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    NFG
    Earnings call· Mar 2026(Q2 FY26)

    NATIONAL FUEL GAS Q2 FY26 earnings call NFG

    Apr 30, 2026 Source

    Executive summary

    National Fuel Gas Company Q2 FY26 — Strong Earnings Growth and Strategic Infrastructure Expansion

    National Fuel Gas delivered solid Q2 FY26 results, marked by a 13% increase in adjusted EPS and strong free cash flow generation, driven by strategic hedging and operational resiliency during severe weather. The company is advancing significant infrastructure projects, including the Line N system upgrade and the Ohio LDC acquisition, which are set to bolster regulated earnings. Despite a slight reduction in production guidance due to weather and older well performance, and lower NYMEX price assumptions, the company maintains its multi-year EPS growth target and is expanding its market access for natural gas.

    Highlights

    5

    • Adjusted earnings per share of $2.71, an increase of 13% from last year, keeping the company on track for its multiyear 10%+ average annual growth target.

    • Generated approximately $160 million in free cash flow during the quarter.

    • Secured a precedent agreement for the Line N system upgrade project, adding 94,000 dekatherms a day of incremental transportation capacity under a long-term contract.

    • Integrated Upstream and Gathering segment delivered record EBITDA of more than $300 million, driven by strong natural gas prices.

    • Total firm transport capacity is expected to grow approximately 50% to more than 1.5 Bcf per day over the next few years, including new Gulf Coast access.

    Concerns

    4

    • Production came in slightly below expectations due to weather-related road closures and underperforming older well designs, resulting in a 5 Bcf impact in Q2 and a 3% reduction in full-year production guidance to 425-440 Bcfe.

    • Gathering O&M is now expected to be $0.01 higher at $0.12 per Mcf for the full year due to a new preventative maintenance strategy.

    • NYMEX price assumption for the remainder of the year was lowered to $3 per MMBtu from $3.75, with basis differentials projected to be $0.80 below NYMEX.

    • Emerging cost headwinds tied to the conflict in Iran, particularly higher oil and diesel prices, are impacting drilling, completions, and logistics.

    Guidance & targets

    11
    CategoryTargetConfidence
    Adjusted EPS
    $7.45 to $7.75 per share
    high materiality
    High
    Production
    425 to 440 Bcfe
    high materiality
    Medium
    Gathering O&M
    $0.12 per Mcf
    medium materiality
    High
    Upstream LOE
    $0.01 lower
    medium materiality
    High
    NYMEX Price Assumption
    $3 per MMBtu
    high materiality
    High
    Basis Differentials
    $0.80 below NYMEX
    medium materiality
    High
    Capital Expenditure
    trending towards the higher end of ranges
    high materiality
    Medium
    Debt-to-EBITDA
    below 2x
    high materiality
    High
    FFO to Debt
    approach 50%
    high materiality
    High
    Debt-to-EBITDA (post-acquisition)
    mid-2x
    high materiality
    High
    Firm Transport Capacity Growth
    grow approximately 50% to more than 1.5 Bcf per day
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Integrated Upstream and Gathering
    Driven by strong natural gas prices and strategic hedging. Production slightly below expectations due to weather-related road closures and underperforming older well designs.
    Net production: 102 BcfPrice realizations: up more than $0.50 per Mcf or nearly 20%
    		———Record EBITDA of more than $300 million
    Pipeline and Storage
    Developing new expansion opportunities on Line N, focused on power generation. Filing a new rate case with FERC seeking $95 million increase to cost of service.
    Line N system upgrade project: 94,000 dekatherms a day incremental capacityLine N system upgrade project estimated capital cost: $93 millionLine N system upgrade project in service: late calendar 2028Shippingport Lateral and Tioga Pathway expansion projects in service: November 2026
    		Increased (for FY26 guidance)Significant growth in fiscal 2027——
    Utility
    Customer affordability remains top of mind. Progressing rate cases in Pennsylvania and New York. CenterPoint acquisition on track for Q4 calendar closing.
    New York rate plan: Year 2 of 3-year plan through end of FY27Pennsylvania rate case request: $20 million increase
    		———Growing base of utility earnings

    Operational metrics

    19
    Gathering O&M
    $0.12up $0.01 from prior expectation
    FY26

    We now expect gathering O&M to be $0.01 higher at $0.12 per Mcf for the full year due to a new preventative maintenance strategy.

    Upstream LOE
    $0.01 lower
    FY26

    Upstream LOE is expected to be $0.01 lower, offsetting the increase in gathering O&M for no combined impact on cost structure.

    Spot market exposure
    30 Bcf
    FY26

    At the midpoint of guidance, our spot exposure is limited to approximately 30 Bcf.

    Debt-to-EBITDA (post-acquisition)
    mid-2x
    first full year post closing

    Target to achieve mid-2x debt-to-EBITDA after the first full year post closing of the Ohio LDC acquisition.

    Financing need for Ohio LDC acquisition
    $1 billion
    at closing

    Plan to raise the remaining $1 billion needed at closing for the Ohio LDC acquisition.

    Refinancing amount
    $300 million
    October maturity

    Plan to refinance our $300 million October maturity.

    Total capital to raise
    up to $1.5 billion
    prior to closing

    Expect to raise up to $1.5 billion across multiple tranches for the acquisition and refinancing.

    Committed credit facility
    $1.3 billionupsized
    current

    Recently upsized our committed credit facility, now providing $1.3 billion of borrowing capacity.

    Firm transport capacity
    more than 1.5 Bcf per daygrow approximately 50%
    next few years

    Expect total firm transport capacity to grow approximately 50% to more than 1.5 Bcf per day over the next few years.

    Gulf Coast firm transportation (new access)
    50 million per day
    this month

    Gained access to new 50 million per day of firm transportation reaching the Gulf Coast this month.

    Additional Gulf Coast firm transportation
    50 million per day
    over the next few years

    Added another 50 million per day of long-term firm capacity along the same route during Q2, doubling Gulf Coast exposure over time.

    Tioga Utica well flow rate
    40 million per daywell above the 25 million to 30 million per day held on Bauer and Taft
    Q2 FY26

    Flowed a single Tioga Utica well rate constrained at 40 million per day, demonstrating expanded deliverability.

    Bauer and Taft pads cumulative production
    130 Bcf
    to date

    Two best-performing Tioga Utica pads reached cumulative production of 130 Bcf.

    Bauer and Taft pads estimated production
    900 million per 1,000 foot
    18 months

    Estimate Bauer and Taft pads will deliver about 900 million per 1,000 foot in 18 months.

    NYMEX price assumption
    $3down from $3.75
    remainder of FY26

    NYMEX price assumption for the remainder of FY26 lowered to $3 per MMBtu.

    Basis differentials
    $0.80 below NYMEX
    remainder of FY26

    Projected basis differentials for the remainder of FY26 are $0.80 below NYMEX.

    Hedged production
    75%
    rest of FY26

    Approximately 75% of production is hedged for the rest of the year, primarily with swaps and fixed price sales.

    Older design wells underperformance
    —
    Q2 FY26

    Four wells with older style designs on a 6-well pad are underperforming projections, contributing to production impact.

    Acreage held by older wells
    almost 20,000-acre parcel
    drilled 18 months ago

    The pad with underperforming older wells was strategically drilled to hold an almost 20,000-acre parcel of land.

    Industry KPIs

    7
    MetricValueDetails
    Ffo to debtapproaching 50%%
    Adjusted operating EPS$2.71per share
    Dividend per share growthincreasing amount of cash
    Regulatory rate base growth—
    Equity hybrid financing atm issuance$1.5 billionUSD
    Large load data center demand pipeline800 million a daymillion per day
    CAPEX multi year capital investment plan$560 million to $610 millionUSD

    Orderbook & backlog

    1
    Line N System Upgrade Project Capacity94,000 dekatherms a dayQ2 FY26

    Subscribed under a long-term contract with an investment-grade counterparty; expected in service late calendar 2028.

    Deals & partnerships

    1
    CenterPointOhio LDC acquisition

    HSR filing completed and waiting period passed. Notice given to the Public Utilities Commission of Ohio, with an order expected late spring/early summer.

    Capital programs

    3
    Line N System Upgrade Projectannounced$93 million

    Benefit: 94,000 dekatherms a day incremental transportation capacity; modernization of 6-mile pipe

    Executed a precedent agreement for this project. Approximately 70% of the capital cost relates to the modernization component.

    Shippingport Lateral and Tioga Pathway Expansion Projectsunderway
    Start: Q2 FY26

    Construction commenced on both projects, which are on track to meet their target in-service dates.

    Non-regulated Capital Expenditureunderway
    Period spend: $560 million to $610 million

    Benefit: Drilling more wells, bolstering acreage position

    Maintaining prior guidance, but trending towards the higher end of the range due to drilling efficiencies and strategic land acquisitions, despite cost headwinds.

    Risks & headwinds

    4
    Production impact from severe weather and older well designsQ2 FY26 and full-year FY26

    5 Bcf impact in Q2; 3% reduction in full-year production guidance (425-440 Bcfe)

    Mitigation: Optimizing integrated development program, testing Gen 4 well designs and Upper Utica locations.

    Lower NYMEX natural gas prices and tighter basis differentialsRemainder of FY26

    NYMEX assumption lowered to $3 per MMBtu from $3.75; basis differentials projected $0.80 below NYMEX

    Mitigation: Approximately 75% hedged for the rest of the year, with bulk in swaps and fixed price sales, providing price certainty.

    Increased gathering O&M costsFY26

    $0.01 higher at $0.12 per Mcf for full year

    Mitigation: Offset by $0.01 lower upstream LOE, resulting in no combined impact on cost structure.

    Cost headwinds from geopolitical conflict (Iran)Ongoing

    Higher oil and diesel prices

    Mitigation: Drilling team driving efficiencies to reduce cost per foot; long-term contracts for frac providers and rigs provide some insulation.

    What to watch in Q3 FY26

    5

    Ohio LDC acquisition closing

    Calendar Q4 2026
    CurrentHSR process completed, PUCO order expected late spring/early summer.
    TargetAcquisition closed.

    Why it matters

    Will provide a further avenue for stable, regulated growth and is a key inflection point for the company.

    The CenterPoint acquisition is on track for a calendar fourth quarter closing.

    Q&A highlights

    7

    Asked about the company's approach to curtailments, specific price levels for shutting in volumes, and current spot market exposure.

    Tim Silverstein stated the company has approximately 30 Bcf exposed to the spot market and does not disclose specific curtailment price levels, but historically flows gas above $2 and curtails well below $1.

    “prices north of $2, we're still flowing gas. Prices well below $1, we're definitely curtailing somewhere in there is where we typically make the decision.”

    asked by Zachary Parham · answered by Timothy Silverstein

    2 min read6 chapters

    Detailed Narrative

    01

    Operational Resiliency and Weather Impact

    National Fuel's natural gas assets demonstrated strong operational resiliency during an extended cold snap in January and February, with systems holding up well across Utility, Pipeline and Storage, and non-regulated production. Despite this, road closures due to heavy snowfall modestly impacted Q2 production by 5 Bcf and will similarly affect full-year production. The company's marketing portfolio was intentionally positioned to capture meaningful upside from higher winter prices, which materialized during the cold snap.

    02

    Upstream Optimization and Inventory

    The Integrated Upstream & Gathering business is focused on optimizing its development program, with successful testing of Gen 4 well designs and Upper Utica locations. The company boasts decades of core inventory locations, a growing marketing portfolio, and ongoing capital efficiency improvements, positioning it for meaningful production and free cash flow growth. Two top-performing Tioga Utica pads, Bauer and Taft, reached cumulative production of 130 Bcf, demonstrating strong productivity.

    03

    Pipeline and Storage Expansion

    The company announced the Line N system upgrade project, adding 94,000 dekatherms/day of capacity and modernizing a 6-mile pipe section for an estimated $93 million, expected in service late calendar 2028. Construction is also underway for Shippingport Lateral and Tioga Pathway projects, targeting November 2026 in-service dates. A new rate case filing with FERC seeks an approximately $95 million increase to cost of service, including a modernization tracker.

    04

    Utility Regulatory Progress and Ohio Acquisition

    The Utility segment is progressing with rate cases in Pennsylvania and New York, aiming to recover modernization investments while maintaining low rates. The CenterPoint acquisition in Ohio is on track for a Q4 calendar closing, with HSR approval obtained and Public Utilities Commission of Ohio order expected in late spring/early summer. This acquisition is anticipated to provide a further avenue for stable, regulated growth.

    05

    Natural Gas Macro and Market Access

    Management is bullish on the long-term natural gas outlook, citing LNG exports, domestic demand growth (gas-fired power, data centers, AI), and producer discipline. The company is executing a multi-year marketing strategy to reach premium markets, expanding firm transport capacity by 50% to over 1.5 Bcf per day, including new Gulf Coast access. This strategic positioning aims to support long-term growth and premium price realizations.

    06

    Capital Structure and Financing

    National Fuel expects to generate significant free cash flow, covering its growing dividend and reducing leverage to below 2x Debt-to-EBITDA by year-end FY26, approaching 50% FFO to debt. The company plans to raise up to $1.5 billion to finance the Ohio LDC acquisition and refinance existing debt, having recently upsized its committed credit facility to $1.3 billion, providing additional financial flexibility.

    AI-generated summary of the company’s earnings call. Not investment advice.