What changed in this filing

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Item 1. Business

2024-11-22 compared with 2023-11-17 · 48 added, 69 removed, 155 unchanged (43% of the section changed)

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Exploration and Production, Pipeline and Storage, Gathering, and Utility.

The Exploration and Production segment operations are carried out by Seneca Resources Company, LLC (Seneca), a Pennsylvania limited liability company.

The Exploration and Production segment operations are carried out by Seneca Resources Company, LLC, a Pennsylvania limited liability company.

Seneca is engaged in the exploration for, and the development and production of, primarily natural gas in the Appalachian region of the United States.

At September 30, 2024, Seneca had proved developed and undeveloped reserves of 4,751,762 MMcf of natural gas and 193 Mbbl of oil.

The Pipeline and Storage segment operations are carried out by National Fuel Gas Supply Corporation (Supply Corporation), a Pennsylvania corporation, and Empire Pipeline, Inc.

(Empire), a New York corporation.

The Pipeline and Storage segment operations are carried out by National Fuel Gas Supply Corporation, a Pennsylvania corporation, and Empire Pipeline, Inc., a New York corporation.

Supply Corporation and Empire provide interstate natural gas transportation services for affiliated and nonaffiliated companies through integrated natural gas pipeline systems in Pennsylvania and New York.

Supply Corporation also provides storage services through its underground natural gas storage fields, and Empire provides storage service (via lease with Supply Corporation) to a nonaffiliated company.

The Gathering segment operations are carried out by wholly-owned subsidiaries of National Fuel Gas Midstream Company, LLC (Midstream Company), a Pennsylvania limited liability company.

Through these subsidiaries, Midstream Company builds, owns and operates natural gas processing and pipeline gathering facilities in the Appalachian region.

The Utility segment operations are carried out by National Fuel Gas Distribution Corporation (Distribution Corporation), a New York corporation.

The Gathering segment operations are carried out by wholly-owned subsidiaries of National Fuel Gas Midstream Company, LLC, a Pennsylvania limited liability company.

Through these subsidiaries, Midstream Company builds, owns and operates gathering facilities in the Appalachian region.

The Utility segment operations are carried out by National Fuel Gas Distribution Corporation, a New York corporation.

Distribution Corporation provides natural gas utility services to approximately 755,000 customers through a local distribution system located in western New York and northwestern Pennsylvania.

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Financial information about each of the Company’s business segments can be found in Item 7, MD&A and also in Item 8 at Note M — Business Segment Information.

Revenue from one customer of the Company's Exploration and Production segment, exclusive of hedging losses transacted with separate parties, represented approximately $208 million, or 9.6%, of the Company's consolidated revenue for the year ended September 30, 2023.

This one customer was also a customer of the Company's Pipeline and Storage segment, accounting for an additional $14 million, or 0.6%, of the Company's consolidated revenue for the year ended September 30, 2023.

No single customer, or group of customers under common control, accounted for more than 10% of the Company’s consolidated revenues in 2024.

Rates and Regulation

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PHMSA may delegate this authority to a state, as it has in New York and Pennsylvania, and that state may choose to institute more stringent safety regulations for the construction, operation and maintenance of intrastate facilities.

In addition to this state safety authority program, the NYPSC imposes additional requirements on the construction of certain utility facilities.

In addition to this state safety program, the NYPSC imposes additional requirements on the construction of certain utility facilities.

Increased regulation by these agencies, and other regulators, or requested changes to construction projects, could lead to operational delays or restrictions and increase compliance costs that the Company may not be able to recover fully through rates or otherwise offset.

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The Exploration and Production Segment

The Exploration and Production segment contributed net income of $232.3 million in 2023.

The Exploration and Production segment incurred a net loss of $164.0 million in 2024.

Additional discussion of the Exploration and Production segment appears below in this Item 1 under the headings “Sources and Availability of Raw Materials” and “Competition:

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Sources and Availability of Raw Materials

The Exploration and Production segment seeks to discover and produce raw materials (primarily natural gas) as further described in this report in Item 7, MD&A and Item 8 at Note M — Business Segment Information and Note N — Supplementary Information for Oil and Gas Producing Activities.

The Pipeline and Storage segment transports and stores natural gas owned by its customers, whose gas primarily originates in the Appalachian region of the United States, as well as other gas supply regions in the United States and Canada.

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(31%), Vitol, Inc.

(14%), Shell Energy North America US (9%), EQT Energy, LLC (9%), Emera Energy Services, Inc.

Aron & Company (7%), Tenaska Marketing Ventures (5%), Chevron Natural Gas (5%), and NRG Business Marketing Inc.

(5%), accounted for nearly 86% of the Utility segment's 2023 gas purchases.

(18%), EQT Energy, LLC (8%), Emera Energy Services, Inc.

(8%), Chevron Natural Gas (6%), and Tenaska Marketing Ventures (6%) accounted for nearly 77% of the Utility segment’s 2024 gas purchases.

No other producer or supplier provided the Utility segment with more than 5% of its gas requirements in 2024.

The Utility segment does not directly purchase gas from affiliates.

Competition in the natural gas industry exists among providers of natural gas, as well as between natural gas and other sources of energy, such as fuel oil, geothermal, solar and wind.

Management believes that the reliability and affordability of natural gas support its competitive position relative to other fuels.

Competition in the natural gas industry exists among providers of natural gas, as well as between natural gas and other sources of energy, such as fuel oil, geothermal, and electrification technologies.

Management believes that the reliability and affordability of natural gas support its competitive position relative to electrification and other energy sources.

The Company competes on the basis of price, service and reliability, product performance and other factors.

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The Exploration and Production Segment

The Exploration and Production segment competes with other natural gas producers and marketers with respect to sales of natural gas.

The Exploration and Production segment also competes, by competitive bidding and otherwise, with other natural gas producers with respect to exploration and development prospects and mineral leaseholds.

To compete in this environment, Seneca originates and acts primarily as operator on its prospects, maintains a portfolio of firm transportation and sales contracts in order to compete in higher priced markets, seeks to minimize the risk of exploratory efforts through partnership-type arrangements, utilizes technology for both exploratory studies and drilling operations, and seeks prospect and partnership opportunities based on size, operating expertise and financial criteria.

The Exploration and Production segment competes with major integrated and other independent natural gas producers and marketers with respect to the sale of natural gas and, in some cases, the acquisition, exploration and development of mineral rights and leasehold interests.

Seneca strives to distinguish itself amongst its competition by capturing capital efficiencies across its large, contiguous operating footprint in Appalachia and integrated with National Fuel’s Gathering segment operations.

Additionally, Seneca is the primary operator on its properties, optimizes technology used for both exploration and development activities, maintains a portfolio of firm transportation and physical firm sales contracts and enters into financial hedges to protect cash flows through commodity price cycles.

The Pipeline and Storage Segment

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Empire’s geographic location provides it the opportunity to compete for service to its on-system LDC markets, as well as for a share of the gas transportation markets into Canada (via Chippawa) and into the northeastern United States.

Various expansion projects on Empire have expanded it's footprint and capability, allowing Empire to serve new markets in New York and elsewhere in the Northeast, and to attach to prolific Marcellus and Utica supplies principally from Tioga and Bradford Counties in Pennsylvania.

Various expansion projects on Empire have expanded its footprint and capability, allowing Empire to serve new markets in New York and elsewhere in the Northeast, and to attach to prolific Marcellus and Utica supplies principally from Tioga and Bradford Counties in Pennsylvania.

Like Supply Corporation, Empire’s expanded system facilitates transportation of natural gas to key markets within New York State, the northeastern United States and Canada.

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In both New York and Pennsylvania, approximately 8% of Distribution Corporation’s small-volume residential and commercial customers purchase their supplies from unregulated marketers.

In contrast, almost all large-volume load is served by unregulated retail marketers.

However, retail competition for gas commodity service does not pose an acute competitive

threat for Distribution Corporation, because in both jurisdictions, utility cost of service is recovered through rates and charges for gas delivery service, not gas commodity service.

In contrast, almost all large commercial and industrial customers are served by marketers.

However, retail competition for gas commodity service does not pose an acute competitive threat for Distribution Corporation, because in both jurisdictions, utility cost of service is recovered through rates and charges for gas delivery service, not gas commodity service.

Competition for transportation service to large-volume customers continues with local producers or pipeline companies attempting to sell or transport gas directly to end-users located within the Utility segment’s service territories without use of the utility’s facilities (i.e., bypass).

In addition, while competition with fuel oil suppliers continues to exist and competition with electrification alternatives is growing, particularly in New York State, natural gas retains its competitive position from a reliability and affordability standpoint.

In addition, while competition with fuel oil

suppliers continues to exist and competition with electrification alternatives is growing, particularly in New York State, natural gas retains its competitive position from a reliability and affordability standpoint.

The Utility segment competes in its most vulnerable markets (the large commercial and industrial markets) by offering unbundled, flexible, high quality services.

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Variations in weather conditions can materially affect the volume of natural gas delivered by the Utility segment, as virtually all of its residential and commercial customers use natural gas for space heating.

The effect that this has on Utility segment margins is largely mitigated by a weather normalization clause (WNC).

Prior to October 2023, the weather impact on cash flow in the Utility segment was mitigated by a WNC solely in its New York rate jurisdiction.

However, effective October 2023, the weather impact on cash flow in the Utility segment will also be mitigated by a WNC in its Pennsylvania rate jurisdiction.

The effect that this has on Utility segment margins is largely mitigated by a weather normalization adjustment (WNA).

Prior to October 2023, the weather impact on cash flow in the Utility segment was mitigated by a WNA solely in its New York rate jurisdiction.

However, effective October 2023, the weather impact on cash flow in the Utility segment is also mitigated by a WNA in its Pennsylvania rate jurisdiction.

Refer to Item 8, Note A — Summary of Significant Accounting Policies under the heading “Regulatory Mechanisms” for additional discussion.

Under the WNC, weather that is warmer than normal results in an upward adjustment to customers’ current bills, while weather that is colder than normal results in a downward adjustment, so that in either case projected delivery revenues calculated at normal temperatures will be largely recovered.

Under the WNA, weather that is warmer than normal results in an upward adjustment to customers’ current bills, while weather that is colder than normal results in a downward adjustment, so that in either case projected delivery revenues calculated at normal temperatures will be largely recovered.

Volumes transported and stored by Supply Corporation and Empire may vary significantly depending on weather, without materially affecting the revenues of those companies.

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The Utility segment has numerous municipal franchises under which it uses public roads and certain other rights-of-way and public property for the location of facilities.

The Company makes its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, available free of charge on the Company’s website, www.nationalfuel.com, as soon as reasonably practicable after they are electronically filed with or furnished to

The information available at the Company’s website is not part of this Form 10-K or any other report filed with or furnished to the SEC.

Human Capital

The Company aims to attract the best employees, to retain those employees through offering competitive total rewards, career development and training opportunities, while also prioritizing their safety and wellness, and to create a safe, inclusive and productive work environment for everyone.

Human capital measures and objectives that the Company focuses on in managing its business include the safety of its employees, its voluntary attrition rate, the number of work stoppages, its total rewards, employee development, and diversity and inclusion.

The Company aims to attract the best employees, and to retain those employees through offering competitive benefits and compensation packages, and career development and training opportunities in a safe, inclusive and productive work environment.

Human capital measures and objectives that the Company focuses on in managing its business are outlined below.

Additional information regarding the Company’s human capital measures and objectives is contained in the Company’s recently published Corporate Responsibility Report, which is available on the Company’s website, www.nationalfuel.com.

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As of September 30, 2024, 47% of the Company’s active workforce was covered under collective bargaining agreements.

The Company has agreements in place with collective bargaining units in New York into February 2025, as well as with collective bargaining units in Pennsylvania into April 2026.

The Company has agreements in place with collective bargaining units in New York into February 2025 and is currently negotiating renewal of those agreements.

Additionally, the Company has agreements with collective bargaining units in Pennsylvania into April 2026.

Safety is one of the Company’s guiding principles.

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This includes required trainings for both field and office employees, as well as specific qualifications and certifications for field employees and applicable contractors.

The Company also ties executive compensation to safety related goals to emphasize the importance of and focus on safety at the Company.

The Company also ties executive compensation and salaried variable pay programs to safety related goals to emphasize the importance of and focus on safety at the Company.

Voluntary Attrition Rate

The Company measures the voluntary attrition rate of its employees in assessing the Company’s overall human capital.

The Company's voluntary attrition rate was 8.7% (not including retirements), which is comparable to last year’s voluntary attrition rate of 8%.

The Company continues to actively monitor employee metrics, including attrition rate, to ensure proper management of and responsiveness to human capital matters.

The Company’s voluntary attrition rate was 4.8% (not including retirements), which is a significant improvement from last year’s voluntary attrition rate of 8.7%.

The Company continues to actively monitor employee metrics, including attrition rate, as an indicator of management of and responsiveness to human capital matters.

No Work Stoppages

During fiscal 2024, the Company did not incur any work stoppages (strikes or lockouts) and therefore experienced zero idle days for the fiscal year.

Total Rewards

To attract employees and meet the needs of the Company’s workforce, the Company offers market-competitive benefits packages to employees of its subsidiaries.

The Company’s benefits package options may vary depending on type of employee and date of hire.

Additionally, the Company continuously looks for ways to improve employee work-life balance and well-being, and periodically conducts employee surveys to provide additional insight into employee perspectives and interest in desired benefits.

Employee Benefits, Compensation and Development

To attract employees and meet the needs of the Company’s workforce, the Company offers market-competitive benefits packages and compensation to employees of its subsidiaries.

The Company’s benefits package options and career development opportunities may vary depending on type of employee and date of hire.

Benefits packages may include healthcare benefits, financial and retirement benefits, insurance benefits, and lifestyle benefits.

Additionally, the Company periodically conducts employee surveys to provide additional insight into employee perspectives and interest in desired benefits.

The Company’s compensation program for salaried employees is intended to align employee compensation with the market while providing greater incentive to the Company’s employees to work toward the achievement of Company goals.

These goals include the coordinated business goals and ESG objectives of the Company's business segments as a whole.

These goals include the coordinated business goals and corporate responsibility and sustainability objectives of the Company’s business segments.

This meaningful investment illustrates the Company’s view that attracting, retaining and motivating our employees is integral to the Company’s success.

Employee Development

The Company provides its employees with tools and development resources to enhance their skills and careers at the Company, including:

(i) encouraging employees to discuss their professional development and identify interests or possible cross-training areas during annual performance reviews with their supervisors;

(ii) offering corporate and technical training programs based on position, regulatory environment, and employee needs;

(iii) providing a tuition aid program for educational pursuits related to present work or possible future positions;

(iv) providing talent review and succession planning;

(v) providing opportunities for on-the-job growth, through stretch assignments or temporary projects outside of an employee’s typical responsibilities;

and (vi) offering one-on-one meetings for supervisory employees at the Company’s subsidiaries to discuss career pathing and employee development.

The Company provides its employees with professional development and training resources to enhance their careers within the Company, which, depending on employee type, may include the following:

(i) tuition aid program;

(ii) sponsorship for professional licensing;

(iii) corporate and technical training programs;

(iv) continuous talent review and succession planning;

and (v) professional development and cross-training discussions encouraged through annual performance reviews and career development discussions.

Diversity, Equity and Inclusion

The Company recognizes that a diverse talent pool provides the opportunity to gain a diversity of perspectives, ideas and solutions to help the Company succeed.

The Company’s focus on building a diverse and inclusive culture is reflected in the Company's approach to Board diversity, its adoption of specific diversity and inclusion performance goals as part of the Company’s executive compensation program, and policies and training that reinforce the Company’s commitment to diversity and inclusion in the workplace.

The Company’s focus on building a diverse and inclusive culture is reflected in its adoption of specific diversity and inclusion performance goals as part of the Company’s executive compensation and salaried variable pay programs, and policies and training that reinforce the Company’s commitment to diversity and inclusion in the workplace.

The Company’s policies prohibit discrimination or harassment against any employee or applicant on the basis of sex, race/ethnicity, and other protected categories.

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Additionally, to ensure transparency over time, the Company publicly discloses gender, racial and ethnic minority representation, and multi-generational workforce metrics in the Company’s Corporate Responsibility Report.

The Company's Diversity and Inclusion team continues to spearhead diversity and inclusion initiatives to help attract candidates within diverse communities, encourage partnerships with diverse vendors and suppliers and provide tools and trainings designed to promote equity and inclusion within employment teams.

The Company also supports multiple active Employee Resource Groups for women, ethnically diverse employees, veterans and employees who identify as LGBTQ+, where employees can network, build community and seek support.

Each group is voluntary, employee-led, open to allies, and has an executive sponsor to help facilitate communication directly to senior management.

Executive Officers of the Company as of November 15, 2024(1)

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Chief Executive Officer of the Company since July 2019.

Bauer previously served as President of Supply Corporation from February 2016 through June 2019.

Treasurer and Principal Financial Officer of the Company from July 2010 through June 2019.

Treasurer of Seneca from April 2015 through June 2019.

Treasurer of Distribution Corporation from April 2015 through June 2019.

Treasurer of Midstream Company from April 2013 through June 2019.

Treasurer of Supply Corporation and Empire from June 2007 through June 2019.

President of Distribution Corporation since February 2019.

DeCarolis previously served as Vice President of Business Development of the Company from October 2007 through January 2019.

Chief Operating Officer of the Company since March 2021, President of Supply Corporation since July 2019 and President of Empire since August 2008.

Kraemer previously served as Senior Vice President of Supply Corporation from June 2016 through June 2019.

Treasurer and Principal Financial Officer of the Company since May 2023.

Treasurer and Chief Financial Officer of the Company since May 2023.

Treasurer of Seneca Resources Company since May 2023.

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General Manager of Finance from April 2019 through March 2020.

Manager of Finance from April 2017 through March 2019.

Controller and Principal Accounting Officer of the Company since July 2019.

Controller and Chief Accounting Officer of the Company since July 2019.

Controller of Distribution Corporation, Supply Corporation, Empire, and Midstream Company since July 2019.

Mendel previously served as Assistant Controller of Distribution Corporation, Supply Corporation and Empire from February 2017 through June 2019.

Chief Information Officer of the Company since December 2018 and Senior Vice President of Distribution Corporation since May 2023.

Prior to joining the Company, Mr.

Krebs served as Chief Information Officer and Chief Information Security Officer of Fidelis Care, a health insurance provider for New York State residents, from January 2012 to June 2018.

Centene Corporation acquired Fidelis Care in July 2018, and Mr.

Krebs served as the Chief Information Officer of the Fidelis Plan and Senior Vice President of Information Technology and Security from the acquisition to November 2018.

Krebs' prior employers are not subsidiaries or affiliates of the Company.

General Counsel and Secretary of the Company since April 2023 and Senior Vice President of Distribution Corporation since May 2020.

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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-K

Item 1. Business