National Fuel Gas pany(US:NFG)2024-11-22 16:55Financial Performance - The Exploration and Production segment incurred a net loss of $164.0 million in 2024[19]. - The Pipeline and Storage segment contributed net income of $79.7 million in 2024[20]. - The Gathering segment generated net income of $106.9 million in 2024, with approximately 94% of its revenues from the Exploration and Production segment[23]. - The Utility segment contributed net income of $57.1 million in 2024[24]. - The All Other category and Corporate operations incurred a net loss of $2.2 million in 2024[25]. - The Company’s earnings decreased to $77.5 million in 2024 from $476.9 million in 2023, a decline of $399.4 million primarily due to losses in the Exploration and Production segment[127]. - The Exploration and Production segment reported a loss of $164.0 million in 2024, down $396.3 million from earnings of $232.3 million in 2023, largely due to non-cash impairments of $343.2 million[133]. - The Pipeline and Storage segment's earnings decreased to $79.7 million in 2024 from $100.5 million in 2023, primarily due to a non-cash impairment charge of $33.8 million[138]. - The Gathering segment's earnings rose to $106.9 million in 2024, an increase of $7.2 million compared to $99.7 million in 2023, mainly due to higher gathering revenues[142]. - Utility segment operating revenues decreased by $245.0 million in 2024 compared to 2023, primarily due to a $251.0 million decrease in retail gas sales revenue[145]. Operational Highlights - The Company operates an integrated business with assets centered in western New York and Pennsylvania, focusing on natural gas production from the Appalachian Basin[15]. - The Gathering segment's operations are primarily focused on natural gas produced by Seneca in the Appalachian region[26]. - The average production per day for the Company was 1,072 MMcf equivalent of gas and oil produced for the year ended September 30, 2024, compared to 1,020 MMcf in 2023, representing a 5.1% increase[94]. - Gas production in the Exploration and Production segment increased to 392,047 MMcf in 2024 from 372,271 MMcf in 2023, indicating growth in production capacity[129]. - The average lifting cost per Mcf equivalent of gas and oil produced was $0.69 for the year ended September 30, 2024, slightly up from $0.68 in 2023[94]. - The Company completed 34 net development wells in fiscal 2024, a slight decrease from 34.25 in 2023 and a significant drop from 66 in 2022[100]. - As of September 30, 2024, there are 42 net wells in the drilling process in the Appalachian region[101]. Capital Expenditures and Investments - Capital expenditures for 2024 were $931.2 million, compared to $1,009.9 million in 2023, indicating a reduction in investment spending[157]. - The Company’s net investment in property, plant, and equipment was $7.3 billion as of September 30, 2024, with the Exploration and Production segment accounting for 32.5% of this investment[88]. - The Pipeline and Storage segment had a net investment of $2.1 billion, with 36% allocated to transmission pipelines, which includes 2,233 miles of pipeline[88]. - The Gathering segment had a net investment of $1.0 billion, primarily in gathering lines and related compressor stations, including 390 miles of pipelines[90]. - The Utility segment's net investment in property, plant, and equipment was $1.8 billion, with approximately 50% in its gas distribution network[90]. - The Company expects total capital expenditures of approximately $930 million in 2025, with significant investments planned for the Exploration and Production segment[170]. Debt and Financing - The Company is dependent on capital and credit markets for financing, with $1.4 billion of long-term debt subject to interest rate increases if credit ratings are downgraded[50]. - The Company expects to be precluded from issuing incremental long-term debt from January 1, 2025, to June 13, 2025, due to impairments recognized in fiscal 2024[50]. - The Credit Agreement maturity date was extended to February 25, 2028, with aggregate commitments available of $1.0 billion[117]. - A $300 million unsecured Term Loan Agreement was established with a maturity date of February 14, 2026, with proceeds used for general corporate purposes[117]. - The Company anticipates using cash on hand and borrowings to meet financing needs for fiscal 2025, including $500 million in long-term debt maturities[117]. - The Company's debt to capitalization ratio was 0.47 as of September 30, 2024, allowing for an additional $3.07 billion in debt before exceeding the 0.65 limit[181]. Regulatory and Environmental Risks - The regulatory and legislative measures related to climate change may adversely affect the Company's operations and financial results[50]. - The Company may face increased costs and operational expenses due to potential new regulations aimed at reducing greenhouse gas emissions, including a proposed cap-and-invest program in New York[52]. - In May 2023, New York State legislation was passed to prohibit the installation of fossil fuel burning equipment in new buildings starting December 31, 2025, which could impact the Company's operations[52]. - The Company faces regulatory risks that may increase costs and limit revenue growth, potentially reducing earnings[75]. - Compliance with environmental regulations could lead to significant costs and operational delays, negatively impacting financial results[76]. - The Company is sensitive to inflationary pressures, which can delay the recovery of increasing costs from customers in regulated businesses[205]. Employee and Workforce Management - The Company had a total of 2,311 full-time employees as of September 30, 2024, with 47% covered under collective bargaining agreements[39]. - The voluntary attrition rate improved to 4.8% (excluding retirements) from 8.7% in the previous year, indicating better employee retention[40]. - The Company offers competitive benefits and compensation packages to attract and retain employees, including professional development and training resources[42]. - Approximately half of the Company's active workforce is represented by collective bargaining units, with ongoing negotiations that could impact operations if agreements are not reached[73]. Safety and Cybersecurity - The Company has implemented safety programs and management practices to promote a culture of safety among employees and contractors[39]. - The Company maintains a cybersecurity program to manage risks from evolving cybersecurity threats, including regular assessments and employee training[82]. - The Information Security Program aligns with NIST standards to identify and manage cybersecurity risks relevant to the business[85]. - The Company has established an Incident Response Team to manage cybersecurity incidents and regularly reviews its Information Security Incident Response Plan[84]. - The Company does not currently believe that cybersecurity threats have materially affected its business strategy or financial condition, but acknowledges ongoing risks[87]. Market and Commodity Price Risks - Fluctuations in natural gas prices significantly impact the Company's revenues, cash flows, and profitability, with potential adverse effects from prolonged price reductions[59]. - The Company regularly enters into commodity price derivatives contracts to hedge against price volatility, which may limit its ability to benefit from rising natural gas prices[61]. - Changes in customer demand due to high natural gas prices could lead to increased bad debt expenses and reduced earnings, particularly in the Pennsylvania service territory[61]. - The average sales price per Mcf of gas was $1.88 for the year ended September 30, 2024, down from $2.78 in 2023, reflecting a decrease of 32.4%[94].