NATIONAL FUEL GAS CO 10-Q

Item 1. Financial Statements National Fuel Gas Company Consolidated Statements of Income and Earnings Reinvested in the Business (Unaudited) Three Months Ended March 31, Six Months Ended March 31, (Thousands of U.S. Dollars, Except Per Common Share Amounts) 2025 2024 2025 2024 INCOME Operating Revenues: Utility Revenues $ 343,574 $ 290,198 $ 571,998 $ 492,119 Exploration and Production and Other Revenues 311,958 264,614 560,818 518,633 Pipeline and Storage and Gathering Revenues 74,418 75,127 146,616 144,549 729,950 629,939 1,279,432 1,155,301 Operating Expenses: Purchased Gas 135,338 105,940 200,675 162,491 Operation and Maintenance: Utility 63,447 59,288 118,691 112,993 Exploration and Production and Other 35,059 32,794 68,600 67,620 Pipeline and Storage and Gathering 42,363 39,340 78,304 74,303 Property, Franchise and Other Taxes 25,214 23,019 47,270 45,434 Depreciation, Depletion and Amortization 111,277 118,935 220,647 234,725 Impairment of Assets — — 141,802 — 412,698 379,316 875,989 697,566 Operating Income 317,252 250,623 403,443 457,735 Other Income (Expense): Other Income (Deductions) 15,232 6,070 22,952 9,801 Interest Expense on Long-Term Debt ( 39,662 ) ( 28,453 ) ( 73,024 ) ( 56,915 ) Other Interest Expense ( 5,095 ) ( 6,636 ) ( 9,476 ) ( 12,910 ) Income Before Income Taxes 287,727 221,604 343,895 397,711 Income Tax Expense 71,369 55,332 82,551 98,419 Net Income Available for Common Stock 216,358 166,272 261,344 299,292 EARNINGS REINVESTED IN THE BUSINESS Balance at Beginning of Period 1,698,648 1,973,279 1,727,326 1,885,856 1,915,006 2,139,551 1,988,670 2,185,148 Share Repurchases under Repurchase Plan ( 13,085 ) ( 3,816 ) ( 40,078 ) ( 3,816 ) Dividends on Common Stock ( 46,555 ) ( 45,563 ) ( 93,226 ) ( 91,160 ) Balance at March 31 $ 1,855,366 $ 2,090,172 $ 1,855,366 $ 2,090,172 Earnings Per Common Share: Basic: Net Income Available for Common Stock $ 2.39 $ 1.81 $ 2.88 $ 3.25 Diluted: Net Income Available for Common Stock $ 2.37 $ 1.80 $ 2.86 $ 3.24 Weighted Average Common Shares Outstanding: Used in Basic Calculation 90,500,162 92,114,415 90,640,333 92,011,772 Used in Diluted Calculation 91,176,327 92,512,447 91,312,334 92,478,604 Dividends Per Common Share: Dividends Declared $ 0.515 $ 0.495 $ 1.030 $ 0.990 See Notes to Condensed Consolidated Financial Statements 6 Table of Content National Fuel Gas Company Consolidated Statements of Comprehensive Income (Unaudited) Three Months Ended March 31, Six Months Ended March 31, (Thousands of U.S. Dollars) 2025 2024 2025 2024 Net Income Available for Common Stock $ 216,358 $ 166,272 $ 261,344 $ 299,292 Other Comprehensive Income (Loss), Before Tax: Unrealized Gain (Loss) on Derivative Financial Instruments Arising During the Period ( 209,046 ) 71,164 ( 262,562 ) 260,331 Reclassification Adjustment for Realized (Gains) Losses on Derivative Financial Instruments in Net Income 8,160 ( 60,148 ) ( 21,344 ) ( 79,857 ) Other Comprehensive Income (Loss), Before Tax ( 200,886 ) 11,016 ( 283,906 ) 180,474 Income Tax Expense (Benefit) Related to Unrealized Gain (Loss) on Derivative Financial Instruments Arising During the Period ( 56,260 ) 19,746 ( 70,663 ) 72,232 Reclassification Adjustment for Income Tax Benefit (Expense) on Realized Losses (Gains) from Derivative Financial Instruments in Net Income 2,196 ( 16,689 ) ( 5,744 ) ( 22,158 ) Income Taxes – Net ( 54,064 ) 3,057 ( 76,407 ) 50,074 Other Comprehensive Income (Loss) ( 146,822 ) 7,959 ( 207,499 ) 130,400 Comprehensive Income $ 69,536 $ 174,231 $ 53,845 $ 429,692 See Notes to Condensed Consolidated Financial Statements 7 Table of Content National Fuel Gas Company Consolidated Balance Sheets (Unaudited) March 31, 2025 September 30, 2024 (Thousands of U.S. Dollars) ASSETS Property, Plant and Equipment $ 14,834,817 $ 14,524,798 Less - Accumulated Depreciation, Depletion and Amortization 7,487,618 7,185,593 7,347,199 7,339,205 Current Assets Cash and Temporary Cash Investments 39,954 38,222 Cash Held in Trust for Bondholders 51,352 — Receivables – Net of Allowance for Uncollectible Accounts of $ 23,451 and $ 26,194 , Respectively 291,132 127,222 Unbilled Revenue 49,077 15,521 Gas Stored Underground 6,413 35,055 Materials and Supplies - at average cost 48,451 47,670 Unrecovered Purchased Gas Costs 3,562 — Other Current Assets 78,532 92,229 568,473 355,919 Other Assets Recoverable Future Taxes 88,623 80,084 Unamortized Debt Expense 7,166 5,604 Other Regulatory Assets 118,800 108,022 Deferred Charges 69,572 69,662 Other Investments 71,958 81,705 Goodwill 5,476 5,476 Prepaid Pension and Post-Retirement Benefit Costs 194,325 180,230 Fair Value of Derivative Financial Instruments 45 87,905 Other 8,326 5,958 564,291 624,646 Total Assets $ 8,479,963 $ 8,319,770 8 Table of Content See Notes to Condensed Consolidated Financial Statements National Fuel Gas Company Consolidated Balance Sheets (Unaudited) March 31, 2025 September 30, 2024 (Thousands of U.S. Dollars) CAPITALIZATION AND LIABILITIES Capitalization: Comprehensive Shareholders’ Equity Common Stock, $ 1 Par Value Authorized - 200,000,000 Shares; Issued And Outstanding – 90,397,698 Shares and 91,005,993 Shares, Respectively $ 90,398 $ 91,006 Paid in Capital 1,042,822 1,045,487 Earnings Reinvested in the Business 1,855,366 1,727,326 Accumulated Other Comprehensive Loss ( 222,975 ) ( 15,476 ) Total Comprehensive Shareholders’ Equity 2,765,611 2,848,343 Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issuance Costs 2,381,126 2,188,243 Total Capitalization 5,146,737 5,036,586 Current and Accrued Liabilities Notes Payable to Banks and Commercial Paper 208,400 90,700 Current Portion of Long-Term Debt 350,000 500,000 Accounts Payable 127,611 165,068 Amounts Payable to Customers 34,393 42,720 Dividends Payable 46,555 46,872 Interest Payable on Long-Term Debt 19,454 27,247 Customer Advances — 19,373 Customer Security Deposits 30,358 36,265 Other Accruals and Current Liabilities 184,925 162,903 Fair Value of Derivative Financial Instruments 201,464 4,744 1,203,160 1,095,892 Other Liabilities Deferred Income Taxes 1,072,436 1,111,165 Taxes Refundable to Customers 302,293 305,645 Cost of Removal Regulatory Liability 300,256 292,477 Other Regulatory Liabilities 140,828 151,452 Other Post-Retirement Liabilities 3,404 3,511 Asset Retirement Obligations 193,802 203,006 Other Liabilities 117,047 120,036 2,130,066 2,187,292 Commitments and Contingencies (Note 7) — — Total Capitalization and Liabilities $ 8,479,963 $ 8,319,770 See Notes to Condensed Consolidated Financial Statements 9 Table of Content National Fuel Gas Company Consolidated Statements of Cash Flows (Unaudited) Six Months Ended March 31, (Thousands of U.S. Dollars) 2025 2024 OPERATING ACTIVITIES Net Income Available for Common Stock $ 261,344 $ 299,292 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Impairment of Assets 141,802 — Depreciation, Depletion and Amortization 220,647 234,725 Deferred Income Taxes 25,787 65,187 Premiums Paid on Early Redemption of Debt 2,385 — Stock-Based Compensation 10,487 10,477 Other 14,317 11,874 Change in: Receivables and Unbilled Revenue ( 197,553 ) ( 50,123 ) Gas Stored Underground and Materials and Supplies 27,861 25,675 Unrecovered Purchased Gas Costs ( 3,562 ) — Other Current Assets 13,737 15,201 Accounts Payable 17,322 ( 15,641 ) Amounts Payable to Customers ( 8,327 ) 13,327 Customer Advances ( 19,373 ) ( 21,003 ) Customer Security Deposits ( 5,907 ) 1,836 Other Accruals and Current Liabilities 21,528 26,927 Other Assets ( 20,282 ) ( 22,165 ) Other Liabilities ( 28,343 ) ( 9,328 ) Net Cash Provided by Operating Activities 473,870 586,261 INVESTING ACTIVITIES Capital Expenditures ( 434,260 ) ( 481,958 ) Other 8,881 ( 1,189 ) Net Cash Used in Investing Activities ( 425,379 ) ( 483,147 ) FINANCING ACTIVITIES Changes in Notes Payable to Banks and Commercial Paper 117,700 ( 8,600 ) Net Proceeds from Issuance of Long-Term Debt 989,019 — Shares Repurchased Under Repurchase Plan ( 50,471 ) ( 4,230 ) Reduction of Long-Term Debt ( 954,086 ) — Dividends Paid on Common Stock ( 93,543 ) ( 91,048 ) Net Repurchases of Common Stock Under Stock and Benefit Plans ( 4,026 ) ( 3,914 ) Net Cash Provided by (Used in) Financing Activities 4,593 ( 107,792 ) Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash 53,084 ( 4,678 ) Cash, Cash Equivalents, and Restricted Cash at October 1 38,222 55,447 Cash, Cash Equivalents, and Restricted Cash at March 31 $ 91,306 $ 50,769 Supplemental Disclosure of Cash Flow Information Non-Cash Investing Activities: Non-Cash Capital Expenditures $ 58,813 $ 62,921 See Notes to Condensed Consolidated Financial Statements 10 Table of Content National Fuel Gas Company Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1 – Summary of Significant Accounting Policies Principles of Consolidation. The Company consolidates all entities in which it has a controlling financial interest. All significant intercompany balances and transactions are eliminated. The Company uses proportionate consolidation when accounting for drilling arrangements related to exploration and production properties accounted for under the full cost method of accounting. The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Earnings for Interim Periods. The Company, in its opinion, has included all adjustments (which consist of only normally recurring adjustments, unless otherwise disclosed in this Quarterly Report on Form 10-Q) that are necessary for a fair statement of the results of operations for the reported periods. The consolidated financial statements and notes thereto, included herein, should be read in conjunction with the financial statements and notes for the years ended September 30, 2024, 2023 and 2022 that are included in the Company's 2024 Form 10-K. The consolidated financial statements for the year ended September 30, 2025 will be audited by the Company's independent registered public accounting firm after the end of the fiscal year. The earnings for the six months ended March 31, 2025 should not be taken as a prediction of earnings for the entire fiscal year ending September 30, 2025. Most of the business of the Utility segment is seasonal in nature and is influenced by weather conditions. Due to the seasonal nature of the heating business in the Utility segment, earnings during the winter months normally represent a substantial part of the earnings that this business is expected to achieve for the entire fiscal year. The Company’s business segments are discussed more fully in Note 8 – Business Segment Information. Consolidated Statements of Cash Flows. 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): Six Months Ended March 31, 2025 Six Months Ended March 31, 2024 Balance at March 31, 2025 Balance at October 1, 2024 Balance at March 31, 2024 Balance at October 1, 2023 Cash and Temporary Cash Investments $ 39,954 $ 38,222 $ 50,769 $ 55,447 Cash Held in Trust for Bondholders 51,352 — — — Cash, Cash Equivalents, and Restricted Cash $ 91,306 $ 38,222 $ 50,769 $ 55,447 The Company considers all highly liquid debt instruments purchased with a maturity date of generally three months or less to be cash equivalents. Cash Held in Trust for Bondholders is the only restricted cash recorded on the Consolidated Balance Sheet and the nature of the restrictions is discussed below in Note 6 – Capitalization under the caption "Long-Term Debt." Allowance for Uncollectible Accounts. The allowance for uncollectible accounts is the Company’s best estimate of the amount of probable credit losses in the existing accounts receivable. 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 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. Starting in the quarter ended March 31, 2025, account balances are being written-off against the allowance approximately three months after the account is final billed or when it is anticipated that the receivable will not be recovered. This change in policy resulted in a one-time cumulative adjustment to the allowance. 11 Table of Content Activity in the allowance for uncollectible accounts for the six months ended March 31, 2025 and 2024 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 Six Months Ended March 31, 2025 Allowance for Uncollectible Accounts $ 26,194 $ 15,497 $ 535 $ ( 18,775 ) $ 23,451 Six Months Ended March 31, 2024 Allowance for Uncollectible Accounts $ 36,295 $ 9,766 $ 468 $ ( 6,834 ) $ 39,695 Gas Stored Underground. In the Utility segment, gas stored underground is carried at lower of cost or net realizable value, on a LIFO method. Gas stored underground normally declines during the first and second quarters of the year as storage quantities are withdrawn and increases in the third and fourth quarters as storage quantities are 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 $ 27.6 million at March 31, 2025, is reduced to zero by September 30 of each year as the inventory is replenished. Property, Plant and Equipment. In the Company’s Exploration and Production segment, property acquisition, exploration and development costs are capitalized under the full cost method of accounting. Under this methodology, all costs associated with property acquisition, exploration and development activities are capitalized, including internal costs directly identified with acquisition, exploration and development activities. The internal costs that are capitalized do not include any costs related to production, general corporate overhead, or similar activities. The Company does not recognize any gain or loss on the sale or other disposition of properties unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves attributable to a cost center. The Company's capitalized costs relating to exploration and production activities, net of accumulated depreciation, depletion and amortization, were $ 2.3 billion at both March 31, 2025 and September 30, 2024. 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 $ 121.4 million and $ 201.0 million at March 31, 2025 and September 30, 2024, respectively. All costs related to unproved properties are reviewed quarterly to determine if impairment has occurred. The amount of any impairment is transferred to the pool of capitalized costs being amortized. Capitalized costs are subject to the SEC full cost ceiling test. The ceiling test, which is performed each quarter, determines a limit, or ceiling, on the amount of property acquisition, exploration and development costs that can be capitalized. The ceiling under this test represents (a) the present value of estimated future net cash flows, excluding future cash outflows associated with settling asset retirement obligations that have been accrued on the balance sheet, using a discount factor of 10 %, which is computed by applying commodity pricing (as adjusted for hedging) to estimated future production of proved reserves as of the date of the latest balance sheet, less estimated future expenditures, plus (b) the cost of unproved properties not being depleted, less (c) income tax effects related to the differences between the book and tax basis of the properties. The commodity prices used to calculate the full cost ceiling are based on an unweighted arithmetic average of first day of the month commodity price for each month within the twelve-month period prior to the end of the reporting period. 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 March 31, 2025, the ceiling exceeded the book value of the exploration and production properties by approximately $ 395.5 million. The book value of the exploration and production properties exceeded the ceiling at December 31, 2024. As such, the Company recognized a non-cash, pre-tax impairment charge of $ 108.3 million for the quarter ended December 31, 2024. A deferred income tax benefit of $ 29.2 million related to the non-cash impairment charge was also recognized for the quarter ended December 31, 2024. The estimated future net cash flows were increased by $ 462.4 million for hedging under the ceiling test at March 31, 2025. The Exploration and Production segment also has items of property, plant and equipment that are accounted for outside of the provisions of the full cost method of accounting. As discussed in Note 3 – Fair Value Measurements, an impairment charge related to certain water disposal assets was recorded at December 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 12 Table of Content historical cost. There were no indications of any impairments to property, plant and equipment in the Utility, Pipeline and Storage and Gathering segments at March 31, 2025. Accumulated Other Comprehensive Income (Loss). The components of Accumulated Other Comprehensive Income (Loss) and changes for the six months ended March 31, 2025 and 2024, 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 March 31, 2025 Balance at January 1, 2025 $ ( 4,878 ) $ ( 71,275 ) $ ( 76,153 ) Other Comprehensive Gains and Losses Before Reclassifications ( 152,786 ) — ( 152,786 ) Amounts Reclassified From Other Comprehensive Loss 5,964 — 5,964 Balance at March 31, 2025 $ ( 151,700 ) $ ( 71,275 ) $ ( 222,975 ) Six Months Ended March 31, 2025 Balance at October 1, 2024 $ 55,799 $ ( 71,275 ) $ ( 15,476 ) Other Comprehensive Gains and Losses Before Reclassifications ( 191,899 ) — ( 191,899 ) Amounts Reclassified From Other Comprehensive Loss ( 15,600 ) — ( 15,600 ) Balance at March 31, 2025 $ ( 151,700 ) $ ( 71,275 ) $ ( 222,975 ) 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 ) Other Comprehensive Gains and Losses Before Reclassifications 188,099 — 188,099 Amounts Reclassified From Other Comprehensive Income ( 57,699 ) — ( 57,699 ) Balance at March 31, 2024 $ 135,023 $ ( 59,683 ) $ 75,340 13 Table of Content Reclassifications Out of Accumulated Other Comprehensive Income (Loss). The details about the reclassification adjustments out of accumulated other comprehensive income (loss) for the six months ended March 31, 2025 and 2024 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 March 31, 2025 2024 2025 2024 Gains (Losses) on Derivative Financial Instrument Cash Flow Hedges: Commodity Contracts ($ 7,834 ) $ 60,184 $ 21,894 $ 79,939 Operating Revenues Foreign Currency Contracts ( 326 ) ( 36 ) ( 550 ) ( 82 ) Operating Revenues ( 8,160 ) 60,148 21,344 79,857 Total Before Income Tax 2,196 ( 16,689 ) ( 5,744 ) ( 22,158 ) Income Tax Expense ($ 5,964 ) $ 43,459 $ 15,600 $ 57,699 Net of Tax Other Current Assets . The components of the Company’s Other Current Assets are as follows (in thousands): At March 31, 2025 At September 30, 2024 Prepayments $ 12,490 $ 18,463 Prepaid Property and Other Taxes 23,692 14,187 Federal Income Taxes Receivable — 8,154 State Income Taxes Receivable 6,171 13,161 Regulatory Assets 36,179 38,264 $ 78,532 $ 92,229 Other Accruals and Current Liabilities . The components of the Company’s Other Accruals and Current Liabilities are as follows (in thousands): At March 31, 2025 At September 30, 2024 Accrued Capital Expenditures $ 40,449 $ 47,344 Regulatory Liabilities 16,285 29,352 Reserve for Gas Replacement 27,614 — Liability for Royalty and Working Interests 30,697 15,007 Federal Income Taxes Payable 8,696 — Non-Qualified Benefit Plan Liability 14,135 14,135 Other 47,049 57,065 $ 184,925 $ 162,903 Earnings Per Common Share. Basic earnings per common share is computed by dividing income or loss by the weighted average number of common shares outstanding for the period. Diluted earnings per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. 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 six months ended March 31, 2025, 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 30 securities and 232 securities excluded 14 Table of Content as being antidilutive for the quarters ended March 31, 2025 and March 31, 2024, respectively. For both the six months ended March 31, 2025 and March 31, 2024, there were no securities excluded as being antidilutive. 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 239,042 performance shares during the six months ended March 31, 2025. The weighted average fair value of such performance shares was $ 55.43 per share for the six months ended March 31, 2025. 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. Earned performance shares may be distributed in the form of shares of common stock of the Company, an equivalent value in cash or a combination of cash and shares of common stock of the Company, as determined by the Company. The performance shares do not entitle the participant to receive dividends during the vesting period. The performance shares granted during the six months ended March 31, 2025 include awards that must meet a performance goal related to either relative total 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 ("Emissions Performance Shares") or relative total 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”). 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 is recorded as compensation expense over the vesting term of the award. The performance goal related to the Emissions Performance Shares over the three-year performance cycle consists of two parts: reductions in the rates of intensity of methane emissions for each of the Company's operating segments, and reduction of the consolidated Company's total greenhouse gas emissions. The Company's Compensation Committee set specific target levels for methane intensity rates and total greenhouse gas emissions, and the performance goal is intended to incentivize and reward performance to the extent management achieves methane intensity and greenhouse gas reduction targets making progress towards or exceeding the Company's 2030 goals. The number of these Emissions Performance Shares that will vest and be paid out will depend upon the number of methane intensity segment targets achieved and whether the Company meets the total greenhouse gas emissions target. The fair value of these Emissions 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. 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 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. The fair value price at the date of grant for the TSR Performance Shares is determined using a Monte Carlo simulation technique, which includes a reduction in value for the present value of forgone dividends over the vesting term of the award. 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 132,352 restricted stock units during the six months ended March 31, 2025. The weighted average fair value of such restricted stock units was $ 58.64 per share for the six months ended March 31, 2025. 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 15 Table of Content time period. These restricted stock units do not entitle the participant to receive dividends during the vesting period. The fair value at the date of grant of the restricted stock units (represented by the market value of Company common stock on the date of the award) must be reduced by the present value of forgone dividends over the vesting term of the award. The fair value of restricted stock units on the date of award is recorded as compensation expense over the vesting period. Note 2 – Revenue from Contracts with Customers The following tables provide a disaggregation of the Company's revenues for the quarter and six months ended March 31, 2025 and 2024, presented by type of service from each reportable segment. Quarter Ended March 31, 2025 (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 $ 318,404 $ — $ — $ — $ — $ — $ 318,404 Production of Crude Oil 393 — — — — — 393 Natural Gas Processing 338 — — — — — 338 Natural Gas Gathering Service — — 65,030 — — ( 61,797 ) 3,233 Natural Gas Transportation Service — 82,481 — 45,256 — ( 27,538 ) 100,199 Natural Gas Storage Service — 25,288 — — — ( 10,691 ) 14,597 Natural Gas Residential Sales — — — 257,100 — — 257,100 Natural Gas Commercial Sales — — — 39,602 — — 39,602 Natural Gas Industrial Sales — — — 1,937 — ( 2 ) 1,935 Other 657 1,804 — ( 3,228 ) — ( 276 ) ( 1,043 ) Total Revenues from Contracts with Customers 319,792 109,573 65,030 340,667 — ( 100,304 ) 734,758 Alternative Revenue Programs — — — 3,026 — — 3,026 Derivative Financial Instruments ( 7,834 ) — — — — — ( 7,834 ) Total Revenues $ 311,958 $ 109,573 $ 65,030 $ 343,693 $ — $ ( 100,304 ) $ 729,950 Six Months Ended March 31, 2025 (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 $ 535,863 $ — $ — $ — $ — $ — $ 535,863 Production of Crude Oil 907 — — — — — 907 Natural Gas Processing 613 — — — — — 613 Natural Gas Gathering Service — — 126,161 — — ( 119,480 ) 6,681 Natural Gas Transportation Service — 163,686 — 72,176 — ( 54,719 ) 181,143 Natural Gas Storage Service — 50,281 — — — ( 21,195 ) 29,086 Natural Gas Residential Sales — — — 413,450 — — 413,450 Natural Gas Commercial Sales — — — 61,845 — — 61,845 Natural Gas Industrial Sales — — — 3,275 — ( 3 ) 3,272 Other 1,541 2,219 — 12,512 — ( 537 ) 15,735 Total Revenues from Contracts with Customers 538,924 216,186 126,161 563,258 — ( 195,934 ) 1,248,595 Alternative Revenue Programs — — — 8,943 — — 8,943 Derivative Financial Instruments 21,894 — — — — — 21,894 Total Revenues $ 560,818 $ 216,186 $ 126,161 $ 572,201 $ — $ ( 195,934 ) $ 1,279,432 16 Table of Content 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 Production of Natural Gas $ 203,198 $ — $ — $ — $ — $ — $ 203,198 Production of Crude Oil 524 — — — — — 524 Natural Gas Processing 303 — — — — — 303 Natural Gas Gathering Service — — 63,993 — — ( 60,076 ) 3,917 Natural Gas Transportation Service — 81,273 — 37,841 — ( 25,852 ) 93,262 Natural Gas Storage Service — 25,343 — — — ( 11,024 ) 14,319 Natural Gas Residential Sales — — — 210,392 — — 210,392 Natural Gas Commercial Sales — — — 30,815 — — 30,815 Natural Gas Industrial Sales — — — 1,281 — ( 2 ) 1,279 Other 405 1,404 — ( 881 ) — ( 238 ) 690 Total Revenues from Contracts with Customers 204,430 108,020 63,993 279,448 — ( 97,192 ) 558,699 Alternative Revenue Programs — — — 11,056 — — 11,056 Derivative Financial Instruments 60,184 — — — — — 60,184 Total Revenues $ 264,614 $ 108,020 $ 63,993 $ 290,504 $ — $ ( 97,192 ) $ 629,939 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 Production of Natural Gas $ 435,859 $ — $ — $ — $ — $ — $ 435,859 Production of Crude Oil 1,211 — — — — — 1,211 Natural Gas Processing 570 — — — — — 570 Natural Gas Gathering Service — — 126,581 — — ( 118,068 ) 8,513 Natural Gas Transportation Service — 152,891 — 67,126 — ( 46,214 ) 173,803 Natural Gas Storage Service — 46,635 — — — ( 20,084 ) 26,551 Natural Gas Residential Sales — — — 356,938 — — 356,938 Natural Gas Commercial Sales — — — 51,096 — — 51,096 Natural Gas Industrial Sales — — — 2,188 — ( 3 ) 2,185 Other 1,054 2,907 — ( 1,448 ) — ( 489 ) 2,024 Total Revenues from Contracts with Customers 438,694 202,433 126,581 475,900 — ( 184,858 ) 1,058,750 Alternative Revenue Programs — — — 16,612 — — 16,612 Derivative Financial Instruments 79,939 — — — — — 79,939 Total Revenues $ 518,633 $ 202,433 $ 126,581 $ 492,512 $ — $ ( 184,858 ) $ 1,155,301 The Company records revenue related to its derivative financial instruments in the Exploration and Production segment. The Company also records revenue related to alternative revenue programs in its Utility segment. 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. 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: $ 117.3 million for the remainder of fiscal 2025; $ 220.7 million for fiscal 2026; $ 203.3 million for fiscal 2027; $ 151.5 million for fiscal 2028; $ 122.3 million for fiscal 2029; and $ 649.1 million thereafter. 17 Table of Content Note 3 – Fair Value Measurements The FASB authoritative guidance regarding fair value measurements establishes a fair-value hierarchy and prioritizes the inputs used in valuation techniques that measure fair value. Those inputs are prioritized into three levels. Level 1 inputs are unadjusted quoted prices in active markets for assets or liabilities that the Company can access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly at the measurement date. Level 3 inputs are unobservable inputs for the asset or liability at the measurement date. 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 March 31, 2025 and September 30, 2024. 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 March 31, 2025 (Thousands of Dollars) Level 1 Level 2 Level 3 Netting Adjustments (1) Total (1) Assets: Cash Equivalents – Money Market Mutual Funds $ 29,300 $ — $ — $ — $ 29,300 Derivative Financial Instruments: Over the Counter Swaps – Gas — 16,763 — ( 16,763 ) — Over the Counter No Cost Collars – Gas — 626 — ( 626 ) — Contingent Consideration for Asset Sale — 45 — — 45 Foreign Currency Contracts — 43 — ( 43 ) — Other Investments: Balanced Equity Mutual Fund 12,210 — — — 12,210 Fixed Income Mutual Fund 16,592 — — — 16,592 Total $ 58,102 $ 17,477 $ — $ ( 17,432 ) $ 58,147 Liabilities: Derivative Financial Instruments: Over the Counter Swaps – Gas $ — $ 143,625 $ — $ ( 16,763 ) $ 126,862 Over the Counter No Cost Collars – Gas — 73,510 — ( 626 ) 72,884 Foreign Currency Contracts — 1,761 — ( 43 ) 1,718 Total $ — $ 218,896 $ — $ ( 17,432 ) $ 201,464 Total Net Assets/(Liabilities) $ 58,102 $ ( 201,419 ) $ — $ — $ ( 143,317 ) 18 Table of Content Recurring Fair Value Measures At fair value as of September 30, 2024 (Thousands of Dollars) Level 1 Level 2 Level 3 Netting Adjustments (1) Total (1) Assets: Cash Equivalents – Money Market Mutual Funds $ 29,238 $ — $ — $ — $ 29,238 Derivative Financial Instruments: Over the Counter Swaps – Gas — 76,009 — ( 17,198 ) 58,811 Over the Counter No Cost Collars – Gas — 32,584 — ( 3,774 ) 28,810 Contingent Consideration for Asset Sale — 729 — — 729 Foreign Currency Contracts — 281 — ( 726 ) ( 445 ) Other Investments: Balanced Equity Mutual Fund 19,523 — — — 19,523 Fixed Income Mutual Fund 17,374 — — — 17,374 Total $ 66,135 $ 109,603 $ — $ ( 21,698 ) $ 154,040 Liabilities: Derivative Financial Instruments: Over the Counter Swaps – Gas $ — $ 22,206 $ — $ ( 17,198 ) $ 5,008 Over the Counter No Cost Collars – Gas — 3,501 — ( 3,774 ) ( 273 ) Foreign Currency Contracts — 726 — ( 726 ) — Total $ — $ 26,433 $ — $ ( 21,698 ) $ 4,735 Total Net Assets/(Liabilities) $ 66,135 $ 83,170 $ — $ — $ 149,305 (1) Netting Adjustments represent the impact of legally-enforceable master netting arrangements that allow the Company to net gain and loss positions held with the same counterparties. The net asset or net liability for each counterparty is recorded as an asset or liability on the Company’s balance sheet. The following table presents impairments of assets associated with certain nonrecurring fair value measurements within Level 3 of the fair value hierarchy as of March 31, 2025 and 2024 (in thousands): Impairments Nonrecurring Fair Value Measures Six Months Ended March 31, Segment Date of Measurement Fair Value 2025 2024 Impairment of Assets: Water Disposal Assets Exploration and Production December 31, 2024 $ 12,880 $ 33,453 $ — In exploring the potential sale of certain water disposal assets during the quarter ended December 31, 2024, the Company determined that the fair market value of such assets was less than the recorded net book value resulting in an impairment charge that reduced the net book value to fair market value. These assets are used to dispose of water from operations in the Exploration and Production segment. Derivative Financial Instruments The derivative financial instruments reported in Level 2 at March 31, 2025 and September 30, 2024 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 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 March 31, 2025, 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. 19 Table of Content Derivative financial instruments reported in Level 2 at March 31, 2025 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 and 2024 contingency periods expired with the ICE Brent Average falling below $ 95 per barrel each calendar year. 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. 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 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): March 31, 2025 September 30, 2024 Carrying Amount Fair Value Carrying Amount Fair Value Long-Term Debt $ 2,731,126 $ 2,693,180 $ 2,688,243 $ 2,656,888 The fair value amounts are not intended to reflect principal amounts that the Company will ultimately be required to pay. Carrying amounts for other financial instruments recorded on the Company’s Consolidated Balance Sheets approximate fair value. The fair value of long-term debt was calculated using observable inputs (U.S. Treasuries or SOFR for the risk-free component and company specific credit spread information – generally obtained from recent trade activity in the debt). As such, the Company considers the debt to be Level 2. Any temporary cash investments, notes payable to banks and commercial paper are stated at cost. Temporary cash investments are considered Level 1, while notes payable to banks and commercial paper are considered to be Level 2. 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. Other Investments. The components of the Company's Other Investments are as follows (in thousands): At March 31, 2025 At September 30, 2024 Life Insurance Contracts $ 43,150 $ 44,808 Equity Mutual Fund 12,210 19,523 Fixed Income Mutual Fund 16,592 17,374 $ 71,952 $ 81,705 Investments in life insurance contracts are stated at their cash surrender values or net present value. Investments in an equity mutual fund and a fixed income mutual fund are stated at fair value based on quoted market prices with changes in fair value recognized in net income. 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 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 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. These instruments are accounted for as cash flow hedges. The duration of the Company’s cash flow hedges does not typically exceed 5 years while the foreign currency forward contracts do not exceed 6 years. 20 Table of Content 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 and 2024 contingency periods expired with the ICE Brent Average falling below $ 95 per barrel each calendar year. 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 less than $ 0.1 million and $ 0.7 million at March 31, 2025 and September 30, 2024, respectively. A $ 0.7 million mark-to-market adjustment to reduce the fair value of the contingent consideration was recorded during the six months ended March 31, 2025. 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, 2025 and September 30, 2024. 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 March 31, 2025, the Company had 422.6 Bcf of natural gas commodity derivative contracts (swaps and no cost collars) outstanding. As of March 31, 2025, 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, 2025, the Company had $ 151.7 million of net hedging losses after taxes included in the accumulated other comprehensive income (loss) balance. Of this amount, it is expected that $ 116.6 million of unrealized losses 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 March 31, 2025 and 2024 (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) for the Three Months Ended 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 March 31, 2025 2024 2025 2024 Commodity Contracts $ ( 208,829 ) $ 71,876 Operating Revenue $ ( 7,834 ) $ 60,184 Foreign Currency Contracts ( 217 ) ( 712 ) Operating Revenue ( 326 ) ( 36 ) Total $ ( 209,046 ) $ 71,164 $ ( 8,160 ) $ 60,148 21 Table of Content The Effect of Derivative Financial Instruments on the Statement of Financial Performance for the Six Months Ended March 31, 2025 and 2024 (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) for the Six Months Ended 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 Six Months Ended March 31, 2025 2024 2025 2024 Commodity Contracts $ ( 260,738 ) $ 259,865 Operating Revenue $ 21,894 $ 79,939 Foreign Currency Contracts ( 1,824 ) 466 Operating Revenue ( 550 ) ( 82 ) Total $ ( 262,562 ) $ 260,331 $ 21,344 $ 79,857 Credit Risk The Company has over-the-counter swap positions, no cost collars and applicable foreign currency forward contracts with eighteen counterparties. The majority of the Company's counterparties are financial institutions and energy traders. Certain counterparties to the Company’s outstanding derivative instrument 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 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 March 31, 2025, the fair market value of the derivative financial instrument liabilities with a credit-risk related contingency feature was $ 147.3 million 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, 2025. 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. 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 March 31, 2025 and March 31, 2024 were 24.8 % and 25.0 %, respectively. The effective tax rates for the six months ended March 31, 2025 and March 31, 2024 were 24.0 % and 24.7 %, respectively. The change in the effective income tax rate was primarily driven by the impact of the impairment of the exploration and production properties under the ceiling test, as well as an impairment of certain water disposal assets, both of which were recorded in the quarter ended December 31, 2024, which resulted in a smaller income tax expense on income before income taxes to be recorded during the six months ended March 31, 2025. 22 Table of Content Note 6 – Capitalization Summary of Changes in Common Stock Equity Common Stock Paid In Capital Earnings Reinvested in the Business Accumulated Other Comprehensive Income (Loss) Shares Amount (Thousands, except per share amounts) Balance at January 1, 2025 90,613 $ 90,613 $ 1,039,705 $ 1,698,648 $ ( 76,153 ) Net Income Available for Common Stock 216,358 Dividends Declared on Common Stock ($ 0.515 Per Share) ( 46,555 ) Other Comprehensive Loss, Net of Tax ( 146,822 ) Share-Based Payment Expense (1) 5,135 Common Stock Issued Under Stock and Benefit Plans 11 11 604 Share Repurchases Under Repurchase Plan ( 226 ) ( 226 ) ( 2,622 ) ( 13,085 ) Balance at March 31, 2025 90,398 $ 90,398 $ 1,042,822 $ 1,855,366 $ ( 222,975 ) Balance at October 1, 2024 91,006 $ 91,006 $ 1,045,487 $ 1,727,326 $ ( 15,476 ) Net Income Available for Common Stock 261,344 Dividends Declared on Common Stock ($ 1.03 Per Share) ( 93,226 ) Other Comprehensive Loss, Net of Tax ( 207,499 ) Share-Based Payment Expense (1) 9,225 Common Stock Issued (Repurchased) Under Stock and Benefit Plans 167 167 ( 2,906 ) Share Repurchases Under Repurchase Plan ( 775 ) ( 775 ) ( 8,984 ) ( 40,078 ) Balance at March 31, 2025 90,398 $ 90,398 $ 1,042,822 $ 1,855,366 $ ( 222,975 ) 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) ( 45,563 ) Other Comprehensive Income, Net of Tax 7,959 Share-Based Payment Expense (1) 5,222 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 ) Net Income Available for Common Stock 299,292 Dividends Declared on Common Stock ($ 0.99 Per Share) ( 91,160 ) Other Comprehensive Income, Net of Tax 130,400 Share-Based Payment Expense (1) 9,356 Common Stock Issued (Repurchased) Under Stock and Benefit Plans 309 309 ( 3,100 ) 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 (1) Paid in Capital includes compensation costs associated with performance shares and/or restricted stock awards. The expense is included within Net Income Available For Common Stock, net of tax benefits. 23 Table of Content Common Stock. Common stock share activity during the six months ended March 31, 2025 consisted of the following items: Six Months Ended March 31, 2025 Vesting of Restricted Stock Units 120,228 Vesting of Performance Shares 89,843 Issuance of Common Stock Pursuant to the Company's Non-Employee Director Equity Compensation Plan and Deferred Compensation Plan for Directors and Officers 20,469 Shares Tendered to Pay Withholding Taxes on Stock-Based Compensation Awards (1) ( 64,067 ) Common Stock Issued Under Stock and Benefit Plans 166,473 Share Repurchases Under Repurchase Plan ( 774,768 ) Total Net Shares Repurchased During the Six Months Ended March 31, 2025 ( 608,295 ) (1) 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 six months ended March 31, 2025, the Company executed transactions to repurchase 774,768 shares at an average price of $ 63.74 per share, for a total cost of $ 49.8 million (including broker fees and excise taxes). Share repurchases that settled during the six months ended March 31, 2025 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. The Company is a party to a syndicated Credit Agreement (as amended from time to time, the “Credit Agreement”) that provides a $ 1.0 billion unsecured committed revolving credit facility. In January 2025, the Company and the eleven banks in the syndicate consented to a second one-year extension of the maturity date of the Credit Agreement, such that the Company has aggregate commitments available under the Credit Agreement in the full amount of $ 1.0 billion through February 23, 2029. Current Portion of Long-Term Debt. The Current Portion of Long-Term Debt at March 31, 2025 consisted of $ 50.0 million of 7.38 % notes that mature in June 2025 and $ 300.0 million of long-term delayed draw term loans that mature in February 2026. The Current Portion of Long-Term Debt at September 30, 2024 consisted of $ 50.0 million of 7.38 % notes that mature in June 2025 and $ 450.0 million of 5.20 % notes with a maturity date in July 2025. As discussed below, the Company placed $ 50.0 million (plus interest) in trust for the benefit of holders of the 7.38 % notes that mature in June 2025 and redeemed the $ 450.0 million of 5.20 % notes on March 6, 2025. Long-Term Debt. On February 19, 2025, the Company issued $ 500.0 million of 5.50 % notes due March 15, 2030 and $ 500.0 million of 5.95 % notes due March 15, 2035. After deducting underwriting discounts, commissions and other debt issuance costs, the net proceeds to the Company amounted to $ 495.4 million and $ 493.6 million, respectively. 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 % on the 5.50 % notes and 7.95 % on the 5.95 % notes, 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 these debt issuances were used for general corporate purposes, including the March 6, 2025 redemptions of $ 450.0 million of the Company's 5.20 % notes that were scheduled to mature in July 2025 and $ 500.0 million of the Company's 5.50 % notes that were scheduled to mature in January 2026. The Company redeemed those notes for $ 450.8 million and $ 503.3 million, respectively, plus accrued interest. In the Exploration and Production and Gathering segments, the call premiums of $ 0.6 million for the redemption of the 5.20 % notes and $ 1.8 million for the redemption of the 5.50 % notes, were recorded to Interest Expense on Long-Term Debt on the Consolidated Income Statement during the quarter ended March 31, 2025, and in the Pipeline and Storage segment, the call premiums of $ 0.2 million for the 5.20 % notes redeemed and $ 1.5 million for the 5.50 % notes redeemed were recorded to Unamortized Debt Expense on the Consolidated Balance Sheet as of March 31, 2025. The remaining proceeds of the debt issuances were used to repay a portion 24 Table of Content of short-term borrowings the Company incurred to fund a trust for the benefit of holders of the 7.38 % notes outstanding under the Company's 1974 indenture, as discussed below. Prior to the long-term debt issuances discussed above, the Company placed a total of $ 53.2 million in trust during the quarter ended March 31, 2025 for the benefit of holders of the 7.38 % notes outstanding under the Company’s 1974 indenture. This included $ 50.0 million in principal and $ 3.2 million in interest (of which $ 1.8 million of interest was subsequently paid out of the trust in February 2025) related to long-term debt issued in June 1995 under the 1974 indenture, with a maturity date of June 13, 2025. The funds held in trust are recorded on the consolidated balance sheet as "Cash Held in Trust for Bondholders" as of March 31, 2025. Placing these funds in trust, in an amount equal to the future principal and interest payments due on the 7.38 % notes, enabled the Company to cancel and discharge the 1974 indenture, effectively relieving the Company from its obligations to comply with the 1974 indenture’s covenants. 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 delayed draw term loan facility with a maturity date of February 14, 2026, and the Company has the ability to select interest periods of one, three or six months for borrowings. In April 2024, pursuant to the delayed draw mechanism, the Company elected to draw a total of $ 300.0 million under the facility. After deducting debt issuance costs, the net proceeds to the Company amounted to $ 299.4 million. The Company used the proceeds for general corporate purposes, which included the redemption of outstanding commercial paper. Borrowings under the Term Loan Agreement currently bear interest at a rate equal to SOFR for the applicable interest period, plus an adjustment of 0.10 %, plus a spread of 1.375 %. The current weighted average locked-in interest rate is 5.79 % until mid-May 2025 . Note 7 – Commitments and Contingencies Environmental Matters. The Company is subject to various federal, state and local laws and regulations relating to the protection of the environment. The Company has established procedures for the ongoing evaluation of its operations to identify potential environmental exposures and to comply with regulatory requirements. 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 March 31, 2025, the Company has estimated its remaining clean-up costs related to former manufactured gas plant sites will be approximately $ 3.7 million. The Company's liability for such clean-up costs has been recorded in Other Liabilities on the Consolidated Balance Sheet at March 31, 2025. The Company has a regulatory liability of $ 2.7 million related to environmental clean-up costs at March 31, 2025 and is currently not aware of any material additional exposure to environmental liabilities. However, changes in environmental laws and regulations, new information or other factors could have an adverse financial impact on the Company. Other. The Company is involved in other litigation and regulatory matters arising in the normal course of business. These other matters may include, for example, negligence claims and tax, regulatory or other governmental audits, inspections, investigations and other proceedings. These matters may involve state and federal taxes, safety, compliance with regulations, rate base, cost of service and purchased gas cost issues, among other things. 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. Note 8 – Business Segment Information The Company reports financial results for four segments: Exploration and Production, Pipeline and Storage, Gathering and Utility. The division of the Company’s operations into reportable segments is based upon a combination of factors including differences in products and services, regulatory environment and geographic factors. The data presented in the tables below reflect financial information for the segments and reconcile to consolidated amounts. As stated in the 2024 Form 10-K, the Company evaluates segment performance based on income before discontinued operations (when applicable). When this is not applicable, the Company evaluates performance based on net income. 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 2024 Form 10-K. A listing of segment assets at March 31, 2025 and September 30, 2024 is shown in the tables below. 25 Table of Content Quarter Ended March 31, 2025 (Thousands) Exploration and Production Pipeline and Storage Gathering Utility Total Reportable Segments All Other Corporate and Intersegment Eliminations Total Consolidated Revenue from External Customers $ 311,958 $ 71,185 $ 3,233 $ 343,574 $ 729,950 $ — $ — $ 729,950 Intersegment Revenues $ — $ 38,388 $ 61,797 $ 119 $ 100,304 $ — $( 100,304 ) $ — Segment Profit: Net Income (Loss) $ 97,828 $ 31,707 $ 26,342 $ 63,544 $ 219,421 $( 271 ) $( 2,792 ) $ 216,358 Six Months Ended March 31, 2025 (Thousands) Exploration and Production Pipeline and Storage Gathering Utility Total Reportable Segments All Other Corporate and Intersegment Eliminations Total Consolidated Revenue from External Customers $ 560,818 $ 139,935 $ 6,681 $ 571,998 $ 1,279,432 $ — $ — $ 1,279,432 Intersegment Revenues $ — $ 76,251 $ 119,480 $ 203 $ 195,934 $ — $( 195,934 ) $ — Segment Profit: Net Income (Loss) $ 51,051 $ 64,162 $ 53,487 $ 96,043 $ 264,743 $( 465 ) $( 2,934 ) $ 261,344 (Thousands) Exploration and Production Pipeline and Storage Gathering Utility Total Reportable Segments All Other Corporate and Intersegment Eliminations Total Consolidated Segment Assets: At March 31, 2025 $ 2,551,961 $ 2,455,903 $ 1,010,473 $ 2,530,906 $ 8,549,243 $ 8,384 $( 77,664 ) $ 8,479,963 At September 30, 2024 $ 2,644,820 $ 2,446,243 $ 987,103 $ 2,398,709 $ 8,476,875 $ 6,227 $( 163,332 ) $ 8,319,770 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 Revenue from External Customers $ 264,614 $ 71,210 $ 3,917 $ 290,198 $ 629,939 $ — $ — $ 629,939 Intersegment Revenues $ — $ 36,810 $ 60,076 $ 306 $ 97,192 $ — $( 97,192 ) $ — Segment Profit: Net Income (Loss) $ 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 26 Table of Content Note 9 – Retirement Plan and Other Post-Retirement Benefits Components of Net Periodic Benefit Cost (in thousands): Retirement Plan Other Post-Retirement Benefits Three Months Ended March 31, 2025 2024 2025 2024 Service Cost $ 1,023 $ 1,049 $ 130 $ 109 Interest Cost 9,223 10,890 3,625 3,890 Expected Return on Plan Assets ( 14,647 ) ( 17,086 ) ( 6,536 ) ( 6,660 ) Amortization of Prior Service Cost (Credit) 76 91 ( 107 ) ( 107 ) Amortization of (Gains) Losses 1,620 ( 335 ) 9 ( 567 ) Net Amortization and Deferral for Regulatory Purposes (Including Volumetric Adjustments) (1) ( 2,946 ) 4,057 ( 4,158 ) 1,769 Net Periodic Benefit Cost (Income) $ ( 5,651 ) $ ( 1,334 ) $ ( 7,037 ) $ ( 1,566 ) Retirement Plan Other Post-Retirement Benefits Six Months Ended March 31, 2025 2024 2025 2024 Service Cost $ 2,046 $ 2,098 $ 259 $ 217 Interest Cost 18,446 21,779 7,251 7,780 Expected Return on Plan Assets ( 29,293 ) ( 34,172 ) ( 13,072 ) ( 13,321 ) Amortization of Prior Service Cost (Credit) 151 181 ( 214 ) ( 214 ) Amortization of (Gains) Losses 3,240 ( 669 ) 18 ( 1,133 ) Net Amortization and Deferral for Regulatory Purposes (Including Volumetric Adjustments) (1) ( 3,111 ) 8,116 ( 4,885 ) 4,008 Net Periodic Benefit Cost (Income) $ ( 8,521 ) $ ( 2,667 ) $ ( 10,643 ) $ ( 2,663 ) (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. 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 six months ended March 31, 2025, and does not anticipate making any such contributions during the remainder of fiscal 2025. The Company also did not make any contributions to its VEBA trusts for its other post-retirement benefits during the six months ended March 31, 2025, and does not anticipate making any such contributions during the remainder of fiscal 2025. 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 December 19, 2024 with rates effective January 1, 2025 (“2024 Rate Order”). The 2024 Rate Order authorizes a three-year rate plan effective October 1, 2024, with a make-whole provision allowing full recovery of revenues that would have been billed at the new rates between October 1, 2024 and December 31, 2024. It also reflects a return on equity of 9.7 % and authorizes a revenue requirement increase of $ 57.3 million in fiscal 2025, an additional revenue requirement increase of $ 15.8 million in fiscal 2026, and an additional revenue requirement increase of $ 12.7 million in fiscal 2027. The revenue requirement for each year of the three-year plan has been reduced by $ 14 million for actuarial projections of income that is 27 Table of Content expected to be recognized for qualified pension and other post-retirement benefits. Qualified pension and other post-retirement benefit income or costs are matched with amounts included in revenue resulting in zero impact to earnings. The 2024 Rate Order approves the continuation of several ratemaking mechanisms, including revenue decoupling and WNA, and establishes a number of new cost trackers and regulatory deferrals. It also includes an earnings sharing mechanism, gas safety and customer service performance metrics (including maintaining the Company’s leak prone pipe replacement program), and provisions that will facilitate achievement of the emissions reduction goals of the CLCPA. Pennsylvania Jurisdiction Distribution Corporation’s current delivery rates in its Pennsylvania jurisdiction were approved by the PaPUC in an order issued on June 15, 2023 with rates effective August 1, 2023 (“2023 Rate Order”). The 2023 Rate Order provided for, among other things, an increase in Distribution Corporation’s annual base rate operating revenues of $ 23 million and authorized a new weather normalization adjustment mechanism. 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. The DSIC petition was approved by the PaPUC on December 5, 2024, and on January 1, 2025, the Company initiated recovery of eligible costs on incremental rate base added after September 30, 2024. During the quarter ended March 31, 2025, Distribution Corporation recovered $ 0.2 million from customers. FERC Jurisdiction Supply Corporation’s rate settlement, approved June 11, 2024, provides that 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. Supply Corporation has no rate case currently on file. On March 17, 2025, FERC approved an amendment to Empire's 2019 rate case settlement, which provides for a modest reduction in Empire’s transportation unit rates, effective November 1, 2025. Based on current contracts, this settlement amendment is estimated to decrease Empire's revenues on a yearly basis by approximately $ 0.5 million. As well, the revenue sharing mechanism under the 2019 rate case settlement was adjusted and Empire committed to undertake greenhouse gas and reliability reporting. Empire will not be able to file a new Section 4 rate case before April 30, 2027 and is required to file a Section 4 rate case by May 31, 2031.