Q3 2024 National Fuel Gas Company Earnings Call

Operator: Good morning. My name is Brianna, and I will be your conference operator today. At this time, I would like to welcome everyone to the National Fuel Gas Company third quarter fiscal 2024 earnings conference call. Please note that this call is being recorded. All lines have been placed on mute to prevent any background noise.

Brianna: Morning, my name is Brianna, and I will be your conference operator today.

Brianna: At this time, I would like to welcome everyone to the National Fuel Gas Company third quarter fiscal 2024 earnings conference call. Please note that this call is being recorded. All lines have been placed on mute to prevent any background noise.

Speaker Change: At this time, I would like to welcome everyone to the National Fuel Gas Company 3rd Quarter Fiscal 2024 Earnings Conference Call.

Speaker Change: Please note that this call is being recorded. All lines have been placed on mute to prevent any background noise.

Brianna: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, press star one again.

Speaker Change: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, then the number 1 on your telephone keypad. To withdraw your question, press star 1 again.

Natalie Fischer: I will now turn the call over to Natalie Fischer, Director of Investor Relations. You may begin your conference.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number 1 on your telephone keypad. To withdraw your question, press star 1 again. I will now turn the call over to Natalie Fischer, Director of Investor Relations. You may begin your conference.

I will now turn the call over to Natalie Fischer, Director of Investor Relations. You may begin your conference.

Natalie Fischer: Thank you, Brianna. Good morning. We appreciate you joining us on today's conference call for discussion of last evening's earnings release. With us on the call from National Fuel Gas Company, are Dave Bauer, our President and Chief Executive Officer; Tim Silverstein, Treasurer and Principal Financial Officer; and Justin Lois, President of Seneca Resources and National Fuel Mistrain.

Natalie Fischer: Thank you, Brianna, and good morning. We appreciate you joining us on today's conference call for a discussion of last evening's earnings release.

Natalie Fischer: With us on the call from National Fuel Gas Company are Dave Bauer, our President and Chief Executive Officer, Tim Silverstein, Treasurer and Principal Financial Officer, and Justin Loweth, President of Seneca Resources and National Fuel Midstream. At the end of today's prepared remarks, we will open the discussion to questions. The third quarter fiscal 2024 earnings release and July investor presentation have been posted on our investor relations website. We may refer to these materials during today's call.

Speaker Change: With us on the call from National Fuel Gas Company are Dave Bauer, our President and Chief Executive Officer, Tim Silverstein, Treasurer and Principal Financial Officer, and Justin Loweth, President of Seneca Resources and National Fuel Midstream.

Natalie Fischer: At the end of today's prepared remarks, we will open the discussion to questions. The third quarter fiscal 2024 earnings release in July investor presentations have been posted on our Investor Relations website. We may refer to these materials during today's call.

Speaker Change: At the end of today's prepared remarks, we will open the discussion to questions. The third quarter fiscal 2024 earnings release and July investor presentation have been posted on our investor relations website. We may refer to these materials during today's call.

Natalie Fischer: We would like to remind you that today's teleconference will contain forward-looking sources. While National Fuel's expectations released and projections are made in good faith and are believed to have a reasonable basis, actual results may differ materially. These statements speak only as of the date on which they are made, and you may refer to last evening's earnings release for a listing of certain specific risk factors.

Natalie Fischer: We would like to remind you that today's teleconference will contain forward-looking speakers. While National Fuel's expectations, beliefs, and projections are made in good faith and are believed to have a reasonable basis, actual results may differ materially. These statements speak only as of the date on which they are made, and you may refer to last evening's earnings release for a listing of certain specific risk factors. With that, I'll turn it over to Dave Bauer.

Speaker Change: We would like to remind you that today's teleconference will contain forward-looking statements. While National Fuel's expectations, beliefs, and projections are made in good faith and are believed to have a reasonable basis, actual results may differ materially.

Speaker Change: These statements speak only as of the date on which they are made, and you may refer to last evening's earnings release for a listing of certain specific risk factors.

David Bauer: With that, I'll turn it over to Dave Bauer. Thank you, Natalie. Good morning, everyone. Overall, the third quarter was a good one for National Fuel, one in which we saw a continued operational success across the system. Apart from natural gas prices, our financial results for the quarter were right in line with expectations.

Dave Bauer: Thank you, Natalie. Good morning, everyone.

Dave Bauer: With that, I'll turn it over to Dave Bauer. Thank you, Natalie. Good morning, everyone. Overall, the third quarter was a good one for National Fuel, one in which we saw continued operational success across the system.

Dave Bauer: Overall, the third quarter was a good one for National Fuel, one in which we saw continued operational success across the system. Apart from natural gas prices, our financial results for the quarter were right in line with expectations. Tim and Justin will get into some more of the details of the quarter, so I'll focus my time highlighting our future growth opportunities and the value proposition National Fuel offers to investors. Last night, we initiated our preliminary guidance for fiscal 2025 from $5.75 to $6.25 per share, at the midpoint, a nearly 20% increase over fiscal 24.

Dave Bauer: Apart from natural gas prices, our financial results for the quarter were right in line with expectations.

David Bauer: Tim and Justin will get into some more of the details of the quarter, so I'll focus my time highlighting our future growth opportunities and the value proposition National Fuel offers to investors. In short, our strong return on capital, our visibility to significant growth in earnings and free cash flow, and our long standing commitment to returning an increasing amount of capital to shareholders positions us very well to deliver significant value in the coming years. Last night, we initiated our preliminary guidance for fiscal 2025 for $5.75 to $6.25 per share at the midpoint, on nearly 20% increase over fiscal 24.

Speaker Change: Tim and Justin will get into some more of the details of the quarter, so I'll focus my time highlighting our future growth opportunities and the value proposition National Fuel offers to investors.

Speaker Change: In short, our strong return on capital, our visibility to significant growth earnings and free cash flow, and our longstanding commitment to returning an increasing amount of capital to shareholders positions us very well to deliver significant value in the coming years.

Speaker Change: Last night, we initiated our preliminary guidance for fiscal 2025 of $5.75 to $6.25 per share. At the midpoint, a nearly 20% increase over fiscal 2024.

Dave Bauer: And we expect that this will be a system-wide increase in earnings, with each of our major operating segments seeing improved results. In addition to our outlook for 2025, we've added multi-year outlooks for several key financial metrics to our updater and investor presentation. In particular, as you can see on page 9 of our updated IR deck, we're now guiding to compound annual consolidated earnings growth of better than 10% for at least the next three years.

David Bauer: And we expect that this will be a system-wide increase in earnings, with each of our major operating segments seeing improved results.

Speaker Change: And we expect that this will be a system-wide increase in earnings, with each of our major operating segments seeing improved results.

David Bauer: In addition to our outlook for 2025, we've added multi-year outlooks for several key financial metrics to our updated investor presentation. In particular, as you can see on page 9 of our updated IR deck, we're now guiding to compound annual consolidated earnings growth of better than 10% for at least the next three years. Importantly, as we expect will be the case in 2025, each of our businesses across the system should contribute to our improved outlook. At our regulated utility and pipeline and storage businesses, we expect a 7 to 10% average annual growth in earnings per share over the next three years.

Speaker Change: In addition to our outlook for 2025, we've added multi-year outlooks for several key financial metrics to our updater and investor presentation.

Speaker Change: In particular, as you can see on page 9 of our updated IR deck, we're now guiding to compound annual consolidated earnings growth of better than 10% for at least the next three years.

Dave Bauer: Importantly, as we expect will be the case in 2025, each of our businesses across the system should contribute to our improved outlook. For example, at our regulated utility, pipeline, and storage businesses, we expect a 7 to 10% average annual growth in earnings per share over the next three years. Much of next year's growth will come from the supply corp rate case we settled earlier this year, along with the impact of our ongoing New York utility rate case. With respect to that case, we are still in settlement discussions, but I am optimistic we'll reach a settlement this quarter.

Speaker Change: Importantly, as we expect will be the case in 2025, each of our businesses across the system should contribute to our improved outlook.

David Bauer: Works. Much of next year's growth will come from the supply corp rate case we settled earlier this year, along with the impact of our ongoing New York utility rate case. With respect to that case, we are still in settlement discussions, but I am optimistic we'll reach a settlement this quarter. Looking beyond next year, the modernization programs at the regulated companies and expansion projects like Tyoga Pathway are expected to drive rate base growth into five and the five to seven percent area. As many of you know, we looked at the regulated businesses to fund the majority of our dividend, and the expected growth in those segments gives me confidence in our ability to continue growing it for many years to come.

Dave Bauer: Looking beyond next year, the modernization programs at the regulated companies and expansion projects like Tioga Pathway are expected to drive rate-based growth in the 5-7% area. As many of you know, we look to the regulated businesses to fund the majority of our dividend, and the expected growth in those segments gives me confidence in our ability to continue growing it for many years to come. One quick note on the status of the Tioga project; we're making good progress with it and expect to file our FERC application later this month for a late calendar 2026 in service day.

Speaker Change: Looking beyond next year, the modernization programs at the regulated companies and expansion projects like Tioga Pathway are expected to drive rate based growth in the five to seven percent area.

Speaker Change: As many of you know, we look to the regulated businesses to fund the majority of our dividend, and the expected growth in those segments gives me confidence in our ability to continue growing it for many years to come.

David Bauer: One quick note on the status of the Tyoga project: we're making good progress with it and expect to file our firm application later this month for a late calendar, 2026 in-service day.

Speaker Change: One quick note on the status of the Tioga project. We're making good progress with it and expect to file our FERC application later this month for a late calendar 2026 in-service date.

David Bauer: The outlook for growth in our non-regulated upstream and gathering businesses is even better. Seneca's one to two rig program should grow production and gathering throughput in the low to mid single-digit percentage area on average. But more importantly, natural gas prices are expected to meaningfully improve in the next several months, which should drive Seneca's earnings higher. Like most in the industry, we expect to see significant demand growth in the year ahead as the next wave of LNG projects come online and additional natural gas fired power generation is needed to support the increase in electricity demand for data centers and the ensuring of manufacturing.

Dave Bauer: The outlook for growth in our non-regulated upstream and gathering businesses is even better. Seneca's one to two rig program should grow production and gathering throughput in the low to mid single-digit percentage range on average. But more importantly, natural gas prices are expected to meaningfully improve in the next several months, which should drive Seneca's earnings higher. Like most in the industry, we expect to see significant demand growth in the year ahead. As the next wave of LNG projects come online, additional natural gas-fired power generation is needed to support the increase in electricity demand for data centers and the onshoring of manufacturing.

Speaker Change: But more importantly, natural gas prices are expected to meaningfully improve in the next several months, which should drive Seneca's earnings higher.

David Bauer: It goes without saying that natural gas prices are volatile, but we expect that our long standing approach to hedging, which layers in trades over generally a three year period, will allow us to continue to lock in increasing price realizations. Providing great greater certainty to our longer term consolidated earnings growth trend. Nevertheless, as you can see from page 27 of our investor deck, we have significant on-hedge volumes in the future that provide considerable upside potential should prices run up. Re cash flow should grow alongside earnings, particularly at our non-regulated businesses. As I've said on prior calls, as we complete our transition to the Eastern development area, we should be in the enviable position where we can grow production at the same time as we're decreasing the amount of capital we invest in.

Dave Bauer: It goes without saying that natural gas prices are volatile, but we expect that our longstanding approach to hedging, which layers in trades over generally a three-year period, will allow us to continue to lock in increasing price realization, providing much greater certainty to our longer-term consolidated earnings growth trend. Nevertheless, as you can see from page 27 of our investor deck, we have significant unhedged volumes in the future that provide considerable upside potential should prices run up.

Dave Bauer: Free cash flow should grow alongside earnings, particularly in our non-regulated businesses. As I've said on prior calls, as we complete our transition to the eastern development area, we should be in the enviable position where we can grow production at the same time as we're decreasing the amount of capital we invest in Seneca's drilling program and when centralized infrastructure and trunk lines are built out, and NFG midstreams as well. The improved capital efficiency combined with the natural gas-Contango natural gas curve should lead to considerable growth in non-regulated free cash flow over the next three years, as you can see on page nine of our IR deck.

Speaker Change: As I've said on prior calls, as we complete our transition to the eastern development area, we should be in the enviable position where we can grow production at the same time as we're decreasing the amount of capital we invest in Seneca's drilling program, and when centralized infrastructure and drug clients are built out.

David Bauer: Seneca's drilling program and once centralized infrastructure and front clients are built out and if she mid streams as well. The improved capital efficiency combined with the natural gas contango natural gas curve should lead to considerable growth and non-regulated free cash flow over the next three years. As you can see on page nine of our IR deck. This should give us significant financial flexibility to allocate capital towards additional growth opportunities, further improve our investment grade balance sheet, or, absent either of these, return additional capital to shareholders.

Speaker Change: and a few midstreams as well.

Speaker Change: The improved capital efficiency combined with the natural gas, a contango natural gas curve should lead to considerable growth in non-regulated free cash flow over the next three years as you can see on page nine of our IR deck.

Dave Bauer: This should give us significant financial flexibility to allocate capital towards additional growth opportunities, further improve our investment grade balance sheet, or, absent either of these, return additional capital to shareholders. To that end, in June, our board approved an 8% or 4% increase in our dividend, which continues our impressive streak of paying a dividend for 122 consecutive years and increasing it in each of the last 54. The dividend is a core element of our value proposition.

Speaker Change: This should give us significant financial flexibility to allocate capital towards additional growth opportunities, further improve our investment grade balance sheet, or, absent either of these, return additional capital to shareholders.

David Bauer: To that end, in June, our board approved an eight cent or 4% increase in our dividend, which continues our impressive streak of paying a dividend for 122 consecutive years and increasing it in each of the last 54. The dividend is a core element of our value proposition. We are one of approximately 50 companies in the country that have increased their dividend for more than half a century, which is a testament to our long history of judiciously allocating capital projects that generate strong returns in excess of our cost of capital. As you know, in March, we initiated a $200 million share buyback program that we expect to complete by the end of next fiscal year.

Speaker Change: To that end, in June , our board approved an 8 cent or 4% increase in our dividend, which continues our impressive streak of paying a dividend for 122 consecutive years and increasing it in each of the last 54.

Dave Bauer: We are one of approximately 50 companies in the country that have increased their dividend for more than half a century, which is a testament to our long history of judiciously allocating capital to projects that generate strong returns in excess of our cost of capital. As you know, in March, we initiated a $200 million share buyback program that we expect to complete by the end of next fiscal year. We're right on track with this program. As of yesterday, we repurchased approximately $45 million of our stock, which has reduced our total shares outstanding by just under 1%.

Speaker Change: We are one of approximately 50 companies in the country that have increased their dividend for more than half a century, which is a testament to our long history of judiciously allocating capital to projects that generate strong returns in excess of our cost of capital.

Speaker Change: As you know, in March we initiated a $200 million share buyback program that we expect to complete by the end of next fiscal year.

David Bauer: We're right on track with this program. As of yesterday, we've repurchased approximately $45 million of our stock, which has reduced our total shares outstanding by just under 1%. Looking to the quarters ahead, I see this program continuing at a similar cadence.

Dave Bauer: Looking to the quarters ahead, I see this program continuing at a similar pace. As I said on the last call, given the positive outlook for our integrated businesses, we see significant long-term value in National Fuel and view this as a great opportunity to buy back shares at a low point in the commodity price cycle. In closing, I'm excited for the future of the natural gas industry and, especially, for national fuel. While there is a vocal minority trying to sway policymakers towards a future without natural gas, the vast majority of people across the globe recognize that natural gas is a reliable, affordable source of energy that is critical to economic prosperity.

David Bauer: As I said on the last call, given the positive outlook for our integrated businesses, we see significant long-term value in National Fuel. And view, this is a great opportunity to buy back shares at a low point in the commodity price cycle.

David Bauer: In closing, I'm excited for the future for the natural gas industry, and especially for National Fuel. While there's a vocal minority trying to sway policymakers towards the future without natural gas, the vast majority of people across the globe recognize that natural gas is a reliable, affordable source of energy that is critical to economic prosperity. The future is bright, and National Fuels' outstanding group of assets and our long history of strong operational execution makes us well positioned to provide these critical energy supplies for decades to come and, in doing so, generate attractive returns for our shareholders.

Dave Bauer: The future is bright, and National Fuel's outstanding group of assets and our long history of strong operational execution make us well-positioned to provide these critical energy supplies for decades to come and, in doing so, generate attractive returns for our shareholders. With that, I'll turn the call over to Tim to discuss the results of the quarter and provide more details on our preliminary guidance for fiscal 2025.

Timothy Silverstein: With that, I'll turn the call over to Tim to discuss the results of the quarter and provide more details on our preliminary guidance for fiscal 2025. Thanks, Dave. Good morning, everyone. As you saw on last night's release for the third quarter, National Fuel reported a gap loss of $54 million for $59 per share. The decline in natural gas prices over the past 12 months caused Senator to record a non-cash full cost ceiling test impairment charge that amounted to a loss of $1.58 per share. Excluding this impairment, as well as a couple of other smaller items impact and comparability, adjusted operating results for the quarter over $0.99 per share.

Tim Silverstein: Thanks Dave, and good morning everyone. As you saw in last night's release, for the third quarter, National Fuel reported a gap loss of $54 million, or $0.59 per share. The decline in natural gas prices over the past 12 months caused Seneca to record a non-cash, full-cost ceiling test impairment charge that amounted to a loss of $1.58 per share. Excluding this impairment, as well as a couple other smaller items impacting comparability, adjusted operating results for the quarter were $0.99 per share.

Timothy Silverstein: Growth from our regulated segments combined with our strong hedge book mitigated nearly all the impact of lower natural gas prices, which were down approximately $0.20 per MMBtu compared to last year's third quarter. In our regulated segments, we continue to see the positive impact from our recent ratemaking activity. In utility, we saw an increase in Pennsylvania margin related to our 2023 rate settlement, along with continued growth in revenues related to our two system modernization trackers in New York. In the pipeline and storage segment, this was the first quarter where we saw the full benefit of our supply corporate rate case, which is expected to increase annual revenues by approximately $56 million.

Tim Silverstein: Growth from our regulated segments, combined with our strong hedge book, mitigated nearly all the impact of lower natural gas prices, which were down approximately $0.20 per MMVTU compared to last year's third quarter. In our regulated segments, we continue to see the positive impact from our recent rate-making activity. In the utility business, we saw an increase in Pennsylvania margin related to our 2023 rate settlement, along with continued growth in revenues related to our two system modernization trackers in New York.

Tim Silverstein: In the pipeline and storage segment, this was the first quarter where we saw the full benefit of our supply corp rate case, which is expected to increase annual revenues by approximately $56 million. In our non-regulated segments, while natural gas pricing was a headwind, our methodical approach to hedging limited the overall impact. Our hedge book delivered a $75 million gain during the quarter, which more than offset lower NYMEX and in-basin prices.

Timothy Silverstein: In our non-regulated segments, while natural gas pricing was a headwind, our methodical approach to hedging limited the overall impact. Our hedge book delivered a $75 million gain during the quarter, which more than offset lower Nimex and invasive pricing. As we've discussed in the past, when invasive pricing reaches a certain threshold, we view it as prudent to curtail our spot gas until prices improve. During the quarter, nearly six BCF of production was curtailed due to pricing. Despite this, Seneca's production of 97 BCF was an increase of 2% compared to last year, which also contributed to growth in our gathering segment revenues.

Tim Silverstein: As we've discussed in the past, when in-basin pricing reaches a certain threshold, we view it as prudent to curtail our spot gas until prices improve. During the quarter, nearly 6 PCF of production was curtailed due to price. Despite this, Seneca's production of 97 BCF was an increase of 2% compared to last year, which also contributed to growth in our gathering segment revenue. This is a testament to the strength of our integrated development program and, specifically, the ongoing transition to our eastern development area, where we continue to see strong well results, outpacing initial expectations.

Speaker Change: Despite this, Seneca's production of 97 BCF was an increase of 2% compared to last year, which also contributed to growth in our gathering segment revenues.

Timothy Silverstein: This is a testament to the strength of our integrated development program, and specifically the ongoing transition to our eastern development area, where we continue to see strong, well results outpacing initial expectations.

Timothy Silverstein: Just want to have more to say on our ENP and gathering activities later in the call.

Tim Silverstein: Justin will have more to say on our E&P and gathering activities later in the call. Turning to guidance, we've updated our fiscal 2024 earnings projection to be in the range of $5 to $5.10 per share, which incorporates our third quarter results and other modest revisions to our guidance for the balance of the year. We reflected the impact of the third quarter price-related curtailments, which reduced the top end of our production guidance by 5 BCI. As a reminder, our guidance does not include any future price curtailments. So, to the extent that low natural gas prices continue, we may voluntarily curtail additional volume.

Timothy Silverstein: Turning to guidance, we've updated our fiscal 2024 earnings projection to be in the range of $5 to $5.10 per share, which incorporates our third quarter results and other modest revisions to our guidance for the balance of the year. We reflected the impact of the third quarter price-related curtailments, which reduced the top end of our production guidance by five BCF. As a reminder, our guidance does not include any future pricing curtailments. So, to the extent low natural gas prices continue, we may voluntarily curtail additional volumes. That being said, we only have five BCF of our remaining production exposed to the spot market.

Speaker Change: Turning to guidance, we've updated our fiscal 2024 earnings projection to be in the range of five dollars to five dollars and ten cents per share, which incorporates our third quarter results and other modest revisions to our guidance for the balance of the year.

Speaker Change: We reflected the impact of the third quarter price-related curtailments, which reduced the top end of our production guidance by 5 BCF. As a reminder, our guidance does not include any future pricing curtailments. So, to the extent low natural gas prices continue, we may voluntarily curtail additional volumes.

Tim Silverstein: That being said, we only have 5 BCF of our remaining production exposed to the spot market. We've also updated our NYMEX price assumption to $2.40 per MMVTU. Prices have been volatile as of late, so to the extent NYMEX changes by $0.25 for the fourth quarter, our earnings would change by approximately $0.05 per share. Our guidance excludes any items impacting comparability, such as the ceiling test impairment we recorded in the third quarter.

Timothy Silverstein: We've also updated our NIMEX price assumption to $2.40 premium BTU. Prices have been volatile as of late, so to the extent NIMEX changes by 25 cents for the fourth quarter, our earnings would change by approximately 5 cents per share. Our guidance excludes any items impacting comparability, such as the ceiling test impairment we recorded in the third quarter. As a reminder, the full cost ceiling test utilizes a historical 12-month average price assumption to assess the future value of our natural gas reserves. Given the current near-term pricing outlook, we expect this trailing 12-month price to decrease, leading to the potential for additional impairments.

Speaker Change: Our guidance excludes any items impacting comparability, such as the ceiling test impairment we recorded in the third quarter.

Tim Silverstein: As a reminder, the full-cost sealing test utilizes a historical 12-month average price assumption to assess the future value of our natural gas reserve. Given the current near-term pricing outlook, we expect this trailing 12-month price to decrease, leading to the potential for additional impairment. While the pricing used in the ceiling test is backward looking, the forward outlook for prices is nearly $1 higher. Thus, the expected economic value of our reserves is well in excess of the carrying value on our financial statements today. On the capital side, we've made a few modest tweaks.

Speaker Change: Given the current near-term pricing outlook, we expect this trailing 12-month price to decrease, leading to the potential for additional impairments.

Timothy Silverstein: While the pricing used in the ceiling test is backwards-looking, the forward outlook for prices is nearly $1 higher. So the expected economic value of our reserves is well in excess of the carrying value on our financial statements today. On the capital side, we've made a few modest tweaks. Most notably, we've reduced the top end of Seneca's range for the second consecutive quarter and are now projecting spending of $525 to $545 million for the year.

Tim Silverstein: Most notably, we've reduced the top end of Seneca's range for the second consecutive quarter and are now projecting spending of $525 to $545 million for the year. Looking ahead, we've initiated preliminary guidance for fiscal 2025, where earnings are expected to be in the range of $5.75 to $6.25 per share. At the midpoint, this is a 19% increase from fiscal 2024. Hitting on a few of the highlights.

Timothy Silverstein: Looking ahead, we've initiated preliminary guidance for fiscal 2025, where earnings are expected to be in the range of $575 to $625 per share. At the midpoint, this is a 19% increase from Fiscal 2024. Getting out a few of the highlights. First, we expect to see a second straight year of significant growth in our regulated businesses. In our pipeline storage segment, we will see the full-year impact of revenue growth related to our supply corporate case, which had rates go into effect in February. This will drive a little more than $20 million in additional revenues year-over-year. Other than the supply corporate case settlement from this year, our fiscal 25 guidance does not include any additional FERC rate case impacts.

Tim Silverstein: First, we expect to see a second straight year of significant growth in our regulated businesses. In our Pipeline and Storage segment, we will see the full year impact of revenue growth related to our Supply Corp rate case, which had rates go into effect in February. This will drive a little more than $20 million in additional revenues year over year. Other than the Supply Corp rate case settlement from this year, our Fiscal 25 guidance does not include any additional FERC rate case impact.

Speaker Change: Hitting on a few of the highlights. First, we expect to see a second straight year of significant growth in our regulated businesses. In our pipeline and storage segment, we will see the full year impact of revenue growth related to our supply corp rate case, which had rates go into effect in February .

Timothy Silverstein: At the utility, given our confidence and our ability to reach a settlement in New York, we've reflected that in our guidance. While new rates would have been effective October 1st of this year, the suspension period for these rates to be implemented has effectively been extended out to February 1st. This is common in New York, and the company's request is a standard make-hole provision that, if approved, will allow us to recover any lost rate increases between October 1st and the date of the formal New York PSE approval of any settlement. This could push the financial statement impact of the rate case out until our second quarter, but we expect to see the majority of the annual rate increase hit within fiscal 2025.

Tim Silverstein: At the utility, given our confidence and our ability to reach a settlement in New York, we've reflected that in our guidance. While new rates would have been effective on October 1st of this year, the suspension period for these rates to be implemented has effectively been extended out to February 1st.

Speaker Change: At the utility, given our confidence and our ability to reach a settlement in New York, we've reflected that in our guidance.

Speaker Change: While new rates would have been effective October 1st of this year, the suspension period for these rates to be implemented has effectively been extended out to February 1st.

Tim Silverstein: This is common in New York, and the company's request is a standard makehold provision that, if approved, will allow us to recover any lost rate increases between October 1st and the date of the formal New York PSC approval of any settlement. This could push the financial statement impact of the rate case out until our second quarter, but we expect to see the majority of the annual rate increase hit within fiscal 2025.

Tim Silverstein: While the details of settlement discussions are confidential, to the extent we reach an agreement with the parties involved, a joint proposal will be filed with the New York PSC, at which point we'd expect to provide updated guidance, if necessary.

Timothy Silverstein: While the details of settlement discussions are confidential, to the extent we reach an agreement with the parties involved, a joint proposal will be filed with the New York PSE, at which point we'd expect to provide updated guidance, if necessary. Switching to our non-regulated businesses, we expect fiscal 25 production to increase to an expected range of 400 to 420 BCF, an increase of 4% at the midpoint. Unit costs are expected to remain generally in line with Fiscal 2024. Underpinning this forecast is the assumption that 9x will average $3.25 per MBTU for the year, and Appalachian spot prices will average $2.30.

Tim Silverstein: Switching to our non-regulated businesses, we expect Fiscal 25 production to increase to an expected range of 400 to 420 BCF, an increase of 4% at the midpoint, while unit costs are expected to remain generally in line with fiscal 2024. Underpinning this forecast is the assumption that NYMEX will average $3.25 per MMVTU for the year, and Appalachian spot prices will average $2.30. To the extent prices are $0.25 higher, we would expect earnings to increase by approximately $0.35 per share.

Speaker Change: Switching to our non-regulated businesses, we expect fiscal 25 production to increase to an expected range of 400 to 420 BCF, an increase of 4% at the midpoint.

Speaker Change: Underpinning this forecast is the assumption that NYMEX will average $3.25 per MMBTU for the year, and Appalachian spot prices will average $2.30.

Timothy Silverstein: To the exempt prices are $0.25 higher, we would expect earnings to increase by approximately $0.35 per share. To the exempt prices are $0.25 lower, earnings would be reduced by approximately $0.30, which is modestly lower given the benefit of the college within our hedge book.

Tim Silverstein: To the extent prices are $0.25 lower, earnings would be reduced by approximately $0.30, which is modestly lower given the benefit of the collars within our hedge. Turning to fiscal 2025 capital expenditures, we expect consolidated expenditures to be in the range of $885 to $970 million, which is largely in line with fiscal 2025. Driving this is a further reduction in non-regulated spending, in particular a $25 million, or 5%, decrease in Seneca's capital at the midpoint.

Timothy Silverstein: Turning to fiscal 2025 capital, we expect consolidated expenditures to be in the range of $885 to $970 million, which is largely in line with fiscal 2024. Driving this is a further reduction in non-regulated spending, in particular, a $25 million or 5% decrease in Sena Coast Capital at the midpoint. Offsetting this is modestly higher expected capital at the regulated subsidiaries. In the utility, the bulk of the increase spending is in New York. This is consistent with the capital levels proposed in our rate case, and are expected to be recoverable through any potential settlement. In the pipeline and storage segment, the increase is largely driven by our ongoing modernization program and the need to meet requirements of the growing number of regulations being implemented at the state and federal level.

Tim Silverstein: Offsetting this is modestly higher expected capital at the regulated subsidiary. For the utility, the bulk of the increased spending is in New York. This is consistent with the capital levels proposed in our rate case and is expected to be recoverable through any potential settlement. In the pipeline and storage segment, the increase is largely driven by our ongoing modernization program and the need to meet requirements of the growing number of regulations being implemented at the state and federal levels.

Speaker Change: In the pipeline and storage segment, the increase is largely driven by our ongoing modernization program and the need to meet requirements of the growing number of regulations being implemented at the state and federal level.

Timothy Silverstein: These investments, which maintain the safety and reliability of our system and reduce emissions, contribute to expected long-term growth and a 5% to 7%, which is expected to support a similar level of long-term growth and regulated earnings.

Tim Silverstein: These investments, which maintain the safety and reliability of our system and reduce emissions, contribute to expected long-term growth and a rate base of 5 to 7 percent, which is expected to support a similar level of long-term growth and regulated earnings. Bringing it all together, our balance sheet is in great shape. While the combination of our dividend and buyback program is expected to modestly exceed free cash flow through the end of fiscal 2025, the incremental leverage we expect to add should be offset by growth in funds from operations and EBITDA, such that our credit metrics are expected to remain near current levels.

Timothy Silverstein: Bringing it all together, our balance sheet is in great shape. While the combination of our dividend and buyback program is expected to modestly exceed free cash flow through the end of fiscal 2025, the incremental leverage we expect to add should be offset by growth in funds from operations and EBITDA. Such that our credit metrics are expected to remain near current levels. Specifically, we expect to be around 40% FFO to debt and below two and a quarter times debt to EBITDA through the end of next fiscal year. This gives us significant cushion relative to our downgrade thresholds, leaving us a lot of financial flexibility as we remain focused on opportunistically creating value for shareholders.

Speaker Change: While the combination of our dividend and buyback program is expected to modestly exceed free cash flow through the end of fiscal 2025, the incremental leverage we expect to add should be offset by growth in funds from operations and EBITDA, such that our credit metrics are expected to remain near current levels.

Tim Silverstein: Specifically, we expect to be around 40% FFO to debt and below two and a quarter times debt to EBITDA through the end of next fiscal year. This gives us significant cushion relative to our downgrade thresholds, leaving us a lot of financial flexibility as we remain focused on opportunistically creating value for shareholders. With that, I'll turn the call over to Justin.

Speaker Change: Specifically, we expect to be around 40% FFO to debt and below two and a quarter times debt to EBITDA through the end of next fiscal year.

Justin Loweth: With that, I'll turn the call over to Justin. Thanks, Tim, and good morning, everyone. Seneca and NFT midstream delivered solid results for the quarter. As our transition to an EDA-focused development program continues to exceed expectations, all Seneca pads turned in line in the first half of the year have demonstrated strong productivity trends, and we're seeing increased capital efficiency across our operations, allowing Seneca to reduce its fiscal 24 capital guidance for the second quarter in a row. Starting with production, Tim hit on the high points for the quarter and our updated guidance assumptions. I'll take a minute to discuss the underlying operational plan and production cadence.

Justin Loweth: Thanks, Tim, and good morning, everyone. Seneca and NFT Midstream delivered solid results for the quarter as our transition to an EDA-focused development program continues to exceed expectations. All Seneca pads that came online in the first half of the year demonstrated strong productivity trends, and we're seeing increased capital efficiency across our operations, allowing Seneca to reduce its fiscal 24 capital guidance for the second quarter in a row. Starting with production, Tim hit on the high points for the quarter and our updated guidance assumption. So I'll take a minute to discuss the underlying operational plan and production cadence. Our operational plan remains unchanged, with only a few wells expected to be brought in line before the next fiscal year.

Speaker Change: With that, I'll turn the call over to Justin.

Justin: Starting with production, Tim hit on the high points for the quarter and our updated guidance assumptions.

Justin Loweth: Our operations plan remains unchanged, with only a few wells expected to be turned in line before the next fiscal year. As such, we expect a modest decline in production in this year's fourth quarter. As we look out to fiscal 25, we plan to turn in line 17 wells during the first half of the year to take advantage of expected stronger pricing as winter arrives and LNG exports ramp up. Overall, we expect production for fiscal 25 to increase over the winter and spring months, then modestly decline by the end of the year. Turning to natural gas pricing, we believe longer-term fundamentals are setting up for a favorable price environment, despite near-term headwinds.

Justin: Our operations plan remains unchanged, with only a few wells expected to be turned in line before the next fiscal year. As such, we expect a modest decline in production in this year's fourth quarter.

Justin Loweth: As such, we expect a modest decline in production in this year's fourth quarter. As we look out to Fiscal 25, we plan to bring in 17 wells during the first half of the year to take advantage of expected stronger pricing as winter arrives and LNG exports ramp up. Overall, we expect production for Fiscal 25 to increase over the winter and spring months, then modestly decline by the end of the year.

Speaker Change: As we look out to fiscal 25, we plan to turn in line 17 wells during the first half of the year to take advantage of expected stronger pricing as winter arrives and LNG exports ramp up.

Justin Loweth: Turning to natural gas pricing, we believe longer-term fundamentals are setting up for a favorable price environment, despite near-term headwinds. Over the next few quarters, we expect that the combination of resilient production and persistently high inventory levels will continue to constrain natural gas prices, likely into the fall. In order to limit our pricing risk during this period, we have methodically layered in both physical firm sales and strong financial hedges over the past several years, which provides a balance of downside protection and upside price participation.

Speaker Change: Turning to natural gas pricing, we believe longer-term fundamentals are setting up for a favorable price environment despite near-term headwinds.

Justin Loweth: Over the next few quarters, we expect that the combination of resilient production and persistently high inventory levels will continue to constrain natural gas prices, likely into the fall. In order to limit our pricing risk during this period, we have methodically layered in both physical firm sales and strong financial hedges over the past several years, which provides a balance of downside protection and upside price participation. For the remainder of fiscal 24, we have downside pricing protection covering more than 70% of our expected production through a combination of swaps, costless collars, and fixed price firm sales. With the weighted average floor price of $3.32 per MBTU, we are well positioned relative to the current forward prices for the remainder of the year.

Speaker Change: For the remainder of Fiscal 24, we have downside pricing protection covering more than 70% of our expected production through a combination of swaps, costless collars, and fixed-price firm sales.

Justin Loweth: With a weighted average floor price of $3.32 per MBtu, we are well positioned relative to the current floor prices for the remainder of the year. Looking ahead to fiscal 25, almost 90% of forecasted production is protected by firm transportation and firm sales, limiting in-base and pricing exposure. Additionally, roughly 60% of expected fiscal 25 production is protected by a swap, collar, or fixed price firm sale. This hedge position is more heavily weighted to the first half of the year, where we see a bit more risk to pricing given some of the uncertainty around the exact timing of LNG demand growth.

Justin Loweth: Looking ahead the fiscal 25, almost 90% of forecasted production is protected by firm transportation and firm sales, limiting in base and pricing exposure. Additionally, roughly 60% of expected fiscal 25 production is protected by a swap collar or fixed price firm sale. This hedge position is more heavily weighted to the first half of the year, where we see a bit more risk to pricing given some of the uncertainty around the exact timing of LNG demand growth. Our portfolio approach has remained consistent with the goal of balancing downside protection if prices remain depressed, while allowing upside participation as expected demand growth materializes in the next 12 to 18 months.

Speaker Change: This hedge position is more heavily weighted to the first half of the year, where we see a bit more risk to pricing, given some of the uncertainty around the exact timing of LNG demand growth.

Justin Loweth: Our portfolio approach has remained consistent, with the goal of balancing downside protection if prices remain depressed while allowing upside participation as expected demand growth materializes in the next 12 to 18 months. With the average floor price sitting comfortably above the forward curve, we are in a great position to see increasing after hedge price realizations going into next year. Moving to capital, our second consecutive decrease in fiscal 24 capital is a testament to our team's ability to drive down costs and increase efficiencies in excess of our prior estimates.

Speaker Change: Our portfolio approach has remained consistent, with the goal of balancing downside protection if prices remain depressed, while allowing upside participation as expected demand growth materializes in the next 12 to 18 months.

Justin Loweth: With the average floor price sitting comfortably above the Ford curve, we are in a great position to see increasing after hedge price realizations going into next year.

Justin Loweth: Moving to capital, our second consecutive decrease in fiscal 24 capital is a testament to our team's ability to drive down costs and increase efficiencies in excess of our prior estimates. Given this strong momentum, we are initiating Seneca's fiscal 25 capital guidance range of 495 to 525 million. At the midpoint, a reduction of 25 million versus fiscal 24 and a 78 million reduction versus fiscal 23. The year when we began our transition to an EVA-focused development plan. Seneca's fiscal 25 development plan includes operating between one and two rigs, periodic top hole rig activity, and a dedicated fracked fleet throughout the year.

Speaker Change: Moving to capital, our second consecutive decrease in fiscal 24 capital is a testament to our team's ability to drive down costs and increase efficiencies in excess of our prior estimates.

Justin Loweth: Given this strong momentum, we are initiating Seneca's Fiscal 25 Capital Guidance Range of $495 to $525 million. At the midpoint, a reduction of $25 million versus Fiscal 24 and a $78 million reduction versus Fiscal 23, the year when we began our transition to an EDA-focused development plan.

Speaker Change: At the midpoint, a reduction of $25 million versus fiscal 24 and a $78 million reduction versus fiscal 23, the year when we began our transition to an EDA-focused development plan.

Justin Loweth: Seneca's Fiscal 25 Development Plan includes operating between one and two rigs, periodic top hole rig activity, and our dedicated frack fleet throughout the year. Drilling and completion activity will focus primarily on development in Tioga and Lycoming County. Across our non-regulated businesses, we are focused on capturing increased capital efficiency by continuing to prioritize our highest return assets while maintaining operational flexibility. At Energy Midstream, our team is executing extremely well. We continue to make long-term investments in centralized facilities while adding greater connectivity and additional deliverability to attractive interstate markets, all of which will help support the development of Seneca's highly prolific acreage for many years to come.

Justin Loweth: Drilling and completion activity will focus primarily on development in Tiagon-like homing counties. Across our non-regulated businesses, we are focused on capturing increased capital efficiencies by continuing to prioritize our highest return assets while maintaining operational flexibility. At energy midstream, our team is executing extremely well. We continue to make long-term investments and centralized facilities while adding greater connectivity and additional deliverability to attractive interstate markets, all of which will help support the development of Seneca's highly prolific acreage for many years to come. During Q3, throughput on energy midstreams gathering systems remained relatively flat compared to the previous year's third quarter, largely driven by voluntary marketing hotelments at Seneca.

Speaker Change: Drilling and completion activity will focus primarily on development in Tioga and Lycoming counties.

Speaker Change: Across our non-regulated businesses, we are focused on capturing increased capital efficiencies.

Speaker Change: by continuing to prioritize our highest return assets while maintaining operational flexibility.

Speaker Change: At Energy Midstream, our team is executing extremely well. We continue to make long-term investments in centralized facilities while adding greater connectivity and additional deliverability to attractive interstate markets.

Speaker Change: all of which will help support the development of Seneca's highly prolific acreage for many years to come. During Q3, throughput on NFG Midstream's gathering systems remained relatively flat compared to the previous year's third quarter, largely driven by voluntary marketing curtailments at Seneca.

Justin Loweth: During Q3, throughput on NFG Midstream's gathering systems remained relatively flat compared to the previous year's third quarter, largely driven by voluntary marketing curtailments at Seneca. Project development and construction activity for the remainder of Fiscal 24 and for the next few years will remain focused on supporting Seneca's EDA development and significant future production growth expected in this region. NFG Midstream's Fiscal 25 capital is expected to remain in line with Fiscal 24, with an estimated range of $95 to $110 million, with approximately 90% of NFG Midstream's capital invested in projects in Tioga County. In Northwest Tioga, dehydration equipment at the Keeneyville Compressor Station will be commissioned this month, capable of handling 400 million gallons a day of production.

Justin Loweth: The development and construction activity for the remainder of fiscal 24 and for the next few years were remained focused on supporting Seneca's EDA development and significant future production growth expected in this region. In a few midstreams, fiscal 25 capital is expected to remain in line with fiscal 24, with an estimated range of 95 to 110 million, with approximately 90 percent of in a few midstreams capital invested in projects in Tiobe County. In Northwest Ioga, dehydration equipment at the Keeneville Compressor Station will be commissioned this month, capable of handling 400 million a day of production. The first pad utilized in these facilities is expected to turn in line early next year.

Speaker Change: Project development and construction activity for the remainder of fiscal 24 and for the next few years will remain focused on supporting Seneca's EDA development and significant future production growth expected in this region.

Speaker Change: NFG Midstream's fiscal 25 capital is expected to remain in line with fiscal 24 with an estimated range of 95 to 110 million with approximately 90 percent of NFG Midstream's capital invested in projects in Tioga County.

Speaker Change: In Northwest Tioga, dehydration equipment at the Keeneyville Compressor Station will be commissioned this month, capable of handling 400 million a day of production.

Justin Loweth: The first pad utilizing these facilities is expected to come online early next year. During Fiscal 25, we also plan to connect more than $150 million of flowing production and over 20 future development locations on Track 100 to our robust Toyota Gathering, which will allow this production to flow into preferential gas markets. As we look to the future, National Fuel Supplies' Tioga Pathway Project will provide further deliverability out of this area.

Speaker Change: The first pad utilizing these facilities is expected to turn in line early next year. During Fiscal 25, we also plan to connect more than $150 million of flowing production and over 20 future development locations on Track 100 to our robust Tioga gathering system.

Justin Loweth: During fiscal 25, we also plan to connect more than 150 million of flowing production in over 20 future development locations on track 100 to our robust Tiobe gathering system, which will allow this production to flow into preferential gas markets. As we look to the future, National Fuel Supplies Tiobe Pathway Project will provide further deliverability out of this area. In addition, in a few midstreams continued to create opportunities for third-party business. Last month, we placed a new third-party interconnect in service and expect throughput to increase early next fiscal year.

Justin Loweth: In addition, NFV Midstream continues to create opportunities for third-party business. Last month, we placed a new third-party interconnect in service, and we expect throughput to increase early next fiscal year. Putting it all together, we continue to execute our EDA-focused development plan and are well-positioned to weather near-term price volatility while capitalizing on expected increases in the natural gas strip. Our integrated model allows us to operate at the low end of the cost curve while ensuring seamless co-development of our best-in-class assets.

Speaker Change: In addition, NFD Midstream continues to create opportunities for third-party business.

Speaker Change: Last month, we placed a new third-party interconnect in service and expect throughput to increase early next fiscal year.

Justin Loweth: Putting it all together, we continue to execute our EDA-focused development plan and are well positioned to weather near-term price volatility, while capitalizing on unexpected increases in the natural gas strip. Our integrated model allows us to operate at the low end of the cost curve while ensuring seamless co-development of our best-in-class assets. Moreover, our culture of operational excellence and focus on leadership and safety and sustainability, alongside our strong asset base and execution, sets us up for considerable success in fiscal 25 in the years to come.

Justin Loweth: Moreover, our culture of operational excellence and focus on leadership, safety, and sustainability alongside our strong asset base and execution set us up for considerable success in Fiscal 25 and in the years to come. With that, I'll ask the operator to open the line for questions.

Speaker Change: Moreover, our culture of operational excellence and focus on leadership and safety and sustainability, alongside our strong asset base and execution, sets us up for considerable success in Fiscal 25 in the years to come.

Brianna: With that, I'll ask the operator to open the line for questions. Thank you. We will now open the line and take your questions.

Speaker Change: With that, I'll ask the operator to open the line for questions.

Operator: Thank you. We will now open the line and take your questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are dialed in and listening via loudspeaker on your device, please pick up your handset and ensure your device is not on mute when asking your question. Our first question comes from Zach Parham with J.P. Morgan. Please go ahead.

Brianna: If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again.

Zach Parham: Thanks for taking my questions. I guess, first, Justin, one for you.

Speaker Change: If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue.

Brianna: If you are dialed in and listening to a loudspeaker on your device, please pick up your handset and ensure your device is not unmute when asking your question.

Speaker Change: If you are dialed in and listening via loudspeaker on your device, please pick up your handset and ensure your device is not on mute when asking your question.

Zach Parham: Our first question comes from Zach Parham with JP Morgan. Please go ahead. Thanks for taking my questions.

Speaker Change: Our first question comes from Zach Parham with JP Morgan. Please go ahead.

Justin Loweth: I guess first, Justin, one for you: we've heard from a lot of ENPs about efficiency gains in the field and also hearing about some modest cost deflation. Can you talk about what NFG is seeing on both efficiency gains and deflation and maybe give us an update on where you're leading edge DNC cost per foot art? Sure, Zach, yeah. Thanks for the question. You know, a couple things on that. One, I attribute a good chunk of our operational efficiencies that we've been gaining is really related to part of our move to an EDA-focused development plan. Our operations team has been laser focused on planning in particular.

Justin Loweth: We've heard from a lot of EMPs about efficiency gains in the field and also about some modest cost deflation. Can you talk about what NFG is seeing in terms of both efficiency gains and deflation and maybe give us an update on where your leading-edge DNC costs per foot are?

Justin Loweth: Sure, Zach. Yeah, thanks for the question. You know, a couple things on that. One, I attribute a good chunk of our operational efficiencies that we've been gaining to part of our move to an EDA-focused development plan. Our operations team has been laser-focused on planning in particular. So, really optimizing the paths we're going to take, the order in which we do it, the amount of infrastructure we need, and then, importantly, a lot of the elements.

Speaker Change: Sure, Zach. Yeah, thanks for the question.

Speaker Change: You know, a couple things on that. One, I attribute a good chunk of our operational efficiencies that we've been gaining is really related to part of our move.

Speaker Change: Our operations team has been laser focused on planning in particular.

Justin Loweth: So really optimizing the paths we're going to, the order in which we do it, the amount of infrastructure we need, and then importantly, a lot of the elements. So I'm getting into like every last detail of how we go about planning our operations in our future development. And that leads to finding ways to lower your costs as well as really good execution in terms of all of our drilling and completions. We have had some tailwinds over the last, I'd say, you know, nine to 12 months related to some service costs. Gas. We don't see a whole lot of that going forward.

Speaker Change: So really optimizing the paths we're going to, the order in which we do it, the amount of infrastructure we need, and then importantly, a lot of the elements. So I'm getting into like every last detail of how we go about planning our operations and our future development. And that leads to finding ways to lower your costs.

Justin Loweth: So, I'm getting into, like, every last detail of how we go about planning our operations in our future development. And that leads to finding ways to lower your costs, as well as really good execution in terms of all of our drilling and completions. We have had some tailwinds over the last, I'd say, you know, 9 to 12 months related to some service costs. But we don't see a whole lot of that going forward.

Speaker Change: as well as really good execution in terms of all of our drilling and completions. We have had some tailwinds over the last, I'd say, you know, 9 to 12 months related to some service costs.

Justin Loweth: I'd say, on balance, it would be something that we'd see being, you know, net-net in our favor. A decrease would be expected, but not significant decreases. So, a lot of this has been about managing both the planning around our development, as well as the execution of how we're actually moving forward with our development. And particularly, what we've been able to accomplish.

Justin Loweth: I'd say, on balance, it would be something that we'd see being, you know, net net in our benefit of decrease would be expected, but not significant decreases. So a lot of this has been about managing both the planning around our development as well as the execution of how we're actually moving forward with our development, um, and particularly what we've been able to accomplish in Tilega County.

Speaker Change: We don't see a whole lot of that going forward.

Speaker Change: You know, net-net, in our benefit, a decrease would be expected, but not significant decreases.

Speaker Change: So, a lot of this has been about managing both the planning around our development as well as the execution of how we're actually moving forward with our development, and particularly what we've been able to accomplish in Tioga County.

Justin Loweth: I think, and the exact color on, on D and C call us, they've got to wear those are now. Sure, yeah, happy to. So I was just getting there. Um, in terms of DNC, the Tilega Utica costs are in the vicinity of around $1,300 a foot. Um, Marcellus Wells, there are, are more like around $1,000 a foot, maybe lower, depending upon the exact lateral length. And that's where the majority of our activity will be focused. So those will be the two most relevant areas. And we see, you know, continued trends on both of those moving downward as we go forward.

Justin Loweth: on B and C costs and kind of where those are now.

Justin Loweth: Sure, yeah, happy to. Sorry, I was just getting there.

Speaker Change: Sure, yeah, happy to. Sorry, I was just getting there. In terms of DNC, the Tioga Utica costs are in the vicinity of around

Justin Loweth: In terms of D&C, the Tioga Utica costs are in the vicinity of around $1,300 a foot. Marcellus Wells costs are more like around $1,000 a foot, maybe lower depending upon the exact lateral length, and that's where the majority of our activity will be focused. So those would be the two most relevant areas, and we see, you know, continued trends on both of those moving downward as we go forward.

Speaker Change: you know, continue trends on both of those moving downward as we go forward.

Zach Parham: Thanks.

Zach Parham: Thanks. And just on my follow-up, I wanted to ask about well productivity, which you mentioned in your prepared remarks. You know, if I look at the state data, it does look like your well productivity took a modest step down on the lateral foot adjusted basis in 2023 versus prior years. You know, some of that's in the WDA, but also to some extent in the EDA. You know, I know the state data isn't perfect, and there are probably some curtailments impacting the data, but can you just give us your broader thoughts on well productivity and how you would expect productivity to trend going forward?

Zach Parham: And just about follow up, wanted to ask on well productivity, which you, you mentioned in your prepared remarks. You know, if I look at the state data, it does look like your well productivity took a modest step down on the lateral foot adjusted basis in 2023 versus prior years. You know, some of that's in the WDA, but also, to some extent, in the EDA. You know, I know the state data is at perfect, and there are probably some curtailments impacting the data. But can you just give us your broader thoughts on, on well productivity and how you would expect productivity to trend going forward?

Speaker Change: Thanks. And just on my follow-up, I wanted to ask on well productivity, which you mentioned in your prepared remarks.

Speaker Change: You know, if I look at the state data, it does look like your well productivity took a modest step down on the lateral foot adjusted basis in 2023 versus prior years.

Justin Loweth: Sure. So I think your, your comment there is exactly right within the state data. There can be some, you know, nuances to look at. If you focus on, on really where, you know, as I've said, I mean, the vast majority of our activity is going to be, which would be Tilega, Utica, Tilega, Marcellus, and also in like combing on Marcellus wells. We've had the other; those areas are all looking very good. They're right in line in some instances, in excess of what we would expect. I think some of the nuances you're seeing in data is probably related to, you know, frankly, the voluntary pricing curtailments we pursue at a time, which can obviously impact what you're seeing versus what we're really seeing in terms of the pressure drop over time.

Justin Loweth: Sure. So, I think your comment there is exactly right. Within the state data, there can be some, you know, nuances to look at. If you focus on really where, as I've said, the vast majority of our activity is going to be, which would be Tioga Utica, Tioga Marcellus, and also in Lycoming on Marcellus Wells, we've had the other, those areas are all looking very good. They're right on line, and in some instances, in excess of what we would expect.

Speaker Change: Sure, so I think your comment there is exactly right. Within the state data, if there can be some...

Speaker Change: you know, nuances to look at. If you focus on really where, you know, as I've said, I mean, the vast majority of our activity is going to be, which would be Tioga Utica, Tioga Marcellus, and also in Lycoming on Marcellus Wells.

Speaker Change: David Bauer, Natalie Fischer, Justin Loweth, Timothy Silverstein

Justin Loweth: I think some of the nuances you're seeing in the data are probably related to, you know, frankly, the voluntary pricing curtailments we pursue at times, which can obviously impact what you're seeing versus what we're really seeing in terms of the pressure drop over time. But, you know, the wells we have are all looking really good to us. And I think you'll see as additional months and quarters of data come out, you'll just continue to see those trends moving exactly as we laid out in our investor data.

Speaker Change: You know, frankly, the voluntary pricing curtailments we pursue at time, which can obviously impact what you're seeing versus what we're really seeing in terms of

Justin Loweth: But, you know, the wells we have are all looking really good to us. And I think you'll see, as additional months and quarters of data come out, you'll just continue to see those trends moving exactly as we laid out in our investor deck.

Speaker Change: the pressure drop over time, but, you know, the wells we have are all looking really good to us, and I think you'll see, as additional months and quarters of data come out, you'll just continue to see those trends moving exactly as we laid out in our investor deck.

Zach Parham: Thanks, Jeff. I really appreciate the dollar. Sure.

Zach Parham: Thanks, Justin. I really appreciate the color.

Speaker Change: Thanks Justin, really appreciate the color.

Greta Dresky: Again, if you would like to ask a question, please press star. Our next question comes from Greta Dresky with Goldman Sachs. Please go ahead. Good morning, and thank you for taking my questions.

Greta Dreschke: Again, if you would like to ask a question, please press star 1. Our next question comes from Greta Dreschke with Goldman Sachs. Please go ahead.

Speaker Change: Sure.

Speaker Change: Again, if you would like to ask a question, please press star 1.

Speaker Change: Our next question comes from Greta Dreschke with Goldman Sachs. Please go ahead.

Greta Dreschke: Good morning, and thank you for taking my questions. Given the wave of consolidation we've seen so far, I was wondering if you could provide your updated views on the M&A landscape, the opportunity set you see for NFG, and your thoughts on the broader macro environment.

David Bauer: Given the wave of consolidation we've seen so far, I was wondering if you could provide your updated views on the M&A landscape, the offer 30 set you see for NFG and your thoughts on the broader macro environment. Thank you. Well, we're very much interested in continuing to grow the company, and M&A is certainly a way that would be interesting for us to do it. You know, I think looking at our company, as I've said on previous calls, I think doing a regulated, adding to a regulated assets would be a priority in the near term to kind of balance out the system.

Greta Dreschke: Good morning and thank you for taking my questions. Given the wave of consolidation we've seen so far, I was wondering if you could provide your updated views on the M&A landscape, the opportunity set you see for NFG, and your thoughts on the broader macro environment. Thank you.

Dave Bauer: Sure. Well, we're very much interested in continuing to grow the company, and M&A is certainly a way that would be interesting for us to do it. You know, I think looking at our company, as I've said on previous calls, I think doing a regulated, adding to our regulated assets would be a priority in the nearer term to kind of balance out the system. But having said that, we do continue to look at smaller bolt-on acquisitions on the E&P side. You know, similar to the ones that we did last year where we're consolidating our acreage position. So, I'm, you know, I'm optimistic that deals will come along that'll be of interest to us.

Speaker Change: Well, we're very much interested in continuing to grow the company, and M&A is certainly a way that would be interesting for us.

Speaker Change: to do it.

Speaker Change: Bye-bye.

Speaker Change: You know, I think looking at our company, as I've said on previous calls, I think adding to our regulated assets would be a priority in the nearer term.

Greta Dresky: But having said that, you know, we do continue to look at, you know, call it smaller bolt-on acquisitions on the EMP side, you know, it's similar to the ones that we did last year where we're consolidating our acreage position. So I'm, you know, I'm optimistic that, uh, that deals will come along. Um, it'll be, uh, be of interest. Got it. Thank you.

Speaker Change: to kind of balance out the system. But having said that, you know, we do continue to look at, you know, call it smaller bolt-on

David Bauer: And then my next question is, you've added here to my 26th hedging position and have some hedging through 2028. Can you speak a bit on any updated views to your outlook on hedging in the longer term and how your thoughts on the natural gas landscape more broadly has impacted your framework? Thank you. Yeah, I mean, just broadly on the natural gas, uh, macro, um, you know, I think in the near term, things are going to be pretty challenging. We've had high storages, uh, kind of high, higher production. Whether it doesn't really seem to, uh, to be driving things very much, but it obviously can be a variable, uh, but the longer term, you know, as we move into next year and beyond, you know, we're confident that, uh, the prices are going to recover as new NLNG comes online.

Greta Dreschke: Got it, thank you. And my next question is, you've added to your 2026 hedging position and have some hedging through 2028. Can you speak a bit on any updated views on your outlook on hedging in the longer term and how your thoughts on the natural gas landscape more broadly have impacted your framework? Thank you.

Speaker Change: Got it, thank you. And my next question is, you've added to your 2026 hedging position and have some hedging through 2028. Can you speak a bit on any updated views to your outlook on hedging in the longer term and how your thoughts on the natural gas landscape more broadly has impacted your framework? Thank you.

Dave Bauer: Yeah, I mean, just broadly on the natural gas macro, you know, I think in the near term things are going to be pretty challenging. We've got high storage, and kind of higher production. Weather doesn't really seem to be driving things very much, but it obviously can be a variable, but in the longer term, you know, as we move into next year and beyond, we're confident that the prices are going to recover as new LNG comes online.

Speaker Change: Yeah, I mean, just broadly on the natural gas macro, you know, I think in the near term, things are going to be pretty challenging. We've got high storages.

Speaker Change: kind of higher production.

Speaker Change: Weather doesn't really seem to be driving things very much, but it obviously can be a variable. But the longer term, you know, as we move into next year and beyond, you know, we're confident that the prices are going to recover as new LNG comes online.

David Bauer: Um, but obviously the timing of when that supply comes online relative to demand probably isn't going to be, uh, exactly lined up, so there could be some, some volatility. So, so we feel good about our, our hedge book, you know, being kind of that 60% area. As you point out, we continue to add, uh, positions in a, uh, in taking advantage of the contango curve, which will, uh, you know, over time, um, you know, cause our net price realizations to increase. Thank you.

Dave Bauer: [inaudible] But obviously, the timing of when that supply comes online relative to demand probably isn't going to be exactly lined up, so there could be some volatility. So we feel good about our hedge book, you know, being kind of in that 60% area. As you point out, we continue to add positions in taking advantage of the contango curve, which will, you know, over time, cause our net price realizations to increase.

Speaker Change: But obviously, the timing of when that supply comes online relative to demand probably isn't going to be exactly lined up, so there could be some volatility. So we feel good about our hedge book being kind of that 60 percent area.

Speaker Change: As you point out, we continue to add positions in taking advantage of the contango curve, which will, you know, over time, you know, cause our net price realizations to increase.

John Daniel: Our next question comes from John Daniel with Daniel Energy Partners. Please go ahead. Hey, good morning. Thank you for including me.

John Daniel: Our next question comes from John Daniel with Daniel Energy Partners. Please go ahead.

Speaker Change: Our next question comes from John Daniel with Daniel Energy Partners. Please go ahead.

John Daniel: Hey, good morning. Thank you for including me. Justin, I've got a big picture question for you. There are differing estimates out there regarding the potential LNG and AI demand opportunities, but you know overall, the estimates point to higher demand for natural gas. I'm not looking for your specific view on what that demand will be, but when you look at the differing estimates, do you see Seneca having to ramp up activity in the 26 and beyond timeframe to meet this demand, or how do you see, what do you think the call on D&C activity will be to meet it?

John Daniel: Justin, that's got a big picture question: big picture question for you. They're, they're different estimates out there regarding the potential LNG and AI demand opportunities, but, you know, overall the estimates point to higher demand for natural gas. I'm not looking for your specific, you know, what that demand will be, but when you, when you look at the differing estimates, do you see Seneca having to ramp activity in the 26 and beyond time frame to meet this demand? Or how do you see the, the, what do you think they call on DNC activity will be to meet it?

John Daniel: Hey, good morning. Thank you for including me.

John Daniel: Justin, I've got a big picture question for you. There are differing estimates out there regarding the potential LNG and AI demand opportunities, but overall the estimates point to higher demand for natural gas.

Speaker Change: I'm not looking for your specific view on what that demand will be, but when you look at the differing estimates...

Speaker Change: Do you see Seneca having to ramp activity in the 26 and beyond timeframe to meet this demand, or how do you see, what do you think the call on D&C activity will be to meet it?

Justin Loweth: Any thoughts?

Justin Loweth: Sure, sure, John, happy to talk about that. Um, you know, so we've looked at this. We have active dialogue with a number of parties to try to better assess exactly what this demand could look like, where it could be, um, both talking, you know, downstream on these, uh, on these hyperscalers, and then also looking at other opportunities, you know, more approximate. I guess the way I would, I would, um, you know, characterize kind of our company stance and view on it is that we have a really deep inventory where an investment-grade credit. We're a great counterparty for anyone interested in getting long, uh, and building, you know, a plant that relies on, on reliable, sustainable, affordable natural gas.

Justin Loweth: Sure. Sure, John.

Speaker Change: Any thoughts?

Justin Loweth: Happy to talk about that. Um, you know, so we've looked at this. We have active dialogue with a number of parties to try to better assess exactly what this demand could look like, where it could be, both talking, you know, downstream on these, uh, these hyperscalers, and then also looking at other opportunities, you know, more proximate. I guess the way I would, I would, know, characterize kind of our company stance and view on it is that we have a really deep inventory. We're an investment grade credit company.

Speaker Change: Sure, sure John , happy to talk about that.

Speaker Change: You know, so it

Speaker Change: you know, characterize kind of our company's stance and view on it is that

Justin Loweth: We're a great counterparty for anyone interested in getting long and building, you know, a plant that relies on reliable, sustainable, affordable natural gas. So, you know, we've got the ability to do that. We're going to be very active in those dialogues. We've also got capacity that connects to markets that should be net net, you know, increasing demand centers. So I think the company's favorably positioned. We'll continue to be evaluating it. But I'd also just say it's early days.

Speaker Change: We have a really deep inventory. We're an investment-grade credit. We're a great counterparty for anyone Interested in getting long and building, you know a plant that relies on on reliable sustainable affordable natural gas

Justin Loweth: So, you know, we've got the ability to do that. We're going to be very active in those dialogues. We've also got capacity that connects to markets that should be, uh, net net, um, you know, increasing demand centers. So I think, uh, I think the company's favorably positioned, uh, will continue to be evaluating it.

Speaker Change: So...

Speaker Change: You know, we've got the ability to do that. We're going to be very active in those dialogues. We've also got capacity that connects to markets that should be net-net increasing demand centers.

Speaker Change: So, I think the company is favorably positioned. We'll continue to be evaluating it, but I'd also just say it's early days. I think this is really an evolving story and something that

Justin Loweth: Um, but I'd also just say it's early days. Um, I think this is really an evolving story and, and something that, um, your point about maybe it's out in 26, 27 is out there, but our operations team and flexibility and depth of resource are going to be standing by to take advantage.

Justin Loweth: I think this is really an evolving story and something that your point about maybe it's out in 26, 27 is out there. But our operations team and flexibility and depth of resources are going to be standing by to take advantage.

Speaker Change: Your point about maybe it's out in 26, 27 is out there, but our operations team and flexibility and depth of resource are going to be standing by to take advantage.

John Daniel: Page. Okay. But simplistically, you know, whether you maybe don't speak for Seneca yourself, but it would seem as you look at a lot of the comments, the EMP industry right now, it's essentially calling for flatish activity next year, right? Because of the efficiency gains and so forth. And I just, I'm just wondering if we're setting up, uh, you know, for a challenge in 26, because the industry's not ready to push down the accelerator, if you will, in terms of maybe an activity. That's all. Just, it's just a thought. Sure. Yeah. It's hard for me to speculate on others, you know, too much.

John Daniel: Okay, but simplistically, you know whether and maybe don't speak for Seneca yourself, but it would seem, as you look at a lot of the comments from the E&P industry right now, it's essentially calling for flattish activity next year, right? Because of efficiency gains and so forth.

Speaker Change: Okay but simplistically you know whether and maybe don't speak for Seneca yourself but

Speaker Change: It would seem as you look at a lot of the comments from the E&P industry right now It's essentially calling for flattish activity next year right because of efficiency gains and so forth I just I'm just wondering if we're setting up

Justin Loweth: And I just wonder if we're setting up, you know, for a challenge in 26 because the industry is not ready to push down the accelerator, if you will, in terms of rambian activity. That's all. It's just a thought.

Speaker Change: You know for for a challenge in 26 because the industry is not ready to Push down the accelerator if you will in terms of a grampian activity. That's all just it's just a thought

Justin Loweth: Sure, yeah, it's hard for me to speculate on others, you know, too much, but certainly within our business, we have ample capacity to accelerate, and we're really benefiting by the fact of having an integrated model, you know, with the midstream business and FERC pipes as well. You know, I'm not exactly sure how others can respond to it, but I feel really good about our depth of resources and, you know, and the other kinds of factors I mentioned earlier. Great Well, I appreicate

Speaker Change: Sure. Yeah, it's hard for me to speculate on others, you know, too much. But certainly within our business, we have

Justin Loweth: But certainly within our business, we have ample capacity to accelerate, and we're really benefited by the fact of having an integrated model, you know, in a, in a, with midstream business and FERC pipes as well. So, you know, I'm not exactly sure how others can, can respond to it, uh, but I feel really good about our depth of resource, and, um, you know, and the other kind of factors I mentioned earlier. Great.

Speaker Change: We have ample capacity to accelerate, and we're really benefited by the fact of having an integrated model, you know, in a, with a midstream business and FERC pipes as well. Right. So.

Speaker Change: You know, I'm not exactly sure how others can respond to it, but I feel really good about our depth of resource and, you know, and the other kind of factors I mentioned earlier.

John Daniel: Great. Well, I appreciate the response and letting me participate in the call. Thank you.

John Daniel: Well, I appreciate the response and what me in the, in the call. Thank you.

Speaker Change: Great. Well, I appreciate the response and letting me in the call.

Brianna: There are no further questions at this time.

Natalie Fischer: There are no further questions at this time. I will now turn the call back over to Natalie Fischer for any closing remarks.

Speaker Change: Thank you.

Natalie Fischer: I will now turn the call back over to Natalie Fisher for any closing remarks. Thank you, Brianna. We'd like to thank everyone for taking the time to be with us today. A replay of this call will be available this afternoon on both our website and by telephone, and we'll run through the close of business on Thursday, August 8th. Please feel free to reach out if you have any follow-up questions. Otherwise, we look forward to speaking with you again next quarter.

Speaker Change: There are no further questions at this time. I will now turn the call back over to Natalie Fischer for any closing remarks.

Operator: We'd like to thank everyone for taking the time to be with us today. A replay of this call will be available this afternoon on both our website and by telephone and will run through the close of business on Thursday, August 8th. Please feel free to reach out if you have any follow-up questions. Otherwise, we look forward to speaking with you again next quarter. Thank you, and have a nice day. This will conclude today's conference call. Thank you for your participation. You may now disconnect. Please wait.

Natalie Fischer: Thank you, Brianna.

Natalie Fischer: We'd like to thank everyone for taking the time to be with us today. A replay of this call will be available this afternoon on both our website and by telephone, and will run through the close of business on Thursday, August 8th. Please feel free to reach out if you have any follow-up questions.

Natalie Fischer: Thank you, and have a nice day.

Speaker Change: Otherwise, we look forward to speaking with you again next quarter. Thank you and have a nice day.

Brianna: This will conclude today's conference call. Thank you for your participation. You may now disconnect. Please wait.

Operator: This will conclude today's conference call. Thank you for your participation. You may now disconnect. Please wait; the conference will begin shortly.

Speaker Change: This will conclude today's conference call. Thank you for your participation. You may now disconnect.

Brianna: The conference will begin shortly. Thank you.

Speaker Change: www.NationalFuelGas.com www.NationalFuelGas.com