National Fuel Gas Company (NFG) Q2 FY26 earnings call: guidance and Q&A

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

Inquired about expectations for plateau period at 40 million per day flow rate and the impact on cost and returns.

Justin Loweth explained that higher flow rates pull value forward, and the team is optimizing designs to achieve these rates at the same or lower production facility costs. The ultimate sustained period will be shorter but brings value forward, balancing with gathering infrastructure.

“we believe that we're close on a design where we'll be able to flow at those higher rates and do it at the exact same production facility cost that we have today, potentially even less as we continue to optimize and improve those designs.”

asked by Zachary Parham · answered by Justin Loweth

Asked for more insight into the underperformance of 4 wells on a 6-well pad and when Gen 4 design might become standard.

Justin Loweth attributed underperformance to older Gen 2 designs and lack of 3D seismic data at the time of drilling, noting that Gen 4 and Upper Utica wells on the same pad performed well. The company is trending towards Gen 4 but will continue optimizing between Gen 3 and Gen 4 for best economic return.

“If I could go back in time, these would all be Gen 3, Gen 4 because the Upper Utica well in the pad and the Gen 4 design in the pad are very strong performers, right in line with our expectations.”

asked by Timothy Rezvan · answered by Justin Loweth

Inquired about the number of potential projects, decision criteria, and likelihood of capturing incremental Line N expansions.

Dave Bauer highlighted power generation as the current focus for Line N expansions, including behind-the-meter and broader PJM generation. He mentioned the Shippingport project's potential to grow from 200 million to 800 million a day and other opportunities on the Empire line, driven by regional electric generation shortages.

“Our current focus right now, if you will, in the Line N area is on power gen, both with behind-the-meter type projects like with our Shippingport project as well as other, call it, just power gen that would go into PJM.”

asked by Timothy Rezvan · answered by David Bauer

Asked for more color on supply chain factors and service cost pressures beyond diesel prices.

Justin Loweth stated that the primary headwind is diesel prices and related surcharges. He confirmed no significant supply chain issues or war-impacted challenges, noting that drilling and completion contracts are generally longer-term, providing some insulation.

“In terms of real supply chain issues, we've actually been talking to all of our counterparties, digging into this, trying to ensure that there's no war-impacted challenges. At this point, we don't believe there are.”

asked by John Freeman · answered by Justin Loweth

Asked for perspective on the gas macro, softening prices, production beats, and how it shapes activity and hedging for the rest of the year.

Justin Loweth reiterated that fundamental views haven't changed, emphasizing the portfolio's design for volatility. He noted increased discipline in Appalachia, leading to a more balanced market and expected Henry Hub prices between $3 and $5 long-term, with short-term fluctuations.

“We're still very much in the camp that we're -- we've entered a market where, generally speaking, we're going to see Henry Hub prices between $3 and $5.”

asked by Neil Mehta · answered by Justin Loweth

Inquired about the opportunity set for firm takeaway to premium end markets, specifically Gulf Coast.

Justin Loweth explained the strategy to bolster takeaway capacity to premium markets, including Tioga Pathway, EGT Project Stratum, and Gulf Coast contracts. He noted securing an additional 50 million per day of Gulf Coast capacity, bringing total to 100 million per day over time, and highlighted the balanced FT portfolio reaching various premium markets.

“During the second quarter, we added another 50 million per day of long-term firm capacity along the same route that will go in service over the next few years, doubling our Gulf Coast exposure over time on similarly attractive terms.”

asked by Neil Mehta · answered by Justin Loweth