Q3 2025 National Fuel Gas Co (NJ) Earnings Call
Presentation has finished please press star one on your telephone keypad.
Nestle Fisher to begin please go ahead.
Thank you Alex and good morning, we appreciate you joining us on today's conference call for a discussion of last evening's earnings release with us on the call from National fuel gas company are Dave Bauer, President and Chief Executive Officer.
Tim Silverstein, Treasurer, and Chief Financial Officer, and Justin Lewis President of Seneca resources and National fuel midstream.
At the end of today's prepared remarks, we will open the discussion for questions. The third quarter of fiscal 2025 earnings release in July Investor presentation have been posted on our Investor Relations website. We may refer to these materials during today's call we.
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.
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.
Thank you Natalie and good morning, everyone.
I Hope you all had an excellent third quarter we're.
We're seeing great execution across the company and our momentum continues to build.
At Seneca, our eastern development area continues to exceed expectations.
Production for the quarter was up 16% from last year and based on our updated guidance, we expect full year production to be up approximately 8% versus fiscal 2024.
We're also seeing ongoing improvements in cash operating costs of furthering our position as a low cost operator with top tier of breakeven economics.
Looking to fiscal 'twenty, six I expect Seneca will deliver further improvements in capital efficiency.
We initiated production guidance of 440 to 455 Bcf, which is a projected increase of 6% at the midpoint.
Equally as important we expect to spend 4% less capital to achieve that growth.
We have a great operational team that continues to improve well productivity. Most recently with our gen three well design.
Same time, driving our D&C cost per foot lower and reducing overall capital expenditures.
It's clear that our E&P assets, which include more than two decades of high quality inventory will drive significant value creation new years ahead.
Justin I'll have more to say on our nonregulated operations later on the call.
Our outlook on the regulated side of the business was equally excited we've recently seen significant growth through rate, making activity and looking forward, we expect to deliver mid single digit rate base growth over the next several years as we continue to invest and system modernization.
On top of that we've also seen meaningful pipeline.
Spansion opportunities develop in recent months.
On prior calls I've talked about the need for infrastructure to support the growing demand for energy and about Pennsylvania suitability for data Center development.
With over $90 billion of new investment in Pennsylvania announced two weeks ago. It's clear that this is becoming a reality for national fuel is as well positioned as anyone to par.
<unk> in that growth.
To that point earlier this month, we announced our shipping port lateral project, which is an approximately seven mile pipeline expansion off of our line and system in Western Pennsylvania.
It's designed to deliver a significant portion of the natural gas supply for the shipping core powered station and a new co located data center.
Speed to market is critical on these types of projects and thanks to FERC recent increase in blanket certificate project cost limits, we should be able to build the project on an expedited basis and include more robust facilities that provide incremental capacity.
We currently have a precedent agreement in place to provide 205000 <unk> per day of capacity starting in the fourth quarter of calendar 2026.
And again this is the largest amount of capacity that we can build in the shortest amount of time.
Overtime shipping port plans to bring online over three gigawatts of generation. So there is the very real potential for us to provide significant additional pipeline capacity to the facility in future years.
In May our Toyota pathway project received FERC approval and remains on track for an early fiscal 2027 and service date.
As a reminder, this 190000 <unk> per day project provides an outlet percentages EDA production volumes to more premium pricing markets.
Construction for both the <unk> pathway and shipping port lateral projects is expected to begin in the first half of calendar 2026.
While both expansions are individually modest in size together, we expect will generate north of $30 million of new revenue annually.
Which represents about 7% of our current pipeline.
<unk> segment revenues.
So in short between modernization and expansion projects the outlet for our pipeline business is very strong.
Turning to our capital return programs based on our strong results for the year and high degree of confidence in our long term outlook in June we raised our dividend for the 55th consecutive year to an annual rate of $2 14 per share.
With respect to the buyback program, we've made good progress with repurchases, but recently hit pause as we evaluate opportunities to grow the company, which as I've said on earlier calls is our top priority.
Should those opportunities not come to fruition.
Fully expect we'll complete the buyback program in 2026.
Switching to state energy policy, Pennsylvania is clearly embracing economic developed development the.
The energy and innovation summit held earlier this month in Pittsburgh was attended by leaders from top energy technology and financial companies.
As well as President Trump and several cabinet members.
The summit highlighted the tens of billions of dollars of investment in the state committed to buy data center developers with our unique set of assets, including a deep inventory.
With high quality drilling locations, and an integrated midstream and downstream business.
Very well positioned to support the infrastructure build out that as anticipated across the Commonwealth hopefully our shipping Port project is the first of many such projects.
While New York Hasnt quite.
<unk> taken the same steps as its neighbor. The pendulum there is starting to swing back towards a more pragmatic approach to energy policy.
Last week the state Energy Planning Board released their draft energy plan something that required to do every five years, but have not done since 2015.
This draft plan acknowledges that the state will not meet some of its interim target set in the 2019 climate Act.
And to take positive steps towards acknowledging the importance of an all of the above approach to energy.
Instead of being driven solely by aggressive short term decarbonization targets.
<unk> planned moves in a direction that will better balance the critical objectives of energy reliability affordability and.
And emission reductions.
While it stopped short of embracing new natural gas generation as a way to achieve the state's decarbonization goals.
It clearly acknowledges the importance of continuing to invest in the natural gas system.
While leaving open the potential for new investment in natural gas generation.
In closing, it's a great time to be in the natural gas industry.
Demand for natural gas is at all time highs, both domestically and abroad and production is increasing in lockstep.
The notion that wind and solar can power everything in just a few short years is largely in the rearview mirror.
Without question natural gas as the foundational fuel that will be key to powering our nation's growth for decades to come.
National fuel has some of the best acreage in the lowest cost basins.
Low cost natural gas basin in the country, we have a pipeline network, that's incredibly well located to support rising regional demand.
Highly talented workforce, that's eager to grow the company.
All of this should translate to meaningful opportunities for the company and in turn value creation for our shareholders with that I'll turn the call over to Tim.
Thanks, Dave and good morning, everyone. We had a great third quarter with adjusted operating results, increasing 66% versus last year.
The main drivers were higher natural gas prices lower per unit operating costs at Seneca and continued growth in production and gathering throughput.
Moving to the outlook for the business I'll start with fiscal 2025, where we've narrowed our earnings guidance to a range of $6 80 to $6 95 per share.
While we've reduced our Nymex forecast from $3 50 to $3 25 for the fourth quarter. Our other guidance updates highlight the positive momentum we are seeing across the company.
Strong well results in the EDA allowed us to move up our production guidance to the high end of our previous range. We are also seeing tailwind with respect to <unk> cost structure for both G&A and LOE are expected to be lower for the year.
Looking at fiscal 2026, we provided preliminary guidance given the evolving supply and demand fundamentals were showing earnings per share ranges at various nymex gas prices using.
Using a $4 price, which closely approximates the current strip, we would expect earnings to be in a range of $8 to $8 50 per share at the midpoint. This reflects a 20% increase from fiscal 2025.
This anticipated earnings growth is supported by a solid hedge book with nearly two thirds of our production protected at strong prices through a mix of swaps collars and fixed price sales.
With an average floor of $3 50.
And an average ceiling of $4 75.
Provide the opportunity to capture higher pricing such that at $5 Nymex, We would expect earnings of $10 per share at the midpoint, an increase of nearly 50% from our estimate this year.
Sticking with the nonregulated businesses I'll highlight a few other key assumptions as Dave mentioned, we are guiding to a 6% increase in production at the midpoint of our range. While production is anticipated to grow it is worth noting that next year, we're expecting a slight decrease in our gathering revenues.
Our near term development program includes a single six well toga Utica pads scheduled to come online late this fiscal year, which will flow through a third party system.
After this pad all of our sales next year will utilize our own gathering systems, which will drive volume growth into 2027.
From a unit cost perspective, we anticipate maintaining the lower levels of cash unit costs achieved during the current year, while DD&A is set to increase the impairments recognized over the past year temporarily lowered our DD&A rate below our long term F&D costs.
Overtime DD&A should trend back towards <unk>, F&B costs, which are approximately <unk> 70 per mcf.
Switching to our regulated subsidiaries at the utility business, we are expecting a 5% to 6% increase in customer margin next year.
This is due to the step up in rates as part of our three year rate settlement, New York, along with higher revenues from our modernization tracker in Pennsylvania.
And the pipeline and storage segment revenues are expected to remain relatively flat in fiscal 2026, we are evaluating the timing of our rate case in supply Corporation, the larger of our two FERC regulated companies.
We will look to file at some point in fiscal 2026, but as of today, we're not projecting any incremental associated revenue from this rate case until early fiscal 2027.
On the cost side outside of general inflationary trends there are two factors driving the anticipated year over year increase the first relates to utility customer receivables in arrears.
And the New York rate settlement, we established an uncollectible tracker and agreed to accelerate write offs.
With this acceleration we were able to write off a large amount of our arrears a good portion of which were the result of state wide policies implemented during the pandemic.
Uncollectible tracker permits us to defer and recover write offs that exceed a certain threshold. Both this year and next we've exceeded that threshold. This year and as a result have reversed a portion of the previously accrued bad debt expense.
The second unique expense item relates to collective bargaining agreements with our unions.
<unk> contract extensions with two of our unions earlier this year and upcoming negotiations in 2026 for the remaining covered employees, we expect to see year over year increases as wages true up to current market levels.
Taken together, we expect utility O&M to increase by approximately 5%.
But for our spending levels and New York is generally in line with what was included in our second year of our three year settlement.
And the pipeline and storage segment costs are projected to be up 4% to 5%.
Longer term regulated O&M increases should trend in the low single digit range.
From a cash tax perspective, the recently passed federal reconciliation Bill provides several tailwind for us.
The reinstatement and permanent extension of 100% bonus depreciation will be a benefit to cash tax expense starting this year.
Addition, there were changes made to the calculation of the corporate A&P.
Without these changes our forecast would have had us paying higher cash taxes, starting in fiscal 2027, but with the new law, we do not expect any corporate AMD payments for at least the next five years.
Switching to capital our consolidated spending guidance for fiscal 2025 is unchanged.
Given the timing of some projects there was a modest shift in spending between the utility and pipeline segments, but other than that we're still on track with our prior consolidated guidance level.
Looking at fiscal 2026, Dave already highlighted the continued positive trend in capital efficiency across the nonregulated businesses.
In our regulated subsidiaries, we are expecting a modest increase in utility spending.
It is related to general cost inflation as our activity levels are consistent year over year.
And the pipeline and storage segment, we are projected to increase of $100 million at the midpoint.
This increase was driven by spending on the Tioga pathway and shipping port lateral projects.
On the Ratemaking front as I said earlier, we anticipate filing a rate case next year for supply Corporation at.
At the utility our capital and O&M levels in New York are generally in line with what is embedded in our three year settlement, allowing us to achieve our allowed returns for Pennsylvania. Our disc mechanism covers the targeted fiscal 2026 modernization spending.
But given we are approaching the cap on that mechanism. We are looking to file a rate case next year with new rates effective in early fiscal 2027.
Bringing it all together next year is expected to be a great. One for national fuel earnings are projected to be meaningfully higher up approximately 20% at current strip pricing and we have a great hedge book that protected the downside, while leaving significant opportunity to capture higher prices.
The outlook for free cash flow was strong at $4 Nymex, we project to generate between $350 and $400 million.
All while investing in significant growth.
And looking further ahead, we remain confident in our ability to deliver mid single digit production growth a decrease in capital spending and to grow rate base by an average of 5% to 7% annually through the end of the decade.
In addition, the strength of our investment grade balance sheet disciplined approach to capital allocation and consistent returns to cash to shareholders further support the ability of national fuel to create meaningful long term value in the years to come.
That I will turn the call over to Justin.
Thanks, Tim and good morning, everyone.
Last night, we reported another quarter of record production and throughput at Seneca and <unk> midstream underscoring the quality of our prolific eastern development area wells excellent operational planning and continued strong execution in the field production.
Production increased 6% from the prior quarter to 112 Bcf driving gathering throughput to a new quarterly high of 133 Bcf.
As shown on slide 21 of our latest investor presentation.
<unk> total <unk> Utica well designs are delivering significantly improved results with both estimated ultimate recoveries and cumulative production per 1000 feet, increasing by 20% to 25% with our Gen three well design.
Based on our strong performance year to date and expectations for the remainder of the year, we are updating our production capital and cash operating expense guidance for fiscal 'twenty five.
For production, we have raised our guidance to the new target range of 420 to 425 Bcf and 8% increase at the midpoint year over year.
In terms of capital, we've tightened guidance by $5 million on both ends to a new range of $500 million to $510 million we.
We forecast a meaningful step up in fourth quarter spending as we enter our peak construction season with substantial activity focused on pads roads and infrastructure projects as well as two rigs running.
Regarding expenses, we have revised our LOE guidance to reflect successful cost management initiatives.
And higher production expectations.
Lowering the range to <unk> 67 to <unk> 68 per Mcf.
<unk> reduction on both ends additions.
Additionally, we anticipate projected per unit G&A of <unk> 18 per Mcf, which represents the low end of our prior guidance range.
Looking ahead to next year, our initial guidance highlights continued progress across key operational and financial metrics for production, we're establishing a range of 440 to 455 Bcf reps.
Representing a 6% increase at the midpoint year over year.
We plan to drill and turn in line approximately 25 to 27 wells with a steady cadence for most of the year before a modest decline in the fourth quarter.
With respect to capital, we forecast to spend $470 million to $500 million next year of $20 million, a 4% reduction relative to the midpoint of our fiscal 2025 range or.
Our development plan includes a one to two rig program with capital expenditures expected to decline in the second half of the year based on planned activity levels.
Going forward, we anticipate continued gains in capital efficiency as our long term development program remains on track to deliver mid single digit production growth alongside further reductions in capital spending.
<unk> fiscal 2023, when we began our transition to an EDA focused development strategy to our fiscal 2026 guidance, we project, 20% production growth against an 18% overall capital reduction this.
This multi year trend of continuous significant capital efficiency improvements is unique among peers and complemented by a multi decade inventory of core development locations.
A recent independent analysis by in various <unk> inventory at the top of the Appalachian peer group with nearly 20 years of drilling locations at breakeven Nymex prices below $2 50 premium Btu.
Third party analysis is consistent with our internal assessments and a testament to our competitive position in the industry.
Turning to the natural gas market, we maintain a constructive outlook for prices supported by strong supply and demand fundamentals.
While U S gas production has increased over the past 12 months much of that growth appears to be driven by the drawdown of DUC inventories and deferred tills accumulated during the period of lower prices experienced in 2024.
This added supply storage levels have remained near the five year average highlighting resilient structural demand.
LNG exports and gas fired power generation have reached record highs with U S. LNG demand recently exceeding 16 Bcf per day and power sector gas burn hitting record seasonal peaks.
Against this backdrop, we are well positioned through our marketing and hedging strategy, which offers price stability, while maintaining upside exposure.
Over 85% of our expected volumes through the end of fiscal 2026 are backed by our marketing portfolio of firm transportation and firm sales, ensuring both financial resilience and positive leverage to potentially higher prices.
Pivoting to NFC midstream, we continue to gather increasing volumes through our system.
To support our EDA development, we're installing additional gathering pipelines expanding existing stations and building centralized facilities in multiple locations to enable future growth.
We are also continuing to advance the engineering designs for our 2026 projects to accommodate <unk>, increasing well productivity and deliverability, we've moved from designing infrastructure based on individual well rates of 18 to 20 million per day to now $25 million to $30 million per day. Additionally.
Additionally, not only are the individual well rates higher but the wells are sustaining those choke restricted rates for long periods of time in some instances for well over one year.
Highlighting the prolific nature and deliverability of our titles of the Utica inventory.
With respect to third party volumes, we are actively working with the type of accounting producer to gather new production as part of our recently signed interconnect agreement and continue to advance discussions with other third party producers to leverage and fully utilize our significant gathering infrastructure and associated facilities.
We see opportunity to further grow this business over time.
In closing our strong results reflect the strength of our team and the quality of our assets both of which continue to exceed expectations. Our focus on development planning operational excellence combined with an integrated business model and a deep inventory of high quality drilling locations is driving greater capital efficiency and growing.
Free cash flow.
Over the past five years, we have transformed the nonregulated business of national fuel through our acquisition of Shell's upstream and midstream business divestiture of our California Division and transitioned to an EDA focused development strategy in <unk>.
2026, we expect to build on that momentum and reinforce the long term trajectory of sustained operational and financial growth with that I'll ask the operator to open the line for questions.
Thank you.
Reminder, if you'd like to ask a question. Please press star followed by one on your telephone keypad and to remove your question that cell phones by two.
Our first question for today comes from Paul <unk> of J P. Morgan.
Your line is now open. Please go ahead.
Thanks for taking my questions.
First just wanted to ask on the buyback, which you pause this quarter could you talk about the drivers of that the stock has moved significantly are now pretty close to all time highs, but you also mentioned preserving balance sheet flexibility for optionality for growth projects can you just talk about the moving pieces on the decision to pause that.
Buyback program.
Yes good.
Yes, it's entirely driven by our.
Our capital allocation priorities, our philosophy on.
Capital return Hasnt change, where we have our dividend that's funded largely by the regulated businesses and then our buyback program.
Largely funded by the free cash flows of the nonregulated businesses.
When when you look at our capital allocation priorities.
As we've said consistently is first get our balance sheet in good shape.
As we've done and then second grow the company.
And then perhaps some growth opportunities, we have excess free cash flow.
Give the cash back to shareholders.
Of late we've been looking at different opportunities and as you said I want to keep the balance sheet flexibility.
Thanks, and then maybe a follow up on cash taxes can you just quantify that impact of cash taxes in 2026 and beyond I think previously you talked about mid to high teens cash taxes or does that move with the passage of the tax bill.
Yes.
So as well.
What ultimately will happen as I alluded to we were expecting to be a corporate A&P payor starting around 2027, so that the impact will be bigger as you move out in time call. It four or 500 basis points of cash tax rate in the near term its probably saying the two to 300 basis point area. So I think as we look out to.
This year, we're in the high single digits from a cash tax perspective next year will be in the sort of low to mid single digit cash tax rate ultimately, depending on where prices go that can cause it to move around a little bit.
Thanks, Tim.
Okay.
Thank you.
Next question comes from.
<unk> of Goldman Sachs. Your line is now open. Please go ahead.
Good morning, all and thank you for taking my question. My first is just on the change in operations in fiscal 'twenty fiscal 'twenty, five and the ramp up of the pathway and shipping port projects I. Appreciate the details you provided of both and the slides just focusing in on the Toyota pathway project. So to the extent you are able to can you talk about the cadence of spending for the <unk>.
In fiscal <unk> from key next steps and maybe the most impactful modernization pieces.
Yeah.
Yeah.
Well, we will kick off.
Construction.
And in the spring and then.
With tree clearing and other prep type work and then the bulk of the spending will be in the summer.
On the contractors and installing the the lines.
In terms of monetization there is an element of modernization to the.
To that project.
It's part of our our ongoing roughly.
Roughly call it $75 million to $100 million a year type program.
Great. Thank you I appreciate the detail and then I just wanted to follow up maybe more broadly on the industry trends theres been a lot of moving pieces in the outlook for D&C costs across the industry can you speak a bit about your current sense of the balancing of potential service cost deflation, especially as oil rigs continue to come off and potentially higher input costs, such as steel from tariff effects.
Yes, sure happy to Greta.
So I'll start with the service cost inflation for example on steel.
We had expectations going back.
Some of the tariffs awkwardly began and got moving that we would see prices move up in.
In part due to lower overall activity levels and in part due to the mills, just keeping up with demand and things kind of lessening in terms of the impact we're really not seeing a lot of inflationary pressure on the steel side of things, we think kind of where we are is where we'll be as we look out over the coming months. I'd also just note as a company we're quite insulated from most of that surge.
Over the near and intermediate term.
More broadly across the industry.
I think that theres, probably more tailwind than headwind when you think about overall service cost I'm not expecting any material increases really across the board I'm not expecting big material decreases either but if I had to if I had to gauge the overall direction I'd say.
Slightly down to neutral as kind of how we think about the world broadly across the services.
Great. Thank you.
Thank you. Our next question comes from Noah <unk> of Bank of America Merrill Lynch.
I'll open. Please go ahead.
Good morning for my first question here.
Was hoping to ask how are you thinking about signing up for a supply agreement, if we see new egress coming out of northeast, Pennsylvania.
Given that you are the only company in the area.
<unk> production has really deep inventory, along with an IGD credit rating and just how does that position you in the event that this new address some of these projects Scott.
Yes. Good morning, Thanks look I mean, we're excited about those opportunities and we've got lots of active dialogue.
Your thesis and philosophy there on our company is exactly right. We've got the perfect Trifecta. When you think about all the things you need to be successful in being a supplier to our.
Future data center and power infrastructure. So we're actively engaged in that sort of dialogue.
As you mentioned, we've got a really deep inventory of frankly, some of the best inventory.
Ross the basin across the country.
And as you know.
Broadly across national fuel, we've just got all the pieces to find ways to participate in that so.
We're going to continue what we've done which is.
Move very methodically have a lot of dialogue and then probably you know talk about things when they are done as opposed to when they are being speculated or potentially looked at so.
Stay tuned and we will continue working on and hopefully we'll see some some development over in our core.
Core upstream production areas, whereas this first kind of wave has been more on the on the western side of the state which has also been great for our company.
Great that's great color and then for my second question.
I'm sure as you guys know, we're very constructive on the Toyota <unk>, Toyota Utica as well and I see you reiterated your productivity estimates for the Gen. Three design, but it does look like the two most recent pads are trending above that type curve.
Should we think that there is upside risk to the current productivity estimates.
Yeah. So no I think what we'll do is we'll continue to assess those curves we did want to be more transparent in part because of all the questions. We've had and so we wanted to include some more data in our investor materials and make sure. We're really highlighting just how great. These wells are.
In time and you can see at those those last two pads have been excellent we're continuing to tweak and modify and methodically evaluate completion design and as I alluded to previously.
There might be a gen beyond Gen III.
We've kind of already started.
Testing various variables on that and so look the rock we have is awesome, we're finding ways to get more gas out of it both in terms of ultimate recoveries and.
Near term deliverability, and I think we'll continue to.
To move forward on that and credit to our broader subsurface team on really thinking through this and how we compete methodical and driving the best returns.
And so yes, leading edge wells are or did better than our type curve and.
We will look to continue that performance and when we think it makes sense to make adjustments if that happens, we'll certainly do so.
We continue to be extremely encouraged with what we're seeing in the resource.
Okay.
Thank you.
Thank you. Our next question comes from John Freeman of Raymond James.
One is now open. Please go ahead.
Good morning. Thanks.
Both.
Constitution, and northeast supply enhancement pipelines, it will get more attention as Williams looks like try and revitalize those projects I believe if you all had to pick I believe Murphy is sort of a <unk>.
Bigger benefit PR, but if you could maybe kind of elaborate on that sort of gives and takes of those projects.
Rates to kind of your <unk> exposure.
Yeah. Thanks, John Good morning.
So Nancy the ability to finance a project that would be a great project to see that get completed.
And even just ourselves both these projects are really needed.
In New York and in New England broadly NASA does have some pretty.
Meaningful we think positive implications if it moves forward regarding some of our existing firm transportation and how that would likely significantly benefit just given it would create even incremental demand that could not only free up the benefits we have on our existing FTE, but also create an opportunity to.
I have more firm sales or other ft projects that connect into it in time.
So.
Yes, he is a great one on constitution.
Yeah, that's interesting as well that's that's a part of the basin that has had a lot of gas there is certainly.
Some challenges there that need to be worked through but.
A lot of really good discussion and positive momentum and seemingly from from both the shippers and the developer a lot of encouraging news coming out of them in terms of what they're seeing in the possibility. So that would also benefit us it would probably move more gas.
Well it would move more gas out of Bradford Susquehanna and in doing so probably take take in basin price.
Pricing up, particularly on Tennessee, 300 line zone, four and likely also some on eastern which would benefit our portfolio as well and create more pathways for additional growth. So both projects would be great. We're hugely supportive of all new infrastructure development and.
And hopefully those start to move forward.
Thanks for that and so and then I guess just following up on what you mentioned earlier adjusted.
We're continuing to sort of look at this kind of evolution of whether you want to call. It Gen III plowed through Gen four.
And I guess I'm trying to think about and you're in the 26 guidance.
Is there any sort of additional well productivity gains that are baked into that guidance or does it sort of reflect just kind of current where you're currently set on well productivity.
Yes, it's a good question John.
The short answer is.
The results and as I mentioned, it continued to exceed our expectations. So I think theres a couple of dynamics at play here that are really interesting to tease out and one is the deliverability and the rates at which we restrict the wells.
We generally are going to rate restrict these wells at around 25 million a day at times 30 million a day and we'll hold them flat I think we're seeing the biggest opportunity for continued positive bias upward is the time in which these wells hold flat.
So the pressure drawdown, we've seen even at those very high per well rates has been low and so we've been able to successfully hold these wells at flat levels for now at times in excess of the year and so the the productivity bias is more how long that flat period can last.
And I think we've got a lot of great engineering work going on on this end.
We're working through exactly what we think that's going to look like both for the current wells and future wells and so what I'm really getting at is.
The day one production in the day 90 production is probably about the same because we're going to deliver a lot of gas and frankly the day 180 production is about the same it's really a question of what do we look like a day $2 70, and $3 65 in a year and a half in.
How long are these wells holding it flat rates and consistently doing so that can create some further opportunity we baked some of that in but quite frankly, the jury's a bit out. So we're not we haven't.
Maybe gone all the way.
Great I appreciate it thanks again.
Yeah.
Thank you. Our next question comes from Timothy Winter of Gabelli.
Your line is now open. Please go ahead.
Good morning, and congrats on another strong quarter.
Thanks for taking my question.
Dave I'm trying to better understand the growth opportunities you guys are considering can you just talk a little bit more about.
What the potential for regulated pipeline investment as it should.
Shipping port and <unk> are great, but are relatively small.
Are there more material opportunities.
That are out there and how do you weigh that.
It is.
Against other regulated investments like some of the LDC is that could be for sale and no one's in AUM.
<unk> is for sale.
And then also against like the.
Potential for behind the meter.
Gas plants in the high <unk>.
Sylvania.
If you could just talk a little bit about your thinking.
No.
Yes, there is a.
A lot in that question.
And I guess the way I would summarize it as that.
As we look at a lot of things.
Our top priority would be growing organically right to be able to spend.
One dollar on rate base.
Is the.
The most cost effective way to to.
And so shipping port and titled Pathways are certainly great projects, we call those the singles and doubles type projects that over time add up to.
A lot of growth for the company.
I do think there'll be opportunities.
Beyond those two projects you look on a map at.
We are.
Existing coal fired plants that have been retired are located they are not far from our system, both in Pennsylvania and.
In New York.
So I think theres going to be the real opportunity for that and I think if we.
If the government got serious about permitting reform the potential for larger scale projects out of the basin are certainly there and when you look at the.
The demand is forecasted.
For natural gas, we're going to need to get at that.
<unk> from somewhere and.
Appalachia is the lowest cost natural gas basin and be able to get more pipes out of there I think is a long run.
A good thing, but I think we're in a permitting reform before you see a lot of really big.
Projects get built.
Okay.
Thank you and just to emphasize.
We agree organically.
Is the best way to grow and it's great to see utility thats getting to.
Free cash flow from your other businesses to grow rate base.
But separately given given the increased sentiment for gas to spotlight on Pennsylvania as energy heartburn.
Does it make any sense or be considered safe floating leg of 15% piece of <unk> into the market to users.
To help fund our regulated acquisition.
Talk a little bit about if that makes any sense.
Who knows I mean, we look at.
When we approach financing the business.
We look at all different options.
I wouldn't want to comment on one specific.
Circumstance like that.
Okay. Thank you.
Yes.
As a reminder to ask a question Thats star one on your telephone keypad.
Our next question comes from Jeff J of Daniel LNG partners.
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Good morning, I guess looking at the capital efficiency I am just kind of curious obviously well productivity is playing a role.
And service costs are likely play a role I'm. Just wondering if you can kind of help me frame the efficiencies you've seen year to date on both the drilling and completion side and how big a factor that's been.
Yes, Jeff Thanks, Thanks for the question.
Look definitely we have seen improvements in our overall costs in terms of D&C per foot over the last.
12 months and.
What I would tell you is I think a lot of that.
Haven't seen a lot of service cost deflation over that 12 month period, and so that's largely been driven by enhanced operational efficiencies I think the other thing I would note just generally and potentially uniquely to our company.
And our development is that we're still pretty early days in terms of the number of these titles the Utica wells, we've drilled and so there is still opportunity for us to get better and better and.
That evolution continues.
We're very much focused on continuous improvement and and we'll have that mindset and culture within our business. We're looking to drive continue to drive those those dollar per foot.
<unk> down lower and lower irrespective of changes in the overall service cost environment. So.
So I'd say, we're still we still see opportunity to get better.
That's just going to be driven by really really good planning and work, particularly in our D&C teams to find ways to do more with less.
Excellent. Thank you.
Okay.
Thank you.
Yes.
Thank you at this time, we currently have a nice to have the questions. So I'll hand back to necessarily Fischer for any further remarks.
Thank you, Alex and 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 7th.
Please feel free to reach out if you have any final questions. Otherwise we look forward to speaking with you again next quarter. Thank you and have a nice day.
Okay.
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