What changed in this filing

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Item 1. Financial Statements

2024-05-02 compared with 2024-02-08 · 254 added, 106 removed, 553 unchanged (39% of the section changed)

4 unchanged sentences

Three Months Ended

March 31, Six Months Ended

(Thousands of U.S.

25 unchanged sentences

2,139,551 1,854,056 2,185,148 1,897,655

Share Repurchases under Repurchase Plan ( 3,816 ) — ( 3,816 ) —

Dividends on Common Stock ( 45,563 ) ( 43,602 ) ( 91,160 ) ( 87,201 )

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

Balance at March 31 $ 2,090,172 $ 1,810,454 $ 2,090,172 $ 1,810,454

Earnings Per Common Share:

11 unchanged sentences

Three Months Ended

March 31, Six Months Ended

(Thousands of U.S.

89 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended

Six Months Ended

(Thousands of U.S.

21 unchanged sentences

Capital Expenditures ( 481,958 ) ( 496,362 )

Deposit Paid for Upstream Assets — ( 12,700 )

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

4 unchanged sentences

Net Change in Other Short-Term Notes Payable to Banks and Commercial Paper ( 8,600 ) 100,000

Shares Repurchased Under Repurchase Plan ( 4,230 ) —

Reduction of Long-Term Debt — ( 549,000 )

Dividends Paid on Common Stock ( 91,048 ) ( 87,051 )

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

Net Repurchases of Common Stock Under Stock and Benefit Plans ( 3,914 ) ( 6,694 )

Net Cash Used in Financing Activities ( 107,792 ) ( 292,745 )

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

Net Decrease in Cash, Cash Equivalents, and Restricted Cash ( 4,678 ) ( 66,185 )

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

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

Cash, Cash Equivalents, and Restricted Cash at March 31 $ 50,769 $ 71,533

Supplemental Disclosure of Cash Flow Information

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

The earnings for the six months ended March 31, 2024 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.

3 unchanged sentences

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):

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

Six Months Ended

March 31, 2024 Six Months Ended

March 31, 2023

March 31, 2024 Balance at October 1, 2023 Balance at

March 31, 2023 Balance at October 1, 2022

Cash and Temporary Cash Investments $ 50,769 $ 55,447 $ 71,533 $ 46,048

12 unchanged sentences

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

Activity in the allowance for uncollectible accounts for the six months ended March 31, 2024 and 2023 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

Three Months Ended December 31, 2023

Six Months Ended March 31, 2024

Allowance for Uncollectible Accounts $ 36,295 $ 9,766 $ 468 $ ( 6,834 ) $ 39,695

Three Months Ended December 31, 2022

Six Months Ended March 31, 2023

Allowance for Uncollectible Accounts $ 40,228 $ 10,973 $ 916 $ ( 3,971 ) $ 48,146

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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 $ 1.2 million at December 31, 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 $ 20.1 million at March 31, 2024, 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 $ 2.5 billion and $ 2.4 billion at December 31, 2023 and September 30, 2023, respectively.

The Company's capitalized costs relating to oil and gas producing activities, net of accumulated depreciation, depletion and amortization, were $ 2.6 billion and $ 2.4 billion at March 31, 2024 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 $ 159.1 million and $ 161.1 million at December 31, 2023 and September 30, 2023, respectively.

Such costs amounted to $ 174.0 million and $ 161.1 million at March 31, 2024 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 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.

At March 31, 2024, the ceiling exceeded the book value of the oil and gas properties by approximately $ 3.1 million.

The estimated future net cash flows were increased by $ 347.1 million for hedging under the ceiling test at March 31, 2024.

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 December 31, 2023.

There were no indications of any impairments to property, plant and equipment in the Utility, Pipeline and Storage and Gathering segments at March 31, 2024.

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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):

The components of Accumulated Other Comprehensive Income (Loss) and changes for the six months ended March 31, 2024 and 2023, 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 December 31, 2023

Three Months Ended March 31, 2024

Balance at January 1, 2024 $ 127,064 $ ( 59,683 ) $ 67,381

Other Comprehensive Gains and Losses Before Reclassifications

51,418 — 51,418

Amounts Reclassified From Other Comprehensive Income ( 43,459 ) — ( 43,459 )

Balance at March 31, 2024 $ 135,023 $ ( 59,683 ) $ 75,340

Six Months Ended March 31, 2024

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

2 unchanged sentences

Amounts Reclassified From Other Comprehensive Income ( 57,699 ) — ( 57,699 )

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

Three Months Ended December 31, 2022

Balance at March 31, 2024 $ 135,023 $ ( 59,683 ) $ 75,340

Three Months Ended March 31, 2023

Balance at January 1, 2023 $ ( 240,176 ) $ ( 53,570 ) $ ( 293,746 )

Other Comprehensive Gains and Losses Before Reclassifications

225,150 — 225,150

Amounts Reclassified From Other Comprehensive Income 13,732 — 13,732

Balance at March 31, 2023 $ ( 1,294 ) $ ( 53,570 ) $ ( 54,864 )

Six Months Ended March 31, 2023

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

2 unchanged sentences

Amounts Reclassified From Other Comprehensive Income 129,502 — 129,502

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

Balance at March 31, 2023 $ ( 1,294 ) $ ( 53,570 ) $ ( 54,864 )

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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):

The details about the reclassification adjustments out of accumulated other comprehensive income (loss) for the six months ended March 31, 2024 and 2023 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

March 31, Six Months Ended

2024 2023 2024 2023

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

4 unchanged sentences

$ 43,459 ($ 13,732 ) $ 57,699 ($ 129,502 ) 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 December 31, 2023 At September 30, 2023

At March 31, 2024 At September 30, 2023

Prepayments $ 13,693 $ 18,966

6 unchanged sentences

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

At December 31, 2023 At September 30, 2023

At March 31, 2024 At September 30, 2023

Accrued Capital Expenditures $ 40,361 $ 43,323

2 unchanged sentences

Liability for Royalty and Working Interests 19,198 17,679

Federal Income Taxes Payable 11,747 —

Non-Qualified Benefit Plan Liability 13,052 13,052

5 unchanged sentences

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 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.

For the quarter and six months ended March 31, 2024, 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 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.

There were 232 securities excluded as being

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antidilutive for the quarter ended March 31, 2024.

There were no securities excluded as being antidilutive for the six months ended March 31, 2024.

There were 9,909 securities and 4,094 securities excluded as being antidilutive for the quarter and six months ended March 31, 2023, respectively.

Share Repurchases.

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

The repurchases are accounted for on the date the share repurchase is traded as an adjustment to common stock (at par value) with the excess repurchase price allocated between paid in capital and retained earnings.

Refer to Note 6 – Capitalization for further discussion of the Company's share repurchase program.

Stock-Based Compensation.

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.

The Company granted 361,729 performance shares during the six months ended March 31, 2024.

The weighted average fair value of such performance shares was $ 44.23 per share for the six months ended March 31, 2024.

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.

1 unchanged sentence

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

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 shares granted during the six months ended March 31, 2024 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”).

1 unchanged sentence

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

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

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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 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.

The Company granted 220,778 restricted stock units during the six months ended March 31, 2024.

The weighted average fair value of such restricted stock units was $ 42.44 per share for the six months ended March 31, 2024.

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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.

These restricted stock units do not entitle the participant to receive dividends during the vesting period.

1 unchanged sentence

The fair value of restricted stock units on the date of award is recorded as compensation expense over the vesting period.

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Pursuant to registration statements for the Company's stock award plans, there were 3,842,625 shares available for future grant at March 31, 2024.

These shares include shares available for future options, SARs, restricted stock and performance share grants.

Note 2 – Revenue from Contracts with Customers

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)

The following tables provide a disaggregation of the Company's revenues for the quarter and six months ended March 31, 2024 and 2023, presented by type of service from each reportable segment.

Quarter Ended March 31, 2024 (Thousands)

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

13 unchanged sentences

Total Revenues $ 264,614 $ 108,020 $ 63,993 $ 290,504 $ — $ ( 97,192 ) $ 629,939

Quarter Ended December 31, 2022 (Thousands)

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Six Months Ended March 31, 2024 (Thousands)

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

13 unchanged sentences

Total Revenues $ 518,633 $ 202,433 $ 126,581 $ 492,512 $ — $ ( 184,858 ) $ 1,155,301

Quarter Ended March 31, 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 $ 259,770 $ — $ — $ — $ — $ — $ 259,770

Production of Crude Oil 526 — — — — — 526

Natural Gas Processing 209 — — — — — 209

Natural Gas Gathering Service — — 56,981 — — ( 55,253 ) 1,728

Natural Gas Transportation Service — 73,794 — 35,796 — ( 21,751 ) 87,839

Natural Gas Storage Service — 21,470 — — — ( 9,219 ) 12,251

Natural Gas Residential Sales — — — 318,649 — — 318,649

Natural Gas Commercial Sales — — — 48,966 — — 48,966

Natural Gas Industrial Sales — — — 2,768 — ( 4 ) 2,764

Other 2,815 ( 161 ) — ( 1,864 ) — ( 264 ) 526

Total Revenues from Contracts with Customers 263,320 95,103 56,981 404,315 — ( 86,491 ) 733,228

Alternative Revenue Programs — — — 2,801 — — 2,801

Derivative Financial Instruments ( 18,768 ) — — — — — ( 18,768 )

Total Revenues $ 244,552 $ 95,103 $ 56,981 $ 407,116 $ — $ ( 86,491 ) $ 717,261

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Six Months Ended March 31, 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 $ 692,129 $ — $ — $ — $ — $ — $ 692,129

Production of Crude Oil 1,154 — — — — — 1,154

Natural Gas Processing 583 — — — — — 583

Natural Gas Gathering Service — — 113,394 — — ( 109,020 ) 4,374

Natural Gas Transportation Service — 149,996 — 64,174 — ( 42,568 ) 171,602

Natural Gas Storage Service — 42,756 — — — ( 18,215 ) 24,541

Natural Gas Residential Sales — — — 562,955 — — 562,955

Natural Gas Commercial Sales — — — 83,461 — — 83,461

Natural Gas Industrial Sales — — — 4,407 — ( 4 ) 4,403

Other 5,589 7 — ( 2,124 ) — ( 548 ) 2,924

Total Revenues from Contracts with Customers 699,455 192,759 113,394 712,873 — ( 170,355 ) 1,548,126

Alternative Revenue Programs — — — 5,923 — — 5,923

Derivative Financial Instruments ( 177,930 ) — — — — — ( 177,930 )

Total Revenues $ 521,525 $ 192,759 $ 113,394 $ 718,796 $ — $ ( 170,355 ) $ 1,376,119

The Company records revenue related to its derivative financial instruments in the Exploration and Production segment.

1 unchanged sentence

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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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 December 31, 2023 and September 30, 2023.

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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 December 31, 2023

Recurring Fair Value Measures At fair value as of March 31, 2024

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

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Total Net Assets/(Liabilities) $ 62,847 $ 196,291 $ — $ — $ 259,138

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

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Derivative Financial Instruments

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.

The derivative financial instruments reported in Level 2 at March 31, 2024 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

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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 trading markets).

1 unchanged sentence

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 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.

At March 31, 2024, 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 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.

Derivative financial instruments reported in Level 2 at March 31, 2024 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.

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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 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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For the quarters ended March 31, 2024 and March 31, 2023, there were no assets or liabilities measured at fair value and classified as Level 3.

Note 4 – Financial Instruments

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

December 31, 2023 September 30, 2023

March 31, 2024 September 30, 2023

Amount Fair Value Carrying

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Given the short-term nature of the notes payable to banks and commercial paper, the Company believes cost is a reasonable approximation of fair value.

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Other Investments.

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

At December 31, 2023 At September 30, 2023

At March 31, 2024 At September 30, 2023

Life Insurance Contracts $ 43,862 $ 42,242

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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 $ 3.1 million and $ 7.3 million at December 31, 2023 and September 30, 2023, respectively.

A $ 4.2 million

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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.

The fair value of this contingent consideration was estimated to be $ 3.6 million and $ 7.3 million at March 31, 2024 and September 30, 2023, respectively.

A $ 0.5 million mark-to-market adjustment to increase the fair value of the contingent consideration was recorded during the quarter ended March 31, 2024.

A $ 3.7 million mark-to-market adjustment to reduce the fair value of the contingent consideration was recorded during the six months ended March 31, 2024.

The Company has presented its net derivative assets and liabilities as “Fair Value of Derivative Financial Instruments” on its Consolidated Balance Sheets at March 31, 2024 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 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.

As of March 31, 2024, the Company had 351.2 Bcf of natural gas commodity derivative contracts (swaps and no cost collars) outstanding.

As of March 31, 2024, the Company was hedging a total of $ 50.4 million of forecasted transportation costs denominated in Canadian dollars with foreign currency forward contracts.

As of March 31, 2024, the Company had $ 135.0 million of net hedging gains after taxes included in the accumulated other comprehensive income (loss) balance.

Of this amount, it is expected that $ 100.9 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.

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

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

Three Months Ended March 31, 2024 and 2023 (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

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

March 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 $ 71,164 $ 310,544 $ 60,148 $ ( 18,940 )

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

Six Months Ended March 31, 2024 and 2023 (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)

Six Months Ended

(Loss) Reclassified from

Accumulated Other

Comprehensive Income (Loss) on

the Consolidated Balance Sheet

into the Consolidated Statement of

Income for the

Six Months Ended

2024 2023 2024 2023

Commodity Contracts $ 259,865 $ 607,743 Operating Revenue $ 79,939 $ ( 177,930 )

Foreign Currency Contracts 466 394 Operating Revenue ( 82 ) ( 351 )

Total $ 260,331 $ 608,137 $ 79,857 $ ( 178,281 )

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 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.

On average, the Company had $ 10.1 million of credit exposure per counterparty in a gain position at March 31, 2024.

The maximum credit exposure per counterparty in a gain position at March 31, 2024 was $ 33.2 million.

As of March 31, 2024, 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 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.

As of March 31, 2024, 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 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 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.

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

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credit rating declined, then hedging collateral deposits or an increase to such deposits could be required.

At March 31, 2024, 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 March 31, 2024.

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.

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Note 5 – Income Taxes

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.

The effective tax rates for the quarters ended March 31, 2024 and March 31, 2023 were 25.0 % and 26.2 %, respectively.

The effective tax rates for the six months ended March 31, 2024 and March 31, 2023 were 24.7 % and 25.7 %, respectively.

The reduction in effective income tax rates was primarily driven by a methodology change for repairs and maintenance tax deductions as a result of updated IRS guidance published in 2023.

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Note 6 – Capitalization

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(Thousands, except per share amounts)

Balance at January 1, 2024 92,116 $ 92,116 $ 1,041,226 $ 1,973,279 $ 67,381

Net Income Available for Common Stock 166,272

Dividends Declared on Common Stock ($ 0.495 Per Share)

Other Comprehensive Income, Net of Tax 7,959

Share-Based Payment Expense (1)

Common Stock Issued Under Stock and Benefit Plans 12 12 569

Share Repurchases Under Repurchase Plan ( 96 ) ( 96 ) ( 1,088 ) ( 3,816 )

Balance at March 31, 2024 92,032 $ 92,032 $ 1,045,929 $ 2,090,172 $ 75,340

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 309 309 ( 3,100 )

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

Share Repurchases Under Repurchase Plan ( 96 ) ( 96 ) ( 1,088 ) ( 3,816 )

Balance at March 31, 2024 92,032 $ 92,032 $ 1,045,929 $ 2,090,172 $ 75,340

Balance at January 1, 2023 91,787 $ 91,787 $ 1,025,639 $ 1,713,176 $ ( 293,746 )

Net Income Available for Common Stock 140,880

Dividends Declared on Common Stock ($ 0.475 Per Share)

Other Comprehensive Income, Net of Tax 238,882

Share-Based Payment Expense (1)

Common Stock Issued Under Stock and Benefit Plans 8 8 502

Balance at March 31, 2023 91,795 $ 91,795 $ 1,031,341 $ 1,810,454 $ ( 54,864 )

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

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Common Stock Issued (Repurchased) Under Stock and Benefit Plans

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

317 317 ( 6,043 )

Balance at March 31, 2023 91,795 $ 91,795 $ 1,031,341 $ 1,810,454 $ ( 54,864 )

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

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Common Stock.

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

During the six months ended March 31, 2024, the Company issued 112,632 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 18,432 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 six months ended March 31, 2024.

In addition, the Company issued 3,559 original issue shares of common stock to officers of the

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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.

Company who elected to defer their shares pursuant to the dividend reinvestment feature of the Company's DCP Plan during the six months ended March 31, 2024.

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.

During the six months ended March 31, 2024, 77,426 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.

On March 8, 2024, the Company’s Board of Directors authorized the Company to implement a share repurchase program, whereby the Company may repurchase outstanding shares of common stock, up to an aggregate amount of $ 200 million in the open market or through privately negotiated transactions, including through the use of trading plans intended to qualify under SEC Rule 10b5-1, in accordance with applicable securities laws and other restrictions.

During the quarter ended March 31, 2024, the Company executed transactions to repurchase 96,133 shares for $ 5.0 million.

Share repurchases that settled during the quarter ended March 31, 2024 were funded with cash provided by operating activities and/or short-term borrowings.

In the future, it is expected that this share repurchase program will continue to be funded with cash provided by operating activities and/or through the use of short-term borrowings.

Short-Term Borrowings.

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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.

Effective February 7, 2024, 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 $ 940.0 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 December 31, 2023 and September 30, 2023 had a maturity date within the following twelve-month period.

None of the Company's long-term debt as of March 31, 2024 and September 30, 2023 had a maturity date within the following twelve-month period.

Delayed Draw Term Loan.

On February 14, 2024, the Company entered into a Term Loan Agreement (the “Term Loan Agreement”) with six lenders, all of which are lenders under the Credit Agreement.

The Term Loan Agreement provides a $ 300.0 million unsecured committed term loan with a maturity date of February 14, 2026.

Pursuant to the Term Loan Agreement, there was a delayed draw mechanism, and the Company elected to draw a total of $ 300.0 million under the facility between April 8, 2024 and April 10, 2024.

The Company used the proceeds for general corporate purposes, which included the redemption of outstanding commercial paper.

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 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.

At March 31, 2024, the Company has estimated its remaining clean-up costs related to former manufactured gas plant sites will be approximately $ 2.7 million.

The Company's liability for such clean-up costs has been recorded in Other Liabilities on the Consolidated Balance Sheet at March 31, 2024.

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 which is the subject of an ongoing appeal at the U.S.

On June 29, 2022, the Company received an extension of time from FERC, until December 31, 2024, to construct the project, which was affirmed on March 29, 2024 by 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.

In light of the recent D.C.

Circuit decision, the

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Company is evaluating next steps for the project, including the status of various regulatory approvals, the $ 500 million preliminary cost estimate, and the potential in-service date.

As of March 31, 2024, the Company has spent approximately $ 55.0 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 December 31, 2023 and September 30, 2023 is shown in the tables below.

Quarter Ended December 31, 2023 (Thousands)

A listing of segment assets at March 31, 2024 and September 30, 2023 is shown in the tables below.

Quarter Ended March 31, 2024 (Thousands)

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

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$ 62,065 $ 30,737 $ 28,706 $ 44,739 $ 166,247 $( 96 ) $ 121 $ 166,272

Six Months Ended March 31, 2024 (Thousands)

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

Revenue from External Customers

$ 518,633 $ 136,036 $ 8,513 $ 492,119 $ 1,155,301 $ — $ — $ 1,155,301

Intersegment Revenues $ — $ 66,397 $ 118,068 $ 393 $ 184,858 $ — $( 184,858 ) $ —

Segment Profit:

Net Income (Loss) $ 114,548 $ 54,792 $ 57,531 $ 71,289 $ 298,160 $( 217 ) $ 1,349 $ 299,292

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

Segment Assets:

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 March 31, 2024 $ 3,049,670 $ 2,472,011 $ 971,741 $ 2,359,961 $ 8,853,383 $ 4,823 $( 181,181 ) $ 8,677,025

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 December 31, 2022 (Thousands)

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Quarter Ended March 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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Net Income (Loss) $ 60,982 $ 23,858 $ 24,334 $ 31,720 $ 140,894 $( 69 ) $ 55 $ 140,880

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Six Months Ended March 31, 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

$ 521,525 $ 131,844 $ 4,374 $ 718,376 $ 1,376,119 $ — $ — $ 1,376,119

Intersegment Revenues $ — $ 60,915 $ 109,020 $ 420 $ 170,355 $ — $( 170,355 ) $ —

Segment Profit:

Net Income (Loss) $ 152,174 $ 53,335 $ 49,072 $ 55,537 $ 310,118 $( 350 ) $ 802 $ 310,570

Note 9 – Retirement Plan and Other Post-Retirement Benefits

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Retirement Plan Other Post-Retirement Benefits

Three Months Ended December 31, 2023 2022 2023 2022

Three Months Ended March 31, 2024 2023 2024 2023

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

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Net Periodic Benefit Cost (Income) $ ( 1,334 ) $ ( 1,155 ) $ ( 1,566 ) $ ( 1,147 )

Retirement Plan Other Post-Retirement Benefits

Six Months Ended March 31, 2024 2023 2024 2023

Service Cost $ 2,098 $ 2,594 $ 217 $ 293

Interest Cost 21,779 21,258 7,780 7,824

Expected Return on Plan Assets ( 34,172 ) ( 33,297 ) ( 13,321 ) ( 12,806 )

Amortization of Prior Service Cost (Credit) 181 218 ( 214 ) ( 214 )

Amortization of (Gains) Losses ( 669 ) ( 3,840 ) ( 1,133 ) ( 4,378 )

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

8,116 10,756 4,008 7,314

Net Periodic Benefit Cost (Income) $ ( 2,667 ) $ ( 2,311 ) $ ( 2,663 ) $ ( 1,967 )

(1) The Company’s policy is to record retirement plan and other post-retirement benefit costs in the Utility segment on a volumetric basis to reflect the fact that the Utility segment experiences higher throughput of natural gas in the winter months and lower throughput of natural gas in the summer months.

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The components of net periodic benefit cost other than service cost are presented in Other Income (Deductions) on the Consolidated Statements of Income.

Employer Contributions.

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.

The Company did not make any contributions to its tax-qualified, noncontributory defined benefit retirement plan (Retirement Plan) during the six months ended March 31, 2024.

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.

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

Note 10 – Regulatory Matters

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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.

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Pennsylvania Jurisdiction

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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.

On April 10, 2024, Distribution Corporation filed with the PaPUC a petition for approval of a distribution system improvement charge (“DSIC”) to recover, between base rate cases, capital expenses related to eligible property constructed or installed to rehabilitate, improve and replace portions of the Company’s natural gas distribution system.

If approved as filed, beginning October 1, 2024, the Company will be able to recover costs associated with plant placed in service on and after August 1, 2024 if it exceeds approximately $ 781.3 million of net plant as of July 31, 2024 and its quarterly rate of return does not exceed the authorized PaPUC rate of return.

The DSIC petition is currently pending before the PaPUC.

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 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.

If the rates approved at the end of the proceeding are lower than the rates in effect at July 31, 2023, such lower rates will become effective prospectively from the effective date provided by the applicable FERC order, and refunds with interest will be limited to the difference between the rates collected subject to refund and the rates in effect at July 31, 2023.

Empire’s 2019 rate settlement provides that Empire must make a rate case filing no later than May 1, 2025.

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

On March 8, 2024, Supply Corporation and the parties in the case reached a settlement in principle (the Settlement) to resolve the rate case.

Supply Corporation’s March 11, 2024 motion to put in place Interim Settlement Rates effective February 1, 2024, was approved by FERC’s Chief Administrative Law Judge on March 12, 2024.

The Settlement was filed with FERC on March 27, 2024 and remains pending.

The “black box” settlement provides for new rates and resolves all issues in the proceeding.

The Interim Settlement Rates are estimated to increase Supply Corporation’s revenues on a yearly basis by approximately $ 56 million, assuming current contract levels.

The Settlement generally provides for the continuation of

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current depreciation rates with minimal changes.

Under the Settlement, Supply Corporation may make a rate filing for new rates to be effective at any time.

As well, any party can make a filing under NGA Section 5.

Empire's 2019 rate settlement requires a Section 4 rate case filing no later than May 1, 2025.

Empire has no rate case currently on file.

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