National Fuel Reports Second Quarter Earnings

National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE:NFG) today announced consolidated results for the second quarter of its 2016 fiscal year and for the six months ended March 31, 2016.

FISCAL 2016 SECOND QUARTER EARNINGS SUMMARY

• Consolidated net loss of $147.7 million, or $1.74 per share
• Operating results, excluding items impacting comparability, of $82.8 million, or $0.97 per share
• Impairment of oil and gas properties, after-tax, of $230.5 million, or $2.72 per share
• Consolidated adjusted EBITDA $224.4 million (see non-GAAP reconciliation on page 24)
• Production of 39.2 Bcfe, a 9.7% increase from prior year and 3.0% increase from the first quarter
• Price-related production curtailments of 9.1 Bcf in Appalachia, a 5.5 Bcf decrease from the first quarter
• Average natural gas and crude oil prices after hedging of $2.99 per Mcf and $53.01 per Bbl, respectively
• Weather 12% warmer than normal and more than 26% warmer than the prior year contributes to $6.9 million, or $0.08 per share, reduction in Utility segment earnings

MANAGEMENT COMMENTS

Ronald J. Tanski, President and Chief Executive Officer of National Fuel Gas Company, stated: "Weather was more than 26 percent warmer than last year’s second quarter across our service territory, and commodity prices were approximately 18 percent lower than last year. Each of these factors had their expected result, lowering the Company’s earnings for the quarter. Additionally, as low commodity prices continue to weigh on all energy companies, we were required to make another adjustment to the balance sheet value of our oil and natural gas reserves.

"Each of our business segments, however, delivered excellent operational results. We have reduced Seneca’s drilling activities by moving to a one-rig drilling program. That will help us to live within cash flow, and more closely align our natural gas production levels with the capacity of our Northern Access project, which has a targeted in-service date of November 2017.

"While near-term commodity market prices remain low, we are well hedged at acceptable prices for the remainder of this year and next fiscal year. We have also seen a firming of prices for our 2018 to 2020 fiscal years, reflecting the expectation that supply and demand will come into balance. We have taken advantage of these pricing signals and have begun to layer in hedges for those future years that lock in acceptable economics for our drilling program.

"Our plans remain on track to add value for our shareholders and grow the Company through the continued development of strategic pipeline infrastructure projects and the ongoing prudent development and production of natural gas from our large acreage holdings.”

DISCUSSION OF SECOND QUARTER RESULTS BY SEGMENT

The following discussion of the earnings of each segment is summarized in a tabular form on pages 8 through 11 of this report. It may be helpful to refer to those tables while reviewing this discussion.

Upstream Business

Exploration and Production Segment

The Exploration and Production segment operations are carried out by Seneca Resources Corporation ("Seneca"). Seneca explores for, develops and produces natural gas and oil reserves, primarily in Pennsylvania and California.

The quarter over quarter variance is mainly due to a non-cash, after-tax charge of $230.5 million to write down the value of Seneca’s oil and natural gas reserves under the full cost method of accounting. This accounting method requires that Seneca perform a quarterly “ceiling test” to compare the present value of future revenues from its oil and natural gas reserves based on an unweighted arithmetic average of the first day of the month oil and gas prices for each month within the 12-month period prior to the end of the reporting period (“the ceiling”) with the book value of those reserves at the balance sheet date. If the book value of the reserves exceeds the ceiling, a non-cash impairment charge must be recorded in order to reduce the book value of the reserves to the calculated ceiling. Unless oil and gas prices improve significantly, Seneca expects to incur additional impairment charges during the remainder of the fiscal year ending September 30, 2016. An impairment is also possible in the first quarter of fiscal 2017.

Excluding this item, Operating Results in the Exploration and Production segment in the current year’s second quarter were $17.2 million, or $0.20 per share, compared to $15.9 million, or $0.19 per share, in the prior year’s second quarter, an increase of $1.3 million or $0.01 per share. The increase in Operating Results is mainly due to higher natural gas production and lower per unit lease operating expense ("LOE") and depreciation, depletion and amortization ("DD&A") expense, offset partially by lower realized natural gas and crude oil prices after hedging.

Seneca's total net second quarter fiscal 2016 production was 39.2 billion cubic feet equivalent ("Bcfe"), an increase of 3.5 Bcfe, or 9.7 percent, from the prior fiscal year's second quarter, and an increase of 1.2 Bcfe, or 3.0 percent, versus the first quarter of fiscal 2016. Net natural gas production for the quarter was 34.9 Bcf, an increase of 3.5 Bcf, or 11.1 percent, versus prior year due mainly to new incremental firm transportation capacity that became available to Seneca during the first quarter of fiscal 2016. The new transportation capacity allows Seneca to deliver and sell a portion of its Marcellus Shale production under long-term firm sales contracts at the premium-priced Dawn market index in Ontario, Canada. Seneca voluntarily curtailed approximately 9.1 Bcf of net natural gas production during the quarter, down 5.5 Bcf from the estimated 14.6 Bcf of net production curtailed during the first quarter. Crude oil production for the quarter was approximately 723 thousand barrels ("Mbbl"), relatively flat when compared to the prior year.

Seneca's average realized natural gas price, after the impact of hedging, for the second quarter was $2.99 per thousand cubic feet ("Mcf"), reflecting $1.12 per Mcf of uplift from financial hedges settled during the quarter. Seneca's average realized oil price, after the impact of hedging, for the second quarter was $53.01 per barrel ("Bbl"), reflecting a $25.95 per Bbl uplift from financial hedges settled during the quarter. Seneca's remaining fiscal 2016 natural gas production is now 80 percent hedged at the midpoint of production guidance, with nearly 67 million Million British thermal units ("MMBtu") (64.3 Bcf) of production hedged at an average price of $3.41 per MMBtu. In California, Seneca's remaining fiscal 2016 oil production is now 55 percent hedged at an average hedge price of $81.10 per Bbl. For fiscal 2017, Seneca has over 115 million MMBtu (110.8 Bcf) of natural gas production hedged at an average hedge price of $3.34 per MMBtu and nearly 700,000 Bbls of oil production hedged at $75.14 per Bbl.

LOE decreased by $3.8 million versus the prior year second quarter. On a per unit basis, LOE for the second quarter decreased by $0.20 per Mcf equivalent ("Mcfe") to $0.96 per Mcfe. The decrease is largely due to a reduction in steam fuel costs in Seneca's California division and lower salt water disposal and maintenance costs in Seneca's Appalachian division, offset slightly by higher average gathering and compression rates on Appalachian production.

DD&A expense decreased $20.2 million versus the prior year second quarter due to lower per unit DD&A, offset partially by the impact of higher production. On a per unit basis, DD&A decreased $0.66 per Mcfe to $0.95 per Mcfe due primarily to the ceiling test impairment charges recorded during the prior four quarters and higher natural gas reserve balances at September 30, 2015.

The increase in interest expense is the result of a new long-term debt issuance that occurred during the quarter ended June 30, 2015.

Midstream Businesses

Pipeline and Storage Segment

The Pipeline and Storage segment’s operations are carried out by National Fuel Gas Supply Corporation (“Supply Corporation”) and Empire Pipeline, Inc. (“Empire”). The Pipeline and Storage segment provides natural gas transportation and storage services to affiliated and non-affiliated companies through an integrated system of pipelines and underground natural gas storage fields in western New York and Pennsylvania.

The decrease in the Pipeline and Storage segment's earnings is due to higher Operation and Maintenance ("O&M"), DD&A and interest expenses, offset partially by higher transportation revenues from the three expansion projects that were placed in service during the first quarter of fiscal 2016. O&M increased $1.4 million versus prior year's second quarter due primarily to higher post-retirement benefit costs. DD&A for the quarter increased $1.1 million due to a higher gross plant in service, which was largely the result of the Company's recent expansion projects. The $1.7 million increase in interest expense is a result of the new long-term debt issuance that occurred during the quarter ended June 30, 2015.

Gathering Segment

The Gathering segment’s operations are carried out by National Fuel Gas Midstream Corporation’s subsidiary limited liability companies. The Gathering segment constructs, owns and operates natural gas pipeline gathering facilities in the Appalachian region and currently provides the gathering infrastructure for transporting Seneca’s Marcellus Shale production to the interstate pipeline system.

The increase in the Gathering segment's earnings is due primarily to higher gathering revenues, offset partially by higher O&M expense and interest costs. Gathering revenues increased $4.2 million, or 24 percent, versus prior year's second quarter mainly due to higher throughput on the Clermont Gathering System, a result of Seneca's increased production volumes in Appalachia during the quarter. The $1.8 million increase in interest expense is a result of the new long-term debt issuance that occurred during the quarter ended June 30, 2015.

Downstream Businesses

Utility Segment

The Utility segment operations are carried out by National Fuel Gas Distribution Corporation (“Distribution”), which sells or transports natural gas to customers located in western New York and northwestern Pennsylvania.

The decrease in the Utility segment's earnings is largely attributable to the impacts of warmer weather and a positive regulatory adjustment recorded in the second quarter of fiscal 2015, partially offset by lower O&M expense and other taxes. Weather in Distribution's New York and Pennsylvania service territories was more than 26 percent warmer than last year, resulting in lower retail residential and transportation customer throughput and revenues, which decreased the Utility segment's earnings by approximately $0.08 per share. The impact of weather variations on earnings in Distribution's New York service territory is largely mitigated by the New York rate jurisdiction's weather normalization clause. In the second quarter of fiscal 2015, the Utility segment recorded a positive $3.2 million after-tax regulatory adjustment to recognize the under collection from customers of a New York State regulatory assessment. A similar regulatory adjustment was not required for the second quarter of fiscal 2016, lowering earnings by $0.04 per share versus the prior year. The $5.4 million decrease in O&M expense is mainly due to lower personnel and pension costs and uncollectible customer accounts.

Energy Marketing Segment

The Energy Marketing segment's operations are carried out by National Fuel Resources, Inc. (“NFR”). NFR markets natural gas to industrial, wholesale, commercial, public authority and residential customers primarily in western and central New York and northwestern Pennsylvania, offering competitively priced natural gas to its customers.

The Energy Marketing segment's second quarter earnings were relatively flat when compared to the prior year's second quarter, as the decrease in revenues from warmer weather was largely offset by declines in purchased gas costs.

Corporate and All Other

The Corporate and All Other category earnings of $1.4 million in the quarter ended March 31, 2016, compares to a net loss of $1.2 million in the prior year’s second quarter. The increase is due to lower income tax expense.

EARNINGS GUIDANCE

The Company is updating earnings guidance for fiscal 2016 to reflect second quarter results and revised forecast assumptions. Updated consolidated earnings guidance and Exploration and Production segment operational guidance are summarized in the tables below:

While the Company currently expects to incur additional ceiling test impairment charges in the remaining quarters of fiscal 2016, and possibly the first quarter of fiscal 2017, the amount of these charges is not reasonably determinable at this time. The amount of any ceiling test charge is determined at the end of the applicable quarter and will depend on many factors, including additions to or subtractions from proved reserves, fluctuations in oil and gas prices, and income tax effects related to the differences between the book and tax basis of the Company’s oil and gas properties. Some or all of these factors are likely to be significant. Because the amount of the expected ceiling test impairment charges is not reasonably determinable at this time, the Company is unable to provide earnings guidance other than on a non-GAAP basis that excludes those charges.

EARNINGS TELECONFERENCE

The Company will host a conference call on Friday, April 29, 2016, at 11 a.m. Eastern Time to discuss this announcement. There are two ways to access this call. For those with Internet access, visit the NFG Investor Relations News & Events page at National Fuel’s website at investor.nationalfuelgas.com. For those without Internet access, audio access is also provided by dialing (toll-free) 877-706-7579, using conference ID number “84814628.” For those unable to listen to the live conference call, an audio replay will be available at approximately 3 p.m. Eastern Time at the same website link and by phone at (toll-free) 855-859-2056 or 404-537-3406, using conference ID number “84814628.” Both the webcast and telephonic replay will be available until the close of business on Friday, May 6, 2016.

National Fuel is an integrated energy company reporting financial results for five operating segments: Exploration and Production, Pipeline and Storage, Gathering, Utility, and Energy Marketing. Additional information about National Fuel is available at www.nationalfuelgas.com.

Certain statements contained herein, including statements identified by the use of the words “anticipates,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “predicts,” “projects,” “believes,” “seeks,” “will,” “may” and similar expressions, and statements which are other than statements of historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Company’s expectations, beliefs and projections contained herein are expressed in good faith and are believed to have a reasonable basis, but there can be no assurance that such expectations, beliefs or projections will result or be achieved or accomplished. In addition to other factors, the following are important factors that could cause actual results to differ materially from those discussed in the forward-looking statements: impairments under the SEC’s full cost ceiling test for natural gas and oil reserves; changes in the price of natural gas or oil; financial and economic conditions, including the availability of credit, and occurrences affecting the Company’s ability to obtain financing on acceptable terms for working capital, capital expenditures and other investments, including any downgrades in the Company’s credit ratings and changes in interest rates and other capital market conditions; delays or changes in costs or plans with respect to Company projects or related projects of other companies, including difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators; factors affecting the Company’s ability to successfully identify, drill for and produce economically viable natural gas and oil reserves, including among others geology, lease availability, title disputes, weather conditions, shortages, delays or unavailability of equipment and services required in drilling operations, insufficient gathering, processing and transportation capacity, the need to obtain governmental approvals and permits, and compliance with environmental laws and regulations; changes in laws, regulations or judicial interpretations to which the Company is subject, including those involving derivatives, taxes, safety, employment, climate change, other environmental matters, real property, and exploration and production activities such as hydraulic fracturing; governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, target rates of return, rate design and retained natural gas), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal; changes in price differentials between similar quantities of natural gas or oil sold at different geographic locations, and the effect of such changes on commodity production, revenues and demand for pipeline transportation capacity to or from such locations; other changes in price differentials between similar quantities of natural gas or oil having different quality, heating value, hydrocarbon mix or delivery date; the cost and effects of legal and administrative claims against the Company or activist shareholder campaigns to effect changes at the Company; uncertainty of oil and gas reserve estimates; significant differences between the Company’s projected and actual production levels for natural gas or oil; changes in demographic patterns and weather conditions; changes in the availability, price or accounting treatment of derivative financial instruments; changes in economic conditions, including global, national or regional recessions, and their effect on the demand for, and customers’ ability to pay for, the Company’s products and services; the creditworthiness or performance of the Company’s key suppliers, customers and counterparties; economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities, acts of war, cyber attacks or pest infestation; significant differences between the Company’s projected and actual capital expenditures and operating expenses; changes in laws, actuarial assumptions, the interest rate environment and the return on plan/trust assets related to the Company’s pension and other post-retirement benefits, which can affect future funding obligations and costs and plan liabilities; increasing health care costs and the resulting effect on health insurance premiums and on the obligation to provide other post-retirement benefits; or increasing costs of insurance, changes in coverage and the ability to obtain insurance. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date thereof.