Hello, all, and welcome. My name is Rita, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Q4 2022 National Fuel Gas Company Earnings Conference Call. All lines have been placed on mute today to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Brandon Haspett, Director of Investor Relations. You may begin your conference.

Thank you, Rita, 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 will open the discussion to questions. The fourth quarter fiscal 2022 earnings release and November 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 they are made, and you may refer to last evening’s earnings release for a listing of certain specific risk factors. With that, I will turn it over to Dave Bauer.

Thanks, Brandon. Good morning, everyone. National Fuel ended fiscal 2022 with a great fourth quarter. Adjusted operating results were right in line with our expectations at $1.19 per share, a 25% increase over last year. Looking back, fiscal 2022 was another exceptional year for National Fuel. Operationally, we had multiple successes, including completing the FM100 project on time and under budget, growing Seneca’s net production by 8% and replacing more than 150 miles of pipe as part of the utilities modernization program. Strategically, we tightened the focus of our company, selling our California assets at the top of the market. And we also made significant progress on sustainability initiatives. All of these great accomplishments position the company extremely well for the future. While the outlook for the business is strong, we aren’t immune to the challenges facing the broader economy. During the year, inflationary pressures in an extremely tight labor market impacted us across our business segments and as we discussed last quarter, we will likely have a continuing impact in 2023. Seneca’s fourth quarter capital came in a little higher than expected. While some of this was timing between fiscal years, the largest factor was related to increased costs associated with the spot frac crew that is completing two pads in Tioga County, ahead of the winter heating season. We have taken several steps to mitigate future inflationary pressures on our Upstream Capital Program and Justin will have more to say on this later in the call. Regarding the labor market, like most other companies, it’s a challenge to attract and retain key talent. In response to these conditions, we have adjusted our compensation practices to bring them more in line with the current market. As a result, we have seen an increase in O&M expense, particularly in our…

Thanks, Dave, and good morning, everyone. Seneca and NFG Midstream wrapped up the fourth quarter of our fiscal year with strong operational and financial performance, continuing the trend of solid execution across our Appalachian development program. For the year, net production increased by 8%, reaching a record 353 Bcfe, while adjusted EBITDA for our Non-Regulated businesses increased by 34%. This strong performance continues to be driven by our expansive high quality acreage position, the ability to deliver gas to premium markets through our valuable marketing portfolio, Gathering infrastructure connectivity and our unique integrated approach to developing our acreage. From a reserve perspective, we also had a great year. Despite the sale of 175 Bcfe of proved reserves, we replaced 240% of our fiscal 2022 production and increased our total reserve base by 319 Bcfe. We now sit with approximately 4.2 Tcfe proved reserves, of which 79% are proved developed, one of the highest among our Appalachian peers. Looking back, fiscal 2022 was a significant year for Seneca. We brought online multiple pads on our acquired acreage in Tioga County, with results from both the Utica and Marcellus exceeding our expectations, and we closed on the sale of our California operations, transitioning to a pure-play Appalachian natural gas producer. We also made major strides in our sustainability initiatives, including certifying our natural gas production under MiQ, Equitable Origin and Project Canary, further and independently validating our culture of environmental stewardship and operational excellence. On the heels of Seneca’s strong results, our Gathering business also had a fantastic year, registering record throughput, significantly growing third-party volumes on our system and commencing the build-out of centralized facilities in Tioga County that will serve our growing production in the years to come. Looking forward, we remain focused on execution with no change to our…

Thanks, Justin, and good morning, everyone. National Fuel closed out its fiscal year on a strong note, with GAAP earnings coming in at $1.71 per share. Several items impacted comparability to our prior year results that are described in last night’s release, so I won’t cover them here. Excluding these items, adjusted operating results for the quarter were $1.19 per share, an increase of 25%. Higher natural gas prices, the increase in Seneca’s production and its corresponding impact on Gathering throughput, along with the benefits of our FM100 pipeline project were all key drivers during the quarter. This was partially offset by higher costs in our Regulated businesses. As Dave mentioned, the tight labor market has driven increases in employee compensation, which is putting upward pressure on O&M expense. Compared to the prior year, O&M expense was up 13%. We saw the combined impacts of wage increases for both our collectively bargained and salaried employees that went into effect earlier in the year. Additionally, we accrued an expense related to a short-term incentive program for our supervisory workforce that is tied to strong corporate performance for the year across a number of metrics. While operating costs are rising alongside the broader inflationary headwinds, the topline of our Regulated businesses is performing really well. Utility margin was up 3% year-over-year, while revenues in our Pipeline and Storage segment were up $13 million or 15% over last year. The increase in Pipeline revenues was largely attributable to our FM100 project along with some good results in our short-term business, which helped push us over the high end of our guidance range. Our commercial team has found ways to optimize our facilities to maximize revenues through short-term contracts leading to some uplift during the quarter. While modest, these contracts continue to highlight the…

Thank you. [Operator Instructions] The first question we have from the phone lines comes from John Abbott of Bank of America. John, your line is open.

Good morning and thank you for taking our questions.

Good morning.

My first question is, yeah, just given where -- just where inflation has been going and stuff is just how do you think about maintenance CapEx across your various businesses for the long-term?

Well, we have had an ongoing capital program that we are going to stick with. I think what it does is to the extent that there inflationary pressures over time. I think it just influences the timing at the edges of when we would be filing for a rate case. But we are certainly going to do what we need to do to keep the system safe and reliable.

Yeah. I was actually sort of thinking about what do you think long-term maintenance CapEx for the E&P business, Gathering business, Pipeline and segment and Utility business. I mean I understand what you are saying about Utility to keep it on that, but where you think long-term maintenance CapEx is for the E&P business?

Yeah. So, John, I’d say, the general view is where we are now to go down to maintenance. You would look for that number to come down by $50 million to $150 million per year. It would be a little bit different, because unlike today where we are continuously operating a couple of rigs, utilizing top hole rig and we will have active completions, and we are growing our production, as I have spoken about and plan to continue to grow in that mid-to-high single digits. Moving to kind of a flat mode, we wouldn’t have the same cadence of completions and that would cause a little variability year-to-year at Seneca. It would also cause a little variability at Midstream, if you think about expansions. But big picture, you can think broadly about a $50 million to $150 million reduction.

That I appreciate it. And then follow-up question I have is to Karen here. So, Karen, if I understand, so cash taxes in fiscal 2023 will now be in the high-single digits versus the mid-teens prior. How do you think of cash tax is looking at strip beyond fiscal 2022 and when do you expect to be forecast taxes just based on the change in cash tax guidance?

Yeah. So, I mean, I think, we will be over the next few years definitely moving into the mid-teens and as far as when we would be a full taxpayer, we are looking at probably 2024.

That is very helpful. Thank you very much for taking our questions.

You bet.

Thanks.

Thank you. We now have Umang Choudhary of Goldman Sachs. Umang, your line is now open.

Hi. Good morning and thank you for taking the question. I want -- for the first question, I would you love to get a thoughts on New York scoping rules. How does that change your long-term plans on E&P business for [inaudible] business and if that creates additional opportunities for NFG to participate in other business lines like RNG, for example, or carbon sequestration, for example?

Yeah. You broke up just a little on the first part for E&P. Could you say that one more time, please?

Sure. So I would love your thoughts around the New York scoping rules and then how does that change your plans for E&P business for it to grow? And if it creates any additional opportunities for NFG to participate in like businesses like RNG, for example, which you had indicated before?

Yeah. Well, I will start with the scoping plan. The Climate Action Council is busy finalizing the plan that they would vote on and publish at the end of the year. Our hope is that they take a more reasonable approach than what was put forth in the initial scoping plan. It seemed to me that they pretty much ignored costs and reliability, and it’s our hope that they take a more reasoned all of the above or hybrid approach, however you want to describe it, approach to energy policy going forward. I think, regardless of the scoping plan, when you just look at the overall trends towards decarbonization, independent of what happens there or at Seneca, we have the ability to participate in RNG, hydrogen and alike, and it’s an area that we have teams in place that are looking at that and it’s my hope and expectation that over time, we will come to a point where we are able to make investments there. With respect to both, the scoping plan and RNG, I am not so sure that has much of the impact on our E&P business. For the near-term, we are going to be operating a two-rig program, generating considerable free cash flow and we are going to do that regardless of what happens in New York and the level of capital that we are talking about on the RNG and hydrogen side isn’t so big that it would put a two-rig program or make it difficult to fund a two-rig program.

Got you. That’s great color. Thank you. And then maybe…

You bet.

… if I just guess, if we look at the Eastern development area, can you remind us how much inventory do you have in that area and then if there are any bolt-on opportunities which you would look towards to add to inventory?

Yeah. So in the -- across the EDA, I mean, we have well over a decade of inventory within that area across Tioga and Lycoming Counties. So we are sitting in a great spot. We do continue to evaluate opportunities to bolt-on. We will continue to do so and we will continue to be basically adhering to the principles we put out before, which is focusing on assets where we see them as either continuous or very contiguous or very proximate to our existing acreage, ideally having an opportunity to leverage our integrated model, whether that’s the Gathering side or at Supply and Empire. We will continue to focus on those and as those opportunities come up, we will certainly evaluate them and look to complete the ones that make sense.

That makes sense. Thank you.

Yeah.

Thank you. [Operator Instructions] We now have the next question on the line from Trafford Lamar of Raymond James. Please go ahead when you are ready Trafford.

Yeah. Thanks for taking my question. My first one is kind of a item that’s been pretty topical this quarter. It revolves around why the basis differentials. And you all have a good chunk of firm takeaway capacity or firm sales already baked in, but looking at the revised guide that saw basis dips widening, especially in the second half of 2023. Can you kind of talk about what you all have seen recently and kind of your thoughts on maybe second half of 2023 and beyond?

Yeah. Sure. Happy to, Trafford. So, generally, it’s been -- to say it’s been an interesting and volatile market. It’s probably a huge understatement. We are very well positioned. I would encourage you to, as you have time to look at slide 29 of our investor deck. That gives you a really good visibility into our overall level of, what I will call, takeaway protection, so the combination of our firm sales and takeaway capacity. Overall for the year, we have got 88% of our forecasted production flowing through either firm transport and/or firm sales. So that significantly mitigates our exposure to any sort of in-basin low cash prices right out of the gates. And then on slide 29, what you can really see is, we have developed our portfolio to kind of meet our expected growing production throughout the year. And so, where we are today versus the growth that we expect through the year, particularly into to Q3, you can see that following the quarterly disclosure on our firm sales. And so we think we have positioned the portfolio really well. We have seen the forward markets widen and so we thought it made sense to kind of true those up to literally what we are seeing as of a couple of days ago in the forwards. But again, that is not a very big exposure for us. It’s a relatively minor exposure for us, given our positioning on firm sales and then you combine that with our kind of hedge and fixed price position, which is roughly of two-thirds. We think we are in a pretty good spot to participate in upside and to have some protection to any sort of downside.

Great. Thank you on that Justin. And then one more on Seneca, you mentioned the long-term contract with an electric frac rig coming on in 2Q, a diesel over $5 a gallon, what are the cost savings versus a diesel crew at this time?

It’s very significant. So on an annualized basis, its well over -- the net difference between the gas versus the diesel is well over $10 million. So it’s a pretty big move to go from one input fuel to the other from a cost perspective, and obviously, there’s some great intangibles there from an emissions and our long-term sustainability goals as well. But that will meaningfully mitigate some of the pricing around our completion operations.

Great. Thanks for the color and congrats on a really good year guys.

Thanks.

Thank you.

Thank you. I’d like to turn the call back over to Brandon Haspett for any further remarks.

Thank you, Rita. We would like to thank everyone for taking the time with us today. A replay of this call will be available this afternoon on both our website and by telephone and will run through the business on Friday, November 11th. To access the replay online, please visit our Investor Relations website at investor.nationalfuelgas.com, and to access by telephone, call 1-866-813-9403 and enter conference ID number 533110. This concludes our conference call for today. Thank you and good-bye.

Thank you all for joining. That does conclude today’s call. You may now disconnect your lines.