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Operator: Hello, and welcome to the National Fuel Gas Company Fourth Quarter and Full Year Fiscal 2025 Earnings Call. My name is Harry, and I’ll be your operator today. [Operator Instructions] I would now like to hand the conference over to Natalie Fischer, Director of Investor Relations. Please go ahead.

Natalie Fischer: Thank you, Harry, 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 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 fourth quarter and full year fiscal 2025 earnings release and November investor presentation have been posted on our Investor Relations website. We may refer to these materials during today’s call. We’d 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.

David Bauer: Thank you, Natalie. Good morning, everyone. As we reported in last night’s release, National Fuel had a great fourth quarter with adjusted earnings per share of $1.22, an increase of 58% from last year. The quarter capped an excellent fiscal year where each of our segments delivered meaningful growth. On a consolidated basis, adjusted earnings per share increased 38% compared to fiscal 2024. At our integrated Upstream and Gathering businesses, we continued our impressive trend in capital efficiency, a trend that is unmatched by our Appalachian peers and perhaps across the industry. Since we began our EDA transition in mid-2023, we’ve grown production by approximately 20% while reducing our overall capital spending by 15%, which is a testament to both the quality of our Tioga County assets and our team’s dedication to operational improvement and execution.

Given the productivity of our acreage and the depth of our inventory, I fully expect our capital efficiency will continue to improve in the coming years. To that end, last night, we announced a significant expansion of our Tioga County inventory, adding approximately 220 prospective well locations in the Upper Utica formation. Over the past few years, we’ve been testing this horizon across our Tioga acreage and the strong performance from the 4 highly productive wells turned in line to date in the Upper Utica give us the confidence to increase our inventory in this area. The addition of Upper Utica locations nearly doubles our inventory in the EDA. At our current pace, we now have almost 20 years of development locations that are economic at NYMEX prices below $2 per MMBtu.

As we’ve discussed in the past, another key driver for future growth at Seneca is additional firm transportation and firm sales to ensure we have an end market for our production. Consistent with that objective, in September, we signed a proceeding agreement with a third-party pipeline that will provide us with an additional 250 million a day of takeaway capacity out of Tioga County starting in late 2028. This new capacity, along with the Tioga Pathway project that should come online in late 2026, underpins the mid-single-digit production growth we’ve been signaling for the past year or so. Justin will have a full update on Seneca later in the call. Turning to our regulated operations. Momentum continues to build at Supply Corporation, which has 2 great growth opportunities in progress.

First is the Tioga Pathway project for Seneca that I just mentioned. Development of that project remains on schedule. We received our certificate in May and are on track for a spring construction start. Second is the Shipping Port lateral off of our Line N system in Western Pennsylvania. Supply Corp made its prior notice filing in late August, and we expect to receive FERC authorization in the coming weeks. In addition, we recently ordered the key materials and awarded the construction contract for the project, keeping us on schedule for a fall 2026 in-service date. As a reminder, this $57 million data center-driven project will create 205 million a day of new delivery capacity and generate $15 million in annual revenue. As I’ve said on prior calls, I’m optimistic that we can provide additional transportation capacity to the Shipping Port site as it advances its development.

The potential for pipeline expansion doesn’t end with shipping port. We’re in dialogue with multiple parties on expansion projects across our system. Our unique portfolio of pipelines in the Appalachian producing region are well positioned to provide speed to market for potential data centers. Our interconnectivity with numerous long-haul pipelines and our significant experience in developing and constructing infrastructure in the region are competitive advantages that position us well to deliver projects on an accelerated time frame. I’m confident we’ll have additional such projects in the years to come. Switching to our utility business. As we announced a few weeks ago, we’ve entered into a definitive agreement with CenterPoint to acquire their Ohio Gas LDC.

At closing, this highly strategic acquisition will double our utility rate base, add significant customers in a state that is supportive of natural gas and provide us with another opportunity to recycle the substantial free cash flow from our Upstream and Gathering businesses into an enterprise that adds both scale and future earnings. We’re excited about this transaction and the value creation potential that it offers. The assets are high quality and have a strong outlook for continued rate base growth. Further, they’re operated by a talented workforce that will be a great fit with National Fuel. We had the chance to meet most of the Ohio team last week, and it was clear that they share our dedication to safe and reliable natural gas service.

We look forward to working with CenterPoint to ensure a seamless integration of the Ohio assets into the National Fuel organization. Before closing, a quick word on energy policy in New York State, where the momentum towards an all-of-the-above approach to energy continues to build. In both public statements and publications like the draft State Energy Plan, elected officials and policymakers are at last beginning to acknowledge the importance of natural gas as a reliable and affordable source of energy that supports economic development in the state. They readily admit New York won’t meet the Climate Act goals on the time frame originally required and have even seen fit to suggest that lawmakers modify the Climate Act in the months to come.

From the beginning, we’ve advocated an all of-the-above approach to energy, and I’m confident that policymakers will ultimately reach that conclusion as well. In closing, fiscal 2025 was a terrific year for National Fuel. Our financial results were the best in the company’s history. And perhaps more importantly, we took actions across each of our businesses that lay the foundation for long-term growth and continued operational excellence. The outlook for the company is as strong as it’s ever been, and I’m excited to execute upon our strategy in the years to come. With that, I’ll turn the call over to Tim.

Timothy Silverstein: Thanks, Dave, and good morning, everyone. We ended fiscal 2025 with a strong fourth quarter. As Dave highlighted, adjusted earnings per share increased 58% from the prior year, driven primarily by excellent results in our Upstream and Gathering operations. For the quarter, production increased 21% from the prior year as Tioga Utica well performance exceeded our expectations. In addition, our realized price after hedging increased by 9% on the back of improved commodity prices, while total per unit operating expenses were lower. Altogether, adjusted earnings per share in our integrated Upstream and Gathering business increased 70% year-over-year. These great results were also supported by continued operational excellence in our regulated businesses, where lower-than-expected expenses led us to beat our projections.

Before I discuss our outlook for the business, I want to highlight a change in our segment reporting structure. Historically, we’ve reported our Exploration and Production and Gathering segments separately. We’ve streamlined our financial reporting by combining those 2 segments into one, which we are calling our Integrated Upstream and Gathering segment. We believe this approach best aligns with how we make capital allocation decisions, how we think about the integrated cost structure benefits and how we will continue to manage the businesses going forward. Shifting to fiscal 2026. All of our underlying operating assumptions and capital spending ranges remain consistent with last quarter’s guidance initiation. Over the past few weeks, NYMEX prices have averaged approximately $3.75.

So we are using that assumption to initiate formal guidance. At that price, adjusted earnings are expected to be within the range of $7.60 to $8.10 per share. As you may recall, with the natural gas price volatility we saw over the summer, we provided preliminary EPS guidance at various NYMEX prices. Volatility on the front end of the curve remains, so we’re sticking with the same approach. While prices move around in the near term, the long-term outlook remains strong, and we’ve continued to lock in additional hedges to protect earnings and cash flows at prices that are highly economic for our development program. We’ve modestly added to our fiscal 2026 position and now sit at 65% hedged with a base of NYMEX swaps at an average price of approximately $4 and a similar level of collars with an average floor of $3.60 and cap of $4.80.

More recently, we’ve been focused on fiscal 2027 and 2028, where we’ve added a number of swaps north of $4 and collars with floors in the mid- to high $3 area. At these prices, we generate strong returns and free cash flow, while the collars allow us to capture upside potential to prices. Sticking with free cash flow, at our current NYMEX assumption, we expect to generate $300 million to $350 million in fiscal 2026. This is well in excess of what we generated last year. In addition to fully covering our dividend, the additional cash will be directed to further strengthen our balance sheet as we move towards the closing of our Ohio Gas utility acquisition in the fourth quarter of calendar 2026. Notably, we are able to generate this level of free cash flow while increasing the amount of growth spending during the year.

As a reminder, capital expenditures are expected to increase approximately 10% from fiscal 2025, driven principally by growth-related spending on our Tioga Pathway and Shipping Port lateral pipeline projects. In addition to the revenue from these projects, which is expected to total approximately $30 million annually starting in early fiscal ’27, we also expect to see an increase in earnings from rate cases that we plan to file. First, Supply Corporation is targeting a FERC rate case in the second half of the fiscal year. As you may recall, we reached a settlement on our last rate case and new rates went into effect in February 2024. We did not agree to any stay-out provision as part of the settlement. We’ve seen a continued need to invest in modernization to maintain the safety and reliability of our system and have also seen the ongoing impacts of inflation.

This puts us in a position to seek an increase in our rates to account for those impacts and ensure we earn an adequate return for our shareholders. We are also likely to file a rate case in our Pennsylvania utility division this fiscal year. Our last rate settlement was in 2023, and we’ve done a good job over the past 2 years controlling costs and deploying capital in line with our modernization tracker. However, we expect to exceed the revenue cap on this tracker in early fiscal 2027, and therefore, plan to file for a base rate increase in advance of that to achieve timely rate relief. Looking at this in total, our 2026 consolidated earnings per share guidance represents a solid 14% growth at the midpoint. With additional growth expected in fiscal ’27, we remain on track to comfortably exceed our multiyear earnings guidance we initiated last year.

While our outlook for organic growth remains strong, we expect a further benefit when we close on the acquisition of CenterPoint’s Ohio Gas utility. The significant scale provided by this acquisition will enhance our long-term outlook for regulated earnings growth. We’re excited about this opportunity and in the near term, are focused on working through the regulatory approval process, which we expect to kick off early next year. Over the past few weeks, we’ve also made progress on the financing front with the successful syndication of our bridge facility. We had overwhelming support from our bank group. As a result, we bifurcated the initial bridge into 2 components. The first is a 364-day term loan commitment and an amount equivalent to the proceeds due at closing.

Funds, if needed, wouldn’t be received until closing, and we would have 364 days from that point to repay. Relative to a traditional bridge facility, this structure reduces our costs and provides additional optionality around the execution of our permanent financing strategy. Second, we will also maintain the traditional bridge facility that aligns with the size and maturity of the promissory note that will be issued to CenterPoint. With the syndication process behind us, we will move into executing our permanent financing strategy, which we expect to commence in the spring. Bringing it all together, this is an exciting time for National Fuel. Our underlying business is very strong. Our industry is flourishing, which creates great opportunities across each of our businesses.

Our balance sheet is in great shape and the acquisition of CenterPoint’s Ohio Gas utility provides an additional avenue to reinvest free cash flow into rate base growth. We expect to be able to drive meaningful growth in earnings per share over the long term, supporting our commitment to returning capital to shareholders via our growing dividend. We are excited about the future of our industry and the growing role National Fuel will play within it. With that, I’ll turn the call over to Justin.

Justin Loweth: Thank you, Tim, and good morning, everyone. As Dave mentioned earlier, fiscal ’25 marked another year of strong operational and financial performance for our integrated Upstream and Gathering business. We grew our [indiscernible] reserve base to nearly 5 Tcfe and achieved record net production of 427 Bcfe, surpassing the high end of guidance and growing 9% year-over-year. This meaningful growth was achieved with capital expenditures of $605 million. A reduction of approximately $35 million from the prior year. Since 2023, we’ve achieved a 30% improvement in capital efficiency, highlighting the strength of our asset base, the effectiveness of our development strategy and our strong operational execution. And we expect this capital efficiency trend to continue to improve in the years ahead.

Beyond capital efficiency improvements, over the past year, we’ve made substantial strides in further increasing our peer-leading inventory depth. As noted in last evening’s earnings release and our updated investor presentation, we’ve significantly increased our core Tioga Utica development inventory. Our delineation efforts have unlocked additional resource potential in the Upper Utica, a distinct zone separated by a large frac barrier from the Lower Utica. We currently have 4 producing Upper Utica wells, each of which was codeveloped on a pad with lower Utica development wells, which allowed us to delineate a large swath of acreage over a multiyear period. As such, we have significant production history and all wells have demonstrated productivity on par with our Gen 3 Lower Utica wells.

This successful appraisal campaign more than doubles our Tioga Utica inventory to approximately 400 future development locations. We estimate net recoverable gas from the future Tioga Utica development of over 10 Tcf, underpinned by an approximately 300-foot Utica resource column. In addition, we have approximately 60 Marcellus locations in Tioga and Lycoming counties. Combined, we now have almost 2 decades of core EDA development inventory with breakevens below $2 NYMEX, a depth of high-quality core inventory that is unmatched by our peers in Appalachia. Looking ahead to fiscal ’26, we expect continued improvement in well results and resource recovery, driven by key well design tests on 3 upcoming pads. These tests will include higher-intensity fracs, wider inter-well spacing, upsized gas processing units and co-development of the upper and lower Utica zones, all aimed at enhancing capital efficiency and maximizing long-term value.

Turning to guidance. We are maintaining forecasted production between 440 and 455 Bcfe, representing a 5% increase at the midpoint year-over-year. Operationally, we plan to run 1 to 2-rig program and a dedicated frac crew throughout the year. Regarding capital, integrated Upstream and Gathering segment expenditures are expected to be $550 million to $610 million this year, down 3% at the midpoint compared to fiscal ’25 and more than $100 million lower versus fiscal ’23. Longer term, we anticipate capital further decreasing to $500 million to $575 million per year for this segment with average annual production growth in the mid-single digits. Pivoting to the natural gas market, we anticipate a constructive pricing environment in 2026, supported by a tightening supply-demand balance.

Production growth has been slowing across key gas-producing regions, while deferred volumes have been absorbed amid accelerating demand from LNG exports and power generation. Weather remains one of the most unpredictable impactful variables, driving continued volatility in the forward natural gas strip. Seneca is well positioned to manage these pricing fluctuations through our marketing and hedging strategy, which offers price stability while maintaining upside exposure. Approximately 85% of our expected fiscal ’26 volumes are covered by physical firm sales and/or firm transportation, leaving only a minimal amount of our production exposed to spot pricing. Where possible, we have also sculpted our spot exposure to capture higher expected in-basin pricing during winter and summer months when in-basin demand is strongest.

To further strengthen our long-term access to premium markets and support Seneca’s growing production and core inventory, in September, we entered into a preceding agreement for new firm transportation. This capacity expected to be in service in late calendar 2028 provides an incremental 250 million a day of new takeaway from our core Tioga producing area to advantaged markets elsewhere in Pennsylvania, giving us access to growing data center-driven demand areas and additional connectivity to long-haul pipes that reach back to the Gulf. This is yet another great step forward in securing access to premium markets for our growing production and something we’ve been working towards for well over a year. I’m optimistic we’ll find additional opportunities to expand our marketing portfolio through additional firm transport and/or long-term firm sales in the quarters ahead.

Switching gears, we remain focused on developing gathering infrastructure to support our growth while pursuing incremental third-party opportunities. In fiscal ’25, we executed an amendment with a third-party shipper to gather production from 2 additional pads. This amendment will add an expected 40 Bcf of throughput and approximately $15 million in revenue over the next 5 years. We also remain focused on enhancing system reliability and capacity and have completed and placed into service a number of pipeline projects as well as commissioned the first compressor unit at our [indiscernible] station. 2025 also marked a significant year with respect to sustainability. NFG Midstream improved its Equitable Origin rating from A- to A, while Seneca maintained its Equitable Origin rating of A and also maintained its MiQ certification of an A grade.

These results reflect our unwavering dedication to environmental stewardship and responsible practices and provide an opportunity to capture additional margin through our responsibly sourced gas sales. In conclusion, fiscal ’25 was a transformative year for our integrated Upstream and Gathering business. We achieved record production and throughput while driving meaningful improvements in capital efficiency and significantly expanding our core inventory. These operational gains were complemented by a strong and growing marketing portfolio that provides reliable long-term access to premium markets. Underlying these results is our large-scale integrated asset base, which enables a differentiated low-cost structure and reinforces our ability to realize strong returns across commodity cycles.

As we enter fiscal ’26, we are energized by the opportunities ahead and remain focused on executing with discipline, innovating across our operations and delivering strong results. With that, I’ll turn the call back to Natalie.

Natalie Fischer: You may open the line for questions.

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Operator: [Operator Instructions] Our first question will be from the line of Greta Drefke with Goldman Sachs.

Margaret Drefke: I first wanted to touch on the incremental core inventory and the economics of the Upper Utica. Can you provide more details on how long you’ve been examining the Upper Utica zone and what was the process like that has given you confidence that these 220 locations are competitive with the rest of the portfolio?

Timothy Silverstein: Greta, thanks for your question. This has been something we’ve been working on for years. Our team saw this opportunity early on in our initial integration of the Shell acquisition and frankly, our prior results. So it’s something we’ve seen the possibility of for a long time. We really began delineating it and getting a better understanding starting within the last 3 years. And so over a period of time, we were able to drill test wells while drilling lower Utica development pads. And so the opportunity we had in front of us was to test this, do it very efficiently and very effectively from a capital efficiency perspective and then bring these wells on at the same time as we were bringing on the balance of the production from these pads.

So we’ve had a lot of opportunity to cover both a large swath of our acreage position and also to have a significant production history. And what we see is outstanding results. The other thing just to note about this that’s very exciting to us is we’re developing these and going to co-develop them in the future exactly where we’re developing the Lower Utica now. So as an integrated Upstream and Gathering company, we will also capture additional margin and efficiencies by reutilizing our midstream infrastructure. So this is yet another step forward in our driving lower capital and increasing production over the long term.

Margaret Drefke: Great. And I also wanted to ask on your outlook for in-basin demand a little bit more broadly. Beyond the Shipping Port project, are you continuing to see interest from other potential project partners for opportunities in basin? And how beneficial would you characterize NFG’s fully integrated operations in these discussions relative to producers that might just have Upstream supply?

David Bauer: Yes, Greta, we’ve had some really good interest from other data center developers, from other entities pursuing power projects, we’re really excited about it. The momentum really continues to build behind it. As I said in my remarks, I think we — our integration gives us a big advantage because we can offer a whole suite of alternatives, ranging from basic plain [indiscernible] pipeline service to gas supply to any combination of those things. So we’re real optimistic about the future and I think we’ll have multiple opportunities going forward.

Operator: The next question today will be from the line of Noah Hungness with Bank of America.

Noah Hungness: For my first question here, this is maybe for you, Justin. How can we think about when the Upper Utica will become a larger part of the NFG program?

Timothy Silverstein: Yes. Noah, thanks. We are already incorporating some Upper Utica into our 4 plants. And so I think what you should expect is that we’re really going to continue to do what we’ve been doing with our lower Utica development, which is trying to optimize our operational planning to allocate capital that we deem to be the highest integrated returns between Seneca and Gathering. We’re going to look at the Upper Utica and that same — through that same prism. — where we’re going to focus on the balance of uppers and lowers that optimize both the land use in terms of the pads we’re building, the midstream infrastructure we’re building and optimize our development plan along that. So while our program to date has been certainly focused on a lower Utica, we will start having more uppers in our plan as we move forward.

Noah Hungness: Well, I guess my question was, if you guys are going to pill 26 wells this year and let’s say, 25 are the Tioga Utica, what percent of that would be uppers? And is that a good number to assume moving forward into ’27 and beyond?

Timothy Silverstein: Yes. So we will have a number of Upper Utica wells over the course of ’26. It will be a much smaller percentage relative to the lowers. And then as we go into ’27 and ’28, I would expect the team to continue to optimize to figure out the right mix. I think near term, you should expect that we’ll certainly have more lowers, but then over time, that may become more balanced between uppers and lowers. Hopefully, that answers your question more and certainly know over time, we can dig into that more with you and others.

Noah Hungness: Yes. No, that’s very helpful. And then the next question here is just on debt. I mean with the CenterPoint deal, you guys are obviously going to be taking on a large amount of debt. The utility can only handle so much. So how are you thinking about allocating the remainder of that debt across the rest of your business?

Timothy Silverstein: That’s a good question. I mean the reality is we do all of our financing at the parent company. So the credit rating agencies look at the total debt at the holding company level relative to the entire cash flows of the system. So we’ll look across the system as to where those cash flows are being generated, and we’ll issue intercompany promissory notes. But at the end of the day, all of that debt is fungible amongst the segments. And so it’s a bit of a balancing act looking at cash flows, looking at capital structures at the various segments as it relates to ratemaking and a whole bunch of considerations. But I’d really stay focused on the capital or the debt being at the parent company and looking at the aggregate cash flows of the entire NFG system.

Operator: [Operator Instructions] And our next question will be from the line of Timothy Winter with Gabelli & Company.

Timothy Winter: Congrats on another strong update. A couple — one real quick one though, Tim. The Supply Corp going in for a rate case, what are the returns you’re earning currently on the Supply Corp?

Timothy Silverstein: Yes. I mean, typically, think of a rate-making return there and recognizing everything is a black box settlement in kind of the low double digits is a typical ratemaking return. So north of the utility ratemaking ROEs, but in that general ZIP code.

Timothy Winter: Under an assumption of a 50-50 structure equity?

Timothy Silverstein: Yes. Yes, 50-50, you have the ability to earn a little bit higher there. And given where our cap structure is north of 50-50, we believe we can earn on that. But again, it’s all black stock settlement. So you typically lose the identity of the individual components.

Timothy Winter: Okay. And then with the update and new numbers in, are you still looking at $300 million to $400 million of equity for the CenterPoint, Ohio? And any more thinking on the timing or how you’re going to go about that?

Timothy Silverstein: Yes. I mean if you look at the outlook for the business, which commodity prices being the bigger near-term driver, they’re still pretty consistent with where we were a couple of weeks ago when we announced the transaction. So I’d expect that sizing to be similar to what we talked about. And as I mentioned on the call, around the acquisition, we will need pro forma financial statements for the offerings. And so that will take a little bit of time to put together. So we’re still looking towards later in the first quarter or spring time frame for accessing the capital markets.

Timothy Winter: Okay. Okay. And that assumes the free cash flow, I guess, what you’re talking about the $300 million to $350 million generated. Is there any more thought on like a creative way to finance it? As I think I mentioned in the last call, maybe like sell a portion of Seneca or any assets that are less core that you could consider to use as equity?

David Bauer: Yes. Tim, this is Dave. I don’t think we have much in the way of noncore assets anymore to consider selling. And in terms of, call it, alternative or creative ways to finance things, I think given the amount of equity that we’re looking at in this transaction, it’s probably a little small to really change the — our whole approach to financing it. But that’s today. As we go through time, if other opportunities come along, we’re certainly going to do the — we’re going to finance them in the way that shareholders will get the best answer.

Operator: With no further questions on the line at this time. I would now hand the call back to Natalie Fischer for closing remarks.

Natalie Fischer: Thank you, Harry. 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, November 13. 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.

Operator: This will conclude the National Fuel Gas Company Fourth Quarter and Full Year Fiscal 2025 Earnings Call. You may now disconnect your lines.

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