WILLIAMSVILLE, N.Y., Nov. 04, 2021 (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, 2021.

FISCAL 2021 FOURTH QUARTER SUMMARY

  • GAAP net income of $87.0 million, or $0.95 per share, compared to GAAP net loss of $145.5 million, or $1.60 per share, in the prior year.
  • Adjusted operating results of $87.3 million, or $0.95 per share, an increase of 138%, compared to $0.40 per share in the prior year (see non-GAAP reconciliation on page 2).
  • Adjusted EBITDA of $215.9 million, an increase of 35%, compared to $159.6 million in the prior year (see non-GAAP reconciliation on page 25).
  • E&P segment Adjusted EBITDA of $120.6 million, an increase of 60% from the prior year.
  • E&P segment net production of 79.6 Bcfe, an increase of 12.3 Bcfe, or 18%, from the prior year.
  • Gathering segment Adjusted EBITDA of $37.9 million, an increase of 15% from the prior year.
  • Pipeline & Storage segment Adjusted EBITDA of $49.1 million, an increase of 5% from the prior year.

FISCAL 2021 HIGHLIGHTS

  • GAAP net income of $363.6 million, or $3.97 per share, compared to GAAP net loss of $123.8 million, or $1.41 per share, in the prior year.
  • Adjusted operating results of $393.1 million, or $4.29 per share, an increase of 47%, compared to $2.92 per share in the prior year (see non-GAAP reconciliation on page 2).
  • Successfully integrated the Company's fiscal 2020 Appalachian acquisition, with E&P segment net production of 327.4 Bcfe, an increase of 85.9 Bcfe, or 36%, from the prior year, and a corresponding 38% increase in Gathering segment throughput.
  • Reduced E&P segment cash operating costs (combined G&A expense, LOE expense, other operation and maintenance expense, and property, franchise, and other taxes) to $1.14 per Mcfe, a decrease of approximately $0.09 per Mcfe, or 7%, from the prior year.
  • Continued growth of Pipeline & Storage segment, with revenues of $343.6 million, an increase of $34.0 million, or 11%, from the prior year, driven largely by the Company's Empire North expansion project.
  • Invested $79.7 million in Utility system modernization and reliability, replacing over 150 miles of older vintage mains and services, and bringing 5-year total to over $358 million.
  • Increased shareholder dividend for the 51st consecutive year to an annual rate of $1.82 per share.
  • Published second annual Corporate Responsibility Report in September 2021, which includes additional climate-related information under the Task Force on Climate-Related Financial Disclosures framework, enhanced disclosure of scope 1 and scope 2 emissions, and methane intensity and greenhouse gas emission reduction targets.

MANAGEMENT COMMENTS

David P. Bauer, President and Chief Executive Officer of National Fuel Gas Company, stated: “National Fuel closed out an excellent fiscal 2021, with a 47% increase in our adjusted operating results compared to last year. The successful integration of our fiscal 2020 Appalachian acquisition, continued growth of our FERC-regulated pipeline business, and higher commodity prices all contributed to the strong results and position National Fuel for success in the coming years.

“As we move into fiscal 2022, the expected December 1, 2021 in-service of our FM100 expansion and modernization project will drive further growth for National Fuel. Once complete, this project is expected to deliver approximately $50 million in incremental annual revenues for the Pipeline and Storage segment, and will provide desirable pipeline takeaway capacity to higher value Mid-Atlantic markets, allowing for further growth in both our Exploration and Production and Gathering segments.

“Overall, the FM100 Project serves as a key example of the value of our integrated business model. Coupled with the Company’s commitment to reducing our emissions footprint in all segments, as evidenced by our targets set out in our recently published Corporate Responsibility Report, we believe we can generate strong, sustainable returns in the years ahead and deliver long-term value for our shareholders.”

RECONCILIATION OF GAAP EARNINGS TO ADJUSTED OPERATING RESULTS

         
  Three Months Ended  Fiscal Year Ended
   September 30,  September 30,
(in thousands except per share amounts) 2021 2020 2021 2020
Reported GAAP Earnings $86,962  $(145,545) $363,647  $(123,772)
Items impacting comparability:        
Impairment of oil and gas properties (E&P) —  253,441  76,152  449,438 
Tax impact of impairment of oil and gas properties —  (69,698) (20,980) (123,187)
Gain on sale of timber properties (Corporate / All Other) —  —  (51,066) — 
Tax impact of gain on sale of timber properties —  —  14,069  — 
Premium paid on early redemption of debt —  —  15,715  — 
Tax impact of premium paid on early redemption of debt —  —  (4,321) — 
Deferred tax valuation allowance —  —  —  56,770 
Unrealized (gain) loss on other investments (Corporate / All Other) 395  (2,439) (181) (1,645)
Tax impact of unrealized (gain) loss on other investments (83) 512  38  345 
Adjusted Operating Results $87,274  $36,271  $393,073  $257,949 
         
Reported GAAP Earnings Per Share $0.95  $(1.60) $3.97  $(1.41)
Items impacting comparability:        
Impairment of oil and gas properties, net of tax (E&P) —  2.02  0.60  3.71 
Gain on sale of timber properties, net of tax (Corporate / All Other) —  —  (0.40) — 
Premium paid on early redemption of debt, net of tax —  —  0.12  — 
Deferred tax valuation allowance —  —  —  0.65 
Unrealized (gain) loss on other investments, net of tax (Corporate / All Other) —  (0.02) —  (0.01)
Earnings per share impact of diluted shares —  —  —  (0.02)
Adjusted Operating Results Per Share $0.95  $0.40  $4.29  $2.92 
                 

FISCAL 2022 GUIDANCE UPDATE

National Fuel is revising its fiscal 2022 earnings guidance to reflect updated forecast assumptions and projections, including the impact of increased natural gas price expectations since the Company’s preliminary guidance was announced in August 2021. The Company is now projecting that earnings will be within the range of $5.05 to $5.45 per share, an increase of 22% from the Company’s 2021 adjusted operating results at the midpoint of the updated guidance range.

Due to the meaningful difference between current winter and summer NYMEX forward natural gas prices for fiscal 2022, the Company is revising its guidance to reflect projections for both the first half and second half of this fiscal year. The Company is now assuming that NYMEX natural gas prices will average $5.50 per MMBtu for the first six months of fiscal 2022 (October-March) and $3.75 per MMBtu for the second half of fiscal 2022 (April-September). Additionally, the Company is now assuming that WTI oil prices will average $75.00 per Bbl in fiscal 2022, a $10.00 increase from the $65.00 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.

Consistent with preliminary guidance, the Exploration and Production segment’s fiscal 2022 net production remains unchanged, which is expected to be in the range of 335 to 365 Bcfe. Seneca currently has firm sales contracts in place for approximately 93% of its projected fiscal 2022 Appalachian production, limiting its exposure to in-basin markets. Approximately 76% of Seneca’s expected Appalachian production is either matched by a financial hedge, including a combination of swaps and no-cost collars, or were entered into at a fixed price. The Company’s consolidated and individual segment capital expenditures guidance also remain unchanged from the preliminary guidance.

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 2022 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, 2021 is summarized in a tabular form on pages 9 and 10 of this report (earnings drivers for the fiscal year ended September 30, 2021 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.

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.

 Three Months Ended
 September 30,
(in thousands)2021 2020 Variance
GAAP Earnings$55,703  $(169,171) $224,874 
Impairment of oil and gas properties, net of tax—  183,743  (183,743)
Adjusted Operating Results$55,703  $14,572  $41,131 
      
Adjusted EBITDA$120,588  $75,439  $45,149 
            

Seneca’s fourth quarter GAAP earnings increased $224.9 million versus the prior year, primarily due to the prior-year fourth quarter impact of a non-cash ceiling test impairment charge of $183.7 million (after-tax). Excluding this item, Seneca’s fourth quarter earnings increased $41.1 million primarily due to higher natural gas production and higher realized natural gas and crude oil prices, as well as lower interest expense and a lower effective income tax rate, partially offset by higher operating expenses.

Seneca produced 79.6 Bcfe during the fourth quarter, an increase of 12.3 Bcfe, or 18%, from the prior year. The improvement was due to an increase in natural gas production, primarily due to the Company's fourth quarter fiscal 2020 Appalachian acquisition coupled with production growth from Seneca's other core development areas. Approximately 6.7 Bcf of the natural gas production increase came from the Eastern Development Area ("EDA"), while the remaining increase of 5.6 Bcf was attributable to Seneca’s Western Development Area ("WDA"). Seneca's crude oil production in California decreased 4 MBbls, or 1%, versus the prior year.

Seneca's average realized natural gas price, after the impact of hedging and transportation costs, was $2.37 per Mcf, an increase of $0.45 per Mcf from the prior year. This increase was primarily due to higher NYMEX prices and higher spot prices at local sales points in Pennsylvania. Seneca's average realized oil price, after the impact of hedging, was $60.04 per Bbl, an increase of $4.34 per Bbl compared to the prior year. The improvement in oil price realizations was primarily due to stronger commodity pricing.

Lease operating and transportation (“LOE”) expense increased $13.0 million primarily due to higher transportation costs in Appalachia from increased production, as well as higher well repairs, workover activity and steam fuel costs in California. LOE expense includes $45.8 million in intercompany expense for gathering and compression services used to connect Seneca’s Appalachian production to sales points along interstate pipelines. DD&A expense increased $1.7 million due largely to higher natural gas production, partially offset by the impact of ceiling test impairments recorded during fiscal 2020. Other taxes increased $2.2 million primarily due to higher impact fee accruals in Pennsylvania, driven by higher expected NYMEX natural gas prices for calendar 2021.

Interest expense decreased $3.6 million due primarily to lower weighted average interest rates as a result of the Company's issuance of a 2.95% coupon 10-year note in February 2021, which replaced a 4.9% coupon 10-year note that was retired in March 2021. The reduction in Seneca's effective income tax rate was primarily driven by a decrease to a valuation allowance for deferred tax assets that was initially established in the second quarter of fiscal 2020, partially offset by a higher effective state income tax rate as a result of the Company's Appalachian acquisition that caused a change in the mix of earnings between state jurisdictions.

Proved Reserves Year-End Update

Seneca’s total proved natural gas and crude oil reserves at September 30, 2021 were 3,853 Bcfe, an increase of 395 Bcfe, or 11%, from September 30, 2020. Seneca’s proved developed reserves at the end of fiscal 2021 were 3,217 Bcfe, representing 84% of total proved reserves, which is consistent with the prior year. The proved reserves base is approximately 97% natural gas and 3% oil. In fiscal 2021, Seneca recorded 696 Bcfe of proved reserve extensions and discoveries, due primarily to Utica and Marcellus locations, and 27 Bcfe of net positive revisions due primarily to certain price-related revisions, improvements in well performance and changes in development plans. As a result, Seneca replaced 221% of its fiscal 2021 production.

Midstream Businesses

Pipeline and Storage Segment

The Pipeline and Storage segment’s operations are carried out by National Fuel Gas Supply Corporation (“Supply Corporation”) and Empire Pipeline, Inc. (“Empire”). The Pipeline and Storage segment provides natural gas transportation and storage services to affiliated and non-affiliated companies through an integrated system of pipelines and underground natural gas storage fields in western New York and Pennsylvania.

 Three Months Ended
 September 30,
(in thousands)2021 2020 Variance
GAAP Earnings$21,482  $16,045  $5,437 
      
Adjusted EBITDA$49,131  $46,966  $2,165 
            

The Pipeline and Storage segment’s fourth quarter GAAP earnings increased $5.4 million versus the prior year primarily due to higher operating revenues and an increase in other income, as well as a lower effective income tax rate, partially offset by higher O&M expense and higher DD&A expense. The increase in operating revenues of $4.7 million, or 6%, was largely due to new demand charges for transportation service from the Company's Empire North expansion project, which was placed in service near the end of the fourth quarter of fiscal 2020, combined with an increase in revenues from a surcharge for pipeline safety and greenhouse gas regulatory costs, which went into effect in November 2020 in accordance with Supply Corporation's fiscal 2020 rate case settlement. Additionally, the Company recognized increased revenue from a surcharge mechanism for power costs related to electric motor drive compression on the Empire North project, for which offsetting O&M expense was recognized during the quarter. These positive items were partially offset by a modest decrease in transportation revenue from miscellaneous contract revisions. The increase in other income of $2.0 million was primarily due to an increase in allowance for funds used during construction (AFUDC) related to Supply Corporation's FM100 project. The reduction in the Pipeline and Storage segment's effective income tax rate was primarily due to timing differences in book and tax deductions. O&M expense increased $1.5 million primarily due to higher pipeline integrity costs, higher vehicle fuel costs and higher personnel costs, as well as the aforementioned Empire power costs. The increase in DD&A expense of $1.0 million was primarily attributable to incremental depreciation from the Empire North expansion project.

Gathering Segment

The Gathering segment’s operations are carried out by National Fuel Gas Midstream Company, LLC’s limited liability companies. The Gathering segment constructs, owns and operates natural gas gathering pipelines and compression facilities in the Appalachian region, which primarily delivers Seneca’s gross Appalachian production to the interstate pipeline system.

 Three Months Ended
 September 30,
(in thousands)2021 2020 Variance
GAAP Earnings$18,597  $17,550  $1,047 
      
Adjusted EBITDA$37,858  $33,062  $4,796 
            

The Gathering segment’s fourth quarter GAAP earnings increased $1.0 million versus the prior year. The earnings increase was primarily driven by higher operating revenues, which was partially offset by higher DD&A expense, higher O&M expense and a higher effective income tax rate. Operating revenues increased $7.8 million, or 20%, primarily due to new Marcellus and Utica wells that were brought online, as well as from increased gathering throughput resulting from the Company's Appalachian acquisition in August 2020. Compression leasing expenses associated with the Appalachian acquisition were partially responsible for the $3.0 million increase in O&M expense, with the remainder of the increase due to higher compression facility and maintenance costs, as well as higher fuel costs. The increase in DD&A expense of $1.4 million was primarily attributable to incremental depreciation expense related to the Company's Appalachian acquisition, as well as higher average depreciable plant in service compared to the prior year. The increase in the Gathering segment's effective income tax rate was primarily driven by a higher effective state income tax rate as a result of the Company's Appalachian acquisition that caused a change in the mix of earnings between state jurisdictions.

Downstream Businesses

Utility Segment

The Utility segment operations are carried out by National Fuel Gas Distribution Corporation (“Distribution”), which sells or transports natural gas to customers located in western New York and northwestern Pennsylvania.

 Three Months Ended
 September 30,
(in thousands)2021 2020 Variance
GAAP Earnings$(5,587) $(6,969) $1,382 
      
Adjusted EBITDA$11,093  $8,550  $2,543 
            

The Utility segment’s fourth quarter net loss was $1.4 million lower than the prior-year fourth quarter primarily due to higher customer margins (operating revenues less purchased gas sold) and lower O&M expense, partially offset by higher DD&A expense. The increase in customer margin was due primarily to the positive impact of adjustments related to certain regulatory rate and cost recovery mechanisms subject to annual reconciliation, as well as higher revenues from the Company's system modernization tracking mechanism in its New York service territory. O&M expense decreased $0.7 million primarily due to lower mandated regulatory compliance fees as well as lower accruals for the allowance for uncollectible accounts, which were higher in the prior-year fourth quarter from the economic backdrop brought on by COVID-19, partially offset by an increase in vehicle fuel costs. The $0.6 million increase in DD&A expense was primarily attributable to higher average depreciable plant in service compared to the prior year.

Corporate and All Other

The Company’s operations that are included in Corporate and All Other generated a combined net loss of $3.2 million in the current year fourth quarter, generally consistent with the combined net loss of $3.0 million generated in the prior-year fourth quarter.

EARNINGS TELECONFERENCE

The Company will host a conference call on Friday, November 5, 2021, at 11 a.m. Eastern Time to discuss this announcement. Pre-registration is required to access the teleconference by phone in a listen-only mode by following this link: http://www.directeventreg.com/registration/event/1909399. To access the webcast, visit the Events Calendar under the News & Events page on the NFG Investor Relations website at investor.nationalfuelgas.com. A replay of the conference call will be available approximately two hours following the teleconference at the same website link and by phone (toll-free) at 800-585-8367 using conference ID number “1909399”. Both the webcast and conference call replay will be available until the close of business on Friday, November 12, 2021.

National Fuel is an integrated energy company reporting financial results for four operating segments: Exploration and Production, Pipeline and Storage, Gathering, and Utility. Additional information about National Fuel is available at www.nationalfuelgas.com.

Certain statements contained herein, including statements identified by the use of the words “anticipates,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “predicts,” “projects,” “believes,” “seeks,” “will,” “may” and similar expressions, and statements which are other than statements of historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Company’s expectations, beliefs and projections contained herein are expressed in good faith and are believed to have a reasonable basis, but there can be no assurance that such expectations, beliefs or projections will result or be achieved or accomplished. In addition to other factors, the following are important factors that could cause actual results to differ materially from those discussed in the forward-looking statements: changes in laws, regulations or judicial interpretations to which the Company is subject, including those involving derivatives, taxes, safety, employment, climate change, other environmental matters, real property, and exploration and production activities such as hydraulic fracturing; governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, target rates of return, rate design, retained natural gas and system modernization), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal; the Company’s ability to estimate accurately the time and resources necessary to meet emissions targets; governmental/regulatory actions and/or market pressures to reduce or eliminate reliance on natural gas; the length and severity of the ongoing COVID-19 pandemic, including its impacts across our businesses on demand, operations, global supply chains and liquidity; changes in economic conditions, including global, national or regional recessions, and their effect on the demand for, and customers’ ability to pay for, the Company’s products and services; changes in the price of natural gas or oil; the creditworthiness or performance of the Company’s key suppliers, customers and counterparties; financial and economic conditions, including the availability of credit, and occurrences affecting the Company’s ability to obtain financing on acceptable terms for working capital, capital expenditures and other investments, including any downgrades in the Company’s credit ratings and changes in interest rates and other capital market conditions; impairments under the SEC’s full cost ceiling test for natural gas and oil reserves; delays or changes in costs or plans with respect to Company projects or related projects of other companies, including disruptions due to the COVID-19 pandemic, as well as difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators; the Company's ability to complete planned strategic transactions; the Company's ability to successfully integrate acquired assets and achieve expected cost synergies; changes in price differentials between similar quantities of natural gas or oil sold at different geographic locations, and the effect of such changes on commodity production, revenues and demand for pipeline transportation capacity to or from such locations; the impact of information technology disruptions, cybersecurity or data security breaches; factors affecting the Company’s ability to successfully identify, drill for and produce economically viable natural gas and oil reserves, including among others geology, lease availability, title disputes, weather conditions, shortages, delays or unavailability of equipment and services required in drilling operations, insufficient gathering, processing and transportation capacity, the need to obtain governmental approvals and permits, and compliance with environmental laws and regulations; increasing health care costs and the resulting effect on health insurance premiums and on the obligation to provide other post-retirement benefits; other changes in price differentials between similar quantities of natural gas or oil having different quality, heating value, hydrocarbon mix or delivery date; the cost and effects of legal and administrative claims against the Company or activist shareholder campaigns to effect changes at the Company; uncertainty of oil and gas reserve estimates; significant differences between the Company’s projected and actual production levels for natural gas or oil; changes in demographic patterns and weather conditions; changes in the availability, price or accounting treatment of derivative financial instruments; changes in laws, actuarial assumptions, the interest rate environment and the return on plan/trust assets related to the Company’s pension and other post-retirement benefits, which can affect future funding obligations and costs and plan liabilities; economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities or acts of war; significant differences between the Company’s projected and actual capital expenditures and operating expenses; or increasing costs of insurance, changes in coverage and the ability to obtain insurance. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date thereof.

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

GUIDANCE SUMMARY

As discussed on page 2, the Company is revising its earnings guidance for fiscal 2022. Additional details on the Company's forecast assumptions and business segment guidance are outlined in the table below.

While the Company expects to record certain adjustments to unrealized gain or loss on investments during the fiscal year ending September 30, 2022, the amounts of these and other potential adjustments are not reasonably determinable at this time. As such, the Company is unable to provide earnings guidance other than on a non-GAAP basis.

 Preliminary FY 2022 Guidance Updated FY 2022 Guidance
Consolidated Earnings per Share, excluding items impacting comparability$4.40 to $4.80 $5.05 to $5.45
Consolidated Effective Tax Rate~ 25-26% ~ 25-26%
    
Capital Expenditures (Millions)   
Exploration and Production$400 - $450 $400 - $450
Pipeline and Storage$100 - $150 $100 - $150
Gathering$50 - $60 $50 - $60
Utility$90 - $100 $90 - $100
Consolidated Capital Expenditures$640 - $760 $640 - $760
    
Exploration & Production Segment Guidance   
    
Commodity Price Assumptions   
NYMEX natural gas price (Oct - Mar | Apr - Sep)$3.50 /MMBtu $5.50 /MMBtu | $3.75 /MMBtu
Appalachian basin spot price (Oct - Mar | Apr - Sep)$2.85 /MMBtu | $2.25 /MMBtu $4.80 /MMBtu | $2.75 /MMBtu
NYMEX (WTI) crude oil price$65.00 /Bbl $75.00 /Bbl
California oil price premium (% of WTI)96% 97%
    
Production (Bcfe)335 to 365 335 to 365
    
E&P Operating Costs ($/Mcfe)   
LOE$0.82 - $0.85 $0.83 - $0.86
G&A$0.19 - $0.21 $0.19 - $0.21
DD&A$0.59 - $0.62 $0.59 - $0.62
    
Other Business Segment Guidance (Millions)   
Gathering Segment Revenues$200 - $225 $200 - $225
Pipeline and Storage Segment Revenues$360 - $380 $360 - $380
    


 
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
QUARTER ENDED SEPTEMBER 30, 2021
(Unaudited)
            
 Upstream Midstream Downstream    
            
 Exploration & Pipeline &     Corporate /  
(Thousands of Dollars)Production Storage Gathering Utility All Other Consolidated*
            
Fourth quarter 2020 GAAP earnings$(169,171) $16,045  $17,550  $(6,969) $(3,000) $(145,545)
Items impacting comparability:           
Impairment of oil and gas properties253,441          253,441 
Tax impact of impairment of oil and gas properties(69,698)         (69,698)
Unrealized (gain) loss on other investments        (2,439) (2,439)
Tax impact of unrealized (gain) loss on other investments        512  512 
Fourth quarter 2020 adjusted operating results14,572  16,045  17,550  (6,969) (4,927) 36,271 
Drivers of adjusted operating results**           
Upstream Revenues           
Higher (lower) natural gas production18,648          18,648 
Higher (lower) crude oil production(179)         (179)
Higher (lower) realized natural gas prices, after hedging27,146          27,146 
Higher (lower) realized crude oil prices, after hedging1,893          1,893 
Midstream and All Other Revenues           
Higher (lower) operating revenues  3,712  6,160    (768) 9,104 
Downstream Margins***           
Impact of usage and weather      (591)   (591)
System modernization tracker revenues      829    829 
Regulatory revenue adjustments      1,439    1,439 
Operating Expenses           
Lower (higher) lease operating and transportation expenses(10,298)         (10,298)
Lower (higher) operating expenses  (1,178) (2,371) 615  2,199  (735)
Lower (higher) property, franchise and other taxes(1,737) (279)       (2,016)
Lower (higher) depreciation / depletion(1,318) (781) (1,133) (505) 912  (2,825)
Other Income (Expense)           
(Higher) lower other deductions  1,998      528  2,526 
(Higher) lower interest expense2,854  847    273  (916) 3,058 
Income Taxes           
Lower (higher) income tax expense / effective tax rate3,906  1,662  (1,360) (551) 114  3,771 
All other / rounding216  (544) (249) (127) (63) (767)
Fourth quarter 2021 adjusted operating results55,703  21,482  18,597  (5,587) (2,921) 87,274 
Items impacting comparability:           
Unrealized gain (loss) on other investments        (395) (395)
Tax impact of unrealized gain (loss) on other investments        83  83 
Fourth quarter 2021 GAAP earnings$55,703  $21,482  $18,597  $(5,587) $(3,233) $86,962 
            
* Amounts do not reflect intercompany eliminations.
** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate.
*** Downstream margin defined as operating revenues less purchased gas expense.
 


 
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
QUARTER ENDED SEPTEMBER 30, 2021
(Unaudited)
            
 Upstream Midstream Downstream     
            
 Exploration & Pipeline &     Corporate /  
 Production Storage Gathering Utility All Other Consolidated*
            
Fourth quarter 2020 GAAP earnings per share$(1.86) $0.18  $0.19  $(0.08) $(0.03) $(1.60)
Items impacting comparability:           
Impairment of oil and gas properties, net of tax2.02          2.02 
Unrealized (gain) loss on other investments, net of tax        (0.02) (0.02)
Fourth quarter 2020 adjusted operating results per share0.16  0.18  0.19  (0.08) (0.05) 0.40 
Drivers of adjusted operating results**           
Upstream Revenues           
Higher (lower) natural gas production0.20          0.20 
Higher (lower) crude oil production—          — 
Higher (lower) realized natural gas prices, after hedging0.30          0.30 
Higher (lower) realized crude oil prices, after hedging0.02          0.02 
Midstream and All Other Revenues           
Higher (lower) operating revenues  0.04  0.07    (0.01) 0.10 
Downstream Margins***           
Impact of usage and weather      (0.01)   (0.01)
System modernization tracker revenues      0.01    0.01 
Regulatory revenue adjustments      0.02    0.02 
Operating Expenses           
Lower (higher) lease operating and transportation expenses(0.11)         (0.11)
Lower (higher) operating expenses  (0.01) (0.03) 0.01  0.02  (0.01)
Lower (higher) property, franchise and other taxes(0.02) —        (0.02)
Lower (higher) depreciation / depletion(0.01) (0.01) (0.01) (0.01) 0.01  (0.03)
Other Income (Expense)           
(Higher) lower other deductions  0.02      0.01  0.03 
(Higher) lower interest expense0.03  0.01    —  (0.01) 0.03 
Income Taxes           
Lower (higher) income tax expense / effective tax rate0.04  0.02  (0.01) (0.01) —  0.04 
All other / rounding—  (0.02) (0.01) 0.01  —  (0.02)
Fourth quarter 2021 adjusted operating results per share0.61  0.23  0.20  (0.06) (0.03) 0.95 
Items impacting comparability:           
Unrealized gain (loss) on other investments, net of tax        —  — 
Fourth quarter 2021 GAAP earnings per share$0.61  $0.23  $0.20  $(0.06) $(0.03) $0.95 
            
* Amounts do not reflect intercompany eliminations.
** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate.
*** Downstream margin defined as operating revenues less purchased gas expense.
 


 
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
TWELVE MONTHS ENDED SEPTEMBER 30, 2021
(Unaudited)
            
 Upstream Midstream Downstream    
            
 Exploration & Pipeline &     Corporate /  
(Thousands of Dollars)Production Storage Gathering Utility All Other Consolidated*
            
Fiscal 2020 GAAP earnings$(326,904) $78,860  $68,631  $57,366  $(1,725) $(123,772)
Items impacting comparability:           
Impairment of oil and gas properties449,438          449,438 
Tax impact of impairment of oil and gas properties(123,187)         (123,187)
Deferred tax valuation allowance60,463    (3,769)   76  56,770 
Unrealized (gain) loss on other investments        (1,645) (1,645)
Tax impact of unrealized (gain) loss on other investments        345  345 
Fiscal 2020 adjusted operating results59,810  78,860  64,862  57,366  (2,949) 257,949 
Drivers of adjusted operating results**           
Upstream Revenues           
Higher (lower) natural gas production141,512          141,512 
Higher (lower) crude oil production(5,073)         (5,073)
Higher (lower) realized natural gas prices, after hedging44,183          44,183 
Higher (lower) realized crude oil prices, after hedging(727)         (727)
Midstream and All Other Revenues           
Higher (lower) operating revenues  26,823  39,793    (2,693) 63,923 
Downstream Margins***           
Impact of usage and weather      (1,069)   (1,069)
System modernization tracker revenues      3,732    3,732 
Regulatory revenue adjustments      273    273 
Higher (lower) energy marketing margins        (5,893) (5,893)
Operating Expenses           
Lower (higher) lease operating and transportation expenses(50,280)         (50,280)
Lower (higher) operating expenses(5,262) (2,443) (8,899) (2,585) 4,101  (15,088)
Lower (higher) property, franchise and other taxes(5,193) (435)       (5,628)
Lower (higher) depreciation / depletion(8,191) (6,699) (7,829) (1,745) 1,439  (23,025)
Other Income (Expense)           
(Higher) lower other deductions  960    (323) 2,818  3,455 
(Higher) lower interest expense2,534  (6,514) (4,464)   (2,536) (10,980)
Income Taxes           
Lower (higher) income tax expense / effective tax rate(6,679) 2,716  (2,288) (1,216) 3,401  (4,066)
All other / rounding1,164  (726) (217) (98) (248) (125)
Fiscal 2021 adjusted operating results167,798  92,542  80,958  54,335  (2,560) 393,073 
Items impacting comparability:           
Impairment of oil and gas properties(76,152)         (76,152)
Tax impact of impairment of oil and gas properties20,980          20,980 
Gain on sale of timber properties        51,066  51,066 
Tax impact of gain on sale of timber properties        (14,069) (14,069)
Premium paid on early redemption of debt(14,772)   (943)     (15,715)
Tax impact of premium paid on early redemption of debt4,062    259      4,321 
Unrealized gain (loss) on other investments        181  181 
Tax impact of unrealized gain (loss) on other investments        (38) (38)
Fiscal 2021 GAAP earnings$101,916  $92,542  $80,274  $54,335  $34,580  $363,647 
            
* Amounts do not reflect intercompany eliminations.
** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate.
*** Downstream margin defined as operating revenues less purchased gas expense.
 


 
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
TWELVE MONTHS ENDED SEPTEMBER 30, 2021
(Unaudited)
            
 Upstream Midstream Downstream    
            
 Exploration & Pipeline &     Corporate /  
 Production Storage Gathering Utility All Other Consolidated*
Fiscal 2020 GAAP earnings per share$(3.72) $0.90  $0.78  $0.65  $(0.02) $(1.41)
Items impacting comparability:           
Impairment of oil and gas properties, net of tax3.71          3.71 
Deferred tax valuation allowance0.69    (0.04)   —  0.65 
Unrealized (gain) loss on other investments, net of tax        (0.01) (0.01)
Earnings per share impact of diluted shares  (0.01) (0.01)     (0.02)
Fiscal 2020 adjusted operating results per share0.68  0.89  0.73  0.65  (0.03) 2.92 
Drivers of adjusted operating results**           
Upstream Revenues           
Higher (lower) natural gas production1.54          1.54 
Higher (lower) crude oil production(0.06)         (0.06)
Higher (lower) realized natural gas prices, after hedging0.48          0.48 
Higher (lower) realized crude oil prices, after hedging(0.01)         (0.01)
Midstream and All Other Revenues           
Higher (lower) operating revenues  0.29  0.43    (0.03) 0.69 
Downstream Margins***           
Impact of usage and weather      (0.01)   (0.01)
System modernization tracker revenues      0.04    0.04 
Regulatory revenue adjustments      —    — 
Higher (lower) energy marketing margins        (0.06) (0.06)
Operating Expenses           
Lower (higher) lease operating and transportation expenses(0.55)         (0.55)
Lower (higher) operating expenses(0.06) (0.03) (0.10) (0.03) 0.04  (0.18)
Lower (higher) property, franchise and other taxes(0.06) —        (0.06)
Lower (higher) depreciation / depletion(0.09) (0.07) (0.09) (0.02) 0.02  (0.25)
Other Income (Expense)           
(Higher) lower other deductions  0.01    —  0.03  0.04 
(Higher) lower interest expense0.03  (0.07) (0.05)   (0.03) (0.12)
Income Taxes           
Lower (higher) income tax expense / effective tax rate(0.07) 0.03  (0.02) (0.01) 0.04  (0.03)
Impact of additional shares(0.02) (0.03) (0.03) (0.03) —  (0.11)
All other / rounding0.02  (0.01) 0.01  —  —  0.02 
Fiscal 2021 adjusted operating results per share1.83  1.01  0.88  0.59  (0.02) 4.29 
Items impacting comparability:           
Impairment of oil and gas properties, net of tax(0.60)         (0.60)
Gain on sale of timber properties, net of tax        0.40  0.40 
Premium paid on early redemption of debt, net of tax(0.12)   —      (0.12)
Unrealized gain (loss) on other investments, net of tax        —  — 
Fiscal 2021 GAAP earnings per share$1.11  $1.01  $0.88  $0.59  $0.38  $3.97 
            
* Amounts do not reflect intercompany eliminations.
** Drivers of adjusted operating results have been calculated using the 21% federal statutory rate.
*** Downstream margin defined as operating revenues less purchased gas expense.
 


        
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
        
(Thousands of Dollars, except per share amounts)       
 Three Months Ended Twelve Months Ended
 September 30, September 30,
 (Unaudited) (Unaudited)
SUMMARY OF OPERATIONS2021 2020 2021 2020
Operating Revenues:       
Utility and Energy Marketing Revenues$80,302  $78,016  $667,549  $728,336 
Exploration and Production and Other Revenues215,664  155,811  837,597  611,885 
Pipeline and Storage and Gathering Revenues60,022  54,162  237,513  206,070 
 355,988  287,989  1,742,659  1,546,291 
Operating Expenses:       
Purchased Gas(5,190) (5,773) 171,827  233,890 
Operation and Maintenance:       
Utility and Energy Marketing40,026  42,120  179,547  181,051 
Exploration and Production and Other46,007  39,800  173,041  148,856 
Pipeline and Storage and Gathering35,747  31,151  123,218  108,640 
Property, Franchise and Other Taxes23,454  21,132  94,713  88,400 
Depreciation, Depletion and Amortization83,671  80,097  335,303  306,158 
Impairment of Oil and Gas Producing Properties—  253,441  76,152  449,438 
 223,715  461,968  1,153,801  1,516,433 
Gain on Sale of Timber Properties—  —  51,066  — 
Operating Income (Loss)132,273  (173,979) 639,924  29,858 
        
Other Income (Expense):       
Other Income (Deductions)(160) 159  (15,238) (17,814)
Interest Expense on Long-Term Debt(30,161) (32,159) (141,457) (110,012)
Other Interest Expense(270) (2,202) (4,900) (7,065)
        
Income (Loss) Before Income Taxes101,682  (208,181) 478,329  (105,033)
        
Income Tax Expense (Benefit)14,720  (62,636) 114,682  18,739 
        
Net Income (Loss) Available for Common Stock$86,962  $(145,545) $363,647  $(123,772)
        
Earnings (Loss) Per Common Share       
Basic$0.95  $(1.60) $3.99  $(1.41)
Diluted$0.95  $(1.60) $3.97  $(1.41)
        
Weighted Average Common Shares:       
Used in Basic Calculation91,181,292  90,954,447  91,130,941  87,968,895 
Used in Diluted Calculation91,851,443  90,954,447  91,684,583  87,968,895 
            


 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
  
 September 30, September 30,
(Thousands of Dollars)2021 2020
ASSETS   
Property, Plant and Equipment$13,103,639  $12,351,852 
Less - Accumulated Depreciation, Depletion and Amortization 6,719,356   6,353,785 
Net Property, Plant and Equipment 6,384,283   5,998,067 
Assets Held for Sale, Net —   53,424 
Current Assets:   
Cash and Temporary Cash Investments 31,528   20,541 
Hedging Collateral Deposits 88,610   — 
Receivables - Net 205,294   143,583 
Unbilled Revenue 17,000   17,302 
Gas Stored Underground 33,669   33,338 
Materials, Supplies and Emission Allowances 53,560   51,877 
Unrecovered Purchased Gas Costs 33,128   — 
Other Current Assets 59,660   47,557 
Total Current Assets 522,449   314,198 
Other Assets:   
Recoverable Future Taxes 121,992   118,310 
Unamortized Debt Expense 10,589   12,297 
Other Regulatory Assets 60,145   156,106 
Deferred Charges 59,939   67,131 
Other Investments 149,632   154,502 
Goodwill 5,476   5,476 
Prepaid Post-Retirement Benefit Costs 149,151   76,035 
Fair Value of Derivative Financial Instruments 1,169   9,308 
Other —   81 
Total Other Assets 558,093   599,246 
Total Assets$7,464,825  $6,964,935 
CAPITALIZATION AND LIABILITIES   
Capitalization:   
Comprehensive Shareholders' Equity   
Common Stock, $1 Par Value Authorized - 200,000,000 Shares; Issued and   
Outstanding - 91,181,549 Shares and 90,954,696 Shares, Respectively$91,182  $90,955 
Paid in Capital 1,017,446   1,004,158 
Earnings Reinvested in the Business 1,191,175   991,630 
Accumulated Other Comprehensive Loss (513,597)  (114,757)
Total Comprehensive Shareholders' Equity 1,786,206   1,971,986 
Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issuance Costs 2,628,687   2,629,576 
Total Capitalization 4,414,893   4,601,562 
Current and Accrued Liabilities:   
Notes Payable to Banks and Commercial Paper 158,500   30,000 
Accounts Payable 171,655   134,126 
Amounts Payable to Customers 21   10,788 
Dividends Payable 41,487   40,475 
Interest Payable on Long-Term Debt 17,376   27,521 
Customer Advances 17,223   15,319 
Customer Security Deposits 19,292   17,199 
Other Accruals and Current Liabilities 194,169   140,176 
Fair Value of Derivative Financial Instruments 616,410   43,969 
Total Current and Accrued Liabilities 1,236,133   459,573 
Other Liabilities:   
Deferred Income Taxes 660,420   696,054 
Taxes Refundable to Customers 354,089   357,508 
Cost of Removal Regulatory Liability 245,636   230,079 
Other Regulatory Liabilities 200,643   161,573 
Pension and Other Post-Retirement Liabilities 7,526   127,181 
Asset Retirement Obligations 209,639   192,228 
Other Liabilities 135,846   139,177 
Total Other Liabilities 1,813,799   1,903,800 
Commitments and Contingencies —   — 
Total Capitalization and Liabilities$7,464,825  $6,964,935 


     
     
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
  Twelve Months Ended
  September 30,
(Thousands of Dollars) 2021 2020
     
Operating Activities:    
Net Income (Loss) Available for Common Stock $363,647  $(123,772)
Adjustments to Reconcile Net Income (Loss) to Net Cash
  Provided by Operating Activities:		    
Gain on Sale of Timber Properties (51,066) — 
Impairment of Oil and Gas Producing Properties 76,152  449,438 
Depreciation, Depletion and Amortization 335,303  306,158 
Deferred Income Taxes 105,993  54,313 
Premium Paid on Early Redemption of Debt 15,715  — 
Stock-Based Compensation 17,065  14,931 
Other 10,896  6,527 
Change in:    
Receivables and Unbilled Revenue (61,413) (2,578)
Gas Stored Underground and Materials, Supplies and Emission Allowances (2,014) (6,625)
Unrecovered Purchased Gas Costs (33,128) 2,246 
Other Current Assets (11,972) 49,367 
Accounts Payable 31,352  (4,657)
Amounts Payable to Customers (10,767) 6,771 
Customer Advances 1,904  2,275 
Customer Security Deposits 2,093  989 
Other Accruals and Current Liabilities 34,314  5,001 
Other Assets 1,250  (24,203)
Other Liabilities (33,771) 4,628 
Net Cash Provided by Operating Activities $791,553  $740,809 
     
Investing Activities:    
Capital Expenditures $(751,734) $(716,153)
Net Proceeds from Sale of Timber Properties 104,582  — 
Acquisition of Upstream Assets and Midstream Gathering Assets —  (506,258)
Other 13,935  (1,205)
Net Cash Used in Investing Activities $(633,217) $(1,223,616)
     
Financing Activities:    
Changes in Notes Payable to Banks and Commercial Paper $128,500  $(25,200)
Reduction of Long-Term Debt (515,715) — 
Dividends Paid on Common Stock (163,089) (153,322)
Net Proceeds From Issuance of Long-Term Debt 495,267  493,007 
Net Proceeds from Issuance (Repurchase) of Common Stock (3,702) 161,603 
Net Cash Provided by (Used in) Financing Activities $(58,739) $476,088 
     
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash 99,597  (6,719)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period 20,541  27,260 
Cash, Cash Equivalents, and Restricted Cash at September 30 $120,138  $20,541 


          
          
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
          
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
          
UPSTREAM BUSINESS
          
          
 Three Months Ended Twelve Months Ended
(Thousands of Dollars, except per share amounts)September 30, September 30,
EXPLORATION AND PRODUCTION SEGMENT2021 2020 Variance 2021 2020 Variance
Total Operating Revenues$215,581  $154,726  $60,855  $836,697  $607,453  $229,244 
Operating Expenses:         
Operation and Maintenance:         
General and Administrative Expense16,957  16,653  304  67,973  63,429  4,544 
Lease Operating and Transportation Expense68,019  54,983  13,036  267,316  203,670  63,646 
All Other Operation and Maintenance Expense3,715  3,548  167  14,659  12,542  2,117 
Property, Franchise and Other Taxes6,302  4,103  2,199  22,220  15,646  6,574 
Depreciation, Depletion and Amortization45,135  43,467  1,668  182,492  172,124  10,368 
Impairment of Oil and Gas Producing Properties—  253,441  (253,441) 76,152  449,438  (373,286)
 140,128  376,195  (236,067) 630,812  916,849  (286,037)
          
Operating Income (Loss)75,453  (221,469) 296,922  205,885  (309,396) 515,281 
          
Other Income (Expense):         
Non-Service Pension and Post-Retirement Benefit Costs(289) (395) 106  (1,148) (1,580) 432 
Interest and Other Income35  115  (80) 211  698  (487)
Interest Expense on Long-Term Debt—  —  —  (15,119) —  (15,119)
Interest Expense(11,942) (15,555) 3,613  (54,543) (58,098) 3,555 
Income (Loss) Before Income Taxes63,257  (237,304) 300,561  135,286  (368,376) 503,662 
Income Tax Expense (Benefit)7,554  (68,133) 75,687  33,370  (41,472) 74,842 
Net Income (Loss)$55,703  $(169,171) $224,874  $101,916  $(326,904) $428,820 
Net Income (Loss) Per Share (Diluted)$0.61  $(1.86) $2.47  $1.11  $(3.72) $4.83 
          


          
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
          
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
          
MIDSTREAM BUSINESSES
          
 Three Months Ended Twelve Months Ended
(Thousands of Dollars, except per share amounts)September 30, September 30,
PIPELINE AND STORAGE SEGMENT2021 2020 Variance 2021 2020 Variance
Revenues from External Customers$58,515  $54,090  $4,425  $234,397  $205,998  $28,399 
Intersegment Revenues26,510  26,236  274  109,160  103,606  5,554 
Total Operating Revenues85,025  80,326  4,699  343,557  309,604  33,953 
Operating Expenses:         
Purchased Gas764  74  690  983  75  908 
Operation and Maintenance26,724  25,233  1,491  90,533  87,440  3,093 
Property, Franchise and Other Taxes8,406  8,053  353  33,120  32,569  551 
Depreciation, Depletion and Amortization15,626  14,638  988  62,431  53,951  8,480 
 51,520  47,998  3,522  187,067  174,035  13,032 
          
Operating Income33,505  32,328  1,177  156,490  135,569  20,921 
          
Other Income (Expense):         
Non-Service Pension and Post-Retirement Benefit (Costs) Credit125  (394) 519  501  (917) 1,418 
Interest and Other Income2,180  701  1,479  5,339  5,552  (213)
Interest Expense(9,623) (10,695) 1,072  (40,976) (32,731) (8,245)
Income Before Income Taxes26,187  21,940  4,247  121,354  107,473  13,881 
Income Tax Expense4,705  5,895  (1,190) 28,812  28,613  199 
Net Income$21,482  $16,045  $5,437  $92,542  $78,860  $13,682 
Net Income Per Share (Diluted)$0.23  $0.18  $0.05  $1.01  $0.90  $0.11 
          
          
 Three Months Ended Twelve Months Ended
 September 30, September 30,
GATHERING SEGMENT2021 2020 Variance 2021 2020 Variance
Revenues from External Customers$1,507  $72  $1,435  $3,116  $72  $3,044 
Intersegment Revenues45,830  39,467  6,363  190,148  142,821  47,327 
Total Operating Revenues47,337  39,539  7,798  193,264  142,893  50,371 
Operating Expenses:         
Operation and Maintenance9,456  6,455  3,001  34,207  22,942  11,265 
Property, Franchise and Other Taxes23  22  1  52  72  (20)
Depreciation, Depletion and Amortization8,219  6,785  1,434  32,350  22,440  9,910 
 17,698  13,262  4,436  66,609  45,454  21,155 
          
Operating Income29,639  26,277  3,362  126,655  97,439  29,216 
          
Other Income (Expense):         
Non-Service Pension and Post-Retirement Benefit Costs(68) (71) 3  (271) (285) 14 
Interest and Other Income6  346  (340) 259  545  (286)
Interest Expense on Long-Term Debt—  —  —  (965) —  (965)
Interest Expense(4,093) (4,115) 22  (16,528) (10,877) (5,651)
Income Before Income Taxes25,484  22,437  3,047  109,150  86,822  22,328 
Income Tax Expense6,887  4,887  2,000  28,876  18,191  10,685 
Net Income$18,597  $17,550  $1,047  $80,274  $68,631  $11,643 
Net Income Per Share (Diluted)$0.20  $0.19  $0.01  $0.88  $0.78  $0.10 
          


          
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
          
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
          
DOWNSTREAM BUSINESS
          
          
 Three Months Ended Twelve Months Ended
(Thousands of Dollars, except per share amounts)September 30, September 30,
UTILITY SEGMENT2021 2020 Variance 2021 2020 Variance
Revenues from External Customers$80,302  $73,000  $7,302  $666,920  $642,855  $24,065 
Intersegment Revenues60  944  (884) 331  9,443  (9,112)
Total Operating Revenues80,362  73,944  6,418  667,251  652,298  14,953 
Operating Expenses:         
Purchased Gas19,826  15,243  4,583  274,837  263,112  11,725 
Operation and Maintenance40,855  41,573  (718) 182,266  178,896  3,370 
Property, Franchise and Other Taxes8,588  8,578  10  38,769  38,872  (103)
Depreciation, Depletion and Amortization14,646  14,007  639  57,457  55,248  2,209 
 83,915  79,401  4,514  553,329  536,128  17,201 
          
Operating Income (Loss)(3,553) (5,457) 1,904  113,922  116,170  (2,248)
          
Other Income (Expense):         
Non-Service Pension and Post-Retirement Benefit Costs(1,985) (2,001) 16  (26,659) (26,963) 304 
Interest and Other Income733  589  144  2,874  3,583  (709)
Interest Expense(5,337) (5,720) 383  (21,795) (22,150) 355 
Income (Loss) Before Income Taxes(10,142) (12,589) 2,447  68,342  70,640  (2,298)
Income Tax Expense (Benefit)(4,555) (5,620) 1,065  14,007  13,274  733 
Net Income (Loss)$(5,587) $(6,969) $1,382  $54,335  $57,366  $(3,031)
Net Income (Loss) Per Share (Diluted)$(0.06) $(0.08) $0.02  $0.59  $0.65  $(0.06)
          


 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
          
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
          
 Three Months Ended Twelve Months Ended
(Thousands of Dollars, except per share amounts)September 30, September 30,
ALL OTHER2021 2020 Variance 2021 2020 Variance
Revenues from External Customers$—  $5,988  $(5,988) $1,173  $89,435  $(88,262)
Intersegment Revenues26  237  (211) 49  836  (787)
Total Operating Revenues26  6,225  (6,199) 1,222  90,271  (89,049)
Operating Expenses:         
Purchased Gas9  5,263  (5,254) 2,306  80,485  (78,179)
Operation and Maintenance(20) 2,139  (2,159) 682  7,895  (7,213)
Property, Franchise and Other Taxes—  243  (243) 47  765  (718)
Depreciation, Depletion and Amortization—  1,064  (1,064) 394  1,716  (1,322)
 (11) 8,709  (8,720) 3,429  90,861  (87,432)
Gain on Sale of Timber Properties—  —  —  51,066  —  51,066 
Operating Income (Loss)37  (2,484) 2,521  48,859  (590) 49,449 
Other Income (Expense):         
Non-Service Pension and Post-Retirement Benefit Costs—  (69) 69  (7) (276) 269 
Interest and Other Income2  201  (199) 231  873  (642)
Interest Expense—  (13) 13  —  (66) 66 
Income (Loss) before Income Taxes39  (2,365) 2,404  49,083  (59) 49,142 
Income Tax Expense (Benefit)10  (565) 575  11,438  210  11,228 
Net Income (Loss)$29  $(1,800) $1,829  $37,645  $(269) $37,914 
Net Income (Loss) Per Share (Diluted)$—  $(0.02) $0.02  $0.41  $—  $0.41 
      
 Three Months Ended Twelve Months Ended
 September 30, September 30,
CORPORATE2021 2020 Variance 2021 2020 Variance
Revenues from External Customers$83  $113  $(30) $356  $478  $(122)
Intersegment Revenues1,146  1,463  (317) 3,864  4,744  (880)
Total Operating Revenues1,229  1,576  (347) 4,220  5,222  (1,002)
Operating Expenses:         
Operation and Maintenance3,857  4,481  (624) 15,423  13,401  2,022 
Property, Franchise and Other Taxes135  133  2  505  476  29 
Depreciation, Depletion and Amortization45  136  (91) 179  679  (500)
 4,037  4,750  (713) 16,107  14,556  1,551 
          
Operating Loss(2,808) (3,174) 366  (11,887) (9,334) (2,553)
Other Income (Expense):         
Non-Service Pension and Post-Retirement Benefit Costs(923) (775) (148) (3,692) (3,101) (591)
Interest and Other Income31,154  37,730  (6,576) 138,882  127,524  11,358 
Interest Expense on Long-Term Debt(30,161) (32,159) 1,998  (125,373) (110,012) (15,361)
Other Interest Expense(405) (1,922) 1,517  (2,816) (6,610) 3,794 
Loss before Income Taxes(3,143) (300) (2,843) (4,886) (1,533) (3,353)
Income Tax Expense (Benefit)119  900  (781) (1,821) (77) (1,744)
Net Loss$(3,262) $(1,200) $(2,062) $(3,065) $(1,456) $(1,609)
Net Loss Per Share (Diluted)$(0.03) $(0.01) $(0.02) $(0.03) $(0.02) $(0.01)
          
          
 Three Months Ended Twelve Months Ended
 September 30, September 30,
INTERSEGMENT ELIMINATIONS2021 2020 Variance 2021 2020 Variance
Intersegment Revenues$(73,572) $(68,347) $(5,225) $(303,552) $(261,450) $(42,102)
Operating Expenses:         
Purchased Gas(25,789) (26,353) 564  (106,299) (109,782) 3,483 
Operation and Maintenance(47,783) (41,994) (5,789) (197,253) (151,668) (45,585)
 (73,572) (68,347) (5,225) (303,552) (261,450) (42,102)
Operating Income—  —  —  —  —  — 
Other Income (Expense):         
Interest and Other Deductions(31,130) (35,818) 4,688  (131,758) (123,467) (8,291)
Interest Expense31,130  35,818  (4,688) 131,758  123,467  8,291 
Net Income$—  $—  $—  $—  $—  $— 
Net Income Per Share (Diluted)$—  $—  $—  $—  $—  $— 
                        


            
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
            
SEGMENT INFORMATION (Continued)
(Thousands of Dollars)
            
            
 Three Months Ended Twelve Months Ended
 September 30, September 30,
 (Unaudited) (Unaudited)
     Increase     Increase
 2021 2020 (Decrease) 2021 2020 (Decrease)
            
Capital Expenditures:           
Exploration and Production(4)$117,646 (1)$375,466 (2)$(257,820) $381,408 (1)(2)$670,455 (2)(3)$(289,047)
Pipeline and Storage96,760 (1)42,520 (2)54,240  252,316 (1)(2)166,652 (2)(3)85,664 
Gathering(5)9,041 (1)251,606 (2)(242,565) 34,669 (1)(2)297,806 (2)(3)(263,137)
Utility34,154 (1)32,034 (2)2,120  100,845 (1)(2)94,273 (2)(3)6,572 
Total Reportable Segments257,601  701,626  (444,025) 769,238  1,229,186  (459,948)
All Other—  2  (2) —  39  (39)
Corporate231  102  129  450  522  (72)
Eliminations2,341  (1,130) 3,471  223  (1,130) 1,353 
Total Capital Expenditures$260,173  $700,600  $(440,427) $769,911  $1,228,617  $(458,706)

(1) Capital expenditures for the quarter and year ended September 30, 2021, include accounts payable and accrued liabilities related to capital expenditures of $47.9 million, $39.4 million, $4.8 million, and $10.6 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at September 30, 2021, since they represent non-cash investing activities at that date.

(2) Capital expenditures for the year ended September 30, 2021, exclude capital expenditures of $45.8 million, $17.3 million, $13.5 million and $10.7 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts were in accounts payable and accrued liabilities at September 30, 2020 and paid during the year ended September 30, 2021. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2020, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at September 30, 2021.

(3) Capital expenditures for the year ended September 30, 2020, exclude capital expenditures of $38.0 million, $23.8 million, $6.6 million and $12.7 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts were in accounts payable and accrued liabilities at September 30, 2019 and paid during the year ended September 30, 2020. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2019, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at September 30, 2020.

(4) 2020 includes $282.8 million related to the acquisition of upstream assets acquired from Shell, of which $281.7 million is included in Property, Plant and Equipment and $1.1 million is included in Materials, Supplies and Emission Allowances.

(5) 2020 includes $223.5 million related to the acquisition of midstream gathering assets acquired from Shell, of which $223.4 million is included in Property, Plant and Equipment and $0.1 million is included in Materials, Supplies and Emission Allowances.

             
DEGREE DAYS            
          Percent Colder
          (Warmer) Than:
Three Months Ended September 30,Normal 2021 2020 Normal (1) Last Year (1)
Buffalo, NY162  38  101  (76.5) (62.4)
Erie, PA124  33  68  (73.4) (51.5)
             
Twelve Months Ended September 30,            
Buffalo, NY6,617  5,731  6,103  (13.4) (6.1)
Erie, PA6,147  5,221  5,449  (15.1) (4.2)
             

(1) Percents compare actual 2021 degree days to normal degree days and actual 2021 degree days to actual 2020 degree days.

             
             
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
             
EXPLORATION AND PRODUCTION INFORMATION
             
             
  Three Months Ended Twelve Months Ended
  September 30, September 30,
      Increase     Increase
  2021 2020 (Decrease) 2021 2020 (Decrease)
             
Gas Production/Prices:            
Production (MMcf)            
Appalachia 75,871  63,548  12,323  312,300  225,513  86,787 
West Coast 420  455  (35) 1,720  1,889  (169)
Total Production 76,291  64,003  12,288  314,020  227,402  86,618 
             
Average Prices (Per Mcf)            
Appalachia $3.14  $1.63  $1.51  $2.46  $1.75  $0.71 
West Coast 7.93  3.31  4.62  6.34  3.82  2.52 
Weighted Average 3.16  1.64  1.52  2.49  1.77  0.72 
Weighted Average after Hedging 2.37  1.92  0.45  2.25  2.07  0.18 
             
Oil Production/Prices:            
Production (Thousands of Barrels)            
Appalachia 1  1  —  2  3  (1)
West Coast 551  555  (4) 2,233  2,345  (112)
Total Production 552  556  (4) 2,235  2,348  (113)
             
Average Prices (Per Barrel)            
Appalachia $66.34  $31.22  $35.12  $48.02  $45.69  $2.33 
West Coast 71.46  41.22  30.24  60.50  45.94  14.56 
Weighted Average 71.45  41.21  30.24  60.49  45.94  14.55 
Weighted Average after Hedging 60.04  55.70  4.34  56.54  56.96  (0.42)
             
Total Production (MMcfe) 79,603  67,339  12,264  327,430  241,490  85,940 
             
Selected Operating Performance Statistics:            
General & Administrative Expense per Mcfe (1) $0.21  $0.25  $(0.04) $0.21  $0.26  $(0.05)
Lease Operating and Transportation Expense per Mcfe (1)(2) $0.85  $0.82  $0.03  $0.82  $0.84  $(0.02)
Depreciation, Depletion & Amortization per Mcfe (1) $0.57  $0.65  $(0.08) $0.56  $0.71  $(0.15)
             

(1) Refer to page 16 for the General and Administrative Expense, Lease Operating and Transportation Expense and Depreciation, Depletion, and Amortization Expense for the Exploration and Production segment.

(2) Amounts include transportation expense of $0.55 and $0.57 per Mcfe for the three months ended September 30, 2021 and September 30, 2020, respectively. Amounts include transportation expense of $0.57 and $0.57 per Mcfe for the twelve months ended September 30, 2021 and September 30, 2020, respectively.

 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
       
EXPLORATION AND PRODUCTION INFORMATION
 
       
Hedging Summary for Fiscal 2022 Volume  Average Hedge Price
Oil Swaps      
Brent 1,140,000 BBL $58.28 / BBL
NYMEX 156,000 BBL $51.00 / BBL
Total 1,296,000 BBL $57.40 / BBL
Gas Swaps      
NYMEX 208,500,000 MMBTU $2.75 / MMBTU
No Cost Collars 2,350,000 MMBTU $2.28 / MMBTU (Floor) / $2.77 / MMBTU (Ceiling)
Fixed Price Physical Sales 52,309,623 MMBTU $2.29 / MMBTU
Total 263,159,623 MMBTU   
Hedging Summary for Fiscal 2023 Volume  Average Hedge Price
Oil Swaps      
Brent 480,000 BBL $58.48 / BBL
Total 480,000 BBL $58.48 / BBL
Gas Swaps      
NYMEX 116,200,000 MMBTU $2.79 / MMBTU
No Cost Collars 17,600,000 MMBTU $2.78 / MMBTU (Floor) / $3.19 / MMBTU (Ceiling)
Fixed Price Physical Sales 57,082,943 MMBTU $2.23 / MMBTU
Total 190,882,943 MMBTU   
Hedging Summary for Fiscal 2024 Volume  Average Hedge Price
Oil Swaps      
Brent 120,000 BBL $50.30 / BBL
Total 120,000 BBL $50.30 / BBL
Gas Swaps      
NYMEX 61,080,000 MMBTU $2.72 / MMBTU
No Cost Collars 1,600,000 MMBTU $2.78 / MMBTU (Floor) / $3.19 / MMBTU (Ceiling)
Fixed Price Physical Sales 42,872,216 MMBTU $2.19 / MMBTU
Total 105,552,216 MMBTU   
Hedging Summary for Fiscal 2025 Volume  Average Hedge Price
Oil Swaps      
Brent 120,000 BBL $50.32 / BBL
Total 120,000 BBL $50.32 / BBL
Gas Swaps      
NYMEX 23,660,000 MMBTU $2.74 / MMBTU
Fixed Price Physical Sales 36,520,814 MMBTU $2.18 / MMBTU
Total 60,180,814 MMBTU   
       
Hedging Summary for Fiscal 2026 Volume  Average Hedge Price
Gas Swaps      
NYMEX 1,720,000 MMBTU $2.75 / MMBTU
Fixed Price Physical Sales 27,780,276 MMBTU $2.19 / MMBTU
Total 29,500,276 MMBTU   
       
Hedging Summary for Fiscal 2027 Volume  Average Hedge Price
Fixed Price Physical Sales 17,348,882 MMBTU $2.22 / MMBTU
       
Hedging Summary for Fiscal 2028 Volume  Average Hedge Price
Fixed Price Physical Sales 1,400,555 MMBTU $2.23 / MMBTU
        


     
     
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
     
EXPLORATION AND PRODUCTION INFORMATION
     
Reserve Quantity Information
(Unaudited)
     
     
  Gas MMcf
  U.S.
  AppalachianWest CoastTotal
  RegionRegionCompany
Proved Developed and Undeveloped Reserves:    
September 30, 2020 3,296,113 28,972 3,325,085 
Extensions and Discoveries 689,395 — 689,395 
Revisions of Previous Estimates 19,940 3,033 22,973 
Production (312,300)(1,720)(314,020)
September 30, 2021 3,693,148 30,285 3,723,433 
     
Proved Developed Reserves:    
September 30, 2020 2,744,851 28,972 2,773,823 
September 30, 2021 3,061,178 30,285 3,091,463 
     
     
  Oil Mbbl
  U.S.
  AppalachianWest CoastTotal
  RegionRegionCompany
Proved Developed and Undeveloped Reserves:    
September 30, 2020 12 22,088 22,100 
Extensions and Discoveries — 1,041 1,041 
Revisions of Previous Estimates 1 630 631 
Production (2)(2,233)(2,235)
September 30, 2021 11 21,526 21,537 
     
Proved Developed Reserves:    
September 30, 2020 12 22,088 22,100 
September 30, 2021 11 20,932 20,943 
     


             
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
             
             
             
Pipeline & Storage Throughput - (millions of cubic feet - MMcf)    
             
  Three Months Ended Twelve Months Ended
  September 30, September 30,
      Increase     Increase
  2021 2020 (Decrease) 2021 2020 (Decrease)
Firm Transportation - Affiliated 14,916  13,021  1,895  107,206  111,166  (3,960)
Firm Transportation - Non-Affiliated 168,619  162,727  5,892  663,078  641,607  21,471 
Interruptible Transportation 256  857  (601) 1,460  2,859  (1,399)
  183,791  176,605  7,186  771,744  755,632  16,112 
             
Gathering Volume - (MMcf)            
  Three Months Ended Twelve Months Ended
  September 30, September 30,
      Increase     Increase
  2021 2020 (Decrease) 2021 2020 (Decrease)
Gathered Volume 90,750  73,441  17,309  366,033  264,305  101,728 
             
             
Utility Throughput - (MMcf)            
  Three Months Ended Twelve Months Ended
  September 30, September 30,
      Increase     Increase
  2021 2020 (Decrease) 2021 2020 (Decrease)
Retail Sales:            
Residential Sales 3,797  4,033  (236) 61,038  60,977  61 
Commercial Sales 535  503  32  8,741  8,798  (57)
Industrial Sales 33  31  2  475  537  (62)
  4,365  4,567  (202) 70,254  70,312  (58)
Transportation 10,197  9,040  1,157  66,012  68,272  (2,260)
  14,562  13,607  955  136,266  138,584  (2,318)
             

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES

NON-GAAP FINANCIAL MEASURES

In addition to financial measures calculated in accordance with generally accepted accounting principles (GAAP), this press release contains information regarding Adjusted Operating Results, Adjusted EBITDA and free cash flow, which are non-GAAP financial measures. The Company believes that these non-GAAP financial measures are useful to investors because they provide an alternative method for assessing the Company's ongoing operating results or liquidity and for comparing the Company’s financial performance to other companies. The Company's management uses these non-GAAP financial measures for the same purpose, and for planning and forecasting purposes. The presentation of non-GAAP financial measures is not meant to be a substitute for financial measures in accordance with GAAP.

Management defines Adjusted Operating Results as reported GAAP earnings before items impacting comparability. The following table reconciles National Fuel's reported GAAP earnings to Adjusted Operating Results for the three and twelve months ended September 30, 2021 and 2020:

  Three Months Ended Twelve Months Ended
  September 30, September 30,
(in thousands except per share amounts) 2021 2020 2021 2020
Reported GAAP Earnings $86,962  $(145,545) $363,647  $(123,772)
Items impacting comparability:        
Impairment of oil and gas properties (E&P) —  253,441  76,152  449,438 
Tax impact of impairment of oil and gas properties —  (69,698) (20,980) (123,187)
Gain on sale of timber properties (Corporate/All Other) —  —  (51,066) — 
Tax impact of gain on sale of timber properties —  —  14,069  — 
Premium paid on early redemption of debt —  —  15,715  — 
Tax impact of premium paid on early redemption of debt —  —  (4,321) — 
Deferred tax valuation allowance —  —  —  56,770 
Unrealized (gain) loss on other investments (Corporate/All Other) 395  (2,439) (181) (1,645)
Tax impact of unrealized (gain) loss on other investments (83) 512  38  345 
Adjusted Operating Results $87,274  $36,271  $393,073  $257,949 
         
Reported GAAP Earnings Per Share $0.95  $(1.60) $3.97  $(1.41)
Items impacting comparability:        
Impairment of oil and gas properties, net of tax (E&P) —  2.02  0.60  3.71 
Gain on sale of timber properties, net of tax (Corporate/All Other) —  —  (0.40) — 
Premium paid on early redemption of debt, net of tax —  —  0.12  — 
Deferred tax valuation allowance —  —  —  0.65 
Unrealized (gain) loss on other investments, net of tax (Corporate/All Other) —  (0.02) —  (0.01)
Earnings per share impact of diluted shares —  —  —  (0.02)
Adjusted Operating Results Per Share $0.95  $0.40  $4.29  $2.92 
                 

Management defines 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. The following tables reconcile National Fuel's reported GAAP earnings to Adjusted EBITDA for the three and twelve months ended September 30, 2021 and 2020:

  Three Months Ended Twelve Months Ended
  September 30, September 30,
(in thousands) 2021 2020 2021 2020
Reported GAAP Earnings $86,962  $(145,545) $363,647  $(123,772)
Depreciation, Depletion and Amortization 83,671  80,097  335,303  306,158 
Other (Income) Deductions 160  (159) 15,238  17,814 
Interest Expense 30,431  34,361  146,357  117,077 
Income Taxes 14,720  (62,636) 114,682  18,739 
Impairment of Oil and Gas Producing Properties —  253,441  76,152  449,438 
Gain on Sale of Timber Properties —  —  (51,066) — 
Adjusted EBITDA $215,944  $159,559  $1,000,313  $785,454 
         
Adjusted EBITDA by Segment        
Pipeline and Storage Adjusted EBITDA $49,131  $46,966  $218,921  $189,520 
Gathering Adjusted EBITDA 37,858  33,062  159,005  119,879 
Total Midstream Businesses Adjusted EBITDA 86,989  80,028  377,926  309,399 
Exploration and Production Adjusted EBITDA 120,588  75,439  464,529  312,166 
Utility Adjusted EBITDA 11,093  8,550  171,379  171,418 
Corporate and All Other Adjusted EBITDA (2,726) (4,458) (13,521) (7,529)
Total Adjusted EBITDA $215,944  $159,559  $1,000,313  $785,454 
                 


 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
SEGMENT ADJUSTED EBITDA
     
  Three Months Ended Twelve Months Ended
  September 30, September 30,
(in thousands) 2021 2020 2021 2020
Exploration and Production Segment        
Reported GAAP Earnings $55,703  $(169,171) $101,916  $(326,904)
Depreciation, Depletion and Amortization 45,135  43,467  182,492  172,124 
Other (Income) Deductions 254  280  937  882 
Interest Expense 11,942  15,555  69,662  58,098 
Income Taxes 7,554  (68,133) 33,370  (41,472)
Impairment of Oil and Gas Producing Properties —  253,441  76,152  449,438 
Adjusted EBITDA $120,588  $75,439  $464,529  $312,166 
         
Pipeline and Storage Segment        
Reported GAAP Earnings $21,482  $16,045  $92,542  $78,860 
Depreciation, Depletion and Amortization 15,626  14,638  62,431  53,951 
Other (Income) Deductions (2,305) (307) (5,840) (4,635)
Interest Expense 9,623  10,695  40,976  32,731 
Income Taxes 4,705  5,895  28,812  28,613 
Adjusted EBITDA $49,131  $46,966  $218,921  $189,520 
         
Gathering Segment        
Reported GAAP Earnings $18,597  $17,550  $80,274  $68,631 
Depreciation, Depletion and Amortization 8,219  6,785  32,350  22,440 
Other (Income) Deductions 62  (275) 12  (260)
Interest Expense 4,093  4,115  17,493  10,877 
Income Taxes 6,887  4,887  28,876  18,191 
Adjusted EBITDA $37,858  $33,062  $159,005  $119,879 
         
Utility Segment        
Reported GAAP Earnings $(5,587) $(6,969) $54,335  $57,366 
Depreciation, Depletion and Amortization 14,646  14,007  57,457  55,248 
Other (Income) Deductions 1,252  1,412  23,785  23,380 
Interest Expense 5,337  5,720  21,795  22,150 
Income Taxes (4,555) (5,620) 14,007  13,274 
Adjusted EBITDA $11,093  $8,550  $171,379  $171,418 
         
Corporate and All Other        
Reported GAAP Earnings $(3,233) $(3,000) $34,580  $(1,725)
Depreciation, Depletion and Amortization 45  1,200  573  2,395 
Gain on Sale of Timber Properties —  —  (51,066) — 
Other (Income) Deductions 897  (1,269) (3,656) (1,553)
Interest Expense (564) (1,724) (3,569) (6,779)
Income Taxes 129  335  9,617  133 
Adjusted EBITDA $(2,726) $(4,458) $(13,521) $(7,529)
                 

Management defines free cash flow as funds from operations less capital expenditures. The Company is unable to provide a reconciliation of projected free cash flow as described in this release to its comparable financial measure calculated in accordance with GAAP without unreasonable efforts. This is due to our inability to calculate the comparable GAAP projected metrics, including operating income and total production costs, given the unknown effect, timing, and potential significance of certain income statement items.