National Fuel Gas (NFG) 7 Nov 242024 Q4 Earnings call transcript

Hello, and welcome to the National Fuel Gas Company Q4 Fiscal 2024 Earnings Conference Call. My name is Elliot, and I'll be coordinating your call today. [Operator Instructions] Now I'd like to hand over to Natalie Fischer, Director of Investor Relations. Please go ahead.

Thank you, Elliot, and good morning. us evening's conference earnings joining discussion for you last of release. appreciate on call today's a We With us Executive on Justin Fuel Company Treasurer are Midstream. the Principal Loweth, call from Bauer, and Resources President National President our of and and Officer; Chief Financial Officer; Seneca Silverstein, Dave Tim and Fuel National Gas At discussion to of prepared we remarks, today's end questions. the will the open website. and and on November year earnings Relations investor our have quarter fiscal full fourth release The posted presentation been Investor XXXX We materials may these refer today's call. to during

to would will We that contain forward-looking remind like you today's statements. teleconference

While made, specific good as differ only National a you risk last to and certain materially. believed release Fuel's reasonable expectations, and have are speak statements of beliefs may a factors. and refer the projections remain to listing earnings may of These evening's faith date in basis, on for results actual they are which

With that, to Bauer. I'll it turn Dave over

morning, you, Natalie. Good Thank everyone.

in results delivered mitigated headwind along regulated reported our positive we million again the last a hedge fourth and National per Fuel's the during largely gain our prices $XX once results with gas the which book, $X.XX businesses, As commodity Natural impact. strong price were from adjusted were release, operating a but night's quarter, quarter share.

development to more well the to a in maximize year-over-year, and up efficiency. XX%, down coming decade of to The Tioga area our focused all highest the impact our years. EDA returns and very area, midstream plan development are counties, Operationally, of we a With development acreage. vast eastern Seneca continue while upstream than of is Lycoming focus Capital businesses, the our in completions with our of execute trend this is optimizing expect we on in which on is our on capital X% well. continue returning the and gathering At team inventory majority drilling and and focused delineated our production clear, is the

Slide returns XX allows deck, Switching pipeline our from million strong into benefit cycle best-in-class, at see can of our breakevens free $XX to increase settlement in forward prices. see IR storage and flow half you As generate our that which are cash annual a which to our us to Supply this rate recall, rate continue you'll past provided February. went we and Corporation effect the business, gas

Tioga Additionally, we which will our Tioga in day FERC XXX its capacity of out for provide transport million Pathway August, application Seneca to County. the filed of to a production project,

FERC's for track process, receive it's in-service in next early an by planned. scheduling date. notice moving XXXX it would to keep by XXXX. project our likely meeting us as February on While still environmental calls the certificate the for fall assessment along recent which makes our target study we'll things fall, are That

pursue release, night's extension at end Northern in last calendar of longer intend As of you to which expires project's the Access saw an year. the no we FERC the certificate,

to Seneca's market You on New may basin. Plan a project project limbo pivoted which B, the we XXXX, to Plan system. out of frankly completed in in A put our to FMXXX recall was production in that growing move XXXX, When York was production moved which the the project, Seneca's better and quickly Transco regulators that

project us But on deliver end look substantial a to to connected key serve New and the day, project State the that approvals, shovels Northern while, believe costs Access in needed of further growing FERC we litigation would continue which at to increase pipeline never the this more development Earlier project region in Due significant to of we infrastructure and project. courts, pursue the several regulated at expected in ground. demand a cease put in regulatory us volumes efforts. take All summer, that to because litigation we was led the had years the resolved the favorably another decide markets. led we to York the

case. the the ongoing for total of a Turning proposal We rate our of to National calls that joint the customers. for both a utility. is The product and reached parties that X-year settlement settlement increase was to revenue good catches It our York New with experienced outcome annual and we Fuel costs the a $XX in that for ongoing addresses the recovery of it million coming requirement over our This inflation operating modernization up regulatory program. a period. we of higher due lag phases X-year in from saw us the out pandemic

a effect, our had lowest has And still rates not rates be will XXXX. even since Our in after York state. new New the delivery base rate increase into utility go the

proposal new into joint it's December could the loss at Regardless, make-whole through any the methane increase the date number from protect other rate a York continuation Commission of the proposal emissions. a allows year. safety proposal Xst in our slip drives included possible of to will modernization the of settlement There provision service performance enhanced our the down of approval system strengthens rates reliability New the effective program, recover session, anticipate that October the standard date including the which customers, actually joint its interest and the long-standing of and that of consider new though effect. We go provisions into customer and that the are approval the our metrics company

Moving considerably the longer agenda policy. an envisioned. Climate to strong National policymakers complete energy advocate pursued Act's and example, goals the for XXXX. electrification York, all-of-the-above a But of achieve more have Take, state policy. it's target XX% becoming goal by renewable In electricity increasingly will the is fuel economy. than approach climate energy anti-fossil New for to Fuel clear cost the substantially aggressive whose to that to take an remains state's

wind passage of solar. but more of intermittent decommissioned and gigawatts baseload and of only act, the X the with X gigawatts Over years replaced nuclear York gas-fired since New X than the mostly has generation, it

of a Over in average New the same have cost Yorkers seen period, the electricity. XX% increase

are year, average costs the to as cost pricing take residential further which poised by York customer's increase more is annual carbon the increase consumers effect to $XXX. gas than program, could heating natural still expected Cap-and-Invest And to energy New next

circumstances However, be signs convened shifting. we're an recently all recently its out and reasonably the energy feasibility the has which policy technical a we've again of spoken New may see importantly, can Energy energy state. of Board, this And economic I'm governor look the since which at Act will policy the current energy based accomplished. a strategy, passed. The potentially beginning reset what was more takes realities forum perhaps above in been X-year to favor momentum be Planning statewide cycle of the the hard advocating carefully in that and is upon assess the York approach hopeful on Climate

capital In program Midstream's strong and enhanced closing, is during delivering our integrated and quarter, and the National continued pleased at with Energy execution program I'm development confident I'm increasing future. Seneca prices. our and the Fuel's businesses. efficiencies projects free cash At expansion gas rate of to levels base forward should time, grow of our flow natural modernization continue the same regulated in

over term. buyback cash growing long history shareholders All with our of and to value program, consolidated lead share drive should returning our of shareholder flows, earnings combined which, the via significant efforts capital these long-standing dividend and should to

And call I'll turn the that, over Justin. to with

for particularly Dave, extremely the meaningfully this with executed delivering of success sets safety commodity drive in a sustainability, capital 'XX, best-in-class culture you, well excellence increased lower Combining and in and increased and continued to production our while fiscal good on of price development Thank and Midstream navigating environment. morning, stage capital the continues integrated Seneca challenging assets efficiency. 'XX NFG with operational beyond. fiscal and our everyone. focus Overall,

respect almost increase XX curtailments. fiscal production XXX Bcfe Bcf to and despite results, delivered Seneca With of of 'XX voluntary fiscal a 'XX or X% over record price

grew over net and reserves year-end, Tcfe of as Additionally, fiscal which X.X XXX of Bcfe. to revisions additions included

production of Taken together, we year. replaced for the about XXX%

X% at record as XXX Midstream, a throughput growth by increased Bcf in Additionally, underpinned customers. 'XX as well at fiscal NFG Seneca third-party to

'XX, Bcfe. As remains XXX to guidance Seneca's XXX to fiscal we production look

curtailments. excludes impact any a reminder, guidance price As our future potential the of

next higher in before in fourth TLL winter or activity As we the drive and the year, through quarter. spring we modestly increasing levels declining fiscal which months the quarter summer move through will each production in flattening expect

gas the continued in Moving year. with gas of We macro. fiscal the to in outlook see prices first 'XX pressure our on natural half natural upside the on potential later

multiyear through focusing sales drive prices in-basin our marketing outlook, take and To we X high But ramp the minimizing expected begin and continues to volatility higher levels which next demand production volumes summer. earnings price the next weakness advantage constructive, on believe to months, minimize project of as firm protecting resilient prolong cash colder-than-normal flows exposed a hedges. storage team financial this a XXXX, physical pricing, to could in Over with remains LNG could longer-term and winter. absent outlook as early

For limiting in-basin protected almost This minimize production forecasted sales, production by pricing transportation volatile of and robust firm XX% pricing through to potential exposure. fiscal environments. rates positions maintain 'XX, Seneca curtailments Seneca's is and firm

Moving fewer a planning reductions we foot. as about low operational per capital in Utica XX% range Tioga our savings capture operations days 'XX of to generating guidance $XX to originally fiscal through team capital. example development budgeted, Seneca recent toward the and is pad, finished drilled end than the cost continued of optimization. efficiencies One

and like dual benefits service which also a per of connecting lasting water placed some handling pipeline costs the our lower infrastructure, to removing Due EDA trucks capital fiscal new the road. continued from accomplishments water is in this guidance $XX barrel We development the produced prolific recently the of and million tailwinds we focused has and capital midpoint 'XX, program. 'XX see below efficiency expectations with of our in for further our future and improvements, fiscal

expect Lycoming X-rig in a frac utilizes early back the Counties. as anticipate operations a late second 'XX program the year first cadence the capital on to we X-rig fiscal plan increase half Tioga and dedicated for Our capital we to shift crew summer. half and spring or for mostly focused year, program of We moderated but X- of development see the a to

focused flow areas, highest mid-single-digit which production of to longer-term development to plan a return generation driving cash while similar maximize Our is expected maintains low on our and growth. activity pace free

development Midstream. progress the over supporting Turning made EDA. aimed quarter our in at projects flexibility and overall to Seneca the on future substantial marketing and past production NFG and We've third-party increasing growth several

will help calendar improve deliverability the few and the volumes growing facilities better last commission During EDA link interstate Seneca access. line XXXX, in key trunk pipelines, which market to we and facilitate months gathering expect of to

Seneca projects support development as low-cost on Our integrated operator. and approach maintaining while optimally NFE capital focus to to status allows Midstream that Seneca a essential growth are investment to coordinated

sustainability quarter. some impressive the front, I'm the On to from achievements proud highlight

of certification score highest reduction XXXX achieving and NFG assessment grade standard. In XX%, example recertification goal In MIQ also X operated. level, A renewed Seneca NFG schedule, commitment assets minus surpassing and improvement level stewardship of of Equitable certification recently an assets Furthermore, owned of to ahead a yet available. the from our represents addition A leadership of responsible received and underwent all our an Origin methane initial EOXXX grade years Seneca and the This again its August, intensity X a in great to Fuel's these under are total, National achievements notches of Midstream's of sustainability. Midstream

and in right we model but various Midstream As Seneca and thrive navigate commodity team, also integrated assets we cycles. not believe ahead, to the look only have NFG

future in followed with supports decile of flow strategy less which including allowing expected certainty plus years decade than Appalachian EDA our the the breakevens top in is returns. We per near-term marketing of NYMEX economic current NYMEX, XXX a the by breakevens locations and have development while portfolio development Moreover, pace, well-level PV-XX than inventory significant cash WDA longer-term Mcf in our of $X at upside. PV-XX expected less highly hedge another with Mcf XX over deep

our Taken team, to in best-in-class come. years poised are considerable for together with the success we

to over With I'll call the that, turn Tim.

everyone. Thanks, morning, Justin, and good

on with Seneca's our that was forecast, voluntary results, generally absent share per in operating we our our curtailments internal did first Focusing not line $X.XX projections.

share, several $X.XX Looking noncash at by reported per loss of was impairments. a driven which we earnings, GAAP

longer mentioned, we our are Access project. Northern Dave forward no with As moving

impairment an approximately Overall, million quarter recorded $XX we to As project. in our during Pipeline incurred the a we the segment. and costs development Storage million of result, related in $XX

for write-down. rights to However, team projects, land which allowed the the on us was repurpose and of other our able to assets various limit amount use

test Seneca. additional We also charge an ceiling at noncash recorded

an the Given recording the settlements anticipate quarter additional we XXXX. November, for first fiscal in impairment NYMEX of and October

year. of E&P per bit of to operating always results, as last an $X.XX the a at the explaining be Looking there increase little in there is Mcf over in fourth segment, Starting came at noise quarter. with worth LOE or $X.XX seems the

impact complete prior the year, X work and for every to from in X increase expected addition timing LOE years. This the was including related, lower once volumes, we In guidance. right maintenance was to most line this our of that was certain with full

Seneca, was Somewhat Mcf at lower in this offsetting for DD&A the per $X.XX quarter. which expense at came

Given capital a on which quarter, base in the reduced we go-forward basis. third the had impairment of DD&A depletable charge lower rate a our

of of In pipeline activity, the This shift be charged to O&M-related more a segments, higher being integrity ended was work expected nature The saw costs previously work work function performed our largest than a wasn't that regulated to merely O&M originally what from we than impact but capital O&M. actual by originally the more up relates to our were planned. program, where projected.

at work impact by York, wage latter costs saw the which, as the in our increased incremental our to of were York to New expect in requirements patrols the proposal, impacted costs was was New a utility, into also timing We in rates. requirements XXXX. reminder, of these restoration enacted delivery utility prevailing The so lead incorporated recover which and related of joint new new we future these

a other our where less and taxes our noise. the year driver relative At we when income York rate. the in allocate adjusting effective state revenue prior New guidance. reduced was of impacting effective was approximately which After XX%. year, upon related rate overall bit we for state jurisdictions Lastly, based comparability, biggest This The tax taxes, Pennsylvania there for the income to of favorable end among revenue. had jurisdictions, our our to on items slightly to compared was tax is

natural that Shifting we've only $X.XX the MMBtu $X.XX to of prices operating results adjusted to NYMEX our year. pricing, per $X per XXXX, revised than assumption averaged the for for under guidance a range to the account share Other increased from prices the noteworthy for consistent in reduce the remained fourth our previous gas last have range. guidance impairment recorded rate change And quarter, DD&A our to with to was expected the quarter. would

curve you know, winter, estimates, sell-side current And been as which a to our gas dispersion of has all start gas down. are that has among using elevated. This are price the trade price natural the strip. the seen volatility However, slow well to assumptions given led wide we've above

additional everyone at the pricing expect included provide this trend To triangulate on transparency, results for where we NYMEX sensitivities our XXXX results adjusted Hopefully, our we've evolves. helps various multiple as to operating prices. outlook

a natural the declined, large of has hedge While meaningfully our impact. strip portion portfolio the moderated gas

quarter, While hedging. production to fiscal we had approximately to we already approach XX% of our stuck disciplined 'XX hedged as of last our

another curve. layer Over price the an at average swap months, added $X.XX more book past above few current we than to hedge XXXX fiscal the forward of our X% for

average we the an For are above hedged the $X.XX XX% nearly floor year, or price with now strip. of XX%

very be shareholders. This strategy, generate effective future proven years, We've cycle approach program. meaningful for prices positions for in also strong which added of we believe has a has value transacting our to created development the we through expect at are will that methodically returns which

downside to to investment-grade in allows also in rating be in are of hedging we able program XXXX, which as has and protecting in acquire heightened opportunistic assets, and supports valuable. challenging environments Appalachian proven like gathering such the our In be volatility now, times we where extremely us for addition were our upstream to Shell's to

of return cash to through creating ongoing are our value We also significant shareholders.

flow per $XXX X.X allow we've million hedge to strong us our in $XX we buyback. look shares of expect To In our progress price an addition current authorization complete buyback we've long-standing buyback We to at balance nonregulated authorized average date, made March. on to 'XX. the share. dividend, portfolio even in good fiscal million was will our the our that and of segments cash free sheet this And the strip, fund to at repurchased

the cushion relatively balance with relative Sticking by FFO ample of remained At stable the have set our rating thresholds to downgrade sheet, course X.XXx metrics agencies. and approximately our year. to we the over fiscal debt, the debt-to-EBITDA credit XX%

these we to modestly capital year. incremental if We to consistent, move value-accretive This great to extent as relatively allocate the we us affords opportunities. flexibility not remain through cushion additional see improve the expect

with also maturing debt fiscal of activity $XXX some us million of We additional of and 'XX. million an refinancing $XXX have ahead summer by the long-term next end

Adding up solid debt our recent and Combining annual growth earnings to positioned for the to quarters even our we the growth performance these of our window flow value by we coming in year XXXX. Given couple the ability a to next return than was to efficiency fiscal to nonregulated years. improvements set clarity coming to to rate proceedings, shareholders us our and our National buyback, Fuel, is confident cash access this has expect to through businesses, have in investment-grade through in outlook our our the from businesses, free for which regulated shareholders the in markets, supported the National managing stronger over capital cash best commitment issuance XX% capital fiscal ongoing are start flexibility strong to the find summary, maturities. In to is along compound and dividend with years. to deliver in deliver significant greater Fuel 'XX

up ask to I'll line for the questions. that, open With operator the

question First Bank Merrill from Hungness America Lynch. Instructions] comes with of Noah [Operator

question make the hours or just maybe is, you latest all your on get to in how expansion projects? that over guess the if does comfortable invest and here I more the And results? past could thoughts so the I that's election regulatory first changed with environment XX at

administrations are business design a run who's first than it that, such better having power. say, with regardless some of to I'll and work guess I others. in thrives it Sure. in that we that way and foremost, said our But

change administration days, the chance will industry, regulatory I better a been for the the there's environment but level, hasn't early energy in. federal Looking be of much change. at a that the still At at operate Trump there state think good it's level, a really to obviously good generally the

and power to balance it beforehand. New to PA, was -- we York expect of the stay exactly stay exactly where

given second opening due assumption. the that assume remarks, as then was XXXX And pricing guys the the my you the for if But we gas EPS question, Appreciate lower mentioned in natural to color. driving flat actually adjusted you guidance revised higher. was assuming what price? drive EPS the what then gas adjusted was be a that Could $X.XX $X.XX last just that about talk and would natural that improvement, would quarter,

in between the but biggest DD&A in guidance us that our DD&A out change that a if the provide But some impairment the That's the collective a our out other some guidance. The of tailwind in and I rate ranges, tailwinds don't constant." system, were we hold pricing we they "increase so driver to took on in Sure. had fourth also of other laid aggregate, amongst really rate the improvements stick we the you guidance operating small They're to a individual small system. across across allow is quarter. function nice guess, our the costs to, lower couple

question. there that And rate be for revised up? XXXX DD&A just a clarification like a that, could chance quick Is

guess likely I be what I would lower. expect slightly is revised to

additional going time. less portion quarter we of fiscal of essentially as our same writing in from assets, had we're so deplete have effect an As perspective guidance from amount an the impairment where of off to first our a I 'XX, which alluded an to, over guidance, it will test we're future original ceiling to have expecting accounting the

to lower, expect more higher. than go would I it so So

[Operator with Modak Instructions] Goldman now We turn Sachs. Ati

cadence. on the activity question Quick

gas in pathway managing gave plans? that you your is based talk tool the a for become decided relatively for year. You where about sensitivity that upon? are? that some on of Does prices Or timing production us Can next cadence

Sure.

ways there's plan, always some the answer So within if our we absolutely retain is good flexibility a to short signal. price accelerate both

example, I longer-term hasn't to things with remarks we winter, for look, mentioned on environment So gas constructive than up levers move that normal a but But very capability our prices, the we way, see the prices. started year change can within quickly. to that. end macro we plan through some the faster on that number of if of in that that. we're the colder evolve natural if sustained a We'll address flexibility into course and to there's Conversely, have look can lower

really other about locked thing of 'XX then a note the fantastic of team of in perspective. XX% almost also just gas would I lot has those And done physical insulating fiscal us job got a from our our changes. from is a We've

balance little very of And and positions So hedge of exposure. the that, great floor a quite of have really that a bit year attractive a us upside. with on top book the over

capital bring it holistically, the combination I and book. got levers leverage hedging upside we've kind and operations needed, the to So positive the the marketing a well but also we've down structured on see how definitely to lot think of as as of as of

year. All of range the or mentioned right. can talk about next end you we was That any other range drivers, or And lot particularly variance expectations sense. the the you efficiencies or CapEx think at then guidance for makes low of Maybe the this cost year? CapEx the a service for about as

to. X on. focused drivers happy that There's we're very Sure, principal

The fewer recent plan in impact if where picture, efficiencies about feet. That TLL an XX% $XX XX,XXX, driving in in we and of about Tioga TLLs drilling savings, of first the that an pad, so per days. has we're further wells is XX,XXX average you I of drilled operations. one Utica just our of a mentioned example think big cost our

So that's north of $X.X per well. million

across pretty of operations. our lot a meaningful. of see elements that we So And different efficiencies our like that's

lasting put Similarly, on produced water very to line Water importantly, dual Management, we in a and has benefits. I place recent spoke benefits most that

come. to lower cost will handling not that So for months, and continue will but on just of fluid deliverability create years that

that, number our of business. see we in tailwinds So there's that a like

ultimately within the our put Seneca I most possible plan, of looking The planning. is into to and We're the deploy the into and at capital just our always Midstream both talk development interstate gas pipeline. to NFG optimize gathering our would system really to to piece amount amount second minimal looking effectively of

movement even get particular, and natural smarter and of in Tioga we area what ways or to incremental lower the production. drive same of better achieve the production the doing within finding is to capital we're that as so we're amount And

to I And talk in to we'll and plan another the that's 'XX us what continuing million 'XX $XX to getting continued to from reduction down at coming tailwinds, iterate allowed and for 'XX, capital that's here guide get in significantly when and we're better that So to I'm about really is better. drive to guide working tailwinds communicating keep see 'XX on that related we the quarters. that and

We have no further questions.

our to So hand remarks. I'll Q&A. for any this concludes now back Natalie final Fischer

the if any we speaking out again business day. November questions. reach Thank have close on nice Thank our to the you I'd everyone will you Please today. forward and for telephone to to next on XX. of through with replay website time this both like free will us feel and you, afternoon and available by Otherwise, this quarter. with Elliot. A be thank have run Thursday, of to taking look a be call you,

you and Ladies for thank has today's participation. now your call gentlemen, like We'd concluded. to

now disconnect lines. your may You