What changed in this filing

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Item 1. Financial Statements

2024-02-08 compared with 2023-08-03 · 139 added, 309 removed, 520 unchanged (46% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

(Thousands of U.S.

14 unchanged sentences

318,251 404,489

Gain on Sale of Assets — 12,736 — 12,736

Operating Income 207,110 254,370

10 unchanged sentences

Dividends on Common Stock ( 45,597 ) ( 43,598 )

Balance at June 30 $ 1,857,630 $ 1,472,395 $ 1,857,630 $ 1,472,395

Balance at December 31 $ 1,973,279 $ 1,713,176

Earnings Per Common Share:

11 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

(Thousands of U.S.

5 unchanged sentences

Reclassification Adjustment for Realized (Gains) Losses on Derivative Financial Instruments in Net Income ( 19,708 ) 159,342

Other Post-Retirement Adjustment for Regulatory Proceeding — — — ( 7,351 )

Other Comprehensive Income (Loss), Before Tax 169,459 456,935

3 unchanged sentences

( 5,468 ) 43,571

Income Tax Expense (Benefit) Related to Other Post-Retirement Adjustment for Regulatory Proceeding — — — ( 1,544 )

Income Taxes – Net 47,018 124,948

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Cash and Temporary Cash Investments 41,685 55,447

Hedging Collateral Deposits — 91,670

Receivables – Net of Allowance for Uncollectible Accounts of $ 37,116 and $ 36,295 , Respectively

3 unchanged sentences

Materials and Supplies - at average cost 47,692 48,989

Unrecovered Purchased Gas Costs 24,098 99,342

Other Current Assets 99,400 100,260

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Earnings Reinvested in the Business 1,973,279 1,885,856

Accumulated Other Comprehensive Loss ( 49,384 ) ( 625,733 )

Accumulated Other Comprehensive Income (Loss) 67,381 ( 55,060 )

Total Comprehensive Shareholders’ Equity 3,174,002 2,963,376

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Notes Payable to Banks and Commercial Paper 300,000 287,500

Current Portion of Long-Term Debt — 549,000

Accounts Payable 105,390 152,193

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Consolidated Statements of Cash Flows

Nine Months Ended

Three Months Ended

(Thousands of U.S.

3 unchanged sentences

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:

Gain on Sale of Assets — ( 12,736 )

Depreciation, Depletion and Amortization 115,790 96,600

1 unchanged sentence

Stock-Based Compensation 4,660 5,575

Reduction of Other Post-Retirement Regulatory Liability — ( 18,533 )

Other 8,041 4,078

Receivables and Unbilled Revenue ( 58,459 ) ( 29,522 )

Gas Stored Underground and Materials, Supplies and Emission Allowances 11,757 24,141

Gas Stored Underground and Materials and Supplies 6,915 5,622

Unrecovered Purchased Gas Costs — 20,603

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Capital Expenditures ( 246,938 ) ( 233,473 )

Net Proceeds from Sale of Oil and Gas Producing Properties — 254,439

Acquisition of Upstream Assets ( 124,758 ) —

Sale of Fixed Income Mutual Fund Shares in Grantor Trust — 10,000

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Proceeds from Issuance of Short-Term Note Payable to Bank — 250,000

Repayment of Short-Term Note Payable to Bank ( 250,000 ) —

Net Change in Other Short-Term Notes Payable to Banks and Commercial Paper 12,500 ( 60,000 )

Net Proceeds from Issuance of Long-Term Debt 297,533 —

Reduction of Long-Term Debt — ( 150,000 )

1 unchanged sentence

Net Repurchases of Common Stock ( 3,897 ) ( 6,694 )

Net Cash Provided by (Used in) Financing Activities ( 310,316 ) 107,412

Net Cash Used in Financing Activities ( 36,848 ) ( 10,146 )

Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash ( 13,762 ) 108,357

Cash, Cash Equivalents, and Restricted Cash at October 1 55,447 137,718

Cash, Cash Equivalents, and Restricted Cash at June 30 $ 53,415 $ 587,046

Cash, Cash Equivalents, and Restricted Cash at December 31 $ 41,685 $ 246,075

Supplemental Disclosure of Cash Flow Information

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Non-Cash Capital Expenditures $ 97,922 $ 110,314

Non-Cash Contingent Consideration for Asset Sale $ — $ 12,571

See Notes to Condensed Consolidated Financial Statements

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The consolidated financial statements for the year ended September 30, 2024 will be audited by the Company's independent registered public accounting firm after the end of the fiscal year.

The earnings for the nine months ended June 30, 2023 should not be taken as a prediction of earnings for the entire fiscal year ending September 30, 2023.

The earnings for the three months ended December 31, 2023 should not be taken as a prediction of earnings for the entire fiscal year ending September 30, 2024.

Most of the business of the Utility segment is seasonal in nature and is influenced by weather conditions.

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The components, as reported on the Company’s Consolidated Balance Sheets, of the total cash, cash equivalents, and restricted cash presented on the Statement of Cash Flows are as follows (in thousands):

Nine Months Ended

June 30, 2023 Nine Months Ended

June 30, 2022

June 30, 2023 Balance at October 1, 2022 Balance at

June 30, 2022 Balance at October 1, 2021

Three Months Ended

December 31, 2023 Three Months Ended

December 31, 2022

December 31, 2023 Balance at October 1, 2023 Balance at

December 31, 2022 Balance at October 1, 2022

Cash and Temporary Cash Investments $ 41,685 $ 55,447 $ 244,475 $ 46,048

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The allowance, the majority of which is in the Utility segment, is determined based on historical experience, the age of customer accounts, other specific information about customer accounts, and the economic and regulatory environment.

Account balances are charged off against the allowance approximately twelve months after the account is final billed or when it is anticipated that the receivable will not be recovered.

Account balances have historically been written off against the allowance approximately twelve months after the account is final billed or when it is anticipated that the receivable will not be recovered.

During 2022 and 2021, final billings were suppressed in the Utility segment as a result of state shut-off moratoriums arising from the COVID-19 pandemic.

Those moratoriums were lifted in 2022 which allowed for the resumption of final billings during 2022, thereby resulting in higher amounts being written off in 2023 and 2024.

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Activity in the allowance for uncollectible accounts for the nine months ended June 30, 2023 and 2022 are as follows (in thousands):

Activity in the allowance for uncollectible accounts for the three months ended December 31, 2023 and 2022 are as follows (in thousands):

Balance at Beginning of Period Additions Charged to Costs and Expenses Discounts on Purchased Receivables Net Accounts Receivable Written-Off Balance at End of Period

Nine Months Ended June 30, 2023

Three Months Ended December 31, 2023

Allowance for Uncollectible Accounts $ 36,295 $ 4,157 $ 119 $ ( 3,455 ) $ 37,116

Nine Months Ended June 30, 2022

Three Months Ended December 31, 2022

Allowance for Uncollectible Accounts $ 40,228 $ 5,035 $ 228 $ ( 1,566 ) $ 43,925

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Gas stored underground normally declines during the first and second quarters of the year and is replenished during the third and fourth quarters.

In the Utility segment, the current cost of replacing gas withdrawn from storage is recorded in the Consolidated Statements of Income and a reserve for gas replacement is recorded in the Consolidated Balance Sheets under the caption “Other Accruals and Current Liabilities.” Such reserve, which amounted to $ 86.5 million at June 30, 2023, is reduced to zero by September 30 of each year as the inventory is replenished.

In the Utility segment, the current cost of replacing gas withdrawn from storage is recorded in the Consolidated Statements of Income and a reserve for gas replacement is recorded in the Consolidated Balance Sheets under the caption “Other Accruals and Current Liabilities.” Such reserve, which amounted to $ 1.2 million at December 31, 2023, is reduced to zero by September 30 of each year as the inventory is replenished.

Property, Plant and Equipment.

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The Company does not recognize any gain or loss on the sale or other disposition of oil and gas properties unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves of oil and gas attributable to a cost center.

The Company's capitalized costs relating to oil and gas producing activities, net of accumulated depreciation, depletion and amortization, were $ 2.4 billion and $ 1.9 billion at June 30, 2023 and September 30, 2022, respectively.

The Company's capitalized costs relating to oil and gas producing activities, net of accumulated depreciation, depletion and amortization, were $ 2.5 billion and $ 2.4 billion at December 31, 2023 and September 30, 2023, respectively.

Capitalized costs include costs related to unproved properties, which are excluded from amortization until proved reserves are found or it is determined that the unproved properties are impaired.

Such costs amounted to $ 190.5 million and $ 66.0 million at June 30, 2023 and September 30, 2022, respectively.

Such costs amounted to $ 159.1 million and $ 161.1 million at December 31, 2023 and September 30, 2023, respectively.

All costs related to unproved properties are reviewed quarterly to determine if impairment has occurred.

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If capitalized costs, net of accumulated depreciation, depletion and amortization and related deferred income taxes, exceed the ceiling at the end of any quarter, a permanent non-cash impairment is required to be charged to earnings in that quarter.

At June 30, 2023, the ceiling exceeded the book value of the oil and gas properties by approximately $ 1.8 billion.

The estimated future net cash flows were decreased by $ 460.4 million for hedging under the ceiling test at June 30, 2023.

At December 31, 2023, the ceiling exceeded the book value of the oil and gas properties by approximately $ 84.4 million.

The estimated future net cash flows were increased by $ 307.0 million for hedging under the ceiling test at December 31, 2023.

The principal assets of the Utility, Pipeline and Storage and Gathering segments, consisting primarily of gas distribution pipelines, transmission pipelines, storage facilities, gathering lines and compressor stations, are recorded at historical cost.

There were no indications of any impairments to property, plant and equipment in the Utility, Pipeline and Storage and Gathering segments at June 30, 2023.

There were no indications of any impairments to property, plant and equipment in the Utility, Pipeline and Storage and Gathering segments at December 31, 2023.

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Accumulated Other Comprehensive Loss.

The components of Accumulated Other Comprehensive Loss and changes for the nine months ended June 30, 2023 and 2022, net of related tax effect, are as follows (amounts in parentheses indicate debits) (in thousands):

Accumulated Other Comprehensive Income (Loss).

The components of Accumulated Other Comprehensive Income (Loss) and changes for the three months ended December 31, 2023 and 2022, net of related tax effect, are as follows (amounts in parentheses indicate debits) (in thousands):

Gains and Losses on Derivative Financial Instruments Funded Status of the Pension and Other Post-Retirement Benefit Plans Total

Three Months Ended June 30, 2023

Balance at April 1, 2023 $ ( 1,294 ) $ ( 53,570 ) $ ( 54,864 )

Other Comprehensive Gains and Losses Before Reclassifications

47,359 — 47,359

Amounts Reclassified From Other Comprehensive Income ( 41,879 ) — ( 41,879 )

Balance at June 30, 2023 $ 4,186 $ ( 53,570 ) $ ( 49,384 )

Nine Months Ended June 30, 2023

Three Months Ended December 31, 2023

Balance at October 1, 2023 $ 4,623 $ ( 59,683 ) $ ( 55,060 )

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Amounts Reclassified From Other Comprehensive Income ( 14,240 ) — ( 14,240 )

Balance at June 30, 2023 $ 4,186 $ ( 53,570 ) $ ( 49,384 )

Three Months Ended June 30, 2022

Balance at April 1, 2022 $ ( 584,812 ) $ ( 69,442 ) $ ( 654,254 )

Other Comprehensive Gains and Losses Before Reclassifications

( 145,322 ) — ( 145,322 )

Amounts Reclassified From Other Comprehensive Loss 216,708 — 216,708

Balance at June 30, 2022 $ ( 513,426 ) $ ( 69,442 ) $ ( 582,868 )

Nine Months Ended June 30, 2022

Balance at December 31, 2023 $ 127,064 $ ( 59,683 ) $ 67,381

Three Months Ended December 31, 2022

Balance at October 1, 2022 $ ( 572,163 ) $ ( 53,570 ) $ ( 625,733 )

1 unchanged sentence

216,216 — 216,216

Amounts Reclassified From Other Comprehensive Loss 429,377 — 429,377

Other Post-Retirement Adjustment for Regulatory Proceeding — ( 5,807 ) ( 5,807 )

Balance at June 30, 2022 $ ( 513,426 ) $ ( 69,442 ) $ ( 582,868 )

During the quarter ended March 31, 2022, the PaPUC concluded a regulatory proceeding that addressed the recovery of other post-employment benefit (“OPEB”) expenses in Distribution Corporation's Pennsylvania service territory.

As a result of that proceeding, Distribution Corporation suspended regulatory accounting for OPEB expenses in Pennsylvania and a regulatory deferral of $ 7.4 million ($ 5.8 million after-tax) related to the funded status of Distribution Corporation’s other post-retirement benefit plans in Pennsylvania was reclassified to accumulated other comprehensive loss.

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Reclassifications Out of Accumulated Other Comprehensive Loss.

The details about the reclassification adjustments out of accumulated other comprehensive loss for the nine months ended June 30, 2023 and 2022 are as follows (amounts in parentheses indicate debits to the income statement) (in thousands):

Details About Accumulated Other Comprehensive Loss Components Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Loss Affected Line Item in the Statement Where Net Income is Presented

Amounts Reclassified From Other Comprehensive Income 115,771 — 115,771

Balance at December 31, 2022 $ ( 240,176 ) $ ( 53,570 ) $ ( 293,746 )

Reclassifications Out of Accumulated Other Comprehensive Income (Loss).

The details about the reclassification adjustments out of accumulated other comprehensive income (loss) for the three months ended December 31, 2023 and 2022 are as follows (amounts in parentheses indicate debits to the income statement) (in thousands):

Details About Accumulated Other Comprehensive Income (Loss) Components Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) Affected Line Item in the Statement Where Net Income is Presented

Three Months Ended

June 30, Nine Months Ended

2023 2022 2023 2022

Gains (Losses) on Derivative Financial Instrument Cash Flow Hedges:

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$ 14,240 ($ 115,771 ) Net of Tax

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Other Current Assets .

The components of the Company’s Other Current Assets are as follows (in thousands):

At June 30, 2023 At September 30, 2022

At December 31, 2023 At September 30, 2023

Prepayments $ 17,993 $ 18,966

Prepaid Property and Other Taxes 14,778 14,186

Prepaid State Income Taxes 5,804 5,933

Federal Income Taxes Receivable 10,799 14,602

State Income Taxes Receivable 18,208 16,133

Regulatory Assets 37,622 36,373

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The components of the Company’s Other Accruals and Current Liabilities are as follows (in thousands):

At June 30, 2023 At September 30, 2022

At December 31, 2023 At September 30, 2023

Accrued Capital Expenditures $ 75,485 $ 43,323

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For purposes of determining earnings per common share, the potentially dilutive securities the Company had outstanding were restricted stock units and performance shares.

For the quarter and nine months ended June 30, 2023, the diluted weighted average shares outstanding shown on the Consolidated Statements of Income reflects the potential dilution as a result of these securities as determined using the Treasury Stock Method.

For the quarter ended December 31, 2023, the diluted weighted average shares outstanding shown on the Consolidated Statements of Income reflects the potential dilution as a result of these securities as determined using the Treasury Stock Method.

Restricted stock units and performance shares that are antidilutive are excluded from the calculation of diluted earnings per common share.

There were 8,322 securities and 4,526 securities excluded as being antidilutive for the quarter and nine months ended June 30, 2023, respectively.

There were 873 securities and 6,990 securities excluded as being antidilutive for the quarter and nine months ended June 30, 2022, respectively.

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There were no securities excluded as being antidilutive for the quarter ended December 31, 2023.

For the quarter ended December 31, 2022, 1,987 securities were excluded as being antidilutive.

Stock-Based Compensation.

The Company granted 202,259 performance shares during the nine months ended June 30, 2023.

The weighted average fair value of such performance shares was $ 64.28 per share for the nine months ended June 30, 2023.

The Company granted 361,729 performance shares during the quarter ended December 31, 2023.

The weighted average fair value of such performance shares was $ 44.23 per share for the quarter ended December 31, 2023.

Performance shares are an award constituting units denominated in common stock of the Company, the number of which may be adjusted over a performance cycle based upon the extent to which performance goals have been satisfied.

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The performance shares do not entitle the participant to receive dividends during the vesting period.

The performance shares granted during the nine months ended June 30, 2023 include awards that must meet a performance goal related to either relative return on capital over a three-year performance cycle ("ROC performance shares"), methane intensity and greenhouse gas emissions reductions over a three-year performance cycle ("ESG performance shares") or relative shareholder return over a three-year performance cycle ("TSR performance shares").

The performance goal related to the ROC performance shares over the three-year performance cycle is the Company’s total return on capital relative to the total return on capital of other companies in a group selected by the Compensation Committee (“Report Group”).

The performance shares granted during the quarter ended December 31, 2023 include awards that must meet a performance goal related to either relative return on capital over a three-year or five-year performance cycle ("ROC performance shares"), methane intensity and greenhouse gas emissions reductions over a three-year performance cycle ("ESG performance shares") or relative shareholder return over a three-year or five-year performance cycle ("TSR performance shares").

The performance goal related to the ROC performance shares over the respective performance cycles is the Company’s total return on capital relative to the total return on capital of other companies in a group selected by the Compensation Committee (“Report Group”).

Total return on capital for a given company means the average of the Report Group companies’ returns on capital for each twelve-month period corresponding to each of the Company’s fiscal years during the performance cycle, based on data reported for the Report Group companies in the Bloomberg database.

The number of these ROC performance shares that will vest and be paid will depend upon the Company’s performance relative to the Report Group and not upon the absolute level of return achieved by the Company.

The fair value of the ROC performance shares is calculated by multiplying the expected number of shares that will be issued by the average market price of Company common stock on the date of grant reduced by the present value of forgone dividends over the vesting term of the award.

The fair value of the ROC performance shares is calculated by multiplying the expected number of shares that will be issued by the average market price of Company common

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stock on the date of grant reduced by the present value of forgone dividends over the vesting term of the award.

The fair value is recorded as compensation expense over the vesting term of the award.

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The fair value is recorded as compensation expense over the vesting term of the award.

The performance goal related to the TSR performance shares over the three-year performance cycle is the Company’s three-year total shareholder return relative to the three-year total shareholder return of the other companies in the Report Group.

Three-year total shareholder return for a given company will be based on the data reported for that company (with the starting and ending stock prices over the performance cycle calculated as the average closing stock price for the prior calendar month and with dividends reinvested in that company’s securities at each ex-dividend date) in the Bloomberg database.

The performance goal related to the TSR performance shares over the respective performance cycles is the Company’s three-year (or five-year) total shareholder return relative to the three-year (or five-year) total shareholder return of the other companies in the Report Group.

Three-year (or five-year) total shareholder return for a given company will be based on the data reported for that company (with the starting and ending stock prices over the performance cycle calculated as the average closing stock price for the prior calendar month and with dividends reinvested in that company’s securities at each ex-dividend date) in the Bloomberg database.

The number of these TSR performance shares that will vest and be paid will depend upon the Company’s performance relative to the Report Group and not upon the absolute level of return achieved by the Company.

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This price is multiplied by the number of TSR performance shares awarded, the result of which is recorded as compensation expense over the vesting term of the award.

The Company granted 125,673 restricted stock units during the nine months ended June 30, 2023.

The weighted average fair value of such restricted stock units was $ 58.67 per share for the nine months ended June 30, 2023.

The Company granted 219,578 restricted stock units during the quarter ended December 31, 2023.

The weighted average fair value of such restricted stock units was $ 42.44 per share for the quarter ended December 31, 2023.

Restricted stock units represent the right to receive shares of common stock of the Company (or the equivalent value in cash or a combination of cash and shares of common stock of the Company, as determined by the Company) at the end of a specified time period.

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Note 2 – Asset Acquisitions and Divestitures

On June 1, 2023, the Company completed its acquisition of certain upstream assets located primarily in Tioga County, Pennsylvania from SWN Production Company, LLC ("SWN") for total consideration of $ 124.8 million.

The purchase price, which reflects an effective date of January 1, 2023, was reduced for production revenues less expenses that were retained by SWN from the effective date to the closing date.

As part of the transaction, the Company acquired approximately 34,000 net acres in an area that is contiguous with existing Company-owned upstream assets.

This transaction was accounted for as an asset acquisition, and, as such, the purchase price was allocated to property, plant and equipment.

The following is a summary of the asset acquisition in thousands:

Purchase Price $ 124,178

Transaction Costs 580

Total Consideration $ 124,758

On June 30, 2022, the Company completed the sale of Seneca’s California assets, all of which were in the Exploration and Production segment, to Sentinel Peak Resources California LLC for a total sale price of $ 253.5 million, consisting of $ 240.9 million in cash and contingent consideration valued at $ 12.6 million at closing.

The Company pursued this sale given the strong commodity price environment and the Company's strategic focus in the Appalachian Basin.

Under the terms of the purchase and sale agreement, the Company can receive up to three annual contingent payments between calendar year 2023 and calendar year 2025, not to exceed $ 10 million per year, with the amount of each annual payment calculated as $ 1.0 million for each $ 1 per barrel that the ICE Brent Average for each calendar year exceeds $ 95 per barrel up to $ 105 per barrel.

The sale price, which reflected an effective date of April 1, 2022, was reduced for production revenues less expenses that were retained by Seneca from the effective date to the closing date.

Under the full cost method of accounting for oil and natural gas properties, $ 220.7 million of the sale price at closing was accounted for as reduction of capitalized costs since the disposition did not alter the relationship between capitalized costs and proved reserves of oil and gas attributable to the cost center.

The remainder of the sale price ($ 32.8 million) was applied against assets that are not subject to the full cost method of accounting, with the Company recognizing a gain of $ 12.7 million on the sale of such assets.

The majority of this gain related to the sale of emission allowances.

The Company also eliminated the asset retirement obligation associated with Seneca’s California oil and gas assets.

This obligation amounted to $ 50.1 million and was accounted for as a reduction of capitalized costs under the full cost method of accounting.

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Note 2 – Revenue from Contracts with Customers

The following tables provide a disaggregation of the Company's revenues for the quarter and nine months ended June 30, 2023 and 2022, presented by type of service from each reportable segment.

Quarter Ended June 30, 2023 (Thousands)

Revenues By Type of Service Exploration and Production Pipeline and Storage Gathering Utility All Other Corporate and Intersegment Eliminations Total Consolidated

Production of Natural Gas $ 157,682 $ — $ — $ — $ — $ — $ 157,682

Production of Crude Oil 483 — — — — — 483

Natural Gas Processing 284 — — — — — 284

Natural Gas Gathering Service — — 58,906 — — ( 54,277 ) 4,629

Natural Gas Transportation Service — 70,424 — 19,905 — ( 20,311 ) 70,018

Natural Gas Storage Service — 21,147 — — — ( 9,006 ) 12,141

Natural Gas Residential Sales — — — 108,398 — — 108,398

Natural Gas Commercial Sales — — — 13,971 — — 13,971

Natural Gas Industrial Sales — — — 866 — ( 2 ) 864

Other 290 824 — 406 — ( 199 ) 1,321

Total Revenues from Contracts with Customers 158,739 92,395 58,906 143,546 — ( 83,795 ) 369,791

Alternative Revenue Programs — — — 1,071 — — 1,071

Derivative Financial Instruments 57,842 — — — — — 57,842

Total Revenues $ 216,581 $ 92,395 $ 58,906 $ 144,617 $ — $ ( 83,795 ) $ 428,704

Nine Months Ended June 30, 2023 (Thousands)

Revenues By Type of Service Exploration and Production Pipeline and Storage Gathering Utility All Other Corporate and Intersegment Eliminations Total Consolidated

Production of Natural Gas $ 849,811 $ — $ — $ — $ — $ — $ 849,811

Production of Crude Oil 1,637 — — — — — 1,637

Natural Gas Processing 867 — — — — — 867

Natural Gas Gathering Service — — 172,300 — — ( 163,297 ) 9,003

Natural Gas Transportation Service — 220,420 — 84,079 — ( 62,880 ) 241,619

Natural Gas Storage Service — 63,903 — — — ( 27,221 ) 36,682

Natural Gas Residential Sales — — — 671,352 — — 671,352

Natural Gas Commercial Sales — — — 97,432 — — 97,432

Natural Gas Industrial Sales — — — 5,273 — ( 6 ) 5,267

Other 5,880 831 — ( 1,717 ) — ( 747 ) 4,247

Total Revenues from Contracts with Customers 858,195 285,154 172,300 856,419 — ( 254,151 ) 1,917,917

Alternative Revenue Programs — — — 6,995 — — 6,995

Derivative Financial Instruments ( 120,088 ) — — — — — ( 120,088 )

Total Revenues $ 738,107 $ 285,154 $ 172,300 $ 863,414 $ — $ ( 254,151 ) $ 1,804,824

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Quarter Ended June 30, 2022 (Thousands)

The following tables provide a disaggregation of the Company's revenues for the three months ended December 31, 2023 and 2022, presented by type of service from each reportable segment.

Quarter Ended December 31, 2023 (Thousands)

Revenues By Type of Service Exploration and Production Pipeline and Storage Gathering Utility All Other Corporate and Intersegment Eliminations Total Consolidated

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Total Revenues $ 254,019 $ 94,413 $ 62,588 $ 202,007 $ — $ ( 87,666 ) $ 525,361

Nine Months Ended June 30, 2022 (Thousands)

Quarter Ended December 31, 2022 (Thousands)

Revenues By Type of Service Exploration and Production Pipeline and Storage Gathering Utility All Other Corporate and Intersegment Eliminations Total Consolidated

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Revenue related to derivative financial instruments and alternative revenue programs are excluded from the scope of the authoritative guidance regarding revenue recognition since they are accounted for under other existing accounting guidance.

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The Company’s Pipeline and Storage segment expects to recognize the following revenue amounts in future periods related to “fixed” charges associated with remaining performance obligations for transportation and storage contracts:

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and $ 581.0 million thereafter.

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Note 3 – Fair Value Measurements

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The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

The following table sets forth, by level within the fair value hierarchy, the Company's financial assets and liabilities (as applicable) that were accounted for at fair value on a recurring basis as of June 30, 2023 and September 30, 2022.

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Recurring Fair Value Measures At fair value as of June 30, 2023

Recurring Fair Value Measures At fair value as of December 31, 2023

(Thousands of Dollars) Level 1 Level 2 Level 3 Netting

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Over the Counter Swaps – Gas $ — $ 16,722 $ — $ ( 16,722 ) $ —

Over the Counter No Cost Collars – Gas — 14,067 — ( 20,361 ) ( 6,294 )

Foreign Currency Contracts — 587 — ( 587 ) —

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Cash Equivalents – Money Market Mutual Funds $ 39,332 $ — $ — $ — $ 39,332

Hedging Collateral Deposits 91,670 — — — 91,670

Derivative Financial Instruments:

Over the Counter Swaps – Gas — 65,800 — ( 37,508 ) 28,292

Over the Counter No Cost Collars – Gas — 30,966 — ( 14,745 ) 16,221

Contingent Consideration for Asset Sale — 7,277 — — 7,277

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Derivative Financial Instruments

The derivative financial instruments reported in Level 2 at June 30, 2023 and September 30, 2022 include natural gas price swap agreements, natural gas no cost collars, and foreign currency contracts, all of which are used in the Company’s Exploration and Production segment.

Hedging collateral deposits of $ 91.7 million at September 30, 2022, which were associated with the price swap agreements, no cost collars and foreign currency contracts, have been reported in Level 1.

The derivative financial instruments reported in Level 2 at December 31, 2023 and September 30, 2023 include natural gas price swap agreements, natural gas no cost collars, and foreign currency contracts, all of which are used in the Company’s Exploration and Production segment.

The fair value of the Level 2 price swap agreements and no cost collars is based on an internal cash flow model that uses observable inputs (i.e.

SOFR based discount rates for the price swap agreements and basis differential information, if applicable, at active natural gas and crude oil trading markets).

SOFR based discount rates for the price swap agreements and basis differential information, if applicable, at active natural gas trading markets).

The fair value of the Level 2 foreign currency contracts is determined using the market approach based on observable market transactions of forward Canadian currency rates.

The authoritative guidance for fair value measurements and disclosures require consideration of the impact of nonperformance risk (including credit risk) from a market participant perspective in the measurement of the fair value of assets and liabilities.

At June 30, 2023, the Company determined that nonperformance risk associated with the price swap agreements, no cost collars and foreign currency contracts would have no material impact on its financial position or results of operation.

At December 31, 2023, the Company determined that nonperformance risk associated with the price swap agreements, no cost collars and foreign currency contracts would have no material impact on its financial position or results of operation.

To assess nonperformance risk, the Company considered information such as any applicable collateral posted, master netting arrangements, and applied a market-based method by using the counterparty's (assuming the derivative is in a gain position) or the Company’s (assuming the derivative is in a loss position) credit default swaps rates.

Derivative financial instruments reported in Level 2 at June 30, 2023 also includes the contingent consideration associated with the sale of the Exploration and Production segment's California assets on June 30, 2022, which is discussed at Note 2 – Asset Acquisitions and Divestitures and at Note 5 – Financial Instruments.

Derivative financial instruments reported in Level 2 at December 31, 2023 also includes the contingent consideration associated with the sale of the Exploration and Production segment's California assets on June 30, 2022.

The terms of the purchase and sale agreement specified that the Company could receive up to three annual contingent payments between calendar year 2023 and calendar year 2025, not to exceed $ 10 million per year, with the amount of each annual payment calculated at $ 1.0 million for each $ 1 per barrel that the ICE Brent Average for each calendar year exceeds $ 95 per barrel up to $ 105 per barrel.

The calendar 2023 contingency period expired with the ICE Brent Average falling below $ 95 per barrel.

The fair value of the contingent consideration was calculated using a Monte Carlo simulation model that uses observable inputs, including the ICE Brent closing price as of the valuation date, initial and max trigger price, volatility, risk-free rate, time of maturity and counterparty risk.

For the quarters ended June 30, 2023 and June 30, 2022, there were no assets or liabilities measured at fair value and classified as Level 3.

For the quarters ended December 31, 2023 and December 31, 2022, there were no assets or liabilities measured at fair value and classified as Level 3.

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Note 4 – Financial Instruments

Long-Term Debt.

The fair market value of the Company’s debt, as presented in the table below, was determined using a discounted cash flow model, which incorporates the Company’s credit ratings and current market conditions in determining the

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yield, and subsequently, the fair market value of the debt.

Based on these criteria, the fair market value of long-term debt, including current portion, was as follows (in thousands):

June 30, 2023 September 30, 2022

December 31, 2023 September 30, 2023

Amount Fair Value Carrying

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The components of the Company's Other Investments are as follows (in thousands):

At June 30, 2023 At September 30, 2022

At December 31, 2023 At September 30, 2023

Life Insurance Contracts $ 42,639 $ 42,242

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The insurance contracts and equity mutual fund are primarily informal funding mechanisms for various benefit obligations the Company has to certain employees.

The fixed income mutual fund is primarily an informal funding mechanism for certain regulatory obligations that the Company has to Utility segment customers in its Pennsylvania jurisdiction, as discussed in Note 11 – Regulatory Matters, and for various benefit obligations the Company has to certain employees.

The fixed income mutual fund is primarily an informal funding mechanism for certain regulatory obligations that the Company has to Utility segment customers in its Pennsylvania jurisdiction and for various benefit obligations the Company has to certain employees.

Derivative Financial Instruments.

The Company uses derivative financial instruments to manage commodity price risk in the Exploration and Production segment.

The Company enters into over-the-counter no cost collar and swap agreements to manage the price risk associated with forecasted sales of natural gas.

The Company enters into over-the-counter no cost collar and swap agreements for natural gas to manage the price risk associated with forecasted sales of natural gas.

In addition, the Company also enters into foreign exchange forward contracts to manage the risk of currency fluctuations associated with transportation costs denominated in Canadian currency in the Exploration and Production segment.

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On June 30, 2022, the Company completed the sale of Seneca’s California assets.

The terms of the purchase and sale agreement specified that the Company could receive up to three annual contingent payments between calendar year 2023 and calendar year 2025, not to exceed $ 10 million per year, with the amount of each annual payment calculated as $ 1.0 million for each $ 1 per barrel that the ICE Brent Average for each calendar year exceeds $ 95 per barrel up to $ 105 per barrel.

The calendar 2023 contingency period expired with the ICE Brent Average falling below $ 95 per barrel.

The Company has determined that this contingent consideration meets the definition of a derivative under the authoritative accounting guidance.

Changes in the fair value of this contingent consideration are marked-to-market each reporting period, with changes in fair value recognized in Other Income (Deductions) on the Consolidated Statement of Income.

The fair value of this contingent consideration was estimated to be $ 4.5 million and $ 8.2 million at June 30, 2023 and September 30, 2022, respectively.

A $ 1.4 million mark-to-market adjustment to reduce the fair value of the contingent consideration was recorded during the quarter ended June 30, 2023.

A $ 3.7 million mark-to-market adjustment to reduce the fair value of the contingent consideration was recorded during the nine months ended June 30, 2023.

The fair value of this contingent consideration was estimated to be $ 3.1 million and $ 7.3 million at December 31, 2023 and September 30, 2023, respectively.

A $ 4.2 million

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The Company has presented its net derivative assets and liabilities as “Fair Value of Derivative Financial Instruments” on its Consolidated Balance Sheets at June 30, 2023 and September 30, 2022.

mark-to-market adjustment to reduce the fair value of the contingent consideration was recorded during the quarter ended December 31, 2023.

The Company has presented its net derivative assets and liabilities as “Fair Value of Derivative Financial Instruments” on its Consolidated Balance Sheets at December 31, 2023 and September 30, 2023.

Cash Flow Hedges

For derivative financial instruments that are designated and qualify as a cash flow hedge, the gain or loss on the derivative is reported as a component of other comprehensive income (loss) and reclassified into earnings in the period or periods during which the hedged transaction affects earnings.

As of June 30, 2023, the Company had 457.7 Bcf of natural gas commodity derivative contracts (swaps and no cost collars) outstanding.

As of June 30, 2023, the Company was hedging a total of $ 53.4 million of forecasted transportation costs denominated in Canadian dollars with foreign currency forward contracts.

As of June 30, 2023, the Company had $ 4.2 million of net hedging gains after taxes included in the accumulated other comprehensive income (loss) balance.

It is expected that $ 21.6 million of unrealized gains after taxes will be reclassified into the Consolidated Statement of Income within the next 12 months as the underlying hedged transactions are recorded in earnings.

As of December 31, 2023, the Company had 380.2 Bcf of natural gas commodity derivative contracts (swaps and no cost collars) outstanding.

As of December 31, 2023, the Company was hedging a total of $ 53.7 million of forecasted transportation costs denominated in Canadian dollars with foreign currency forward contracts.

As of December 31, 2023, the Company had $ 127.1 million of net hedging gains after taxes included in the accumulated other comprehensive income (loss) balance.

Of this amount, it is expected that $ 92.3 million of unrealized gains after taxes will be reclassified into the Consolidated Statement of Income within the next 12 months as the underlying hedged transactions are recorded in earnings.

The Effect of Derivative Financial Instruments on the Statement of Financial Performance for the

Three Months Ended June 30, 2023 and 2022 (Thousands of Dollars)

Three Months Ended December 31, 2023 and 2022 (Thousands of Dollars)

Derivatives in Cash Flow Hedging Relationships Amount of Derivative Gain or (Loss) Recognized in Other Comprehensive Income (Loss) on

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Three Months Ended

June 30, Location of Derivative Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) on the Consolidated Balance Sheet into the Consolidated Statement of Income Amount of Derivative Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) on the Consolidated Balance Sheet into the Consolidated Statement of Income for the

December 31, Location of Derivative Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) on the Consolidated Balance Sheet into the Consolidated Statement of Income Amount of Derivative Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) on the Consolidated Balance Sheet into the Consolidated Statement of Income for the

Three Months Ended

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Total $ 189,167 $ 297,593 $ 19,708 $ ( 159,342 )

The Effect of Derivative Financial Instruments on the Statement of Financial Performance for the

Nine Months Ended June 30, 2023 and 2022 (Thousands of Dollars)

Derivatives in Cash Flow Hedging Relationships Amount of Derivative Gain or

(Loss) Recognized in Other

Comprehensive Income (Loss) on

the Consolidated Statement of

Comprehensive Income (Loss)

Nine Months Ended

(Loss) Reclassified from

Accumulated Other

Comprehensive Income (Loss) on

the Consolidated Balance Sheet

into the Consolidated Statement of

Income for the

Nine Months Ended

2023 2022 2023 2022

Commodity Contracts $ 672,396 $ ( 677,942 ) Operating Revenue $ ( 120,088 ) $ ( 591,271 )

Foreign Currency Contracts 985 ( 616 ) Operating Revenue ( 502 ) 91

Total $ 673,381 $ ( 678,558 ) $ ( 120,590 ) $ ( 591,180 )

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The Company may be exposed to credit risk on any of the derivative financial instruments that are in a gain position.

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The majority of the Company’s counterparties are financial institutions and energy traders.

The Company has over-the-counter swap positions, no cost collars and applicable foreign currency forward contracts with eighteen counterparties of which nine are in a net gain position.

On average, the Company had $ 4.6 million of credit exposure per counterparty in a gain position at June 30, 2023.

The maximum credit exposure per counterparty in a gain position at June 30, 2023 was $ 16.1 million.

As of June 30, 2023, no collateral was received from the counterparties by the Company.

The Company has over-the-counter swap positions, no cost collars and applicable foreign currency forward contracts with nineteen counterparties of which all nineteen are in a net gain position.

On average, the Company had $ 9.6 million of credit exposure per counterparty in a gain position at December 31, 2023.

The maximum credit exposure per counterparty in a gain position at December 31, 2023 was $ 35.6 million.

As of December 31, 2023, no collateral was received from the counterparties by the Company.

The Company's gain position on such derivative financial instruments had not exceeded the established thresholds at which the counterparties would be required to post collateral, nor had the counterparties' credit ratings declined to levels at which the counterparties were required to post collateral.

As of June 30, 2023, sixteen of the eighteen counterparties to the Company’s outstanding derivative financial contracts (specifically the over-the-counter swaps, over-the-counter no cost collars and applicable foreign currency forward contracts) had a common credit-risk related contingency feature.

In the event the Company’s credit rating increases or falls below a certain threshold (applicable debt ratings), the available credit extended to the Company would either increase or decrease.

As of December 31, 2023, sixteen of the nineteen counterparties to the Company’s outstanding derivative financial contracts (specifically the over-the-counter swaps, over-the-counter no cost collars and applicable foreign currency forward contracts) had a common credit-risk related contingency feature.

In the event the Company’s credit rating increases or falls below a certain threshold (applicable debt ratings), the available credit that could be extended to the Company when it is in a

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derivative financial liability position would either increase or decrease.

A decline in the Company’s credit rating, in and of itself, would not cause the Company to be required to post or increase the level of its hedging collateral deposits (in the form of cash deposits, letters of credit or treasury debt instruments).

If the Company’s outstanding derivative financial contracts with a credit-risk contingency feature were in a liability position (or if the liability were larger) and/or the Company’s credit rating declined, then hedging collateral deposits or an increase to such deposits could be required.

At June 30, 2023, the fair market value of the derivative financial instrument liabilities with a credit-risk related contingency feature was $ 7.4 million according to the Company’s internal model (discussed in Note 4 – Fair Value Measurements), and no hedging collateral deposits were required to be posted by the Company at June 30, 2023.

Depending on the movement of commodity prices in the future, it is possible that these liability positions could swing into asset positions, at which point the Company would be exposed to credit risk on its derivative financial instruments.

In that case, the Company's counterparties could be required to post hedging collateral deposits.

If the Company’s outstanding derivative financial instrument contracts with a credit-risk contingency feature were in a liability position (or if the liability were larger) and/or the Company’s credit rating declined, then hedging collateral deposits or an increase to such deposits could be required.

At December 31, 2023, the Company did not have any derivative financial instrument liabilities with a credit-risk related contingency feature according to the Company’s internal model (discussed in Note 3 – Fair Value Measurements), and no hedging collateral deposits were required to be posted by the Company at December 31, 2023.

Depending on the movement of commodity prices in the future, it is possible that the Company's derivative asset positions could swing into liability positions, at which point the Company could be required to post hedging collateral deposits.

The Company’s requirement to post hedging collateral deposits and the Company's right to receive hedging collateral deposits is based on the fair value determined by the Company’s counterparties, which may differ from the Company’s assessment of fair value.

Note 5 – Income Taxes

The effective tax rates for the quarters ended June 30, 2023 and June 30, 2022 were 26.2 % and 23.3 %, respectively.

The effective tax rates for the nine months ended June 30, 2023 and June 30, 2022 were 25.8 % and 24.9 % , respectively.

During the quarter and nine months ended June 30, 2022, the Company was able to utilize the Enhanced Oil Recovery tax credit, which was not available during the quarter and nine months ended June 30, 2023 due to the sale of its California properties.

On April 14, 2023, the IRS issued guidance that provides a safe harbor method of accounting that taxpayers may use to determine whether expenses to repair, maintain, replace, or improve natural gas transmission and distribution property must be capitalized.

The Company is currently analyzing this guidance to determine the potential impact on the financial statements.

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The effective tax rates for the quarters ended December 31, 2023 and December 31, 2022 were 24.5 % and 25.3 %, respectively.

The reduction in effective income tax rates was primarily driven by a methodology change for repairs and maintenance tax deductions.

Note 6 – Capitalization

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(Thousands, except per share amounts)

Balance at April 1, 2023 91,795 $ 91,795 $ 1,031,341 $ 1,810,454 $ ( 54,864 )

Net Income Available for Common Stock 92,620

Dividends Declared on Common Stock ($ 0.495 Per Share) ( 45,444 )

Other Comprehensive Income, Net of Tax 5,480

Share-Based Payment Expense (1)

Common Stock Issued Under Stock and Benefit Plans 9 9 502

Balance at June 30, 2023 91,804 $ 91,804 $ 1,035,852 $ 1,857,630 $ ( 49,384 )

Balance at October 1, 2023 91,819 $ 91,819 $ 1,040,761 $ 1,885,856 $ ( 55,060 )

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Common Stock Issued (Repurchased) Under Stock and Benefit Plans 297 297 ( 3,670 )

Balance at June 30, 2023 91,804 $ 91,804 $ 1,035,852 $ 1,857,630 $ ( 49,384 )

Balance at April 1, 2022 91,449 $ 91,449 $ 1,018,784 $ 1,407,683 $ ( 654,254 )

Net Income Available for Common Stock 108,158

Dividends Declared on Common Stock ($ 0.475 Per Share) ( 43,446 )

Other Comprehensive Income, Net of Tax 71,386

Share-Based Payment Expense (1)

Common Stock Issued Under Stock and Benefit Plans 17 17 76

Balance at June 30, 2022 91,466 $ 91,466 $ 1,022,954 $ 1,472,395 $ ( 582,868 )

Balance at December 31, 2023 92,116 $ 92,116 $ 1,041,226 $ 1,973,279 $ 67,381

Balance at October 1, 2022 91,478 $ 91,478 $ 1,027,066 $ 1,587,085 $ ( 625,733 )

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Dividends Declared on Common Stock ($ 0.475 Per Share)

Other Comprehensive Loss, Net of Tax ( 69,271 )

Other Comprehensive Income, Net of Tax 331,987

Share-Based Payment Expense (1)

Common Stock Issued (Repurchased) Under Stock and Benefit Plans 309 309 ( 6,545 )

284 284 ( 8,318 )

Balance at June 30, 2022 91,466 $ 91,466 $ 1,022,954 $ 1,472,395 $ ( 582,868 )

Balance at December 31, 2022 91,787 $ 91,787 $ 1,025,639 $ 1,713,176 $ ( 293,746 )

(1) Paid in Capital includes compensation costs associated with performance shares and/or restricted stock awards.

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Common Stock.

During the nine months ended June 30, 2023, the Company issued 12,055 original issue shares of common stock as a result of SARs exercises, 113,566 original issue shares of common stock for restricted stock units that vested and 278,687 original issue shares of common stock for performance shares that vested.

The Company also issued 22,685 original issue shares of common stock to the non-employee directors of the Company who receive compensation under the Company’s 2009 Non-Employee Director Equity Compensation Plan, including the reinvestment of dividends for certain non-employee directors who elected to defer their shares pursuant to the dividend reinvestment feature of the Company's Deferred Compensation Plan for Directors and Officers (the "DCP") during the nine months ended June 30, 2023.

In addition, the Company issued 1,735 original issue shares of common stock to officers of the Company who elected to defer their shares pursuant to the dividend reinvestment feature of the Company's DCP Plan during the nine months ended June 30, 2023.

During the three months ended December 31, 2023, the Company issued 111,832 original issue shares of common stock for restricted stock units that vested and 251,255 original issue shares of common stock for performance shares that vested.

The Company also issued 9,128 original issue shares of common stock to the non-employee directors of the Company who receive compensation under the Company’s 2009 Non-Employee Director Equity Compensation Plan, including the reinvestment of dividends for certain non-employee directors who elected to defer their shares pursuant to the dividend reinvestment feature of the Company's Deferred Compensation Plan for Directors and Officers (the "DCP") during the three months ended December 31, 2023.

In addition, the Company issued 1,055 original issue shares of common stock to officers of

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of stock-based compensation awards will often tender shares of common stock to the Company for payment of applicable withholding taxes.

During the nine months ended June 30, 2023, 102,796 shares of common stock were tendered to the Company for such purposes.

the Company who elected to defer their shares pursuant to the dividend reinvestment feature of the Company's DCP Plan during the three months ended December 31, 2023.

Holders of stock-based compensation awards will often tender shares of common stock to the Company for payment of applicable withholding taxes.

During the three months ended December 31, 2023, 77,094 shares of common stock were tendered to the Company for such purposes.

The Company considers all shares tendered as cancelled shares restored to the status of authorized but unissued shares, in accordance with New Jersey law.

Short-Term Borrowings.

On June 30, 2022, the Company entered into a 364-Day Credit Agreement (the "364-Day Credit Agreement") with a syndicate of five banks, all of which are also lenders under the Credit Agreement (as amended from time to time, the "Credit Agreement").

The 364-Day Credit Agreement provided an additional $ 250.0 million unsecured committed delayed draw term loan credit facility with a maturity date of June 29, 2023.

The Company elected to draw $ 250.0 million under the facility on October 27, 2022.

The Company used the proceeds for general corporate purposes, which included using $ 150.0 million for the November 2022 redemption of a portion of the Company's outstanding long-term debt with a maturity date in March 2023.

All indebtedness under the 364-Day Credit Agreement was repaid in May 2023 prior to its June 29, 2023 maturity date.

On February 28, 2022, the Company entered into a Credit Agreement (as amended from time to time, the "Credit Agreement") with a syndicate of twelve banks.

The Credit Agreement replaced the previous Fourth Amended and Restated Credit Agreement and a previous 364-Day Credit Agreement.

The Credit Agreement provides a $ 1.0 billion unsecured committed revolving credit facility with a maturity date of February 26, 2027.

On February 7, 2024, the Company and certain lenders under the Credit Agreement consented to an extension of the maturity date of the Credit Agreement from February 26, 2027 to February 25, 2028.

As a result, the Company has aggregate commitments available under the Credit Agreement of $ 1.0 billion before February 26, 2027, and $ 940 million in aggregate commitments available on and after February 26, 2027 to February 25, 2028.

Current Portion of Long-Term Debt.

None of the Company's long-term debt as of June 30, 2023 had a maturity date within the following twelve-month period.

The Current Portion of Long-Term Debt at September 30, 2022 consisted of $ 500.0 million of 3.75 % notes and $ 49.0 million of 7.395 % notes.

The Company redeemed $ 150.0 million of the 3.75 % notes on November 25, 2022 using a portion of the proceeds from short-term borrowings, as discussed above.

In March 2023, the Company redeemed the remaining $ 350.0 million of the 3.75 % notes as well as the $ 49.0 million of 7.395 % notes.

Long-Term Debt.

On May 18, 2023, the Company issued $ 300.0 million of 5.50 % notes due October 1, 2026.

After deducting underwriting discounts, commissions and other debt issuance costs, the net proceeds to the Company amounted to $ 297.5 million.

The holders of the notes may require the Company to repurchase their notes at a price equal to 101 % of the principal amount in the event of both a change in control and a ratings downgrade to a rating below investment grade.

Additionally, the interest rate payable on the notes will be subject to adjustment from time to time, with a maximum adjustment of 2.00 %, such that the coupon will not exceed 7.50 %, if certain change of control events involving a material subsidiary result in a downgrade of the credit rating assigned to the notes to a rating below investment grade.

A downgrade with a resulting increase to the coupon does not preclude the coupon from returning to its original rate if the Company's credit rating is subsequently upgraded.

The proceeds of this debt issuance were used for general corporate purposes, including to repay all indebtedness under the $ 250.0 million unsecured committed delayed draw term loan under the 364-Day Credit Agreement, as discussed above.

None of the Company's long-term debt as of December 31, 2023 and September 30, 2023 had a maturity date within the following twelve-month period.

Note 7 – Commitments and Contingencies

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It is the Company’s policy to accrue estimated environmental clean-up costs (investigation and remediation) when such amounts can reasonably be estimated and it is probable that the Company will be required to incur such costs.

At June 30, 2023, the Company has estimated its remaining clean-up costs related to former manufactured gas plant sites will be approximately $ 3.6 million.

The Company's liability for such clean-up costs has been recorded in Other Liabilities on the Consolidated Balance Sheet at June 30, 2023.

At December 31, 2023, the Company has estimated its remaining clean-up costs related to former manufactured gas plant sites will be approximately $ 3.2 million.

The Company's liability for such clean-up costs has been recorded in Other Liabilities on the Consolidated Balance Sheet at December 31, 2023.

The Company has recovered its environmental clean-up costs through rate recovery and is currently not aware of any material additional exposure to environmental liabilities.

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In addition, in the Company's state court litigation challenging the NYDEC's actions with regard to various state permits, the New York State Supreme Court issued a decision finding these permits to be preempted.

The Company remains committed to the project and, on June 29, 2022, received an extension of time from FERC, until December 31, 2024, to construct the project.

As of June 30, 2023, the Company has spent approximately $ 55.8 million on the project, all of which is recorded on the balance sheet.

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The Company remains committed to the project and, on June 29, 2022, received an extension of time from FERC, until December 31, 2024, to construct the project which is the subject of an ongoing appeal at the U.S.

Court of Appeals for the D.C.

As of December 31, 2023, the Company has spent approximately $ 56.0 million on the project, all of which is recorded on the balance sheet.

The Company is involved in other litigation and regulatory matters arising in the normal course of business.

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While these other matters arising in the normal course of business could have a material effect on earnings and cash flows in the period in which they are resolved, an estimate of the possible loss or range of loss, if any, cannot be made at this time.

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Note 8 – Business Segment Information

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There have not been any changes in the basis of segmentation nor in the basis of measuring segment profit or loss from those used in the Company’s 2023 Form 10-K.

A listing of segment assets at June 30, 2023 and September 30, 2022 is shown in the tables below.

Quarter Ended June 30, 2023 (Thousands)

A listing of segment assets at December 31, 2023 and September 30, 2023 is shown in the tables below.

Quarter Ended December 31, 2023 (Thousands)

Exploration and Production Pipeline and Storage Gathering Utility Total Reportable Segments All Other Corporate and Intersegment Eliminations Total Consolidated

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$ 52,483 $ 24,055 $ 28,825 $ 26,551 $ 131,914 $( 121 ) $ 1,227 $ 133,020

Nine Months Ended June 30, 2023 (Thousands)

Exploration and Production Pipeline and Storage Gathering Utility Total Reportable Segments All Other Corporate and Intersegment Eliminations Total Consolidated

Revenue from External Customers

$ 738,107 $ 194,800 $ 9,003 $ 862,914 $ 1,804,824 $ — $ — $ 1,804,824

Intersegment Revenues $ — $ 90,354 $ 163,297 $ 500 $ 254,151 $ — $( 254,151 ) $ —

Segment Profit:

Net Income (Loss) $ 195,503 $ 77,147 $ 73,207 $ 55,574 $ 401,431 $( 430 ) $ 2,188 $ 403,189

(Thousands) Exploration and Production Pipeline and Storage Gathering Utility Total Reportable Segments All Other Corporate and Intersegment Eliminations Total Consolidated

Segment Assets:

At June 30, 2023 $ 2,683,959 $ 2,383,201 $ 908,028 $ 2,294,656 $ 8,269,844 $ 3,805 $( 167,017 ) $ 8,106,632

At December 31, 2023 $ 3,057,345 $ 2,439,479 $ 936,547 $ 2,301,116 $ 8,734,487 $ 4,758 $( 151,753 ) $ 8,587,492

At September 30, 2023 $ 2,814,218 $ 2,427,214 $ 912,923 $ 2,247,743 $ 8,402,098 $ 4,795 $( 126,633 ) $ 8,280,260

Quarter Ended June 30, 2022 (Thousands)

Quarter Ended December 31, 2022 (Thousands)

Exploration and Production Pipeline and Storage Gathering Utility Total Reportable Segments All Other Corporate and Intersegment Eliminations Total Consolidated

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Nine Months Ended June 30, 2022 (Thousands)

Exploration and Production Pipeline and Storage Gathering Utility Total Reportable Segments All Other Corporate and Intersegment Eliminations Total Consolidated

Revenue from External Customers

$ 758,428 $ 196,579 $ 10,063 $ 785,664 $ 1,750,734 $ — $ 166 $ 1,750,900

Intersegment Revenues $ — $ 82,716 $ 150,696 $ 245 $ 233,657 $ 6 $( 233,663 ) $ —

Segment Profit:

Net Income (Loss) $ 189,987 $ 77,236 $ 69,887 $ 79,800 $ 416,910 $( 7 ) $( 9,024 ) $ 407,879

Note 9 – Retirement Plan and Other Post-Retirement Benefits

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Retirement Plan Other Post-Retirement Benefits

Three Months Ended June 30, 2023 2022 2023 2022

Service Cost $ 1,297 $ 2,190 $ 147 $ 332

Interest Cost 10,629 5,707 3,912 2,267

Expected Return on Plan Assets ( 16,648 ) ( 13,074 ) ( 6,403 ) ( 7,340 )

Amortization of Prior Service Cost (Credit) 109 134 ( 107 ) ( 107 )

Amortization of (Gains) Losses ( 1,920 ) 6,601 ( 2,189 ) ( 1,903 )

Net Amortization and Deferral for Regulatory Purposes (Including Volumetric Adjustments) (1)

5,378 3,470 3,829 5,351

Net Periodic Benefit Cost (Income) $ ( 1,155 ) $ 5,028 $ ( 811 ) $ ( 1,400 )

Retirement Plan Other Post-Retirement Benefits

Nine Months Ended June 30, 2023 2022 2023 2022

Three Months Ended December 31, 2023 2022 2023 2022

Service Cost $ 1,049 $ 1,297 $ 109 $ 147

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Employer Contributions.

The Company did not make any contributions to its tax-qualified, noncontributory defined benefit retirement plan (Retirement Plan) or its VEBA trusts for its other post-retirement benefits during the nine months ended June 30, 2023, and does not anticipate making any such contributions during the remainder of fiscal 2023.

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The Company did not make any contributions to its tax-qualified, noncontributory defined benefit retirement plan (Retirement Plan) during the three months ended December 31, 2023.

In the remainder of fiscal 2024, the Company expects its contributions to the Retirement Plan to be in the range of zero to $ 5.0 million.

The Company did not make any contributions to its VEBA trusts for its other post-retirement benefits during the three months ended December 31, 2023, and does not anticipate making any such contributions during the remainder of fiscal 2024.

Note 10 – Regulatory Matters

New York Jurisdiction

Distribution Corporation's current delivery rates in its New York jurisdiction were approved by the NYPSC in an order issued on April 20, 2017 with rates becoming effective May 1, 2017.

The order provided for a return on equity of 8.7 %, and directed the implementation of an earnings sharing mechanism to be in place beginning on April 1, 2018.

The order also authorized the Company to recover approximately $ 15 million annually for pension and OPEB expenses from customers.

Because the Company’s future pension and OPEB costs were projected to be satisfied with existing funds held in reserve, in July 2022, Distribution Corporation made a filing with the NYPSC to effectuate a pension and OPEB surcredit to customers to offset these amounts being collected in base rates effective October 1, 2022.

On September 16, 2022, the NYPSC issued an order approving the filing.

The surcredit will remain in effect until modified by the NYPSC in another proceeding, or until December 31, 2024, whichever is earlier.

With the implementation of this surcredit, Distribution Corporation will no longer be funding the Retirement Plan or its VEBA trusts in its New York jurisdiction.

Distribution Corporation's current delivery rates in its New York jurisdiction were approved by the NYPSC in an order issued on April 20, 2017 with rates becoming effective May 1, 2017 ("2017 Rate Order").

The 2017 Rate Order provided for a return on equity of 8.7 % and directed the implementation of an earnings sharing mechanism to be in place beginning on April 1, 2018.

On October 31, 2023, Distribution Corporation made a filing with the NYPSC seeking an increase of approximately $ 88 million in its total annual operating revenues for the projected rate year ending September 30, 2025, with a proposed effective date of October 1, 2024 that includes the maximum suspension period permitted under the New York Public Service Law ("2023 Rate Filing").

The Company is also proposing, among other things, to continue its leak prone pipe replacement program and to implement a number of initiatives that will facilitate achievement of the emissions reduction goals of the CLCPA.

On August 13, 2021, the NYPSC issued an order extending the date through which qualified pipeline replacement costs incurred by the Company can be recovered using the existing system modernization tracker for two years (until March 31, 2023).

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The NYPSC approved the petition by order dated March 17, 2023 contingent on the Company not filing a base rate case that would result in new rates becoming effective prior to October 1, 2024.

On January 19, 2023, the NYPSC issued an order in its Effects of COVID-19 on Utility Service (20-M-0266) and Energy Affordability for Low Income Utility Customers (14-M-0565) proceedings whereby a Phase 2 Utility Arrears Relief Program was authorized.

Specifically, the order directed Distribution Corporation and certain other New York utilities to, among other things, address arrears on residential non-energy affordability program (EAP) ratepayer accounts that did not receive a credit under the NYPSC’s Phase 1 program and small commercial ratepayer accounts by issuing a one-time bill credit to such customers to reduce or eliminate accrued arrears through May 1, 2022.

The credits shall be processed within 90 days of the effective date of the order, provided that residential non-EAP customers who had their service disconnected for non-payment in 2022 shall be allowed the opportunity to have their service reinstated in order to receive the credit through June 30, 2023.

The order further directs utilities to suspend residential service terminations for non-payment while arrears credits are applied to accounts through March 1, 2023, or 30 days after credits have been applied, whichever is later.

The order authorizes the utilities to recover the Phase 2 costs (the arrears credits and associated carrying charges) through a surcharge.

Utilities proposed various offsets to Phase 2 program costs, and Distribution Corporation has proposed certain offsets as part of an uncollectible expense reconciliation proposal.

On February 17, 2023, Distribution Corporation made a filing with the NYPSC seeking approval of its uncollectible expense reconciliation mechanism.

On July 19, 2023, the NYPSC noticed Distribution Corporation’s filing in the New York State Register indicating that public comment will be received on the filing until sixty days after publication or until September 18, 2023.

Application of the proposed offsets and collection periods will be determined when the NYPSC rules on the uncollectible expense reconciliation filing.

Pennsylvania Jurisdiction

Distribution Corporation’s delivery rates effective through July 31, 2023 in its Pennsylvania jurisdiction were approved by the PaPUC on November 30, 2006 as part of a settlement agreement that became effective January 1, 2007.

On October 28, 2022, Distribution Corporation made a filing with the PaPUC seeking an increase in its annual base rate operating revenues of $ 28.1 million with a proposed effective date of December 27, 2022.

On December 8, 2022, the PaPUC issued an order suspending the filing until July 27, 2023 by operation of law unless directed otherwise by the PaPUC.

Following discovery, the submission of testimony and an evidentiary hearing, the parties to the proceeding agreed to a settlement that authorizes, among other things, an increase in Distribution Corporation’s annual base rate operating revenues of $ 23 million as of August 1, 2023.

On April 13, 2023, Distribution Corporation filed a joint petition with the PaPUC seeking approval of the settlement on behalf of all active parties to the proceeding.

On June 15, 2023, the PaPUC issued an order granting the joint petition and adopting the settlement in full, without modification or correction.

Effective October 1, 2021, pursuant to a tariff supplement filed with the PaPUC, Distribution Corporation reduced base rates by $ 7.7 million in order to stop collecting OPEB expenses from customers.

It also began to refund to customers overcollected OPEB expenses in the amount of $ 50.0 million.

All matters with respect to this tariff supplement were finalized on February 24, 2022 with the PaPUC’s approval of an Administrative Law Judge’s Recommended Decision.

Concurrent with

The 2023 Rate Filing proposes to stop accruing and collecting revenues under its current system modernization and system improvement trackers and shift those revenues into the Company’s new base delivery rates.

In the absence of a multi-year rate plan settlement, the Company is requesting that it be allowed to reinstate a tracking mechanism similar to the existing system modernization tracker.

Table of Content

that decision, the Company discontinued regulatory accounting for OPEB expenses and recorded an $ 18.5 million adjustment during the quarter ended March 31, 2022 to reduce its regulatory liability for previously deferred OPEB income amounts through September 30, 2021 and to increase Other Income (Deductions) on the consolidated financial statements by a like amount.

The Company also increased customer refunds of overcollected OPEB expenses from $ 50.0 million to $ 54.0 million.

All refunds specified in the tariff supplement are being funded entirely by grantor trust assets held by the Company, most of which are included in a fixed income mutual fund that is a component of Other Investments on the Company’s Consolidated Balance Sheet.

With the elimination of OPEB expenses in base rates, Distribution Corporation is no longer funding the grantor trust or its VEBA trusts in its Pennsylvania jurisdiction.

Pennsylvania Jurisdiction

On October 28, 2022, Distribution Corporation made a filing with the PaPUC seeking an increase in its annual base rate operating revenues of $ 28.1 million.

A settlement involving all active parties to the proceeding was reached and filed with the PaPUC on April 13, 2023.

The settlement provided for, among other things, an increase in Distribution Corporation’s annual base rate operating revenues of $ 23 million.

The PaPUC approved the settlement in full, without modification or correction, on June 15, 2023 and new rates went into effect on August 1, 2023.

FERC Jurisdiction

Supply Corporation filed a NGA Section 4 rate case at FERC on July 31, 2023 proposing rate increases to be effective February 1, 2024.

The proposed rates reflect an annual cost of service of $ 385.4 million, a rate base of $ 1.32 billion an d a proposed cost of equity of 15.12 %.

The proposed rates reflect an annual cost of service of $ 385.4 million, a rate base of $ 1.32 billion and a proposed cost of equity of 15.12 %.

If the proposed rate increases finally approved at the end of the proceeding exceed the rates that were in effect at July 31, 2023, but are less than rates put into effect subject to refund on February 1, 2024, Supply Corporation would be required to refund the difference between the rates collected subject to refund and the final approved rates, with interest at the FERC-approved rate.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements