þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) |
New Jersey | 13-1086010 | |
(State or other jurisdiction
of
incorporation or organization) |
(I.R.S. Employer
Identification No.) |
|
6363 Main Street
Williamsville, New York (Address of principal executive offices) |
14221
(Zip Code) |
Name of
|
||
Each Exchange
|
||
on Which
|
||
Title of Each Class
|
Registered
|
|
Common Stock, $1 Par Value, and
Common Stock Purchase Rights |
New York Stock Exchange |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
National Fuel Gas Companies |
Regulatory Agencies |
Other |
1
2
Item 1 | Business |
3
| Horizon Energy Development, Inc. (Horizon), a New York corporation formed to engage in foreign and domestic energy projects through investments as a sole or substantial owner in various business entities. These entities include Horizons wholly owned subsidiary, Horizon Energy Holdings, Inc., a New York corporation, which owns 100% of Horizon Energy Development B.V. (Horizon B.V.). Horizon B.V. is a Dutch company that is in the process of winding up or selling certain power development projects in Europe; | |
| Horizon LFG, Inc. (Horizon LFG), a New York corporation engaged through subsidiaries in the purchase, sale and transportation of landfill gas in Ohio, Michigan, Kentucky, Missouri, Maryland and Indiana. Horizon LFG and one of its wholly owned subsidiaries own all of the partnership interests in Toro Partners, LP (Toro), a limited partnership which owns and operates short-distance landfill gas pipeline companies. The Company acquired Toro in June 2003; | |
| Leidy Hub, Inc. (Leidy Hub), a New York corporation formed to provide various natural gas hub services to customers in the eastern United States; | |
| Data-Track Account Services, Inc. (Data-Track), a New York corporation formed to provide collection services principally for the Companys subsidiaries; | |
| Horizon Power, Inc. (Horizon Power), a New York corporation which is an exempt wholesale generator under PUHCA 2005 and is developing or operating mid-range independent power production facilities and landfill gas electric generation facilities; | |
| Empire Pipeline, Inc., a New York corporation formed in 2005 to be the surviving corporation of a planned future merger with Empire, which is expected to occur after construction of the Empire Connector project (described below under the heading Rates and Regulation and under Item 7, MD&A under the headings Investing Cash Flow and Rate and Regulatory Matters); and | |
| National Fuel Gas Midstream Corporation, a Pennsylvania corporation formed to build, own and operate natural gas processing and pipeline gathering facilities in the Appalachian region. |
4
5
6
7
8
9
10
Current Company
|
||
Positions and
|
||
Other Material
|
||
Business Experience
|
||
Name and Age (as of
|
During Past
|
|
November 15, 2008)
|
Five Years | |
David F. Smith
(55) |
Chief Executive Officer of the Company since February 2008 and President of the Company since February 2006. Mr. Smith previously served as Chief Operating Officer of the Company from February 2006 through January 2008; President of Supply Corporation from April 2005 through June 2008; President of Empire from April 2005 through January 2008; Vice President of the Company from April 2005 through January 2006; President of Distribution Corporation from July 1999 to April 2005; and Senior Vice President of Supply Corporation from July 2000 to April 2005. | |
Ronald J. Tanski
(56) |
Treasurer and Principal Financial Officer of the Company since April 2004; President of Supply Corporation since July 2008. Mr. Tanski previously served as President of Distribution Corporation from February 2006 through June 2008; Treasurer of Distribution Corporation from April 2004 through September 2008; Controller of the Company from February 2003 through March 2004; Senior Vice President of Distribution Corporation from July 2001 through January 2006; and Controller of Distribution Corporation from February 1997 through March 2004. | |
Matthew D. Cabell
(50) |
President of Seneca since December 2006. Prior to joining Seneca, Mr. Cabell served as Executive Vice President and General Manager of Marubeni Oil & Gas (USA) Inc., an exploration and production company, from June 2003 to December 2006. From January 2002 to June 2003, Mr. Cabell served as a consultant assisting oil companies in upstream acquisition and divestment transactions as well as Gulf of Mexico entry strategy, first as an independent consultant and then as Vice President of Randall & Dewey, Inc., a major oil and gas transaction advisory firm. Mr. Cabells prior employers are not subsidiaries or affiliates of the Company. | |
Anna Marie Cellino
(55) |
President of Distribution Corporation since July 2008. Ms. Cellino previously served as Secretary of the Company from October 1995 through June 2008; Secretary of Distribution Corporation from September 1999 through September 2008; and Senior Vice President of Distribution Corporation from July 2001 through June 2008. | |
Karen M. Camiolo
(49) |
Controller and Principal Accounting Officer of the Company since April 2004; Controller of Distribution Corporation and Supply Corporation since April 2004; and Chief Auditor of the Company from July 1994 through March 2004. | |
Carl M. Carlotti
(53) |
Senior Vice President of Distribution Corporation since January 2008. Mr. Carlotti previously served as Vice President of Distribution Corporation from October 1998 to January 2008. | |
Paula M. Ciprich
(48) |
Secretary of the Company since July 2008; General Counsel of the Company since January 2005; Secretary of Distribution Corporation since July 2008. Ms. Ciprich previously served as General Counsel of Distribution Corporation from February 1997 through February 2007 and as Assistant Secretary of Distribution Corporation from February 1997 through June 2008. | |
Donna L. DeCarolis
(49) |
Vice President Business Development of the Company since October 2007. Ms. DeCarolis previously served as President of NFR from January 2005 to October 2007; Secretary of NFR from March 2002 to October 2007; and Vice President of NFR from May 2001 to January 2005. | |
John R. Pustulka
(56) |
Senior Vice President of Supply Corporation since July 2001. | |
James D. Ramsdell
(53) |
Senior Vice President of Distribution Corporation since July 2001. |
(1) | The executive officers serve at the pleasure of the Board of Directors. The information provided relates to the Company and its principal subsidiaries. Many of the executive officers also have served or currently serve as officers or directors of other subsidiaries of the Company. |
11
22
26
93
95
103
106
110
112
113
115
119
120
121
122
123
Item 1A
Risk
Factors
12
Table of Contents
13
Table of Contents
14
Table of Contents
15
Table of Contents
16
Table of Contents
17
Table of Contents
18
Table of Contents
Item 1B
Unresolved
Staff Comments
Item 2
Properties
19
Table of Contents
20
Table of Contents
For The Year Ended September 30
2008
2007
2006
$
10.03
$
6.58
$
8.01
$
107.27
$
63.04
$
64.10
$
9.49
$
6.87
$
5.89
$
98.56
$
64.09
$
47.46
$
1.63
$
1.08
$
0.86
38
40
36
$
8.71
$
6.54
$
7.93
$
98.17
$
56.86
$
56.80
$
8.22
$
6.82
$
7.19
$
77.64
$
47.43
$
37.69
$
2.01
$
1.54
$
1.35
51
50
53
$
9.73
$
7.48
$
9.53
$
97.40
$
62.26
$
65.28
$
8.85
$
8.25
$
8.90
$
97.40
$
62.26
$
65.28
$
0.77
$
0.69
$
0.69
22
17
15
$
9.70
$
6.82
$
8.42
$
99.64
$
58.43
$
58.47
$
9.05
$
7.25
$
7.02
$
81.75
$
51.68
$
40.26
$
1.64
$
1.23
$
1.09
111
108
104
21
Table of Contents
For The Year Ended September 30
2008
2007
2006
$
$
6.09
$
7.14
$
$
50.06
$
51.40
$
$
6.17
$
7.47
$
$
50.06
$
51.40
$
$
1.94
$
1.57
21
26
$
9.70
$
6.64
$
8.04
$
99.64
$
57.93
$
57.94
$
9.05
$
6.98
$
7.15
$
81.75
$
51.58
$
41.10
$
1.64
$
1.35
$
1.18
111
129
130
Gulf Coast
West Coast
Appalachian
Region
Region
Region
Total Company
Gas
Oil
Gas
Oil
Gas
Oil
Gas
Oil
25
42
1,437
2,641
6
2,666
1,485
14
14
1,426
2,570
5
2,584
1,445
Gulf
West
Coast
Coast
Appalachian
Total
Region
Region
Region
Company
113,934
11,360
531,743
657,037
80,852
10,945
501,411
593,208
142,118
458,894
601,012
102,831
438,040
540,871
Table of Contents
Productive
Dry
2008
2007
2006
2008
2007
2006
1.14
1.31
2.94
0.37
1.42
0.85
1.00
0.78
0.67
1.00
0.50
62.00
58.99
92.98
1.00
2.00
1.00
8.00
8.10
3.88
1.00
186.00
184.00
140.58
2.00
1.75
10.14
9.91
6.82
1.37
1.42
0.85
248.00
243.99
234.34
1.00
4.67
2.75
6.38
12.60
1.35
1.80
2.50
1.00
10.14
16.29
19.42
1.37
1.42
2.20
248.00
245.79
236.84
1.00
4.67
3.75
Gulf
West
Coast
Coast
Appalachian
Total
Region
Region
Region
Company
2.00
1.00
148.00
151.00
0.59
1.00
146.00
147.59
(1)
Includes wells awaiting completion.
Item 3
Legal
Proceedings
23
Table of Contents
Item 4
Submission
of Matters to a Vote of Security Holders
Item 5
Market
for the Registrants Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
Total Number
Maximum Number
of Shares
of Shares
Purchased as
that May
Part of
Yet Be
Publicly Announced
Purchased Under
Total Number
Average Price
Share Repurchase
Share Repurchase
of Shares
Paid per
Plans or
Plans or
Purchased(a)
Share
Programs
Programs(b)
6,404
$
54.02
1,332,725
544,982
$
46.72
537,165
795,560
1,832,488
$
45.08
1,824,541
6,971,019
2,383,874
$
45.48
2,361,706
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, (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, and (iii) shares of
common stock of the Company purchased on the open market
pursuant to the Companys publicly announced share
repurchase program. Shares purchased other than through a
publicly announced share repurchase program totaled 6,404 in
July 2008, 7,817 in August 2008 and 7,947 in September 2008 (a
three-month total of 22,168). All of those shares were purchased
for the Companys 401(k) plans.
(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 had, 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 if conditions improve.
Such repurchases would be made in the open market or through
private transactions.
24
Table of Contents
Item 6
Selected
Financial Data
Year Ended September 30
2008
2007
2006
2005
2004
(Thousands)
$
2,400,361
$
2,039,566
$
2,239,675
$
1,860,774
$
1,867,875
1,235,157
1,018,081
1,267,562
959,827
949,452
432,871
396,408
395,289
388,094
374,010
75,585
70,660
69,202
68,164
68,378
170,623
157,919
151,999
156,502
159,184
1,914,236
1,643,068
1,884,052
1,572,587
1,551,024
(1,252
)
486,125
396,498
355,623
288,187
315,599
6,303
4,979
3,583
3,362
805
(4,158
)
10,815
1,550
9,409
6,236
1,771
7,376
4,936
2,825
12,744
2,908
(70,099
)
(68,446
)
(72,629
)
(73,244
)
(82,989
)
(3,870
)
(6,029
)
(5,952
)
(9,069
)
(6,354
)
436,650
333,488
292,859
224,058
231,740
167,922
131,813
108,245
85,621
89,820
268,728
201,675
184,614
138,437
141,920
15,479
(46,523
)
25,277
24,666
120,301
25,774
135,780
(46,523
)
51,051
24,666
$
268,728
$
337,455
$
138,091
$
189,488
$
166,586
25
Table of Contents
Year Ended September 30
2008
2007
2006
2005
2004
(Thousands)
$
3.27
$
2.43
$
2.20
$
1.66
$
1.73
$
3.18
$
2.37
$
2.15
$
1.63
$
1.71
$
3.27
$
4.06
$
1.64
$
2.27
$
2.03
$
3.18
$
3.96
$
1.61
$
2.23
$
2.01
$
1.27
$
1.22
$
1.18
$
1.14
$
1.10
$
1.26
$
1.21
$
1.17
$
1.13
$
1.09
$
1.30
$
1.24
$
1.20
$
1.16
$
1.12
16,544
16,989
17,767
18,369
19,063
$
1,125,859
$
1,099,280
$
1,084,080
$
1,064,588
$
1,048,428
826,528
681,940
674,175
680,574
696,487
1,095,960
982,698
1,002,265
974,806
923,730
98
102
59
97
80
86,392
89,902
90,939
94,826
82,838
11,946
16,735
17,394
18,098
21,172
7,317
7,748
8,814
6,311
234,029
$
3,154,100
$
2,878,405
$
2,877,726
$
2,839,300
$
3,006,764
$
4,130,187
$
3,888,412
$
3,763,748
$
3,749,753
$
3,738,103
$
1,603,599
$
1,630,119
$
1,443,562
$
1,229,583
$
1,253,701
999,000
799,000
1,095,675
1,119,012
1,133,317
$
2,602,599
$
2,429,119
$
2,539,237
$
2,348,595
$
2,387,018
(1)
Includes discontinued operations.
(2)
Includes net plant of SECI discontinued operations as follows:
$0 for 2008 and 2007, $88,023 for 2006, $170,929 for 2005, and
$142,860 for 2004.
(3)
Includes net plant of the former international segment as
follows: $29 for 2008, $38 for 2007, $27 for 2006, $20 for 2005,
and $227,905 for 2004.
Table of Contents
Item 7
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
1.
The critical accounting estimates of the Company;
2.
Changes in revenues and earnings of the Company under the
heading, Results of Operations;
3.
Operating, investing and financing cash flows under the heading
Capital Resources and Liquidity;
4.
Off-Balance Sheet Arrangements;
5.
Contractual Obligations; and
6.
Other Matters, including: (a) 2008 and 2009 funding for the
Companys pension and other post-retirement benefits,
(b) realizability of deferred tax assets,
(c) disclosures and tables concerning market risk sensitive
instruments, (d) rate and regulatory matters in the
Companys New York, Pennsylvania and FERC regulated
jurisdictions, (e) environmental matters, and (f) new
accounting pronouncements.
27
Table of Contents
28
Table of Contents
29
Table of Contents
30
Table of Contents
31
Table of Contents
A $0.6 million gain in the All Other category associated
with the sale of Horizon Powers gas-powered turbine;
A $120.3 million gain on the sale of SECI, which was
completed in August 2007. This amount is included in earnings
from discontinued operations;
A $4.8 million benefit to earnings in the Pipeline and
Storage segment due to the reversal of a reserve established for
all costs incurred related to the Empire Connector project
recognized during June 2007;
A $1.9 million benefit to earnings in the Pipeline and
Storage segment associated with the discontinuance of hedge
accounting for Empires interest rate collar; and
A $2.3 million benefit to earnings in the Energy Marketing
segment related to the resolution of a purchased gas contingency.
32
Table of Contents
$68.6 million of impairment charges related to the
Exploration and Production segments Canadian oil and gas
assets under the full cost method of accounting using natural
gas pricing at June 30, 2006 and September 30, 2006;
An $11.2 million benefit to earnings in the Exploration and
Production segment ($6.1 million in continuing operations
and $5.1 million in discontinued operations) related to
income tax adjustments recognized during 2006; and
A $2.6 million benefit to earnings in the Utility segment
related to the correction of Distribution Corporations
calculation of the symmetrical sharing component of New
Yorks gas adjustment rate.
Year Ended September 30
2008
2007
2006
(Thousands)
$
61,472
$
50,886
$
49,815
54,148
56,386
55,633
146,612
74,889
67,494
5,889
7,663
5,798
107
3,728
5,704
268,228
193,552
184,444
5,672
2,564
359
(5,172
)
5,559
(189
)
268,728
201,675
184,614
135,780
(46,523
)
$
268,728
$
337,455
$
138,091
Year Ended September 30
2008
2007
2006
(Thousands)
$
876,677
$
848,693
$
993,928
135,361
136,863
166,779
7,419
8,271
13,484
1,019,457
993,827
1,174,191
58,225
9,751
113,901
102,534
92,569
18,686
14,612
14,003
$
1,210,269
$
1,120,724
$
1,280,763
33
Table of Contents
Year Ended September 30
2008
2007
2006
57,463
60,236
59,443
9,769
10,713
10,681
552
727
985
67,784
71,676
71,109
5,686
1,355
64,267
62,240
57,950
137,737
135,271
129,059
Percent (Warmer)
Colder Than
Normal
Actual
Normal
Prior Year
Buffalo
6,729
6,277
(6.7
)%
0.1
%
Erie
6,277
5,779
(7.9
)%
(3.8
)%
Buffalo
6,692
6,271
(6.3
)%
5.1
%
Erie
6,243
6,007
(3.8
)%
5.6
%
Buffalo
6,692
5,968
(10.8
)%
(9.4
)%
Erie
6,243
5,688
(8.9
)%
(8.9
)%
34
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35
Table of Contents
36
Table of Contents
Year Ended September 30
2008
2007
2006
(Thousands)
$
122,321
$
118,771
$
118,551
4,330
4,161
4,858
126,651
122,932
123,409
67,020
66,966
66,718
14
169
39
67,034
67,135
66,757
22,871
21,899
24,186
$
216,556
$
211,966
$
214,352
Year Ended September 30
2008
2007
2006
353,173
351,113
363,379
5,197
4,975
11,609
358,370
356,088
374,988
37
Table of Contents
Year Ended September 30
2008
2007
2006
(Thousands)
$
202,153
$
143,785
$
126,969
250,965
167,627
134,307
49,090
37,528
42,252
(944
)
1,147
3,072
(34,504
)
(26,050
)
(31,704
)
$
466,760
$
324,037
$
274,896
$
$
50,495
$
71,984
(1)
Represents the elimination of certain West Coast gas production
revenue included in Gas (after Hedging) from Continuing
Operations in the table above that is 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.
38
Table of Contents
Year Ended September 30
2008
2007
2006
11,033
10,356
9,110
4,039
3,929
3,880
7,269
5,555
5,108
22,341
19,840
18,098
6,426
7,673
22,341
26,266
25,771
505
717
685
2,460
2,403
2,582
105
124
69
3,070
3,244
3,336
206
272
3,070
3,450
3,608
Year Ended September 30
2008
2007
2006
$
10.03
$
6.58
$
8.01
$
8.71
$
6.54
$
7.93
$
9.73
$
7.48
$
9.53
$
9.70
$
6.82
$
8.42
$
9.05
$
7.25
$
7.02
$
$
6.09
$
7.14
$
107.27
$
63.04
$
64.10
$
98.17
$
56.86
$
56.80
$
97.40
$
62.26
$
65.28
$
99.64
$
58.43
$
58.47
$
81.75
$
51.68
$
40.26
$
$
50.06
$
51.40
(1)
Refer to further discussion of hedging activities below under
Market Risk Sensitive Instruments and in
Note F Financial Instruments in Item 8 of
this report.
(2)
Includes low gravity oil which generally sells for a lower price.
39
Table of Contents
40
Table of Contents
Year Ended September 30
2008
2007
2006
(Thousands)
$
551,243
$
413,405
$
496,769
(11
)
207
300
$
551,232
$
413,612
$
497,069
Year Ended September 30
2008
2007
2006
56,120
50,775
45,270
41
Table of Contents
Year Ended September 30
2008
2007
2006
(Thousands)
$
19,989
$
21,927
$
23,077
4,864
5,097
7,123
22,914
27,908
32,809
1,749
3,965
2,020
$
49,516
$
58,897
$
65,029
Year Ended September 30
2008
2007
2006
(Thousands)
9,272
8,660
9,527
9,747
9,358
10,454
13,425
14,778
16,862
32,444
32,796
36,843
42
Table of Contents
43
Table of Contents
44
Table of Contents
Year Ended September 30
2008
2007
2006
(Millions)
$
482.8
$
394.2
$
471.4
(397.7
)
(276.7
)
(294.2
)
(3.3
)
232.1
58.4
(58.2
)
5.9
5.1
4.4
(0.8
)
(3.2
)
(200.0
)
(119.6
)
(9.8
)
296.6
17.4
17.5
23.3
(103.7
)
(100.6
)
(98.2
)
16.3
13.7
6.5
(237.0
)
(48.1
)
(85.2
)
(0.1
)
1.4
$
(56.6
)
$
55.2
$
12.0
45
Table of Contents
Year Ended
September 30,
2008
Total Expenditures
For Long-Lived
Assets
(Millions)
$
57.5
165.5
192.2
1.4
0.3
(2.4
)
$
414.5
(1)
Amount includes $16.8 million of accrued capital
expenditures related to the Empire Connector project. This
amount has been excluded from the Consolidated Statement of Cash
Flows at September 30, 2008 since it represents a non-cash
investing activity at that date.
(2)
Represents $2.4 million of capital expenditures included in
the Appalachian region of the Exploration and Production segment
for the purchase of storage facilities, buildings, and base gas
from Supply Corporation during the quarter ended March 31,
2008.
46
Table of Contents
Year Ended September 30
2009
2010
2011
(Millions)
$
58.0
$
60.0
$
56.0
73.0
76.0
46.0
285.0
227.0
244.0
1.0
1.0
1.0
$
417.0
$
364.0
$
347.0
(1)
Includes estimated expenditures for the years ended
September 30, 2009, 2010 and 2011 of approximately
$48 million, $42 million and $18 million,
respectively, to develop proved undeveloped reserves.
47
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48
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49
Table of Contents
Payments by Expected Maturity Dates
2009
2010
2011
2012
2013
Thereafter
Total
(Millions)
$
167.5
$
65.0
$
252.2
$
191.4
$
282.3
$
565.0
$
1,523.4
$
6.0
$
4.6
$
3.6
$
3.2
$
2.5
$
12.4
$
32.3
$
0.5
$
0.4
$
0.4
$
0.2
$
$
$
1.5
$
745.8
$
122.3
$
14.5
$
10.3
$
10.3
$
83.8
$
987.0
$
47.4
$
45.7
$
41.1
$
36.7
$
11.3
$
16.9
$
199.1
$
13.5
$
$
$
$
$
$
13.5
$
12.4
$
10.5
$
4.2
$
4.0
$
3.5
$
12.6
$
47.2
(1)
Refer to Note E Capitalization and Short-Term
Borrowings, as well as the table under Interest Rate Risk in the
Market Risk Sensitive Instruments section below, for the amounts
excluding interest expense.
(2)
Gas prices are variable based on the NYMEX prices adjusted for
basis.
50
Table of Contents
Expected Maturity Dates
2009
2010
2011
Total
11.8
3.3
0.0
(1)
15.1
$
9.35
$
10.89
$
10.55
$
9.69
$
8.10
$
8.74
$
9.30
$
8.24
(1)
The Energy Marketing segment has natural gas swap agreements
covering approximately 40,000 Mcf in 2011.
51
Table of Contents
Expected Maturity Dates
2009
2010
2011
Total
1,260,000
600,000
60,000
1,920,000
$
83.12
$
102.52
$
125.25
$
90.50
$
103.08
$
104.17
$
105.21
$
103.49
Expected Maturity Dates
2009
2010
2011
2012
Total
(Equivalent Bcf)
2.1
0.3
(1)
(1)
2.4
$
10.02
$
9.59
$
8.05
$
8.68
$
9.99
$
9.41
$
9.85
$
7.49
$
8.27
$
9.43
(1)
The Energy Marketing segment has purchased 7 and 6 futures
contracts (1 contract = 2,500 Dth) for 2011 and 2012,
respectively.
52
Table of Contents
Principal Amounts by Expected Maturity Dates
2009
2010
2011
2012
2013
Thereafter
Total
(Dollars in millions)
$
100.0
(1)
$
$
200.0
$
150.0
$
250.0
$
399.0
$
1,099.0
6.0
%
7.5
%
6.7
%
5.3
%
6.7
%
6.5
%
(1)
These notes have been classified as Current Portion of Long-Term
Debt on the Companys Consolidated Balance Sheet.
53
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54
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55
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56
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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 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;
7.
Changes in demographic patterns and weather conditions;
8.
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;
9.
Impairments under the SECs full cost ceiling test for
natural gas and oil reserves;
10.
Uncertainty of oil and gas reserve estimates;
11.
Ability to successfully identify, drill for and produce
economically viable natural gas and oil reserves, including
shortages, delays or unavailability of equipment and services
required in drilling operations;
12.
Significant changes from expectations in the Companys
actual production levels for natural gas or oil;
13.
Changes in the availability
and/or
price
of derivative financial instruments;
14.
Changes in the price differentials between various types of oil;
15.
Inability to obtain new customers or retain existing ones;
16.
Significant changes in competitive factors affecting the Company;
17.
Changes in laws and regulations to which the Company is subject,
including tax, environmental, safety and employment laws and
regulations;
18.
Governmental/regulatory actions, initiatives and proceedings,
including those involving 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;
19.
Unanticipated impacts of restructuring initiatives in the
natural gas and electric industries;
20.
Significant changes from expectations in actual capital
expenditures and operating expenses and unanticipated project
delays or changes in project costs or plans;
21.
The nature and projected profitability of pending and potential
projects and other investments, and the ability to obtain
necessary governmental approvals and permits;
22.
Ability to successfully identify and finance acquisitions or
other investments and ability to operate and integrate existing
and any subsequently acquired business or properties;
57
Table of Contents
23.
Changes in the market price of timber and the impact such
changes might have on the types and quantity of timber harvested
by the Company;
24.
Significant changes in tax rates or policies or in rates of
inflation or interest;
25.
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;
26.
Changes in accounting principles or the application of such
principles to the Company;
27.
The cost and effects of legal and administrative claims against
the Company or activist shareholder campaigns to effect changes
at the Company;
28.
Increasing health care costs and the resulting effect on health
insurance premiums and on the obligation to provide other
post-retirement benefits; or
29.
Increasing costs of insurance, changes in coverage and the
ability to obtain insurance.
Item 7A
Quantitative
and Qualitative Disclosures About Market Risk
58
Item 8
Financial
Statements and Supplementary Data
Page
60
61
62
63
64
65
115
59
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60
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61
Table of Contents
At September 30
2008
2007
(Thousands of dollars)
$
4,873,969
$
4,461,586
1,719,869
1,583,181
3,154,100
2,878,405
68,239
124,806
61,964
1
4,066
185,397
172,380
24,364
20,682
87,294
66,195
31,317
35,669
37,708
14,769
65,158
45,057
8,550
499,478
554,138
82,506
83,954
13,978
12,070
189,587
137,577
4,417
5,545
80,640
85,902
16,279
18,256
5,476
5,476
26,174
28,836
21,034
61,006
28,786
9,188
7,732
8,059
476,609
455,869
$
4,130,187
$
3,888,412
$
79,121
$
83,461
567,716
569,085
953,799
983,776
1,600,636
1,636,322
2,963
(6,203
)
1,603,599
1,630,119
999,000
799,000
2,602,599
2,429,119
100,000
200,024
142,520
109,757
2,753
10,409
25,714
25,873
22,114
18,158
33,017
22,863
45,220
36,062
1,871
1,362
16,200
374,571
439,346
634,372
575,356
18,449
14,026
4,691
5,392
103,100
91,226
91,933
76,659
78,909
70,555
93,247
75,939
128,316
110,794
1,153,017
1,019,947
$
4,130,187
$
3,888,412
62
Table of Contents
Year Ended September 30
2008
2007
2006
(Thousands of dollars)
$
268,728
$
337,455
$
138,091
(159,873
)
104,739
170,623
170,803
179,615
72,496
52,847
(5,230
)
1,977
(3,366
)
1,067
(16,275
)
(13,689
)
(6,515
)
4,858
16,399
4,829
4,065
15,610
58,108
(16,815
)
5,669
(12,343
)
(22,116
)
(5,714
)
1,679
(22,939
)
(1,799
)
1,847
(36,376
)
18,800
(39,572
)
32,763
(26,002
)
(23,144
)
(7,656
)
(13,526
)
22,777
10,154
(6,554
)
4,946
(3,641
)
8,950
(17,754
)
(11,887
)
4,109
(22,700
)
54,817
(5,922
)
80,960
482,776
394,197
471,400
(397,734
)
(276,728
)
(294,159
)
(3,300
)
232,092
58,397
(58,248
)
5,969
5,137
13
4,376
(725
)
(3,230
)
(328,992
)
(101,772
)
(297,376
)
16,275
13,689
6,515
(237,006
)
(48,070
)
(85,168
)
296,655
(200,024
)
(119,576
)
(9,805
)
17,432
17,498
23,339
(103,683
)
(100,632
)
(98,266
)
(210,351
)
(237,091
)
(163,385
)
(139
)
1,365
(56,567
)
55,195
12,004
124,806
69,611
57,607
$
68,239
$
124,806
$
69,611
$
69,841
$
75,987
$
78,003
$
103,154
$
97,961
$
54,359
63
Table of Contents
Year Ended September 30
2008
2007
2006
(Thousands of dollars)
$
268,728
$
337,455
$
138,091
165,914
(13,584
)
1,924
12
7,874
7,408
(42,658
)
(716
)
(4,856
)
4,747
2,573
(31,490
)
8,495
90,196
64,645
5,106
91,743
16,651
(16,436
)
357,118
58,070
(5,127
)
726
(1,434
)
1,724
894
(13,228
)
3,153
34,772
26,548
2,824
35,338
7,485
7,701
129,074
9,166
(24,137
)
228,044
$
277,894
$
313,318
$
366,135
64
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65
Table of Contents
66
Table of Contents
As of September 30
2008
2007
(Thousands)
$
1,580,366
$
1,539,808
996,743
976,316
1,800,422
1,577,745
1,232
1,199
120,021
119,237
25,984
32,806
$
4,524,768
$
4,247,111
Year Ended September 30
2008
2007
2006
2.6
%
2.8
%
2.8
%
3.2
%
3.5
%
4.0
%
$
2.26
$
1.94
$
2.00
3.5
%
2.8
%
4.8
%
4.1
%
4.0
%
5.6
%
5.0
%
4.6
%
4.1
%
67
Table of Contents
(1)
Amounts include depletion of oil and gas producing properties as
well as depreciation of fixed assets. As disclosed in Note
O Supplementary Information for Oil and Gas
Producing Properties, depletion of oil and gas producing
properties amounted to $2.23, $1.92 and $1.98 per Mcfe of
production in 2008, 2007 and 2006, respectively. Depletion of
oil and gas producing properties in the United States amounted
to $2.23, $1.97 and $1.74 per Mcfe of production in 2008, 2007
and 2006, respectively. Depletion of oil and gas producing
properties in Canada amounted $1.67 and $2.95 per Mcfe of
production in 2007 and 2006, respectively.
68
Table of Contents
Year Ended September 30
2008
2007
(Thousands)
$
(19,741
)
$
(12,482
)(1)
(71
)
(83
)
15,949
(3,886
)
6,826
10,248
$
2,963
$
(6,203
)
(1)
In accordance with the transition recognition implementation
provisions of SFAS 158, the adjustment to recognize the
funded status of the pension and other post-retirement benefit
plans are shown as an adjustment to the ending balance of
accumulated other comprehensive income (loss). The adjustment is
not shown as other comprehensive income (loss) in the
Consolidated Statements of Comprehensive Income.
69
Table of Contents
Year Ended September 30
2008
2007
(Thousands)
$
9,911
$
8,925
7,383
5,641
$
17,294
$
14,566
70
Table of Contents
71
Table of Contents
72
Table of Contents
Year Ended September 30
2008
2007
2006
N/A
4.46
%
5.08
%
N/A
7.0
7.0
N/A
17.73
%
17.71
%
N/A
0.76
%
0.83
%
73
Table of Contents
Year Ended
September 30,
2007
4.53
%
7.0
17.55
%
0.73
%
Year Ended
September 30,
2008
3.78
%
7.25
17.69
%
0.64
%
74
Table of Contents
75
Table of Contents
Note B
Asset
Retirement Obligations
76
Table of Contents
Year Ended September 30
2008
2007
2006
(Thousands)
$
75,939
$
77,392
$
41,411
23,234
18,739
(932
)
11,244
(6,871
)
(6,108
)
(1,303
)
5,440
5,394
2,671
193
135
$
93,247
$
75,939
$
77,392
77
Table of Contents
Note C
Regulatory
Matters
At September 30
2008
2007
(Thousands)
$
147,909
$
98,787
82,506
83,954
37,708
14,769
22,530
20,738
8,155
8,315
7,524
8,470
4,518
4,445
6,475
5,292
317,325
244,770
103,100
91,226
42,994
21,676
23,502
19,147
19,012
27,964
18,449
14,026
3,933
7,422
2,753
10,409
2,492
450
216,235
192,320
$
101,090
$
52,450
(1)
The Company recovers the cost of its regulatory assets but, with
the exception of Unrecovered Purchased Gas Costs, does not earn
a return on them.
(2)
Included in Other Regulatory Assets on the Consolidated Balance
Sheets.
(3)
Included in Other Regulatory Liabilities on the Consolidated
Balance Sheets.
78
Table of Contents
79
Table of Contents
Note D
Income
Taxes
Year Ended September 30
2008
2007
2006
(Thousands)
$
75,079
$
99,608
$
65,593
20,257
21,700
13,511
90
22
2,212
56,668
39,340
19,111
15,828
10,751
9,024
2,756
(33,365
)
167,922
174,177
76,086
(697
)
(697
)
(697
)
$
167,225
$
173,480
$
75,389
$
(697
)
$
(697
)
$
(697
)
167,922
131,813
108,245
2,792
(32,159
)
39,572
$
167,225
$
173,480
$
75,389
Year Ended September 30
2008
2007
2006
(Thousands)
$
435,982
$
496,074
$
293,887
(29
)
14,861
(80,407
)
$
435,953
$
510,935
$
213,480
80
Table of Contents
Year Ended September 30
2008
2007
2006
(Thousands)
$
152,584
$
178,827
$
74,718
23,455
21,093
14,648
69
(20,980
)
(3,718
)
(2,877
)
(8,883
)
(5,460
)
(7,382
)
$
167,225
$
173,480
$
75,389
At September 30
2008
2007
(Thousands)
$
673,313
$
612,648
43,340
21,892
55,391
39,724
772,044
674,264
(43,340
)
(21,892
)
(92,461
)
(85,566
)
(135,801
)
(107,458
)
$
636,243
$
566,806
$
1,871
$
(8,550
)
634,372
575,356
$
636,243
$
566,806
81
Table of Contents
Amount
(thousands)
$
1,700
$
1,700
Fiscal 2002
Fiscal 2003
Fiscal 2004
Fiscal 2004
82
Table of Contents
Note E
Capitalization
and Short-Term Borrowings
Earnings
Accumulated
Reinvested
Other
Paid
in
Comprehensive
Common Stock
In
the
Income
Shares
Amount
Capital
Business
(Loss)
(Thousands, except per share amounts)
84,357
$
84,357
$
529,834
$
813,020
$
(197,628
)
138,091
(98,829
)
228,044
1,705
1,572
1,572
28,564
(2,526
)
(2,526
)
(16,373
)
(66,269
)
83,403
83,403
543,730
786,013
30,416
337,455
(101,496
)
(24,137
)
(12,482
)
3,727
1,367
1,367
30,193
(1,309
)
(1,309
)
(8,565
)
(38,196
)
83,461
83,461
569,085
983,776
(6,203
)
268,728
(103,523
)
(406
)
9,166
2,332
854
854
33,335
(5,194
)
(5,194
)
(37,036
)
(194,776
)
79,121
$
79,121
$
567,716
$
953,799
(3)
$
2,963
(1)
Paid in Capital includes tax benefits of $16.3 million,
$13.7 million and $6.5 million for September 30,
2008, 2007 and 2006, respectively, associated with the exercise
of stock options.
(2)
As of October 1, 2005, Paid in Capital includes
compensation costs associated with stock option, stock-settled
SARs and/or restricted stock awards, in accordance with
SFAS 123R. The expense is included within Net Income
Available For Common Stock, net of tax benefits.
(3)
The availability of consolidated earnings reinvested in the
business for dividends payable in cash is limited under terms of
the indentures covering long-term debt. At September 30,
2008, $808.8 million of accumulated earnings was free of
such limitations.
83
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84
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85
Table of Contents
Weighted
Average
Number of
Remaining
Aggregate
Shares Subject
Weighted Average
Contractual
Intrinsic
to Option
Exercise Price
Life (Years)
Value
(In thousands)
7,360,041
$
25.89
$
(890,944
)
$
23.78
(4,400
)
$
27.97
6,464,697
$
26.17
3.11
$
103,477
6,337,697
$
25.94
3.02
$
102,909
745,797
(1)
Including shares available for stock-settled SARs and restricted
stock grants.
Weighted
Average
Number of
Remaining
Aggregate
Shares Subject
Weighted Average
Contractual
Intrinsic
To Option
Exercise Price
Life (Years)
Value
(In thousands)
50,000
$
41.20
$
$
$
50,000
$
41.20
8.45
$
49
$
86
Table of Contents
Weighted
Average
Number of
Remaining
Aggregate
Shares Subject
Weighted Average
Contractual
Intrinsic
To Option
Exercise Price
Life (Years)
Value
(In thousands)
$
321,000
$
48.46
$
(6,000
)
$
58.99
315,000
$
48.26
9.42
$
(1,914
)
$
Number of
Weighted Average
Restricted
Fair Value per
Share Awards
Award
36,328
$
38.16
25,000
$
48.41
(2,500
)
$
34.94
$
58,828
$
42.65
87
Table of Contents
At September 30
2008
2007
(Thousands)
$
549,000
$
749,000
550,000
250,000
1,099,000
999,000
24
1,099,000
999,024
100,000
200,024
$
999,000
$
799,000
(1)
The medium-term notes and notes are unsecured.
(2)
In April 2008, the Company issued $300.0 million of
6.50% senior, unsecured notes in a private placement exempt
from registration under the Securities Act of 1933. The notes
have a term of 10 years, with a maturity date in April
2018. The holders of the notes may require the Company to
repurchase their notes in the event of a change in control at a
price equal to 101% of the principal amount. In addition, the
Company is required to either offer to exchange the notes for
substantially similar notes registered under the Securities Act
of 1933 or, in certain circumstances, register the resale of the
notes. The Company used $200.0 million of the proceeds from
the sale of the notes to refund $200.0 million of 6.303%
medium-term notes that subsequently matured on May 27, 2008.
88
Table of Contents
Note F
Financial
Instruments
At September 30
2008 Carrying
2008 Fair
2007 Carrying
2007 Fair
Amount
Value
Amount
Value
(Thousands)
$
1,099,000
$
1,027,098
$
999,024
$
1,024,417
89
Table of Contents
90
Table of Contents
Note G
Retirement
Plan and Other Post-Retirement Benefits
91
Table of Contents
Retirement Plan
Other Post-Retirement Benefits
Year Ended September 30
Year Ended September 30
2008
2007
2006
2008
2007
2006
(Thousands)
$
742,519
$
732,207
$
825,204
$
444,545
$
445,931
$
546,273
12,597
12,898
16,416
5,104
5,614
8,029
44,949
44,350
40,196
27,081
27,198
26,804
1,990
1,566
1,559
1,532
1,325
(31,874
)
(34,189
)
(2,986
)
(108,112
)
(14,390
)
(14,450
)
(115,052
)
(46,817
)
(43,950
)
(41,497
)
(22,443
)
(22,639
)
(21,682
)
$
719,059
$
742,519
$
732,207
$
411,545
$
444,545
$
445,931
$
765,144
$
664,521
$
616,462
$
412,371
$
325,624
$
271,636
(39,206
)
119,662
68,649
(43,478
)
65,552
34,785
3,817
16,488
20,907
29,200
42,268
39,326
12,151
8,423
1,990
1,566
1,559
(46,817
)
(43,950
)
(41,497
)
(22,443
)
(22,639
)
(21,682
)
$
695,089
$
765,144
$
664,521
$
377,640
$
412,371
$
325,624
$
(23,970
)
$
22,625
$
(67,686
)
$
(33,905
)
$
(32,174
)
$
(120,307
)
107,626
54,487
49,890
7,185
12
$
(23,970
)
$
22,625
$
47,125
$
(33,905
)
$
(32,174
)
$
(15,918
)
92
Table of Contents
Retirement Plan
Other Post-Retirement Benefits
Year Ended September 30
Year Ended September 30
2008
2007
2006
2008
2007
2006
(Thousands)
$
(23,970
)
$
$
$
(54,939
)
$
(70,555
)
$
(32,918
)
22,625
47,125
21,034
38,381
17,000
$
(23,970
)
$
22,625
$
47,125
$
(33,905
)
$
(32,174
)
$
(15,918
)
6.75
%
6.25
%
6.25
%
6.75
%
6.25
%
6.25
%
8.25
%
8.25
%
8.25
%
8.25
%
8.25
%
8.25
%
5.00
%
5.00
%
5.00
%
5.00
%
5.00
%
5.00
%
$
12,598
$
12,898
$
16,416
$
5,104
$
5,614
$
8,029
44,949
44,350
40,196
27,081
27,198
26,804
(55,000
)
(51,235
)
(49,943
)
(33,715
)
(26,960
)
(22,302
)
808
882
957
4
4
4
7,127
7,127
7,127
11,063
13,528
23,108
2,927
8,214
23,402
6,008
1,211
(6,409
)
22,264
16,220
(11,084
)
$
20,426
$
21,634
$
24,325
$
30,792
$
37,417
$
31,980
$
$
$
(165,914
)
$
$
$
NA
$
11,256
NA
NA
$
778
NA
6.25
%
6.25
%
5.00
%
6.25
%
6.25
%
5.00
%
8.25
%
8.25
%
8.25
%
8.25
%
8.25
%
8.25
%
5.00
%
5.00
%
5.00
%
5.00
%
5.00
%
5.00
%
Table of Contents
(1)
In Fiscal 2008, the Company passed an amendment, for most of the
subsidiaries, which increased the participant contributions for
active employees at the time of the amendment. This decreased
the benefit obligation.
(2)
Distribution Corporations New York jurisdiction calculates
the amortization of the actuarial loss on a vintage year basis
over 10 years, as mandated by the NYPSC. All the other
subsidiaries of the Company utilize the corridor approach.
Before
Consolidated
After
Application of
SFAS 158
Application of
SFAS 158(1)
Impact
SFAS 158
(Thousands)
$
51,612
$
(28,987
)
$
22,625
$
$
17,731
$
17,731
$
$
7,008
$
7,008
$
$
4,248
$
4,248
94
Table of Contents
Before
Consolidated
After
Application of
SFAS 158
Application of
SFAS 158(1)
Impact
SFAS 158
(Thousands)
$
26,067
$
12,314
$
38,381
$
$
38,472
$
38,472
$
$
(3,247
)
$
(3,247
)
$
$
484
$
484
$
$
294
$
294
$
(22,238
)
$
(48,317
)
$
(70,555
)
$
$
5,704
$
5,704
$
$
4,990
$
4,990
$
$
3,027
$
3,027
$
(30,115
)
$
(13,721
)
$
(43,836
)
$
77,679
$
(16,673
)
$
61,006
$
$
61,907
$
61,907
$
$
(3,247
)
$
(3,247
)
$
$
12,482
$
12,482
$
$
7,569
$
7,569
$
(22,238
)
$
(48,317
)
$
(70,555
)
$
(30,115
)
$
(13,721
)
$
(43,836
)
(1)
Amounts represent balances before applying the effects of the
adoption of SFAS 158, but after giving effect to any
necessary adjustments as a result of recognizing an additional
minimum pension liability. At September 30, 2007, there was
no additional minimum pension liability adjustment since the
fair value of the plan assets exceeded the accumulated benefit
obligation.
Table of Contents
Other
Retirement
Post-Retirement
Non-Qualified
Plan
Benefits
Benefit Plan
(Thousands)
$
(71,637
)
$
(53,108
)
$
(13,530
)
(11,326
)
(5,495
)
7,561
(11
)
$
(77,132
)
$
(56,873
)
$
(13,541
)
$
(5,676
)
$
(9,271
)
$
(1,322
)
(2,265
)
(731
)
1,074
$
(6,407
)
$
(10,462
)
$
(1,322
)
(1)
Amounts presented are shown before recognizing deferred taxes.
2008
2007
2006
(Thousands)
$
719,059
$
742,519
$
732,207
$
659,004
$
672,340
$
660,026
$
695,089
$
765,144
$
664,520
96
Table of Contents
97
Table of Contents
Benefit Payments
Subsidy Receipts
$
26,210,000
$
(1,714,000
)
$
28,248,000
$
(1,942,000
)
$
30,122,000
$
(2,167,000
)
$
31,484,000
$
(2,437,000
)
$
32,687,000
$
(2,719,000
)
$
181,354,000
$
(17,304,000
)
2008
2007
2006
9.0
%(1)
8.0
%(2)
9.0
%(2)
7.0
%(1)
6.67
%(2)
7.0
%(2)
10.0
%(1)
10.0
%(2)
11.0
%(2)
7.0
%(1)
7.0
%(3)
5.25
%(4)
(1)
It was assumed that this rate would gradually decline to 5.0% by
2018.
(2)
It was assumed that this rate would gradually decline to 5.0% by
2014.
(3)
It was assumed that this rate would gradually decline to 5.0% by
2016.
(4)
It was assumed that this rate would gradually decline to 5.0% by
2017.
Percentage of Plan
Target Allocation
Assets at September 30
2009
2008
2007
2006
60-75
%
67
%
70
%
67
%
20-35
%
29
%
24
%
26
%
0-15
%
4
%
6
%
7
%
100
%
100
%
100
%
98
Table of Contents
Percentage of Plan
Target Allocation
Assets at September 30
2009
2008
2007
2006
85-100
%
93
%
95
%
95
%
0-15
%
2
%
1
%
1
%
0-15
%
5
%
4
%
4
%
100
%
100
%
100
%
Note H
Commitments
and Contingencies
99
Table of Contents
(i)
Former
Manufactured Gas Plant Sites
(ii)
Other
100
Table of Contents
Note I
Discontinued
Operations
Year Ended September 30
2007
2006
(Thousands)
$
50,495
$
71,984
33,306
151,532
17,189
(79,548
)
1,082
866
18,271
(78,682
)
2,792
(32,159
)
15,479
(46,523
)
120,301
$
135,780
$
(46,523
)
101
Table of Contents
Note J
Business
Segment Information
102
Table of Contents
Year Ended September 30, 2008
Corporate
Pipeline
Exploration
Total
and
and
and
Energy
Reported
All
Intersegment
Total
Utility
Storage
Production
Marketing
Timber
Segments
Other
Eliminations
Consolidated
(Thousands)
$
1,194,657
$
135,052
$
466,760
$
549,932
$
49,516
$
2,395,917
$
3,749
$
695
$
2,400,361
$
15,612
$
81,504
$
$
1,300
$
$
98,416
$
14,115
$
(112,531
)
$
$
1,836
$
843
$
10,921
$
323
$
1,053
$
14,976
$
179
$
(4,340
)
$
10,815
$
27,683
$
13,783
$
41,645
$
175
$
3,142
$
86,428
$
640
$
(13,099
)
$
73,969
$
39,113
$
32,871
$
92,221
$
42
$
4,904
$
169,151
$
783
$
689
$
170,623
$
36,303
$
34,008
$
92,686
$
3,180
$
(378
)
$
165,799
$
2,564
$
(441
)
$
167,922
$
$
$
$
$
$
$
6,303
$
$
6,303
$
61,472
$
54,148
$
146,612
$
5,889
$
107
$
268,228
$
5,672
$
(5,172
)
$
268,728
$
57,457
$
165,520
$
192,187
$
39
$
1,354
$
416,557
$
131
$
(2,186
)
$
414,502
At September 30, 2008
(Thousands)
$
1,643,665
$
948,984
$
1,416,120
$
89,527
$
149,896
$
4,248,192
$
67,978
$
(185,983
)
$
4,130,187
Year Ended September 30, 2007
Corporate
Pipeline
Exploration
Total
and
and
and
Energy
Reported
All
Intersegment
Total
Utility
Storage
Production
Marketing
Timber
Segments
Other
Eliminations
Consolidated
(Thousands)
$
1,106,453
$
130,410
$
324,037
$
413,612
$
58,897
$
2,033,409
$
5,385
$
772
$
2,039,566
$
14,271
$
81,556
$
$
$
$
95,827
$
8,726
$
(104,553
)
$
$
(2,345
)
$
357
$
9,905
$
682
$
1,249
$
9,848
$
16
$
(8,314
)
$
1,550
$
28,190
$
9,623
$
51,743
$
263
$
3,265
$
93,084
$
2,687
$
(21,296
)
$
74,475
$
40,541
$
32,985
$
78,174
$
33
$
4,709
$
156,442
$
785
$
692
$
157,919
$
31,642
$
35,740
$
52,421
$
5,654
$
2,818
$
128,275
$
1,647
$
1,891
$
131,813
$
$
$
$
$
$
$
4,979
$
$
4,979
$
50,886
$
56,386
$
74,889
$
7,663
$
3,728
$
193,552
$
2,564
$
5,559
$
201,675
$
54,185
$
43,226
$
146,687
$
76
$
3,657
$
247,831
$
87
$
(319
)
$
247,599
At September 30, 2007
(Thousands)
$
1,565,593
$
810,957
$
1,326,073
$
59,802
$
165,224
$
3,927,649
$
66,531
$
(105,768
)
$
3,888,412
Year Ended September 30, 2006
Corporate
Pipeline
Exploration
Total
and
and
and
Energy
Reported
All
Intersegment
Total
Utility
Storage
Production
Marketing
Timber
Segments
Other
Eliminations
Consolidated
(Thousands)
$
1,265,695
$
132,921
$
274,896
$
497,069
$
65,024
$
2,235,605
$
3,304
$
766
$
2,239,675
$
15,068
$
81,431
$
$
$
5
$
96,504
$
9,444
$
(105,948
)
$
$
4,889
$
454
$
7,816
$
445
$
747
$
14,351
$
22
$
(4,964
)
$
9,409
$
26,174
$
6,620
$
50,457
$
227
$
3,095
$
86,573
$
2,555
$
(10,547
)
$
78,581
$
40,172
$
36,876
$
67,122
$
53
$
6,495
$
150,718
$
789
$
492
$
151,999
$
35,699
$
33,896
$
29,351
$
3,748
$
3,277
$
105,971
$
969
$
1,305
$
108,245
$
$
$
$
$
$
$
3,583
$
$
3,583
$
49,815
$
55,633
$
67,494
$
5,798
$
5,704
$
184,444
$
359
$
(189
)
$
184,614
$
54,414
$
26,023
$
166,535
$
16
$
2,323
$
249,311
$
85
$
2,995
$
252,391
At September 30, 2006
(Thousands)
$
1,498,442
$
767,889
$
1,209,969
(1)
$
81,374
$
159,421
$
3,717,095
$
64,287
$
(17,634
)
$
3,763,748
Table of Contents
(1)
Amount includes $134,930 of assets of SECI, which has been
classified as discontinued operations as of September 30,
2007. (See Note I Discontinued Operations).
For The Year Ended September 30
2008
2007
2006
(Thousands)
$
2,400,361
$
2,039,566
$
2,239,675
At September 30
2008
2007
2006
(Thousands)
$
3,630,709
$
3,334,274
$
3,181,769
97,234
$
3,630,709
$
3,334,274
$
3,279,003
(1)
Revenue is based upon the country in which the sale originates.
This table excludes revenues from Canadian discontinued
operations of $50,495 and $71,984 for September 30, 2007
and 2006, respectively.
Note K
Investments
in Unconsolidated Subsidiaries
At September 30
2008
2007
(Thousands)
$
3,958
$
4,652
10,589
12,033
1,732
1,571
$
16,279
$
18,256
104
Table of Contents
Note L
Intangible
Assets
At September 30,
At September 30, 2008
2007
Gross Carrying
Accumulated
Net Carrying
Net Carrying
Amount
Amortization
Amount
Amount
$
8,580
$
(6,058
)
$
2,522
$
3,591
31,864
(8,212
)
23,652
25,245
$
40,444
$
(14,270
)
$
26,174
$
28,836
$
2,662
$
2,662
$
2,662
Note M
Quarterly
Financial Data (unaudited)
105
Table of Contents
Net
Income
Income
Income
Available
Earnings from
from
from
for
Continuing Operations per
Quarter
Operating
Operating
Continuing
Discontinued
Common
Common Share
Earnings per Common Share
Revenues
Income
Operations
Operations
Stock
Basic
Diluted
Basic
Diluted
(Thousands, except per common share amounts)
$
397,858
$
79,149
$
43,266
$
$
43,266
$
0.54
$
0.52
$
0.54
$
0.52
$
548,382
$
110,947
$
59,855
$
$
59,855
$
0.74
$
0.72
$
0.74
$
0.72
$
885,853
$
170,020
$
95,003
(1)
$
$
95,003
(1)
$
1.14
$
1.11
$
1.14
$
1.11
$
568,268
$
126,009
$
70,604
$
$
70,604
$
0.84
$
0.82
$
0.84
$
0.82
$
302,030
$
73,504
$
34,295
$
123,395
(2)
$
157,690
(2)
$
0.41
$
0.40
$
1.89
$
1.84
$
448,779
$
83,933
$
41,212
(3)
$
5,586
$
46,798
(3)
$
0.49
$
0.48
$
0.56
$
0.55
$
798,100
$
142,404
$
75,480
(4)
$
2,967
$
78,447
(4)
$
0.91
$
0.89
$
0.95
$
0.92
$
490,657
$
96,657
$
50,688
(5)
$
3,832
$
54,520
(5)
$
0.61
$
0.60
$
0.66
$
0.64
(1)
Includes a $0.6 million gain on sale of turbine.
(2)
Includes a $120.3 million gain on the sale of SECI.
(3)
Includes $4.8 million of income associated with the
reversal of reserve for preliminary project costs associated
with the Empire Connector project.
(4)
Includes $2.3 million of income associated with the
reversal of a purchased gas expense accrual related to the
resolution of a contingency.
(5)
Includes a $1.9 million positive earnings impact associated
with the discontinuance of hedge accounting on an interest rate
collar.
Note N
Market
for Common Stock and Related Shareholder Matters
(unaudited)
Price Range
High
Low
Dividends Declared
$
60.36
$
39.16
$
.325
$
63.71
$
47.00
$
.325
$
48.78
$
38.04
$
.31
$
50.29
$
45.20
$
.31
$
47.00
$
40.95
$
.31
$
47.87
$
42.75
$
.31
$
43.79
$
36.94
$
.30
$
40.21
$
35.02
$
.30
Table of Contents
Note O
Supplementary
Information for Oil and Gas Producing Activities
(unaudited)
At September 30
2008
2007
(Thousands)
$
1,783,276
$
1,583,956
23,285
20,005
1,806,561
1,603,961
718,166
627,073
$
1,088,395
$
976,888
(1)
Includes asset retirement costs of $60.9 million and
$40.9 million at September 30, 2008 and 2007,
respectively.
Total
as of
September 30,
Year Costs Incurred
2008
2008
2007
2006
Prior
(Thousands)
$
23,285
$
7,914
$
2,433
$
11,918
$
1,020
107
Table of Contents
Year Ended September 30
2008
2007
2006
(Thousands)
$
16,474
$
2,621
$
5,339
8,449
3,210
8,844
56,274
26,891
64,087
106,975
113,206
87,738
20,048
2,139
10,965
208,220
148,067
176,973
(1,404
)
(427
)
(1,142
)
6,492
20,134
20,778
11,414
14,385
167
279
29,169
41,507
16,474
1,217
4,912
8,449
2,068
15,336
56,274
47,025
84,865
106,975
124,620
102,123
20,048
2,306
11,244
$
208,220
$
177,236
$
218,480
108
Table of Contents
Year Ended September 30
2008
2007
2006
(Thousands, except per Mcfe amounts)
$
216,623
$
135,399
$
152,451
305,887
189,539
195,050
522,510
324,938
347,501
66,685
48,410
41,354
4,056
3,704
2,412
91,093
77,452
66,488
144,922
78,928
88,104
215,754
116,444
149,143
39,114
54,819
10,313
13,985
49,427
68,804
14,846
14,628
249
258
12,787
27,439
104,739
3,703
(31,987
)
17,842
(46,273
)
109
Table of Contents
Year Ended September 30
2008
2007
2006
(Thousands, except per Mcfe amounts)
216,623
174,513
207,270
305,887
199,852
209,035
522,510
374,365
416,305
66,685
63,256
55,982
4,056
3,953
2,670
91,093
90,239
93,927
104,739
144,922
82,631
56,117
$
215,754
$
134,286
$
102,870
(1)
Exclusive of hedging gains and losses. See further discussion in
Note F Financial Instruments.
(2)
See discussion of impairment in Note A Summary
of Significant Accounting Policies.
Table of Contents
111
Table of Contents
Oil Mbbl
U. S.
Gulf
West
Canada
Coast
Coast
Appalachian
Total
(Discontinued
Total
Region
Region
Region
U.S.
Operations)
Company
1,295
57,085
177
58,557
1,700
60,257
39
172
108
319
128
447
595
(80
)
57
572
101
673
(685
)
(2,582
)
(69
)
(3,336
)
(272
)
(3,608
)
274
274
274
(25
)
(25
)
1,244
54,869
273
56,386
1,632
58,018
63
281
344
108
452
851
(6,822
)
84
(5,887
)
(76
)
(5,963
)
(717
)
(2,403
)
(124
)
(3,244
)
(206
)
(3,450
)
(6
)
(7
)
(13
)
(1,458
)
(1,471
)
1,435
45,644
507
47,586
47,586
298
471
58
827
827
203
(34
)
(64
)
105
105
(505
)
(2,460
)
(105
)
(3,070
)
(3,070
)
2,084
2,084
2,084
(73
)
(1,261
)
(1,334
)
(1,334
)
1,358
44,444
396
46,198
46,198
1,229
41,701
177
43,107
1,700
44,807
1,217
42,522
273
44,012
1,632
45,644
1,435
36,509
483
38,427
38,427
1,313
37,224
357
38,894
38,894
Table of Contents
Year Ended September 30
2008
2007
2006
(Thousands)
$
5,845,214
$
4,879,496
$
3,911,059
1,231,705
872,536
758,258
265,515
229,987
205,497
1,645,351
1,423,707
1,019,307
2,702,643
2,353,266
1,927,997
1,434,799
1,292,804
1,066,338
1,267,844
1,060,462
861,659
197,227
92,234
11,520
(151
)
93,624
19,375
74,249
5,845,214
4,879,496
4,108,286
1,231,705
872,536
850,492
265,515
229,987
217,017
1,645,351
1,423,707
1,019,156
2,702,643
2,353,266
2,021,621
1,434,799
1,292,804
1,085,713
$
1,267,844
$
1,060,462
$
935,908
Table of Contents
Year Ended September 30
2008
2007
2006
(Thousands)
Net Cash Flows at Beginning of Year
$
1,060,462
$
861,659
$
1,491,532
(455,825
)
(276,529
)
(306,147
)
509,705
539,895
(941,545
)
67,768
7,607
(31,642
)
484
143,394
98,751
66,975
(100,684
)
(83,199
)
(83,750
)
65,156
58,710
67,048
(119,585
)
(174,920
)
404,176
(3,936
)
(140,203
)
4,850
133,031
175,814
150,913
1,267,844
1,060,462
861,659
Net Cash Flows at Beginning of Year
74,249
206,643
(34,581
)
(54,176
)
35,628
(180,216
)
(151,236
)
(238
)
6,908
10,369
5,722
(3,282
)
5,798
4,450
(10,075
)
82,966
34,998
(15,478
)
32,589
23,211
74,249
114
Table of Contents
Year Ended September 30
2008
2007
2006
(Thousands)
Net Cash Flows at Beginning of Year
1,060,462
935,908
1,698,175
(455,825
)
(311,110
)
(360,323
)
509,705
575,523
(1,121,761
)
67,768
7,607
(31,642
)
(150,752
)
(238
)
143,394
105,659
77,344
(100,684
)
(77,477
)
(87,032
)
65,156
64,508
71,498
(119,585
)
(184,995
)
487,142
(3,936
)
(105,205
)
(10,628
)
133,031
208,403
174,124
$
1,267,844
$
1,060,462
$
935,908
Additions
Balance
Charged
Additions
Balance
at
to
Charged
at
Beginning
Costs
to
End
of
and
Other
of
Period
Expenses
Accounts(1)
Deductions(2)
Period
(Thousands)
$
28,654
$
27,274
$
2,734
$
25,545
$
33,117
$
31,427
$
27,652
$
1,414
$
31,839
$
28,654
$
26,940
$
29,088
$
907
$
25,508
$
31,427
$
2,877
$
(2,877
)
$
$
$
(1)
Represents the discount on accounts receivable purchased in
accordance with the Utility segments 2005 New York rate
agreement.
(2)
Amounts represent net accounts receivable written-off.
Table of Contents
Item 9
Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure
Item 9A
Controls
and Procedures
Item 9B
Other
Information
Item 10
Directors,
Executive Officers and Corporate Governance
116
Table of Contents
Item 11
Executive
Compensation
Item 12
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
(a)
Security
Ownership of Certain Beneficial Owners
(b)
Security
Ownership of Management
117
Table of Contents
(c)
Changes
in Control
Item 13
Certain
Relationships and Related Transactions, and Director
Independence
Item 14
Principal
Accountant Fees and Services
Item 15
Exhibits
and Financial Statement Schedules
Exhibit
Description of
3(i)
Articles of Incorporation:
Restated Certificate of Incorporation of National Fuel Gas
Company dated September 21, 1998 (Exhibit 3.1,
Form 10-K
for fiscal year ended September 30, 1998 in File
No. 1-3880)
Certificate of Amendment of Restated Certificate of
Incorporation (Exhibit 3(ii),
Form 8-K
dated March 14, 2005 in File
No. 1-3880)
3(ii)
By-Laws:
National Fuel Gas Company By-Laws as amended June 11, 2008
(Exhibit 3.1,
Form 8-K
dated June 16, 2008 in File
No. 1-3880)
4
Instruments Defining the Rights of Security Holders, Including
Indentures:
Indenture, dated as of October 15, 1974, between the
Company and The Bank of New York (formerly Irving
Trust Company) (Exhibit 2(b) in File
No. 2-51796)
118
Table of Contents
Exhibit
Description of
Third Supplemental Indenture, dated as of December 1, 1982,
to Indenture dated as of October 15, 1974, between the
Company and The Bank of New York (formerly Irving
Trust Company) (Exhibit 4(a)(4) in File
No. 33-49401)
Eleventh Supplemental Indenture, dated as of May 1, 1992,
to Indenture dated as of October 15, 1974, between the
Company and The Bank of New York (formerly Irving
Trust Company) (Exhibit 4(b),
Form 8-K
dated February 14, 1992 in File
No. 1-3880)
Twelfth Supplemental Indenture, dated as of June 1, 1992,
to Indenture dated as of October 15, 1974, between the
Company and The Bank of New York (formerly Irving
Trust Company) (Exhibit 4(c),
Form 8-K
dated June 18, 1992 in File
No. 1-3880)
Thirteenth Supplemental Indenture, dated as of March 1,
1993, to Indenture dated as of October 15, 1974, between
the Company and The Bank of New York (formerly Irving
Trust Company) (Exhibit 4(a)(14) in File
No. 33-49401)
Fourteenth Supplemental Indenture, dated as of July 1,
1993, to Indenture dated as of October 15, 1974, between
the Company and The Bank of New York (formerly Irving
Trust Company) (Exhibit 4.1,
Form 10-K
for fiscal year ended September 30, 1993 in File
No. 1-3880)
Fifteenth Supplemental Indenture, dated as of September 1,
1996, to Indenture dated as of October 15, 1974, between
the Company and The Bank of New York (formerly Irving
Trust Company) (Exhibit 4.1,
Form 10-K
for fiscal year ended September 30, 1996 in File
No. 1-3880)
Indenture dated as of October 1, 1999, between the Company
and The Bank of New York (Exhibit 4.1,
Form 10-K
for fiscal year ended September 30, 1999 in File
No. 1-3880)
Officers Certificate Establishing Medium-Term Notes, dated
October 14, 1999 (Exhibit 4.2,
Form 10-K
for fiscal year ended September 30, 1999 in File
No. 1-3880)
Officers Certificate establishing 5.25% Notes due 2013,
dated February 18, 2003 (Exhibit 4,
Form 10-Q
for the quarterly period ended March 31, 2003 in File
No. 1-3880)
Officers Certificate establishing 6.50% Notes due
2018, dated April 11, 2008 (Exhibit 4.1,
Form 10-Q
for the quarterly period ended June 30, 2008 in File
No. 1-3880)
Amended and Restated Rights Agreement, dated as of July 11,
2008, between the Company and The Bank of New York, as rights
agent (Exhibit 4.1,
Form 8-K
dated July 15, 2008 in File
No. 1-3880)
10
Material Contracts:
Credit Agreement, dated as of August 19, 2005, among the
Company, the Lenders Party Thereto and JPMorgan Chase Bank,
N.A., as Administrative Agent (Exhibit 10.1,
Form 10-K
for fiscal year ended September 30, 2005 in File
No. 1-3880)
Form of Indemnification Agreement, dated September 2006, between
the Company and each Director (Exhibit 10.1,
Form 8-K
dated September 18, 2006 in File
No. 1-3880)
Settlement Agreement dated January 24, 2008 among the
Company, New Mountain Vantage GP, L.L.C. (Vantage)
and certain of Vantages affiliates (Exhibit 10.1,
Form 8-K
dated January 24, 2008 in File
No. 1-3880)
Director Services Agreement, dated as of June 1, 2008,
between the Company and Philip C. Ackerman (Exhibit 99,
Form 8-K
dated June 16, 2008 in File
No. 1-3880)
Resolutions adopted by the National Fuel Gas Company Board of
Directors on February 21, 2008 regarding director stock
ownership guidelines (Exhibit 10.5,
Form 10-Q
for the quarterly period ended March 31, 2008 in File
No. 1-3880)
10
.1
Form of Amended and Restated Employment Continuation and
Noncompetition Agreement among the Company, a subsidiary of the
Company and each of Karen M. Camiolo, Carl M. Carlotti, Anna
Marie Cellino, Paula M. Ciprich, Donna L. DeCarolis, John R.
Pustulka, James D. Ramsdell, David F. Smith and Ronald J. Tanski
10
.2
Form of Amended and Restated Employment Continuation and
Noncompetition Agreement among the Company, Seneca Resources
Corporation and Matthew D. Cabell
Letter Agreement between the Company and Matthew D. Cabell,
dated November 17, 2006 (Exhibit 10.1,
Form 10-Q
for the quarterly period ended December 31, 2006 in File
No. 1-3880)
Table of Contents
Exhibit
Description of
National Fuel Gas Company 1993 Award and Option Plan, dated
February 18, 1993 (Exhibit 10.1,
Form 10-Q
for the quarterly period ended March 31, 1993 in File
No. 1-3880)
Amendment to National Fuel Gas Company 1993 Award and Option
Plan, dated October 27, 1995 (Exhibit 10.8,
Form 10-K
for fiscal year ended September 30, 1995 in File
No. 1-3880)
Amendment to National Fuel Gas Company 1993 Award and Option
Plan, dated December 11, 1996 (Exhibit 10.8,
Form 10-K
for fiscal year ended September 30, 1996 in File
No. 1-3880)
Amendment to National Fuel Gas Company 1993 Award and Option
Plan, dated December 18, 1996 (Exhibit 10,
Form 10-Q
for the quarterly period ended December 31, 1996 in File
No. 1-3880)
National Fuel Gas Company 1993 Award and Option Plan, amended
through June 14, 2001 (Exhibit 10.1,
Form 10-K
for fiscal year ended September 30, 2001 in File
No. 1-3880)
National Fuel Gas Company 1993 Award and Option Plan, amended
through September 8, 2005 (Exhibit 10.2,
Form 10-K
for fiscal year ended September 30, 2005 in File
No. 1-3880)
Administrative Rules with Respect to At Risk Awards under the
1993 Award and Option Plan (Exhibit 10.14,
Form 10-K
for fiscal year ended September 30, 1996 in File
No. 1-3880)
National Fuel Gas Company 1997 Award and Option Plan, as amended
and restated as of July 23, 2007 (Exhibit 10.4,
Form 10-Q
for the quarterly period ended March 31, 2008 in File
No. 1-3880)
Form of Award Notice under National Fuel Gas Company 1997 Award
and Option Plan (Exhibit 10.1,
Form 8-K
dated March 28, 2005 in File
No. 1-3880)
Form of Award Notice under National Fuel Gas Company 1997 Award
and Option Plan (Exhibit 10.1,
Form 8-K
dated May 16, 2006 in File
No. 1-3880)
Form of Restricted Stock Award Notice under National Fuel Gas
Company 1997 Award and Option Plan (Exhibit 10.2,
Form 10-Q
for the quarterly period ended December 31, 2006 in File
No. 1-3880)
Form of Stock Option Award Notice under National Fuel Gas
Company 1997 Award and Option Plan (Exhibit 10.3,
Form 10-Q
for the quarterly period ended December 31, 2006 in File
No. 1-3880)
Form of Stock Appreciation Right Award Notice under National
Fuel Gas Company 1997 Award and Option Plan (Exhibit 10.2,
Form 10-Q
for the quarterly period ended March 31, 2008 in
File No. 1-3880)
Administrative Rules with Respect to At Risk Awards under the
1997 Award and Option Plan amended and restated as of
September 8, 2005 (Exhibit 10.4,
Form 10-K
for fiscal year ended September 30, 2005 in File
No. 1-3880)
10
.3
Amended and Restated National Fuel Gas Company 2007 Annual At
Risk Compensation Incentive Program
Description of performance goals for certain executive officers
under the Companys Annual At Risk Compensation Incentive
Program (Exhibit 10.8,
Form 10-Q
for the quarterly period ended December 31, 2006 in File
No. 1-3880)
Description of performance goals for certain executive officers
under the Companys Annual At Risk Compensation Incentive
Program (Exhibit 10.1,
Form 10-Q
for the quarterly period ended December 31, 2007 in File
No. 1-3880)
10
.4
National Fuel Gas Company Executive Annual Cash Incentive Program
Administrative Rules of the Compensation Committee of the Board
of Directors of National Fuel Gas Company, as amended and
restated effective February 20, 2008 (Exhibit 10.3,
Form 10-Q
for the quarterly period ended March 31, 2008 in File
No. 1-3880)
National Fuel Gas Company Deferred Compensation Plan, as amended
and restated through May 1, 1994 (Exhibit 10.7,
Form 10-K
for fiscal year ended September 30, 1994 in File
No. 1-3880)
Amendment to National Fuel Gas Company Deferred Compensation
Plan, dated September 27, 1995 (Exhibit 10.9,
Form 10-K
for fiscal year ended September 30, 1995 in File
No. 1-3880)
Amendment to National Fuel Gas Company Deferred Compensation
Plan, dated September 19, 1996 (Exhibit 10.10,
Form 10-K
for fiscal year ended September 30, 1996 in File
No. 1-3880)
Table of Contents
Exhibit
Description of
National Fuel Gas Company Deferred Compensation Plan, as amended
and restated through March 20, 1997 (Exhibit 10.3,
Form 10-K
for fiscal year ended September 30, 1997 in File
No. 1-3880)
Amendment to National Fuel Gas Company Deferred Compensation
Plan, dated June 16, 1997 (Exhibit 10.4,
Form 10-K
for fiscal year ended September 30, 1997 in File
No. 1-3880)
Amendment No. 2 to the National Fuel Gas Company Deferred
Compensation Plan, dated March 13, 1998 (Exhibit 10.1,
Form 10-K
for fiscal year ended September 30, 1998 in File
No. 1-3880)
Amendment to the National Fuel Gas Company Deferred Compensation
Plan, dated February 18, 1999 (Exhibit 10.1,
Form 10-Q
for the quarterly period ended March 31, 1999 in File
No. 1-3880)
Amendment to National Fuel Gas Company Deferred Compensation
Plan, dated June 15, 2001 (Exhibit 10.3,
Form 10-K
for fiscal year ended September 30, 2001 in File
No. 1-3880)
Amendment to the National Fuel Gas Company Deferred Compensation
Plan, dated October 21, 2005 (Exhibit 10.5,
Form 10-K
for fiscal year ended September 30, 2005 in File
No. 1-3880)
Form of Letter Regarding Deferred Compensation Plan and Internal
Revenue Code Section 409A, dated July 12, 2005
(Exhibit 10.6,
Form 10-K
for fiscal year ended September 30, 2005 in
File No. 1-3880)
National Fuel Gas Company Tophat Plan, effective March 20,
1997 (Exhibit 10,
Form 10-Q
for the quarterly period ended June 30, 1997 in File
No. 1-3880)
Amendment No. 1 to National Fuel Gas Company Tophat Plan,
dated April 6, 1998 (Exhibit 10.2,
Form 10-K
for fiscal year ended September 30, 1998 in File
No. 1-3880)
Amendment No. 2 to National Fuel Gas Company Tophat Plan,
dated December 10, 1998 (Exhibit 10.1,
Form 10-Q
for the quarterly period ended December 31, 1998 in File
No. 1-3880)
Form of Letter Regarding Tophat Plan and Internal Revenue Code
Section 409A, dated July 12, 2005 (Exhibit 10.7,
Form 10-K
for fiscal year ended September 30, 2005 in File
No. 1-3880)
National Fuel Gas Company Tophat Plan, Amended and Restated
December 7, 2005 (Exhibit 10.1,
Form 10-Q
for the quarterly period ended December 31, 2005 in File
No. 1-3880)
National Fuel Gas Company Tophat Plan, as amended
September 20, 2007 (Exhibit 10.3,
Form 10-K
for the fiscal year ended September 30, 2007 in File
No. 1-3880)
Amended and Restated Split Dollar Insurance and Death Benefit
Agreement, dated September 17, 1997 between the Company and
Philip C. Ackerman (Exhibit 10.5,
Form 10-K
for fiscal year ended September 30, 1997 in File
No. 1-3880)
Amendment Number 1 to Amended and Restated Split Dollar
Insurance and Death Benefit Agreement by and between the Company
and Philip C. Ackerman, dated March 23, 1999
(Exhibit 10.3,
Form 10-K
for fiscal year ended September 30, 1999 in File
No. 1-3880)
Split Dollar Insurance and Death Benefit Agreement, dated
September 15, 1997, between the Company and David F. Smith
(Exhibit 10.13,
Form 10-K
for fiscal year ended September 30, 1999 in File
No. 1-3880)
Amendment Number 1 to Split Dollar Insurance and Death Benefit
Agreement by and between the Company and David F. Smith, dated
March 29, 1999 (Exhibit 10.14,
Form 10-K
for fiscal year ended September 30, 1999 in File
No. 1-3880)
National Fuel Gas Company Parameters for Executive Life
Insurance Plan (Exhibit 10.1,
Form 10-K
for fiscal year ended September 30, 2004 in File
No. 1-3880)
National Fuel Gas Company and Participating Subsidiaries
Executive Retirement Plan as amended and restated through
November 1, 1995 (Exhibit 10.10,
Form 10-K
for fiscal year ended September 30, 1995 in File
No. 1-3880)
Amendments to National Fuel Gas Company and Participating
Subsidiaries Executive Retirement Plan, dated September 18,
1997 (Exhibit 10.9,
Form 10-K
for fiscal year ended September 30, 1997 in File
No. 1-3880)
Amendments to National Fuel Gas Company and Participating
Subsidiaries Executive Retirement Plan, dated December 10,
1998 (Exhibit 10.2,
Form 10-Q
for the quarterly period ended December 31, 1998 in File
No. 1-3880)
Table of Contents
Exhibit
Description of
Amendments to National Fuel Gas Company and Participating
Subsidiaries Executive Retirement Plan, effective
September 16, 1999 (Exhibit 10.15,
Form 10-K
for fiscal year ended September 30, 1999 in File
No. 1-3880)
Amendment to National Fuel Gas Company and Participating
Subsidiaries Executive Retirement Plan, effective
September 5, 2001 (Exhibit 10.4,
Form 10-K/A
for fiscal year ended September 30, 2001, in File
No. 1-3880)
National Fuel Gas Company and Participating Subsidiaries
Executive Retirement Plan, Amended and Restated as of
January 1, 2007 (Exhibit 10.5,
Form 10-Q
for the quarterly period ended December 31, 2006 in File
No. 1-3880)
National Fuel Gas Company and Participating Subsidiaries
Executive Retirement Plan, Amended and Restated as of
September 20, 2007 (Exhibit 10.4,
Form 10-K
for the fiscal year ended September 30, 2007 in File
No. 1-3880)
10
.5
National Fuel Gas Company and Participating Subsidiaries
Executive Retirement Plan, Amended and Restated as of
September 24, 2008
National Fuel Gas Company and Participating Subsidiaries 1996
Executive Retirement Plan Trust Agreement (II), dated
May 10, 1996 (Exhibit 10.13,
Form 10-K
for fiscal year ended September 30, 1996 in File
No. 1-3880)
National Fuel Gas Company Participating Subsidiaries Executive
Retirement Plan 2003 Trust Agreement (I), dated
September 1, 2003 (Exhibit 10.2,
Form 10-K
for fiscal year ended September 30, 2004 in File
No. 1-3880)
National Fuel Gas Company Performance Incentive Program
(Exhibit 10.1,
Form 8-K
dated June 3, 2005 in File
No. 1-3880)
Excerpts of Minutes from the National Fuel Gas Company Board of
Directors Meeting of March 20, 1997 regarding the Retainer
Policy for Non-Employee Directors (Exhibit 10.11,
Form 10-K
for fiscal year ended September 30, 1997 in File
No. 1-3880)
Amended and Restated Retirement Benefit Agreement for David F.
Smith, dated September 20, 2007, among the Company,
National Fuel Gas Supply Corporation and David F. Smith
(Exhibit 10.5,
Form 10-K
for the fiscal year ended September 30, 2007 in File
No. 1-3880)
Description of assignment of interests in certain life insurance
policies (Exhibit 10.1,
Form 10-Q
for the quarterly period ended June 30, 2006 in File
No. 1-3880)
Description of long-term performance incentives under the
National Fuel Gas Company Performance Incentive Program
(Exhibit 10.7,
Form 10-Q
for the quarterly period ended December 31, 2006 in
File No. 1-3880)
Description of long-term performance incentives under the
National Fuel Gas Company Performance Incentive Program
(Exhibit 10.1,
Form 10-Q
for the quarterly period ended March 31, 2008 in File
No. 1-3880)
Description of agreement between the Company and Philip C.
Ackerman regarding death benefit (Exhibit 10.3,
Form 10-Q
for the quarterly period ended June 30, 2006 in File
No. 1-3880)
Agreement, dated September 24, 2006, between the Company
and Philip C. Ackerman regarding death benefit
(Exhibit 10.1,
Form 10-K
for the fiscal year ended September 30, 2006 in File
No. 1-3880)
12
Statements regarding Computation of Ratios: Ratio of Earnings to
Fixed Charges for the fiscal years ended September 30, 2004
through 2008
21
Subsidiaries of the Registrant
23
Consents of Experts:
23
.1
Consent of Netherland, Sewell & Associates, Inc.
regarding Seneca Resources Corporation
23
.2
Consent of Independent Registered Public Accounting Firm
31
Rule 13a-14(a)/15d-14(a)
Certifications:
31
.1
Written statements of Chief Executive Officer pursuant to
Rule 13a-14(a)/15d-14(a)
of the Exchange Act
Table of Contents
Exhibit
Description of
31
.2
Written statements of Principal Financial Officer pursuant to
Rule 13a-14(a)/15d-14(a)
of the Exchange Act
32
Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
99
Additional Exhibits:
99
.1
Report of Netherland, Sewell & Associates, Inc.
regarding Seneca Resources Corporation
99
.2
Company Maps
Incorporated herein by reference as indicated.
All other exhibits are omitted because they are not applicable
or the required information is shown elsewhere in this Annual
Report on
Form 10-K
In accordance with Item 601(b)(32)(ii) of
Regulation S-K
and SEC Release Nos.
33-8238
and
34-47986,
Final Rule: Managements Reports on Internal Control Over
Financial Reporting and Certification of Disclosure in Exchange
Act Periodic Reports, the material contained in Exhibit 32
is furnished and not deemed filed with
the SEC and is not to be incorporated by reference into any
filing of the Registrant under the Securities Act of 1933 or the
Exchange Act, whether made before or after the date hereof and
irrespective of any general incorporation language contained in
such filing, except to the extent that the Registrant
specifically incorporates it by reference
Table of Contents
(Registrant)
By
Chairman of the Board and Director
Date: November 26, 2008
Director
Date: November 26, 2008
Director
Date: November 26, 2008
Director
Date: November 26, 2008
Director
Date: November 26, 2008
Director
Date: November 26, 2008
Director
Date: November 26, 2008
Director
Date: November 26, 2008
Director
Date: November 26, 2008
President, Chief Executive
Officer and Director
Date: November 26, 2008
124
Table of Contents
Treasurer and Principal
Financial Officer
Date: November 26, 2008
Controller and Principal
Accounting Officer
Date: November 26, 2008
125
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[SUBSIDIARY CORPORATION] | |||||
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Attest: /s/
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By: | |||||
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NATIONAL FUEL GAS COMPANY | |||||
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Attest: /s/
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By: | |||||
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EXECUTIVE: | |||||
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1. Operation of Agreement
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2 | |||
a. Effective Date
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2 | |||
b. Termination of Employment Following a Potential
Change in Control
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2 | |||
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2. Definitions
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2 | |||
a. Change in Control
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2 | |||
b. Potential Change in Control
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3 | |||
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3. Employment Period
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4 | |||
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4. Position and Duties
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4 | |||
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5. Compensation
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4 | |||
a. Base Salary
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4 | |||
b. Annual Bonus
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4 | |||
c. Long-term Incentive Compensation Programs
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4 | |||
d. Benefit Plans
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5 | |||
e. Expenses
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5 | |||
f. Vacation and Fringe Benefits
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5 | |||
g. Indemnification
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5 | |||
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6. Termination
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5 | |||
a. Death, Disability or Retirement
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5 | |||
b. Voluntary Termination
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c. Cause
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6 | |||
d. Good Reason
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6 | |||
e. Notice of Termination
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f. Date of Termination
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7 | |||
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7. Obligations of the Company upon Termination
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8 | |||
a. Death or Disability
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8 | |||
b. Cause and Voluntary Termination
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8 | |||
c. Termination by the Company other than for Cause
and Termination by the Executive for Good
Reason
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8 | |||
i. Severance Benefits
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8 | |||
ii. Continuation of Welfare Benefits
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9 |
21
iii. Qualification for Early Retirement
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9 | |||
d. Discharge of the Companys Obligations
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10 | |||
e. Limit on Payments by the Company
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i. Application of Section 7(e)
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11 | |||
ii. Calculation of Benefits
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11 | |||
iii. Imposition of Payment Cap
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11 | |||
iv. Application of Section 280G
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12 | |||
v. Applicable Tax Rates
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12 | |||
vi. Adjustments in Respect of the Payment Cap
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13 | |||
f. If Termination of Employment Occurs After the Executive
Has Reached Age 62
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8. Non-exclusivity of Rights
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9. No Offset
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10. Non-Competition and Non-Solicitation
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a. Noncompete
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14 | |||
b. Non-Solicitation of Employees
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15 | |||
c. Confidential Information
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15 | |||
d. Non-disparagement
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15 | |||
e. Company Property
|
16 | |||
f. Additional Payment
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16 | |||
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11. Injunctive Relief and Other Remedies with Respect to
Covenants
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16 | |||
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12. Successors
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16 | |||
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13. Miscellaneous
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a. Applicable Law
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17 | |||
b. Arbitration
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17 | |||
c. Amendments
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17 | |||
d. Entire Agreement
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17 | |||
e. Notices
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18 | |||
f. Source of Payments
|
18 | |||
g. Tax Withholding
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19 | |||
h. Severability; Reformation
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19 | |||
i. Waiver
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19 | |||
j. Counterparts
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19 | |||
k. Captions
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19 | |||
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Signature Page
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SENECA RESOURCES CORPORATION | ||||
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Attest:
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By: | |||
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Name: | |||
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Title: | |||
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NATIONAL FUEL GAS COMPANY | ||||
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Attest:
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By: | |||
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Name: | |||
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Title: | |||
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EXECUTIVE: | ||||
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20
Page | ||||
1. Operation of Agreement
|
2 | |||
a. Effective Date
|
2 | |||
b. Termination of Employment Following a Potential
Change in Control
|
2 | |||
|
||||
2. Definitions
|
2 | |||
a. Change in Control
|
2 | |||
b. Potential Change in Control
|
3 | |||
|
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3. Employment Period
|
4 | |||
|
||||
4. Position and Duties
|
4 | |||
|
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5. Compensation
|
4 | |||
a. Base Salary
|
4 | |||
b. Annual Bonus
|
4 | |||
c. Long-term Incentive Compensation Programs
|
5 | |||
d. Benefit Plans
|
5 | |||
e. Expenses
|
5 | |||
f. Vacation and Fringe Benefits
|
5 | |||
g. Indemnification
|
5 | |||
|
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6. Termination
|
6 | |||
a. Death, Disability or Retirement
|
6 | |||
b. Voluntary Termination
|
6 | |||
c. Cause
|
6 | |||
d. Good Reason
|
6 | |||
e. Notice of Termination
|
7 | |||
f. Date of Termination
|
7 | |||
|
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7. Obligations of the Company upon Termination
|
8 | |||
a. Death or Disability
|
8 | |||
b. Cause and Voluntary Termination
|
8 | |||
c. Termination by the Company other than for Cause
and Termination by the Executive for Good Reason
|
9 |
21
Page | ||||
i. Severance Benefits
|
9 | |||
ii. Continuation of Medical Benefits
|
9 | |||
iii. Continuation of Other Welfare Benefits
|
10 | |||
iv. Vesting of Retirement Benefit Account
|
10 | |||
d. Discharge of the Companys Obligations
|
10 | |||
e. Limit on Payments by the Company
|
11 | |||
i. Application of Section 7(e)
|
11 | |||
ii. Calculation of Benefits
|
11 | |||
iii. Imposition of Payment Cap
|
11 | |||
iv. Application of Section 280G
|
12 | |||
v. Applicable Tax Rates
|
12 | |||
vi. Adjustments in Respect of the Payment Cap
|
13 | |||
f. If Termination of Employment Occurs After the
Executive Has Reached Age 62
|
13 | |||
|
||||
8. Non-exclusivity of Rights
|
14 | |||
|
||||
9. No Offset
|
14 | |||
|
||||
10. Non-Competition and Non-Solicitation
|
14 | |||
a. Noncompete
|
14 | |||
b. Non-Solicitation of Employees
|
14 | |||
c. Confidential Information
|
15 | |||
d. Non-disparagement
|
15 | |||
e. Company Property
|
15 | |||
f. Additional Payment
|
15 | |||
|
||||
11. Injunctive Relief and Other Remedies with Respect to
Covenants
|
16 | |||
|
||||
12. Successors
|
16 | |||
|
||||
13. Miscellaneous
|
16 | |||
a. Applicable Law
|
16 | |||
b. Arbitration
|
17 | |||
c. Amendments
|
17 | |||
d. Entire Agreement
|
17 | |||
e. Notices
|
18 | |||
f. Source of Payments
|
18 | |||
g. Tax Withholding; Section 409A
|
19 | |||
h. Severability; Reformation
|
19 | |||
i. Waiver
|
19 | |||
j. Counterparts
|
19 | |||
k. Captions
|
19 | |||
|
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Signature Page
|
20 |
22
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6
ARTICLE | PAGE NO. | |||
ARTICLE 1 Purpose
|
1 | |||
ARTICLE 2 Definitions
|
1 | |||
ARTICLE 3 Determination of Retirement Benefits
|
7 | |||
ARTICLE 4 Vesting; Forfeiture
|
11 | |||
ARTICLE 5 Form of Payment of Benefits
|
12 | |||
ARTICLE 6 Source of Payment
|
18 | |||
ARTICLE 7 Administration of the Plan
|
18 | |||
ARTICLE 8 Amendment and Termination
|
20 | |||
ARTICLE 9 General Provisions
|
20 |
2
3
AARCIP Award (relating to | ||||||||
fiscal year ending September | ||||||||
Salary | 30 but paid in December) | |||||||
2001
|
$ | 480,000 | $ | 120,000 | ||||
2002
|
$ | 540,000 | $ | 150,000 | ||||
2003
|
$ | 600,000 | $ | 180,000 | ||||
2004
|
$ | 660,000 | $ | 210,000 | ||||
2005
|
$ | 780,000 | $ | 240,000 | ||||
2006
|
$ | 840,000 | $ | 270,000 |
4
(1) | the Members Total Benefit Base; | ||
(2) | the sum of |
(i) | the Members Social Security Offset and | ||
(ii) | the Members Basic Pension Plan Benefit. |
5
(1) | the Members Benefit Base as determined under the Basic Pension Plan, but without reduction on account of Benefit Limitations and adjusted as if deferrals under the National Fuel Gas Company Deferred Compensation Plan were not excluded from the definition of Final Average Pay under the Basic Pension Plan and | ||
(2) | the Members Basic Pension Plan Benefit. |
(1) | .0197 times the Members Years of Service not in excess of 30; | ||
(2) | .0132 times the Members Years of Service, if any, in excess of 30 (but not to exceed 10); | ||
(3) | the Members Final Average Pay. |
6
7
(1) | the product of (i) and (ii), where (i) and (ii) are |
(i) | the Members Top-Hat Benefit, | ||
( ii ) | the early retirement percentage that would be applicable to the Member were the Top-Hat Benefit actually payable from the Basic Pension Plan commencing on the date on which payment of the Top-Hat Benefit is to commence hereunder (regardless of when payment of the Basic Pension Plan Benefit actually commences); |
(2) | the product of (i) and (ii ), where (i) and (ii) are |
( i ) | the remainder of (x) minus [the sum of (y) and (z)], where (x), (y) and (z) are: |
( x ) | the Members Total Benefit Base; | ||
( y ) | the amount determined under Section 3.3(a)(1); | ||
( z ) | (A) the Members Basic Pension Plan Benefit times (B) the early retirement percentage that would be applicable to the Member were the Basic Pension Plan to commence on the date on which payment of the Top-Hat Benefit is to commence hereunder (regardless of when payment of the Basic Pension Plan Benefit actually commences); |
8
( ii ) | the Members Early Retirement Percentage as determined in Section 3.3(b) below; and |
(3) | the Members Social Security Offset. |
Age at Early Retirement Date | Early Retirement Percentage | |
65
|
100 | |
64 | 94 | |
63 | 88 | |
62 | 82 | |
61 | 70 | |
60 | 58 | |
59 | 46 | |
58 | 34 | |
57 | 22 | |
56 | 10 | |
55 years and 2 months
|
0 |
9
The Members Base Pension Plan Benefit is
[(.015 x $220,000) x 29] ($3,300) x 29 = $95,700 |
||||
so the Top-Hat Benefit is
[(.015 x $300,000) x 29] -$95,700 [$4,500 x 29] - $95,700 $130,500 95,700= |
$ | 34,800 |
$34,800 x .9 =
|
$ | 31,320 |
[(.0197 x $300,000) x 30]
$5,910 x 30 = |
$ | 177,300 |
$177,300 [Adjusted Top-Hat Benefit + Adjusted Basic Pension
Plan Benefit]
|
||||
$177,300 [$31,320 + (95,700 x .9)]
$177,300 [$31,320 + 86,130] $177,300 - $117,450 = |
$ | 59,850 |
$59,850 x .34 =
|
$ | 20,349 |
10
[(.0125 x 30) x $15,000]
(0.3750) x $15,000 = |
$ | 5,625 |
($31,320
+ 20,349) - $5,625
$51,669- $5,625 = |
$ | 46,044 |
11
12
13
14
15
16
17
18
19
20
21
22
(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 2005 includes the Impairment of Investment in Partnership of $4,158. |
Legal Name | Domicile | |
National Fuel Gas Company:
|
USA, New Jersey | |
Leidy Hub, Inc.
|
USA, New York | |
National Fuel Gas Distribution Corporation
|
USA, New York | |
National Fuel Gas Supply Corporation
|
USA, Pennsylvania | |
Seneca Resources Corporation
|
USA, Pennsylvania | |
Highland Forest Resources, Inc.
|
USA, New York | |
Empire Pipeline Company, LLC
|
USA, New York | |
St. Clair Pipeline Company, LLC
|
USA, New York | |
Empire State Pipeline
|
USA, New York | |
Empire Pipeline, Inc.
|
USA, New York | |
Horizon Energy Development, Inc.
|
USA, New York | |
Horizon Energy Holdings, Inc.
|
USA, New York | |
Horizon Energy Development B.V.
|
The Netherlands | |
Horizon LFG, Inc.
|
USA, New York | |
Toro Partners, LP
|
USA, Texas | |
Data-Track Account Services, Inc.
|
USA, New York | |
Horizon Power, Inc.
|
USA, New York | |
Seneca Energy II, LLC
|
USA, New York | |
Model City Energy, LLC
|
USA, New York | |
Energy Systems Northeast, LLC
|
USA, Delaware | |
National Fuel Resources, Inc.
|
USA, New York | |
National Fuel Gas Midstream Corporation
|
USA, Pennsylvania |
NETHERLAND, SEWELL & ASSOCIATES, INC.
|
||||
By: | /s/ J. Carter Henson, Jr., P. E. | |||
J. Carter Henson, Jr., P. E. | ||||
Senior Vice President | ||||
/s/ D. F. Smith
|
||
President and Chief Executive Officer
|
/s/ R. J. Tanski
|
||
Treasurer and Principal Financial Officer
|
1. | The Companys Annual Report on Form 10-K for the year ended September 30, 2008 (the Annual Report) fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934, as amended; and | ||
2. | Information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ D. F. Smith | ||||
President and Chief Executive Officer | ||||
/s/ R. J. Tanski | ||||
Treasurer and Principal Financial Officer | ||||
Net Reserves | Future Net Revenue (M$) | |||||||||||||||||||
Oil | NGL | Gas | Present Worth | |||||||||||||||||
Category | (MBBL) | (MBBL) | (MMCF) | Total | at 10% | |||||||||||||||
|
||||||||||||||||||||
Proved Developed
|
38,779.5 | 114.8 | 202,518.6 | 3,728,117.0 | 1,679,270.0 | |||||||||||||||
Proved Undeveloped
|
7,303.9 | 0.0 | 23,380.4 | 619,876.7 | 238,761.9 | |||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Total Proved
|
46,083.4 | 114.8 | 225,899.0 | 4,347,993.5 | 1,918,031.8 |
Net Reserves | Future Net Revenue (M$) | |||||||||||||||||||
Oil | NGL | Gas | Present Worth | |||||||||||||||||
Category | (MBBL) | (MBBL) | (MMCF) | Total | at 10% | |||||||||||||||
|
||||||||||||||||||||
Proved Developed
|
356.8 | 0.0 | 115,823.5 | 669,499.5 | 305.818.9 | |||||||||||||||
Proved Undeveloped
|
39.8 | 0.0 | 12,574.3 | 65,194.2 | 18,580.9 | |||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Total Proved
|
396.5 | 0.0 | 128,397.9 | 734,693.7 | 324,399.8 |
Net Reserves | Future Net Revenue (M$) | |||||||||||||||||||
Oil | NGL | Gas | Present Worth | |||||||||||||||||
Category | (MBBL) | (MBBL) | (MMCF) | Total | at 10% | |||||||||||||||
|
||||||||||||||||||||
Proved Developed
|
1,198.0 | 114.8 | 18,241.8 | 127,560.5 | 116,874.2 | |||||||||||||||
Proved Undeveloped
|
44.8 | 0.0 | 6,399.3 | 28,671.3 | 21,143.9 | |||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Total Proved
|
1,242.8 | 114.8 | 24,641.1 | 156,231.8 | 138,018.2 |
Net Reserves | Future Net Revenue (M$) | |||||||||||||||||||
Oil | NGL | Gas | Present Worth | |||||||||||||||||
Category | (MBBL) | (MBBL) | (MMCF) | Total | at 10% | |||||||||||||||
|
||||||||||||||||||||
Proved Developed
|
37,224.7 | 0.0 | 68,453.4 | 2,931,057.3 | 1,256,576.5 | |||||||||||||||
Proved Undeveloped
|
7,219.3 | 0.0 | 4,406.7 | 526,011.1 | 199,037.0 | |||||||||||||||
|
||||||||||||||||||||
Total Proved
|
44,444.0 | 0.0 | 72,860.1 | 3,457,068.5 | 1,455,613.9 |
Sincerely, | ||||||||||
|
||||||||||
NETHERLAND, SEWELL & ASSOCIATES, INC. | ||||||||||
|
||||||||||
|
By: | /s/ C.H. (Scott) Rees III, P.E. | ||||||||
|
||||||||||
|
C.H. (Scott) Rees III, P.E. | |||||||||
|
Chairman and Chief Executive Officer | |||||||||
|
||||||||||
By:
|
/s/ Danny D. Simmons, P.E. | By: | /s/ Mike K. Norton, P.G. | |||||||
|
||||||||||
|
Danny D. Simmons, P.E. | Mike K. Norton, P.G. | ||||||||
|
President and Chief Operating Officer | Senior Vice President | ||||||||
|
||||||||||
Date Signed: October 16, 2008 | Date Signed: October 16, 2008 |