National Fuel Gas : Reports Fourth Quarter and Full Year Fiscal 2020 Earnings

	6363 Main Street/Williamsville, NY	14221
Release Date:	Immediate November 5, 2020 Kenneth E. Webster	Karen M. Camiolo
	Investor Relations	Treasurer
	716-857-7067	716-857-7344

NATIONAL FUEL REPORTS FOURTH QUARTER

AND FULL YEAR FISCAL 2020 EARNINGS

WILLIAMSVILLE, N.Y.: 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

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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)		2020			2019			2020			2019
Reported GAAP Earnings	$	(145,545)		$	47,281		$	(123,772)		$	304,290
Items impacting comparability:
Impairment of oil and gas properties (E&P)		253,441			-			449,438			-
Tax impact of impairment of oil and gas properties		(69,698)			-			(123,187)			-
Deferred tax valuation allowance as of March 31, 2020		-			-			56,770			-
Remeasurement of deferred income taxes under 2017 Tax Reform		-			-			-			(5,000)
Mark-to-market adjustments due to hedge ineffectiveness (E&P)		-			(1,313)			-			(2,096)
Tax impact of mark-to-market adjustments due to hedge ineffectiveness		-			276			-			440
Unrealized (gain) loss on other investments (Corporate / All Other)		(2,439)			949			(1,645)			2,045
Tax impact of unrealized (gain) loss on other investments		512			(199)			345			(429)
Adjusted Operating Results	$	36,271		$	46,994		$	257,949		$	299,250
Reported GAAP Earnings Per Share	$	(1.60)	$	0.54	$	(1.41)	$	3.51
Items impacting comparability:
Impairment of oil and gas properties, net of tax (E&P)		2.02			-			3.71			-
Deferred tax valuation allowance as of March 31, 2020		-			-			0.65			-
Remeasurement of deferred income taxes under 2017 Tax Reform		-			-			-			(0.06)
Mark-to-market adjustments due to hedge ineffectiveness, net of tax (E&P)		-			(0.01)			-			(0.02)
Unrealized (gain) loss on other investments, net of tax (Corporate / All Other)		(0.02)			0.01			(0.01)			0.02
Earnings per share impact of diluted shares		-			-			(0.02)			-
Adjusted Operating Results Per Share	$	0.40		$	0.54		$	2.92		$	3.45

FISCAL 2021 GUIDANCE UPDATE

National Fuel is revising its fiscal 2021 earnings guidance to reflect updated forecast assumptions and projections, including the impact of increased near-term natural gas price expectations since the Company's preliminary guidance was announced in August 2020. The Company is now projecting that earnings will be within the range of $3.55 to $3.85 per

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share, an increase of 27% from the Company's 2020 adjusted operating results at the midpoint of the updated guidance range. The increase from the preliminary guidance is primarily due to higher expected price realizations on Seneca's natural gas production and lower expected depreciation, depletion and amortization ("DD&A") rates at Seneca as a result of the Company's fourth quarter fiscal 2020 impairment, which is expected to be partially offset by lower expected price realizations on Seneca's crude oil production.

The Company is now assuming that NYMEX natural gas prices will average $3.00 per MMBtu in fiscal 2021, an increase of $0.35 per MMBtu from the $2.65 per MMBtu assumed in the preliminary guidance. Additionally, the Company is now assuming that WTI oil prices will average $37.50 per Bbl in fiscal 2021, a $5.00 decrease from the $42.50 per Bbl assumed in the previous guidance. For guidance purposes, the Company's updated projections approximate the current NYMEX forward markets for natural gas and oil and consider the impact of local sales point differentials and new physical firm sales, transportation, and financial hedge contracts.

During the fourth quarter, Seneca executed approximately 30 billion cubic feet ("Bcf") of new NYMEX natural gas swap contracts for fiscal 2021. Seneca currently has firm sales contracts in place for 275 Bcf, or approximately 90% of its projected fiscal 2021 Appalachian production, limiting its exposure to in-basin markets. Approximately 234 Bcf of those sales, or 77% of Seneca's expected Appalachian production, are either matched by a financial hedge, including a combination of swaps and no-cost collars, or were entered into at a fixed price.

In connection with the continued development of the Leidy South and FM100 projects, both of which are on track to come online in the fourth quarter of calendar 2021, the Company now plans to add a second horizontal drilling rig in Appalachia in early calendar 2021. Production from the first pad that will be drilled in connection with this activity addition is expected in early fiscal 2022. Overall, the Company's increased activity will allow Seneca to utilize its 330,000 dekatherms per day of incremental pipeline capacity on Leidy South to reach premium markets during the winter heating season. The Company expects this second drilling rig to focus on the development of its highly-economic Eastern Development Area ("EDA") assets, including its recently-acquired inventory in Tioga, County, Pa. In order to further mitigate the risk of commodity price exposure for this additional activity, Seneca executed approximately 16 Bcf of new NYMEX natural gas swap contracts for fiscal 2022 at an average price of $2.90 per Mcf. In total, Seneca now has approximately 170 Bcf of its fiscal 2022 Appalachian production secured by either financial hedges or fixed price physical sales contracts.

As a result of Seneca's additional activity, the Company is increasing its Exploration and Production segment capital expenditure range to $350 million to $390 million, an increase of $60 million at the midpoint of the Company's updated guidance range, and a decrease of approximately $15 million from Seneca's 2020 fiscal year capital expenditures. Based on the Company's fiscal 2021 assumptions, the Company expects its consolidated Exploration and Production and Gathering segment funds from operations to significantly exceed those segments' capital expenditures for the year, generating in excess of $100 million in consolidated free cash flow from these businesses.

In total, the Company's consolidated capital expenditures in fiscal 2021 are now expected to be in the range of $720 million to $830 million. Based on the Company's fiscal 2021 assumptions, it still anticipates its cash flow from operations to exceed its capital expenditures for the year.

The Company's other guidance assumptions remain largely unchanged from the previous guidance. Additional details on the Company's updated forecast assumptions and business segment guidance for fiscal 2021 are outlined in the table on page 8.

DISCUSSION OF FOURTH QUARTER RESULTS BY SEGMENT

The following earnings discussion of each operating segment for the quarter ended September 30, 2020 is summarized in a tabular form on pages 9 and 10 of this report (earnings drivers for the fiscal year ended September 30, 2020 are summarized on pages 11 and 12). It may be helpful to refer to those tables while reviewing this discussion.

Note that management defines Adjusted Operating Results as reported GAAP earnings adjusted for items impacting comparability, and Adjusted EBITDA as reported GAAP earnings before the following items: interest expense, income taxes, depreciation, depletion and amortization, other income and deductions, impairments, and other items reflected in operating income that impact comparability.

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Upstream Business

Exploration and Production Segment

The Exploration and Production segment operations are carried out by Seneca Resources Company, LLC ("Seneca"). Seneca explores for, develops and produces natural gas and oil reserves, primarily in Pennsylvania and California.

(in thousands)

GAAP Earnings

Impairment of oil and gas properties, net of tax Mark-to-market adjustments due to hedge ineffectiveness, net of tax Adjusted Operating Results

Adjusted EBITDA

	Three Months Ended
		September 30,
	2020		2019		Variance
$	(169,171)	$	25,208	$	(194,379)
	183,743		-		183,743
	-		(1,037)		1,037
$	14,572	$	24,171	$	(9,599)
$	75,439	$	89,509	$	(14,070)

Seneca's fourth quarter GAAP earnings decreased $194.4 million versus the prior year. This was primarily driven by a non-cash,pre-tax impairment charge of $253.4 million ($183.7 million after-tax) to write-down the value of Seneca's oil and natural gas reserves under the full cost method of accounting. This method requires Seneca to perform a quarterly "ceiling test" comparing the present value of future net revenues from its oil and natural gas reserves based on an unweighted arithmetic average of the first day of the month oil and gas prices for each month within the 12-month period prior to the end of the reporting period ("the ceiling") with the book value of those reserves at the balance sheet date. If the book value of the reserves exceeds the ceiling, a non-cash impairment charge must be recorded in order to reduce the book value of the reserves to the calculated ceiling. Seneca could potentially record non-cash impairments in future quarters depending on the commodity price environment.

Excluding this item, as well as the net impact of non-cashmark-to-market adjustments recorded in the prior year relating to hedge ineffectiveness (see table above), Seneca's fourth quarter earnings decreased $9.6 million as the positive impacts of higher natural gas production and a lower effective income tax rate after the effect of the impairment were more than offset by the negative impacts of lower realized natural gas and crude oil prices, lower crude oil production, higher operating expenses resulting from increased production and higher interest expense.

Seneca produced 67.3 Bcfe during the fourth quarter, an increase of 8.2 Bcfe, or 14%, from the prior year. Natural gas production increased 8.6 Bcf, or 15%, due primarily to production from the Company's acquisition of Appalachian upstream assets on July 31, 2020, and new Marcellus and Utica wells in Appalachia, partially offset by approximately 6 Bcf of price- related curtailments. Net production increased 5.5 Bcf to 36.2 Bcf in the Eastern Development Area ("EDA"), primarily due to higher production from the Company's recent Appalachian acquisition, partly offset by natural production declines and the impact of price-related curtailments. Net production increased 3.2 Bcf to 27.3 Bcf in Seneca's Western Development Area ("WDA"), primarily due to the ongoing development program in the region partially offset by price-related curtailments. Oil production for the fourth quarter decreased 56,000 Bbls, or 9%, from the prior year due to a decline in production from assets in the Midway Sunset area of California driven by a reduction in steam injection rates in response to decreased oil prices, as well as workover activities, partially offset by new production brought on-line in Seneca's Coalinga development area.

Seneca's average realized natural gas price, after the impact of transportation costs and $0.28 per Mcf of hedging gains, was $1.92 per Mcf, a decrease of $0.34 per Mcf from the prior year. This decline was largely due to lower NYMEX prices and lower spot pricing at local sales points in Pennsylvania. Seneca's average realized oil price, after the impact of $14.49 per Bbl of hedging gains, was $55.70 per Bbl, a decrease of $5.30 per Bbl compared to the prior year. The decline in oil price realizations was due primarily to lower market prices for unhedged crude oil during the quarter and reduced price differentials at local sales points in California.

Lease operating and transportation ("LOE") expense increased $4.6 million primarily due to higher transportation costs in Appalachia from increased production, partly offset by a decline in well repairs, workover activity and steam fuel costs in California. LOE expense includes the fees paid to the Company's Gathering segment for gathering and compression services used to connect Seneca's Marcellus and Utica production to sales points along interstate pipelines. DD&A expense decreased $0.7 million due largely to the ceiling test impairments recorded during fiscal 2020, partially offset by higher natural gas production. On a unit of production basis, Seneca's combined general and administrative ("G&A"), LOE and DD&A expenses during the quarter collectively decreased $0.15 per Mcfe, or 8%, during the quarter. Interest expense

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