National Fuel Gas Company Annual Report 2018

FY2018 Annual Report · National Fuel Gas Company

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NATIONAL FUEL GAS COMPANY

Summary Annual Report 2018

RON TANSKI
President and
Chief Executive Officer

Ron stands on the construction
right-of-way for Supply Corporation’s
YM28 and FM120 Modernization
Project in McKean County, Pa. This
approximately $40-million investment
in new pipeline infrastructure
exemplifies National Fuel’s
continuing efforts to enhance
the safety and reliability of its
transmission, storage, and
distribution systems across
its operating footprint
in New York and
Pennsylvania.

DEAR SHAREHOLDERS,

I am pleased to share with you the results
of another strong fiscal year. I am also
happy to discuss a number of positive
developments across our operating segments
that provide the Company with significant
opportunities for continued growth.

These developments highlight the resilience of
National Fuel’s business model and the dedication of
the Company’s employees to providing a strong return
on investment for our shareholders, ensuring safe
and reliable service for our customers, and meeting
the rising challenges in today’s energy industry.

Our operating strengths are underpinned by a
strong balance sheet, which provides National Fuel
a solid base to support ongoing growth and gives
us the ability to pull forward the value of our large,
integrated Appalachian asset base. Over the past
three years, our cumulative cash from operations
and asset sales exceeded our capital expenditures by
nearly $500 million, and we returned approximately
$400 million of that amount to our shareholders through
our long-standing dividend, which we increased for
the 48th consecutive year.

Across our various business segments, we are well-
positioned for continued success. Despite significant
regulatory hurdles placed in our path, our Pipeline &
Storage business has continued to create meaningful
opportunities for further expansion that leverage
our geographic location within the Marcellus and
Utica shales. Our 490,000 Dekatherm (Dth)-per-
day Northern Access project remains important but
continues to face challenges in New York State. Our
pipeline development efforts during the past year,
therefore, were focused in Pennsylvania, culminating in
the announcement of a $280-million project involving
our FM100 pipeline. In addition to growing our Pipeline
& Storage business, this modernization and expansion
project, in conjunction with an interstate pipeline
project under development by Transco, will provide
an important outlet for Seneca Resources’ growing
natural gas production, allowing it to reach premium
markets. We are targeting calendar 2021 for the
startup of this 330,000 Dth-per-day project. We are
also continuing to move forward with our 205,000
Dth-per-day Empire North project, targeting a 2020
completion date for this $145-million investment.

As our interstate pipeline projects move through
their phases of development, we expect average
annual production growth of 15 to 20 percent over
the next four years in our Exploration & Production

segment, driven by Seneca’s addition of a third drilling
rig this past May. Gathering segment revenues are
expected to grow at a similar pace. We will continue
our transition to development of the Utica Shale
in our Western Development Area, returning to
existing Marcellus pads to drill new wells in the deeper
Utica formation. This is expected to drive enhanced
consolidated returns and minimize our environmental
footprint. In our Eastern Development Area, the
commissioning of Transco’s Atlantic Sunrise project
in October provided the Company with an important
pipeline outlet to allow further development of our
prolific acreage in Lycoming County, Pa.

In our Utility segment, we continue to invest in the
safety and reliability of our pipeline distribution system.
Having invested approximately $70 million on those
efforts in fiscal 2018 and approximately $300 million
over the past five years, we expect to continue this
pace of activity over the next several years.

As we look forward, we envision significant
opportunities to invest in our regulated businesses,
expanding and modernizing our transmission, storage,
and distribution assets, with the potential to deploy
$1.5 billion over the next four to five years. In the
Exploration and Production business, Seneca’s acreage
position remains one of the largest in the basin and,
as a proven low-cost producer with the vast majority
of our natural gas rights owned in fee, we have the

ability to capitalize on opportunities as pricing and
returns warrant.

I expect that our plans for the continued growth of
our integrated businesses will provide significant value
for both our shareholders and customers, but those
plans will not come without challenges. Consumers
across North America love their access to affordable
energy supplies that are abundant, safe, and secure.
More and more, they are expecting the energy they
use to leave a smaller and smaller carbon footprint;
however, the average consumer gives surprisingly little
thought to how their energy is sourced or generated.
Many vocal “environmental groups” and public
policymakers, meanwhile, are stepping up campaigns
to reshape the energy grids across North America
and the rest of the world. Although the U.S. Energy
Information Administration’s 2018 Annual Energy
Outlook demonstrates a growing need for natural
gas in the national energy picture through 2050, New
York regulators and “environmentalists” continue their
attempts to block the construction of critical natural
gas infrastructure, preventing natural gas production
from reaching demonstrable areas of need.

The impacts of the lack of available pipeline capacity
were on display in January 2018, when a severe
weather event necessitated the import of Russian
liquefied natural gas (LNG) into the Boston area
despite the availability of abundant U.S. natural gas

Discipline and Flexibility to Invest in Our Future
Consolidated Capital Expenditures ($ Millions)

Diversity of Earnings and Cash Flows
Percent of Fiscal 2018 Operating Income by Segment

$970

$1,001

$725–$810

$583

$366

$455

2014

2015

2016*

2017*

2018*

2019E

17%

29%

39%

15%

Exploration & Production

Gathering

Pipeline & Storage

Utility, Energy Marketing & All Other

*Netof$157million(2016),$7million(2017),and$17million(2018)ofupfrontproceedsfromjointdevelopmentpartner,and$21 millioninintercompany
asset transfersin2018

supplies just a few hundred miles away. Although
domestic natural gas supplies could be used to
significantly lower energy costs for consumers in
the Northeast and to further reduce greenhouse gas
emissions on a regional and national scale, they instead
remain without a pipeline path to reach those who
need them most.

Unmentioned by the “keep it in the ground movement”
are the immense environmental and economic benefits
afforded by the continued and expanded use of clean-
burning natural gas. Since 2005, the portion of the U.S.
electric generation fleet that is fueled by natural gas
has grown from 19 to 32 percent, largely through the
displacement of coal-fired power plants. This dynamic
has resulted in an approximately 14 percent reduction
in U.S. carbon dioxide emissions over that same period.
Appalachian natural gas production has also resulted in
significant cost savings for consumers. You need look
no further than the 46 percent reduction in average
residential bills across our Utility service territories since
the winter of 2007–08 to see the benefits afforded by
access to this prolific resource.

I firmly believe that there is, and will continue to be,
a need for natural gas to serve the space-heating
requirements of our customers for the foreseeable
future. The oft-mentioned natural gas “bridge” to
renewables is actually a misnomer. In areas of the
country with colder climates, such as New York and
New England, that have higher heating loads, and
where electricity prices are higher relative to natural
gas, natural gas is actually a “foundation” that enables
renewables to be part of the energy mix. Critics of
natural gas, including state policymakers, often push

for accelerated renewable development without
discussion of the real world consequences, including
cost and other environmental impacts implicated in
such policy objectives.

In New York State alone, based on estimates of
the Public Service Commission and the operator of
the state electric grid, approximately 17 gigawatts
(GW) of new renewable energy generation capacity
is needed to meet the governor’s policy goal of
50 percent generation of electricity from renewables
by 2030. To put that in context, in 2016, the generating
capacity of all New York power plants totaled about
40 GW. In terms of scale, bridging the renewable
power generation gap would require the installation
of the equivalent of approximately 77 million solar
panels covering 47,000 acres or approximately
3,600 wind turbines covering 400,000 acres — not
to mention the billions of dollars of new electric
transmission infrastructure needed to transport this
energy to consumers.

While certain northeastern states continue to
eschew the benefits of a secure and abundant
supply of domestic natural gas, the rest of the world
is embracing its use. This past June, the World Gas
Conference was convened in Washington, D.C., and
14,000 delegates from across the globe gathered to
discuss the burgeoning worldwide use of natural gas
and the development of LNG export plants in the
U.S. to supply the growing demand. The beauty of
the world-class interstate pipeline system in the U.S.
is that suppliers like Seneca are able to deliver their
produced natural gas into that system to help meet
the demand.

Forty-Eight Years of Dividend Increases
Annual Rate at Fiscal Year-End

$1.70

$0.19

1970

1982

1994

2006

2018

$2.9 billion
dividend payments
since 1970

We plan to grow our businesses over the
coming years to meet the increasing
national and global demand for natural
gas. In the following pages of this
report, you will see that we plan to keep
operating the Company in a thoughtful,
responsible manner.

Last year, we summarized the principles
that have guided the Company for many
years. Frankly, we thought that they
went without saying, as we had walked
the walk each day — as you might expect
from a company that has operated
successfully for 116 years. The 2,100
employees at National Fuel are the heart
of the Company and are rooted in the areas
where we operate — from the bottom of
the wellbore of the wells we drill across our
hundreds of thousands of acres of mineral
rights, across the landscape that our pipelines
traverse for thousands of miles, and in the cities
and towns where we deliver a premium fuel that
has been the primary contributor to the 14 percent
reduction in carbon dioxide emissions since 2005.
Earlier this year, the Company launched our corporate
responsibility website, which details our longstanding
commitment to the environmentally conscious
development, transportation, storage, and distribution
of natural gas and oil resources. I urge you to review
our website, available at responsibility.natfuel.com, for
further information on the Company’s commitment to
conducting our business responsibly.

As one of our Company’s guiding principles,
environmental stewardship reflects our understanding
and deep appreciation for the vital role we play
in upholding standards of environmental protection.
Each day this becomes increasingly important, as
highlighted in the recently issued National Climate
Assessment. In furtherance of our commitment to
sustainability and environmental protection, each of
the Company’s major subsidiaries became a participant
in the U.S. Environmental Protection Agency’s
Methane Challenge Program in 2018. As part of this
program, our various businesses have committed to
analyzing new and innovative approaches to further
reduce emissions.

OUR GUIDING PRINCIPLES

SAFETY

We embrace a culture of safety that extends to our
customers, employees, and communities.

ENVIRONMENTAL STEWARDSHIP

We play a vital role in upholding standards of environmental
protection in every area of our business.

COMMUNITY

We are committed to the health and vitality of our local
communities.

INNOVATION

We strive to exceed the standards for safe, clean, and
reliable energy development.

SATISFACTION

We work to deliver reliable, high-quality service and
to address the distinct needs of our stakeholders.

TRANSPARENCY

We believe that open communication is
key to maintaining strong relationships.

With each well we drill, every pipeline and facility we
build, and as we continually upgrade our utility
infrastructure, National Fuel’s employees are dedicated
to protecting the environment and the health and
safety of the members of our communities. I am
confident that our dedication to these principles will
ensure the financial strength and continued growth
of National Fuel over the coming decades.

Ronald J. Tanski
President and Chief Executive Officer

January 3, 2019

An important part of our commitment to
the health and vitality of our local
communities includes giving back. National
Fuel employees have a long-standing history
of donating their time and financial
resources to the causes that are important
to them. In August, we participated in the
United Way of Buffalo and Erie County’s
Day of Caring to help rehabilitate a Habitat
for Humanity Buffalo-sponsored home
on the city’s West Side, as pictured above.

Through National Fuel’s volunteerism
program, employees dedicate their nights
and/or weekends to many worthwhile
causes in their communities, including
serving at neighborhood food kitchens or
participating in fundraising walks and
runs. Dan Yaeger, a Senior Security
Administrator in the Information Services
department, said, “I’ve been committed
to volunteering because I can see what
a difference it can make in others’ lives,
and also in my own life.”

In addition to countless volunteer hours,
since 2005, the Company and its employees
in New York, Pennsylvania, Texas, and
California, through the National Fuel
Gas Company Foundation, have donated
more than $18 million to 800-plus local
and national charitable organizations. The
Company is proud of our employees and
the impact they make across the operating
regions we call home.

Pictured:
Top Row
Brian Ketcheson
Denita Mungro
Christian Kanaley
Jeffrey Morris
David Ismert

Bottom Row
David Chmiel
Rachel Gebhart
Dan Yaeger
Michael Wolcott

COMMITTED TO OUR
GUIDING PRINCIPLES

For more than a century, National Fuel has been the
hometown energy team, providing an affordable, reliable,
and clean-burning source of energy that fuels the daily
lives of hundreds of thousands of families and businesses in
western New York and northwestern Pennsylvania. Across our
operating footprint in New York, Pennsylvania, and California,
we remain committed to our corporate guiding principles of
safety, environmental stewardship, community, innovation,
satisfaction, and transparency. By embracing these core values
each and every day, National Fuel plays a meaningful role in the
environmental and economic well-being of our communities.

Over the last decade, we have invested more than $6.3 billion
to increase the availability and accessibility of abundant
Appalachian natural gas supplies. With our ability to explore
across approximately 785,000 acres in Pennsylvania, largely
underlying our existing interstate natural gas pipeline system,
as well as use our wholly owned gathering infrastructure
to transport each and every dekatherm (Dth) of our production,
National Fuel is uniquely positioned to serve the growing
energy needs of our operating territory and customers along
the North American pipeline grid.

Seneca Resources’ Environmental,
Health, Safety and Quality Team
(EHSQ) is pictured here at a drilling
rig in western Pennsylvania. This
team’s responsibilities include guidance
and support on risk mitigation as
well as assisting in compliance with
industry standards and regulations.
“We are implementing practices that
often exceed regulatory requirements
because it is the right thing to do —
not because we have to,” said Teresa
Marion, EHSQ Supervisor.

Pictured:
Teresa Marion
Andy Woodward
Kyle Kline
Jeffrey Passerrello Jr.

Seneca Resources Production (Bcfe)

173.5

178.1

160.5

157.8

161.1

2014

2015

2016

2017

2018

EXPLORATION & PRODUCTION AND
GATHERING

National Fuel’s Exploration & Production
segment operations are carried out by Seneca
Resources Company, LLC, with natural gas and oil
activities focused in Pennsylvania and California,
respectively. Our Gathering segment’s operations
are carried out by the subsidiaries of National Fuel
Gas Midstream Company, LLC, which transports
Seneca’s production to interconnections with
interstate natural gas pipelines.

In fiscal 2018, Exploration & Production
and Gathering set Company production and
throughput records of 178.1 Bcfe and 198.4 Bcf,
respectively. Seneca added a third horizontal
drilling rig in May, which we expect to drive
production growth of approximately 24 percent
in 2019, with Gathering revenues expected to
grow at a similar pace. Seneca’s rig addition
continues our transition to development of the
Utica Shale in the Western Development Area
(WDA), where we return to Marcellus pads to
drill deeper Utica wells. By utilizing existing
infrastructure, we minimize our environmental
footprint.

In furtherance of Seneca’s efforts to limit its
surface footprint and to reduce air emissions, we
pioneered the use of large-scale, multi-well gas
processing units in our Pennsylvania operations
this past year, a first in the Appalachian basin.
This innovative technology allows Seneca to use
a single unit to process up to five wells, which is
expected to lower methane emissions and reduce
capital costs and has the potential to reduce pad

Our Gathering Segment’s
Clermont Compressor Station and
the employees pictured above
play important roles in transporting
Seneca’s natural gas production to
interconnections with interstate
pipelines. As a fourth-generation
industry employee, Matthew Wingard,
Operations and Maintenance
Supervisor, said, “I think the job
chose me. I love being able to
work in, protect, and develop the
resources of the area where I grew
up. Providing customers access to
safe, clean, and reliable natural gas
makes our effort and dedication to
the job each day all worth it.”

Pictured:
Keith Gahr
Kevin Riekofsky
Matthew Wingard

size by nearly 30 percent. Additionally, Seneca continues to use ultrasonic
leak detection technology to reduce emissions. With more than 100 units
now in place, this technology remotely identifies the presence of any
leaks, and, if necessary, immediately shuts down production for repair.

Seneca, through its subsidiary Highland Field Services, LLC, also continues
its efforts to recycle water and fluids produced in Appalachian drilling
operations. In fiscal 2018, Highland recycled 8.2 million barrels of produced
fluids, allowing Seneca to use approximately 70 percent recycled water in
its shale well completions.

In California, Seneca further reduced its carbon footprint through the
installation of solar power facilities at its Bakersfield office. This
investment, which is expected to save Seneca nearly $1 million in utility
bills over the life of the equipment, follows our 2016 installation of a
3.1-megawatt photovoltaic solar power facility at our North Midway
Sunset Field.

PIPELINE & STORAGE

National Fuel’s Pipeline & Storage operations are carried out by National
Fuel Gas Supply Corporation and Empire Pipeline, Inc.

Since 2010, National Fuel has invested more than $1 billion in pipeline
system expansion and modernization projects to move low-cost
Appalachian natural gas supplies to diverse markets served by the
North American pipeline grid. The Company has continued developing
new projects to leverage its existing pipeline infrastructure to
transport production to demand centers.

In May 2018, Supply Corporation announced an expansion of its FM100
Project. This project, combined with a companion Transco pipeline project,

Gathering Throughput (Bcf)

194.9

198.4

162.0

138.7

139.6

2014

2015

2016

2017

2018

Every day, our engineers work with
various state and federal agencies to
minimize impacts to environmental
resources. Wayne Graham,
Environmental Compliance Manager
for Supply Corporation, is responsible
for the oversight of environmental
permitting and compliance for pipeline
construction projects, including
the installation of Line KL in McKean
County, Pa., pictured below. When
asked what makes him most proud to
work for National Fuel, he said,
“A commitment from co-workers
to do the right thing.”

Pictured:
John Cass
Taylor Adam
Wayne Graham

will provide Seneca with 330,000 Dth per day
of incremental firm transportation capacity from
its WDA and Eastern Development Area acreage
positions to premium markets outside of the
Appalachian basin. This $280-million project
will include two new compressor stations, and
approximately 30 miles of new pipeline facilities
along existing pipeline corridors, minimizing
environmental and landowner impacts. We are
targeting the submittal of an application with the
Federal Energy Regulatory Commission (FERC)
for this project in summer 2019 and an in-service
date of late calendar 2021.

Additionally, in 2018, Empire filed its application
with FERC for authorization to construct its
$145-million Empire North Project. This fully
subscribed, 205,000-Dth-per-day project includes
the addition of two new compressor stations.
Empire received a positive environmental
assessment from FERC in October 2018, keeping
the project on track for an in-service date in
the second half of fiscal 2020.

In addition to these larger projects, we continued
the development of our Line N to Monaca
Project, which will deliver fuel to a new $6-billion
petrochemical facility in Beaver County, Pa. This
project is expected to come online in July 2019.
We also maintained our focus on modernizing
the Supply Corporation pipeline system, spending
$47 million on these efforts in fiscal 2018.

On each and every construction project, National
Fuel’s engineers are focused on implementing
best management practices to limit environmental

National Fuel responsibly
operates nearly 17,000 miles
of pipeline in New York and
Pennsylvania. These pipelines
traverse public and private rights-
of-way, including in national
forests and state parks, under
streams and rivers, through
wetlands, fields, and farms, below
hiking and biking trails and golf
courses, and under sidewalks,
streets, and yards.

Technologies, such as in-line
inspections using “smart pigs”
and hydrostatic testing, assess
the safety and integrity of the
Company’s pipelines, including
for Line X North pictured here
at the Porterville Compressor
Station in East Aurora, N.Y.

John Kasinski, Senior
Engineer II, is a pipeline
integrity manager who oversees
these tests and procedures. As
a second-generation employee
whose father worked at the
Company for nearly 40 years,
he said, “All of the people
I work with genuinely care
about what they do and work
hard to ensure pipeline safety
for the millions of people that
live, shop, and travel within
the boundaries of our system
every day.”

Pictured:
Rachael Sebesta
John Kasinski
Andrew Emhof

impacts, utilizing the best available technologies to mitigate and
reduce emissions from our facilities, and ensuring continued safe
and efficient operations.

UTILITY & ENERGY MARKETING

National Fuel’s Utility & Energy Marketing segments are operated by
National Fuel Gas Distribution Corporation and National Fuel Resources,
Inc. These businesses provide natural gas service to more than 750,000
residential, commercial, and industrial customers in New York and
Pennsylvania.

Our Utility’s ongoing investment in the modernization of its pipeline
delivery network — totaling approximately $300 million over the past five
fiscal years — ensures the continued safety and reliability of our systems.
This modernization has resulted in a 17.4 percent reduction in greenhouse
gas emissions from calendar years 2012 to 2017, as reported to the EPA.

From our customer service and construction personnel to our call center
representatives, Utility employees are dedicated to providing high-quality
service to the communities in which they live and work. In 2018, we
achieved impressive 92 and 93 percent residential customer satisfaction
rates in New York and Pennsylvania, respectively.

In 2018, the Company provided a grant
through its Area Development Program
to North Delaware Holdings LLC for its
Steelbound Brewery & Distillery located
in Ellicottville, N.Y., pictured below. The
project created 20 jobs and is expected
to account for approximately 2,300 Mcf
in incremental annual gas load, which
will be used in the brewing and distilling
processes and the restaurant kitchen,
as well as to heat the building.

Cathryn Hilliard, Energy Consultant in
the Energy Services department, assists
commercial and industrial customers
with their energy-related needs, including
guiding them through the grant process.

“I am proud to work for a local company
that provides reliable and affordable
energy to homes and businesses.
National Fuel values our communities
and always strives to make a positive
impact through economic development
incentives, volunteer work, and
employee charitable giving.”

Pictured:
Erik Solomon
Cathryn Hilliard

Utility GHG Emissions from
Physical Plant*
(Thousand metric tons of CO2e)

317

307

296

285

272

2013

2014

2015

2016

2017

*EPA Subpart W

National Fuel also has a vested interest in the
economic health of the communities where
we operate. The Utility’s Area Development
Program offers grants for qualifying businesses
that are expanding in or relocating to Western
New York to help offset the cost of natural gas
infrastructure, interior natural gas piping, and
even job training and workforce development.
During fiscal 2018, this program provided
$1.7 million in grants to 23 projects. In total,
these projects represented nearly $624 million
in private expenditures, the creation of almost
1,500 jobs, and accounted for more than
300,000 Mcf in incremental annual gas load.

With a 116-year track record of constructing
our facilities in a safe and environmentally
responsible manner, and reliably delivering
natural gas to our customers, National Fuel —
its 2,100-plus employees and more than 2,200
retirees — is woven into the fabric of the
communities in which we operate. We are
proud of our role as the hometown energy
team and are committed to ensuring the long-
term sustainability of our integrated natural
gas business.

Philip C. Ackerman
Former Chairman of the
Board and Chief Executive
Officer of the Company

David C. Carroll
President and Chief Executive
Officer of Gas Technology
Institute

Stephen E. Ewing
Former Vice Chairman of
DTE Energy Company

Steven C. Finch
Senior Vice President at
AAA Western and Central
New York

Joseph N. Jaggers
Former President, Chairman,
and Chief Executive Officer of
Jagged Peak Energy Inc.

Rebecca Ranich
Former Director at Deloitte
Consulting, LLP

Jeffrey W. Shaw
Former Director and
Chief Executive Officer of
Southwest Gas Corporation

Thomas E. Skains
Former President, Chairman,
and Chief Executive Officer
of Piedmont Natural Gas
Company, Inc.

David F. Smith
Chairman of the Board and
former Chief Executive
Officer of the Company

Ronald J. Tanski
President and Chief Executive
Officer of the Company

Ronald J. Tanski
President and
Chief Executive Officer

Donna L. DeCarolis
Vice President, Business
Development

John R. Pustulka
Chief Operating Officer

Ann M. Wegrzyn
Chief Information Officer

Paula M. Ciprich
Senior Vice President and
General Counsel

David P. Bauer
Treasurer and Principal
Financial Officer

Karen M. Camiolo
Controller and Principal
Accounting Officer

Sarah J. Mugel
Secretary

Carl M. Carlotti
President, National Fuel Gas
Distribution Corporation

Ronald C. Kraemer
President, Empire Pipeline, Inc.

John P. McGinnis
President, Seneca Resources
Company, LLC

DIRECTORS

From left to right: David C. Carroll, Steven C. Finch,
Jeffrey W. Shaw, Philip C. Ackerman, Ronald J. Tanski,
David F. Smith, Thomas E. Skains, Rebecca Ranich,
Stephen E. Ewing, Joseph N. Jaggers

OFFICERS

From left to right: Donna L. DeCarolis, John P. McGinnis,
Ann M. Wegrzyn, Ronald C. Kraemer, John R. Pustulka,
David P. Bauer, Paula M. Ciprich, Carl M. Carlotti, Sarah J. Mugel,
Karen M. Camiolo

SUBSIDIARY OFFICERS

Upstream
SENECA RESOURCES COMPANY, LLC

John P. McGinnis
President

Steven J. Conley
Senior Vice President

Justin I. Loweth
Senior Vice President

David P. Bauer
Treasurer

Cindy D. Wilkinson
Controller and Secretary

Bradley D. Elliott
Vice President

Benjamin F. Elmore
Vice President and General Counsel

Jeffrey J. Formica
Vice President

Douglas Kepler
Vice President

Dale A. Rowekamp
Vice President

Kevin M. Ryan
Vice President

Downstream
NATIONAL FUEL GAS
DISTRIBUTION CORPORATION

Carl M. Carlotti
President

Jay W. Lesch
Senior Vice President

Paula M. Ciprich
Secretary

David P. Bauer
Treasurer

Karen M. Camiolo
Vice President and Controller

Michael W. Reville
Vice President and General Counsel

Joseph N. Del Vecchio
Vice President and Chief Regulatory
Counsel

Michael D. Colpoys
Vice President

Kevin D. House
Vice President

John J. Polka Jr.
Assistant Vice President

James A. Rizzo
Assistant Vice President

Amy L. Shiley
Assistant Vice President

Craig K. Swiech
Assistant Vice President

Elena G. Mendel
Assistant Controller

NATIONAL FUEL RESOURCES, INC.

Jeffrey F. Hart
Vice President

Midstream
NATIONAL FUEL GAS
SUPPLY CORPORATION

David P. Bauer
President and Treasurer

Bruce D. Heine
Senior Vice President

Ronald C. Kraemer
Senior Vice President

Sarah J. Mugel
Vice President, General Counsel and
Secretary

Karen M. Camiolo
Controller

Ramon P. Harris
Vice President

Jeffrey J. Kittka
Vice President

Lee E. Hartz
Assistant Vice President

Elena G. Mendel
Assistant Controller

EMPIRE PIPELINE, INC.

Ronald C. Kraemer
President

David P. Bauer
Treasurer

Karen M. Camiolo
Controller

Sarah J. Mugel
Secretary

Elena G. Mendel
Assistant Controller

NATIONAL FUEL GAS
MIDSTREAM COMPANY, LLC

Michael P. Kasprzak
President

David P. Bauer
Treasurer

Karen M. Camiolo
Controller

Sarah J. Mugel
Secretary

James C. Welch
Assistant Vice President

FINANCIAL AND OPERATING HIGHLIGHTS

National Fuel Gas Company Year Ended September 30

2018

2017

2016

2015

2014

Operating Revenues (Thousands)

$ 1,592,668

$ 1,579,881

$ 1,452,416

$ 1,760,913

$ 2,113,081

Net Income (Loss) Available for Common Stock (Thousands)

391,521(1)

283,482

(290,958)(2)

(379,427)(3)

299,413(4)

Return On Average Common Equity(5)

21.51%

17.55%

(16.4%)

(17.1%)

13.0%

Per Common Share

Basic Earnings (Loss)

Diluted Earnings (Loss)

Dividends Paid

Dividend Rate at Year-End

Book Value at Year-End

4.56

4.53

1.67

1.70

22.54

3.32

3.30

1.63

1.66

19.92

(3.43)

1.59

1.62

17.94

(4.50)

1.55

1.58

23.94

3.57

3.52

1.51

1.54

28.64

Common Shares Outstanding at Year-End

85,956,814

85,543,125

85,118,886

84,594,383

84,157,220

Weighted Average Common Shares Outstanding

Basic

Diluted

85,830,597

85,364,929

84,847,993

84,387,755

83,929,989

86,439,698

86,021,386

84,847,993

84,387,755

84,952,347

Average Common Shares Traded Daily

437,677

477,190

518,574

482,631

451,731

Common Stock Price

High

Low

Net Cash Provided by Operating Activities (Thousands)

59.90

48.31

56.06

613,603

61.25

50.61

56.61

684,251

59.62

37.03

54.07

588,979

72.21

48.61

49.98

853,580

78.79

65.23

69.99

909,390

Total Assets (Thousands)

$ 6,036,486

$ 6,103,320

$ 5,636,387

$ 6,564,939

$ 6,687,717

Capital Expenditures per Statements of Cash Flows (Thousands)

584,004

450,335

581,576

$ 1,018,179

914,417

Volume Information

Production

Gas – MMcf

Oil – Mbbl

Total – MMcfe

Proved Reserves

Gas – MMcf

Oil – Mbbl

Total – MMcfe

Pipeline & Storage Throughput – MMcf

Gas Transportation

Gathering Volume – MMcf

Gathered Volume

Utility Throughput – MMcf

Gas Sales

Gas Transportation

Energy Marketing Volume – MMcf

Gas

Average Number of Utility Retail Customers

Average Number of Utility Transportation Customers

Number of Employees at September 30

162,906

2,535

178,116

157,088

143,547

139,563

142,307

2,740

2,923

3,034

3,036

173,528

161,085

157,767

160,523

2,357,342

1,973,120

1,674,575

2,142,128

1,682,884

27,663

30,207

29,009

33,722

38,477

2,523,320

2,154,362

1,848,629

2,344,460

1,913,746

767,866

785,187

764,423

750,080

735,995

198,355

194,921

161,955

139,629

138,726

70,125

76,828

42,262

628,875

121,328

2,105

61,955

71,040

38,901

608,489

135,106

2,100

58,705

70,847

39,849

602,284

139,951

2,080

72,434

78,749

46,752

591,098

148,877

2,125

73,892

80,949

52,694

584,415

153,407

2,010

(1) Includes a $103.5 million reduction in income tax expense associated with the remeasurement of accumulated deferred income taxes in accordance with the 2017

Tax Reform Act.

(2) Includes impairment of oil and gas producing properties of ($550.0) million and includes joint development agreement professional fees of $4.6 million.
(3) Includes impairment of oil and gas producing properties of ($650.2) million and includes reversal of stock-based compensation expense of $4.7 million.
(4) Includes a $3.6 million gain on life insurance policies.
(5)CalculatedusingaverageTotalComprehensiveShareholderEquity.

INVESTOR INFORMATION

COMMON STOCK TRANSFER
AGENT AND REGISTRAR
EQ Shareowner Services
P.O. Box 64854
St. Paul, MN 55164-0854

Telephone: 800-648-8166
http://www.shareowneronline.com
Email: stocktransfer@eq-us.com

Change of address notices and
inquiries about dividends should be
sent to the Transfer Agent at the
address listed above.

INVESTOR RELATIONS
Investorsorfinancialanalystsdesiring
information should contact:

David P. Bauer
Treasurer
Telephone: 716-857-7318

Kenneth E. Webster
Director of Investor Relations
Telephone: 716-857-7067
Email: WebsterK@natfuel.com

NationalFuelGasCompany
6363 Main Street
Williamsville, NY 14221

NATIONAL FUEL DIRECT STOCK
PURCHASE AND DIVIDEND
REINVESTMENT PLAN
National Fuel offers a simple, cost-
effective method for purchasing shares
of National Fuel stock. A prospectus,
which includes details of the Plan,
canbeobtainedbycalling,writing,or
emailing the administrator of the Plan,
EQ Shareowner Services, at the address
listed above.

ANNUAL MEETING
The Annual Meeting of Stockholders
will be held at 9:30 a.m. (local time)
on Thursday, March 7, 2019, at The
Ritz Carlton Golf Resort at 2600
Tiburon Drive, Naples, Florida, 34109.
Stockholders of record as of the close of
businessonJanuary7,2019,willreceive
aformalnoticeofthemeeting,proxy
statement,andproxy.

ADDITIONAL SHAREHOLDER
REPORTS
Additional copies of this report, the
2018 Form 10-K, and the 2018 Financial
and Statistical Report can be obtained
withoutchargebywritingtoorcalling:

Sarah J. Mugel
CorporateSecretary
Telephone: 716-857-7163

Kenneth E. Webster
Director of Investor Relations
Telephone: 716-857-7067

NationalFuelGasCompany
6363 Main Street
Williamsville, NY 14221

STOCK EXCHANGE LISTING
New York Stock Exchange
(StockSymbol:NFG)

TRUSTEE FOR DEBENTURES
The Bank of New York Mellon
Attention: Corporate Trust
101BarclayStreet,7W
New York, NY 10286

UNITS OF MEASURE

Bcf

Billion cubic feet (of natural gas)

Mcfe

Mcf equivalent (of natural gas and crude oil)

Bcfe

Bcf equivalent (of natural gas and crude oil)

MMcf Million cubic feet (of natural gas)

Dth

Dekatherm (Approx. 1 Mcf of natural gas)

MMcfe MMcf equivalent (of natural gas and crude oil)

Mbbl

Thousands of barrels (of crude oil)

Mcf

Thousand cubic feet (of natural gas)

Tcf

Tcfe

Trillion cubic feet (of natural gas)

Tcf equivalent (of natural gas and crude oil)

This Summary Annual Report contains “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking
statements should be read with the cautionary statements and important factors included in the Company’s Form 10-K at Item 7, MD&A, under the heading
“Safe Harbor for Forward-Looking Statements,” and with the “Risk Factors” included in the Company’s Form 10-K at Item 1A. Forward-looking statements
are all statements other than statements of historical fact, including, without limitation, statements regarding future prospects, plans, objectives, goals,
projections, estimates of oil and gas quantities, strategies, future events or performance and underlying assumptions, capital structure, anticipated
capital expenditures, completion of construction and other projects, projections for pension and other post-retirement benefit obligations, impacts of the
adoption of new accounting rules, and possible outcomes of litigation or regulatory proceedings, as well as statements that are identified by the use of the
words “anticipates,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “predicts,” “projects,” “believes,” “seeks,” “will,” “may” and similar expressions.

Forward-looking statements include estimates of oil and gas quantities. Proved oil and gas reserves are those quantities of oil and gas which, by analysis of
geoscience and engineering data, can be estimated with reasonable certainty to be economically producible under existing economic conditions, operating
methods and government regulations. Other estimates of oil and gas quantities, including estimates of probable reserves, possible reserves, and resource
potential, are by their nature more speculative than estimates of proved reserves. Accordingly, estimates other than proved reserves are subject to
substantially greater risk of being actually realized.

This Summary Annual Report and the statements contained herein are submitted for the general information of stockholders and employees of the
Company and are not intended to induce any sale or purchase of securities or to be used in connection therewith. For up-to-date investor information,
please visit the Investor Relations section of National Fuel Gas Company’s Corporate Web site at http://www.nationalfuel.com. If you would like to receive
news releases automatically by e-mail, simply visit the News section and subscribe.

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A drilling rig operates at a well pad in
McKean County, Pa., in the Company’s
Clermont-Rich Valley development area.
Seneca Resources previously used this
pad to complete six Marcellus Shale wells
and is now utilizing the same surface
footprint to produce natural gas reserves
from the approximately 5,000-foot deeper
Utica Shale formation. This is expected
to reduce environmental impacts as Seneca
will use existing gathering facilities, water
infrastructure, and roadways.

NATIONAL FUEL GAS COMPANY
6363 Main Street, Williamsville, New York 14221
716-857-7000 www.nationalfuel.com
NYSE: NFG