eastern niagAmerican Chronicle
eastern niagAmerican Chronicle，
National Fuel Gas Company (National Fuel or the Company) (NYSE:NFG) today announced consolidated earnings for the first quarter of its 2011 fiscal year (the quarter ended December 31， 2010). HIGHLIGHTS Earnings for the first quarter were $58.5 million， or $0.70 per share， compared to $64.5 million， or $0.78 per share， for the prior years first quarter. The decrease is mainly due to lower earnings in the Pipeline and Storage， and Exploration and Production segments. Higher pension expense in the Pipeline and Storage segment and lower natural gas prices in the Exploration and Production segment were the main drivers of the decreased earnings. Compared to the prior years first quarter， Seneca Resources Corporations (Seneca) combined production of crude oil and natural gas increased over 4.1 billion cubic feet equivalent (Bcfe)， or 35.7%， to 15.7 Bcfe. Appalachian production increased approximately 184% to 8.1 Bcfe， including production from the Marcellus Shale of 5.9 Bcfe. Senecas production estimate for the entire 2011 fiscal year has been increased to a range between 65 and 75 Bcfe. The previously announced range was between 60 and 70 Bcfe. The Companys subsidiary Horizon Power， Inc. has entered into a Purchase and Sale Agreement to sell its interests in certain entities that own landfill gas electric generation assets. The sale is expected to generate a gain of approximately $28 million and close in the second quarter of fiscal 2011. The Company is revising its GAAP earnings guidance range for fiscal 2011 to a range of $2.75 to $3.00 per share. The previous earnings guidance had been a range of $2.40 to $2.70 per share. This guidance assumes flat NYMEX equivalent pricing of $4.00 per Million British Thermal Units (MMBtu) for natural gas and $80.00 per barrel (Bbl) for crude oil for unhedged production for the remainder of the fiscal year. It also assumes a non-recurring gain on the sale of landfill gas electric generation assets of approximately $0.34 per share. A conference call is scheduled for Friday， February 4， 2011， at 11 a.m. Eastern Standard Time. MANAGEMENT COMMENTS David F. Smith， Chairman and Chief Executive Officer of National Fuel Gas Company， stated: Throughout the first quarter， we continued to deliver excellent operational results. In our Exploration and Production segment， strong growth in the Marcellus shale led to an overall production increase of 36 percent from the prior year. Seneca brought 14 additional net Marcellus wells on production and exited the quarter with daily Marcellus production reaching 90 MMcf per day， which was up from only 8 MMcf per day at the same time last year. The expected divesture of the Horizon Power， Inc. investments demonstrates the continued sharpened focus towards our core businesses. We continue to ramp up our pace of Marcellus development， taking advantage of the vorable economics across our extensive acreage position. At the same time， we are moving forward on our numerous Appalachian infrastructure projects and have reached a major milestone with the commencement of construction on the first phase of the Pipeline and Storage segments Line N Expansion project in southwestern Pennsylvania. Though low commodity prices and anticipated short-term challenges in the Pipeline and Storage segment weighed on our financial results for the quarter， consistent earnings in the Utility and Energy Marketing segments continued to provide the earnings stability that we look for in our balanced business model. As we progress through 2011， we will continue to maintain our strong balance sheet， capitalizing on our opportunities and generating long-term value for our shareholders. SUMMARY OF RESULTS National Fuel had consolidated earnings for the quarter ended December 31， 2010， of $58.5 million， or $0.70 per share， compared to the prior years first quarter of $64.5 million or $0.78 per share. (Note: all references to earnings per share are to diluted earnings per share， all amounts are stated in U.S. dollars， and all amounts used in the discussion of earnings and operating results before items impacting comparability (Operating Results) are after tax unless otherwise noted). Three Months Ended December 31， 2010 2009 (in thousands except per share amounts) Reported GAAP earnings $ 58，543 $ 64，499 Items impacting comparability1: (Income) loss from discontinued operations (274 ) Operating Results $ 58，543 $ 64，225 Reported GAAP earnings per share $ 0.70 $ 0.78 Items impacting comparability1: (Income) loss from discontinued operations 0.00 Operating Results $ 0.70 $ 0.78 ——————————————————————————- (1) See discussion of these items below. ——————————————————————————- As outlined in the table above， certain items included in GAAP earnings impacted the comparability of the Companys financial results when comparing the first quarters of fiscal 2011 and fiscal 2010. Excluding these items， Operating Results for the current first quarter of $58.5 million decreased $5.7 million from the prior years first quarter. Items impacting comparability will be discussed in more detail within the discussion of segment earnings below. DISCUSSION OF RESULTS BY SEGMENT The following discussion of the earnings of each segment is summarized in a tabular form at pages 8 and 9 of this report. It may be helpful to refer to those tables while reviewing this discussion. Exploration and Production Segment The Exploration and Production segment operations are carried out by Seneca Resources Corporation (Seneca). Seneca explores for， develops and produces natural gas and oil reserves in California， in the Appalachian region and in the Gulf of Mexico. The Exploration and Production segments earnings in the first quarter of fiscal 2011 of $27.4 million， or $0.33 per share， decreased $2.4 million， or $0.03 per share， when compared with the prior years first quarter. Overall production for the current quarter of 15.7 Bcfe increased 4.1 Bcfe， or approximately 35.7 percent， compared to the prior years first quarter. Production increased approximately 5.3 Bcfe， or 184 percent， in Appalachia due entirely to higher Marcellus Shale production. In the Gulf of Mexico and California， production decreased by 25.7 percent and 4.7 percent， respectively. The positive impact ofeastern niagara health system higher production was offset by lower natural gas prices realized after hedging. For the quarter ended December 31， 2010， the weighted average natural gas price received by Seneca (after hedging) was $5.26 per thousand cubic feet (Mcf)， a decrease of $1.04 per Mcf compared to the prior years first quarter. The weighted average oil price received by Seneca (after hedging) was $76.24 per Bbl， an increase of $1.71 per Bbl， from the prior years first quarter. Aside from the change in production and pricing， several other items impacted earnings. Depletion expense increased， mainly due to higher production and the increase in the depletable base. Lease operating expenses were higher， primarily due to the costs to transport Marcellus production in Appalachia and increased well repair costs in California. General and administrative expenses also increased due to higher labor expenses， including additional staffing and associated costs in the East division. Pipeline and Storage Segment The Pipeline and Storage segment operations are carried out by National Fuel Gas Supply Corporation (Supply Corporation) and Empire Pipeline， Inc. (Empire). These companies provide natural gas transportation and storage services to affiliated and non-affiliated companies through an integrated system of pipelines and underground natural gas storage fields in western New York and western Pennsylvania. The Pipeline and Storage segments earnings of $8.6 million， or $0.10 per share， for the quarter ended December 31， 2010， decreased $1.8 million， or $0.03 per share， when compared with the same period in the prior fiscal year. The decrease was mostly due to increased pension and operating expenses. Transportation revenues for both Supply Corporation and Empire were also lower in the current quarter compared to the first quarter of 2010. Persistent strong Niagara/Chippawa basis prices have caused shippers to evaluate lower cost supply sources， and certain shippers have reduced their imports of natural gas from Canada. This has resulted in some contract terminations on Supply Corporation from Niagara. In order to counteract this reduced demand for these transportation services， Supply Corporations Northern Access expansion project and Empires Tioga County Extension Project have been designed to utilize the existing pipeline system to provide producers of Marcellus gas a transportation path from Marcellus supply basins to Canadian and other northern markets. Utility Segment The Utility segment operations are carried out by National Fuel Gas Distribution Corporation (Distribution)， which sells or transports natural gas to customers located in western New York and northwestern Pennsylvania. The Utility segments earnings of $23.0 million for the quarter ended December 31， 2010， were consistent with prior years first quarter. Colder weather and higher customer usage in Pennsylvania offset the impact of higher operating expenses， higher depreciation expense， higher property taxes and lower interest income in the Utility segment during the current years first quarter. In New York， colder weather did not have a significant impact on earnings for the quarter. The impact of weather variations on earnings in New York is mitigated by that jurisdictions weather normalization clause. Energy Marketing National Fuel Resources， Inc. (NFR) comprises the Companys Energy Marketing segment. NFR markets natural gas to industrial， wholesale， commercial， public authority and residential customers primarily in western and central New York and northwestern Pennsylvania， offering competitively priced natural gas to its customers. The Energy Marketing segments earnings for the quarter ended December 31， 2010， of $0.9 million decreased $0.2 million from the prior years first quarter mainly due to higher operating expenses. Corporate and All Other The Corporate and All Other category includes the following active， wholly owned subsidiaries of the Company: National Fuel Gas Midstream Corporation (Midstream)， formed to build， own and operate natural gas processing and pipeline gathering cilities in the Appalachian region; Horizon Power， Inc.， a corporation that develops and owns independent electric generation cilities that are fueled by natural gas or landfill gas; and Highland Forest Resources， Inc.， a corporation that markets high quality hardwoods from Appalachian land holdings. The Corporate and All Other category had a loss of $1.3 million for the quarter ended December 31， 2010， compared to the prior years first quarter earnings of $0.3 million. On September 1， 2010， the Company completed the sale of its landfill gas operations. As a result of this transaction， the Company is presenting the landfill gas operations as discontinued operations. Earnings in the first quarter of fiscal 2010 include earnings from discontinued operations of $0.3 million. The results of discontinued operations are discussed below and are excluded from the remaining discussion of the Corporate and All Other category quarterly results. Excluding discontinued operations， Operating Results in the Corporate and All Other category is a loss of $1.3 million in the current year first quarter compared to a loss of less than $0.1 million in the prior years first quarter. Lower income from unconsolidated subsidiaries and lower earnings from timber sales more than offset higher earnings from Midstreams pipeline gathering and natural gas processing operations. Discontinued Operations Earnings from discontinued operations for the quarter ended December 31， 2010， decreased $0.3 million. The decrease is primarily the result of the Companys September 1， 2010， sale of its landfill gas operations. EARNINGS GUIDANCE The Company is updating its earnings guidance for fiscal 2011 to reflect actual first quarter results， the acquisition of the oil and gas properties in Tioga County， and the anticipated sale of the Horizon Power， Inc. investments. The revised GAAP earnings range is $2.75 to $3.00 per share. This includes forecast oil and gas production for fiscal 2011 for the Exploration and Production segment in the range between 65 and 75 Bcfe， hedges currently in place， and NYMEX equivalent flat commodity pricing on non-hedged volumes exclusive of basis differential of $4.00 per MMBtu for natural gas and $80.00 per Bbl for crude oil. EARNINGS TELECONFERENCE The Company will host a conference call on Friday， February 4， 2011， at 11 a.m. (Eastern Time) to discuss this announcement. There are two ways to access this call. For those with Internet access， visit the investor relations page at National Fuels website at investor.nationalfuelgas.com. For those without Internet access， access is also provided by dialing (toll-free) 1-866-356-4281， and using the passcode 97734191. For those unable to listen to the live conference call， a replay will be available at approximately 2 p.m. (Eastern Time) at the same website link and by phone at (toll free) 1-888-286-8010 using passcode 96062954. Both the webcast and telephonic replay will be available until the close of business on Friday， February 11， 2010. National Fuel is an integrated energy company with $5.0 billion in assets comprised of the following four operating segments: Exploration and Production， Pipeline and Storage， Utility， and Energy Marketing. Additional information about National Fuel is available on its website at www.nationalfuelgas.com or through its investor information service at 1-800-334-2188. Certain statements contained herein， including those regarding estimated future earnings， and statements that are identified by the use of the words anticipates， estimates， expects， forecasts， intends， plans， predicts， projects， believes， seeks， will， may and similar expressions， are forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties， which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Companys expectations， beliefs and projections contained herein are expressed in good ith and are believed to have a reasonable basis， but there can be no assurance that such expectations， beliefs or projections will result or be achieved or accomplished. In addition to other ctors， the following are important ctors that could cause actual results to differ materially from those discussed in the forward-looking statements: financial and economic conditions， including the availability of credit， and occurrences affecting the Companys ability to obtain financing on acceptable terms for working capital， capital expenditures and other investments， including any downgrades in the Companys credit ratings and changes in interest rates and other capital market conditions; changes in economic conditions， including global， national or regional recessions， and their effect on the demand for， and customers ability to pay for， the Companys products and services; the creditworthiness or performance of the Companys key suppliers， customers and counterparties; economic disruptions or uninsured losses resulting from terrorist activities， acts of war， major accidents， fires， hurricanes， other severe weather， pest infestation or other natural disasters; ctors affecting the Companys ability to successfully identify， drill for and produce economically viable natural gas and oil reserves， including among others geology， lease availability， weather conditions， shortages， delays or unavailability of equipment and services required in drilling operations， insufficient gathering， processing and transportation capacity， the need to obtain governmental approvals and permits， and compliance with environmental laws and regulations; changes in laws and regulations to which the Company is subject， including those involving derivatives， taxes， safety， employment， climate change， other environmental matters， and exploration and production activities such as hydraulic fracturing; uncertainty of oil and gas reserve estimates; significant differences between the Companys projected and actual production levels for natural gas or oil; significant changes in market dynamics or competitive ctors affecting the Companys ability to retain existing customers or obtain new customers; changes in demographic patterns and weather conditions; changes in the availability and/or price of natural gas or oil and the effect of such changes on the accounting treatment of derivative financial instruments; impairments under the SECs full cost ceiling test for natural gas and oil reserves; changes in the availability and/or cost of derivative financial instruments; changes in the price differential between similar quantities of natural gas at different geographic locations， and the effect of such changes on the demand for pipeline transportation capacity to or from such locations; other changes in price differentials between similar quantities of oil or natural gas having different quality， heating value or geographic location; changes in the projected profitability of pending or potential projects， investments or transactions; significant differences between the Companys projected and actual capital expenditures and operating expenses; delays or changes in costs or plans with respect to Company projects or related projects of other companies， including difficulties or delays in obtaining necessary governmental approvals， permits or orders or in obtaining the cooperation of interconnecting cility operators; governmental/regulatory actions， initiatives and proceedings， including those involving derivatives， acquisitions， financings， rate cases (which address， among other things， allowed rates of return， rate design and retained natural gas)， affiliate relationships， industry structure， franchise renewal， and environmental/safety requirements; unanticipated impacts of restructuring initiatives in the natural gas and electric industries; ability to successfully identify and finance acquisitions or other investments and ability to operate and integrate existing and any subsequently acquired business or properties; changes in actuarial assumptions， the interest rate environment and the return on plan/trust assets related to the Companys pension and other post-retirement benefits， which can affect future funding obligations and costs and plan liabilities; significant changes in tax rates or policies or in rates of inflation or interest; significant changes in the Companys relationship with its employees or contractors and the potential adverse effects if labor disputes， grievances or shortages were to occur; changes in accounting principles or the application of such principles to the Company; the cost and effects of legal and administrative claims against the Company or activist shareholder campaigns to effect changes at the Company; increasing health care costs and the resulting effect on health insurance premiums and on the obligation to provide other post-retirement benefits;or increasing costs of insurance， changes in coverage and the ability to obtain insurance. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof. NATIONAL FUEL GAS COMPANY RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS QUARTER ENDED DECEMBER 31， 2010 Exploration & Pipeline & Energy Corporate / (Thousands of Dollars) Production Storage Utility Marketing All Other Consolidated First quarter 2010 GAAP earnings $ 29，779 $ 10，354 $ 23，013 $ 1，092 $ 261 $ 64，499 Items impacting comparability: Income from discontinued operations (274 ) (274 ) First quarter 2010 operating results 29，779 10，354 23，013 1，092 (13 ) 64，225 Drivers of operating results Higher (lower) crude oil prices 858 858 Higher (lower) natural gas prices (7，460 ) (7，460 ) Higher (lower) natural gas production 18，601 18，601 Higher (lower) crude oil production (3，460 ) (3，460 ) Lower (higher) lease operating expenses (3，318 ) (3，318 ) Lower (higher) depreciation / depletion (6，341 ) (209 ) 1，105 (5，445 ) Higher (lower) processing plant revenues 546 546 Higher (lower) transportation revenues (954 ) (954 ) Higher (lower) gathering and processing revenues 1，238 1，238 Lower (higher) operating expenses (1，664 ) (969 ) (212 ) (146 ) (405 ) (3，396 ) Lower (higher) property， franchise and other taxes (311 ) (153 ) (464 ) Higher (lower) usage 482 482 Colder weather in Pennsylvania 467 467 Higher (lower) income from unconsolidated subsidiaries (975 ) (975 ) Higher (lower) margins (2，900 ) (2，900 ) Higher (lower) interest income (178 ) (1，017 ) (1，195 ) (Higher) lower interest expense 1，104 1，102 2，206 Lower (higher) income tax expense / effective tax rate (834 ) (834 ) All other / rounding (127 ) 147 (220 ) (14 ) 535 321 First quarter 2011 GAAP earnings $ 27，373 $ 8，578 $ 22，990 $ 932 $ (1，330 ) $ 58，543 ——————————————————————————- NATIONAL FUEL GAS COMPANY RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE QUARTER ENDED DECEMBER 31， 2010 Exploration & Pipeline & Energy Corporate / Production Storage Utility Marketing All Other Consolidated First quarter 2010 GAAP earnings $ 0.36 $ 0.13 $ 0.28 $ 0.01 $ – $ 0.78 Items impacting comparability: Income from discontinued operations – – First quarter 2010 operating results 0.36 0.13 0.28 0.01 – 0.78 Drivers of operating results Higher (lower) crude oil prices 0.01 0.01 Higher (lower) natural gas prices (0.09eastern niagAmerican Chronicle ) (0.09 ) Higher (lower) natural gas production 0.22 0.22 Higher (lower) crude oil production (0.04 ) (0.04 ) Lower (higher) lease operating expenses (0.04 ) (0.04 ) Lower (higher) depreciation / depletion (0.08 ) – 0.01 (0.07 ) Higher (lower) processing plant revenues 0.01 0.01 Higher (lower) transportation revenues (0.01 ) (0.01 ) Higher (lower) gathering and processing revenues 0.01 0.01 Lower (higher) operating expenses (0.02 ) (0.01 ) – – – (0.03 ) Lower (higher) property， franchise and other taxes – – – Higher (lower) usage – – Colder weather in Pennsylvania – – Higher (lower) income from unconsolidated subsidiaries (0.01 ) (0.01 ) Higher (lower) margins (0.03 ) (0.03 ) Higher (lower) interest income (0.01 ) (0.01 ) (Higher) lower interest expense 0.01 0.01 0.02 Lower (higher) income tax expense / effective tax rate (0.01 ) (0.01 ) All other / rounding – (0.01 ) – – (0.01 ) First quarter 2011 GAAP earnings $ 0.33 $ 0.10 $ 0.28 $ 0.01 $ (0.02 ) $ 0.70 ——————————————————————————- NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES (Thousands of Dollars， except per share amounts) Three Months Ended December 31， (Unaudited) SUMMARY OF OPERATIONS 2010 2009 Operating Revenues $ 450，948 $ 454，135 Operating Expenses: Purchased Gas 163，038 171，290 Operation and Maintenance 97，450 93，770 Property， Franchise and Other Taxes 19，736 18，650 Depreciation， Depletion and Amortization 53，313 44，788 333，537 328，498 Operating Income 117，411 125，637 Other Income (Expense): Income (Loss) from Unconsolidated Subsidiaries (1，100 ) 401 Interest Income 884 1，154 Other Income 993 356 Interest Expense on Long-Term Debt (20，192 ) (22，063 ) Other Interest Expense (1，401 ) (1，377 ) Income from Continuing Operations Before Income Taxes 96，595 104，108 Income Tax Expense 38，052 39，883 Income from Continuing Operations 58，543 64，225 Income from Discontinued Operations， Net of Tax – 274 Net Income Available for Common Stock $ 58，543 $ 64，499 Earnings Per Common Share: Basic: Income from Continuing Operations $ 0.71 $ 0.80 Income from Discontinued Operations – – Net Income Available for Common Stock $ 0.71 $ 0.80 Diluted: Income from Continuing Operations $ 0.70 $ 0.78 Income from Discontinued Operations – – Net Income Available for Common Stock $ 0.70 $ 0.78 Weighted Average Common Shares: Used in Basic Calculation 82，223，428 80，612，303 Used in Diluted Calculation 83，420，351 82，172，649 ——————————————————————————- NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) December 31， September 30， (Thousands of Dollars) 2010 2010 ASSETS Property， Plant and Equipment $ 5，837，365 $ 5，637，498 Less – Accumulated Depreciation， Depletion and Amortization 2，236，152 2，187，269 Net Property， Plant and Equipment 3，601，213 3，450，229 Current Assets: Cash and Temporary Cash Investments 79，622 395，171 Cash Held in Escrow – 2，000 Hedging Collateral Deposits 31，446 11，134 Receivables – Net 147，829 132，136 Unbilled Utility Revenue 59，211 20，920 Gas Stored Underground 47，839 48，584 Materials and Supplies – at average cost 31，560 24，987 Other Current Assets 107，201 115，969 Deferred Income Taxes 20，901 24，476 Total Current Assets 525，609 775，377 Other Assets: Recoverable Future Taxes 150，865 149，712 Unamortized Debt Expense 12，036 12，550 Other Regulatory Assets 534，146 542，801 Deferred Charges 10，219 9，646 Other Investments 80，701 77，839 Investments in Unconsolidated Subsidiaries 13，728 14，828 Goodwill 5，476 5，476 Fair Value of Derivative Financial Instruments 46，152 65，184 Other 1，836 1，983 Total Other Assets 855，159 880，019 Total Assets $ 4，981，981 $ 5，105，625 CAPITALIZATION AND LIABILITIES Capitalization: Comprehensive Shareholders Equity Common Stock， $1 Par Value Authorized – 200，000，000 Shares; Issued and Outstanding – 82，338，454 Shares and 82，075，470 Shares， Respectively $ 82，338 $ 82，075 Paid in Capital 643，856 645，619 Earnings Reinvested in the Business 1，093，398 1，063，262 Total Common Shareholders Equity Before Items of Other Comprehensive Loss 1，819，592 1，790，956 Accumulated Other Comprehensive Loss (64，650 ) (44，985 ) Total Comprehensive Shareholders Equity 1，754，942 1，745，971 Long-Term Debt， Net of Current Portion 899，000 1，049，000 Total Capitalization 2，653，942 2，794，971 Current and Accrued Liabilities: Notes Payable to Banks and Commercial Paper 20，500 – Current Portion of Long-Term Debt 150，000 200，000 Accounts Payable 181，564 145，223 Amounts Payable to Customers 23，914 38，109 Dividends Payable 28，407 28，316 Interest Payable on Long-Term Debt 15，953 30，512 Customer Advances 27，633 27，638 Customer Security Deposits 18，508 18，320 Other Accruals and Current Liabilities 30，838 16，046 Fair Value of Derivative Financial Instruments 34，500 20，160 Total Current and Accrued Liabilities 531，817 524，324 Deferred Credits: Deferred Income Taxes 821，001 800，758 Taxes Refundable to Customers 69，589 69，585 Unamortized Investment Tax Credit 3，112 3，288 Cost of Removal Regulatory Liability 125，862 124，032 Other Regulatory Liabilities 88，263 89，334 Pension and Other Post-Retirement Liabilities 433，010 446，082 Asset Retirement Obligations 100，580 101，618 Other Deferred Credits 154，805 151，633 Total Deferred Credits 1，796，222 1，786，330 Commitments and Contingencies – – Total Capitalization and Liabilities $ 4，981，981 $ 5，105，625 ——————————————————————————- NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended December 31， (Thousands of Dollars) 2010 2009 Operating Activities: Net Income Available for Common Stock $ 58，543 $ 64，499 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation， Depletion and Amortization 53，313 44，955 Deferred Income Taxes 36，600 21，092 (Income) Loss from Unconsolidated Subsidiaries， Net of Cash Distributions 1，100 1，599 Excess Tax Benefits Associated with Stock-Based Compensation Awards – (13，437 ) Other 2，443 7，958 Change in: Hedging Collateral Deposits (20，312 ) (244 ) Receivables and Unbilled Utility Revenue (53，984 ) (67，882 ) Gas Stored Underground and Materials and Supplies (5，828 ) 2，839 Prepayments and Other Current Assets 8，768 17，859 Accounts Payable 29，246 11，408 Amounts Payable to Customers (14，195 ) (11，310 ) Customer Advances (5 ) 6，098 Customer Security Deposits 188 2，135 Other Accruals and Current Liabilities 1，387 (13，536 ) Other Assets (10，463 ) 16，967 Other Liabilities 670 (22，667 ) Net Cash Provided by Operating Activities $ 87，471 $ 68，333 Investing Activities: Capital Expenditures ($192，052 ) ($62，205 ) Investment in Subsidiary， Net of Cash Acquired (1，750 ) – Cash Held in Escrow 2，000 – Other (298 ) (247 ) Net Cash Used in Investing Activities ($192，100 ) ($62，452 ) Financing Activities: Changes in Notes Payable to Banks and Commercial Paper $ 20，500 $ – Excess Tax Benefits Associated with Stock-Based Compensation Awards – 13，437 Reduction of Long-Term Debt (200，000 ) – Dividends Paid on Common Stock (28，316 ) (26，967 ) Proceeds From Issuance (Repurchase) of Common Stock (3，104 ) 3，997 Net Cash Used in Financing Activities ($210，920 ) ($9，533 ) Net Decrease in Cash and Temporary Cash Investments (315，549 ) (3，652 ) Cash and Temporary Cash Investments at Beginning of Period 395，171 408，053 Cash and Temporary Cash Investments at December 31 $ 79，622 $ 404，401 ——————————————————————————- NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES SEGMENT OPERATING RESULTS AND STATISTICS (UNAUDITED) Three Months Ended (Thousands of Dollars， except per share amounts) December 31， EXPLORATION AND PRODUCTION SEGMENT 2010 2009 Variance Total Operating Revenues $ 120，168 $ 106，351 $ 13，817 Operating Expenses: Operation and Maintenance: General and Administrative Expense 11，190 8，489 2，701 Lease Operating Expense 17，349 12，244 5，105 All Other Operation and Maintenance Expense 2，043 2，184 (141 ) Property， Franchise and Other Taxes 2，830 2，352 478 Depreciation， Depletion and Amortization 33，667 23，911 9，756 67，079 49，180 17，899 Operating Income 53，089 57，171 (4，082 ) Other Income (Expense): Interest Income 49 153 (104 ) Other Interest Expense (6，101 ) (7，868 ) 1，767 Income Before Income Taxes 47，037 49，456 (2，419 ) Income Tax Expense 19，664 19，677 (13 ) Net Income $ 27，373 $ 29，779 $ (2，406 ) Net Income Per Share (Diluted) $ 0.33 $ 0.36 $ (0.03 ) Three Months Ended December 31， PIPELINE AND STORAGE SEGMENT 2010 2009 Variance Revenues from External Customers $ 33，513 $ 34，504 $ (991 ) Intersegment Revenues 19，882 20，257 (375 ) Total Operating Revenues 53，395 54，761 (1，366 ) Operating Expenses: Purchased Gas (33 ) (63 ) 30 Operation and Maintenance 18，522 17，032 1，490 Property， Franchise and Other Taxes 5，211 5，109 102 Depreciation， Depletion and Amortization 8，987 8，839 148 32，687 30，917 1，770 Operating Income 20，708 23，844 (3，136 ) Other Income (Expense): Interest Income 75 31 44 Other Income 266 98 168 Other Interest Expense (6，576 ) (6，596 ) 20 Income Before Income Taxes 14，473 17，377 (2，904 ) Income Tax Expense 5，895 7，023 (1，128 ) Net Income $ 8，578 $ 10，354 $ (1，776 ) Net Income Per Share (Diluted) $ 0.10 $ 0.13 $ (0.03 ) ——————————————————————————- NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES SEGMENT OPERATING RESULTS AND STATISTICS (UNAUDITED) Three Months Ended (Thousands of Dollars， except per share amounts) December 31， UTILITY SEGMENT 2010 2009 Variance Revenues from External Customers $ 242，842 $ 232，404 $ 10，438 Intersegment Revenues 4，570 4，514 56 Total Operating Revenues 247，412 236，918 10，494 Operating Expenses: Purchased Gas 136，774 127，391 9，383 Operation and Maintenance 45，217 44，987 230 Property， Franchise and Other Taxes 10，941 10，735 206 Depreciation， Depletion and Amortization 10，241 9，919 322 203，173 193，032 10，141 Operating Income 44，239 43，886 353 Other Income (Expense): Interest Income 444 718 (274 ) Other Income 317 270 47 Other Interest Expense (8，736 ) (8，724 ) (12 ) Income Before Income Taxes 36，264 36，150 114 Income Tax Expense 13，274 13，137 137 Net Income $ 22，990 $ 23，013 $ (23 ) Net Income Per Share (Diluted) $ 0.28 $ 0.28 $ – Three Months Ended December 31， ENERGY MARKETING SEGMENT 2010 2009 Variance Operating Revenues $ 53，652 $ 71，736 $ (18，084 ) Operating Expenses: Purchased Gas 50，559 68，603 (18，044 ) Operation and Maintenance 1，558 1，334 224 Property， Franchise and Other Taxes 7 9 (2 ) Depreciation， Depletion and Amortization 9 11 (2 ) 52，133 69，957 (17，824 ) Operating Income 1，519 1，779 (260 ) Other Income (Expense): Interest Income 9 6 3 Other Income 8 16 (8 ) Other Interest Expense (6 ) (6 ) – Income Before Income Taxes 1，530 1，795 (265 )A service of YellowBrix， Inc.