Thursday, integrated energy company National Fuel Gas Co. (NFG) reported a 23% decline in profit for the second quarter from the prior-year period, hut by lower average commodity prices realized in the exploration and production segment during the quarter. For fiscal year 2009, the company lowered its earnings outlook to reflect a ceiling test impairment charge recorded in the first quarter and a decrease in the natural gas pricing for the remainder of the fiscal year.
For the second quarter, the Williamsville, New York-based company's net income declined to $73.48 million, or $0.92 per share, from $95.00 million, or $1.11 per share, in the prior-year period.
The year-ago quarter's results include a gain on sale of turbine of $586 million, or $0.01 per share.
Excluding items, operating earnings for the quarter were $73.48 million, or $0.92 per share, down from $94.42 million, or $1.10 per share, in the same period last year. On average, six analysts polled by Thomson Reuters expected the company to report earnings of $0.90 per share. Analysts' estimates typically exclude special items.
Operating revenues for the period declined to $804.65 million from $885.85 million in the previous-year period. Analysts had a consensus revenue estimate for the quarter of $706.05 million.
David Smith, Chief Executive Officer and President of National Fuel Gas Co. said, "During our second quarter, the steady and predictable performance of our regulated businesses kept our Company on course despite the impact of the negative commodity price environment on our Exploration and Production segment. The consistent earnings from the Pipeline and Utility businesses support our commitment to a strong dividend to benefit our shareholders."
The company's operating income for the quarter declined to $138.64 million from $170.02 million in the year-ago quarter.
Segment wise, the company's Exploration and Production segment reported earnings for the quarter of $18.11 million, or $0.23 per share, down from $34.57 million, or $0.40 per share, in the prior -year quarter. The 47.6% drop in earnings was primarily due to lower crude oil and natural gas prices realized after hedging and lower natural gas production in the Gulf of Mexico. Operating revenues for the segment dropped to $87.08 million from $114.72 million in the year-ago period.
The Pipeline and Storage segment's earnings were $15.19 million, or $0.19 per share, essentially flat when compared to the year-ago period. Supply Corporation's earnings for the quarter decreased by $2.2 million primarily due to lower efficiency gas revenues, mainly the result of lower commodity prices. This was offset by an increase in Empire's earnings as a result of the Empire Connector that was placed in service in mid December 2008. Operating revenues for the segment increased to $61.00 million from $58.80 million in the same period last year.
Utility segment's earnings for the quarter were $32.82 million, or $0.41 per share, compared to earnings of $34.16 million, or $0.40 per share, in the year-ago period. Operating revenues declined to $507.86 million from $528.84 million a year ago.
National Fuel Resources Inc., which comprises the company's energy marketing segment, reported earnings for the quarter of $5.6 million, or $0.07 per share, that were flat with the year-ago period. Higher margins mainly due to increased volumes were offset by higher operating expenses and higher state income taxes. Operating revenues declined to $163.55 million from $191.26 million in the previous-year quarter.
The "Corporate and All Other" segment reported net income of $1.91 million, or $0.02 per share, down from $5.58 million, or $0.07 per share, a year ago. Total operating revenues declined to $13.12 million from $22.14 million in the year-ago quarter.
During the quarter, the company produced 5,151 million cubic feet, or mmcf, of gas, compared to 5,827 mmcf of gas produced in the year-ago quarter. Total oil production during the quarter rose to 826 thousands of barrels from 755 thousands of barrels oil in the year-ago quarter.
For the six-month period, the company's net income was $30.81 million, or $0.38 per share, down from $165.61 million, or $1.93 per share, in the prior-year period.
Operating revenues for the half month declined to $1.41 billion from $1.45 billion in the year-ago period.
For fiscal year 2009, the company lowered its forecast for GAAP earnings to a range of $0.95-$1.10 per share, from the prior range of $1.10-$1.30 per share.
Analysts expect the company to report earnings of $2.40 per share for the year.
The revised earnings guidance includes the ceiling test impairment charge recorded in the first quarter and a revised natural gas Nymex equivalent price of $3.50 per million British thermal units, or MMBtu, from the prior $5.50 per MMBtu, for unhedged production for the remainder of the fiscal year.
NFG closed Thursday's regular trading session at $32.71, down $0.38 or 1.15% on a volume of 0.46 million shares.
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