National Fuel Reports 2006 Earnings.WILLIAMSVILLE, N.Y. -- National Fuel Gas Company ("National Fuel" or the "Company") (NYSE NYSE See: New York Stock Exchange :NFG NFG No Freaking Good (polite form) NFG Nefteyugansk (Russia) NFG New Found Glory (band from Coral Springs, Florida) NFG Neighborhood Funders Group ) today announced results for its fourth quarter and fiscal year ended September 30, 2006. HIGHLIGHTS * Reported GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). earnings for the quarter and fiscal year of $0.02 and $1.61 per share, respectively, were down $0.55 per share from the prior year's fourth quarter and $0.62 from the prior year mostly due to the previously announced full cost ceiling test impairments. * Quarterly operating results before items impacting comparability were $0.36 per share, a 125 percent increase over the prior year, mostly due to higher average commodity prices realized in the Exploration and Production segment. * Fiscal year operating results before items impacting comparability were $2.25 per share, a 30 percent increase, also due to higher average commodity prices. * Production of crude oil and natural gas volumes for the quarter and fiscal year were 12.1 billion cubic feet equivalent ("Bcfe") and 47.4 Bcfe, respectively, and were in line with the Company's guidance. * The Company's expected fiscal 2007 production remains at the previously announced level of 47 to 52 Bcfe.* Based on recent reductions in crude oil and natural gas pricing strips, the Company is revising its earnings guidance for fiscal 2007 to a range of $2.10 to $2.30 per share. Earnings guidance had previously been $2.60 to $2.80 per share.* * A conference call is scheduled for Friday, November 10, 2006 at 11:00 am Eastern Standard Time. MANAGEMENT COMMENTS Philip C. Ackerman, Chairman and Chief Executive Officer of National Fuel Gas Company stated: "This year, the continued volatility of commodity prices caused us to experience non-cash write downs of our Canadian exploration and production properties in the third and fourth quarters. Absent these write downs, consolidated earnings improved dramatically. Similarly, cash provided by operating activities improved substantially, reaching $471 million, and was sufficient to fund an increase in capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. , an increase in our dividend, and the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of more than 2,000,000 shares of stock. Our balance sheet remains solid, with an equity component growing to more than 56 percent of our capital structure, and strong operational results in all of our business segments reflect the continued dedication of the Company's employees." SUMMARY OF RESULTS National Fuel had consolidated earnings for the quarter ended September 30, 2006 of $2.0 million, or $0.02 per share, a decrease of $47.2 million, or $0.55 per share, from the prior year's fourth quarter of $49.2 million or $0.57 per share. (note: all references to earnings per share are to diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of and all amounts are stated in U.S. dollars). Consolidated earnings for the fiscal year ended September 30, 2006 were $138.1 million, or $1.61 per share, a decrease of $51.4 million, or $0.62 per share, from the prior year's earnings of $189.5 million or $2.23 per share. Please refer to the table below to view the effect of items impacting comparability for both the quarterly and twelve-month periods. [TABLE OMITTED] 1 National Fuel presents the earnings of United Energy, a.s. ("United Energy"), its former operations in the Czech Republic Czech Republic, Czech Česká Republika (2005 est. pop. 10,241,000), republic, 29,677 sq mi (78,864 sq km), central Europe. It is bordered by Slovakia on the east, Austria on the south, Germany on the west, and Poland on the north. , as "Income from Discontinued Operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. ." 2 See discussion of these items below. As outlined in the table above, certain items included in GAAP earnings impacted the comparability of the Company's operating results when comparing the fourth quarter of 2006 to the fourth quarter of 2005 and the annual results for fiscal 2006 to those for fiscal 2005. Excluding these items, operating results for the current fourth quarter were $31.1 million, or $0.36 per share, an increase of $16.7 million, or $0.20 per share, over the prior year's quarter. Operating results for fiscal 2006 of $193.0 million, or $2.25 per share, increased $46.0 million, or $0.52 per share, compared to the prior year. Items impacting comparability will be discussed in more detail within the discussion of segment earnings below. DISCUSSION OF RESULTS BY SEGMENT (The following discussion of the earnings of each segment is summarized in a tabular form Same as table view with respect to printed output. in this report. It may be helpful to refer to those tables while reviewing this discussion.) 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
Western New York refers to the westernmost region of New York State. and northwestern Pennsylvania. The Utility segment's loss of approximately $1.4 million, or $0.02 per share, for the quarter ended September 30, 2006 improved from a loss of $6.1 million, or $0.07 per share, in the prior year's fourth quarter. Annual earnings of $49.8 million, or $0.58 per share, for the Utility segment were up $10.6 million, or $0.12 per share, compared to $39.2 million, or $0.46 per share, in fiscal 2005. In the fourth quarter, Distribution's New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Division recorded a loss of $0.6 million which represents an improvement from a loss of $2.9 million for the fourth quarter of 2005. In Distribution's Pennsylvania Division, the loss for the quarter of approximately $0.8 million improved from a loss of $3.2 million in the prior year's fourth quarter. The improvement in earnings in both Divisions was due primarily to lower bad debt expense. In the fourth quarter of 2005, Distribution increased the allowance for uncollectible accounts Uncollectible account An account which cannot be collected by a company because the customer is not able to pay or is unwilling to pay. in its New York and Pennsylvania divisions to reflect the increase in final billed account balances and the increased age of outstanding active receivables heading into the heating season. A similar adjustment to the allowance balance was not required in 2006. In addition, in the New York Division, higher usage per account during the quarter and the impact of the last rate case also contributed to the improvement. These positive impacts were partially offset by a higher effective tax rate due to positive tax adjustments recorded in 2005 that did not recur in 2006. For the year ended September 30, 2006, earnings in Distribution's New York Division of $40.0 million increased $9.2 million compared to the prior year. The comparability of the fiscal year results is impacted by a $2.6 million positive out-of-period adjustment recorded in the first quarter of fiscal 2006 to correct Distribution's calculation of the symmetrical symmetrical equally on both sides. symmetrical multifocal encephalopathy inherited disease in two forms: Limousin form appears at about a month old with blindness, forelimb hypermetria, hyperesthesia, nystagmus, aggression, weight sharing component of New York's gas adjustment rate. The increase in operating results is due to the impact of the last rate settlement and the absence of two negative adjustments recorded in 2005 to true-up regulatory liabilities that did not recur in 2006. Partially offsetting these increases to operating results were lower average usage per account overall for the year, higher bad debt (on an annual basis), pension, and interest expense, and a higher effective tax rate. For the fiscal year ended September 30, 2006, earnings in Distribution's Pennsylvania Division of $9.8 million, increased $1.4 million, or $0.02 per share, compared to the prior year. Earnings increased mainly due to the positive impact of the last rate settlement combined with lower bad debt expense. Partially offsetting this increase was warmer weather and lower usage per account. In addition, a higher effective tax rate partially offset the increase in earnings. Pipeline and Storage Segment The Pipeline and Storage segment operations are carried out by National Fuel Gas Supply Corporation ("Supply Corporation") and Empire State Pipeline ("Empire"). These companies provide 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 western Pennsylvania Western Pennsylvania consists of the western third of the state of Pennsylvania in the United States. Pittsburgh is the largest city in the region, with a metropolitan area of about 2.4 million people, and is the cultural center for Western Pennsylvania. . The Pipeline and Storage segment's earnings of $10.2 million, or $0.12 per share, for the quarter ended September 30, 2006, decreased $8.6 million, or $0.10 per share, when compared with the same period in the prior fiscal year. The comparability of the results for the quarter is impacted by a $3.9 million gain associated with insurance proceeds received in a prior year for which a contingency contingency n. an event that might not occur. (related to possible migration of storage gas) was resolved during last year's fourth quarter. Excluding that gain, operating results decreased $4.7 million mainly due to lower efficiency gas revenue resulting from a lower of cost or market lower of cost or market A method for determining an asset's value such that either the original cost or the current replacement cost, whichever is lowest, is used for financial reporting purposes. adjustment of $4.7 million (after tax) to the value of efficiency gas held in inventory at the end of the quarter. The value of the efficiency gas inventory was adjusted to current market prices at September 30, 2006. In addition, higher pension and other operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , partially offset by lower expenses for preliminary project costs associated with the Empire Connector project, contributed to the decrease in earnings. Earnings of $55.6 million, or $0.65 per share, for the fiscal year ended September 30, 2006, decreased $4.8 million, or $0.06 per share, when compared with the fiscal year ended September 30, 2005. The comparability of the fiscal year results is impacted by the $3.9 million gain in 2005 associated with insurance proceeds described above and a $2.6 million gain in 2005 on the sale of base gas from Supply Corporation's jointly-owned Ellisburg Storage Field. The increase in operating results of $1.7 million, or $0.02 per share, is due to higher transportation and storage revenues and a lower effective tax rate that more than offset lower efficiency gas revenues (including the impact of the lower of cost or market adjustment). Exploration and Production Segment The Exploration and Production segment operations are carried out by Seneca Resources Corporation ("Seneca"). Seneca explores for, develops and purchases natural gas and oil reserves Oil reserves refer to portions of oil in place that are claimed to be recoverable under economic constraints. Oil in the ground is not a "reserve" unless it is claimed to be economically recoverable, since as the oil is extracted, the cost of recovery increases incrementally in California, in the Appalachian region, in the Gulf Coast region of Texas, Louisiana and Alabama, and in the western provinces of Canada. The Exploration and Production segment's loss in the fourth quarter of fiscal 2006 of $7.2 million, or $0.08 per share, is a decrease of $18.9 million, or $0.21 per share, when compared with the prior year's fourth quarter. The decrease was mainly due to the previously announced non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $29.1 million (after tax) to write down the value of Seneca's Canadian oil and natural gas producing properties. Seneca uses the full cost method of accounting for determining the book value of its oil and natural gas properties. This method requires that Seneca perform a quarterly "ceiling test" to compare, on a country-by-country basis, the present value of future revenues from its oil and natural gas reserves based on period-end spot prices ("the ceiling") with the book value of those reserves at the balance sheet date. If the book value of the reserves in any country exceeds the ceiling, a non-cash charge must be recorded to reduce the book value of the reserves to the calculated ceiling. For purposes of calculating the ceiling, Seneca values its Canadian reserves (of which more than 80 percent are natural gas) at commodity prices on the last day of the quarter. Seneca determines this quarter-end price by reference to a Canadian current cash index price, a price quoted by Alberta Energy Company or "AECO AECO Aeromedical Evacuation Control Officer AECO Advance Engineering Change Order AECO Architecture, Engineering, Construction and Owner-operated ." That price had declined from approximately CDN (Content Delivery Network) A system of distributed content on a large intranet or the public Internet in which copies of content are replicated and cached throughout the network. $7.30/MMBtu at the end of March 2006 to CDN $5.50/MMBtu at the end of June 2006 and to CDN $3.70/MMBtu at September 30, 2006 (MMBtu is the designation for one million British Thermal Units British thermal unit, abbr. Btu, unit for measuring heat quantity in the customary system of English units of measurement, equal to the amount of heat required to raise the temperature of one pound of water at its maximum density [which occurs at a temperature of 39. , a measure of heating value The heating value or calorific value of a substance, usually a fuel or food, is the amount of heat released during the combustion of a specified amount of it. The calorific value is a characteristic for each substance. . One MMBtu is approximately equivalent to one thousand cubic feet, or one Mcf, of natural gas). At November 8, 2006, the AECO cash index price had rebounded to approximately CDN $7.50/MMBtu. If Seneca's Canadian reserves had been valued at that price, no impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. would have been recorded. In the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Seneca had a ceiling test cushion Cushion In the context of project financing, the extra amount of net cash flow remaining after expected debt service. cushion See call protection. (i.e. the present value of future net revenue exceeded the book value) of approximately $200.0 million at September 30, 2006. Excluding the impact of the ceiling test this quarter, Seneca's earnings were $22.0 million, or $0.26 per share, an increase of $10.3 million, or $0.13 per share, compared to the fourth quarter of the prior year. The increase was primarily due to higher weighted average crude oil prices after hedging, as well as the impact of a mark-to-market adjustment recorded in the fourth quarter of 2005 that did not recur in 2006. That adjustment related to losses on certain derivatives contracts that no longer qualified as effective hedges due to anticipated delays in oil and gas production volumes caused by Hurricane Rita Hurricane Rita was the fourth-most intense Atlantic hurricane ever recorded and the most intense tropical cyclone ever observed in the Gulf of Mexico. Rita caused $11.3 billion in damage on the U.S. Gulf Coast in September 2005. . This increase was partially offset by slightly lower natural gas prices and a 0.6 Bcfe decline in production. For the quarter ended September 30, 2006, the weighted average oil price (after hedging) was $45.73/barrel ("Bbl"), an increase of $15.03/Bbl from the prior year's quarter and the weighted average natural gas price (after hedging) was $6.36/Mcf, a decrease of $0.41/Mcf from the prior year's quarter. Earnings of $21.0 million, or $0.24 per share, for the fiscal year ended September 30, 2006 decreased $29.7 million, or $0.36 per share, when compared with the year ended September 30, 2005. The comparability of the fiscal year results is impacted by the two non-cash charges totaling $68.6 million (after tax) to write down the value of Seneca's Canadian oil and natural gas producing properties described above and in the Company's third quarter earnings release, and certain positive tax adjustments recorded in the second and third quarters of fiscal 2006. In the second quarter, Seneca recognized a $5.1 million benefit to earnings that resulted from an adjustment to a deferred income tax balance. Under generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , a company may recognize the benefit of certain expected future income tax deductions Tax deduction An expense that a taxpayer is allowed to deduct from taxable income. tax deduction See deduction. as a deferred tax asset only if it anticipates sufficient future taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. to utilize those deductions. As a result of changing circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or , Seneca increased its forecast of future taxable income in the Canadian division and, consequently, recorded a deferred tax asset for certain costs related to capital expenditures that it now expects to deduct de·duct v. de·duct·ed, de·duct·ing, de·ducts v.tr. 1. To take away (a quantity) from another; subtract. 2. To derive by deduction; deduce. v.intr. on future income tax returns. In the third quarter, Seneca recognized a $6.1 million benefit to earnings related to income taxes. The Company reversed a valuation allowance associated with the capital loss carryforward Loss Carryforward An accounting technique with which a company applies net operating losses of the current year to future year's profits in order to reduce tax liability. Notes: that resulted from the 2003 sale of certain Seneca oil properties and also recognized a tax benefit related to the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. resolution of certain open tax issues. Excluding the items that impacted comparability, annual operating results in the Exploration and Production segment increased $27.8 million, or $0.31 per share, from the prior year. This increase is mainly due to higher weighted average natural gas and oil prices after hedging that were partially offset by lower production volumes. For the year ended September 30, 2006, the weighted average oil price (after hedging) was $41.10/Bbl, an increase of $13.24/Bbl, or 47.5 percent, from the prior year and the weighted average natural gas price (after hedging) was $7.15/Mcf, an increase of $0.92/Mcf, or 14.8 percent, from the prior year. These price increases more than offset a 5.0 Bcfe decline in production. More than 4.0 Bcfe of the decline was due to production shut-ins resulting from Hurricane Rita. The increase in annual operating results also reflects the positive impact of a mark-to-market adjustment recorded in the fourth quarter of 2005 for losses on certain derivatives contracts that no longer qualified as effective hedges that did not recur in 2006 as described above. Energy Marketing National Fuel Resources, Inc. ("NFR (Near Field Recording) See near field optics and Terastor. ") comprises the Company's Energy Marketing segment. NFR markets natural gas to industrial, commercial, public authority and residential customers in western and central New York Central New York is a term used to broadly describe the central region of New York State, roughly including the following counties and cities: Cayuga County – Auburn Cortland County – Cortland Madison County – Oneida and northwestern Pennsylvania, offering competitively priced energy and energy management services to its customers. The Energy Marketing segment's net loss for the quarter of $0.1 million compares to earnings of $0.2 million in the fourth quarter last year. This decrease is mainly due to a slight decrease in margin. Earnings for the year ended September 30, 2006 in the Energy Marketing segment of $5.8 million, or $0.07 per share, increased $0.7 million, or $0.01 per share, from the prior year due to higher margins offset partially by higher operating expenses. Timber Segment The Timber segment operations are carried out by Highland Forest Resources, Inc. ("Highland") and Seneca's Northeast Division. This segment markets high quality hardwoods from its New York and Pennsylvania land holdings and owns two sawmill/dry kiln operations in northwestern Pennsylvania. The Timber segment's fourth quarter earnings of $0.5 million compared to $0.8 million in the prior year's fourth quarter. The decrease is due to lower margins during the quarter. Earnings for the year ended September 30, 2006 of $5.7 million, or $0.07 per share, increased $0.7 million, or $0.01 per share, from the prior year's earnings. The increase is due to higher margins overall for the fiscal year. Corporate and All Other Other direct, wholly-owned subsidiaries of the Company include Horizon Energy Development, Inc., a corporation formerly engaged in the development of international power projects, Horizon LFG LFG Landfill Gas LFG Lincoln Financial Group (insurance & financial planning company) LFG Looking For Group (Everquest) LFG Lexical-Functional Grammar (computational linguistics) , Inc., a corporation engaged, through subsidiaries, in the purchase, processing, transportation and sale of landfill gas, and Horizon Power, Inc. ("Horizon Power"), a corporation that develops and owns independent electric generation facilities which are fueled by natural gas or landfill gas. Break-even earnings in the quarter for this category decreased $23.8 million or $0.29 per share when compared to the prior year's fourth quarter. Excluding earnings from discontinued operations of $30.9 million, operating results improved from a loss of $7.2 million in the fourth quarter of 2005 to breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations results for the fourth quarter of 2006. Annual earnings of $0.2 million decreased $28.9 million, or $0.34 per share, when compared to the prior year. Excluding earnings from discontinued operations of $36.0 million, operating results improved from a loss of $6.9 million in fiscal year 2005 to income of $0.2 million in fiscal year 2006. The loss during last year's fourth quarter and fiscal year included an impairment in the value of the Horizon Power's 50 percent investment in Energy Systems North East, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , a partnership that owns an 80-megawatt natural gas-fired combined cycle A combined cycle is characteristic of a power producing engine or plant that employs more than one thermodynamic cycle. Heat engines are only able to use a portion of the energy their fuel generates (usually less than 50%). The remaining heat from combustion is generally wasted. power plant, and an impairment of a gas-fired turbine turbine, rotary engine that uses a continuous stream of fluid (gas or liquid) to turn a shaft that can drive machinery. A water, or hydraulic, turbine is used to drive electric generators in hydroelectric power stations. Horizon Power had previously planned to use in the development of an independent power plant. SHARE REPURCHASES Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. During the quarter, the Company repurchased in the open market 242,200 shares of its common stock pursuant to the authorization The right or permission to use a system resource; the process of granting access. See access control. of the Company's Board of Directors to repurchase up to 8,000,000 shares of its common stock. Through September 30, 2006, the Company has repurchased 2,526,550 shares pursuant to this authorization. Depending upon other investment opportunities, and subject to market conditions, such purchases may continue from time to time.* The Company estimates that the share repurchases had no meaningful impact upon the calculated diluted earnings per share for the quarter. For the year ended September 30, 2006, the Company estimates that the calculated diluted earnings per share were increased by $0.017 per share as a result of the share repurchases. With respect to the earnings guidance discussed below, the Company has not incorporated any additional share repurchases into its earnings per share guidance. The Company continues to view share repurchases as a good use of its cash, and will continue to consider repurchasing shares up to the full 8,000,000 repurchase authorization of its Board of Directors.* The Company cannot predict with any certainty the timing of those repurchases or the impact of those repurchases on the calculation of earnings per share. EARNINGS GUIDANCE The Company's consolidated earnings guidance for fiscal 2007 is in the range of $2.10 to $2.30 per share.* This guidance includes a revision in New York Mercantile Exchange New York Mercantile Exchange (NYMEX) The world's largest physical commodity futures exchange. ("NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). ") futures pricing for the unhedged portion of Seneca's projected production. The NYMEX futures closing prices on September 21, 2006 are incorporated into this current guidance on a consolidated basis, and are shown in this release. An earnings sensitivity is also shown in this release. Changes in actual prices from the NYMEX prices shown in the table, will affect earnings accordingly. Following a growing trend by other public companies, National Fuel will provide earnings guidance only on its consolidated earnings and will no longer provide earnings guidance by segment or by future quarterly periods. Based on certain corporate events, National Fuel will update its annual guidance as necessary. For its 2007 fiscal year, the $2.10 to $2.30 earnings guidance range includes: Exploration and Production segment * Production between 47 and 52 Bcfe.* * Pricing based on September 21, 2006 NYMEX futures pricing strip. * No new 2007 production from the venture with EOG Resources EOG Resources NYSE: EOG is a Fortune 600 company based in Houston, Texas. This company is one of the largest independent oil and natural gas companies in the United States. History 1999
Pipeline and Storage segment * Settlement of complaint proceeding brought by Joint State Agencies with new tariff tariff, tax on imported and, more rarely, exported goods. It is also called a customs duty. Tariffs may be distinguished from other taxes in that their predominant purpose is not financial but economic—not to increase a nation's revenue but to protect domestic rates in effect during fiscal 2007.* Utility segment * Pennsylvania rate settlement in effect as of January 1, 2007.* EARNINGS TELECONFERENCE The Company will host a conference call on Friday, November 10, 2006, at 11 a.m. (Eastern Standard Time) to discuss this announcement. There are two ways to access this call. For those with Internet access See how to access the Internet. , visit National Fuel's Web site at http://www.nationalfuelgas.com and click on the "For Investors" link at the top of the homepage. For those without Internet access, access is also provided by dialing (toll-free) 1-866-578-5771, and using the passcode "93603463." For those unable to listen to the live conference call, a replay will be available approximately one hour after the conclusion of the call at the same Web site link and by phone at (toll free) 888-286-8010 using passcode "91885312." Both the webcast and telephonic replay will be available until the close of business on Friday, November 17, 2006. National Fuel is an integrated energy company with $3.7 billion in assets comprised of the following five operating segments: Utility, Pipeline and Storage, Exploration and Production, Energy Marketing, and Timber. Additional information about National Fuel is available on its Internet Web site: http://www.nationalfuelgas.com or through its investor information service at 1-800-334-2188. * - Certain statements contained herein, including those which are designated with an asterisk (1) See Asterisk PBX. (2) In programming, the asterisk or "star" symbol (*) means multiplication. For example, 10 * 7 means 10 multiplied by 7. The * is also a key on computer keypads for entering expressions using multiplication. ("*") and those which use words such as "anticipates," "estimates," "expects," "intends," "plans," "predicts," "projects," and similar expressions, are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " as defined by the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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: changes in laws and regulations to which the Company is subject, including changes in tax, environmental, safety and employment laws and regulations; changes in economic conditions, including economic disruptions caused by terrorist activities, acts of war Tom Clancy's Op-Center: Acts of War is a technothriller by Jeff Rovin Plot introduction The mobile Regional Operations Center (ROC) in Turkey investigates a dam blown up by Kurdish terrorists. or major accidents; changes in demographic patterns and weather conditions, including the occurrence of severe weather, such as hurricanes; changes in the availability and/or price of natural gas or oil and the effect of such changes on the accounting treatment or valuation of derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. financial instruments or the Company's natural gas and oil reserves; impairments under the Securities and Exchange Commission's full cost ceiling test for natural gas and oil reserves; changes in the availability and/or price of derivative financial instruments; changes in the price differentials between various types of oil; failure of the price differential between heavy sour crude oil Sour crude oil contains the impurities hydrogen sulfide (H2S) and carbon dioxide, or mercaptans. All crude oil contains some impurities. When the total sulfide level in the oil is > 1 % the oil is called "sour". and light sweet crude oil Sweet crude oil is a type of petroleum. Petroleum is considered "sweet" if it contains less than 0.5% sulfur[1], compared to a higher level of sulfur in sour crude oil. Sweet crude oil contains small amounts of hydrogen sulfide and carbon dioxide. to return to its historical norm; inability to obtain new customers or retain existing ones; significant changes in competitive factors affecting the Company; governmental/regulatory actions, initiatives and proceedings, including those involving acquisitions, financings, rate cases (which address, among other things, allowed rates of return, rate design and retained gas), affiliate relationships, industry structure, franchise renewal, and environmental/safety requirements; unanticipated impacts of restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). initiatives in the natural gas and electric industries; significant changes from expectations in actual capital expenditures and operating expenses and unanticipated project delays or changes in project costs or plans, including changes in the plans of the sponsors of the proposed Millennium Pipeline with respect to that project; the nature and projected profitability of pending and potential projects and other investments; occurrences affecting the Company's ability to obtain funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. , debt or equity to finance needed capital expenditures and other investments, including any downgrades in the Company's credit ratings; uncertainty of oil and gas reserve estimates; ability to successfully identify and finance acquisitions or other investments and ability to operate and integrate existing and any subsequently acquired business or properties; ability to successfully identify, drill for and produce economically viable natural gas and oil reserves; significant changes from expectations in the Company's actual production levels for natural gas or oil; regarding foreign operations, changes in trade and monetary policies, inflation and exchange rates, taxes, operating conditions, laws and regulations related to foreign operations, and political and governmental changes; significant changes in tax rates or policies or in rates of inflation or interest; significant changes in the Company's relationship with its employees or contractors and the potential adverse effects if labor disputes, grievances or shortages were to occur; changes in accounting principles or the application of such principles to the Company; the cost and effects of legal and administrative claims against the Company; changes in actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin assumptions and the return on assets Return on assets (ROA) Indicator of profitability. Determined by dividing net income for the past 12 months by total average assets. Result is shown as a percentage. ROA can be decomposed into return on sales (net income/sales) multiplied by asset utilization (sales/assets). with respect to the Company's retirement plan and post retirement benefit plans; increasing health care costs and the resulting effect on health insurance premiums and on the obligation to provide 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 hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" or to reflect the occurrence of unanticipated events. 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