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 [5][13] - Adjusted EBITDA increased by 29% compared to the prior year, driven by higher production and natural gas prices [5] - The company reaffirmed its adjusted EPS guidance range for the fiscal year at $7.60-$8.10, with a midpoint of $7.85 [15] Business Line Data and Key Metrics Changes - The integrated upstream and gathering segment saw net production of 109 billion cubic feet (BCF), a 12% increase over Q1 2025 [24] - The utility business filed a new rate case requesting a $20 million increase in rates, which would result in an approximate 11% increase in customer bills if approved [9][10] - The regulated businesses benefited from a three-year rate settlement at the New York utility and a pipeline modernization tracker at the Pennsylvania utility [6] 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 [16] - 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 [29] 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 [7] - The Tioga Pathway project and Shippingport Lateral project are progressing well, with expectations for additional expansion opportunities [8] - The company is optimistic about the Ohio utility acquisition, which is expected to close in Q4 2026, enhancing its growth potential [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong outlook for natural gas demand, citing bipartisan support for an all-of-the-above energy approach [6] - The company noted that pricing fluctuations are expected to persist, but its hedge book provides downside protection for 70% of remaining production [16] - Management highlighted the importance of building more pipeline infrastructure to alleviate price volatility in the Northeast [55] Other Important Information - The company completed a $350 million private placement of common stock to satisfy equity needs for the Ohio utility acquisition [11][19] - The Ohio regulatory environment is improving, with new laws expected to shorten the rate case timeline and provide greater certainty in achieving allowed returns [22] Q&A Session Summary Question: Ability to take advantage of local price spikes - Management confirmed they keep a portion of gas available to capitalize on high local prices during extreme weather events [34] Question: Future growth projects in the pipeline business - Management indicated there are additional opportunities for pipeline projects beyond those currently announced, given the strategic location of their pipelines [37] Question: Impact of federal permitting reform on pipeline projects - Management believes permitting reform would expedite project development but does not fundamentally change their view on pipeline development [40] Question: Optimal production growth rate - Management stated that mid-single digit growth (3%-7%) is the target, contingent on interstate pipeline capacity and market conditions [50] Question: Co-development strategy for Upper Utica - Management is currently testing co-development strategies and remains flexible based on data and results from ongoing projects [64][65] Question: Incremental takeaway capacity from the basin - Management noted ongoing projects that will enhance takeaway capacity and expressed optimism about future infrastructure developments [76][77]