National Fuel Gas Company (NFG) reported a difficult GAAP quarter in QQ4 2024, with a net loss driven largely by non-cash impairments and one-time charges, despite a resilient operating framework and a strong hedge book. Adjusted operating results were $0.77 per share, supported by a $61 million hedge gain that mitigated the impact of weak natural gas prices. Management emphasized disciplined capital allocation and ongoing growth in regulated and non-regulated segments, including Seneca Resources and NFG Midstream, underpinned by an integrated development program and ongoing modernization that should expand rate bases and cash flows over time.
Key sources of strength include: (1) a robust hedge portfolio that reduced earnings volatility and offset commodity weakness; (2) continued recovery and rate-base growth in New York through the NY rate-case settlement and modernization program; and (3) capital-efficient development in the Eastern Development Area (EDA) with meaningful reported production gains and solid reserves growth. Management signaled constructive optics for 2025, including a guided adjusted operating range of $5.50â$6.00 per share (assuming NYMEX around $2.80/MMBtu), supported by hedging and disciplined DD&A adjustments post impairment. The company also highlighted ongoing capex efficiency and structural improvements (e.g., Tioga Utica pad productivity, water management investments) that should drive lower per-foot costs and higher free cash flow in the medium term.
Near-term headwinds include: (i) continued commodity price volatility in Henry Hub pricing, (ii) impairments tied to Northern Access and potential first-quarter 2025 ceiling-test adjustments, and (iii) liquidity considerations as debt maturities come due in 2025â2026. Taken together, NFG presents a bifurcated risk/return profile: a higher-risk, non-regulated earnings cadence offset by a more stable, regulated rate-base growth engine and substantial hedging that reduces downside risk, with an explicit long-term plan for free cash flow expansion and >10% CAGR through fiscal 2027.