• Earnings Growth: Earnings increased more than 30% compared to last year.
• Production Growth: 8% sequential growth in production, reaching almost 106 BCF.
• Utility Earnings Per Share: Increased by $0.22 due to a rate settlement.
• Adjusted Operating Results: Increased 32% for the quarter.
• Natural Gas Price Assumption: NYMEX price of $3.50 per MMBtu for the remainder of the year.
• Adjusted Operating Results Guidance: Range of $6.75 to $7.05 per share, a $0.15 increase from prior guidance.
• Production Guidance: Increased to a range of 415 to 425 BCF for fiscal 2025.
• Capital Expenditure Guidance: Maintained at $495 million to $515 million.
• Debt Issuance: $1 billion in new notes issued, split across five- and ten-year tranches.
• Gathering Volumes: Reached nearly 130 BCF, an all-time high.

• Warning! GuruFocus has detected 9 Warning Signs with NFG.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• National Fuel Gas Co (NYSE:NFG) reported a more than 30% increase in earnings compared to the previous year, driven by strong performance across its business segments.
• The company achieved an 8% sequential growth in production, largely due to outstanding well results from its Utica program in Tioga County.
• NFG's utility segment saw a significant earnings per share increase of $0.22, primarily due to a favorable rate settlement approved by the New York PSC.
• The company successfully executed a $1 billion bond issuance, achieving record low credit spreads and managing its fixed income liabilities effectively.
• NFG has a strong outlook for natural gas prices, supported by increasing demand and strategic hedging, which positions the company well for future growth.

Negative Points

• The company faces regulatory and litigation risks in building significant energy infrastructure projects, which can lead to delays and increased costs.
• NFG's buyback program has been slowed due to broader macroeconomic uncertainty, potentially impacting shareholder returns.
• The company anticipates increasing basis differentials, which could offset some of the benefits from higher natural gas prices.
• There is uncertainty regarding the potential for retaliatory tariffs on energy, which could impact a portion of Seneca's production sold through marketing counterparties.
• NFG's infrastructure expansion is contingent on regulatory approvals and market conditions, which could affect the timing and success of its projects.

Q & A Highlights

Q: Could you talk a little bit more about how you're thinking about the buyback? The stock's been very strong year-to-date, both absolute and relative. It's a new all-time high. How does stock price factor in how you're thinking about buying back shares, and if the stock remains strong, do you think about pushing out the buyback even further? A: David Bauer, President and CEO: We don't see any change in our thinking regarding the buyback program. While stock price is a factor, our primary focus is on capital allocation. Once our balance sheet is where we want it, our preference is to grow the company organically or through M&A. If those opportunities aren't available, we plan to return capital to shareholders. We remain committed to the buyback program, even if it takes a bit longer to complete.

Q: Could you give us some additional color on what leading edge EUR per 1,000 ft is for the recent EDA tills, and if the wells haven't been flowing long enough to have an EUR in mind, could you talk about the pressure declines you've seen? A: Justin Loweth, President of Seneca Resources and Midstream: We've seen productivity from recent wells exceeding expectations, with pressure declines being lower than anticipated. Our EUR expectation has moved up to 2.5 BCF per 1,000 ft. The wells are maintaining sustained rates of 25 to 30 million a day for 9 to 12 months, indicating strong productivity.

Q: Could we see a Gen 4 well design, and if so, what might that look like? A: Justin Loweth, President of Seneca Resources and Midstream: We are testing variables that could lead to a Gen 4 design. Potential improvements could come from adjustments in inner wall spacing and proppant loading, possibly increasing from GBP2,200 to GBP3,000 or GBP3,800 per foot. We're looking for the right balance between invested capital and productivity.

Q: How would you characterize the outlook for regulated M&A in the current macro environment? Does your disposition towards acquisitions change? A: David Bauer, President and CEO: We remain focused on gaining scale, particularly in the regulated side of the business. While we're interested in upstream M&A, our focus would be on bolt-on acquisitions. We're optimistic about potential opportunities that fit well with our strategy.

Q: Could you speak to your views on the current outlook for growing in-basin demand and what components of your integrated business model are most attractive to potential counterparties? A: Justin Loweth, President of Seneca Resources and Midstream: We see opportunities for in-basin demand growth, including industrial development and increased power generation. Our integrated business model, particularly our pipeline solutions, is attractive to counterparties seeking timely market access.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.