NATIONAL FUEL GAS CO

Previous wording

The Company has continued to pursue development projects to expand its Pipeline and Storage segment. One project on Supply Corporation's system, referred to as the Tioga Pathway Project, would allow for the transportation of 190,000 Dth per day of shale gas supplies from a new interconnection in northwest Tioga County, Pennsylvania to an existing Supply Corporation interconnection with Tennessee Gas Pipeline Company, LLC at Ellisburg and a new virtual delivery point into an existing Transcontinental Gas Pipe Line Company, LLC’s (“Transco”) capacity lease, providing access to Mid-Atlantic markets. The Tioga Pathway Project has a target in-service date in late calendar 2026 and a preliminary cost estimate of approximately $90 million. The Tioga Pathway Project is discussed in more detail in the Capital Resources and Liquidity section that follows.

Current wording

The Company has continued to pursue development projects to expand its Pipeline and Storage segment. One project on Supply Corporation's system, referred to as the Tioga Pathway Project, would allow for the transportation of 190,000 Dth per day of shale gas supplies from a new interconnection in northwest Tioga County, Pennsylvania to an existing Supply Corporation interconnection with Tennessee Gas Pipeline Company, LLC at Ellisburg and a new virtual delivery point into an existing Transcontinental Gas Pipe Line Company, LLC (“Transco”) capacity lease, providing access to Mid-Atlantic markets. The Tioga Pathway Project has a target in-service date in late calendar 2026 and a preliminary cost estimate of approximately $90 million. The Tioga Pathway Project is discussed in more detail in the Capital Resources and Liquidity section that follows.

Previous wording

From a rate perspective, Distribution Corporation, in its Pennsylvania jurisdiction, reached a settlement with the parties to its rate case proceeding. On June 15, 2023, the PaPUC issued an order adopting the settlement in full. The settlement authorized an increase in Distribution Corporation's annual base rate operating revenues of $23 million that became effective August 1, 2023. Distribution Corporation also filed a rate case proceeding with the NYPSC in its New York jurisdiction on October 31, 2023 seeking an increase of approximately $88 million in its total annual operating revenues for the projected rate year ending September 30, 2025, with a proposed effective date of October 1, 2024. In addition, Supply Corporation filed a NGA Section 4 rate case at FERC on July 31, 2023. For further discussion of Distribution Corporation and Supply Corporation rate matters, refer to the Rate Matters section below.

Current wording

From a rate perspective, Distribution Corporation, in its Pennsylvania jurisdiction, reached a settlement with the parties to its rate case proceeding. On June 15, 2023, the PaPUC issued an order adopting the settlement in full. The settlement authorized an increase in Distribution Corporation's annual base rate operating revenues of $23 million that became effective August 1, 2023. Distribution Corporation also filed a rate case proceeding with the NYPSC in its New York jurisdiction on October 31, 2023 seeking an increase of approximately $88 million in its total annual operating revenues for the projected rate year ending September 30, 2025, with a proposed effective date of October 1, 2024. In addition, Supply Corporation filed a NGA Section 4 rate case at FERC on July 31, 2023. Interim settlement rates became effective on February 1, 2024 under a settlement in principle that was filed with FERC on March 27, 2024, and are estimated to increase Supply Corporation's revenues by approximately $56 million on an annual basis. The settlement remains subject to final FERC approval. For further discussion of Distribution Corporation and Supply Corporation rate matters, refer to the Rate Matters section below.

Previous wording

From a financing perspective, on February 7, 2024, the Company and certain lenders under the Credit Agreement consented to an extension of the maturity date of the Credit Agreement from February 26, 2027 to February 25, 2028. As a result, the Company has aggregate commitments available under the Credit Agreement of $1.0 billion before February 26, 2027, and $940 million in aggregate commitments available on and after February 26, 2027 to February 25, 2028.

Current wording

From a financing perspective, effective February 7, 2024, certain lenders under the Credit Agreement consented to an extension of the maturity date of the Credit Agreement from February 26, 2027 to February 25, 2028. As a result, the Company has aggregate commitments available under the Credit Agreement of $1.0 billion before February 26, 2027, and $940 million in aggregate commitments available on and after February 26, 2027 to February 25, 2028.

Previous wording

Oil and Gas Exploration and Development Costs. The Company, in its Exploration and Production segment, follows the full cost method of accounting for determining the book value of its oil and natural gas properties, with natural gas properties in the Appalachian Region being the primary component after the fiscal 2022 sale of the Company's California oil and natural gas properties. In accordance with the full cost methodology, the Company is required to perform a quarterly ceiling test. Under the ceiling test, the present value of future revenues from the Company's oil and gas reserves based on an unweighted arithmetic average of the first day of the month oil and gas prices for each month within the twelve-month period prior to the end of the reporting period (the “ceiling”) is compared with the book value of the Company’s oil and gas properties at the balance sheet date. The present value of future revenues is calculated using a 10% discount factor. If the book value of the oil and gas properties exceeds the ceiling, a non-cash impairment charge must be recorded to reduce the book value of the oil and gas properties to the calculated ceiling. At December 31, 2023, the ceiling exceeded the book value of the oil and gas properties by approximately $84.4 million. The 12-month average of the first day of the month price for natural gas for each month during the twelve months ended December 31, 2023, based on the quoted Henry Hub spot price for natural gas, was $2.64 per MMBtu. (Note: Because actual pricing of the Company’s producing properties vary depending on their location and hedging, the prices used to calculate the ceiling may differ from the Henry Hub price, which is only indicative of 12-month average prices for the twelve months ended December 31, 2023. Actual realized pricing includes adjustments for regional market differentials, transportation fees and contractual arrangements.) In regard to the sensitivity of the ceiling test calculation to commodity price changes, if natural gas prices were $0.25 per MMBtu lower than the average prices in the twelve-month period used at December 31, 2023 in the ceiling test calculation, the book value of the Company's oil and gas properties would have exceeded the ceiling by approximately $250.8 million (after-tax), which would have resulted in an impairment charge. This calculated amount is based solely on price changes and does not take into account any other changes to the ceiling test calculation, including, among others, changes in reserve quantities and future cost estimates.

Current wording

Oil and Gas Exploration and Development Costs. The Company, in its Exploration and Production segment, follows the full cost method of accounting for determining the book value of its oil and natural gas properties, with natural gas properties in the Appalachian Region being the primary component after the fiscal 2022 sale of the Company's California oil and natural gas properties. In accordance with the full cost methodology, the Company is required to perform a quarterly ceiling test. Under the ceiling test, the present value of future revenues from the Company's oil and gas reserves based on an unweighted arithmetic average of the first day of the month oil and gas prices for each month within the twelve-month period prior to the end of the reporting period (the “ceiling”) is compared with the book value of the Company’s oil and gas properties at the balance sheet date. The present value of future revenues is calculated using a 10% discount factor. If the book value of the oil and gas properties exceeds the ceiling, a non-cash impairment charge must be recorded to reduce the book value of the oil and gas properties to the calculated ceiling. At March 31, 2024, the ceiling exceeded the book value of the oil and gas properties by approximately $3.1 million. The 12-month average of the first day of the month price for natural gas for each month during the twelve months ended March 31, 2024, based on the quoted Henry Hub spot price for natural gas, was $2.45 per MMBtu. (Note: Because actual pricing of the Company’s producing properties vary depending on their location and hedging, the prices used to calculate the ceiling may differ from the Henry Hub price, which is only indicative of 12-month average prices for the twelve months ended March 31, 2024. Actual realized pricing includes adjustments for regional market differentials, transportation fees and contractual arrangements.) In regard to the sensitivity of the ceiling test calculation to commodity price changes, if natural gas prices were $0.25 per MMBtu lower than the average prices in the twelve-month period used at March 31, 2024 in the ceiling test calculation, the book value of the Company's oil and gas properties would have exceeded the ceiling by approximately $329.9 million (after-tax), which would have resulted in an impairment charge. This calculated amount is based solely on price changes and does not take into account any other changes to the ceiling test calculation, including, among others, changes in reserve quantities and future cost estimates. Looking ahead, the first day of the month Henry Hub spot price for natural gas in April 2024 was $1.56 per MMBtu. Given the April price, and the expected replacement of higher gas prices with lower gas prices in the historical 12-month average that will be used in the ceiling test calculation at June 30, 2024 and September 30, 2024, the Company expects to experience a ceiling test impairment in each of these quarters.

Previous wording

It is difficult to predict what factors could lead to future non-cash impairments under the SEC's full cost ceiling test. Fluctuations in or subtractions from proved reserves, increases in development costs for undeveloped reserves and significant fluctuations in natural gas prices have an impact on the amount of the ceiling at any point in time. For a more complete discussion of the full cost method of accounting, refer to "Oil and Gas Exploration and Development Costs" under "Critical Accounting Estimates" in Item 7 of the Company's 2023 Form 10-K.

Current wording

It is difficult to predict what additional factors beyond price could contribute to future non-cash impairments under the SEC's full cost ceiling test. Fluctuations in or subtractions from proved reserves and increases in development costs for undeveloped reserves can have an impact on the amount of the ceiling at any point in time. For a more complete discussion of the full cost method of accounting, refer to "Oil and Gas Exploration and Development Costs" under "Critical Accounting Estimates" in Item 7 of the Company's 2023 Form 10-K.

Previous wording

The Company's earnings were $133.0 million for the quarter ended December 31, 2023 compared to earnings of $169.7 million for the quarter ended December 31, 2022. The decrease in earnings of $36.7 million is primarily the result of lower earnings in the Exploration and Production segment and the Pipeline and Storage segment. Partially offsetting these decreases were higher earnings in the Gathering segment, Utility segment and Corporate category, as well as a lower loss in the All Other category. Note that all amounts used in earnings discussions are after-tax amounts, unless otherwise noted.

Current wording

The Company's earnings were $299.3 million for the six months ended March 31, 2024 compared to earnings of $310.6 million for the six months ended March 31, 2023. The decrease in earnings of $11.3 million is primarily the result of lower earnings in the Exploration and Production segment. Higher earnings in the Utility segment, Gathering segment and Pipeline and Storage segment, as well as higher earnings in the Corporate category and a lower loss in the All Other category partially offset this decrease. Note that all amounts used in earnings discussions are after-tax amounts, unless otherwise noted.

Previous wording

Operating revenues for the Exploration and Production segment decreased $23.0 million for the quarter ended December 31, 2023 as compared with the quarter ended December 31, 2022. Gas production revenue after hedging decreased $20.8 million due to the impact of a $0.51 per Mcf decrease in the weighted average price of natural gas after hedging, offset by a 10.2 Bcf increase in natural gas production. This was partially offset by increased natural gas production largely due to additional production from new Marcellus and Utica wells in the Appalachian region. In addition, other revenue decreased $2.2 million due to the non-recurrence of temporary capacity release revenue for a portion of this segment's transportation capacity during the quarter ended December 31, 2022.

Current wording

Operating revenues for the Exploration and Production segment increased $20.1 million for the quarter ended March 31, 2024 as compared with the quarter ended March 31, 2023. Gas production revenue after hedging increased $22.4 million due to the impact of a 9.6 Bcf increase in natural gas production, offset by a $0.02 per Mcf decrease in the weighted average price of natural gas after hedging. The increase in natural gas production was largely due to additional production from new Marcellus and Utica wells in the Appalachian region. In addition, other revenue decreased $2.3 million due to the non-recurrence of temporary capacity release revenue for a portion of this segment's transportation capacity during the quarter ended March 31, 2023.

Previous wording

The Exploration and Production segment's earnings for the quarter ended December 31, 2023 were $52.5 million, a decrease of $38.7 million when compared with earnings of $91.2 million for the quarter ended December 31, 2022. The decrease in earnings was attributable to lower natural gas prices after hedging ($40.7 million), higher depletion expense ($13.0 million), higher lease operating and transportation expenses ($4.4 million), higher other operating expenses ($4.1 million), an increase in interest expense ($1.6 million) and an unrealized loss on contingent consideration received as part of the sale of Seneca's California assets ($3.0 million). These decreases were partially offset by higher natural gas production ($24.3 million) and lower other taxes ($2.6 million). The increase in depletion expense was primarily due to the net increase in production combined with a $0.10 per Mcf increase in the depletion rate. The increase in lease operating and transportation expenses was primarily the result of higher gathering and transportation costs combined with higher workover and saltwater disposal expenses. The increase in other operating expenses was primarily attributable to recognizing an accrual of plugging and abandonment costs related to certain California wells that were formerly owned by Seneca, combined with higher general and administrative costs. The increase in interest expense can largely be attributed to higher average interest rates on intercompany short-term and long-term borrowings, partially offset by lower intercompany long-term debt balances. The decrease in other taxes was primarily attributable to lower Impact Fees in the Appalachian region due to lower NYMEX pricing, which reduces the cost per well due to moving the Company into a lower rate tier.

Current wording

The Exploration and Production segment's earnings for the quarter ended March 31, 2024 were $62.1 million, an increase of $1.1 million when compared with earnings of $61.0 million for the quarter ended March 31, 2023. The increase in earnings was attributable to higher natural gas production ($19.7 million) and lower other taxes ($1.3 million). There was also an unrealized gain recognized in the three-month period ended March 31, 2024 ($0.4 million) on contingent consideration received as part of the California asset sale, compared to an unrealized loss that was recognized in the three-month period ended March 31, 2023 ($1.8 million) on such contingent consideration. These increases were partially offset by lower natural gas prices after hedging ($2.0 million) and lower other revenue ($1.8 million) as previously discussed. Higher depletion expense ($11.7 million), higher lease operating and transportation expenses ($3.1 million) and an increase in interest expense ($2.3 million) also reduced earnings. The decrease in other taxes was primarily attributable to lower Impact Fees in the Appalachian region due to lower NYMEX pricing, which reduces the cost per well due to moving the Company into a lower rate tier. The increase in depletion expense was primarily due to the net increase in production combined with a $0.08 per Mcf increase in the depletion rate. The increase in lease operating and transportation expenses was primarily the result of higher gathering and transportation costs and higher workover expenses, offset by lower saltwater disposal expenses. The increase in interest expense can largely be attributed to higher average interest rates on intercompany short-term and long-term borrowings, partially offset by lower intercompany long-term debt balances.

Previous wording

Operating revenues for the Pipeline and Storage segment decreased $3.2 million for the quarter ended December 31, 2023 as compared with the quarter ended December 31, 2022. The decrease in operating revenues was primarily due to a decrease in transportation revenues of $4.6 million, partially offset by an increase in other revenues of $1.3 million. The decrease in transportation revenues is primarily due to contract expirations and revisions combined with a decrease in revenues from an electric surcharge. The increase in other revenues primarily reflects an adjustment to the aforementioned electric surcharge revenues. All customer surcharges and related adjustments for the electric surcharge mechanism are completely offset by an equal amount of electric power costs recorded in operation and maintenance expense.

Current wording

Operating revenues for the Pipeline and Storage segment increased $9.7 million for the six months ended March 31, 2024 as compared with the six months ended March 31, 2023. The increase in operating revenues was primarily due to an increase in transportation revenues of $2.9 million, an increase in storage revenues of $3.9 million, and an increase in other revenues of $2.9 million. The increase in transportation and storage revenues was primarily attributable to an increase in Supply Corporation's transportation and storage rates effective February 1, 2024 in accordance with the aforementioned Supply Corporation rate case settlement and final true-up adjustment to a surcharge for pipeline safety and greenhouse gas costs. The increase in transportation revenues was partially offset by a decline in revenues associated with miscellaneous contract terminations and revisions. The increase in other revenues primarily reflects an adjustment to match electric surcharge revenues to electric power costs recorded in operation and maintenance expense.

Previous wording

Transportation volume for the quarter ended December 31, 2023 decreased by 25.7 Bcf from the prior year's quarter ended December 31, 2022 primarily due to a decrease in volume from certain contract expirations combined with a decline in volume from warmer weather. Volume fluctuations, other than those caused by the addition or termination of contracts, generally do not have a significant impact on revenues as a result of the straight fixed-variable rate design utilized by Supply Corporation and Empire.

Current wording

Transportation volume for the quarter ended March 31, 2024 decreased by 8.2 Bcf from the prior year's quarter ended March 31, 2023. For the six months ended March 31, 2024, transportation volume decreased by 33.9 Bcf from the prior year's six-month period ended March 31, 2023. The decrease in transportation volume for both the quarter and six months ended March 31, 2024 is primarily due to a decrease in volume from certain contract expirations combined with a decline in volume from warmer weather. Volume fluctuations, other than those caused by the addition or termination of contracts, generally do not have a significant impact on revenues as a result of the straight fixed-variable rate design utilized by Supply Corporation and Empire.

Previous wording

The Pipeline and Storage segment’s earnings for the quarter ended December 31, 2023 were $24.1 million, a decrease of $5.4 million when compared with earnings of $29.5 million for the quarter ended December 31, 2022. The decrease in earnings was primarily due to the earnings impact of lower operating revenues ($2.6 million), as discussed above, combined with an increase in operating expenses ($1.5 million), an increase in depreciation expense ($0.6 million) and an increase in interest expense ($0.6 million). The increase in operating expenses was primarily due to an increase in personnel costs, as well as higher power costs related to Empire's electric motor drive compressor station. This increase in electric power costs is offset by an equal increase in revenue, as discussed above. These increases were partially offset by lower pipeline integrity costs. The increase in depreciation expense was primarily due to certain system modernization projects going into service since the prior-year first quarter. The increase in interest expense is mainly due to an increase in intercompany short-term borrowings.

Current wording

The Pipeline and Storage segment’s earnings for the quarter ended March 31, 2024 were $30.7 million, an increase of $6.8 million when compared with earnings of $23.9 million for the quarter ended March 31, 2023. The increase in earnings was primarily due to the earnings impact of higher operating revenues ($10.2 million), as discussed above. This increase was partially offset by increases in operating expenses ($1.4 million), depreciation expense ($1.4 million) and interest expense ($1.0 million). The increase in operating expenses was primarily due to an increase in personnel costs, as well as higher power costs related to Empire's electric motor drive compressor station. This increase in electric power costs is offset by an equal increase in revenue. The increase in depreciation expense was primarily due to higher average depreciable plant in service compared to the prior year. The increase in interest expense is mainly due to an increase in intercompany short-term borrowings.

Previous wording

Operating revenues for the Gathering segment increased $6.2 million for the quarter ended December 31, 2023 as compared with the quarter ended December 31, 2022, which was driven primarily by a 16.2 Bcf increase in gathered volume. Gathered volume on the Trout Run and Tioga gathering systems increased 12.1 Bcf and 6.3 Bcf, respectively, partially offset by a decrease of 2.2 Bcf on the Clermont gathering system. The net increase in gathered volume can be attributed to an increase in gross natural gas production in the Appalachian region by producers connected to the aforementioned gathering systems.

Current wording

Operating revenues for the Gathering segment increased $7.0 million for the quarter ended March 31, 2024 as compared with the quarter ended March 31, 2023, which was driven primarily by a 16.2 Bcf increase in gathered volume. Gathered volume on the Trout Run and Tioga gathering systems increased 17.5 Bcf and 5.3 Bcf, respectively, partially offset by a decrease of 6.6 Bcf on the Clermont gathering system. The net increase in gathered volume can be attributed to an increase in gross natural gas production in the Appalachian region by producers connected to the aforementioned gathering systems.

Previous wording

The Gathering segment’s earnings for the quarter ended December 31, 2023 were $28.8 million, an increase of $4.1 million when compared with earnings of $24.7 million for the quarter ended December 31, 2022. The increase in earnings was primarily due to higher gathering revenues ($4.9 million) driven by the increase in gathered volume, as discussed above. This increase was partially offset by higher depreciation expense ($0.6 million). The increase in depreciation expense was largely due to additional plant in-service associated with the Tioga and Clermont gathering systems.

Current wording

The Gathering segment’s earnings for the quarter ended March 31, 2024 were $28.7 million, an increase of $4.4 million when compared with earnings of $24.3 million for the quarter ended March 31, 2023. The increase in earnings was primarily due to higher gathering revenues ($5.5 million) driven by the increase in gathered volume, as discussed above. This increase was partially offset by higher depreciation expense ($0.5 million) and higher income tax expense ($0.5 million). The increase in depreciation expense was largely due to additional plant in-service associated with the Tioga and Clermont gathering systems. The increase in income tax expense was due to higher state income taxes driven by higher pre-tax income.

Previous wording

Operating revenues for the Utility segment decreased $109.7 million for the quarter ended December 31, 2023 as compared with the quarter ended December 31, 2022. This decrease resulted from a $110.7 million decrease in retail gas sales revenue and a $0.3 million decrease in other revenues, partially offset by a $1.3 million increase in transportation revenue. The decrease in retail gas sales revenue reflects a decrease in the cost of gas sold (per Mcf) and a 2.4 Bcf decrease in throughput mainly due to warmer weather. It should be noted that under its purchased gas adjustment clauses in New York and Pennsylvania, Distribution Corporation's earnings are not impacted by fluctuations in gas costs. Purchased gas expense recorded on the consolidated income statement matches the revenues collected from customers. The decrease in retail gas sales revenue was partially offset by the impact of new base rates in Distribution Corporation's Pennsylvania jurisdiction pursuant to a settlement approved by the PaPUC on June 15, 2023. The increase in transportation revenue was also largely attributable to the impact of new base rates in Pennsylvania combined with an increase in revenues earned under the system modernization and system improvement tracker mechanisms in Distribution Corporation's New York jurisdiction, which allow for the recovery of investments in leak prone pipe replacement. Additional details regarding the base rate regulatory proceeding in Distribution Corporation's Pennsylvania jurisdiction can be found in the Rate Matters section below.

Current wording

Operating revenues for the Utility segment decreased $116.6 million for the quarter ended March 31, 2024 as compared with the quarter ended March 31, 2023. This decrease resulted from a $120.8 million decrease in retail gas sales revenue, which was partially offset by a $3.2 million increase in transportation revenue and a $1.0 million increase in other revenue. The decrease in retail gas sales revenue reflects a decrease in the cost of gas sold (per Mcf) combined with a 1.0 Bcf decrease in throughput mainly due to warmer weather. It should be noted that under its purchased gas adjustment clauses in New York and Pennsylvania, Distribution Corporation's earnings are not impacted by fluctuations in gas costs. Purchased gas expense recorded on the consolidated income statement matches the revenues collected from customers. The decrease in retail gas sales revenue was partially offset by the impact of new base rates in Distribution Corporation's Pennsylvania jurisdiction pursuant to a settlement approved by the PaPUC on June 15, 2023. Additional details regarding the base rate regulatory proceeding can be found in the Rate Matters section below. The increase in transportation revenue was also largely attributable to the impact of new base rates in Pennsylvania, as well as an increase in revenues earned under the system modernization and system improvement tracker mechanisms in Distribution Corporation's New York jurisdiction, which allow for the recovery of investments in leak prone pipe replacement. The increase in other revenue was mainly the result of a smaller estimated refund provision from the income tax benefits resulting from the 2017 Tax Reform Act ($2.2 million), partially offset by decreases in late payment charges billed to customers ($0.7 million) and capacity release revenues ($0.6 million).

Previous wording

The Utility segment’s earnings for the quarter ended December 31, 2023 were $26.6 million, an increase of $2.8 million compared to earnings of $23.8 million for the quarter ended December 31, 2022. The increase was primarily due to the impact of new base rates in the Utility's Pennsylvania jurisdiction ($6.8 million) and lower income tax expense ($1.8 million). The lower income tax expense was largely related to an increase in tax deductions related to certain repairs and maintenance expenditures recorded in the Utility's Pennsylvania jurisdiction as a result of recently updated IRS guidance. These factors were partially offset by higher operating expenses ($3.8 million), primarily due to higher personnel costs, and a decrease in customer usage, primarily due to warmer weather ($2.8 million).

Current wording

The Utility segment’s earnings for the quarter ended March 31, 2024 were $44.7 million, an increase of $13.0 million compared to earnings of $31.7 million for the quarter ended March 31, 2023. The increase was primarily due to the impact of new base rates in the Utility segment's Pennsylvania jurisdiction ($8.5 million), lower income tax expense ($2.4 million), and the impact of system modernization and system improvement trackers in New York ($1.8 million). The decrease in income tax expense was largely due to an increase in tax deductions related to certain repairs and maintenance expenditures recorded in the Utility's Pennsylvania jurisdiction as a result of updated IRS guidance published in 2023. The Utility segment's earnings also increased $4.5 million due to the impact of higher usage and weather, with current quarter earnings benefiting from the implementation of a weather normalization adjustment (WNA) in the Utility segment's Pennsylvania jurisdiction. These increases were partially offset by higher operating expenses ($2.3 million), primarily due to higher personnel costs, and a decrease in earnings from regulatory adjustments ($1.6 million).

Previous wording

The impact of weather variations on earnings in the Utility segment is mitigated by a weather normalization clause (WNC). Prior to October 2023, the impact of weather variations on earnings was mitigated by a WNC solely in the Utility segment’s New York rate jurisdiction. However, effective October 2023, the impact of weather variations on earnings is also mitigated by a WNC in the Utility segment’s Pennsylvania rate jurisdiction. The WNC, which covers the eight-month period from October through May, has had a stabilizing effect on earnings for the Utility segment. In addition, in periods of colder than normal weather, the WNC benefits the Utility segment's customers. For the quarter ended December 31, 2023, the WNC preserved earnings in the Utility segment’s New York rate jurisdiction of approximately $1.4 million and preserved earnings in the Utility segment’s Pennsylvania rate jurisdiction of approximately $0.4 million, as the weather was warmer than normal in both jurisdictions. For the quarter ended December 31, 2022, the WNC preserved earnings in the Utility segment’s New York rate jurisdiction of approximately $0.9 million, as the weather was warmer than normal.

Current wording

However, effective October 2023, the impact of weather variations on earnings is also mitigated by a WNA in the Utility segment’s Pennsylvania rate jurisdiction. The WNA, which covers the eight-month period from October through May, has had a stabilizing effect on earnings for the Utility segment. In addition, in periods of colder than normal weather, the WNA benefits the Utility segment's customers. For the quarter ended March 31, 2024, the WNA preserved earnings in the Utility segment’s New York rate jurisdiction of approximately $5.0 million and preserved earnings in the Utility segment’s Pennsylvania rate jurisdiction of approximately $3.6 million, as the weather was warmer than normal in both jurisdictions. For the quarter ended March 31, 2023, the WNA preserved earnings in the Utility segment’s New York jurisdiction of approximately $3.3 million, as the weather was warmer than normal.

Previous wording

Corporate and All Other operations had earnings of $1.1 million for the quarter ended December 31, 2023, an increase of $0.6 million when compared with earnings of $0.5 million for the quarter ended December 31, 2022. The increase was primarily attributable to changes in unrealized gains on investments in equity securities. During the quarter ended December 31, 2023, the Company recorded unrealized gains of $0.8 million. During the quarter ended December 31, 2022, the Company recorded unrealized gains of $0.2 million.

Current wording

Corporate and All Other operations had earnings of less than $0.1 million for the quarter ended March 31, 2024, essentially flat when compared with a net loss of less than $0.1 million for the quarter ended March 31, 2023. For the six months ended March 31, 2024, Corporate and All Other operations had earnings of $1.1 million, an increase of $0.6 million when compared with earnings of $0.5 million for the six months ended March 31, 2023. The increase in earnings for the six-month period was primarily attributable to changes in unrealized gains on investments in equity securities. During the six months ended March 31, 2024, the Company recorded unrealized gains of $1.4 million. During the six months ended March 31, 2023, the Company recorded unrealized gains of $1.0 million.

Previous wording

Net other income on the Consolidated Statements of Income was $3.7 million for the quarter ended December 31, 2023, compared to net other income of $6.3 million for the quarter ended December 31, 2022, for a decrease of $2.6 million. This decrease can be attributed primarily to a $4.2 million negative mark-to-market valuation adjustment for the contingent consideration received from the sale of Seneca's California assets in June 2022 (compared to a gain of $0.2 million for the quarter ended December 31, 2022), as well as lower interest income of $1.4 million. The decrease in interest income was mainly due to lower interest income from investments and a decrease in interest from hedging collateral for derivative financial instruments. These decreases were partially offset by $2.0 million of business interruption insurance proceeds that Seneca received during the current quarter related to a pipeline outage impacting Seneca's ability to market its gas, along with changes in realized and unrealized gains and losses on investments in equity securities that increased other income by $0.9 million.

Current wording

Net other income on the Consolidated Statement of Income was $9.8 million for the six months ended March 31, 2024, compared to net other income of $9.2 million for the six months ended March 31, 2023, for an increase of $0.6 million. This increase was primarily due to $2.0 million of business interruption insurance proceeds that Seneca received during the current fiscal year related to a pipeline outage impacting Seneca's ability to market its gas, along with an increase in the cash surrender value of life insurance policies of $1.0 million. There was also a $0.6 million increase in non-service pension and post-retirement benefit income year over year and an increase of $0.6 million in allowance for funds used during construction. These increases were partially offset by a decrease in interest income of $2.4 million that was mainly due to lower interest income from investments and a decrease in interest from hedging collateral for derivative financial instruments as well as a $3.7 million loss on the revaluation of the contingent consideration received from the sale of Seneca's California assets in June 2022 (compared to a loss of $2.3 million for the six months ended March 31, 2023).

Previous wording

Interest expense on long-term debt on the Consolidated Statement of Income decreased $1.1 million for the quarter ended December 31, 2023 as compared to the quarter ended December 31, 2022. This was primarily due to lower average long-term debt balances. In November 2022 and March 2023, the Company redeemed 3.75% notes, which in the aggregate amounted to $500.0 million, and in March 2023, the Company also redeemed $49.0 million of 7.395% notes. These redemptions were partially offset by the issuance of $300.0 million of 5.50% notes in May 2023.

Current wording

Interest expense on long-term debt on the Consolidated Statement of Income increased $0.9 million for the quarter ended March 31, 2024 as compared to the quarter ended March 31, 2023. This was primarily due to a higher weighted average interest rate on long-term debt. For the six months ended March 31, 2024, interest expense on long-term debt decreased $0.3 million as compared with the six months ended March 31, 2023. This decrease is primarily due to an increase in capitalized interest (mostly in Midstream Company) as a result of higher capital expenditures. This was partially offset by a higher weighted average interest rate on long-term debt. In November 2022 and March 2023, the Company redeemed 3.75% notes, which in the aggregate amounted to $500.0 million, and in March 2023, the Company also redeemed $49.0 million of 7.395% notes. These redemptions were partially offset by the issuance of $300.0 million of 5.50% notes in May 2023.

Previous wording

The Company’s primary sources of cash during the three-month period ended December 31, 2023 consisted of cash provided by operating activities and net proceeds from short-term borrowings. The Company’s primary sources of cash during the three-month period ended December 31, 2022 consisted of cash provided by operating activities, net proceeds from short-term borrowings and proceeds from the sale of a fixed income mutual fund held in a grantor trust.

Current wording

The Company’s primary source of cash during the six-month period ended March 31, 2024 consisted of cash provided by operating activities. The Company’s primary sources of cash during the six-month period ended March 31, 2023 consisted of cash provided by operating activities, proceeds from short-term borrowings and proceeds from the sale of a fixed income mutual fund held in a grantor trust.

Previous wording

The Company expects to have adequate amounts of cash available to meet both its short-term and long-term cash requirements for at least the next twelve months and for the foreseeable future thereafter. During the remainder of 2024, cash provided by operating activities is forecasted to be lower than 2023, but is expected to be more than enough to fund the Company's capital expenditures. Looking forward to 2025, based on current commodity prices, cash provided by operating activities is again expected to exceed capital expenditures. The Company also has two long-term debt maturities in 2025, totaling $500.0 million, which the Company anticipates funding with cash on hand as well as short-term and long-term borrowings. These cash flow projections do not reflect the impact of acquisitions or divestitures that may arise in the future.

Current wording

The Company expects to have adequate amounts of cash available to meet both its short-term and long-term cash requirements for at least the next twelve months and for the foreseeable future thereafter. During the remainder of 2024, the Company expects to use cash provided by operating activities, as well as net proceeds from short-term borrowings, to fund the Company's capital expenditures. Looking forward to 2025, based on current commodity prices, cash provided by operating activities is expected to exceed capital expenditures. The Company also has two long-term debt maturities in 2025, totaling $500.0 million, which the Company anticipates funding with cash on hand as well as short-term and long-term borrowings. These cash flow projections do not reflect the impact of acquisitions or divestitures that may arise in the future.

Previous wording

Cash provided by operating activities in the Utility and Pipeline and Storage segments may vary substantially from period to period because of the impact of rate cases. In the Utility segment, supplier refunds, over- or under-recovered purchased gas costs and weather may also significantly impact cash flow. The impact of weather on cash flow is tempered in the Pipeline and Storage segment by the straight fixed-variable rate design used by Supply Corporation and Empire. Prior to October 2023, the weather impact on cash flow in the Utility segment was mitigated by a WNC solely in its New York rate jurisdiction. However, effective October 2023, the weather impact on cash flow in the Utility segment is also mitigated by a WNC in its Pennsylvania rate jurisdiction. The Pennsylvania rate jurisdiction WNC resulted from the PaPUC's approved settlement on June 15, 2023, further discussed in the Rate Matters section below.

Current wording

Cash provided by operating activities in the Utility and Pipeline and Storage segments may vary substantially from period to period because of the impact of rate cases. In the Utility segment, supplier refunds, over- or under-recovered purchased gas costs and weather may also significantly impact cash flow. The impact of weather on cash flow is tempered in the Pipeline and Storage segment by the straight fixed-variable rate design used by Supply Corporation and Empire. Prior to October 2023, the weather impact on cash flow in the Utility segment was mitigated by a WNA solely in its New York rate jurisdiction. However, effective October 2023, the weather impact on cash flow in the Utility segment is also mitigated by a WNA in its Pennsylvania rate jurisdiction. The Pennsylvania rate jurisdiction WNA resulted from the PaPUC's approved settlement on June 15, 2023, further discussed in the Rate Matters section below.

Previous wording

Net cash provided by operating activities totaled $270.9 million for the three months ended December 31, 2023, a decrease of $56.4 million compared with $327.3 million provided by operating activities for the three months ended December 31, 2022. The decrease in cash provided by operating activities primarily reflects lower cash provided by operating activities in the Exploration and Production segment, partially offset by higher cash provided by operating activities in the Utility segment. The decrease in the Exploration and Production segment is primarily due to lower cash receipts from lower realized natural gas prices. The increase in the Utility segment is primarily due to the timing of gas cost recovery and the timing of customer receivable balance collections.

Current wording

Net cash provided by operating activities totaled $586.3 million for the six months ended March 31, 2024, a decrease of $124.9 million compared with $711.2 million provided by operating activities for the six months ended March 31, 2023. The decrease in cash provided by operating activities primarily reflects lower cash provided by operating activities in the Exploration and Production segment due to lower cash receipts from lower realized natural gas prices for this segment's natural gas production.

Previous wording

The Company’s expenditures for long-lived assets totaled $235.7 million during the three months ended December 31, 2023 and $223.5 million during the three months ended December 31, 2022. The table below presents these expenditures:

Current wording

The Company’s expenditures for long-lived assets totaled $435.7 million during the six months ended March 31, 2024 and $440.6 million during the six months ended March 31, 2023. The table below presents these expenditures:

Previous wording

(1)At December 31, 2023, capital expenditures for the Exploration and Production segment, the Pipeline and Storage segment, the Gathering segment and the Utility segment include $74.9 million, $5.5 million, $11.1 million and $6.4 million, respectively, of non-cash capital expenditures. At September 30, 2023, capital expenditures for the Exploration and Production segment, the Pipeline and Storage segment, the Gathering segment and the Utility segment included $43.2 million, $31.8 million, $20.6 million and $13.6 million, respectively, of non-cash capital expenditures.

Current wording

(1)At March 31, 2024, capital expenditures for the Exploration and Production segment, the Pipeline and Storage segment, the Gathering segment and the Utility segment included $44.4 million, $5.0 million, $5.5 million and $8.0 million, respectively, of non-cash capital expenditures. At September 30, 2023, capital expenditures for the Exploration and Production segment, the Pipeline and Storage segment, the Gathering segment and the Utility segment included $43.2 million, $31.8 million, $20.6 million and $13.6 million, respectively, of non-cash capital expenditures.

Previous wording

(2)At December 31, 2022, capital expenditures for the Exploration and Production segment, the Pipeline and Storage segment, the Gathering segment and the Utility segment included $102.9 million, $2.1 million, $1.1 million and $4.2 million, respectively, of non-cash capital expenditures. At September 30, 2022, capital expenditures for the Exploration and Production segment, the Pipeline and Storage segment, the Gathering segment and the Utility segment included $83.0 million, $15.2 million, $10.7 million and $11.4 million, respectively, of non-cash capital expenditures.

Current wording

(2)At March 31, 2023, capital expenditures for the Exploration and Production segment, the Pipeline and Storage segment, the Gathering segment and the Utility segment included $56.1 million, $2.2 million, $2.0 million and $4.2 million, respectively, of non-cash capital expenditures. At September 30, 2022, capital expenditures for the Exploration and Production segment, the Pipeline and Storage segment, the Gathering segment and the Utility segment included $83.0 million, $15.2 million, $10.7 million and $11.4 million, respectively, of non-cash capital expenditures.

Previous wording

The Exploration and Production segment capital expenditures for the three months ended December 31, 2023 were primarily well drilling and completion expenditures in the Appalachian region, and included $37.5 million in the Marcellus Shale area and $120.2 million in the Utica Shale area. These amounts included approximately $106.0 million spent to develop proved undeveloped reserves.

Current wording

The Exploration and Production segment capital expenditures for the six months ended March 31, 2024 were primarily well drilling and completion expenditures in the Appalachian region, and included $52.0 million in the Marcellus Shale area and $224.9 million in the Utica Shale area. These amounts included approximately $185.8 million spent to develop proved undeveloped reserves.

Previous wording

The Exploration and Production segment capital expenditures for the three months ended December 31, 2022 were primarily well drilling and completion expenditures in the Appalachian region, and included $60.9 million in the Marcellus Shale area and $104.6 million in the Utica Shale area. These amounts included approximately $110.5 million spent to develop proved undeveloped reserves.

Current wording

The Exploration and Production segment capital expenditures for the six months ended March 31, 2023 were primarily well drilling and completion expenditures in the Appalachian region, and included $143.2 million in the Marcellus Shale area and $172.4 million in the Utica Shale area. These amounts included approximately $208.2 million spent to develop proved undeveloped reserves.

Previous wording

The Pipeline and Storage segment capital expenditures for the three months ended December 31, 2023 and December 31, 2022 were primarily for additions, improvements and replacements to this segment's transmission and gas storage systems, which included system modernization expenditures that enhance the reliability and safety of the systems and reduce emissions.

Current wording

The Pipeline and Storage segment capital expenditures for the six months ended March 31, 2024 and March 31, 2023 were primarily for additions, improvements and replacements to this segment's transmission and gas storage systems, which included system modernization expenditures that enhance the reliability and safety of the systems and reduce emissions.

Previous wording

Supply Corporation concluded an Open Season on August 25, 2023, and based on post-open season discussions, has designed a project that would allow for the transportation of 190,000 Dth per day of shale gas supplies from a new interconnection in northwest Tioga County, Pennsylvania to an existing Supply Corporation interconnection with Tennessee Gas Pipeline Company, LLC at Ellisburg and a new virtual delivery point into an existing Transcontinental Gas Pipe Line Company, LLC’s (“Transco”) capacity lease, providing access to Mid-Atlantic markets (“Tioga Pathway Project”). The Tioga Pathway Project involves the construction of approximately 19 miles of new pipeline and the replacement of approximately four miles of existing pipeline on the Supply Corporation system. Supply Corporation has executed a Precedent Agreement with Seneca for 190,000 Dth per day of transportation capacity. Supply Corporation expects to file a Section 7(c) application with the FERC in the second half of calendar 2024. The Tioga Pathway Project has a projected in-service date of late calendar year 2026 and an estimated capital cost of approximately $90 million. As of December 31, 2023, $0.2 million has been spent to study this project, all of which has been included in Deferred Charges on the Consolidated Balance Sheet at December 31, 2023.

Current wording

Supply Corporation concluded an Open Season on August 25, 2023, and based on post-open season discussions, has designed a project that would allow for the transportation of 190,000 Dth per day of shale gas supplies from a new interconnection in northwest Tioga County, Pennsylvania to an existing Supply Corporation interconnection with Tennessee Gas Pipeline Company, LLC at Ellisburg and a new virtual delivery point into an existing Transcontinental Gas Pipe Line Company, LLC (“Transco”) capacity lease, providing access to Mid-Atlantic markets (“Tioga Pathway Project”). The Tioga Pathway Project involves the construction of approximately 19 miles of new pipeline and the replacement of approximately four miles of existing pipeline on the Supply Corporation system. Supply Corporation has executed a Precedent Agreement with Seneca for 190,000 Dth per day of transportation capacity. Supply Corporation expects to file a Section 7(c) application with the FERC in late summer 2024. The Tioga Pathway Project has a projected in-service date of late calendar year 2026 and an estimated capital cost of approximately $90 million. As of March 31, 2024, approximately $1.0 million has been spent to study this project, all of which has been included in Deferred Charges on the Consolidated Balance Sheet at March 31, 2024.

Previous wording

The majority of the Gathering segment capital expenditures for the three months ended December 31, 2023 included expenditures related to the continued expansion of Midstream Company's Tioga and Clermont gathering systems. Midstream Company spent $15.7 million and $3.2 million, respectively, during the three months ended December 31, 2023 on the development of the Tioga and Clermont gathering systems. These expenditures were largely attributable to the installation of new in-field gathering pipelines related to bringing new development online, as well as the continued development of centralized station facilities, including increased dehydration capacity and compression horsepower.

Current wording

The majority of the Gathering segment capital expenditures for the six months ended March 31, 2024 included expenditures related to the continued expansion of Midstream Company's Tioga and Clermont gathering systems. Midstream Company spent $31.2 million and $7.0 million, respectively, during the six months ended March 31, 2024 on the development of the Tioga and Clermont gathering systems. These expenditures were largely attributable to the installation of new in-field gathering pipelines related to bringing new development online, as well as the continued development of centralized station facilities, including increased dehydration capacity and compression horsepower.

Previous wording

The majority of the Gathering segment capital expenditures for the three months ended December 31, 2022 included expenditures related to the continued expansion of Midstream Company's Clermont and Tioga gathering systems. Midstream Company spent $5.7 million and $5.2 million, respectively, during the three months ended December 31, 2022 on the development of the Clermont and Tioga gathering systems. These expenditures were largely attributable to the installation of new in-field gathering pipelines in the Clermont gathering system. In the Tioga gathering system, expenditures were largely attributable to the expansion of on-pad and centralized station facilities related to bringing new development online.

Current wording

The majority of the Gathering segment capital expenditures for the six months ended March 31, 2023 included expenditures related to the continued expansion of Midstream Company's Clermont, Tioga and Trout Run gathering systems. Midstream Company spent $10.2 million, $16.8 million and $3.8 million, respectively, during the six months ended March 31, 2023 on the development of the Clermont, Tioga and Trout Run gathering systems. These expenditures were largely attributable to the installation of new in-field gathering pipelines, as well as the continued development of centralized station facilities, including increased compression horsepower, at the Clermont, Trout Run, and Tioga gathering systems. In the Tioga gathering system, expenditures were also largely attributable to the expansion of on-pad and centralized station facilities related to bringing new development online.

Previous wording

The majority of the Utility segment capital expenditures for the three months ended December 31, 2023 and December 31, 2022 were made for main and service line improvements and replacements that enhance the reliability and safety of the system and reduce emissions. Expenditures were also made for main extensions.

Current wording

The majority of the Utility segment capital expenditures for the six months ended March 31, 2024 and March 31, 2023 were made for main and service line improvements and replacements that enhance the reliability and safety of the system and reduce emissions. Expenditures were also made for main extensions.

Previous wording

The Company estimates that the Utility segment capital expenditures are expected to be approximately $165 million for fiscal 2024, which is approximately $25 million higher than the estimate previously reported. This increase is due to the estimated impact of New York State’s recently enacted Roadway Excavation Quality Assurance Act. This Act requires contractors to pay state published prevailing wages on projects that require a permit to operate in a public right of way, which is expected to increase contractor charges to the Company.

Current wording

The Company estimates that the Utility segment capital expenditures are expected to be approximately $165 million for fiscal 2024, which is approximately $25 million higher than the estimate previously reported in the 2023 Form 10-K. This increase is due to the estimated impact of New York State’s recently enacted Roadway Excavation Quality Assurance Act. This Act requires contractors to pay state published prevailing wages on projects that require a permit to operate in a public right of way, which is expected to increase contractor charges to the Company.

Previous wording

During the quarter ended December 31, 2023 and fiscal 2023, the Company has been financing capital expenditures with cash from operations and short-term debt. Going forward, the Company expects to use cash on hand, cash from operations and short-term and long-term borrowings, as needed, to finance capital expenditures. The level of short-term and/or long-term borrowings will depend upon the amount of cash provided by operations, which, in turn, will likely be most impacted by natural gas production and the associated commodity price realizations in the Exploration and Production segment. It will also likely depend on the timing of gas cost recovery in the Utility segment.

Current wording

During the six months ended March 31, 2024 and fiscal 2023, the Company has been financing capital expenditures with cash from operations and short-term debt. Going forward, the Company expects to use cash on hand, cash from operations and short-term and long-term borrowings, as needed, to finance capital expenditures. The level of short-term and/or long-term borrowings will depend upon the amount of cash provided by operations, which, in turn, will likely be most impacted by natural gas production and the associated commodity price realizations in the Exploration and Production segment. It will also likely depend on the timing of gas cost recovery in the Utility segment.

Previous wording

Consolidated short-term debt increased $12.5 million, to a total of $300.0 million, when comparing the balance sheet at December 31, 2023 to the balance sheet at September 30, 2023. The maximum amount of short-term debt outstanding during the three months ended December 31, 2023 was $402.9 million. In addition to cash provided by operating activities, the Company continues to consider short-term debt (consisting of short-term notes payable to banks and commercial paper) an important source of cash for temporarily financing items such as capital expenditures, asset purchases, gas-in-storage inventory, unrecovered purchased gas costs, margin calls on derivative financial instruments, other working capital needs and repayment of long-term debt. Fluctuations in these items can have a significant impact on the amount and timing of short-term debt. As of December 31, 2023, the Company had outstanding commercial paper of $300.0 million. The Company did not have any short-term notes payable to banks as of December 31, 2023.

Current wording

Consolidated short-term debt decreased $8.6 million, to a total of $278.9 million, when comparing the balance sheet at March 31, 2024 to the balance sheet at September 30, 2023. The maximum amount of short-term debt outstanding during the six months ended March 31, 2024 was $402.9 million. In addition to cash provided by operating activities, the Company continues to consider short-term debt (consisting of short-term notes payable to banks and commercial paper) an important source of cash for temporarily financing items such as capital expenditures, asset purchases, gas-in-storage inventory, unrecovered purchased gas costs, margin calls on derivative financial instruments, repurchases of stock, other working capital needs and repayment of long-term debt. Fluctuations in these items can have a significant impact on the amount and timing of short-term debt. As of March 31, 2024, the Company did not have any short-term notes payable to banks and had outstanding commercial paper of $278.9 million.

Previous wording

On February 28, 2022, the Company entered into a Credit Agreement (as amended from time to time, the "Credit Agreement") with a syndicate of twelve banks. The Credit Agreement replaced the previous Fourth Amended and Restated Credit Agreement and a previous 364-Day Credit Agreement. The Credit Agreement provides a $1.0 billion unsecured committed revolving credit facility with a maturity date of February 26, 2027. On February 7, 2024, the Company and certain lenders under the Credit Agreement consented to an extension of the maturity date of the Credit Agreement from February 26, 2027 to February 25, 2028. As a result, the Company has aggregate commitments available under the Credit Agreement of $1.0 billion before February 26, 2027, and $940 million in aggregate commitments available on and after February 26, 2027 to February 25, 2028.

Current wording

On February 28, 2022, the Company entered into a Credit Agreement (as amended from time to time, the "Credit Agreement") with a syndicate of twelve banks. The Credit Agreement replaced the previous Fourth Amended and Restated Credit Agreement and a previous 364-Day Credit Agreement. The Credit Agreement provides a $1.0 billion unsecured committed revolving credit facility with a maturity date of February 26, 2027. Effective February 7, 2024, certain lenders under the Credit Agreement consented to an extension of the maturity date of the Credit Agreement from February 26, 2027 to February 25, 2028. As a result, the Company has aggregate commitments available under the Credit Agreement of $1.0 billion before February 26, 2027, and $940.0 million in aggregate commitments available on and after February 26, 2027 to February 25, 2028.

Previous wording

The Company also has uncommitted lines of credit with financial institutions for general corporate purposes. Borrowings under these uncommitted lines of credit would be made at competitive market rates. The uncommitted credit lines are revocable at the option of the financial institution and are reviewed on an annual basis. The Company anticipates that its uncommitted lines of credit generally will be renewed or substantially replaced by similar lines. Other financial institutions may also provide the Company with uncommitted or discretionary lines of credit in the future.

Current wording

The total amount available to be issued under the Company’s commercial paper program is $500.0 million. The commercial paper program is backed by the Credit Agreement. The Company also has uncommitted lines of credit with financial institutions for general corporate purposes. Borrowings under these uncommitted lines of credit would be made at competitive market rates. The uncommitted credit lines are revocable at the option of the financial institution and are reviewed on an annual basis. The Company anticipates that its uncommitted lines of credit generally will be renewed or substantially replaced by similar lines. Other financial institutions may also provide the Company with uncommitted or discretionary lines of credit in the future.

Previous wording

The total amount available to be issued under the Company’s commercial paper program is $500.0 million. The commercial paper program is backed by the Credit Agreement, which provides that the Company's debt to capitalization ratio will not exceed 0.65 at the last day of any fiscal quarter. For purposes of calculating the debt to capitalization ratio, the Company's total capitalization will be increased by adding back 50% of the aggregate after-tax amount of non-cash charges directly arising from any ceiling test impairment occurring on or after July 1, 2018, not to exceed $400 million. Since July 1, 2018, the Company recorded non-cash, after-tax ceiling test impairments totaling $381.4 million. As a result, at December 31, 2023, $190.7 million was added back to the Company's total capitalization for purposes of the calculation under the Credit Agreement. On May 3, 2022, the Company entered into Amendment No. 1 to the Credit Agreement with the same twelve banks under the initial Credit Agreement. The amendment further modified the definition of consolidated capitalization, for purposes of calculating the debt to capitalization ratio under the Credit Agreement, to exclude, beginning with the quarter ended June 30, 2022, all unrealized gains or losses on commodity-related derivative financial instruments and up to $10 million in unrealized gains or losses on other derivative financial instruments included in Accumulated Other Comprehensive Income (Loss) within Total Comprehensive Shareholders' Equity on the Company's consolidated balance sheet. Under the Credit Agreement, such unrealized losses will not negatively affect the calculation of the debt to capitalization ratio, and such unrealized gains will not positively affect the calculation. At December 31, 2023, the Company’s debt to capitalization ratio, as calculated under the Credit Agreement was 0.45. The constraints specified in the Credit Agreement would have permitted an additional $3.32 billion in short-term and/or long-term debt to be outstanding at December 31, 2023 before the Company’s debt to capitalization ratio exceeded 0.65.

Current wording

Both the Credit Agreement and Term Loan Agreement require that the Company's debt to capitalization ratio will not exceed 0.65 at the last day of any fiscal quarter. For purposes of calculating the debt to capitalization ratio, the Company's total capitalization will be increased by adding back 50% of the aggregate after-tax amount of non-cash charges directly arising from any ceiling test impairment occurring on or after July 1, 2018, not to exceed $400 million. Since July 1, 2018, the Company recorded non-cash, after-tax ceiling test impairments totaling $381.4 million. As a result, at March 31, 2024, $190.7 million was added back to the Company's total capitalization for purposes of the calculation under these agreements. In addition, for purposes of calculating the debt to capitalization ratio under these agreements, all unrealized gains or losses on commodity-related derivative financial instruments and up to $10 million in unrealized gains or losses on other derivative financial instruments included in Accumulated Other Comprehensive Income (Loss) within Total Comprehensive Shareholders' Equity on the Company's consolidated balance sheet. Under the agreements, such unrealized losses will not negatively affect the calculation of the debt to capitalization ratio, and such unrealized gains will not positively affect the calculation. At March 31, 2024, the Company’s debt to capitalization ratio, as calculated under the agreements was 0.44. The constraints specified in the agreements would have permitted an additional $3.57 billion in short-term and/or long-term debt to be outstanding at March 31, 2024 before the Company’s debt to capitalization ratio exceeded 0.65.

Previous wording

The Credit Agreement contains a cross-default provision whereby the failure by the Company or its significant subsidiaries to make payments under other borrowing arrangements, or the occurrence of certain events affecting those other borrowing arrangements, could trigger an obligation to repay any amounts outstanding under the Credit Agreement. In particular, a repayment obligation could be triggered if (i) the Company or any of its significant subsidiaries fails to make a payment when due of any principal or interest on any other indebtedness aggregating $40.0 million or more or (ii) an event occurs that causes, or would permit the holders of any other indebtedness aggregating $40.0 million or more to cause, such indebtedness to become due prior to its stated maturity.

Current wording

The Credit Agreement and the Term Loan Agreement each contain a cross-default provision whereby the failure by the Company or its significant subsidiaries to make payments under other borrowing arrangements, or the occurrence of certain events affecting those other borrowing arrangements, could trigger an obligation to repay any amounts outstanding under the Credit Agreement or Term Loan Agreement, as applicable. In particular, a repayment obligation could be triggered if (i) the Company or any of its significant subsidiaries fails to make a payment when due of any principal or interest on any other indebtedness aggregating $40.0 million or more or (ii) an event occurs that causes, or would permit the holders of any other indebtedness aggregating $40.0 million or more to cause, such indebtedness to become due prior to its stated maturity.