Rising energy prices, which caused earnings to soar at its oil and natural gas drilling business, helped National Fuel Gas Co. boost its first-quarter profits by 19 percent, the Buffalo-based energy company said Wednesday.
National Fuel's earnings, which matched analyst expectations, also were enhanced by stronger profits from its utility business, which had lower returns during the first quarter of last year because of a pair of one-time charges for an early retirement program and a reserve fund for the state's gas restructuring efforts.
Excluding those charges, National Fuel's earnings from its utility business would have declined this year.
The company also said lower expenses caused a slight increase in profits at its international operations, which are mainly centered in the Czech Republic. Earnings fell at its pipeline and storage business, where profits last year were bolstered by a one-time gain from an Internal Revenue Service settlement.
In all, National Fuel's profits rose to $44.87 million, or $1.14 per share, from $37.62 million, or 97 cents per share, a year ago.
"We are very pleased with the earnings results this quarter," said Bernard J. Kennedy, National Fuel's chairman and chief executive officer.
The biggest improvement came from National Fuel's exploration and production business, which increased its profits by $7.7 million from the almost break-even results of a year ago. A 60 percent surge in National Fuel's average oil prices and a 21 percent jump in its average natural gas prices accounted for much of the increase.
At the same time, the company increased its natural gas production by 21 percent because of increased output from its wells in the Gulf of Mexico and California.
The company's utility business increased its earnings by $3.1 million, with all of the gain coming because last year's profits were depressed by a $3 million charge for the early retirement program and a $1.1 million charge for the gas restructuring reserve.
National Fuel's international business increased profits by 9 percent to $4.7 million after lowering its operating expenses. The company's pipeline and storage business had its earnings fall by 25 percent to $9.3 million because last year's profits were inflated by $3 million because of extra interest income and lower income taxes stemming from an IRS settlement.
National Fuel's energy marketing business lost $17,000 after earning $221,000 a year ago because of higher advertising costs associated with its major push to sign up residential heating customers. National Fuel Resources now has more than 26,000 residential customers.
Earnings from the company's timber business fell 30 percent to $931,000, mostly because of higher interest expenses stemming from acquisitions last year and delays in cutting some timber because of the warm, wet weather during the quarter.