Low oil and natural gas prices keep cutting into National Fuel Gas Co.’s profits, but the Amherst energy company’s executives think prices will start firming up next year.
National Fuel’s earnings from its operations slipped by 4 percent as low energy prices hurt profits at its oil and gas drilling business, while its utility business was hurt by warm winter weather, which reduced natural gas consumption.
The earnings were slightly better than analysts were expecting, and National Fuel narrowed its profit forecast for the full fiscal year, keeping it within its previously issued guidance.
“We had a pretty steady second quarter,” said Ronald Tanski, National Fuel’s president and CEO, during a conference call Friday.
Because of the steep drop in oil and natural gas prices, National Fuel has scaled back its drilling program in Pennsylvania to a single drilling rig – a level of activity it expects to maintain for another year. The company also has slowed the pace it is using the wells it has drilled, limiting fracking work to daylight hours.
National Fuel plans to increase drilling to bring its production beginning in the middle of next year to the level needed to fill the capacity that will become available on the Northern Access pipeline that it is building to bring gas into New York and Canada, said John P. McGinnis, who will take over next week as the head of National Fuel’s oil and gas drilling business.
To cut costs, National Fuel cut workers within its oil and gas drilling business, largely in Pennsylvania and California, by 10 percent.
National Fuel’s earnings from its operations fell to $82.8 million, or 97 cents per share, from $86.1 million, or $1.02 per share, a year ago. The earnings were a penny per share better than analysts were expecting.
Because of the low energy prices, the company wrote down the value of its reserves by $230 million, continuing a trend of curtailment charges that began last year. That write-down led to a net loss of $147.7 million, or $1.74 per share.
For the full fiscal year, National Fuel said it expects to earn between $2.80 and $2.95 per share from its operations.