DEF: National Fuel Gas Reports Strong 2025, Plans Ohio Utility Expansion

National Fuel Gas Company reports strong fiscal 2025 performance with record natural gas production, strategic pipeline projects, and a significant Ohio utility acquisition, alongside continued dividend growth.

Summary

• The Annual Meeting of Stockholders will be held virtually on March 12, 2026, at 10:00 a.m. Eastern Time.
• Stockholders will vote on the election of eleven directors, advisory approval of named executive officer compensation, and ratification of PricewaterhouseCoopers LLP as the independent public accounting firm for fiscal 2026.
• The Board of Directors unanimously recommends a vote FOR all director nominees and FOR proposals 2 and 3.
• Fiscal 2025 was a strong year, with all segments delivering substantial earnings growth and operational excellence.
• The Integrated Upstream and Gathering business achieved record net natural gas production of 427 billion cubic feet equivalent (Bcfe), a 9% increase from the prior year, and significantly improved capital efficiency.
• The company expanded its prospective Tioga County well inventory by over 200 potential Upper Utica formation locations, providing almost 20 years of highly economic inventory.
• The Pipeline and Storage segment received FERC approval for the Tioga Pathway Project ($101 million, 190,000 Dth/d capacity) and announced the Shippingport Lateral Project ($57 million, 205,000 Dth/d capacity) to serve a data center and power generation facility.
• These pipeline projects are expected to add approximately $30 million in incremental annual revenues with target in-service dates of November 2026.
• The Utility segment reached a three-year settlement with the New York Public Service Commission, allowing base delivery rate increases effective October 1, 2024, and invested in replacing over 160 miles of pipeline.
• In October 2025, the company announced a definitive agreement to acquire CenterPoint Energy, Inc.'s Ohio natural gas utility business, expected to close in Q4 2026 (calendar), which will double the utility rate base and add significant customers.
• The company increased its annual dividend rate by 4% to $2.14 per share, marking its 123rd straight year of paying a dividend and 55th consecutive year of dividend increases.
• NFG Midstream improved its Equitable Origin rating to A, and Seneca re-certified its A grade by MiQ and Equitable Origin, demonstrating commitment to environmental stewardship.
• The 2025 say-on-pay advisory vote received 87.6% support from stockholders, indicating approval of the executive compensation philosophy.
• The Board's commitment to diversity is reflected in three of the last six directors increasing Board diversity and the incorporation of the Rooney Rule for independent director candidates.

Sentiment

Score: 8

Explanation: The company reported strong financial and operational performance across all segments in fiscal 2025, including record natural gas production and significant revenue/income growth in regulated businesses. A major strategic acquisition is planned to double the utility rate base, and the company continues its long track record of dividend increases. ESG performance is also strong, and corporate governance practices are robust.

Positives

• Strong fiscal 2025 performance with substantial earnings growth across all business segments.
• Record net natural gas production of 427 Bcfe in fiscal 2025, representing a 9% increase from the prior year.
• Continued peer-leading capital efficiency improvements in the Integrated Upstream and Gathering business.
• Significant expansion of Tioga County well inventory by over 200 potential Upper Utica locations, providing almost 20 years of highly economic inventory.
• FERC approval for the Tioga Pathway Project, an approximately $101 million pipeline modernization and expansion project providing 190,000 dekatherms per day (Dth/d) of firm transportation capacity.
• Announcement of the Shippingport Lateral Project, an approximately $57 million investment to provide 205,000 Dth/d of new pipeline transportation capacity to a data center and power generation facility.
• These two pipeline projects are expected to add approximately $30 million in incremental annual revenues.
• Constructive three-year settlement with the New York Public Service Commission, allowing base delivery rate increases for the Utility segment effective October 1, 2024.
• Substantial investments in Utility system modernization, integrity, and reliability, including replacing over 160 miles of pipeline in fiscal 2025.
• Execution of a definitive agreement to acquire CenterPoint Energy, Inc.'s Ohio natural gas utility business, expected to double the utility rate base and add significant customers in a supportive state.
• Increased annual dividend rate by 4% to $2.14 per share, marking the 55th consecutive year of dividend increases and 123rd year of uninterrupted dividend payments.
• NFG Midstream improved its Equitable Origin rating from Ato A (the highest certification level), and Seneca achieved re-certification of an A grade by MiQ and Equitable Origin, reflecting strong environmental stewardship.
• Executive compensation program received 87.6% stockholder support in the 2025 say-on-pay advisory vote.
• The company's relative Total Shareholder Return (TSR) for the 2023-2025 performance cycle was 43.69%, outperforming 9 of 15 peer companies (60th percentile).
• The company's relative Return on Capital (ROC) for the 2023-2025 performance cycle was 8.50%, outperforming 8 of 15 peer companies (53rd percentile).
• Achieved 200% payout for emissions reduction performance shares for the 2022-2024 performance cycle by meeting all segment targets for methane intensity and the overall GHG emissions target.

Risks

• Forward-looking statements are subject to cautionary statements and important factors, including those in the company's Form 10-K at Item 7 (Management's Discussion and Analysis) and Item 1A (Risk Factors).
• Possible outcomes of litigation or regulatory proceedings could impact the company.
• Enterprise-wide risks include climate-related risk and cybersecurity risk.
• Volatility of natural gas prices, despite hedging arrangements, remains a factor affecting financial forecasts.
• The Ohio utility acquisition is expected to temporarily distort Return on Capital (ROC) results, making it an unsuitable measure for management performance during the financing and integration period (expected through fiscal 2028).

Future Outlook

The company expects continued improvement in capital efficiency for its Upstream and Gathering business in the coming years, supported by its extensive Tioga County inventory. Meaningful growth opportunities are anticipated in Appalachia due to increasing natural gas demand from power generation and data centers, with new pipeline projects (Tioga Pathway and Shippingport Lateral) expected to add $30 million in annual revenues by November 2026. The acquisition of CenterPoint Energy's Ohio natural gas utility business, expected to close in Q4 2026 (calendar), is projected to double the utility rate base, add significant customers, and provide stable, predictable regulated cash flows and long-term growth. The overall outlook is strong, with a commitment to delivering meaningful shareholder value. The Compensation Committee plans to reevaluate the inclusion of Return on Capital (ROC) as a performance metric for long-term incentives once the Ohio utility acquisition integration nears completion, anticipated in fiscal 2028.

Management Comments

• "Each year, our proxy statement provides you with a brief summary of the Company's recent operations and detailed information relating to the items on the agenda for you to vote on at the Annual Meeting of Stockholders."
• "Your Board of Directors unanimously recommends that you vote FOR each of the director nominees and FOR proposals 2 and 3."
• "Your vote is always important. Stockholder voting is the primary means by which stockholders can influence a company's operations and its corporate governance. Please make your voice heard by voting your shares."
• "We believe the outlook for the Company is as strong as ever, as the combination of meaningful growth potential and commitment to shareholder returns puts us in a position to deliver meaningful shareholder value over the years to come."

Industry Context

The company operates across the natural gas value chain, encompassing exploration and production (E&P), gathering, interstate transmission and storage, and natural gas utility operations. It is strategically positioned to capitalize on increasing natural gas demand in Appalachia for power generation and data centers. The planned acquisition of CenterPoint Energy's Ohio natural gas utility business reflects a strategy to expand regulated assets in states supportive of natural gas, aligning with broader industry trends of utility consolidation and growth. The company's focus on environmental stewardship, evidenced by improved Equitable Origin and MiQ ratings, addresses the growing industry and investor emphasis on ESG performance and the energy transition towards lower-carbon fuels. Executive compensation practices are benchmarked against a competitive energy industry peer group, reflecting the need to attract and retain high-caliber talent in this dynamic sector.

Comparison to Industry Standards

• The Integrated Upstream and Gathering business has demonstrated a peer-leading trend in capital efficiency improvements since transitioning to the Eastern Development Area (EDA) in 2023.
• The company's almost 20 years of highly economic inventory in the Tioga County Upper Utica formation is believed to be unmatched by peers in the Appalachian basin.
• For the 2023-2025 performance cycle, the company's three-year Total Shareholder Return (TSR) of 43.69% placed it at the 60th percentile, outperforming 9 of 15 companies in its Corporate Peer Group.
• For the 2023-2025 performance cycle, the company's average three-year Return on Capital (ROC) of 8.50% placed it at approximately the 53rd percentile, outperforming 8 of 15 companies in its Corporate Peer Group.
• The company's CEO's target total direct compensation and actual total direct compensation for fiscal 2024 were at the 41st and 39th percentiles, respectively, of its Corporate Peer Group, indicating compensation is below the median for comparable roles.
• The E&P Peer Group, used for evaluating Seneca's compensation, includes companies ranging from approximately $1.5 billion to $15.4 billion in assets (median $7.3 billion), with Seneca's assets at $2.6 billion and consolidated assets at $8.3 billion, positioning Seneca within the peer group's size range.

Management Changes

Corporate Governance

Related Party Transactions

• The company had no related person transactions in fiscal 2025.

Stakeholder Impact

• Shareholders: Benefit from strong financial performance, record production, increased dividends, strategic acquisition for long-term growth, and executive compensation aligned with shareholder interests.
• Employees: Benefit from a focus on safety and inclusion, career development, succession planning, and an inclusive workplace, with executive compensation tied to safety and human capital metrics.
• Customers: Benefit from continued investments in system modernization, integrity, and reliability, as well as constructive rate case resolutions ensuring service affordability and reliability.
• Communities: Experience significant economic impact from the company's operations, including over $1.5 billion in capital investments, wages, pensions, local vendor payments, taxes, and natural gas production royalties in 2025, alongside corporate giving and employee volunteering programs.
• Suppliers: Benefit from local vendor payments, contributing to regional economic activity.
• Creditors: The company's strong financial health, strategic growth plans, and commitment to stable cash flows are positive for creditors.

Next Steps

• Stockholders will vote on director elections, executive compensation, and auditor ratification at the Annual Meeting on March 12, 2026.
• The Tioga Pathway Project and Shippingport Lateral Project have target in-service dates of November 2026.
• The acquisition of CenterPoint Energy, Inc.'s Ohio natural gas utility business is expected to close in the fourth calendar quarter of 2026.
• The integration of the Ohio utility acquisition is anticipated to be completed in fiscal 2028.
• The New York State Climate Action Council is scheduled to update its Scoping Plan in 2027.
• Management will continue to engage with interested stockholders to gather feedback.
• The Compensation Committee intends to reevaluate the inclusion of Return on Capital (ROC) as a performance metric for long-term incentives once the Ohio utility acquisition integration nears completion.
• Stockholder proposals for the 2027 Annual Meeting under SEC Rule 14a-8 must be received by September 25, 2026.
• The window for stockholder proposals outside SEC Rule 14a-8 and director nominees under the company's By-Laws is October 13, 2026, to November 12, 2026.
• The deadline for notice of proxy solicitation for director nominees (SEC Rule 14a-19) for the 2027 Annual Meeting is January 11, 2027 (if the meeting date is not changed by more than 30 calendar days).

Key Dates

Recommendation

The company demonstrates strong operational and financial performance, including record natural gas production and significant earnings growth in regulated segments. The strategic acquisition of CenterPoint Energy's Ohio utility business is a transformative move expected to double the utility rate base and provide stable, long-term growth. Consistent dividend increases for 55 consecutive years highlight a commitment to shareholder returns. While the LTI compensation adjustment due to the acquisition's temporary ROC distortion is noted, the overall outlook is highly positive, with clear growth drivers and a robust corporate governance framework. The company's peer-leading capital efficiency and extensive inventory further support a positive investment thesis.

Keywords

Natural Gas, Utility, Pipeline, Exploration and Production, Gathering, SEC Filing, Proxy Statement, Corporate Governance, Executive Compensation, Dividends, Acquisition, Energy Transition, ESG, Shareholder Meeting, Capital Efficiency, Tioga Pathway Project, Shippingport Lateral Project