National Fuel Gas Company Q4 FY2025 earnings call

• Upstream and Gathering: Continued capital efficiency trend, grew production ~20% since mid-2023 EDA transition while reducing capital spending 15%; announced expansion of Tioga County inventory by adding ~220 prospective well locations in Upper Utica formation; signed proceeding agreement for additional takeaway capacity out of Tioga County starting in late 2028.
• Regulated operations: Tioga Pathway project on schedule, received certificate in May and on track for spring construction start; Shipping Port lateral project made prior notice filing in late August, expecting FERC authorization soon, ordered key materials and awarded construction contract, on schedule for fall 2026 in-service date.
• Utility business: Excited about the acquisition of CenterPoint's Ohio Gas LDC, which will enhance regulated earnings growth and scale; assets are high quality with a strong outlook for rate base growth.
• Sustainability: NFG Midstream improved Equitable Origin rating from A- to A, while Seneca maintained Equitable Origin rating of A and MiQ certification of A grade.

Upstream and Gathering

• Fourth quarter adjusted earnings per share was $1.22, up 58% from prior year. Full year adjusted earnings per share increased 38% compared to fiscal 2024. Since mid-2023 EDA transition, production grew ~20% while capital spending reduced 15%. 2025 fiscal year net production was 427 Bcfe with capital expenditures of $605 million. Fiscal 2026 production is forecasted between 440 and 455 Bcfe, with integrated Upstream and Gathering segment expenditures expected to be $550 million to $610 million, down 3% at midpoint from fiscal 2025.

Regulated operations

• Supply Corporation has ongoing growth opportunities like the Tioga Pathway project for Seneca, which is on schedule, and the Shipping Port lateral off Line N system in Western Pennsylvania, with FERC authorization expected soon and in-service date set for fall 2026. The acquisition of CenterPoint's Ohio Gas LDC will double the utility rate base.

Utility business

• Entered into a definitive agreement to acquire CenterPoint's Ohio Gas LDC, which will add significant customers and provide an opportunity to recycle free cash flow, doubling the utility rate base.

• Fiscal 2026 adjusted earnings expected to be within the range of $7.60 to $8.10 per share based on NYMEX prices averaging approximately $3.75; expected to generate $300 million to $350 million in free cash flow in fiscal 2026; capital expenditures expected to increase ~10% from fiscal 2025 driven by growth-related spending on pipeline projects; acquisition of CenterPoint's Ohio Gas LDC will enhance long-term regulated earnings growth; successfully syndicated bridge facility, bifurcated into 364-day term loan commitment and traditional bridge facility, reducing costs and providing optionality.

• Commodity price volatility which may impact earnings and cash flows; - Regulatory approval risks for projects and acquisitions; - Challenges in integrating the acquired CenterPoint's Ohio Gas LDC.

Q: Can you provide more details on how long you've been examining the Upper Utica zone and what was the process like that has given you confidence that these 220 locations are competitive with the rest of the portfolio?

A: This has been something we've been working on for years. Our team saw this opportunity early on. We began delineating it and getting a better understanding starting within the last 3 years. Drilled test wells while drilling lower Utica development pads, had a lot of opportunity to cover a large swath of our acreage position and have significant production history, with outstanding results. We will co-develop Upper Utica with Lower Utica, capturing additional margin and efficiencies by reutilizing midstream infrastructure.

Q: How can we think about when the Upper Utica will become a larger part of the NFG program?

A: We are already incorporating some Upper Utica into our 4 plants. We will continue to optimize operational planning to allocate capital for highest integrated returns between Seneca and Gathering. Near term, we'll have more lowers, but over time, the mix may become more balanced between uppers and lowers.

Q: The Supply Corp going in for a rate case, what are the returns you're earning currently on the Supply Corp?

A: Typically, ratemaking return there is in the low double digits, north of the utility ratemaking ROEs but in that general ZIP code. Under an assumption of a 50-50 structure equity, we have the ability to earn a little bit higher there, but it's a black box settlement so the individual components' identities are lost.