30, September 30, (Unaudited) (Unaudited) SUMMARY OF OPERATIONS 2021 2020 2021 2020 Operating Revenues: Utility and Energy Marketing Revenues $ 80,302 $ 78,016 $ 667,549 $ 728,336 Exploration and Production and Other Revenues 215,664 155,811 837,597 611,885 Pipeline and Storage and Gathering Revenues 60,022 54,162 237,513 206,070 355,988 287,989 1,742,659 1,546,291 Operating Expenses: Purchased Gas (5,190 ) (5,773 ) 171,827 233,890 Operation and Maintenance: Utility and Energy Marketing 40,026 42,120 179,547 181,051 Exploration and Production and Other 46,007 39,800 173,041 148,856 Pipeline and Storage and Gathering 35,747 31,151 123,218 108,640 Property, Franchise and Other Taxes 23,454 21,132 94,713 88,400 Depreciation, Depletion and Amortization 83,671 80,097 335,303 306,158 Impairment of Oil and Gas Producing Properties — 253,441 76,152 449,438 223,715 461,968 1,153,801 1,516,433 Gain on Sale of Timber Properties — — 51,066 — Operating Income (Loss) 132,273 (173,979 ) 639,924 29,858 Other Income (Expense): Other Income (Deductions) (160 ) 159 (15,238 ) (17,814 ) Interest Expense on Long-Term Debt (30,161 ) (32,159 ) (141,457 ) (110,012 ) Other Interest Expense (270 ) (2,202 ) (4,900 ) (7,065 ) Income (Loss) Before Income Taxes 101,682 (208,181 ) 478,329 (105,033 ) Income Tax Expense (Benefit) 14,720 (62,636 ) 114,682 18,739 Net Income (Loss) Available for Common Stock $ 86,962 $ (145,545 ) $ 363,647 $ (123,772 ) Earnings (Loss) Per Common Share Basic $ 0.95 $ (1.60 ) $ 3.99 $ (1.41 ) Diluted $ 0.95 $ (1.60 ) $ 3.97 $ (1.41 ) Weighted Average Common Shares: Used in Basic Calculation 91,181,292 90,954,447 91,130,941 87,968,895 Used in Diluted Calculation 91,851,443 90,954,447 91,684,583 87,968,895 NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) September 30, September 30, (Thousands of Dollars) 2021 2020 ASSETS Property, Plant and Equipment $ 13,103,639 $ 12,351,852 Less - Accumulated Depreciation, Depletion and Amortization 6,719,356 6,353,785 Net Property, Plant and Equipment 6,384,283 5,998,067 Assets Held for Sale, Net — 53,424 Current Assets: Cash and Temporary Cash Investments 31,528 20,541 Hedging Collateral Deposits 88,610 — Receivables - Net 205,294 143,583 Unbilled Revenue 17,000 17,302 Gas Stored Underground 33,669 33,338 Materials, Supplies and Emission Allowances 53,560 51,877 Unrecovered Purchased Gas Costs 33,128 — Other Current Assets 59,660 47,557 Total Current Assets 522,449 314,198 Other Assets: Recoverable Future Taxes 121,992 118,310 Unamortized Debt Expense 10,589 12,297 Other Regulatory Assets 60,145 156,106 Deferred Charges 59,939 67,131 Other Investments 149,632 154,502 Goodwill 5,476 5,476 Prepaid Post-Retirement Benefit Costs 149,151 76,035 Fair Value of Derivative Financial Instruments 1,169 9,308 Other — 81 Total Other Assets 558,093 599,246 Total Assets $ 7,464,825 $ 6,964,935 CAPITALIZATION AND LIABILITIES Capitalization: Comprehensive Shareholders' Equity Common Stock, $1 Par Value Authorized - 200,000,000 Shares; Issued and Outstanding - 91,181,549 Shares and 90,954,696 Shares, Respectively $ 91,182 $ 90,955 Paid in Capital 1,017,446 1,004,158 Earnings Reinvested in the Business 1,191,175 991,630 Accumulated Other Comprehensive Loss (513,597 ) (114,757 ) Total Comprehensive Shareholders' Equity 1,786,206 1,971,986 Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issuance Costs 2,628,687 2,629,576 Total Capitalization 4,414,893 4,601,562 Current and Accrued Liabilities: Notes Payable to Banks and Commercial Paper 158,500 30,000 Accounts Payable 171,655 134,126 Amounts Payable to Customers 21 10,788 Dividends Payable 41,487 40,475 Interest Payable on Long-Term Debt 17,376 27,521 Customer Advances 17,223 15,319 Customer Security Deposits 19,292 17,199 Other Accruals and Current Liabilities 194,169 140,176 Fair Value of Derivative Financial Instruments 616,410 43,969 Total Current and Accrued Liabilities 1,236,133 459,573 Other Liabilities: Deferred Income Taxes 660,420 696,054 Taxes Refundable to Customers 354,089 357,508 Cost of Removal Regulatory Liability 245,636 230,079 Other Regulatory Liabilities 200,643 161,573 Pension and Other Post-Retirement Liabilities 7,526 127,181 Asset Retirement Obligations 209,639 192,228 Other Liabilities 135,846 139,177 Total Other Liabilities 1,813,799 1,903,800 Commitments and Contingencies — — Total Capitalization and Liabilities $ 7,464,825 $ 6,964,935 NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Twelve Months Ended September 30, (Thousands of Dollars) 2021 2020 Operating Activities: Net Income (Loss) Available for Common Stock $ 363,647 $ (123,772 ) Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided by Operating Activities:Gain on Sale of Timber Properties (51,066 ) — Impairment of Oil and Gas Producing Properties 76,152 449,438 Depreciation, Depletion and Amortization 335,303 306,158 Deferred Income Taxes 105,993 54,313 Premium Paid on Early Redemption of Debt 15,715 — Stock-Based Compensation 17,065 14,931 Other 10,896 6,527 Change in: Receivables and Unbilled Revenue (61,413 ) (2,578 ) Gas Stored Underground and Materials, Supplies and Emission Allowances (2,014 ) (6,625 ) Unrecovered Purchased Gas Costs (33,128 ) 2,246 Other Current Assets (11,972 ) 49,367 Accounts Payable 31,352 (4,657 ) Amounts Payable to Customers (10,767 ) 6,771 Customer Advances 1,904 2,275 Customer Security Deposits 2,093 989 Other Accruals and Current Liabilities 34,314 5,001 Other Assets 1,250 (24,203 ) Other Liabilities (33,771 ) 4,628 Net Cash Provided by Operating Activities $ 791,553 $ 740,809 Investing Activities: Capital Expenditures $ (751,734 ) $ (716,153 ) Net Proceeds from Sale of Timber Properties 104,582 — Acquisition of Upstream Assets and Midstream Gathering Assets — (506,258 ) Other 13,935 (1,205 ) Net Cash Used in Investing Activities $ (633,217 ) $ (1,223,616 ) Financing Activities: Changes in Notes Payable to Banks and Commercial Paper $ 128,500 $ (25,200 ) Reduction of Long-Term Debt (515,715 ) — Dividends Paid on Common Stock (163,089 ) (153,322 ) Net Proceeds From Issuance of Long-Term Debt 495,267 493,007 Net Proceeds from Issuance (Repurchase) of Common Stock (3,702 ) 161,603 Net Cash Provided by (Used in) Financing Activities $ (58,739 ) $ 476,088 Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash 99,597 (6,719 ) Cash, Cash Equivalents, and Restricted Cash at Beginning of Period 20,541 27,260 Cash, Cash Equivalents, and Restricted Cash at September 30 $ 120,138 $ 20,541 NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES SEGMENT OPERATING RESULTS AND STATISTICS (UNAUDITED) UPSTREAM BUSINESS Three Months Ended Twelve Months Ended (Thousands of Dollars, except per share amounts) September 30, September 30, EXPLORATION AND PRODUCTION SEGMENT 2021 2020 Variance 2021 2020 Variance Total Operating Revenues $ 215,581 $ 154,726 $ 60,855 $ 836,697 $ 607,453 $ 229,244 Operating Expenses: Operation and Maintenance: General and Administrative Expense 16,957 16,653 304 67,973 63,429 4,544 Lease Operating and Transportation Expense 68,019 54,983 13,036 267,316 203,670 63,646 All Other Operation and Maintenance Expense 3,715 3,548 167 14,659 12,542 2,117 Property, Franchise and Other Taxes 6,302 4,103 2,199 22,220 15,646 6,574 Depreciation, Depletion and Amortization 45,135 43,467 1,668 182,492 172,124 10,368 Impairment of Oil and Gas Producing Properties — 253,441 (253,441 ) 76,152 449,438 (373,286 ) 140,128 376,195 (236,067 ) 630,812 916,849 (286,037 ) Operating Income (Loss) 75,453 (221,469 ) 296,922 205,885 (309,396 ) 515,281 Other Income (Expense): Non-Service Pension and Post-Retirement Benefit Costs (289 ) (395 ) 106 (1,148 ) (1,580 ) 432 Interest and Other Income 35 115 (80 ) 211 698 (487 ) Interest Expense on Long-Term Debt — — — (15,119 ) — (15,119 ) Interest Expense (11,942 ) (15,555 ) 3,613 (54,543 ) (58,098 ) 3,555 Income (Loss) Before Income Taxes 63,257 (237,304 ) 300,561 135,286 (368,376 ) 503,662 Income Tax Expense (Benefit) 7,554 (68,133 ) 75,687 33,370 (41,472 ) 74,842 Net Income (Loss) $ 55,703 $ (169,171 ) $ 224,874 $ 101,916 $ (326,904 ) $ 428,820 Net Income (Loss) Per Share (Diluted) $ 0.61 $ (1.86 ) $ 2.47 $ 1.11 $ (3.72 ) $ 4.83 NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES SEGMENT OPERATING RESULTS AND STATISTICS (UNAUDITED) MIDSTREAM BUSINESSES Three Months Ended Twelve Months Ended (Thousands of Dollars, except per share amounts) September 30, September 30, PIPELINE AND STORAGE SEGMENT 2021 2020 Variance 2021 2020 Variance Revenues from External Customers $ 58,515 $ 54,090 $ 4,425 $ 234,397 $ 205,998 $ 28,399 Intersegment Revenues 26,510 26,236 274 109,160 103,606 5,554 Total Operating Revenues 85,025 80,326 4,699 343,557 309,604 33,953 Operating Expenses: Purchased Gas 764 74 690 983 75 908 Operation and Maintenance 26,724 25,233 1,491 90,533 87,440 3,093 Property, Franchise and Other Taxes 8,406 8,053 353 33,120 32,569 551 Depreciation, Depletion and Amortization 15,626 14,638 988 62,431 53,951 8,480 51,520 47,998 3,522 187,067 174,035 13,032 Operating Income 33,505 32,328 1,177 156,490 135,569 20,921 Other Income (Expense): Non-Service Pension and Post-Retirement Benefit (Costs) Credit 125 (394 ) 519 501 (917 ) 1,418 Interest and Other Income 2,180 701 1,479 5,339 5,552 (213 ) Interest Expense (9,623 ) (10,695 ) 1,072 (40,976 ) (32,731 ) (8,245 ) Income Before Income Taxes 26,187 21,940 4,247 121,354 107,473 13,881 Income Tax Expense 4,705 5,895 (1,190 ) 28,812 28,613 199 Net Income $ 21,482 $ 16,045 $ 5,437 $ 92,542 $ 78,860 $ 13,682 Net Income Per Share (Diluted) $ 0.23 $ 0.18 $ 0.05 $ 1.01 $ 0.90 $ 0.11 Three Months Ended Twelve Months Ended September 30, September 30, GATHERING SEGMENT 2021 2020 Variance 2021 2020 Variance Revenues from External Customers $ 1,507 $ 72 $ 1,435 $ 3,116 $ 72 $ 3,044 Intersegment Revenues 45,830 39,467 6,363 190,148 142,821 47,327 Total Operating Revenues 47,337 39,539 7,798 193,264 142,893 50,371 Operating Expenses: Operation and Maintenance 9,456 6,455 3,001 34,207 22,942 11,265 Property, Franchise and Other Taxes 23 22 1 52 72 (20 ) Depreciation, Depletion and Amortization 8,219 6,785 1,434 32,350 22,440 9,910 17,698 13,262 4,436 66,609 45,454 21,155 Operating Income 29,639 26,277 3,362 126,655 97,439 29,216 Other Income (Expense): Non-Service Pension and Post-Retirement Benefit Costs (68 ) (71 ) 3 (271 ) (285 ) 14 Interest and Other Income 6 346 (340 ) 259 545 (286 ) Interest Expense on Long-Term Debt — — — (965 ) — (965 ) Interest Expense (4,093 ) (4,115 ) 22 (16,528 ) (10,877 ) (5,651 ) Income Before Income Taxes 25,484 22,437 3,047 109,150 86,822 22,328 Income Tax Expense 6,887 4,887 2,000 28,876 18,191 10,685 Net Income $ 18,597 $ 17,550 $ 1,047 $ 80,274 $ 68,631 $ 11,643 Net Income Per Share (Diluted) $ 0.20 $ 0.19 $ 0.01 $ 0.88 $ 0.78 $ 0.10 NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES SEGMENT OPERATING RESULTS AND STATISTICS (UNAUDITED) DOWNSTREAM BUSINESS Three Months Ended Twelve Months Ended (Thousands of Dollars, except per share amounts) September 30, September 30, UTILITY SEGMENT 2021 2020 Variance 2021 2020 Variance Revenues from External Customers $ 80,302 $ 73,000 $ 7,302 $ 666,920 $ 642,855 $ 24,065 Intersegment Revenues 60 944 (884 ) 331 9,443 (9,112 ) Total Operating Revenues 80,362 73,944 6,418 667,251 652,298 14,953 Operating Expenses: Purchased Gas 19,826 15,243 4,583 274,837 263,112 11,725 Operation and Maintenance 40,855 41,573 (718 ) 182,266 178,896 3,370 Property, Franchise and Other Taxes 8,588 8,578 10 38,769 38,872 (103 ) Depreciation, Depletion and Amortization 14,646 14,007 639 57,457 55,248 2,209 83,915 79,401 4,514 553,329 536,128 17,201 Operating Income (Loss) (3,553 ) (5,457 ) 1,904 113,922 116,170 (2,248 ) Other Income (Expense): Non-Service Pension and Post-Retirement Benefit Costs (1,985 ) (2,001 ) 16 (26,659 ) (26,963 ) 304 Interest and Other Income 733 589 144 2,874 3,583 (709 ) Interest Expense (5,337 ) (5,720 ) 383 (21,795 ) (22,150 ) 355 Income (Loss) Before Income Taxes (10,142 ) (12,589 ) 2,447 68,342 70,640 (2,298 ) Income Tax Expense (Benefit) (4,555 ) (5,620 ) 1,065 14,007 13,274 733 Net Income (Loss) $ (5,587 ) $ (6,969 ) $ 1,382 $ 54,335 $ 57,366 $ (3,031 ) Net Income (Loss) Per Share (Diluted) $ (0.06 ) $ (0.08 ) $ 0.02 $ 0.59 $ 0.65 $ (0.06 ) NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES SEGMENT OPERATING RESULTS AND STATISTICS (UNAUDITED) Three Months Ended Twelve Months Ended (Thousands of Dollars, except per share amounts) September 30, September 30, ALL OTHER 2021 2020 Variance 2021 2020 Variance Revenues from External Customers $ — $ 5,988 $ (5,988 ) $ 1,173 $ 89,435 $ (88,262 ) Intersegment Revenues 26 237 (211 ) 49 836 (787 ) Total Operating Revenues 26 6,225 (6,199 ) 1,222 90,271 (89,049 ) Operating Expenses: Purchased Gas 9 5,263 (5,254 ) 2,306 80,485 (78,179 ) Operation and Maintenance (20 ) 2,139 (2,159 ) 682 7,895 (7,213 ) Property, Franchise and Other Taxes — 243 (243 ) 47 765 (718 ) Depreciation, Depletion and Amortization — 1,064 (1,064 ) 394 1,716 (1,322 ) (11 ) 8,709 (8,720 ) 3,429 90,861 (87,432 ) Gain on Sale of Timber Properties — — — 51,066 — 51,066 Operating Income (Loss) 37 (2,484 ) 2,521 48,859 (590 ) 49,449 Other Income (Expense): Non-Service Pension and Post-Retirement Benefit Costs — (69 ) 69 (7 ) (276 ) 269 Interest and Other Income 2 201 (199 ) 231 873 (642 ) Interest Expense — (13 ) 13 — (66 ) 66 Income (Loss) before Income Taxes 39 (2,365 ) 2,404 49,083 (59 ) 49,142 Income Tax Expense (Benefit) 10 (565 ) 575 11,438 210 11,228 Net Income (Loss) $ 29 $ (1,800 ) $ 1,829 $ 37,645 $ (269 ) $ 37,914 Net Income (Loss) Per Share (Diluted) $ — $ (0.02 ) $ 0.02 $ 0.41 $ — $ 0.41 Three Months Ended Twelve Months Ended September 30, September 30, CORPORATE 2021 2020 Variance 2021 2020 Variance Revenues from External Customers $ 83 $ 113 $ (30 ) $ 356 $ 478 $ (122 ) Intersegment Revenues 1,146 1,463 (317 ) 3,864 4,744 (880 ) Total Operating Revenues 1,229 1,576 (347 ) 4,220 5,222 (1,002 ) Operating Expenses: Operation and Maintenance 3,857 4,481 (624 ) 15,423 13,401 2,022 Property, Franchise and Other Taxes 135 133 2 505 476 29 Depreciation, Depletion and Amortization 45 136 (91 ) 179 679 (500 ) 4,037 4,750 (713 ) 16,107 14,556 1,551 Operating Loss (2,808 ) (3,174 ) 366 (11,887 ) (9,334 ) (2,553 ) Other Income (Expense): Non-Service Pension and Post-Retirement Benefit Costs (923 ) (775 ) (148 ) (3,692 ) (3,101 ) (591 ) Interest and Other Income 31,154 37,730 (6,576 ) 138,882 127,524 11,358 Interest Expense on Long-Term Debt (30,161 ) (32,159 ) 1,998 (125,373 ) (110,012 ) (15,361 ) Other Interest Expense (405 ) (1,922 ) 1,517 (2,816 ) (6,610 ) 3,794 Loss before Income Taxes (3,143 ) (300 ) (2,843 ) (4,886 ) (1,533 ) (3,353 ) Income Tax Expense (Benefit) 119 900 (781 ) (1,821 ) (77 ) (1,744 ) Net Loss $ (3,262 ) $ (1,200 ) $ (2,062 ) $ (3,065 ) $ (1,456 ) $ (1,609 ) Net Loss Per Share (Diluted) $ (0.03 ) $ (0.01 ) $ (0.02 ) $ (0.03 ) $ (0.02 ) $ (0.01 ) Three Months Ended Twelve Months Ended September 30, September 30, INTERSEGMENT ELIMINATIONS 2021 2020 Variance 2021 2020 Variance Intersegment Revenues $ (73,572 ) $ (68,347 ) $ (5,225 ) $ (303,552 ) $ (261,450 ) $ (42,102 ) Operating Expenses: Purchased Gas (25,789 ) (26,353 ) 564 (106,299 ) (109,782 ) 3,483 Operation and Maintenance (47,783 ) (41,994 ) (5,789 ) (197,253 ) (151,668 ) (45,585 ) (73,572 ) (68,347 ) (5,225 ) (303,552 ) (261,450 ) (42,102 ) Operating Income — — — — — — Other Income (Expense): Interest and Other Deductions (31,130 ) (35,818 ) 4,688 (131,758 ) (123,467 ) (8,291 ) Interest Expense 31,130 35,818 (4,688 ) 131,758 123,467 8,291 Net Income $ — $ — $ — $ — $ — $ — Net Income Per Share (Diluted) $ — $ — $ — $ — $ — $ — NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES SEGMENT INFORMATION (Continued) (Thousands of Dollars) Three Months Ended Twelve Months Ended September 30, September 30, (Unaudited) (Unaudited) Increase Increase 2021 2020 (Decrease) 2021 2020 (Decrease) Capital Expenditures: Exploration and Production(4) $ 117,646 (1) $ 375,466 (2) $ (257,820 ) $ 381,408 (1)(2) $ 670,455 (2)(3) $ (289,047 ) Pipeline and Storage 96,760 (1) 42,520 (2) 54,240 252,316 (1)(2) 166,652 (2)(3) 85,664 Gathering(5) 9,041 (1) 251,606 (2) (242,565 ) 34,669 (1)(2) 297,806 (2)(3) (263,137 ) Utility 34,154 (1) 32,034 (2) 2,120 100,845 (1)(2) 94,273 (2)(3) 6,572 Total Reportable Segments 257,601 701,626 (444,025 ) 769,238 1,229,186 (459,948 ) All Other — 2 (2 ) — 39 (39 ) Corporate 231 102 129 450 522 (72 ) Eliminations 2,341 (1,130 ) 3,471 223 (1,130 ) 1,353 Total Capital Expenditures $ 260,173 $ 700,600 $ (440,427 ) $ 769,911 $ 1,228,617 $ (458,706 ) (1) Capital expenditures for the quarter and year ended September 30, 2021, include accounts payable and accrued liabilities related to capital expenditures of $47.9 million, $39.4 million, $4.8 million, and $10.6 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at September 30, 2021, since they represent non-cash investing activities at that date.
(2) Capital expenditures for the year ended September 30, 2021, exclude capital expenditures of $45.8 million, $17.3 million, $13.5 million and $10.7 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts were in accounts payable and accrued liabilities at September 30, 2020 and paid during the year ended September 30, 2021. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2020, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at September 30, 2021.
(3) Capital expenditures for the year ended September 30, 2020, exclude capital expenditures of $38.0 million, $23.8 million, $6.6 million and $12.7 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts were in accounts payable and accrued liabilities at September 30, 2019 and paid during the year ended September 30, 2020. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2019, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at September 30, 2020.
(4) 2020 includes $282.8 million related to the acquisition of upstream assets acquired from Shell, of which $281.7 million is included in Property, Plant and Equipment and $1.1 million is included in Materials, Supplies and Emission Allowances.
(5) 2020 includes $223.5 million related to the acquisition of midstream gathering assets acquired from Shell, of which $223.4 million is included in Property, Plant and Equipment and $0.1 million is included in Materials, Supplies and Emission Allowances.
DEGREE DAYS Percent Colder (Warmer) Than: Three Months Ended September 30, Normal 2021 2020 Normal (1) Last Year (1) Buffalo, NY 162 38 101 (76.5 ) (62.4 ) Erie, PA 124 33 68 (73.4 ) (51.5 ) Twelve Months Ended September 30, Buffalo, NY 6,617 5,731 6,103 (13.4 ) (6.1 ) Erie, PA 6,147 5,221 5,449 (15.1 ) (4.2 ) (1) Percents compare actual 2021 degree days to normal degree days and actual 2021 degree days to actual 2020 degree days.
NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES EXPLORATION AND PRODUCTION INFORMATION Three Months Ended Twelve Months Ended September 30, September 30, Increase Increase 2021 2020 (Decrease) 2021 2020 (Decrease) Gas Production/Prices: Production (MMcf) Appalachia 75,871 63,548 12,323 312,300 225,513 86,787 West Coast 420 455 (35 ) 1,720 1,889 (169 ) Total Production 76,291 64,003 12,288 314,020 227,402 86,618 Average Prices (Per Mcf) Appalachia $ 3.14 $ 1.63 $ 1.51 $ 2.46 $ 1.75 $ 0.71 West Coast 7.93 3.31 4.62 6.34 3.82 2.52 Weighted Average 3.16 1.64 1.52 2.49 1.77 0.72 Weighted Average after Hedging 2.37 1.92 0.45 2.25 2.07 0.18 Oil Production/Prices: Production (Thousands of Barrels) Appalachia 1 1 — 2 3 (1 ) West Coast 551 555 (4 ) 2,233 2,345 (112 ) Total Production 552 556 (4 ) 2,235 2,348 (113 ) Average Prices (Per Barrel) Appalachia $ 66.34 $ 31.22 $ 35.12 $ 48.02 $ 45.69 $ 2.33 West Coast 71.46 41.22 30.24 60.50 45.94 14.56 Weighted Average 71.45 41.21 30.24 60.49 45.94 14.55 Weighted Average after Hedging 60.04 55.70 4.34 56.54 56.96 (0.42 ) Total Production (MMcfe) 79,603 67,339 12,264 327,430 241,490 85,940 Selected Operating Performance Statistics: General & Administrative Expense per Mcfe (1) $ 0.21 $ 0.25 $ (0.04 ) $ 0.21 $ 0.26 $ (0.05 ) Lease Operating and Transportation Expense per Mcfe (1)(2) $ 0.85 $ 0.82 $ 0.03 $ 0.82 $ 0.84 $ (0.02 ) Depreciation, Depletion & Amortization per Mcfe (1) $ 0.57 $ 0.65 $ (0.08 ) $ 0.56 $ 0.71 $ (0.15 ) (1) Refer to page 16 for the General and Administrative Expense, Lease Operating and Transportation Expense and Depreciation, Depletion, and Amortization Expense for the Exploration and Production segment.
(2) Amounts include transportation expense of $0.55 and $0.57 per Mcfe for the three months ended September 30, 2021 and September 30, 2020, respectively. Amounts include transportation expense of $0.57 and $0.57 per Mcfe for the twelve months ended September 30, 2021 and September 30, 2020, respectively.
NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES EXPLORATION AND PRODUCTION INFORMATION Hedging Summary for Fiscal 2022 Volume Average Hedge Price Oil Swaps Brent 1,140,000 BBL $ 58.28 / BBL NYMEX 156,000 BBL $ 51.00 / BBL Total 1,296,000 BBL $ 57.40 / BBL Gas Swaps NYMEX 208,500,000 MMBTU $ 2.75 / MMBTU No Cost Collars 2,350,000 MMBTU $ 2.28 / MMBTU (Floor) / $2.77 / MMBTU (Ceiling) Fixed Price Physical Sales 52,309,623 MMBTU $ 2.29 / MMBTU Total 263,159,623 MMBTU Hedging Summary for Fiscal 2023 Volume Average Hedge Price Oil Swaps Brent 480,000 BBL $ 58.48 / BBL Total 480,000 BBL $ 58.48 / BBL Gas Swaps NYMEX 116,200,000 MMBTU $ 2.79 / MMBTU No Cost Collars 17,600,000 MMBTU $ 2.78 / MMBTU (Floor) / $3.19 / MMBTU (Ceiling) Fixed Price Physical Sales 57,082,943 MMBTU $ 2.23 / MMBTU Total 190,882,943 MMBTU Hedging Summary for Fiscal 2024 Volume Average Hedge Price Oil Swaps Brent 120,000 BBL $ 50.30 / BBL Total 120,000 BBL $ 50.30 / BBL Gas Swaps NYMEX 61,080,000 MMBTU $ 2.72 / MMBTU No Cost Collars 1,600,000 MMBTU $ 2.78 / MMBTU (Floor) / $3.19 / MMBTU (Ceiling) Fixed Price Physical Sales 42,872,216 MMBTU $ 2.19 / MMBTU Total 105,552,216 MMBTU Hedging Summary for Fiscal 2025 Volume Average Hedge Price Oil Swaps Brent 120,000 BBL $ 50.32 / BBL Total 120,000 BBL $ 50.32 / BBL Gas Swaps NYMEX 23,660,000 MMBTU $ 2.74 / MMBTU Fixed Price Physical Sales 36,520,814 MMBTU $ 2.18 / MMBTU Total 60,180,814 MMBTU Hedging Summary for Fiscal 2026 Volume Average Hedge Price Gas Swaps NYMEX 1,720,000 MMBTU $ 2.75 / MMBTU Fixed Price Physical Sales 27,780,276 MMBTU $ 2.19 / MMBTU Total 29,500,276 MMBTU Hedging Summary for Fiscal 2027 Volume Average Hedge Price Fixed Price Physical Sales 17,348,882 MMBTU $ 2.22 / MMBTU Hedging Summary for Fiscal 2028 Volume Average Hedge Price Fixed Price Physical Sales 1,400,555 MMBTU $ 2.23 / MMBTU NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES EXPLORATION AND PRODUCTION INFORMATION Reserve Quantity Information (Unaudited) Gas MMcf U.S. Appalachian West Coast Total Region Region Company Proved Developed and Undeveloped Reserves: September 30, 2020 3,296,113 28,972 3,325,085 Extensions and Discoveries 689,395 — 689,395 Revisions of Previous Estimates 19,940 3,033 22,973 Production (312,300 ) (1,720 ) (314,020 ) September 30, 2021 3,693,148 30,285 3,723,433 Proved Developed Reserves: September 30, 2020 2,744,851 28,972 2,773,823 September 30, 2021 3,061,178 30,285 3,091,463 Oil Mbbl U.S. Appalachian West Coast Total Region Region Company Proved Developed and Undeveloped Reserves: September 30, 2020 12 22,088 22,100 Extensions and Discoveries — 1,041 1,041 Revisions of Previous Estimates 1 630 631 Production (2 ) (2,233 ) (2,235 ) September 30, 2021 11 21,526 21,537 Proved Developed Reserves: September 30, 2020 12 22,088 22,100 September 30, 2021 11 20,932 20,943 NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES Pipeline & Storage Throughput - (millions of cubic feet - MMcf) Three Months Ended Twelve Months Ended September 30, September 30, Increase Increase 2021 2020 (Decrease) 2021 2020 (Decrease) Firm Transportation - Affiliated 14,916 13,021 1,895 107,206 111,166 (3,960 ) Firm Transportation - Non-Affiliated 168,619 162,727 5,892 663,078 641,607 21,471 Interruptible Transportation 256 857 (601 ) 1,460 2,859 (1,399 ) 183,791 176,605 7,186 771,744 755,632 16,112 Gathering Volume - (MMcf) Three Months Ended Twelve Months Ended September 30, September 30, Increase Increase 2021 2020 (Decrease) 2021 2020 (Decrease) Gathered Volume 90,750 73,441 17,309 366,033 264,305 101,728 Utility Throughput - (MMcf) Three Months Ended Twelve Months Ended September 30, September 30, Increase Increase 2021 2020 (Decrease) 2021 2020 (Decrease) Retail Sales: Residential Sales 3,797 4,033 (236 ) 61,038 60,977 61 Commercial Sales 535 503 32 8,741 8,798 (57 ) Industrial Sales 33 31 2 475 537 (62 ) 4,365 4,567 (202 ) 70,254 70,312 (58 ) Transportation 10,197 9,040 1,157 66,012 68,272 (2,260 ) 14,562 13,607 955 136,266 138,584 (2,318 ) NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIESNON-GAAP FINANCIAL MEASURES
In addition to financial measures calculated in accordance with generally accepted accounting principles (GAAP), this press release contains information regarding Adjusted Operating Results, Adjusted EBITDA and free cash flow, which are non-GAAP financial measures. The Company believes that these non-GAAP financial measures are useful to investors because they provide an alternative method for assessing the Company's ongoing operating results or liquidity and for comparing the Company’s financial performance to other companies. The Company's management uses these non-GAAP financial measures for the same purpose, and for planning and forecasting purposes. The presentation of non-GAAP financial measures is not meant to be a substitute for financial measures in accordance with GAAP.
Management defines Adjusted Operating Results as reported GAAP earnings before items impacting comparability. The following table reconciles National Fuel's reported GAAP earnings to Adjusted Operating Results for the three and twelve months ended September 30, 2021 and 2020:
Three Months Ended Twelve Months Ended September 30, September 30, (in thousands except per share amounts) 2021 2020 2021 2020 Reported GAAP Earnings $ 86,962 $ (145,545 ) $ 363,647 $ (123,772 ) Items impacting comparability: Impairment of oil and gas properties (E&P) — 253,441 76,152 449,438 Tax impact of impairment of oil and gas properties — (69,698 ) (20,980 ) (123,187 ) Gain on sale of timber properties (Corporate/All Other) — — (51,066 ) — Tax impact of gain on sale of timber properties — — 14,069 — Premium paid on early redemption of debt — — 15,715 — Tax impact of premium paid on early redemption of debt — — (4,321 ) — Deferred tax valuation allowance — — — 56,770 Unrealized (gain) loss on other investments (Corporate/All Other) 395 (2,439 ) (181 ) (1,645 ) Tax impact of unrealized (gain) loss on other investments (83 ) 512 38 345 Adjusted Operating Results $ 87,274 $ 36,271 $ 393,073 $ 257,949 Reported GAAP Earnings Per Share $ 0.95 $ (1.60 ) $ 3.97 $ (1.41 ) Items impacting comparability: Impairment of oil and gas properties, net of tax (E&P) — 2.02 0.60 3.71 Gain on sale of timber properties, net of tax (Corporate/All Other) — — (0.40 ) — Premium paid on early redemption of debt, net of tax — — 0.12 — Deferred tax valuation allowance — — — 0.65 Unrealized (gain) loss on other investments, net of tax (Corporate/All Other) — (0.02 ) — (0.01 ) Earnings per share impact of diluted shares — — — (0.02 ) Adjusted Operating Results Per Share $ 0.95 $ 0.40 $ 4.29 $ 2.92 Management defines Adjusted EBITDA as reported GAAP earnings before the following items: interest expense, income taxes, depreciation, depletion and amortization, other income and deductions, impairments, and other items reflected in operating income that impact comparability. The following tables reconcile National Fuel's reported GAAP earnings to Adjusted EBITDA for the three and twelve months ended September 30, 2021 and 2020:
Three Months Ended Twelve Months Ended September 30, September 30, (in thousands) 2021 2020 2021 2020 Reported GAAP Earnings $ 86,962 $ (145,545 ) $ 363,647 $ (123,772 ) Depreciation, Depletion and Amortization 83,671 80,097 335,303 306,158 Other (Income) Deductions 160 (159 ) 15,238 17,814 Interest Expense 30,431 34,361 146,357 117,077 Income Taxes 14,720 (62,636 ) 114,682 18,739 Impairment of Oil and Gas Producing Properties — 253,441 76,152 449,438 Gain on Sale of Timber Properties — — (51,066 ) — Adjusted EBITDA $ 215,944 $ 159,559 $ 1,000,313 $ 785,454 Adjusted EBITDA by Segment Pipeline and Storage Adjusted EBITDA $ 49,131 $ 46,966 $ 218,921 $ 189,520 Gathering Adjusted EBITDA 37,858 33,062 159,005 119,879 Total Midstream Businesses Adjusted EBITDA 86,989 80,028 377,926 309,399 Exploration and Production Adjusted EBITDA 120,588 75,439 464,529 312,166 Utility Adjusted EBITDA 11,093 8,550 171,379 171,418 Corporate and All Other Adjusted EBITDA (2,726 ) (4,458 ) (13,521 ) (7,529 ) Total Adjusted EBITDA $ 215,944 $ 159,559 $ 1,000,313 $ 785,454 NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
SEGMENT ADJUSTED EBITDAThree Months Ended Twelve Months Ended September 30, September 30, (in thousands) 2021 2020 2021 2020 Exploration and Production Segment Reported GAAP Earnings $ 55,703 $ (169,171 ) $ 101,916 $ (326,904 ) Depreciation, Depletion and Amortization 45,135 43,467 182,492 172,124 Other (Income) Deductions 254 280 937 882 Interest Expense 11,942 15,555 69,662 58,098 Income Taxes 7,554 (68,133 ) 33,370 (41,472 ) Impairment of Oil and Gas Producing Properties — 253,441 76,152 449,438 Adjusted EBITDA $ 120,588 $ 75,439 $ 464,529 $ 312,166 Pipeline and Storage Segment Reported GAAP Earnings $ 21,482 $ 16,045 $ 92,542 $ 78,860 Depreciation, Depletion and Amortization 15,626 14,638 62,431 53,951 Other (Income) Deductions (2,305 ) (307 ) (5,840 ) (4,635 ) Interest Expense 9,623 10,695 40,976 32,731 Income Taxes 4,705 5,895 28,812 28,613 Adjusted EBITDA $ 49,131 $ 46,966 $ 218,921 $ 189,520 Gathering Segment Reported GAAP Earnings $ 18,597 $ 17,550 $ 80,274 $ 68,631 Depreciation, Depletion and Amortization 8,219 6,785 32,350 22,440 Other (Income) Deductions 62 (275 ) 12 (260 ) Interest Expense 4,093 4,115 17,493 10,877 Income Taxes 6,887 4,887 28,876 18,191 Adjusted EBITDA $ 37,858 $ 33,062 $ 159,005 $ 119,879 Utility Segment Reported GAAP Earnings $ (5,587 ) $ (6,969 ) $ 54,335 $ 57,366 Depreciation, Depletion and Amortization 14,646 14,007 57,457 55,248 Other (Income) Deductions 1,252 1,412 23,785 23,380 Interest Expense 5,337 5,720 21,795 22,150 Income Taxes (4,555 ) (5,620 ) 14,007 13,274 Adjusted EBITDA $ 11,093 $ 8,550 $ 171,379 $ 171,418 Corporate and All Other Reported GAAP Earnings $ (3,233 ) $ (3,000 ) $ 34,580 $ (1,725 ) Depreciation, Depletion and Amortization 45 1,200 573 2,395 Gain on Sale of Timber Properties — — (51,066 ) — Other (Income) Deductions 897 (1,269 ) (3,656 ) (1,553 ) Interest Expense (564 ) (1,724 ) (3,569 ) (6,779 ) Income Taxes 129 335 9,617 133 Adjusted EBITDA $ (2,726 ) $ (4,458 ) $ (13,521 ) $ (7,529 ) Management defines free cash flow as funds from operations less capital expenditures. The Company is unable to provide a reconciliation of projected free cash flow as described in this release to its comparable financial measure calculated in accordance with GAAP without unreasonable efforts. This is due to our inability to calculate the comparable GAAP projected metrics, including operating income and total production costs, given the unknown effect, timing, and potential significance of certain income statement items.
Brandon J. Haspett Investor Relations 716-857-7697 Media Contact: Karen L. Merkel 716-857-7654