National Fuel Gas (NYSE:NFG) reported a “solid start” to fiscal 2026, as management pointed to strong first-quarter performance across its integrated upstream and gathering business and steady contributions from its regulated utility operations. On the company’s first-quarter fiscal 2026 earnings call, executives also discussed pipeline expansion progress, ongoing natural gas price volatility, and the planned acquisition of CenterPoint’s Ohio local distribution company (LDC), which remains targeted to close in the fourth quarter of calendar 2026.
First-quarter results and operating conditions
President and CEO Dave Bauer said the company delivered adjusted earnings per share of $2.06, which he described as “right in line with our expectations.” Bauer opened the call by recognizing operations teams working through “incredibly challenging winter weather conditions,” noting minimal operational disruptions at Seneca Resources and no significant issues on the transmission and distribution systems.
Upstream and gathering: production growth, testing, and hedging
Justin Loweth, president of Seneca Resources and National Fuel Midstream, said the integrated upstream and gathering business produced 109 BCF in the quarter, up 12% from the first quarter of fiscal 2025. He said the combination of “significant production growth” and “lower capital spending” reflected the strength of the company’s Tioga Utica program and a focus on capital efficiency.
Seneca reaffirmed fiscal 2026 guidance for production of 440–455 BCF and capital spending of $560 million–$610 million, with capital expected to be “relatively steady throughout the year.” Loweth said second-quarter volumes are expected to be “slightly down” from the first quarter due in part to drilling timing and deferred activity during the storm, followed by higher volumes in the third quarter as large Tioga Utica pads come online.
Loweth outlined several development initiatives, including Gen 4 Lower Utica well design testing. He said a five-well Lower Utica pad with wider inter-well spacing and larger completion designs is expected to come online in the spring to evaluate productivity and cost impacts. He also said the company is piloting larger completions in the Upper Utica to assess whether performance improvements can be replicated, and it is enhancing facility designs to support higher initial rates “up to $40 million per day” on longer laterals while minimizing incremental capital.
On co-development, Loweth said the company is beginning flowback on its first “true co-development” Upper and Lower Utica pad, with more tests planned over the next 12 to 18 months. While the Lower Utica is the current operational plan due to slightly better economics, he said the testing program is designed to confirm the best approach over a broader set of results.
In the question-and-answer session, Loweth provided a rough estimate of incremental drilling and completion costs for Gen 4 designs, attributing the increase largely to pumping more sand and fluid and additional pump time. He put the incremental cost at approximately $150–$175 per foot.
Management also addressed natural gas market volatility and marketing strategy. Loweth said the company views price fluctuation as “the new normal” and expects it to persist, citing strong structural demand from LNG exports and power generation, alongside limited new storage and pipeline infrastructure. He described an expected pricing environment of $3–$5, with weather-driven deviations lasting weeks or months.
Guidance reaffirmed as price volatility remains a key variable
Treasurer and CFO Tim Silverstein reaffirmed the company’s full-year adjusted EPS guidance range of $7.60–$8.10 (midpoint $7.85). Silverstein said assumptions were unchanged, though he noted tailwinds that could benefit results, including improvements in integrated upstream and gathering cost structure and stronger basin pricing tied to cold weather.
Silverstein emphasized that natural gas prices are the largest variable in the outlook and cited sharp recent contract moves. He said the February contract settled at almost $7.50, a 140% increase from two weeks earlier, which he said was “a record move” in the 35-year history of a NYMEX natural gas contract. Despite the volatility, the company maintained its $3.75 price assumption for the remainder of the fiscal year and said it would continue to provide earnings sensitivities.
On hedging, Silverstein said the hedge book provides downside protection on 70% of remaining fiscal-year production while preserving upside exposure if higher prices persist. He said the company has about 80 BCF of collars in fiscal 2026 with an average weighted floor of $3.60 and a cap of $4.75, and that the collars plus unhedged volumes provide exposure to higher prices on more than 50% of expected remaining production. For fiscal 2027 and 2028, he said the company layered swaps at $4.00–$4.25 and collars with floors in the high $3 range and caps “well north of $5.00.”
Pipelines, utilities, and the Ohio LDC acquisition
Bauer said near-term pipeline expansion projects are progressing. The Tioga Pathway project is moving forward on schedule after the company received a notice to proceed from FERC, with tree clearing expected to begin in the coming weeks. Bauer also said the Shippingport Lateral has received all required permits and remains on track for a late calendar 2026 in-service date. Executives said they are seeing increasing interest in other expansion opportunities and expect to have more to discuss over the coming year.
On permitting reform, Bauer said potential federal changes would generally help projects get built sooner, adding that in Pennsylvania the issue is typically “a question of time as opposed to whether projects get built or not.” Executives also highlighted the role of additional “steel in the ground” in reducing price volatility, pointing to recent extreme pricing in the Northeast.
In the utility business, Bauer said the company’s Pennsylvania division filed a new rate case requesting an approximately $20 million increase. He said the filing addresses general cost inflation and would reset the modernization tracking mechanism. If approved, he said customer bills would rise by about 11%. Bauer said the company currently has the lowest rates in Pennsylvania and expects to remain the lowest-cost provider after the case. He also noted the New York utility is in year two of a three-year rate settlement running through the end of fiscal 2027 and said its delivery rates remain the lowest in the state.
Bauer also pointed to New York policy developments, including the state energy plan published in December that acknowledges challenges in meeting Climate Act targets and emphasizes continued investment in natural gas infrastructure. He added that New York has agreed to delay implementation of the All-Electric Buildings Act pending litigation, with the delay expected to last at least one year and potentially longer depending on the outcome.
On the planned Ohio LDC acquisition from CenterPoint, Bauer said the transaction remains on track to close in the fourth quarter of calendar 2026. Silverstein said the company completed a $350 million private placement of common stock in December, which he said satisfies the equity need for the acquisition. He also said the company expects to issue approximately $1.5 billion in long-term debt to fund the remaining closing proceeds and address refinancing needs, including a term loan and an October long-term debt maturity. Silverstein said timing depends in part on receiving audited financials for the acquired asset, which the company expects in the next month or so, followed by pro forma financial statements.
Silverstein also discussed the Ohio Commission’s final order in CenterPoint’s rate case, including a reduction in allowed ROE to 9.79% (a six-basis-point decrease), which he said would reduce near-term earnings by roughly $500,000 per year. He also said the Commission extended amortization periods on certain modernization tracker deferrals from 15 to 25 years, which he said modestly reduces near-term cash flows but could benefit longer-term earnings and cash flows through a larger rate base. Silverstein highlighted a new Ohio law that modernizes the natural gas rate-making process by shortening the rate case timeline to 360 days and shifting to a three-year fully projected test year with annual true-ups to authorized ROEs.
Looking ahead, management reiterated confidence in the company’s balance sheet and growth outlook, with Silverstein saying the company expects to approach 1.75x net debt to EBITDA exiting fiscal 2026, and Bauer and Loweth pointing to continued opportunities across upstream development, gathering buildout, and pipeline expansions.
About National Fuel Gas (NYSE:NFG)
National Fuel Gas Company (NYSE: NFG) is a diversified energy company engaged primarily in the production, gathering, transmission, distribution and marketing of natural gas. The company operates through four principal segments: Exploration & Production, Pipeline & Storage, Utilities, and Energy Marketing. Its integrated asset base spans upstream development in the Appalachian Basin, regional pipeline networks, underground storage facilities, and regulated utility distribution systems.
In its Exploration & Production segment, National Fuel Gas focuses on developing natural gas reserves in the Marcellus and Utica shales, leveraging modern drilling and completion techniques.
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