National Fuel Gas Co. F1Q09 (Qtr End 12/31/08) Earnings Call Transcript

Executives

James C. Welch - Director, Investor Relations

David F. Smith - President and Chief Executive Officer

Matthew D. Cabell - President of Seneca Resources Corporation

Ronald J. Tanski - Treasurer and Principal Financial Officer

Analysts

Carl Kirst - BMO Capital Markets

Shneur Gershuni - UBS

Rebecca Followill - Tudor Pickering &Co.

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2009 National Fuel Gas Company Earnings Conference Call. My name is Shannon and I'll be your coordinator for today. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today's call, Mr. Jim Welch, Director of Investor Relations. Please proceed.

James C. Welch

Thank you and good morning everyone. Thank you for 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 Smith, President and Chief Executive Officer; and Ron Tanski, Treasurer and Principal Financial Officer. Joining us from Seneca Resources Corporation is Matt Cabell, President. At the end of the prepared remarks, we'll open the discussion for questions.

We'd 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 day 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, we'll begin with Dave Smith.

David F. Smith

Thank you, Jim, and good morning to everyone. Last night, we reported a net loss for our first fiscal quarter of $0.07 per share. A sharp drop in crude oil and natural gas prices required us to take a $108 million after tax charge, to write down the book value of our exploration and production assets. While disappointing, it was expected, its non-cash, and it's important to realize this impairment was entirely price driven, with no significant loss reserves. Our reserves are still in place, and as they are produced, they will contribute to future earnings.

As we've said in the past, diversity of assets is a defining characteristics of National Fuel's long-term strategy. Our regulated operations, which are not greatly impacted by short-term swings in commodity prices, act as a natural hedge to our more price sensitive E&P operations. The benefit of our diversified and balanced portfolio of assets was readily evident in this quarter's results. While lower crude oil prices and hurricane related production shut-ins Gulf, our Seneca's recurring operating results to drop by $0.08 per share.

Our utility and our pipeline and storage operations posted strong results; results that largely offset the reduction at Seneca. Consequently, consolidated operating results were down only $0.02 per share, compared to the prior year's record first quarter.

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