Good morning. My name is Joanne and I will be your conference operator today. At this time I would like to welcome everyone to the Third Quarter 2022 National Fuel Gas Company Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Brandon Haspett, you may begin your conference.

Thank you, Joanne and good morning. We appreciate you joining us on today's conference call for a discussion of last evening's earnings release. With us on the call from National Fuel Gas Company are Dave Bauer, President and Chief Executive Officer; Karen Camiolo, Treasurer and Principal Financial Officer; and Justin Loweth, President of Seneca Resources and National Fuel Midstream. At the end of the prepared remarks, we'll open the discussion to questions. The third quarter fiscal 2022 earnings release and August Investor Presentation have been posted on our Investor Relations website. We may refer to these materials during today's call. We would like to remind you that today's teleconference will contain forward-looking statements. While National Fuel's expectations, beliefs and projections are made in good faith and are believed to have a reasonable basis, actual results may differ materially. These statements speak only as of the date on which they are made, and you may refer to last evening's earnings release for a listing of certain specific risk factors. With that, I'll turn it over to Dave Bauer.

Thanks, Brandon. Good morning, everyone. National Fuel had a great third quarter with earnings and cash flows up significantly over last year. Looking at each of the segments, Seneca had a particularly good quarter. Overall production increased by 9 Bcfe, which along with higher commodity price realizations contributed to a nearly 60% increase in adjusted EBITDA. Higher production also benefited our Gathering business, where adjusted EBITDA was up 16% over last year. The Regulated Pipeline and Storage business had a great quarter as well. Revenues from the FM100 expansion and modernization project drove an 18% increase in adjusted EBITDA versus last year. This is the first quarter in which we saw the full impact of FM100. On April 1, in accordance with Supply Corporation last rate agreement, the rate increase associated with the modernization component of the project went into effect. Combined with the expansion of revenues that commenced in December, when the project went in service, the FM100 project will deliver approximately $50 million in annual revenues. Utility earnings were generally flat year-over-year. We continue to see margin growth as a result of our system modernization tracker in New York, but the rising costs, driven mostly by inflation, offset much of that benefit. Looking forward, the outlook for our business continues to improve. As you saw in last night's release, we're initiating preliminary 2023 earnings guidance with a range of $7.25 to $7.75 per share, which at the midpoint is a 27% increase year-over-year. And it's important to remember that fiscal 2022 includes three quarters of California operations. And so our ability to increase projected earnings by this level, despite the divestiture is a testament to the strength of our ongoing operations. Switching to capital. We've made some modest refinements to our expected spending levels for the remainder of…

Thanks Dave and good morning everyone. As Dave mentioned earlier, our Upstream and Gathering businesses had an excellent third quarter, continuing the trend of solid execution across our integrated Appalachian operations. This strong operational and financial performance is driven by our expansive high quality acreage position, the ability to deliver gas to premium markets through our valuable marketing portfolio and our unique integrated approach to developing our acreage. Looking to the future, these same attributes underpin our long-term plans, which remain unchanged. Our two-rig program is expected to deliver mid to high single-digit production growth and increasing levels of free cash flow over the next several years. As Dave discussed, we expect our fiscal 2022 Upstream and Gathering capital guidance to be towards the higher end of our range. Looking to fiscal 2023, we expect to see spending flat to slightly higher in our Upstream business and up $40 million in our Gathering segment. This overall increase is driven by a few factors. I'll start with Seneca. As we discussed last quarter, we accelerated completion activity to bring new production online earlier and capture premium pricing this upcoming winter, which is approximately $3 higher than the summer of 2023. We expect to turn in line a seven-well WDA Utica pad in our fourth quarter and two additional pads one in the WDA and one in Tioga during the first quarter of fiscal 2023. As a result, production is forecasted to decline modestly during the fiscal fourth quarter, but we should exit December at a meaningfully higher rate. Additionally cost inflation continues to be a headwind, which is reflected in our guidance assumptions for the remainder of the fiscal year and our preliminary guidance for 2023. Over the last year, we've seen significant cost increases in some areas such as the…

Thank you, Justin, and good morning, everyone. National Fuel's GAAP earnings were $1.17 per share while adjusted operating results for the quarter were $1.54, an increase of 66% from the prior year. At the end of the quarter, we closed on our California sale. This resulted in net proceeds of just under $200 million. Specific to the sales, there were several items that impacted comparability to last year. While the majority of the purchase price is allocated as an adjustment to the forecast pool, there was a value ascribed to certain non-full cost pool fixed assets that led to a gain being recorded during the quarter. Going the other way, employee severance transaction expenses and the loss associated with terminating our remaining crude oil hedges, reduced earnings. The net impact was a decrease to earnings of $0.34. Dave and Justin hit on the high points for the quarter, so I'll focus on our guidance updates for the remainder of the year and our preliminary projections for next year. Starting with fiscal 2022, we're increasing and tightening our earnings guidance to a range of $5.85 to $5.95 per share, which is up modestly at the midpoint. This increase is primarily driven by the strength of our performance during the third quarter. Outside of updated NYMEX natural gas pricing for the remainder of the year, which has a minimal impact due to our hedge portfolio, the rest of our assumptions remain largely unchanged at their midpoints. Switching to fiscal 2023, we are initiating preliminary earnings guidance in a range of $7.25 to $7.75 per share, an increase of 27% at the midpoint. There are several tailwinds in our nonregulated operations supporting this increase. First and foremost is the strength of the natural gas forward curve. We are forecasting NYMEX prices to average…

[Operator Instructions] Your first question comes from the line of Trafford Lamar with Raymond James. Your line is open.

Thank you. Hey, guys, congrats on a great quarter, and thanks for taking my call.

You bet, Trafford.

Yes, thank you all. I think, first question kind of revolves around free cash flow and looking at it for next year. I guess any chance of potential additional shareholder return over the base dividend? And then I guess kind of on a follow-up with that are there any -- I know right now priority especially with the California sale continue to reduce debt pay the fixed dividend increase that year-over-year. But any -- do you all have any near to midterm leverage or total debt targets you're shooting for?

Yes. Well, we like to deleverage and we focus not just on the ratios like FFO to debt or debt to EBITDA, but also absolute leverage, because when we file a rate case both at the state and the federal level, our capital structure is used as in the rate setting process. So our goal is to get absolute leverage down. And as Karen said, we likely will be able to fund the 2023 maturities with cash from operations and maybe a little short-term debt if we need to for the near term. Longer-term, once, we achieve our leverage targets my priority is to grow the company. My hope would be to continue our track record. So we're pursuing opportunities. I mentioned on the Midstream side, and certainly further M&A would be of interest. But if we get to the point where we've achieved our leverage targets and don't see any immediate uses for capital looking at an increase in the amount of capital return to shareholders certainly is something that we would do.

Perfect. Thanks for that. I guess, my second question, I guess this would be for Justin. Looking at '23 Seneca CapEx, really -- not really too much change going into '23. I guess, I was wondering kind of what kind of inflation assumptions you'll take in for Seneca CapEx and what percentage of that was mitigated by both the electric frac fleet and primarily the electric frac rate?

Sure. So, our view is that, we think kind of the environment we're in, we've been experiencing here of late and what we're seeing through a lot of the conversations we've had with our vendors over the recent weeks and couple of months looking at locking in a number of our services for next year. We feel like we've got a pretty good line on where those are going to settle out and land. There's still of course, can be some variability, but big picture, we think that the '23 is kind of round numbers 5% to 10% further inflation over kind of where we sit today, if you were locking in contracts for today. What we're working towards and I'll speak to the -- our focus on the completion side, what we're looking for is a combination of a longer-term commitment. That has multiple benefits. I spoke to that. We think there's a good opportunity there for both sides to have relatively good certainty around the cost of that service by eliminating or significantly reducing our diesel consumption that will meaningfully moderate our overall use of diesel fuel and therefore any sort of inflationary impacts on that. And of course, mentioned, some of the benefits that has from an emissions perspective and some of our long-term reduction goals and efforts.

Perfect. Thanks, Justin. Thank you, and congrats on the quarter again.

Thanks.

Thank you.

[Operator Instructions] There are no further questions. At this time I will now turn the call back over to Brandon for closing remarks.

Thank you, Joanne. I'd like to thank everyone for taking the time to be with us today. A replay of this call will be available this afternoon on both our website and by telephone, who will run through the close of business on Friday, August 12. To access the replay online, please visit our Investor Relations website at investor.nationalfuelgas.com and access by telephone call 1-800-770-2030, annual conference ID number 9953. This concludes our conference call for today. Thank you and goodbye.

This concludes today's conference call. You may now disconnect.