National Fuel Gas Guides Fiscal 2027 Down on Weaker Gas Prices

By Sophie Lindqvist

National Fuel Gas (NYSE:NFG) forecast fiscal 2027 adjusted earnings of $6 to $6.40 per share, down from $7.55 in fiscal 2026, as weaker natural gas prices and flat production offset growth in its regulated businesses. The company reported fourth-quarter adjusted earnings of $1.22 per share, unchanged year over year, alongside GAAP earnings of $1.02 per share.

For the full fiscal year, adjusted earnings rose 9% to $7.55 per share, President and CEO Dave Bauer said on the earnings call. The separation into two public companies proceeds apace. The new entity will carry the Seneca Resources name, with management targeting completion of the spin in the second half of calendar 2027.

What drives the lower guidance?

Treasurer and CFO Tim Silverstein attributed the decline chiefly to a natural gas price assumption of $2.85 per million British thermal units (the standard heat-content measure for gas pricing), an $0.80 drop in NYMEX prices from the prior year. Nearly two-thirds of expected production is hedged at a weighted average floor of $3.80, Silverstein said. Hedges soften the fall; they do not repeal it.

Seneca production is expected at 400 billion to 435 billion cubic feet in fiscal 2027, roughly flat at the midpoint. The forecast includes about 3 billion cubic feet of voluntary, price-related curtailments in October and assumes no further curtailments.

Regulated operations will partly compensate. Pipeline and storage revenue should benefit from recently completed projects and a pending rate case, and utility guidance includes a full year of the acquired Ohio business. National Fuel expects utility operating income to double, though Silverstein noted the acquisition will be modestly dilutive in fiscal 2027, partly due to an above-market interest rate on seller financing.

Why did Seneca miss its production target?

Seneca produced 419.5 billion cubic feet in fiscal 2026, just below the low end of revised guidance, said Justin Loweth, president of Seneca Resources and National Fuel Midstream. The integrated upstream and gathering business still generated more than $1 billion in EBITDA (earnings before interest, taxes, depreciation and amortization) and lifted its SEC reserve base to 5.2 trillion cubic feet equivalent.

Loweth cited three culprits: an underperforming Marcellus development pad in Lycoming County, Pennsylvania; Upper Utica appraisal results below expectations; and greater-than-anticipated interactions between hydraulic fracturing and nearby Lower Utica wells. The six-well pad's underperformance remains under evaluation; Loweth called it an anomaly with no material impact on long-term value.

Seneca will deploy its Gen 3 well design across much of the fiscal 2027 program. The more intensive Gen 4 design, Loweth said, did not consistently deliver enough additional estimated ultimate recovery (the projected lifetime output of a well) to justify its cost, and it could raise the risk of fracturing interactions. The company plans to turn 20 to 26 wells in line, including roughly eight involving appraisal or testing.

Loweth expects the changes to position Seneca for production growth in fiscal 2028, with emphasis on the Lower Utica and Tioga County Marcellus. He sees gas markets remaining somewhat oversupplied through 2027, with a more constructive outlook as liquefied natural gas demand grows in 2028 and beyond.

How are the separation and projects advancing?

Silverstein said National Fuel intends to submit its initial confidential Form 10 filing for the separation before the end of calendar 2026, working toward a public filing around March or April, subject to review. An IRS private letter ruling process is also underway and could take longer.

Bauer said the Tioga Pathway and Shippingport Lateral pipeline projects entered service and should add approximately $30 million in combined annual revenue. The Line N upgrade remains on track for late 2028, adding about $20 million annually.

The company also acquired Honeoye Storage Corporation for approximately $5 million, adding 5.9 billion cubic feet of federally regulated storage capacity. New rates in Supply Corporation's pending rate case took effect Nov. 1 subject to refund, while settlement discussions continue. In Pennsylvania, a regulatory order awarded a $10 million rate increase and reset a charge allowing recovery of modernization investments; in New York, regulators approved a system modernization tracker in August in exchange for a commitment not to file a rate case for at least a year.

The Ohio utility acquisition closed Oct. 1. Bauer said the transition proceeds as expected, with the company hoping to exit its back-office transition services agreement with seller CenterPoint by the end of calendar 2027, ahead of the maximum 24-month term.

For fiscal 2027, total capital spending should rise approximately 10%, including $350 million to $400 million for the utility and $600 million to $640 million for integrated upstream and gathering. Another $50 million to $100 million in discretionary land spending sits outside guidance; Silverstein said it could be cut if commodity prices stay depressed. Prudence, one assumes, is cheaper than acreage.