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, is an expansion and modernization 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. Supply Corporation filed a Section 7 (c) application with FERC for the project on August 21, 2024 and on February 13, 2025, the FERC issued the Environmental Assessment for the project. The Tioga Pathway Project has a target in-service date in late calendar 2026 and a preliminary cost estimate of approximately $101 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, is an expansion and modernization 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. On May 5, 2025, FERC issued the Section 7(b)/7(c) certificate for the project. Construction on the Tioga Pathway Project is expected to commence in early calendar 2026. This project has a target in-service date in late calendar 2026 and a preliminary cost estimate of approximately $101 million.

Previous wording

From a rate perspective, Distribution Corporation, in its New York jurisdiction, reached a settlement with the parties to its rate case proceeding. On December 19, 2024, the NYPSC issued an order approving the settlement. The settlement, effective January 1, 2025, establishes a three-year rate plan that reflects a return on equity of 9.7% and authorizes a revenue requirement increase of $57.3 million in fiscal 2025, an additional revenue requirement increase of $15.8 million in fiscal 2026, and an additional revenue requirement increase of $12.7 million in fiscal 2027. The settlement also includes standard make-whole language allowing full recovery of revenues that would have been billed at the new rates between October 1, 2024 and December 31, 2024. In addition, on March 17, 2025, FERC approved an amendment to Empire's 2019 rate case settlement. This settlement amendment is estimated to decrease Empire's revenues on a yearly basis by approximately $0.5 million. For further discussion of Distribution Corporation and Empire rate matters, refer to the Rate Matters section below.

Current wording

From a rate perspective, Distribution Corporation, in its New York jurisdiction, reached a settlement with the parties to its rate case proceeding. On December 19, 2024, the NYPSC issued an order approving the settlement. The settlement, effective January 1, 2025, established a three-year rate plan that reflects a return on equity of 9.7% and authorizes a revenue requirement increase of $57.3 million in fiscal 2025, an additional revenue requirement increase of $15.8 million in fiscal 2026, and an additional revenue requirement increase of $12.7 million in fiscal 2027. The settlement also included standard make-whole language allowing full recovery of revenues that would have been billed at the new rates between October 1, 2024 and December 31, 2024. In addition, on March 17, 2025, FERC approved an amendment to Empire's 2019 rate case settlement. This settlement amendment is estimated to decrease Empire's revenues on a yearly basis by approximately $0.5 million. For further discussion of these and other rate matters, refer to the Rate Matters section below.

Previous wording

As discussed in the following Critical Accounting Estimates section, the Company uses the full cost method of accounting for determining the book value of its exploration and production properties and that book value is subject to a quarterly ceiling test. In addition to the non-cash impairment charges under the ceiling test that the Company recorded during fiscal 2024, the Company recorded a non-cash impairment charge under the ceiling test during the quarter ended December 31, 2024 of $108.3 million ($79.1 million after-tax). At March 31, 2025, the ceiling exceeded the book value of the exploration and production properties, and thus, did not result in an impairment charge for the quarter ended March 31, 2025. Please refer to the Critical Accounting Estimates section below for more details on this matter and a sensitivity analysis concerning commodity price changes.

Current wording

As discussed in the following Critical Accounting Estimates section, the Company uses the full cost method of accounting for determining the book value of its exploration and production properties and that book value is subject to a quarterly ceiling test. In addition to the non-cash impairment charges under the ceiling test that the Company recorded during fiscal 2024, the Company recorded a non-cash impairment charge under the ceiling test during the quarter ended December 31, 2024 of $108.3 million ($79.1 million after-tax). At both June 30, 2025 and March 31, 2025, the ceiling exceeded the book value of the exploration and production properties, and thus, did not result in an impairment charge in either the quarter ended June 30, 2025 or the quarter ended March 31, 2025. Please refer to the Critical Accounting Estimates section below for more details on this matter and a sensitivity analysis concerning commodity price changes.

Previous wording

From a financing perspective, on February 19, 2025, the Company issued $500.0 million of 5.50% notes due March 15, 2030 and $500.0 million of 5.95% notes due March 15, 2035. The proceeds of these debt issuances were used for general corporate purposes, including the March 2025 redemptions of $450.0 million of the Company's 5.20% notes that were scheduled to mature in July 2025 and $500.0 million of the Company's 5.50% notes that were scheduled to mature in January 2026. The Company redeemed those notes for $450.8 million and $503.3 million, respectively, plus accrued interest. The remaining proceeds of the debt issuances were used to repay a portion of short-term borrowings the Company incurred to fund a trust for the benefit of holders of the 7.38% notes outstanding under the Company's 1974 indenture, as discussed below. For further details of these matters, refer to the Capital Resources and Liquidity section below.

Current wording

From a financing perspective, on February 19, 2025, the Company issued $500.0 million of 5.50% notes due March 15, 2030 and $500.0 million of 5.95% notes due March 15, 2035. The proceeds of these debt issuances were used for general corporate purposes, including the March 2025 redemptions of $450.0 million of the Company's 5.20% notes that were scheduled to mature in July 2025 and $500.0 million of the Company's 5.50% notes that were scheduled to mature in January 2026. The Company redeemed those notes for $450.8 million and $503.3 million, respectively, plus accrued interest. The remaining proceeds of the debt issuances were used to repay a portion of short-term borrowings the Company incurred to fund a trust for the benefit of holders of $50.0 million of 7.38% notes under the Company's 1974 indenture prior to the June 13, 2025 maturity date of these notes. Placing these funds in trust enabled the Company to cancel and discharge the 1974 indenture. This relieved the Company from its obligations to comply with the 1974 indenture’s covenants. The funds were paid out of the trust on June 13, 2025 for the redemption of the $50.0 million of 7.38% notes, leaving no notes outstanding under the 1974 indenture. For details of these matters, refer to the Capital Resources and Liquidity section below.

Previous wording

The Company is a party to a syndicated Credit Agreement that provides a $1.0 billion unsecured committed revolving credit facility. In January 2025, the Company and the eleven banks in the syndicate of banks under the Credit Agreement consented to a second one-year extension on the maturity date of the Credit Agreement, such that the Company has aggregate commitments available under the Credit Agreement in the full amount of $1.0 billion through February 23, 2029.

Current wording

The Company is a party to a syndicated Credit Agreement that provides a $1.0 billion unsecured committed revolving credit facility. In January 2025, the Company and the syndicate of banks under the Credit Agreement consented to a second one-year extension on the maturity date of the Credit Agreement, such that the Company has aggregate commitments available in the full amount of $1.0 billion through February 23, 2029. In May 2025, the total lenders under the Credit Agreement increased to twelve as a new lender joined the syndicate, assuming a portion of an existing lender's commitment.

Previous wording

The Company began repurchasing outstanding shares of its common stock during the quarter ended March 31, 2024 under a share repurchase program authorized by the Company’s Board of Directors. The program authorizes the Company to repurchase up to an aggregate amount of $200 million of its outstanding common stock in the open market or through privately negotiated transactions. Given the recent macroeconomic uncertainty, as well as increased volatility in the natural gas market, the Company has slowed its pace of repurchases. During the six months ended March 31, 2025, the Company executed transactions to repurchase 774,768 shares at an average price of $63.74 per share, for a total cost of $49.8 million (including broker fees and excise taxes). As of March 31, 2025, the Company has repurchased 1,921,027 shares under the share repurchase program at an average price of $59.32, for a total cost of $115.0 million (including broker fees and excise taxes). These matters are discussed further in the Capital Resources and Liquidity section that follows.

Current wording

The Company began repurchasing outstanding shares of its common stock during the quarter ended March 31, 2024 under a share repurchase program authorized by the Company’s Board of Directors. The program authorizes the Company to repurchase up to an aggregate amount of $200 million of its outstanding common stock in the open market or through privately negotiated transactions. In April 2025, repurchases under the program were temporarily paused. As a result, the Company expects completion of the program will extend into calendar 2026. The timing and amount of future repurchases under this program will depend on a number of factors, including but not limited to stock price, market conditions, applicable securities laws (including SEC Rule 10b-18), corporate and regulatory requirements, and capital and liquidity needs. During the nine months ended June 30, 2025, the Company executed transactions to repurchase 828,720 shares at an average price of $64.37 per share, for a total cost of $53.8 million (including broker fees and excise taxes). As of June 30, 2025, the Company has repurchased 1,974,979 shares under the share repurchase program at an average price of $59.70, for a total cost of $119.0 million (including broker fees and excise taxes). The program has no fixed expiration date. These matters are discussed further in the Capital Resources and Liquidity section that follows.

Previous wording

The Company expects to use cash on hand, cash from operations, and short-term and long-term borrowings, as needed, to meet its financing needs for the remainder of fiscal 2025. The Company continues to evaluate these financing needs and options to meet them. Given the current economic conditions, which include continued inflationary pressures, volatile interest rates and the ongoing impacts of federal policy changes, the cost and/or availability of capital may be impacted, but the Company continues to expect to meet its financing needs.

Current wording

The Company expects to use cash on hand, cash from operations, and short-term and/or long-term borrowings, as needed, to meet its financing needs for the remainder of fiscal 2025. The Company continues to evaluate these financing needs and options to meet them. Given the current economic conditions, which include continued inflationary pressures, volatile interest rates and the ongoing impacts of federal policy changes, the cost and/or availability of capital may be impacted, but the Company continues to expect to meet its financing needs.

Previous wording

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 exploration and production properties, with natural gas properties in the Appalachian Region being the primary component after the fiscal 2022 sale of the Company's California exploration and production 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 exploration and production reserves based on an unweighted arithmetic average of first day of the month commodity 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 exploration and production 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 exploration and production properties exceeds the ceiling, a non-cash impairment charge must be recorded to reduce the book value of such properties to the calculated ceiling. At March 31, 2025, the ceiling exceeded the book value of the exploration and production properties by approximately $395.5 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, 2025, based on the quoted Henry Hub spot price for natural gas, was $2.44 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, 2025. 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, 2025 in the ceiling test calculation, the ceiling would have exceeded the book value of the Company's exploration and production properties by approximately $16.4 million (after-tax), which would not 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

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 exploration and production properties, with natural gas properties in the Appalachian Region being the primary component after the fiscal 2022 sale of the Company's California exploration and production 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 exploration and production reserves based on an unweighted arithmetic average of first day of the month commodity 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 exploration and production 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 exploration and production properties exceeds the ceiling, a non-cash impairment charge must be recorded to reduce the book value of such properties to the calculated ceiling. At June 30, 2025, the ceiling exceeded the book value of the exploration and production properties by approximately $798.8 million (after-tax). The 12-month average of the first day of the month price for natural gas for each month during the twelve months ended June 30, 2025, based on the quoted Henry Hub spot price for natural gas, was $2.86 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 June 30, 2025. 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 June 30, 2025 in the ceiling test calculation, the ceiling would have exceeded the book value of the Company's exploration and production properties by approximately $440.1 million (after-tax), which would not 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.

Previous wording

The Company's earnings were $216.4 million for the quarter ended March 31, 2025 compared to earnings of $166.3 million for the quarter ended March 31, 2024. The increase in earnings of $50.1 million is primarily the result of higher earnings in the Exploration and Production segment and Utility segment, as well as the Pipeline and Storage segment. Lower earnings in the Gathering segment and losses in the Corporate and All Other categories partially offset these increases.

Current wording

The Company's earnings were $149.8 million for the quarter ended June 30, 2025 compared to a loss of $54.2 million for the quarter ended June 30, 2024. The increase in earnings of $204.0 million is primarily the result of higher earnings in the Exploration and Production segment, as well as the Gathering and Utility segments. Lower earnings in the Pipeline and Storage segment and losses in the Corporate and All Other categories partially offset these increases.

Previous wording

The Company's earnings were $261.3 million for the six months ended March 31, 2025 compared to earnings of $299.3 million for the six months ended March 31, 2024. The decrease in earnings of $38.0 million is primarily the result of lower earnings in the Exploration and Production segment and Gathering segment, along with losses in the Corporate and All Other categories. Higher earnings in the Utility segment and Pipeline and Storage segment partially offset these decreases.

Current wording

The Company's earnings were $411.2 million for the nine months ended June 30, 2025 compared to earnings of $245.1 million for the nine months ended June 30, 2024. The increase in earnings of $166.1 million is primarily the result of higher earnings in all reportable segments, partially offset by losses in the Corporate and All Other categories.

Previous wording

The Company's earnings for the six months ended March 31, 2025 included non-cash impairment charges of $141.8 million ($103.6 million after-tax) in the Exploration and Production segment, consisting mostly of ceiling test impairment charges of $108.3 million ($79.1 million after-tax), as discussed above. The remaining charges are related to the impairment of certain water disposal assets. Note that all amounts used in earnings discussions are after-tax amounts, unless otherwise noted.

Current wording

The Company's earnings for the nine months ended June 30, 2025 included non-cash impairment charges of $141.8 million ($103.6 million after-tax) in the Exploration and Production segment, consisting mostly of ceiling test impairment charges of $108.3 million ($79.1 million after-tax), as discussed above. The remaining charges are related to the impairment of certain water disposal assets. The Company's earnings for the quarter and nine months ended June 30, 2024 included a non-cash ceiling test impairment charge of $200.7 million ($145.0 million after-tax) recorded during the quarter ended June 30, 2024 in the Exploration and Production segment. 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 increased $47.3 million for the quarter ended March 31, 2025 as compared with the quarter ended March 31, 2024. Gas production revenue after hedging increased $47.2 million due to the impact of a 2.6 Bcf increase in natural gas production combined with a $0.38 per Mcf increase in the weighted average price of natural gas after hedging. The increase in natural gas production was largely due to pads recently turned in line in the Appalachian region.

Current wording

Operating revenues for the Exploration and Production segment increased $83.0 million for the quarter ended June 30, 2025 as compared with the quarter ended June 30, 2024. Gas production revenue after hedging increased $82.8 million due to the impact of a $0.43 per Mcf increase in the weighted average price of natural gas after hedging, combined with a 15.1 Bcf increase in natural gas production. The increase in natural gas production was largely due to pads recently turned in line.

Previous wording

Operating revenues for the Exploration and Production segment increased $42.2 million for the six months ended March 31, 2025 as compared with the six months ended March 31, 2024. Gas production revenue after hedging increased $42.0 million due to the impact of a $0.21 per Mcf increase in the weighted average price of natural gas after hedging, partially offset by a 0.4 Bcf decrease in natural gas production. The minor decrease in natural gas production for the six months ended March 31, 2025 as compared with the six months ended March 31, 2024 is due to the timing of turned in line production.

Current wording

Operating revenues for the Exploration and Production segment increased $125.2 million for the nine months ended June 30, 2025 as compared with the nine months ended June 30, 2024. Gas production revenue after hedging increased $124.8 million due to the impact of a $0.28 per Mcf increase in the weighted average price of natural gas after hedging, combined with a 14.7 Bcf increase in natural gas production. The increase in natural gas production for the nine months ended June 30, 2025 as compared with the nine months ended June 30, 2024 was largely due to pads recently turned in line.

Previous wording

(6)The increase in other tax expense was primarily attributable to higher Impact Fees in the Appalachian region as the Company moved into a higher rate tier due to higher NYMEX pricing.

Current wording

(4)The increase in other tax expense was primarily attributable to higher Impact Fees in the Appalachian region as the Company moved into a higher rate tier due to higher NYMEX pricing.

Previous wording

(1)Includes a ceiling test impairment of $79.1 million and a $24.5 million impairment of certain water disposal assets recorded during the quarter ended December 31, 2024.

Current wording

(1)Includes a ceiling test impairment of $79.1 million and a $24.5 million impairment of certain water disposal assets recorded during the quarter ended December 31, 2024, offset by a ceiling test impairment of $145.0 million in the nine months ending June 30, 2024.

Previous wording

(1)The decrease in depletion expense was primarily due to ceiling test impairments recorded in the third and fourth quarters of fiscal 2024 as well as the first quarter of fiscal 2025 that lowered Seneca’s full cost pool depletable base.

Current wording

(2)The decrease in depletion expense was primarily due to ceiling test impairments recorded in fiscal 2024 and 2025 that lowered Seneca’s full cost pool depletable base.

Previous wording

(2)The increase in income tax expense was primarily driven by an increase in state income tax expense due to higher pre-tax income before impairments.

Current wording

(3)The increase in income tax expense was primarily driven by an increase in state income tax expense due to higher pre-tax income before impairments.

Previous wording

(4)The increase in lease operating and transportation expenses was primarily the result of higher gathering and transportation costs.

Current wording

(4)The increase in lease operating and transportation expenses was primarily the result of higher production combined with higher gathering and transportation costs.

Previous wording

(3)The decrease in other income is mainly attributable to non-recurrence of business interruption insurance proceeds received during the quarter ended December 31, 2023 related to a pipeline outage impacting Seneca’s ability to market gas.

Current wording

(5)The decrease in other income is mainly attributable to non-recurrence of business interruption insurance proceeds received during the quarter ended December 31, 2023 related to a pipeline outage impacting Seneca’s ability to market gas.

Previous wording

Operating revenues for the Pipeline and Storage segment increased $13.8 million for the six months ended March 31, 2025 as compared with the six months ended March 31, 2024. The $10.8 million increase in transportation revenues and $3.6 million increase in 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 partially offset by the impact of a final true-up adjustment recorded in the quarter ended March 31, 2024 to the surcharge for pipeline safety and greenhouse gas costs that ended effective February 1, 2024. The increase in transportation revenues was also partially offset by a decline in revenues associated with miscellaneous contract terminations and revisions. The $0.7 million decrease in other revenues primarily reflects lower cashout revenues, which are completely offset by purchased gas expense, and an adjustment to match electric surcharge revenues to electric power costs recorded in operation and maintenance expense, partially offset by the recognition of a gain on the sale of base gas during the quarter ended March 31, 2025.

Current wording

Operating revenues for the Pipeline and Storage segment were relatively consistent for the quarter ended June 30, 2025 as compared with the quarter ended June 30, 2024. Operating revenues for the Pipeline and Storage segment increased $13.9 million for the nine months ended June 30, 2025 as compared with the nine months ended June 30, 2024. For the nine months ended June 30, 2025, the $11.4 million increase in transportation revenues and $4.1 million increase in storage revenues was primarily attributable to an increase in Supply Corporation's transportation and storage rates effective February 1, 2024 in accordance with Supply Corporation's rate case settlement. The settlement was approved by FERC on June 11, 2024. This increase was partially offset by the impact of a final true-up adjustment recorded in the nine months ended June 30, 2024 to the surcharge for pipeline safety and greenhouse gas costs that ended effective February 1, 2024. The increase in transportation revenues was also partially offset by a decline in revenues associated with miscellaneous contract terminations and revisions. The $1.5 million decrease in other revenues primarily reflects lower cashout revenues, which are completely offset by purchased gas expense, and an adjustment to match electric surcharge revenues to electric power costs recorded in operation and maintenance expense.

Previous wording

Transportation volume for the quarter and six months ended March 31, 2025 increased by 11.7 Bcf and 14.4 Bcf, respectively, from the prior year's quarter and six month periods. The increase in transportation volume for both the quarter and six months ended March 31, 2025 is primarily due to an increase in volume from a new long-term contract combined with an increase in volume from colder weather. These were partially offset by lower capacity utilization with certain contract shippers and certain contract expirations and revisions. 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 and nine months ended June 30, 2025 increased by 10.6 Bcf and 24.9 Bcf, respectively, from the prior year's quarter and nine month periods. The increase in transportation volume for both the quarter and nine months ended June 30, 2025 is primarily due to an increase in volume from colder weather. This increase for the nine month period was partially offset by lower capacity utilization with certain contract shippers and certain contract expirations and revisions. 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 March 31, 2025 were $31.7 million, an increase of $1.0 million when compared with earnings of $30.7 million for the quarter ended March 31, 2024. The $1.0 million increase can be attributed to the following factors:

Current wording

The Pipeline and Storage segment’s earnings for the quarter ended June 30, 2025 were $28.9 million, a decrease of $1.8 million when compared with earnings of $30.7 million for the quarter ended June 30, 2024. The $1.8 million decrease can be attributed to the following factors:

Previous wording

(2)The decrease in interest expense was primarily driven by a decrease in intercompany short-term borrowings.

Current wording

(3)The decrease in interest expense was primarily driven by a decrease in intercompany short-term borrowings, partially offset by an increase in interest on additional intercompany long-term borrowings associated with the Company's February 2025 debt issuance.

Previous wording

(3)The increase in operating expenses was primarily due to an increase in personnel costs, as well as an increase in outside services expenses (including compressor and other pipeline maintenance costs) and higher power costs related to Empire’s electric motor drive compressor station. The increase in electric power costs is offset by an equal increase in revenue.

Current wording

(2)The increase in operating expenses was primarily due to an increase in personnel costs, as well as an increase in outside service expenses, largely related to system integrity and maintenance spending, and higher power costs related to Empire’s electric motor drive compressor station. The increase in electric power costs is offset by an equal increase in revenue.

Previous wording

(4)The decrease in other income was primarily driven by a decline in non-service pension and post-retirement benefit income.

Current wording

(3)The decrease in other income was primarily due to a lower average amount outstanding on intercompany short-term notes receivables and a lower weighted average interest rate on those receivables, as well as a decline in non-service pension and post-retirement benefit income.

Previous wording

Operating revenues for the Gathering segment increased $1.0 million for the quarter ended March 31, 2025 as compared with the quarter ended March 31, 2024, which was driven primarily by a 4.2 Bcf increase in gathered volume. Gathered volume increased 6.5 Bcf in the Gathering segment's eastern development areas (Tioga and Trout Run), partially offset by a 2.3 Bcf decrease in gathered volume in the Gathering segment's western development area (Clermont). 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 $7.8 million for the quarter ended June 30, 2025 as compared with the quarter ended June 30, 2024, which was driven primarily by a 14.8 Bcf increase in gathered volume. Gathered volume increased 11.0 Bcf in the Gathering segment's Eastern Development Area (Tioga and Trout Run), consisting of an increase of 14.0 Bcf in the Tioga gathering system and a decrease of 3.0 Bcf in the Trout Run gathering system. The Gathering segment's Western Development Area (Clermont) also contributed an increase of 3.8 Bcf in gathered volume. The net increase in gathered volume can be attributed to an increase in gross natural gas production in the Appalachian region, largely by Seneca, connected to the aforementioned gathering systems.

Previous wording

Operating revenues for the Gathering segment decreased $0.4 million for the six months ended March 31, 2025 as compared with the six months ended March 31, 2024. Although gathered volume increased 1.3 Bcf over the aforementioned time period, changes in the throughput producer mix drove the decrease in revenue. Gathered volume increased 4.9 Bcf in the Gathering segment's eastern development areas (Tioga and Trout Run), partially offset by a 3.6 Bcf decrease in gathered volume in the Gathering segment's western development area (Clermont). The net increase 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 $7.3 million for the nine months ended June 30, 2025 as compared with the nine months ended June 30, 2024, which was primarily driven by a 16.2 Bcf increase in gathered volume. Gathered volume increased 16.0 Bcf in the Gathering segment's Eastern Development Area (Tioga and Trout Run), consisting of an increase of 33.4 Bcf in the Tioga gathering system and a decrease of 17.4 Bcf in the Trout Run gathering system. Additionally, the Gathering segment's Western Development Area (Clermont) contributed an increase of 0.2 Bcf. The net increase can be attributed to an increase in gross natural gas production in the Appalachian region, largely by Seneca, connected to the aforementioned gathering systems.

Previous wording

(5)The decrease in income tax expense was primarily due to lower state income taxes driven by lower pre-tax income.

Current wording

(2)The increase in income tax expense was largely due to higher state income taxes driven by higher pre-tax income.

Previous wording

(5)The decrease in income tax expense was primarily due to lower state income taxes driven by lower pre-tax income.

Current wording

(1)The decrease in income tax expense was largely due to lower state income taxes resulting from the application of different state apportionment factors in 2025 vs. 2024, as well as a lower tax rate in Pennsylvania.

Previous wording

Operating revenues for the Utility segment increased $53.2 million for the quarter ended March 31, 2025 as compared with the quarter ended March 31, 2024. This increase resulted from a $46.6 million increase in retail gas sales revenue, a $3.0 million increase in transportation revenue, and a $3.6 million increase in other revenue. The increases in retail gas sales and transportation revenues reflect the impact of new base delivery rates in Distribution Corporation's New York jurisdiction pursuant to a settlement approved by the NYPSC on December 19, 2024. Additional details regarding the base rate regulatory proceeding can be found in Note 10 - Regulatory Matters. The increase in retail gas sales revenue also reflects higher purchased gas revenues resulting from a 6.3 Bcf increase in throughput due to colder temperatures combined with an increase in the cost of gas sold (per Mcf). 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 increase in transportation revenue also reflects a 2.4 Bcf increase in throughput due primarily to colder temperatures. The increase in other revenue was mainly due to the elimination of the refund provision that was required to defer and return the income tax benefits resulting from the 2017 Tax Reform Act to customers ($4.8 million), partially offset by decreases in capacity release revenues ($0.6 million), other gas revenues ($0.3 million), and late payment charges billed to customers ($0.2 million). The refund provision is no longer necessary because Distribution Corporation's new base delivery rates now reflect a revenue requirement determined with the current federal income tax rate of 21% and the refund of excess accumulated deferred income taxes.

Current wording

Operating revenues for the Utility segment increased $32.6 million for the quarter ended June 30, 2025 as compared with the quarter ended June 30, 2024. This increase resulted from a $31.5 million increase in retail gas sales revenue and a $2.7 million increase in other revenue. The increase in retail gas sales revenue reflects the impact of new base delivery rates in Distribution Corporation's New York jurisdiction pursuant to a settlement approved by the NYPSC on December 19, 2024. Additional details regarding the base rate regulatory proceeding can be found in the Rate Matters section below. The increase in retail gas sales revenue also reflects higher purchased gas revenues resulting from a 2.4 Bcf increase in throughput mainly due to colder weather combined with an increase in the cost of gas sold (per Mcf). 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 increase in other revenue was mainly due to the elimination of the refund provision that was required to defer and return the income tax benefits resulting from the 2017 Tax Reform Act to customers ($2.8 million). The refund provision is no longer necessary because Distribution Corporation's new base delivery rates now reflect a revenue requirement determined with the current federal income tax rate of 21% and the refund of excess accumulated deferred income taxes. The increases in retail gas sales revenue and other revenue were partially offset by a $1.6 million decrease in transportation revenue, primarily due to the the amortization of certain regulatory assets in accordance with the New York rate settlement, despite a 1.0 Bcf increase in throughput and the impact of new base rates in New York discussed above.

Previous wording

Operating revenues for the Utility segment increased $79.7 million for the six months ended March 31, 2025 as compared with the six months ended March 31, 2024. The increase resulted from a $70.7 million increase in retail gas sales revenue, a $2.8 million increase in transportation revenue, and a $6.1 million increase in other revenue. The increases in retail gas sales and transportation revenues reflect the impact of new base delivery rates in Distribution Corporation's New York jurisdiction, as mentioned above. The increase in retail gas sales revenue also reflects higher purchased gas revenues resulting from a 7.0 Bcf increase in throughput due to colder temperatures combined with an increase in the cost of gas sold (per Mcf). The increase in transportation revenue also reflects a 1.9 Bcf increase in throughput due primarily to colder temperatures. The increase in other revenue was largely due to the elimination of the refund provision that was required to defer and return the income tax benefits resulting from the 2017 Tax Reform Act to customers ($8.1 million), as discussed above, partially offset by decreases in capacity release revenues ($1.0 million), other gas revenues ($0.6 million), and late payment charges billed to customers ($0.4 million).

Current wording

Operating revenues for the Utility segment increased $112.3 million for the nine months ended June 30, 2025 as compared with the nine months ended June 30, 2024. The increase resulted from a $102.2 million increase in retail gas sales revenue, a $1.2 million increase in transportation revenue, and an $8.8 million increase in other revenue. The increases in retail gas sales and transportation revenues reflect the impact of new base delivery rates in Distribution Corporation's New York jurisdiction, as mentioned above. The increase in retail gas sales revenue also reflects higher purchased gas revenues resulting from a 9.4 Bcf increase in throughput mainly due to colder weather combined with an increase in the cost of gas sold (per Mcf). The increase in transportation revenue also reflects a 2.9 Bcf increase in throughput due primarily to colder weather, partially offset by the amortization of certain regulatory assets in accordance with the New York rate settlement. The increase in other revenue was largely due to the elimination of the refund provision that was required to defer and return the income tax benefits resulting from the 2017 Tax Reform Act to customers ($10.8 million), as discussed above, partially offset by decreases in capacity release revenues ($0.9 million), other gas revenues ($0.7 million), and late payment charges billed to customers ($0.4 million).

Previous wording

The Utility segment’s earnings for the quarter ended March 31, 2025 were $63.5 million, an increase of $18.8 million when compared with earnings of $44.7 million for the quarter ended March 31, 2024. The increase can be attributed to the following factors:

Current wording

The Utility segment’s earnings for the quarter ended June 30, 2025 were $5.0 million, an increase of $2.4 million when compared with earnings of $2.6 million for the quarter ended June 30, 2024. The increase can be attributed to the following factors:

Previous wording

(2)The increase in operating expenses is attributable to higher personnel costs partially offset by amortizations of certain regulatory assets associated with the New York rate settlement.

Current wording

(2)The increase in operating expenses is attributable to higher personnel costs, partially offset by amortizations of certain regulatory assets and a reduction in uncollectible expenses as a result of a tracker implemented, both of which were associated with the New York rate settlement.

Previous wording

(3)The increase in interest expense is mainly attributed to an increase in intercompany debt balances.

Current wording

(3)The increase in interest expense is mainly attributed to an increase in long-term intercompany debt balances.

Previous wording

(5)The increase in income tax expense was primarily driven by an increase in state income tax expense due to higher pre-tax income.

Current wording

(5)The increase in income tax expense was primarily driven by updates to the amortization of excess deferred income taxes in accordance with the New York rate settlement.

Previous wording

The impact of weather variations on cash flows and customer bills in the Utility segment is mitigated by a WNA. 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, 2025, the WNA preserved earnings of approximately $0.6 million in the Utility segment’s New York rate jurisdiction, as the weather was warmer than normal. The earnings preserved by the WNA in the Utility segment's Pennsylvania rate jurisdiction were negligible. 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.

Current wording

The impact of weather variations on cash flows and customer bills in the Utility segment is mitigated by a WNA. 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 June 30, 2025, the WNA preserved earnings of approximately $1.3 million in the Utility segment’s New York rate jurisdiction and preserved earnings of approximately $0.5 million in the Utility segment's Pennsylvania rate jurisdiction, as the weather was warmer than normal on a cycle-bill basis in both jurisdictions. For the quarter ended June 30, 2024, the WNA preserved earnings in the Utility segment’s New York rate jurisdiction of approximately $1.7 million and preserved earnings in the Utility segment’s Pennsylvania rate jurisdiction of approximately $1.4 million, as the weather was warmer than normal in both jurisdictions.

Previous wording

The Utility segment’s earnings for the six months ended March 31, 2025 were $96.0 million, an increase of $24.7 million when compared with earnings of $71.3 million for the six months ended March 31, 2024. The increase can be attributed to the following factors:

Current wording

The Utility segment’s earnings for the nine months ended June 30, 2025 were $101.0 million, an increase of $27.2 million when compared with earnings of $73.8 million for the nine months ended June 30, 2024. The increase can be attributed to the following factors:

Previous wording

(3)The increase in interest expense is mainly attributed to an increase in intercompany debt balances.

Current wording

(3)The increase in interest expense is mainly attributed to an increase in both short-term and long-term intercompany debt balances.

Previous wording

For the six months ended March 31, 2025, the WNA preserved earnings in the Utility segment’s New York rate jurisdiction of approximately $2.6 million and preserved earnings in the Utility segment’s Pennsylvania rate jurisdiction of approximately $1.2 million, as the weather was warmer than normal in both jurisdictions. For the six months ended March 31, 2024, the WNA preserved earnings in the Utility segment’s New York rate jurisdiction of approximately $6.4 million and preserved earnings in the Utility segment’s Pennsylvania rate jurisdiction of approximately $4.1 million, as the weather was warmer than normal in both jurisdictions.

Current wording

For the nine months ended June 30, 2025, the WNA preserved earnings in the Utility segment’s New York rate jurisdiction of approximately $3.9 million and preserved earnings in the Utility segment’s Pennsylvania rate jurisdiction of approximately $1.7 million, as the weather was warmer than normal on a cycle-bill basis in both jurisdictions. For the nine months ended June 30, 2024, the WNA preserved earnings in the Utility segment’s New York rate jurisdiction of approximately $8.1 million and preserved earnings in the Utility segment’s Pennsylvania rate jurisdiction of approximately $5.5 million, as the weather was warmer than normal in both jurisdictions.

Previous wording

For the six months ended March 31, 2025, Corporate and All Other operations recorded a net loss of $3.4 million, a decrease of $4.5 million when compared with earnings of $1.1 million for the six months ended March 31, 2024. The decrease was primarily attributable to higher interest expense ($3.2 million) mainly due to a higher average amount of long-term borrowings, combined with changes in unrealized gains and losses on investments in equity securities. During the six months ended March 31, 2025, the Company recorded unrealized losses of $2.1 million. During the six months ended March 31, 2024, the Company recorded unrealized gains of $1.4 million. These changes were partially offset by realized gains from investment securities sold during the current six-month period ($1.2 million) and an increase in interest income on temporary cash investments ($1.2 million).

Current wording

Corporate and All Other operations recorded a net loss of $0.7 million for the quarter ended June 30, 2025, which was relatively consistent with the net loss of $0.4 million for the quarter ended June 30, 2024. For the nine months ended June 30, 2025, Corporate and All Other operations recorded a net loss of $4.1 million, a decrease of $4.9 million when compared with earnings of $0.8 million for the nine months ended June 30, 2024. The decrease for the nine-month period was primarily attributable to changes in unrealized gains and losses on investments in equity securities. During nine months ended June 30, 2025, the Company recorded unrealized losses of $1.4 million. During the nine months ended June 30, 2024, the Company recorded unrealized gains of $1.4 million. Also contributing to the decrease included higher interest expense ($2.7 million)