þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
New Jersey | 13-1086010 | |
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification No.) |
|
6 363 Main Street | ||
Williamsville, New York | 14221 | |
(Address of principal executive offices) | (Zip Code) |
Large Accelerated Filer þ | Accelerated Filer o | Non-Accelerated Filer o | Smaller Reporting Company o | |||
(Do not check if a smaller reporting company) |
National Fuel Gas Companies | ||
Company
|
The Registrant, the Registrant and its subsidiaries or the Registrants subsidiaries as appropriate in the context of the disclosure | |
Distribution Corporation
|
National Fuel Gas Distribution Corporation | |
Empire
|
Empire Pipeline, Inc. | |
ESNE
|
Energy Systems North East, LLC | |
Highland
|
Highland Forest Resources, Inc. | |
Horizon
|
Horizon Energy Development, Inc. | |
Horizon LFG
|
Horizon LFG, Inc. | |
Horizon Power
|
Horizon Power, Inc. | |
Midstream Corporation
|
National Fuel Gas Midstream Corporation | |
Model City
|
Model City Energy, LLC | |
National Fuel
|
National Fuel Gas Company | |
NFR
|
National Fuel Resources, Inc. | |
Registrant
|
National Fuel Gas Company | |
Seneca
|
Seneca Resources Corporation | |
Seneca Energy
|
Seneca Energy II, LLC | |
Supply Corporation
|
National Fuel Gas Supply Corporation | |
|
||
Regulatory Agencies
|
||
EPA
|
United States Environmental Protection Agency | |
FASB
|
Financial Accounting Standards Board | |
FERC
|
Federal Energy Regulatory Commission | |
NYDEC
|
New York State Department of Environmental Conservation | |
NYPSC
|
State of New York Public Service Commission | |
PaPUC
|
Pennsylvania Public Utility Commission | |
SEC
|
Securities and Exchange Commission | |
|
||
Other
|
||
2009 Form 10-K
|
The Companys Annual Report on Form 10-K for the year ended September 30, 2009 | |
Bbl
|
Barrel (of oil) | |
Bcf
|
Billion cubic feet (of natural gas) | |
Board foot
|
A measure of lumber and/or timber equal to 12 inches in length by 12 inches in width by one inch in thickness. | |
Btu
|
British thermal unit; the amount of heat needed to raise the temperature of one pound of water one degree Fahrenheit. | |
Capital expenditure
|
Represents additions to property, plant, and equipment, or the amount of money a company spends to buy capital assets or upgrade its existing capital assets. | |
Degree day
|
A measure of the coldness of the weather experienced, based on the extent to which the daily average temperature falls below a reference temperature, usually 65 degrees Fahrenheit. | |
Derivative
|
A financial instrument or other contract, the terms of which include an underlying variable (a price, interest rate, index rate, exchange rate, or other variable) and a notional amount (number of units, barrels, cubic feet, etc.). The terms also permit for the instrument or contract to be settled net and no initial net investment is required to enter into the financial instrument or contract. Examples include futures contracts, options, no cost collars and swaps. | |
Development costs
|
Costs incurred to obtain access to proved reserves and to provide facilities for extracting, treating, gathering and storing the oil and gas. | |
Dth
|
Decatherm; one Dth of natural gas has a heating value of 1,000,000 British thermal units, approximately equal to the heating value of 1 Mcf of natural gas. | |
Exchange Act
|
Securities Exchange Act of 1934, as amended |
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GLOSSARY OF TERMS (Cont.) | ||
|
||
Expenditures for long-lived assets
|
Includes capital expenditures, stock acquisitions and/or investments in partnerships. | |
Exploration costs
|
Costs incurred in identifying areas that may warrant examination, as well as costs incurred in examining specific areas, including drilling exploratory wells. | |
Firm transportation and/or storage
|
The transportation and/or storage service that a supplier of such service is obligated by contract to provide and for which the customer is obligated to pay whether or not the service is utilized. | |
GAAP
|
Accounting principles generally accepted in the United States of America | |
Goodwill
|
An intangible asset representing the difference between the fair value of a company and the price at which a company is purchased. | |
Hedging
|
A method of minimizing the impact of price, interest rate, and/or foreign currency exchange rate changes, often times through the use of derivative financial instruments. | |
Hub
|
Location where pipelines intersect enabling the trading, transportation, storage, exchange, lending and borrowing of natural gas. | |
Interruptible transportation and/or storage
|
The transportation and/or storage service that, in accordance with contractual arrangements, can be interrupted by the supplier of such service, and for which the customer does not pay unless utilized. | |
LIBOR
|
London Interbank Offered Rate | |
LIFO
|
Last-in, first-out | |
Mbbl
|
Thousand barrels (of oil) | |
Mcf
|
Thousand cubic feet (of natural gas) | |
MD&A
|
Managements Discussion and Analysis of Financial Condition and Results of Operations | |
MDth
|
Thousand decatherms (of natural gas) | |
MMBtu
|
Million British thermal units | |
MMcf
|
Million cubic feet (of natural gas) | |
NGA
|
The Natural Gas Act of 1938, as amended; the federal law regulating interstate natural gas pipeline and storage companies, among other things, codified beginning at 15 U.S.C. Section 717. | |
NYMEX
|
New York Mercantile Exchange. An exchange which maintains a futures market for crude oil and natural gas. | |
Open Season
|
A bidding procedure used by pipelines to allocate firm transportation or storage capacity among prospective shippers, in which all bids submitted during a defined time period are evaluated as if they had been submitted simultaneously. | |
Precedent Agreement
|
An agreement between a pipeline company and a potential customer to sign a service agreement after specified events (called conditions precedent) happen, usually within a specified time. | |
Proved developed reserves
|
Reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. | |
Proved undeveloped reserves
|
Reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required to make these reserves productive. | |
Reserves
|
The unproduced but recoverable oil and/or gas in place in a formation which has been proven by production. | |
Restructuring
|
Generally referring to partial deregulation of the pipeline and/or utility industries by a statutory or regulatory process. Restructuring of federally regulated natural gas pipelines has resulted in the separation (or unbundling) of gas commodity service from transportation service for wholesale and large-volume retail markets. State restructuring programs attempt to extend the same process to retail mass markets. | |
S&P
|
Standard & Poors Ratings Service | |
SAR
|
Stock appreciation right | |
Stock acquisitions
|
Investments in corporations. |
-3-
GLOSSARY OF TERMS (Concl.) | ||
|
||
Unbundled service
|
A service that has been separated from other services, with rates charged that reflect only the cost of the separated service. | |
VEBA
|
Voluntary Employees Beneficiary Association | |
WNC
|
Weather normalization clause; a clause in utility rates which adjusts customer rates to allow a utility to recover its normal operating costs calculated at normal temperatures. If temperatures during the measured period are warmer than normal, customer rates are adjusted upward in order to recover projected operating costs. If temperatures during the measured period are colder than normal, customer rates are adjusted downward so that only the projected operating costs will be recovered. |
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Consolidated Statements of Income and Earnings
Reinvested in the Business
(Unaudited)
Table of Contents
Consolidated Statements of Income and Earnings
Reinvested in the Business
(Unaudited)
Table of Contents
Consolidated Balance Sheets
(Unaudited)
June 30,
September 30,
(Thousands of Dollars)
2010
2009
$
5,518,060
$
5,184,844
2,164,383
2,051,482
3,353,677
3,133,362
458,847
408,053
2,000
2,000
8,222
848
143,684
144,466
12,957
18,884
27,245
55,862
32,753
24,520
42,639
68,474
32,893
53,863
761,240
776,970
138,435
138,435
13,116
14,815
518,225
530,913
6,447
2,737
76,354
78,503
14,037
14,940
5,476
5,476
20,188
21,536
41,897
44,817
269
6,625
834,444
858,797
$
4,949,361
$
4,769,129
Table of Contents
Consolidated Balance Sheets
(
Unaudited)
June 30,
September 30,
(Thousands of Dollars)
2010
2009
$
81,965
$
80,500
644,751
602,839
1,053,176
948,293
1,779,892
1,631,632
(38,153
)
(42,396
)
1,741,739
1,589,236
1,049,000
1,249,000
2,790,739
2,838,236
200,000
106,087
90,723
51,014
105,778
28,278
26,967
17,203
32,031
1,029
24,555
18,618
17,430
65,244
18,875
2,776
2,148
490,249
318,507
735,558
663,876
67,057
67,046
3,463
3,989
123,357
105,546
86,106
120,229
420,361
415,888
92,601
91,373
139,870
144,439
1,668,373
1,612,386
$
4,949,361
$
4,769,129
Table of Contents
Consolidated Statement of Cash Flows
(Unaudited)
Table of Contents
Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended
June 30,
(Thousands of Dollars)
2010
2009
$
42,585
$
42,904
77
(42
)
(3,361
)
3,775
16,528
(24,446
)
(11,830
)
(24,853
)
1,414
(45,566
)
(1,271
)
1,429
6,794
(9,950
)
(4,858
)
(10,108
)
665
(18,629
)
749
(26,937
)
$
43,334
$
15,967
Nine Months Ended
June 30,
(Thousands of Dollars)
2010
2009
$
187,512
$
73,710
140
(1
)
(2,916
)
(9,202
)
39,308
127,357
(29,472
)
(93,260
)
7,060
24,894
(1,104
)
(3,475
)
16,041
51,576
(12,120
)
(37,478
)
2,817
10,623
4,243
14,271
$
191,755
$
87,981
Table of Contents
Table of Contents
Table of Contents
At June 30, 2010
At September 30, 2009
$
(63,802
)
$
(63,802
)
36
(104
)
24,406
18,491
1,207
3,019
$
(38,153
)
$
(42,396
)
Table of Contents
Table of Contents
Recurring Fair Value Measures
At fair value as of June 30, 2010
(Thousands of Dollars)
Level 1
Level 2
Level 3
Total
$
303,261
$
$
$
303,261
576
576
58
79
137
41,184
41,184
15,805
15,805
5,762
5,762
201
201
8,222
8,222
$
333,827
$
41,242
$
79
$
375,148
$
2,521
$
$
$
2,521
225
225
30
30
$
2,521
$
30
$
225
$
2,776
$
331,306
$
41,212
$
(146
)
$
372,372
(1)
The Companys requirement to post hedging collateral deposits is based on the
fair value determined by the Companys counterparties, which may differ from the Companys
assessment of fair value. Hedging collateral deposits may also include closed derivative positions
in which the broker has not cleared the cash from the account to offset the derivative liability.
The Company records liabilities related to closed derivative positions in Other Accruals and
Current Liabilities on the Consolidated Balance Sheet. These liabilities are relieved when the
broker clears the cash from the hedging collateral deposit account.
Table of Contents
Recurring Fair Value Measures
At fair value as of September 30, 2009
(Thousands of Dollars)
Level 1
Level 2
Level 3
Total
$
390,462
$
$
$
390,462
5,312
12,536
26,969
44,817
24,276
24,276
848
848
$
420,898
$
12,536
$
26,969
$
460,403
$
$
2,148
$
$
2,148
$
$
2,148
$
$
2,148
$
420,898
$
10,388
$
26,969
$
458,255
Table of Contents
Total Gains/Losses-
Realized and Unrealized
Included in Other
March 31,
Included in
Comprehensive
Transfer In/Out of
June 30,
(Thousands of Dollars)
2010
Earnings
Income (Loss)
Level 3
2010
$
(14,100
)
$
(2,172
)
(1)
$
16,126
$
$
(146
)
(1)
Amounts are reported in Operating Revenues in the Consolidated Statement of
Income for the three months ended June 30, 2010.
(2)
Derivative Financial Instruments are shown on a net basis.
Total Gains/Losses-
Realized and Unrealized
Included in Other
Transfer
September 30,
Included in
Comprehensive
In/Out of
June 30,
(Thousands of Dollars)
2009
Earnings
Income (Loss)
Level 3
2010
$
26,969
$
(6,969
)
(1)
$
(20,146
)
$
$
(146
)
(1)
Amounts are reported in Operating Revenues in the Consolidated Statement of
Income for the nine months ended June 30, 2010.
(2)
Derivative Financial Instruments are shown on a net basis.
Total Gains/Losses-
Realized and Unrealized
Included in Other
March 31,
Included in
Comprehensive
Transfer In/Out of
(Thousands of Dollars)
2009
Earnings
Income (Loss)
Level 3
June 30, 2009
$
79,159
$
(13,662
)
(1)
$
(22,459
)
$
(8,492
)
$
34,546
(1)
Amounts are reported in Operating Revenues in the Consolidated Statement of
Income for the three months ended June 30, 2009.
(2)
Derivative Financial Instruments are shown on a net basis.
Total Gains/Losses
Realized and Unrealized
Included in Other
Transfer
September 30,
Included in
Comprehensive
In/Out of
(Thousands of Dollars)
2008
Earnings
Income (Loss)
Level 3
June 30, 2009
$
6,333
$
(49,443
)
(1)
$
86,148
$
(8,492
)
$
34,546
(1)
Amounts are reported in Operating Revenues in the Consolidated Statement of
Income for the nine months ended June 30, 2009.
(2)
Derivative Financial Instruments are shown on a net basis.
Table of Contents
June 30, 2010
September 30, 2009
Carrying
Carrying
Amount
Fair Value
Amount
Fair Value
$
1,249,000
$
1,372,413
$
1,249,000
$
1,347,368
Table of Contents
Derivatives
Designated as
Fair Values of Derivative Instruments
Hedging
(Thousands of Dollars)
Instruments
Gross Asset Derivatives
Gross Liability Derivatives
Fair Value
Fair Value
$
52,984
$
13,863
$
63,601
$
20,932
Commodity
Units
41.4 Bcf (all short positions)
2,803,000 Bbls (all short positions)
Commodity
Units
4.8 Bcf (4.5 Bcf short positions (forecasted storage
withdrawals) and 0.3 Bcf long positions (forecasted storage
injections))
Commodity
Units
1.5 Bcf (all short positions)
Table of Contents
Table of Contents
Three Months Ended June 30, 2010 and 2009 (Thousands of Dollars)
Location of
Amount of Derivative Gain or
Amount of Derivative Gain or
Derivative Gain or
(Loss) Reclassified from
Location of
(Loss) Recognized in Other
(Loss) Reclassified
Accumulated Other
Derivative Gain or
Comprehensive Income (Loss)
from Accumulated
Comprehensive Income (Loss)
(Loss) Recognized
Derivative Gain or (Loss)
on the Consolidated
Other Comprehensive
on the Consolidated Balance
in the Consolidated
Recognized in the
Statement of Comprehensive
Income (Loss) on
Sheet into the Consolidated
Statement of Income
Consolidated Statement of
Income (Loss)
the Consolidated
Statement of Income
(Ineffective
Income (Ineffective Portion
(Effective Portion)
Balance Sheet into
(Effective Portion)
Portion and Amount
and Amount Excluded from
Derivatives in Cash
for the Three
the Consolidated
for the Three
Excluded from
Effectiveness Testing) for
Flow Hedging
Months Ended
Statement of Income
Months Ended
Effectiveness
the Three Months Ended
Relationships
June 30,
(Effective Portion)
June 30,
Testing)
June 30,
2010
2009
2010
2009
2010
2009
$
16,445
$
(23,013
)
Operating Revenue
$
11,592
$
22,940
Operating Revenue
$
$
158
$
519
$
(1,433
)
Purchased Gas
$
238
$
1,913
Operating Revenue
$
$
$
(436
)
$
Operating Revenue
$
$
Operating Revenue
$
$
$
16,528
$
(24,446
)
$
11,830
$
24,853
$
$
158
Table of Contents
Nine Months Ended June 30, 2010 and 2009 (Thousands of Dollars)
Location of
Amount of Derivative Gain or
Amount of Derivative Gain or
Derivative Gain or
(Loss) Reclassified from
Location of
(Loss) Recognized in Other
(Loss) Reclassified
Accumulated Other
Derivative Gain or
Comprehensive Income (Loss)
from Accumulated
Comprehensive Income (Loss)
(Loss) Recognized
Derivative Gain or (Loss)
on the Consolidated
Other Comprehensive
on the Consolidated Balance
in the Consolidated
Recognized in the
Statement of Comprehensive
Income (Loss) on
Sheet into the Consolidated
Statement of Income
Consolidated Statement of
Income (Loss)
the Consolidated
Statement of Income
(Ineffective
Income (Ineffective Portion
(Effective Portion)
Balance Sheet into
(Effective Portion)
Portion and Amount
and Amount Excluded from
Derivatives in Cash
for the Nine
the Consolidated
for the Nine
Excluded from
Effectiveness Testing) for
Flow Hedging
Months Ended
Statement of Income
Months Ended
Effectiveness
the Nine Months Ended
Relationships
June 30,
(Effective Portion)
June 30,
Testing)
June 30,
2010
2009
2010
2009
2010
2009
$
32,910
$
117,764
Operating Revenue
$
29,170
$
71,324
Operating Revenue
$
$
424
$
5,821
$
9,410
Purchased Gas
$
(209
)
$
21,328
Operating Revenue
$
$
$
577
$
Operating Revenue
$
511
$
1,290
Operating Revenue
$
$
$
$
183
Purchased Gas
$
$
(682
)
Purchased Gas
$
$
$
39,308
$
127,357
$
29,472
$
93,260
$
$
424
(1)
There were no open hedging positions at June 30, 2010. As such there is no mention of these positions in the preceeding sections of this footnote.
Table of Contents
Consolidated
Statement of Income
Gain/(Loss) on Derivative
Gain/(Loss) on Commitment
$
(892,512
)
$
892,512
$
(502,195
)
$
502,195
Amount of Derivative Gain or
(Loss) Recognized in the
Location of Derivative Gain or
Consolidated Statement of Income
(Loss) Recognized in the
for the Nine Months Ended June
Derivatives in
Consolidated Statement of
30, 2010
Fair Value Hedging Relationships
Income
(In Thousands)
Operating Revenues
$
(893
)
Purchased Gas
$
(456
)
Purchased Gas
$
(46
)
$
(1,395
)
(1)
Represents hedging of fixed price sales commitments of natural gas.
(2)
Represents hedging of fixed price purchase commitments of natural gas.
(3)
Represents hedging of natural gas held in storage.
Table of Contents
Nine Months Ended
June 30,
2010
2009
Current Income Taxes
$
42,323
$
95,526
9,914
25,528
50,079
(67,051
)
13,734
(18,443
)
116,050
35,560
(523
)
(523
)
$
115,527
$
35,037
$
(523
)
$
(523
)
116,050
35,560
$
115,527
$
35,037
Table of Contents
Nine Months Ended
June 30,
2010
2009
$
303,039
$
108,747
$
106,064
$
38,061
15,371
4,605
(711
)
(1,790
)
(5,197
)
(5,839
)
$
115,527
$
35,037
At June 30, 2010
At September 30, 2009
$
781,581
$
733,581
177,124
178,440
55,716
54,977
1,014,421
966,998
(214,161
)
(212,299
)
(97,595
)
(144,686
)
(311,756
)
(356,985
)
$
702,665
$
610,013
$
(32,893
)
$
(53,863
)
735,558
663,876
$
702,665
$
610,013
Table of Contents
Table of Contents
Exploration
Corporate and
and
Total Reportable
Intersegment
Utility
Pipeline and Storage
Production
Energy Marketing
Segments
All Other
Eliminations
Total Consolidated
$
126,326
$
32,086
$
112,802
$
72,830
$
344,044
$
9,859
$
224
$
354,127
$
2,653
$
19,466
$
$
$
22,119
$
1,418
$
(23,537
)
$
$
5,969
$
7,234
$
27,883
$
1,411
$
42,497
$
186
$
(98
)
$
42,585
Exploration
Corporate and
and
Total Reportable
Intersegment
Utility
Pipeline and Storage
Production
Energy Marketing
Segments
All Other
Eliminations
Total Consolidated
$
707,323
$
107,560
$
328,312
$
303,103
$
1,446,298
$
35,568
$
652
$
1,482,518
$
13,315
$
60,289
$
$
$
73,604
$
1,418
$
(75,022
)
$
$
62,254
$
30,036
$
85,046
$
8,472
$
185,808
$
2,925
$
(1,221
)
$
187,512
Table of Contents
Exploration
Corporate and
and
Total Reportable
Intersegment
Utility
Pipeline and Storage
Production
Energy Marketing
Segments
All Other
Eliminations
Total Consolidated
$
158,310
$
30,791
$
97,619
$
71,894
$
358,614
$
8,269
$
228
$
367,111
$
2,940
$
20,033
$
$
$
22,973
$
374
$
(23,347
)
$
$
5,396
$
9,221
$
27,083
$
1,331
$
43,031
$
(1,086
)
$
959
$
42,904
Exploration
Corporate and
and
Total Reportable
Intersegment
Utility
Pipeline and Storage
Production
Energy Marketing
Segments
All Other
Eliminations
Total Consolidated
$
1,009,962
$
105,904
$
281,410
$
350,445
$
1,747,721
$
30,523
$
675
$
1,778,919
$
13,339
$
62,026
$
$
$
75,365
$
3,890
$
(79,255
)
$
$
60,303
$
41,582
$
(38,366
)
$
7,509
$
71,028
$
(46
)
$
2,728
$
73,710
At September 30,
At June 30, 2010
2009
Gross
Net
Net
Carrying
Accumulated
Carrying
Carrying
Amount
Amortization
Amount
Amount
Intangible Assets Subject to Amortization:
$
4,701
$
(2,926
)
$
1,775
$
2,071
31,864
(13,451
)
18,413
19,465
$
36,565
$
(16,377
)
$
20,188
$
21,536
$
449
$
497
$
1,348
$
1,547
Table of Contents
Retirement Plan
Other Post-Retirement Benefits
2010
2009
2010
2009
$
3,249
$
2,728
$
1,075
$
950
11,077
11,709
6,254
6,875
(14,585
)
(14,489
)
(6,583
)
(7,904
)
164
183
(427
)
(268
)
135
566
5,410
1,419
6,470
2,318
(920
)
2,255
(569
)
3,878
$
4,395
$
3,805
$
6,355
$
6,415
Retirement Plan
Other Post-Retirement Benefits
2010
2009
2010
2009
$
9,747
$
8,185
$
3,224
$
2,851
33,231
35,127
18,763
20,624
(43,756
)
(43,468
)
(19,751
)
(23,711
)
492
548
(1,282
)
(805
)
405
1,699
16,230
4,257
19,411
6,953
2,896
12,853
2,919
16,232
$
18,840
$
17,502
$
23,689
$
23,843
(1)
The Companys policy is to record retirement plan and other post-retirement
benefit costs in the Utility segment on a volumetric basis to reflect the fact that the
Utility segment experiences higher throughput of natural gas in the winter months and lower
throughput of natural gas in the summer months.
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Table of Contents
of items that are discussed in greater detail in subsequent sections of this report.]
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Table of Contents
Three Months Ended
Nine Months Ended
June 30,
June 30,
Increase
Increase
(Thousands)
2010
2009
(Decrease)
2010
2009
(Decrease)
$
5,969
$
5,396
$
573
$
62,254
$
60,303
$
1,951
7,234
9,221
(1,987
)
30,036
41,582
(11,546
)
27,883
27,083
800
85,046
(38,366
)
123,412
1,411
1,331
80
8,472
7,509
963
42,497
43,031
(534
)
185,808
71,028
114,780
186
(1,086
)
1,272
2,925
(46
)
2,971
(98
)
959
(1,057
)
(1,221
)
2,728
(3,949
)
$
42,585
$
42,904
$
(319
)
$
187,512
$
73,710
$
113,802
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Three Months Ended
Nine Months Ended
June 30,
June 30,
Increase
Increase
(Thousands)
2010
2009
(Decrease)
2010
2009
(Decrease)
$
88,158
$
119,746
$
(31,588
)
$
521,202
$
786,170
$
(264,968
)
10,721
15,627
(4,906
)
73,438
122,197
(48,759
)
696
808
(112
)
4,579
6,835
(2,256
)
99,575
136,181
(36,606
)
599,219
915,202
(315,983
)
20,909
22,012
(1,103
)
92,112
94,951
(2,839
)
5,486
5,486
20,491
3,740
16,751
3,009
3,057
(48
)
8,816
9,408
(592
)
$
128,979
$
161,250
$
(32,271
)
$
720,638
$
1,023,301
$
(302,663
)
Three Months Ended
Nine Months Ended
June 30,
June 30,
Increase
Increase
(MMcf)
2010
2009
(Decrease)
2010
2009
(Decrease)
7,055
8,468
(1,413
)
50,292
55,001
(4,709
)
920
1,221
(301
)
7,666
8,984
(1,318
)
66
55
11
512
499
13
8,041
9,744
(1,703
)
58,470
64,484
(6,014
)
10,530
10,747
(217
)
51,957
52,476
(519
)
1,124
1,124
4,034
513
3,521
19,695
20,491
(796
)
114,461
117,473
(3,012
)
Percent Colder
(Warmer) Than
Three Months Ended June 30
Normal
2010
2009
Normal
(1)
Prior Year
(1)
927
665
854
(28.3
)
(22.1
)
885
631
821
(28.7
)
(23.1
)
6,514
6,152
6,558
(5.6
)
(6.2
)
6,108
5,842
6,064
(4.4
)
(3.7
)
(1)
Percents compare actual 2010 degree days to normal degree days and actual 2010
degree days to actual 2009 degree days.
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Three Months Ended
Nine Months Ended
June 30,
June 30,
Increase
Increase
(Thousands)
2010
2009
(Decrease)
2010
2009
(Decrease)
$
32,205
$
32,894
$
(689
)
$
106,926
$
105,931
$
995
618
635
(17
)
1,458
2,862
(1,404
)
32,823
33,529
(706
)
108,384
108,793
(409
)
16,646
16,648
(2
)
50,032
50,101
(69
)
19
4
15
78
18
60
2,064
643
1,421
9,355
9,018
337
$
51,552
$
50,824
$
728
$
167,849
$
167,930
$
(81
)
Three Months Ended
Nine Months Ended
June 30,
June 30,
Increase
Increase
(MMcf)
2010
2009
(Decrease)
2010
2009
(Decrease)
52,448
60,798
(8,350
)
245,233
296,524
(51,291
)
1,016
501
515
3,575
3,375
200
53,464
61,299
(7,835
)
248,808
299,899
(51,091
)
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Three Months Ended
Nine Months Ended
June 30,
June 30,
Increase
Increase
(Thousands)
2010
2009
(Decrease)
2010
2009
(Decrease)
$
48,381
$
38,450
$
9,931
$
135,761
$
118,345
$
17,416
60,891
56,690
4,201
183,800
156,340
27,460
7,207
5,380
1,827
22,078
18,785
3,293
218
270
(52
)
380
717
(337
)
(3,895
)
(3,171
)
(724
)
(13,707
)
(12,777
)
(930
)
$
112,802
$
97,619
$
15,183
$
328,312
$
281,410
$
46,902
(1)
Represents the elimination of certain West Coast gas production included in
Gas (after Hedging) in the table above that was sold to the gas processing plant shown in the
table above. An elimination for the same dollar amount was made to reduce the gas processing
plants Purchased Gas expense.
Three Months Ended
Nine Months Ended
June 30,
June 30,
Increase
Increase
Production Volumes
2010
2009
(Decrease)
2010
2009
(Decrease)
2,745
3,307
(562
)
8,079
7,118
961
940
1,014
(74
)
2,866
3,063
(197
)
4,741
2,155
2,586
11,084
6,065
5,019
8,426
6,476
1,950
22,029
16,246
5,783
135
176
(41
)
389
470
(81
)
661
654
7
2,007
1,984
23
13
14
(1
)
34
41
(7
)
809
844
(35
)
2,430
2,495
(65
)
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Three Months Ended
Nine Months Ended
June 30,
June 30,
Increase
Increase
2010
2009
(Decrease)
2010
2009
(Decrease)
$
4.95
$
3.95
$
1.00
$
5.26
$
4.90
$
0.36
$
4.38
$
3.04
$
1.34
$
4.92
$
4.10
$
0.82
$
4.45
$
4.11
$
0.34
$
5.10
$
6.06
$
(0.96
)
$
4.61
$
3.86
$
0.75
$
5.13
$
5.18
$
(0.05
)
$
5.74
$
5.94
$
(0.20
)
$
6.16
$
7.28
$
(1.12
)
$
76.42
$
56.29
$
20.13
$
78.64
$
50.64
$
28.00
$
71.92
$
55.77
$
16.15
$
71.79
$
46.84
$
24.95
$
74.90
$
48.93
$
25.97
$
77.77
$
54.90
$
22.87
$
72.72
$
55.77
$
16.95
$
72.97
$
47.69
$
25.28
$
75.23
$
67.19
$
8.04
$
75.65
$
62.67
$
12.98
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Three Months Ended
Nine Months Ended
June 30,
June 30,
Increase
(Thousands)
2010
2009
Increase
2010
2009
(Decrease)
$
72,759
$
71,870
$
889
$
302,931
$
350,331
$
(47,400
)
71
24
47
172
114
58
$
72,830
$
71,894
$
936
$
303,103
$
350,445
$
(47,342
)
Three Months Ended
Nine Months Ended
June 30,
June 30,
2010
2009
Decrease
2010
2009
Increase
13,047
14,634
(1,587
)
51,144
50,459
685
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Nine Months Ended June 30,
Increase
(Millions)
2010
2009
(Decrease)
$
39.5
$
40.4
$
(0.9
)
22.2
37.2
(3)
(15.0
)
273.8
(1) (2)
151.7
(4)
122.1
6.5
(2)
3.9
2.6
(0.3
)
(5)
0.3
$
342.0
$
232.9
$
109.1
(1)
Amount includes $24.3 million of accrued capital expenditures at June 30, 2010,
the majority of which was in the Appalachian region. This amount has been excluded from the
Consolidated Statement of Cash Flows at June 30, 2010 since it represents a non-cash investing
activity at that date.
(2)
Capital expenditures for the Exploration and Production segment for the
nine months ended June 30, 2010 exclude $9.1 million of accrued capital expenditures, the majority
of which was in the Appalachian region. Capital expenditures for All Other for the nine months
ended June 30, 2010 exclude $0.7 million of accrued capital expenditures related to the
construction of the Midstream Covington Gathering System. Both of these amounts were accrued at
September 30, 2009 and paid during the nine months ended June 30, 2010. These amounts were
excluded from the Consolidated Statement of Cash Flows at September 30, 2009 since they represented
non-cash investing activities at that date. These amounts have been included in the Consolidated
Statement of Cash Flows at June 30, 2010.
(3)
Amount for the nine months ended June 30, 2009 excludes $16.8 million of
accrued capital expenditures related to the Empire Connector project accrued at September 30, 2008
and paid during the nine months ended June 30, 2009. This amount was excluded from the
Consolidated Statement of Cash Flows at September 30, 2008, since it represented a non-cash
investing activity at that date. The amount has been included in the Consolidated Statement of
Cash Flows at June 30, 2009.
(4)
Amount for the nine months ended June 30, 2009 includes $9.4 million
of accrued capital expenditures, the majority of which was in the Appalachian region. This amount
has been excluded from the Consolidated Statement of Cash Flows at June 30, 2009 since it
represents a non-cash investing activity at that date.
(5)
Represents $0.3 million of capital expenditures in the Pipeline and Storage
segment for the purchase of pipeline facilities from the Appalachian region of the Exploration and
Production segment during the quarter ended December 31, 2008.
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1.
Financial and economic conditions, including the availability of credit, and their effect on
the Companys ability to obtain financing on acceptable terms for working capital, capital
expenditures and other investments;
2.
Occurrences affecting the Companys ability to obtain financing under credit lines or other
credit facilities or through the issuance of commercial paper, other short-term notes or debt
or equity securities, including any downgrades in the Companys credit ratings and changes in
interest rates and other capital market conditions;
3.
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;
4.
The creditworthiness or performance of the Companys key suppliers, customers and
counterparties;
5.
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;
6.
Changes in demographic patterns and weather conditions;
7.
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 or the valuation of the
Companys natural gas and oil reserves;
8.
Impairments under the SECs full cost ceiling test for natural gas and oil reserves;
9.
Uncertainty of oil and gas reserve estimates;
10.
Factors 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, and the need to obtain governmental approvals and permits and comply
with environmental laws and regulations;
11.
Significant differences between the Companys projected and actual production levels for
natural gas or oil;
12.
Changes in the availability and/or price of derivative financial instruments;
13.
Changes in the price differentials between oil having different quality and/or different
geographic locations, or changes in the price differentials between natural gas having
different heating values and/or different geographic locations;
14.
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;
Table of Contents
15.
The nature and projected profitability of pending and potential projects and other
investments, and the ability to obtain necessary governmental approvals and permits;
16.
Significant differences between the Companys projected and actual capital expenditures and
operating expenses, and unanticipated project delays or changes in project costs or plans;
17.
Inability to obtain new customers or retain existing ones;
18.
Significant changes in competitive factors affecting the Company;
19.
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;
20.
Unanticipated impacts of restructuring initiatives in the natural gas and electric
industries;
21.
Ability to successfully identify and finance acquisitions or other investments and ability to
operate and integrate existing and any subsequently acquired business or properties;
22.
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;
23.
Significant changes in tax rates or policies or in rates of inflation or interest;
24.
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;
25.
Changes in accounting principles or the application of such principles to the Company;
26.
The cost and effects of legal and administrative claims against the Company or activist
shareholder campaigns to effect changes at the Company;
27.
Increasing health care costs and the resulting effect on health insurance premiums and on the
obligation to provide other post-retirement benefits; or
28.
Increasing costs of insurance, changes in coverage and the ability to obtain insurance.
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-58-
-59-
Total Number of
Maximum Number
Shares Purchased
of Shares that May
as Part of Publicly
Yet Be Purchased
Total Number of
Announced Share
Under Share
Shares
Average Price
Repurchase Plans
Repurchase Plans
Period
Purchased
(a)
Paid per Share
or Programs
or Programs
(b)
7,747
$
52.37
6,971,019
8,298
$
49.81
6,971,019
11,261
$
48.66
6,971,019
27,306
$
50.06
6,971,019
(a)
Represents (i) shares of common stock of the Company purchased on the open market
with Company matching contributions for the accounts of participants in the Companys 401(k)
plans, and (ii) shares of common stock of the Company tendered to the Company by holders of
stock options or shares of restricted stock for the payment of option exercise prices or
applicable withholding taxes. During the quarter ended June 30, 2010, the Company did not
purchase any shares of its common stock pursuant to its publicly announced share repurchase
program. Of the 27,306 shares purchased other than through a publicly announced share
repurchase program, 24,154 were purchased for the Companys 401(k) plans and 3,152 were
purchased as a result of shares tendered to the Company by holders of stock options or shares
of restricted stock.
(b)
In December 2005, the Companys Board of Directors authorized the repurchase of up
to eight million shares of the Companys common stock. The Company completed the repurchase
of the eight million shares during 2008. In September 2008, the Companys Board of Directors
authorized the repurchase of an additional eight million shares of the Companys common stock.
The Company, however, stopped repurchasing shares after September 17, 2008 in light of the
unsettled nature of the credit markets. However, such repurchases may be made in the future,
either in the open market or through private transactions.
Exhibit
Number
Description of Exhibit
Amendment to National Fuel Gas Company and Participating Subsidiaries
Executive Retirement Plan, dated June 1, 2010
Statements regarding Computation of Ratios:
Ratio of Earnings to Fixed Charges for the Twelve Months Ended June
30, 2010 and the Fiscal Years Ended September 30, 2006 through 2009.
Written statements of Chief Executive Officer pursuant to Rule
13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934.
Written statements of Principal Financial Officer pursuant to
Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934.
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
National Fuel Gas Company Consolidated Statements of Income for
the Twelve Months Ended June 30, 2010 and 2009.
Table of Contents
101
Interactive data files pursuant to Regulation S-T: (i) the
Consolidated Statements of Income and Earnings Reinvested in the Business for
the three and nine months ended June 30, 2010 and 2009, (ii) the Consolidated
Balance Sheets at June 30, 2010 and September 30, 2009, (iii) the Consolidated
Statement of Cash Flows for the nine months ended June 30, 2010 and 2009, (iv)
the Consolidated Statements of Comprehensive Income for the three and nine
months ended June 30, 2010 and 2009 and (v) the Notes to Condensed Consolidated
Financial Statements.
Table of Contents
-60-
NATIONAL FUEL GAS COMPANY
(Registrant)
/s/ D. P. Bauer
D. P. Bauer
Treasurer and Principal Financial Officer
/s/ K. M. Camiolo
K. M. Camiolo
Controller and Principal Accounting Officer
NATIONAL FUEL GAS COMPANY
|
||||
By: | /s/ D. F. Smith | |||
Name: | D. F. Smith | |||
Title: | President | |||
Date: | June 1, 2010 |
(1) | Investment Tax Credit is included in Other Income. | |
(2) | Rentals shown above represent the portion of all rentals (other than delay rentals) deemed representative of the interest factor. | |
(3) | Fiscal 2009 includes an impairment of an investment in a partnership of $1,804. |
/s/ D. F. Smith | ||||
D. F. Smith | ||||
Chairman of the Board and Chief Executive Officer | ||||
/s/ D. P. Bauer | ||||
D. P. Bauer | ||||
Treasurer and Principal Financial Officer | ||||
1. | The Companys Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 (the Report) fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934, as amended; and |
2. | Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ D. F. Smith | ||||
Chairman of the Board and Chief | ||||
Executive Officer | ||||
/s/ D. P. Bauer | ||||
Treasurer and Principal Financial Officer | ||||
Twelve Months Ended | ||||||||
June 30 | ||||||||
2010 | 2009 | |||||||
(Thousands of Dollars) | ||||||||
INCOME
|
||||||||
Operating Revenues
|
$ | 1,761,452 | $ | 2,176,776 | ||||
|
||||||||
|
||||||||
Operating Expenses
|
||||||||
Purchased Gas
|
666,229 | 1,093,988 | ||||||
Operation and Maintenance
|
401,895 | 417,785 | ||||||
Property, Franchise and Other Taxes
|
73,173 | 74,088 | ||||||
Depreciation, Depletion and Amortization
|
188,128 | 169,001 | ||||||
Impairment of Oil and Gas Producing Properties
|
| 182,811 | ||||||
|
||||||||
|
1,329,425 | 1,937,673 | ||||||
|
||||||||
Operating Income
|
432,027 | 239,103 | ||||||
|
||||||||
Other Income (Expense):
|
||||||||
Income from Unconsolidated Subsidiaries
|
2,343 | 4,157 | ||||||
Impairment of Investment in Partnership
|
| (1,804 | ) | |||||
Interest Income
|
3,467 | 6,817 | ||||||
Other Income
|
3,332 | 8,804 | ||||||
Interest Expense on Long-Term Debt
|
(87,301 | ) | (75,411 | ) | ||||
Other Interest Expense
|
(7,748 | ) | (4,674 | ) | ||||
|
||||||||
|
||||||||
Income Before Income Taxes
|
346,120 | 176,992 | ||||||
|
||||||||
Income Tax Expense
|
131,610 | 60,016 | ||||||
|
||||||||
|
||||||||
Net Income Available for Common Stock
|
$ | 214,510 | $ | 116,976 | ||||
|
||||||||
|
||||||||
Earnings Per Common Share:
|
||||||||
Basic:
|
||||||||
Net Income Available for Common Stock
|
$ | 2.65 | $ | 1.47 | ||||
|
||||||||
|
||||||||
Diluted:
|
||||||||
Net Income Available for Common Stock
|
$ | 2.61 | $ | 1.44 | ||||
|
||||||||
|
||||||||
Weighted Average Common Shares Outstanding:
|
||||||||
Used in Basic Calculation
|
80,941,793 | 79,805,689 | ||||||
|
||||||||
|
||||||||
Used in Diluted Calculation
|
82,335,561 | 80,994,294 | ||||||
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