The plunge in energy prices continues to batter National Fuel Gas Co.
The Amherst-based energy company was forced to write down the value of its oil and natural gas reserves by nearly $130 million to reflect the plunge in oil prices and the continued decline in natural gas prices.
The company also said it expects further write-downs into next year.
The write-downs are an accounting measure that reflect the value of the oil and natural gas that is believed to be beneath the ground where National Fuel has drilling rights. Oil prices have plunged by more than half to $19 a barrel from $54 in mid-February, slashing the potential value of the oil in those fields.
Excluding that write-down, earnings from National Fuel's operations fell by 9% to $84 million, or 97 cents per share, topping analyst forecasts by a penny per share.
"The continued drop in commodity prices weighed on our results," said David Bauer, National Fuel's president and CEO, during a conference call with analysts Friday.
Warmer winter weather hurt earnings at its utility business, while the company's pipeline businesses strengthened and its oil and gas production increased.
"Other than pricing and weather, the quarter was right in line with our expectations and was another great example of the benefits of integrated, diversified business model," Bauer said.
With energy prices down, National Fuel plans to reduce its natural gas drilling program in Pennsylvania to a single drilling rig this summer, down from two currently. The company said it also plans to significantly reduce its capital spending at its oil drilling facilities in California beginning this fall because of the plunge in prices.
For the second straight quarter, the company reduced its earnings guidance for this year to around $2.85 per share, down from its reduced forecast of $3.05 per share in January and $3.45 per share a year ago, excluding one-time items.