Integrated energy company National Fuel Gas Co. (NFG) on Thursday reported a 28.3% year-over-year drop in profit for the third quarter, hurt by a 33% lower average commodity prices realized in the exploration and production segment during the quarter. Earnings per share for the quarter declined, but topped analysts' expectations significantly. The company also boosted its earnings outlook for fiscal 2009, and provided initial earnings guidance for fiscal 2010, in line with current analysts' expectations.
In a statement, chief executive officer and president, David Smith said, "It's no surprise that the dramatic drop in commodity prices compared to a year ago had a considerable impact on the earnings of our Exploration and Production segment and Pipeline and Storage segment. But putting aside the effect of commodity price changes, the third quarter was another strong quarter for the Company. Production was up 12% over the prior year, and our regulated operations delivered another quarter of consistent results."
The Williamsville, New York-based company reported net income of $42.90 million or $0.53 per share for the third quarter, lower than $59.86 million or $0.72 per share in the prior-year quarter.
On average, eight analysts polled by Thomson Reuters expected the company to report earnings of $0.44 per share for the third quarter. Analysts' estimates typically exclude special items.
Operating revenues for the quarter declined to $367.11 million from $548.38 million in the same quarter last year, and significantly missed three Wall Street analysts' consensus estimate of $502.49 million.
Segment-wise, the company's exploration and production segment reported net income of $27.08 million or $0.33 per share for the quarter, down from $39.79 million or $0.48 per share in the prior-year quarter. Operating revenues for the segment dropped to $97.62 million from $126.15 million in the year-ago period.
The pipeline and storage segment's net income declined to $9.22 million or $0.11 per share from $12.53 million or $0.15 per share in the year-ago quarter. Operating revenues for the segment edged down to $50.82 million from $52.19 million in the same period last year.
Utility segment's net income for the quarter was $5.40 million or $0.07 per share, lower than $7.85 million or $0.09 per share in the same quarter last year. Operating revenues dropped to $161.25 million from $220.49 million a year ago.
Net income for the company's energy marketing segment rose to $1.33 million, or $0.02 per share from $0.48 million or breakeven per share in the prior-year quarter. Operating revenues plunged to $71.89 million from $162.13 million last year.
Operating income for the third quarter declined to $88.09 million from $110.95 million in the prior-year quarter, while total operating expenses was $279.03 million, down from $437.43 million in the year-ago quarter.
Capital expenditure for the quarter totaled $59.14 million, down from $139.88 million in the year-ago quarter. The company ended the third quarter with cash and cash equivalents of $433.23 million, compared to $259.20 million at end of the prior-year quarter.
During the third quarter, the company produced 6,476 million cubic feet, or mmcf, of gas, up from 5,819 mmcf of gas produced in the year-ago quarter. Total oil production during the quarter rose to 844 thousands of barrels from 745 thousands of barrels of oil in the prior-year quarter.
Last month, National Fuel boosted its quarterly dividend on its common stock by 3.1% 33.5 cents per share from 32.5 cents per share, for an annual rate of $1.34 per share, payable July 15, to shareholders of record at the close of business on June 30, 2009.
For the nine-month period, the company reported net income of $73.71 million or $0.92 per share, sharply down from $225.46 million or $2.65 per share in the prior-year period.
Excluding special items, net income for the period dropped to $180.69 million or $2.25 per share, from $224.88 million or $2.64 per share in the year-ago period.
Operating revenues for the year=-to-date period declined to $1.78 billion from $2.0 billion in the same period last year.
"As we prepare for our next heating season, we are injecting natural gas into storage at rates that are substantially below last year's prices. These lower prices should help our customers moderate their utility bills over the upcoming heating season." Smith added.
For fiscal 2009, National Fuel raised its GAAP earnings guidance to a range of $1.20 to $1.30 per share from the prior forecast in the range of $0.95 to $1.10 per share. Analysts currently expect the company to report earnings of $2.47 per share for the full year 2009.
Oil and gas production for the exploration and production segment is anticipated in the upper half of the previously announced range of 38 to 44 Bcfe for the full year 2009.
For fiscal 2010, the company provided initial GAAP earnings guidance in a range of $2.30 to $2.60 per share. The Street is anticipating earnings of $2.45 per share for the full year 2010.
NFG closed Thursday's regular trading session at $40.63, down $0.01 or 0.02% on a volume of 0.34 million shares, lower than the three-month average volume of 0.47 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.