National Fuel Gas pany(NFG) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported adjusted earnings per share (EPS) of $2.06 for Q1 2026, aligning with expectations and reflecting a solid start to the fiscal year [4][13] - Adjusted EBITDA increased by 29% compared to the prior year, driven by higher production and natural gas prices [4] Business Line Data and Key Metrics Changes - The integrated upstream and gathering segment achieved net production of 109 BCF, a 12% increase over Q1 2025, highlighting the strength of the Tioga Utica program [23] - The utility business filed a new rate case in Pennsylvania requesting a $20 million increase, which, if approved, would raise customer bills by about 11% [9][10] Market Data and Key Metrics Changes - Natural gas prices have shown significant volatility, with the February contract settling at nearly $7.50, a 140% increase from two weeks prior, marking a record move in NYMEX history [15] - The company anticipates a price environment for natural gas in the $3-$5 range, supported by strong structural demand from LNG exports and power generation [27] Company Strategy and Development Direction - The company is focused on operational excellence and growth, with plans to expand Seneca's inventory and improve capital efficiency, targeting a 30% gain since 2023 [6] - The company is optimistic about future pipeline expansion opportunities and is actively engaged in discussions for additional projects [7][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the natural gas market, citing all-time high demand and bipartisan support for an all-of-the-above energy approach [5][11] - The adjusted EPS guidance for the full year remains unchanged at $7.60-$8.10, with expectations for a 14% growth over the previous year [14][21] Other Important Information - The company is progressing with the acquisition of CenterPoint's Ohio LDC, expected to close in Q4 2026, with financing secured through a $350 million private placement [12][18] - Regulatory changes in Ohio are expected to shorten the rate case timeline and provide greater certainty in achieving allowed returns [20] Q&A Session Summary Question: Ability to take advantage of local price spikes - The company has a marketing portfolio that allows it to keep some gas available to take advantage of high local prices during cold weather [32][33] Question: Future growth projects in the pipeline business - Management indicated that there are additional opportunities for pipeline projects beyond the announced Tioga Pathway, with ongoing interest in the area [34][35] Question: Impact of federal permitting reform on pipeline projects - Management believes that permitting reform would expedite project development but does not fundamentally change their view on pipeline development [39] Question: Optimal production growth rate - The company aims for a mid-single digit growth rate, contingent on interstate pipeline capacity and market conditions [48] Question: Plans for further delineation or testing in the Upper Utica zone - The company is actively appraising and delineating additional locations in both the upper and lower Utica, with over 400 locations identified [50][51] Question: Variability of the frac barrier between upper and lower Utica - The company has a good understanding of the thickness of the impermeable barrier across its acreage, which is consistent and effective [72] Question: Incremental takeaway industry-wide from the basin - Management noted ongoing projects that are increasing takeaway capacity and expressed cautious optimism about future developments [76][77]