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National Fuel Gas: National Fuel Gas Company Reports Strong Q3 Earnings

National Fuel Gas Company reported an excellent third quarter with adjusted operating results increasing 66% versus last year, driven by higher natural gas prices, lower per unit operating costs, and growth in production and gathering throughput. The company's production for the quarter was up 16% from last year, and based on updated guidance, expects full-year production to be up approximately 8% versus fiscal 2024. The company's earnings per share (EPS) came out at $1.64, beating estimates of $1.5. Revenues for the quarter were not explicitly stated, but the company's increased production and higher natural gas prices likely contributed to the significant increase in adjusted operating results.

NFG

USD 82.1

1.06%

A-Score: 6.1/10

Publication date: July 31, 2025

Full Report

Author: Analystock.ai

📋 Highlights
  • Adjusted Operating Results: Increased by 66% year-over-year, driven by higher natural gas prices and lower operating costs.
  • Production Growth: 16% year-over-year increase in production, with full-year guidance expecting an 8% growth.
  • Fiscal 2026 Guidance: EPS expected to be $8.00 to $8.50, representing a 20% increase from fiscal 2025.
  • Capital Efficiency: Production guidance of 440-455 Bcf, a 6% increase at midpoint, with a 4% reduction in capital spending.
  • Long-Term Growth: Projected 20% production growth and 18% capital reduction from fiscal 2023 to 2026.

Operational Highlights

The company's Seneca Resources segment is expected to deliver further improvements in capital efficiency, with production guidance of 440 to 455 Bcf, a 6% increase at the midpoint, and a 4% reduction in capital spending. This growth is supported by a solid hedge book with nearly 2/3 of production protected at strong prices. According to Justin I. Loweth, the company has achieved improvements in drilling and completion costs over the last 12 months, mainly driven by operational efficiencies rather than service cost deflation.

Guidance and Outlook

The company provided preliminary guidance for fiscal 2026, expecting earnings per share of $8 to $8.50 at a $4 NYMEX price, representing a 20% increase from fiscal 2025. The company expects to generate $350-400 million in free cash flow at $4 NYMEX pricing. National Fuel anticipates continued capital efficiency gains, with a long-term development program on track to deliver mid-single-digit production growth and reduced capital spending. From fiscal 2023 to 2026, the company projects 20% production growth and an 18% overall capital reduction.

Valuation

At current prices, National Fuel Gas Company trades at a P/E Ratio of 32.2, a P/B Ratio of 2.64, and a P/S Ratio of 4.75. The company's EV/EBITDA multiple is 8.17, and it offers a Dividend Yield of 2.4% and a Free Cash Flow Yield of 2.37%. The company's ROIC is 4.45%, and its ROE is 8.59%, with a Net Debt / EBITDA ratio of -0.04. These valuation metrics suggest that the company's strong growth prospects and improving capital efficiency are not yet fully priced in.

Industry Outlook

The natural gas market outlook remains constructive, with strong supply and demand fundamentals. LNG exports and gas-fired power generation have reached record highs, with U.S. LNG demand exceeding 16 Bcf per day. The company's marketing and hedging strategy offers price stability while maintaining upside exposure, with over 85% of expected volumes through 2026 backed by firm transportation and firm sales.

National Fuel Gas's A-Score