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    NFG
    Earnings call· Jun 2026(Q3 FY26)

    NATIONAL FUEL GAS Q3 FY26 earnings call NFG

    Jul 30, 2026 Source

    Executive summary

    National Fuel Gas Company Q3 FY26 — Strong Long-Term Outlook Driven by Regulated Growth and Upstream Efficiency

    National Fuel Gas Company reported Q3 FY26 adjusted EPS of $1.54, slightly below prior year due to lower upstream production. The company unveiled a compelling long-term outlook, projecting 7% to 10% annual EPS growth and $1 billion to $1.5 billion in free cash flow through FY29, driven by regulated business expansions, the Ohio utility acquisition, and upstream capital efficiency. Despite some operational challenges in Utica well development and political pressure on a Pennsylvania rate case, management expressed strong confidence in its integrated strategy and commitment to shareholder returns.

    Highlights

    5

    • Expanded Line N system upgrade project by 200,000 dekatherms/day, now totaling 294,000 dekatherms/day, contracted for 20 years.

    • New long-term EPS growth outlook of 7% to 10% per year on average through FY29.

    • Expected free cash flow generation of $1 billion to $1.5 billion through FY29.

    • Ohio utility acquisition approved by Ohio Commission and fully financed with $1.5 billion debt issuance, on track to close in Q4 calendar.

    • 56th consecutive dividend increase approved by the Board.

    Concerns

    5

    • Adjusted EPS of $1.54 was down $0.10 compared to prior year, primarily due to lower production in IUG.

    • Pennsylvania utility rate case facing political pressure, making settlement difficult, with a recommended decision from ALJ expected next month.

    • Upper Utica wells on a co-development pad performed modestly below original expectations.

    • Observed greater-than-anticipated frac interactions between offset Lower Utica wells during Gen 4 testing.

    • Full-year FY26 adjusted EPS guidance revised down to $7.40-$7.60 per share.

    Guidance & targets

    13
    CategoryTargetConfidence
    Long-term Adjusted EPS growth
    between 7% and 10% per year on average
    high materiality
    High
    Free Cash Flow generation
    between $1 billion and $1.5 billion
    high materiality
    High
    Adjusted EPS
    $7.40 to $7.60 per share
    high materiality
    High
    Seneca production
    between 420 and 430 Bcfe
    medium materiality
    High
    Ohio utility acquisition closing date
    October 1
    high materiality
    High
    Supply Corp rate case settlement
    resolution with FERC and our shippers
    medium materiality
    Medium
    Pennsylvania utility new base rates effective date
    November
    medium materiality
    High
    Pennsylvania utility DIS mechanism incremental revenues
    additional incremental revenues
    low materiality
    High
    New York system modernization tracker commission order
    commission order
    low materiality
    High
    Line N system upgrade project in-service date
    November 2028
    medium materiality
    High
    Seneca wells to come online
    14 wells
    low materiality
    High
    Longest lateral wells online
    early 2027
    low materiality
    High
    Capex guidance (midpoint)
    modestly increasing
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Regulated Businesses
    Continued top-line margin growth resulting from multiyear rate plan in New York and revenue associated with the DIS mechanism in Pennsylvania. Benefits largely offset by higher operating costs due to inflation and discrete items (bad debt tracker, new labor agreement). Expecting material step-up in earnings from regulated businesses with Ohio acquisition and rate proceedings.
    Additional expansion revenue: ~$30M (FY27)Utility rate base: expected to double (post-Ohio acquisition)
    		———top-line margin growth
    Integrated Upstream and Gathering (IUG)
    Lower production in IUG more than offset stronger natural gas price realizations and hedge gains, leading to lower adjusted EPS YoY. Focus on capital efficiency improvements and optimizing development program in Tioga County. Longest laterals drilled (4 wells, >30,000 feet measured depth, 18,000-20,000 feet treatable lateral). Expect to exit FY26 at record daily production rates with 14 wells coming online in Q4 FY26.
    Production: 104 Bcf (Q3 FY26)Throughput: 117 Bcf (Q3 FY26)Full-year FY26 production outlook: 420-430 Bcfe
    		———strong cash flow margins relative to peers

    Operational metrics

    19
    Adjusted EPS
    $1.54down $0.10 compared to prior year
    Q3 FY26

    Generally in line with our expectations. Resulted from lower production in our Integrated Upstream and Gathering business that more than offset stronger natural gas price realizations and hedge gains.

    Long-term Adjusted EPS growth rate
    7% to 10%
    annual average

    Updated long-term outlook, assuming current forward curve for natural gas prices.

    Seneca Production
    104
    Q3 FY26

    Did not fully meet expectations.

    Seneca Throughput
    117
    Q3 FY26
    Line N System Upgrade Project Capacity
    294,000expanded by 200,000 dekatherms/day
    target in-service November 2028

    Supports initial phase of coal-to-gas conversion at Shippingport Power Station.

    Shippingport Site Contracted Capacity
    400,000
    current

    Supports both behind-the-meter power generation and power generation into PJM interconnection. Potential to nearly double over time.

    Additional expansion revenue
    $30 million
    FY27

    Expected as these expansion projects are placed in service in November.

    DD&A rate
    low to mid-$0.80
    long-term expected

    Per unit DD&A continues to normalize towards expected long-term rate. Current rate temporarily lowered due to ceiling test impairments in FY25.

    Common equity issued
    4.4 million
    this fiscal year

    As part of financing the Ohio acquisition.

    Long-term debt issued
    $1.5 billion
    June

    Largest debt capital raise in company's history, satisfied financing need for Ohio utility acquisition.

    Incremental long-term debt for acquisition
    $1.2 billion
    this fiscal year

    Portion of proceeds from $1.5B issuance, after redeeming a $300M note.

    Promissory note with CenterPoint
    $1.2 billion
    at closing

    Will be entered into at closing of Ohio acquisition.

    Maintenance land spending
    $15 million
    per year

    Required to support 5-year development plan.

    Discretionary capital for core acreage
    $100 million to $200 million
    over the next several years

    To secure additional core acreage and bolster position in Tioga County.

    Longest laterals drilled
    4
    Q3 FY26

    Expected to be among the most productive in portfolio, with potential to sustain production rates approaching 40 million cubic feet per day per well.

    Expected production rate for longest laterals
    40 million
    sustained

    For the 4-well pad with longest laterals.

    Wells to come online
    14
    Q4 FY26

    Expected to exit fiscal '26 at record daily production rates.

    Hedged production
    75%
    balance of FY26

    Provides price certainty.

    Target leverage ratio
    2.0x to 2.25x
    long-term

    To rebuild balance sheet flexibility post-acquisition.

    Industry KPIs

    6
    MetricValueDetails
    Adjusted operating EPS$1.54USD/share
    Dividend per share growth56th consecutive increaseincrease
    Regulatory rate base growth5% to 7%%
    Equity hybrid financing atm issuance4.4 millionshares
    Large load data center demand pipeline400,000dekatherms/day
    CAPEX multi year capital investment planmodestly increasingguidance

    Orderbook & backlog

    1
    Contracted Capacity for Shippingport Site400,000 dekatherms/dayQ3 FY26

    Supports both behind-the-meter power generation and power generation into PJM interconnection. Potential to nearly double over time through future expansion projects.

    Deals & partnerships

    1
    CenterPointAcquisition of Ohio Gas utilities

    Received order from Ohio Commission approving the acquisition in June. Fully financed by $1.5 billion long-term debt issuance. Teams working closely with CenterPoint to integrate the business.

    Capital programs

    2
    Line N System Upgrade Projectunderway

    Benefit: 294,000 dekatherms/day

    Expanded by 200,000 dekatherms/day. Incremental capacity contracted for 20 years, supporting the initial phase of coal-to-gas conversion at Shippingport Power Station.

    Discretionary Leasing Programunderway$100 million to $200 million

    Benefit: Secure additional core acreage, bolster footprint in Tioga County, extend inventory runway, enhance development optionality, support sustainable growth.

    Strategic investment over the next several years to protect and expand one of the premier natural gas inventory positions in North America.

    Risks & headwinds

    6
    Lower production in Integrated Upstream and Gathering (IUG)Q3 FY26

    Adjusted EPS down $0.10 compared to prior year

    Mitigation: Ongoing capital efficiency improvements, 14 wells forecasted to come online in Q4 FY26, expected to exit FY26 at record daily production rates.

    Higher operating costs in regulated businessesQ3 FY26

    largely offset top-line margin growth

    Mitigation: Driven by general inflation and two discrete items (bad debt tracker, new labor agreement). Increase for labor agreement included in Pennsylvania rate case, expecting minimal regulatory lag.

    Political pressure on Pennsylvania utility rate casecurrent

    difficult to find common ground with all the parties involved

    Mitigation: Case fully briefed, expecting recommended decision from ALJ next month. Optimistic commission will reach an outcome balancing investment needs with customer affordability. New base rates expected November.

    Underperformance of Upper Utica wells and frac interactions in Lower UticaQ3 FY26

    Upper Utica wells on the pad performed modestly below our original expectations; frac interactions between offset Lower Utica wells that were greater than anticipated

    Mitigation: Insights gained are being incorporated into future plans, refining Gen 4 completion designs, adjusting offset well stage design. No interaction between Upper and Lower Utica wells observed, confirming seismic barrier.

    Near-term pressure on credit metrics post-acquisitionnear-term

    current commodity price outlook is expected to place some near-term pressure on credit metrics

    Mitigation: Longer-term deleveraging trajectory remains intact. Active dialogue with rating agencies, key metrics well within investment-grade thresholds. Targeting leverage ratio of 2.0x-2.25x within first few years.

    More moderate natural gas price environmentFY27

    current forward curve implies a more moderate price environment next year

    Mitigation: Strong hedge book provides meaningful protection, 75% of FY26 production hedged at prices well above current strip.

    What to watch in Q4 FY26

    5

    Ohio Utility Acquisition Closing

    Next quarter (Q4 FY26 / Q4 CY26)
    CurrentApproved by Ohio Commission, fully financed.
    TargetClosed by October 1, 2026.

    Why it matters

    This acquisition is transformational, doubling the utility rate base and rebalancing the business mix. Its successful closing is key to the company's strategic shift.

    We are targeting an October 1 closing date and are currently working diligently with CenterPoint to finalize the transition plan and related services, which we expect to complete in the coming weeks.

    Q&A highlights

    5

    Seeking more detail on the well interaction issue, specifically if it was due to tight spacing with Gen 4 fracs or offset well interference, and how it impacts future development plans.

    Justin Loweth clarified that the interactions were lower-to-lower Utica, with no communication between upper and lower zones, confirming the seismic barrier. He stated it was "noise, not substance" in the holistic development, and that practices are being implemented to dampen future impacts. The focus remains on optimizing completion designs for capital efficiency.

    “So from a holistic development, this is noise, not substance. The reality is we're early in the innings in terms of these significantly basically 50% upsized completions intensity jobs.”

    asked by Timothy Rezvan · answered by Justin Loweth

    2 min read6 chapters

    Detailed Narrative

    01

    Regulated Business Growth Drivers

    National Fuel's regulated businesses are poised for significant growth, driven by increasing natural gas demand and strategic expansions. The Line N system upgrade project has been expanded to 294,000 dekatherms/day, supporting the Shippingport Power Station's coal-to-gas conversion and future data center/power generation facilities. Additionally, ongoing rate-making activities in Pennsylvania and New York, coupled with the pending Ohio utility acquisition, are expected to materially step up earnings.

    02

    Integrated Upstream and Gathering (IUG) Strategy

    The IUG segment is focused on optimizing its significant acreage position in Tioga County, which offers a nearly 20-year inventory of low-breakeven locations. The company is implementing a discretionary leasing program with $100 million to $200 million of capital over several years to bolster this footprint. The strategy emphasizes capital efficiency, aiming to generate more production per dollar invested, and continuous refinement of development programs, including Gen 3 and Gen 4 completion designs for Utica wells.

    03

    Ohio Utility Acquisition

    The acquisition of CenterPoint's Ohio Gas utilities is progressing well, having received Ohio Commission approval in June. The transaction is fully financed through a $1.5 billion long-term debt issuance and is targeted to close on October 1, 2026. This acquisition is expected to double the utility rate base, rebalance the business mix, and further strengthen the company's investment-grade credit profile.

    04

    Utica Well Development Learnings

    Recent co-development tests of Upper and Lower Utica wells provided valuable insights. While Upper Utica wells performed modestly below expectations, the tests confirmed no communication between Upper and Lower Utica zones, reinforcing the seismic barrier's effectiveness. Gen 4 completion designs are being refined, with observations of greater-than-anticipated frac interactions between offset Lower Utica wells, leading to adjustments in future development plans to optimize capital efficiency.

    05

    Capital Efficiency and Production Outlook

    Seneca Resources continues to focus on capital efficiency improvements, with a clear path to sustained gains through development optimization, improved well performance, and leveraging gathering infrastructure. Despite some appraisal test impacts, 14 wells are forecasted to come online in Q4 FY26, expected to drive record daily production rates by fiscal year-end. The full-year FY26 production outlook is revised to 420-430 Bcfe.

    06

    Financing and Balance Sheet Management

    The company successfully completed a $1.5 billion multi-tranche debt issuance in June, with a weighted average interest rate of just over 5%, to finance the Ohio acquisition. While near-term credit metrics may face pressure due to the acquisition and commodity prices, the long-term deleveraging trajectory remains intact, with a target leverage ratio of 2.0x-2.25x within the first few years post-acquisition.

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