National Fuel Gas Kicks Off Fiscal 2026 with Strong Upstream Performance, Eyes Pipeline Growth and Ohio Acquisition

National Fuel Gas Company (NYSE: NFG) signaled a confident start to its fiscal year, posting first-quarter results that underscored strength in its core production business alongside steady utility operations. Management, during the earnings call, painted a picture of a company navigating natural gas price volatility while advancing strategic growth projects, including key pipeline expansions and a major utility acquisition.

"We delivered a solid performance across our integrated portfolio," stated President and CEO Dave Bauer, citing adjusted earnings per share of $2.06. He credited operations teams for maintaining reliability during severe winter weather. The standout was the upstream and gathering segment, where adjusted EBITDA jumped 29% year-over-year, fueled by both higher production volumes and stronger realized prices.

Justin Loweth, President of Seneca Resources and National Fuel Midstream, provided operational details, noting quarterly production of 109 billion cubic feet (BCF), a 12% increase. He emphasized capital discipline, with spending down despite significant output growth, largely due to the efficiency of the Tioga Utica development program. The company reaffirmed its full-year production guidance of 440-455 BCF.

Innovation remains a focus. Loweth outlined testing of next-generation "Gen 4" well designs in the Lower Utica, expected online this spring, which carry an estimated incremental cost of $150-$175 per foot. The company is also piloting larger completions and evaluating co-development strategies for the Upper and Lower Utica formations.

Addressing the market backdrop, management characterized the current $3-$5 natural gas price environment as "the new normal," driven by structural LNG and power demand against constrained infrastructure. CFO Tim Silverstein highlighted recent extreme volatility, including a February contract settlement near $7.50, but noted the company's hedges protect 70% of remaining fiscal-year production while retaining upside exposure on over 50%. Full-year adjusted EPS guidance was maintained at $7.60-$8.10.

On the growth front, the Tioga Pathway pipeline expansion is on schedule following FERC approval, and the Shippingport Lateral remains targeted for a late 2026 in-service date. Bauer argued that adding pipeline capacity is crucial to mitigating the price spikes recently seen in the Northeast.

The planned acquisition of CenterPoint Energy's Ohio local distribution company (LDC) remains on track for a late 2026 closing. Silverstein confirmed the equity portion is funded via a recent $350 million private placement, with long-term debt issuance of roughly $1.5 billion to follow. He also addressed an Ohio regulatory order that slightly reduced the allowed return on equity for the asset but extended amortization periods, a trade-off viewed as beneficial for long-term rate base growth.

In regulated utilities, the company's Pennsylvania division filed for a rate increase of approximately $20 million, which would raise customer bills by about 11%. Bauer asserted that even with the hike, the company's rates would remain the lowest in the state. He also noted policy developments in New York, including a delayed implementation of the All-Electric Buildings Act, which provides near-term certainty for gas infrastructure planning.

Analyst & Investor Commentary:

"The upstream beat and maintained guidance demonstrate operational execution in a tricky market. Their hedging strategy is particularly savvy—locking in a floor while staying positioned for any sustained rallies." — Michael Thorne, Energy Analyst at ClearView Capital

"Another rate case in Pennsylvania? Consumers are already squeezed, and an 11% hike is substantial, even if they claim to still be the 'lowest cost.' It feels like the regulatory compact is shifting costs steadily onto households." — Sarah Chen, Portfolio Manager at Sustainable Futures Fund (More emotional/pointed)

"The Ohio LDC acquisition is a smart, scale-adding move in a constructive regulatory environment. The new Ohio rate-making law should provide more predictability, which is exactly what utilities need for long-term investment." — David Reeves, Managing Director at Midwest Utility Advisors

Looking ahead, management expressed confidence in its balance sheet, projecting a net debt-to-EBITDA ratio of about 1.75x by the end of fiscal 2026, and pointed to continued opportunities across its integrated business model.