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National Fuel Reports Fourth Quarter and Full Year Fiscal 2020 Earnings

National Fuel Gas Company (NYSE:NFG) reported its fiscal 2020 results, revealing a GAAP net loss of $145.5 million, or $1.60 per share, influenced by a significant impairment charge.

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Rhea-AI Summary

National Fuel Gas Company (NYSE:NFG) reported its fiscal 2020 results, revealing a GAAP net loss of $145.5 million, or $1.60 per share, influenced by a significant impairment charge. Despite this, the company highlighted several achievements: increased production by 14% to 241.5 Bcfe, a 12% rise in reserves to approximately 3.5 Tcfe, and the completion of a $100 million upstream acquisition expected to enhance cash flow. The dividend was raised for the 50th consecutive year to $1.78 per share. Adjusted EBITDA showed a slight increase, signaling some operational stability amid challenging market conditions.

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Positive

  • Acquisition expected to generate over $100 million in cash flow in fiscal 2021.
  • E&P segment net production increased by 14%, reaching 241.5 Bcfe.
  • Increased reserves to approximately 3.5 Tcfe, up 12% from the prior year.
  • Pipeline & Storage segment Adjusted EBITDA rose by 31% year-over-year.

Negative

  • GAAP net loss of $145.5 million, primarily due to a $183.7 million impairment of oil and gas properties.
  • Adjusted operating results declined to $36.3 million, down from $47.0 million in the prior year.
  • Average natural gas and oil prices decreased, negatively impacting revenue.
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WILLIAMSVILLE, N.Y., Nov. 05, 2020 (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, 2020.

FISCAL 2020 HIGHLIGHTS

  • Completed highly-accretive acquisition of Appalachian upstream and midstream gathering assets in July, which is expected to generate in excess of $100 million of consolidated E&P and Gathering segment free cash flow in fiscal 2021
  • E&P segment capital expenditures reduced by $107 million, or 22% from the prior year, excluding the Company's Appalachian upstream acquisition (see page 20)
  • E&P segment net production of 241.5 Bcfe, an increase of 29.7 Bcfe, or 14%, from the prior year, with corresponding 13% increase in Gathering segment throughput
  • Increased E&P segment reserves to approximately 3.5 Tcfe, an increase of 12% versus fiscal 2019, driven largely by the Company's recent acquisition, which added 684 Bcf of proved developing producing reserves at a cost of $0.36 per Mcf
  • Placed Empire North project into service in mid-September, which is expected to generate $27 million in incremental annual Pipeline & Storage segment revenue
  • Invested $71.4 million in Utility system modernization and reliability, replacing over 150 miles of older vintage mains and services, and bringing 5-year total to over $341 million
  • Increased shareholder dividend for the 50th consecutive year to an annual rate of $1.78 per share
  • Published initial Corporate Responsibility Report in September 2020, which is available on the Company's corporate responsibility website, responsibility.natfuel.com

FISCAL 2020 FOURTH QUARTER SUMMARY

  • GAAP net loss of $145.5 million, or $1.60 per share, which includes a $183.7 million non-cash, after-tax impairment of oil and gas properties, compared to GAAP net income of $47.3 million, or $0.54 per share, in the prior year
  • Adjusted operating results of $36.3 million, or $0.40 per share, compared to $47.0 million, or $0.54 per share, in the prior year (see non-GAAP reconciliation on page 2)
  • Adjusted EBITDA of $159.6 million compared to $157.3 million in the prior year (non-GAAP reconciliation on page 25)
  • Pipeline & Storage segment Adjusted EBITDA of $47.0 million, an increase of 31% from the prior year
  • Gathering segment Adjusted EBITDA of $33.1 million, an increase of 11% from the prior year
  • E&P segment net production of 67.3 Bcfe, an increase of 8.2 Bcfe, or 14%, from the prior year, which includes the impact of the Company's recently-closed Appalachian acquisition and approximately 6 Bcf of price-related natural gas curtailments
  • Average natural gas prices of $1.92 per Mcf, after hedge gains of $0.28 per Mcf, down $0.34 per Mcf from the prior year
  • Average oil prices of $55.70 per Bbl, after hedge gains of $14.49 per Bbl, down $5.30 per Bbl from the prior year

MANAGEMENT COMMENTS

David P. Bauer, President and Chief Executive Officer of National Fuel Gas Company, stated: “National Fuel turned a challenging 2020 fiscal year into one of opportunity, with several important milestones achieved in our fourth quarter. Over the past few months, we completed a highly-accretive acquisition, brought online the $129 million Empire North expansion project, and received the FERC certificate for our $279 million FM100 Project, giving us line of sight on significant growth in the years ahead. In addition, our Utility completed its annual system modernization program, through which over 150 miles of older vintage pipelines were replaced, further reducing our greenhouse gas emissions. And, in September, the Company published its initial Corporate Responsibility Report, an important step in the continuous improvement of our environmental, social, and governance initiatives and disclosures.

These milestones were not possible without the significant efforts of National Fuel’s 2,100 dedicated and hard-working employees, who have continued to meet the increased demands of our business during the pendency of the COVID-19 pandemic. Throughout the year, as we confronted the constantly evolving landscape of the health crisis, as well as significant commodity price headwinds, our integrated, diversified business model continued to provide an important measure of stability and predictability. 

As we move into fiscal 2021, National Fuel is well-positioned for growth, and we expect our Appalachian acquisition, which included significant, highly-economic drilling inventory, as well as the substantial growth of our FERC-regulated pipelines, to drive long-term value for our shareholders.  Combining this with a large base of stable, regulated cash flows, we are poised to generate strong consolidated returns, and grow our earnings and cash flows in the years ahead, while maintaining the strength of the Company’s investment-grade balance sheet and our focus on the sustainability of our operations.”

RECONCILIATION OF GAAP EARNINGS TO ADJUSTED OPERATING RESULTS

        
 Three Months Ended  Fiscal Year Ended
  September 30,  September 30,
(in thousands except per share amounts)