What National Fuel Gas (NFG) Said on Its Q4 Earnings Call

Key Points

• Fiscal 2026 adjusted earnings rose 9% to $7.55 per share, but National Fuel forecast fiscal 2027 adjusted earnings of $6.00–$6.40 per share, citing lower assumed gas prices and roughly flat production.
• Seneca’s fiscal 2027 production outlook reflects setbacks at a Marcellus pad and weaker-than-expected Upper Utica results. The company plans to prioritize higher-return Lower Utica wells and expects production growth to resume in fiscal 2028.
• National Fuel continues to target a separation into two publicly traded companies in the second half of calendar 2027, with an initial confidential Form 10 filing planned before the end of 2026. Pipeline projects and utility operations are expected to help offset upstream pressure.

National Fuel Gas NYSE: NFG reported higher adjusted earnings for fiscal 2026 but forecast a decline in fiscal 2027 as lower natural gas prices and flat production weigh on its upstream business.

The company reported fourth-quarter adjusted earnings of $1.22 per share, unchanged from a year earlier, and GAAP earnings of $1.02 per share. For the full fiscal year, adjusted earnings rose 9% to $7.55 per share, President and CEO Dave Bauer said on the earnings call.

National Fuel also updated investors on its planned separation into two publicly traded companies. The new company will operate under the Seneca Resources name, and management continues to target completion of the spin in the second half of calendar 2027.

Lower gas prices weigh on outlook

National Fuel initiated fiscal 2027 earnings guidance of $6 to $6.40 per share. Treasurer and CFO Tim Silverstein said the main driver of the expected decline was the company’s natural gas price assumption of $2.85 per million British thermal units, an $0.80 drop in NYMEX prices from the prior year.

Nearly two-thirds of expected production is hedged at a weighted average floor of $3.80, Silverstein said, but the decline in pricing will still hurt earnings. The company expects Seneca production of 400 billion to 435 billion cubic feet in fiscal 2027, approximately flat with the prior year at the midpoint. The forecast includes about 3 billion cubic feet of voluntary, price-related curtailments in October but assumes no further curtailments.

Silverstein said growth in regulated operations will partly offset the pressure. Pipeline and storage revenue is expected to benefit from recently completed projects and a pending rate case, while utility guidance includes a full year of earnings from the acquired Ohio business. National Fuel expects utility operating income to double, although Silverstein said the acquisition would be modestly dilutive in fiscal 2027, partly because of an above-market interest rate on seller financing.

Seneca addresses production setbacks

Seneca produced 419.5 billion cubic feet in fiscal 2026, just below the low end of its revised guidance, said Justin Loweth, president of Seneca Resources and National Fuel Midstream. Its integrated upstream and gathering business generated more than $1 billion in EBITDA and increased its SEC reserve base to 5.2 trillion cubic feet equivalent, he said.

Loweth attributed the weaker production outlook to an underperforming Marcellus development pad in Lycoming County, Pennsylvania; Upper Utica appraisal results below expectations; and greater-than-anticipated interactions between hydraulic fracturing operations and nearby Lower Utica wells.

The company is still evaluating the cause of the six-well Marcellus pad’s underperformance, which Loweth described as an anomaly with no material impact on long-term value. He said the Upper Utica remains attractive, but Seneca will prioritize the higher-return Lower Utica in the near term.

Seneca plans to use its Gen 3 well design across much of the fiscal 2027 program. Loweth said the more intensive Gen 4 design did not consistently deliver enough additional estimated ultimate recovery to justify its cost and could increase the risk of fracturing interactions. Seneca plans to turn 20 to 26 wells in line during the year, including approximately eight involving appraisal or testing.

Loweth said the development changes should position Seneca to resume production growth in fiscal 2028, with a greater focus on the Lower Utica and Tioga County Marcellus. He expects gas markets to remain somewhat oversupplied through 2027, with a more constructive outlook as liquefied natural gas demand grows in 2028 and beyond.

Separation and regulated projects advance

Silverstein said National Fuel intends to submit its initial confidential Form 10 filing for the separation before the end of calendar 2026. The company is working toward making the filing public around March or April, subject to the review process. An IRS private letter ruling process is also underway and could take longer, he said.

In the pipeline business, Bauer said the Tioga Pathway and Shippingport Lateral projects were placed in service and are expected to add approximately $30 million in combined annual revenue. The Line N system upgrade remains on track for service in late 2028 and is expected to add about $20 million in annual revenue.

National Fuel also acquired Honeoye Storage Corporation for approximately $5 million, adding 5.9 billion cubic feet of federally regulated storage capacity, Bauer said. New rates in Supply Corporation’s pending rate case took effect Nov. 1 subject to refund, while settlement discussions continue.

In the utility business, a Pennsylvania regulatory order awarded a $10 million rate increase and reset a charge that allows recovery of modernization investments. In New York, regulators approved a system modernization tracker in August in exchange for the company agreeing not to file a rate case for at least a year.

National Fuel closed its Ohio utility acquisition on Oct. 1. Bauer said the transition is proceeding as expected and that the company hopes to exit its back-office transition services agreement with seller CenterPoint by the end of calendar 2027, ahead of the agreement’s maximum 24-month term.

For fiscal 2027, National Fuel expects total capital spending to rise approximately 10% from the prior year, including $350 million to $400 million for its utility and $600 million to $640 million for integrated upstream and gathering. It also projects $50 million to $100 million in discretionary land spending outside that guidance, which Silverstein said could be reduced if commodity prices remain depressed.

About National Fuel Gas (NYSE:NFG)

National Fuel Gas Company NYSE: NFG is a diversified energy company engaged in the exploration, production, gathering, transportation, storage and distribution of natural gas. Its operations span the natural gas value chain, with an emphasis on resources and infrastructure in the Appalachian Basin.

Through its exploration and production business, National Fuel develops natural gas reserves primarily in the Marcellus Shale of Pennsylvania. Its pipeline and storage operations transport and store natural gas for utilities, marketers and other customers, while its gathering systems connect production wells to larger transmission networks.

National Fuel also operates a regulated natural gas utility that distributes gas to residential, commercial and industrial customers in portions of western New York and northwestern Pennsylvania.

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