Vertically integrated New York natural gas company National Fuel Gas Co. increased its forecast for 2023 earnings 27% to $7.50 per share at midpoint, projecting continued strength in commodity prices and a small increase in production.
National Fuel said Aug. 4 that it expects the NYMEX natural gas futures price to average $7.50/MMBtu from October to March 2023, the winter heating season, with an average of $5/MMBtu through the following summer, the injection season. These prices are roughly in line with current NYMEX futures prices, according to S&P Global Market Intelligence data.
Announcing its fiscal third-quarter earnings, National Fuel said it plans to increase capital spending roughly 10% in 2023, while increasing production volumes 11% to over 1 Bcfe/d. Its gas gathering unit will seeing the largest percentage increase as the company builds out its gathering system, to catch up with production growth from the company's Pennsylvania wells.
"We'll shift more of our overall activity to Tioga County" in Pennsylvania, President and CEO David Bauer said on an Aug. 5 earnings call. "We've had great success on the initial development of the acreage we acquired there, so it makes sense to overweight that area."
"While this change will not have a material impact on our level of upstream spending, it will drive a near-term increase in gathering-related capital, primarily in '23 and '24, to build out the necessary infrastructure to move this production to the interstate pipeline system," Bauer said.
The company's exploration and production subsidiary Seneca Resources Company LLC was the largest contributor to National Fuel's earnings. The subsidiary provided $56.5 million in net income to the parent on the strength of an increase in natural gas production to 981 MMcf/d. National Fuel said it realized $2.87/Mcf for this gas after hedging, a 30% increase over the previous year.
For the quarter ending June 30, National Fuel reported GAAP net income of $108.2 million, or $1.17 per share, compared to GAAP net income of $86.5 million, or 94 cents per share, in the prior year.