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National Fuel expects a big jump in profits as natural gas prices surge

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National Fuel   HICKEY

David Bauer at National Fuel headquarters.

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National Fuel Gas Co. expects the surge in natural gas prices to lead to a big jump in its profits during the coming fiscal year.

The Amherst-based energy company said it expects its profits to jump by around 27% during the fiscal year that starts in October, compared with its expected earnings during the current year.

The reason: Rising natural gas prices that are pushing up profits at its natural gas drilling business in western Pennsylvania.

While National Fuel, like most U.S. energy producers, has not sharply stepped up its drilling plans as oil and natural gas prices have surged this year, it expects to increase its gas production by about 8% next year, while the prices it gets for that gas, after hedging, are forecast to be about 22% higher than this year.

"We expect to continue to grow our natural gas production base, with our gathering [pipeline] business growing in lockstep," said David P. Bauer, National Fuel's president and CEO. "The company is poised for continued earnings growth."

National Fuel said Friday it expects its adjusted profits during the upcoming fiscal year to range between $7.25 and $7.75 per share, up from a forecast of about $5.90 per share during the fiscal year that ends in September.

The company's third-quarter profits rose by 25%, fueled by higher natural gas prices and a gain from the sale of its California oil drilling business for $241 million, with the potential for another $30 million if oil prices are above $95 a barrel during the next three years.

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