NATIONAL FUEL GAS CO

NATIONAL FUEL GAS CO Annual Review – Straight Talk for Investors (2023 Update)

Hey there! Let’s break down how National Fuel Gas Co (NFG) did this year in plain terms. No jargon – just the key stuff you need to know.

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1. What NFG Does & This Year’s Snapshot

NFG supplies natural gas to homes/businesses in NY/PA and operates pipelines/storage. This year was mixed:

• ✅ Cold winters = higher gas sales
• ❌ Lower natural gas prices = squeezed profits

Key Insight: Their utility business uses "rate adjustment" rules (like a thermostat for your bill) to pass gas cost changes to customers quickly. This helps stabilize profits when prices swing.

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2. Financial Performance: Growth or Slowdown?

• Revenue: Up slightly to $2.3B (from $2.2B last year)
• Profit: Dropped to $476M (from $511M)
• Split Growth:
  • ✅ Utilities (your gas bill) grew steadily
  • ❌ Pipelines slowed due to delayed projects

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3. Wins vs. Challenges

Wins:

• Approved a major pipeline expansion (future growth)
• Cut debt by 10% (like paying off a credit card)
• Added 15,000 new utility customers (steady income)

Challenges:

• Natural gas prices fell 20%, hurting profits
• A key pipeline project delayed by regulators (cost time/money)
• Unpaid bills surged 47% to $29.1M (up from $19.8M three years ago). The company didn’t detail why – could signal customer stress in their regions.

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4. Financial Health Check

Stable but watchful:

• Enough cash to cover bills and projects
• Debt decreased (good!)
• Pays a reliable 3.5% dividend (like a yearly shareholder bonus)
• Caution: Rising unpaid bills could strain cash flow if trend continues.

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5. Top Risks to Know

1. Gas Prices: If prices stay low, profits may shrink further.
2. Regulators: Delays or strict rules could block growth projects.
3. Customer Debt: Unpaid bills hit $29.1M – keep an eye on this.
4. Green Energy Shift: NY’s push for renewables could pressure gas long-term.

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6. How They Compare to Competitors

• Smaller but focused: NFG isn’t a giant like Dominion Energy but specializes in gas.
• ✅ Outpaced peers in customer growth
• ❌ Lags in renewable energy investments (most competitors are adding solar/wind).

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7. Leadership & Strategy

No leadership changes. Strategy remains:

• Grow gas infrastructure (pipelines, storage)
• Testing hydrogen blending in pipelines (a small step toward cleaner energy).

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8. What’s Next?

• Slow utility growth
• Push to finish pipeline projects
• Betting on gas demand for decades (not rushing into renewables).

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9. Market Trends Affecting NFG

• Cheap U.S. Gas: Great for customers, tough for profits.
• Green Energy Push: States like NY want less fossil fuel use – a long-term risk.

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The Bottom Line for Investors
✅ Good for:

• Dividend seekers (3.5% yield)
• Investors who believe gas will stay relevant for 10-20 years

🚩 Risks:

• Slow growth if pipelines face delays
• Pressure from renewables long-term
• Rising customer debt could hint at economic stress in their regions

Actionable Takeaway: NFG is a “steady Eddie” stock with reliable dividends, but not for growth seekers or green energy believers. Watch pipeline progress, gas prices, and those unpaid bills!

Let me know if you’d like me to clarify anything! 😊