National Fuel Gas Company

Adjusted earnings per share were $1.54 for the quarter, down $0.10 versus the prior year. The decline was driven by lower production in Integrated Upstream and Gathering, which more than offset stronger natural gas price realizations and hedge gains. FY2026 adjusted EPS guidance was revised to $7.40-$7.60 per share, versus prior expectations, and the main driver was a revised Seneca production outlook of 420-430 Bcfe. Management also said it remains well hedged for the balance of the fiscal year with price certainty on 75% of production at prices above the current strip. On the project side, Line N capacity was expanded by 200,000 dekatherms per day to a revised 294,000 dekatherms, with the incremental capacity contracted for 20 years and targeted for November 2028 in-service. Looking ahead, management said it plans to provide formal fiscal 2027 guidance next quarter and still expects the Ohio utility acquisition to close in the calendar fourth quarter, with an October 1 target mentioned on the call.

Dave Bauer framed the quarter around long-term value creation rather than the near-term EPS miss. He highlighted strong demand for natural gas, growing regulated opportunities, the nearing Ohio utility acquisition, and Tioga County acreage as the core pillars of the company’s growth story. His tone was upbeat and confident, especially around the company’s ability to deliver 7%-10% annual EPS growth while also producing free cash flow without needing to issue substantial equity.

Tim Silverstein said the quarter’s $1.54 adjusted EPS was down $0.10 year over year because lower upstream production outweighed better gas realizations and hedge gains. He also explained that higher operating costs were driven by inflation plus two one-time items: the prior-year New York bad-debt tracker benefit that did not recur, and higher Pennsylvania labor costs tied to a new agreement. He revised FY2026 adjusted EPS guidance to $7.40-$7.60 and said Seneca production should be 420-430 Bcfe; he also noted 75% of production is hedged for the rest of the year. On financing, he said the company raised $1.5 billion across 3-, 5- and 10-year tranches at a weighted average rate of a little over 5%, plus 4.4 million shares of equity and an incremental $1.2 billion of long-term debt, and he said near-term focus will be deleveraging before any buybacks. He added the company wants leverage back in the low 2s to 2.25x over the longer term.

Analysts focused on two issues: how much of the recent Seneca completion variability was structural versus noise, and how management thinks about capital allocation after the Ohio deal closes. Justin Loweth said the Gen 4 underperformance on some wells was mostly a learning issue, not a structural problem, stressing that the Upper and Lower Utica are not communicating and that the team is adjusting design and spacing as it learns what works best in different rock. On buybacks, Silverstein said the near-term priority is using free cash flow to delever and rebuild flexibility, while acknowledging that buybacks or other capital returns become more feasible once leverage improves. He said the company is not expecting anything in the near term, but wants to get back to low-2x leverage within the first few years.