National Fuel Reports Second Quarter Results

Apr 25, 2001, 01:00 ET from National Fuel Gas Company

    BUFFALO, N.Y., April 25 /PRNewswire/ -- National Fuel Gas Company
 ("National Fuel" or the "Company")  (NYSE:   NFG) today reported earnings for
 the second quarter ended March 31, 2001 of $75.3 million, or $1.91 per share
 ($1.87 per share on a diluted basis).  This compares with earnings of
 $71.1 million, or $1.82 per share ($1.81 per share on a diluted basis), for
 the quarter ended March 31, 2000.
     Earnings for the first six months of fiscal 2001 were $128.3 million, or
 $3.25 per share ($3.19 per share on diluted basis).  This compares with
 earnings of $115.9 million, or $2.97 per share ($2.94 per share on a diluted
 basis), for the first six months of fiscal 2000.
     Bernard J. Kennedy, Chairman and Chief Executive Officer, stated: "We are
 encouraged by our year-to-date performance, which shows we are well on the way
 to deliver our estimated record basic earnings this year of $4.25 to $4.35 per
 share."*  The Company's earnings estimate for fiscal 2001 assumes an expense
 for stock appreciation rights ("SARs") based on the stock returning to a price
 of $63.00 at year end and other factors including, but not limited to,
 achieving certain oil and gas production volumes and realizing certain
 commodity prices.  Furthermore, this projection also assumes that no material
 acquisitions or divestitures will occur during the remainder of fiscal 2001.
 
     DISCUSSION OF SECOND QUARTER RESULTS
     The increase in earnings of $4.2 million for the quarter as compared with
 the prior year's quarter was the result of higher earnings in the Exploration
 and Production and the Pipeline and Storage segments.  These higher earnings
 were offset in part by lower earnings in the Utility, International, Timber
 and Energy Marketing segments.  Increased earnings were also offset by a net
 loss in the All Other category compared with net income in the prior year's
 quarter.
     In the Exploration and Production segment, earnings for the quarter ended
 March 31, 2001 were $16.6 million, up $8.7 million from the prior year's
 second quarter. An 89% increase in oil production, largely attributable to
 production from National Fuel's Canadian properties acquired last June,
 combined with higher commodity prices were the main reasons for higher
 earnings.
     Included in this segment's results is a $2.2 million (after tax) negative
 valuation in the second quarter of no cost collars used for hedging oil and
 gas prices.  This represents a portion of the expected reversal of the
 positive valuation of $3.8 million (after tax) recorded in the first quarter.
 A reversal of SARs expense was also included in this segment's earnings (see
 discussion below).  Additional details on the activities of Seneca Resources
 Corporation (Seneca Resources) can be found in the separate press release
 issued today by Seneca Resources.
     Mr. Kennedy added: "Another of the bright spots in the Exploration and
 Production segment that should not be overlooked is the 91% drilling success
 rate this quarter, with a number of successful exploration wells having been
 completed in the Gulf Coast region.  We are also proud that Seneca Resources
 was recently recognized by the Minerals Management Service of the United
 States Department of the Interior for its safe drilling operations in the Gulf
 area.  This commitment to safety, combined with Seneca Resources' continued
 emphasis on cost reduction, will ensure this segment's strong contribution to
 this year's earnings results."*
     The Utility segment's second quarter fiscal 2001 earnings were
 $39.4 million, or $2.1 million less when compared with the second quarter of
 fiscal 2000.  A primary factor in this quarter's lower earnings is the
 $10.0 million decrease in rates for the Utility's New York customers that went
 into effect October 1, 2000 in connection with the three year rate settlement
 agreement reached with the New York State Public Service Commission.  This
 rate decrease was provided in the form of a bill credit included in rates
 during the November 1 through March 31 heating season. Colder weather in the
 Utility's Pennsylvania service territory and the continuing efforts to control
 Operating and Maintenance expenses and improve efficiencies offset to a
 certain extent the full impact of the New York base rate reduction.  While
 benefiting the Utility segment in the future, another significant factor
 regarding the lower earnings was the $3.6 million (after tax) expense incurred
 in connection with an early retirement offer accepted by 119 employees in New
 York.* Earnings were also impacted by the reversal of SARs expense previously
 recorded.
     In the Pipeline and Storage segment, earnings of $14.8 million for the
 quarter ended March 31, 2001 were up $4.6 million compared to the second
 quarter of fiscal 2000.  The primary reasons for the increase were the
 reversal of SARs expense and higher efficiency gas revenues compared to a year
 ago.
     The International segment's earnings for the second quarter of fiscal 2001
 of $2.8 million were $1.5 million lower than the earnings in the prior year's
 quarter. The decrease can be attributed chiefly to a decline in electric
 revenues as a result of the scheduled shutdown of a generating turbine and a
 decline in electric rates. Decreases in Operating and Maintenance expenses
 were a partial offset.
     The Timber segment's second quarter earnings of $2.7 million were
 $1.4 million less than the prior year's second quarter.  This decrease is the
 result of a gain realized on the sale of timber properties in last year's
 second quarter.
     The Energy Marketing segment's second quarter fiscal 2001 earnings of
 $0.5 million were $0.9 million less than last year's second quarter.  This
 primarily reflects lower sales margins and higher interest expense during the
 quarter.
     The All Other category incurred a second quarter net loss of $2.5 million
 compared to $0.7 million of earnings during the second quarter last year.  The
 loss is the result of a natural gas inventory write-down by National Fuel's
 wholly-owned subsidiary Upstate Energy Inc. (Upstate).  This subsidiary is
 engaged in stored gas trading.
     The decrease in the market price of National Fuel's stock from $62.94 at
 December 31, 2000 to $53.58 at March 31, 2001 resulted in the reversal of
 $9.7 million (after tax) of previously recorded expense for SARs.  This
 reversal of expense was spread across all segments with the greatest impact on
 Pipeline and Storage.
 
     DISCUSSION OF SIX MONTHS RESULTS
     The increase in earnings of $12.3 million for the six months ended March
 31, 2001 as compared with the prior year's period was mainly the result of
 higher earnings in the Exploration and Production segment as the increase in
 oil production combined with higher commodity prices drove up earnings.  These
 higher earnings were offset in part by lower earnings in the Utility and
 International segments and a net loss in the All Other category.  In the
 Utility segment, the decrease in rates in the New York jurisdiction, the first
 quarter early retirement expense in Pennsylvania and the second quarter early
 retirement expense in New York were the factors leading to lower earnings.  In
 the International segment, lower heat and electric margins have had a negative
 impact on earnings.  In the All Other category, the net loss is primarily the
 result of Upstate's inventory write-down.
     The Company will host a conference call on Thursday, April 26, 2001 at
 2:00 p.m. (Eastern Time) to discuss this announcement.  There are two ways to
 access this call; first you may go to the Company's home page at its Internet
 Web site http://www.nationalfuelgas.com and click on the words "Conference
 Call", and second, for those without Internet access, a toll free number may
 be used.  Please call 1-888-455-5419 and use the passcode "National Fuel" to
 listen to the live call.  For those unable to listen to the live broadcast, a
 replay will be available at the above-mentioned Internet Web site beginning
 about one hour after the call.  In addition, the call will be recorded and a
 toll-free replay will be available for playback by telephone approximately one
 hour after the call is completed at 1-888-568-0673 (no passcode is required).
 National Fuel is an integrated energy company with $3.5 billion in assets
 comprised of the following six operating segments: Utility, Pipeline and
 Storage, Exploration and Production, International, 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 "*", are "forward-looking statements" as defined by
      the Private Securities Litigation Reform Act of 1995 and 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 economic conditions or weather conditions; changes
      in the availability or price of natural gas and oil; significant changes
      in competitive conditions affecting the Company; governmental/regulatory
      actions, initiatives and proceedings, including those affecting
      acquisitions, financings, allowed rates of return, industry and rate
      structure, franchise renewal, and environmental/safety requirements;
      significant changes from expectations in actual capital expenditures and
      operating expenses and unanticipated project delays or changes in project
      costs; the nature and projected profitability of pending and potential
      projects and other investments; uncertainty of oil and gas reserve
      estimates; ability to successfully identify and finance oil and gas
      property acquisitions and ability to operate 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 foreign trade and monetary policies, laws, and regulations
      related to foreign operations, political and governmental changes,
      inflation and exchange rates, taxes and operating conditions; significant
      changes in tax rates or policies or in rates of inflation or interest;
      significant changes in the Company's relationship with its employees and
      the potential adverse effects if labor disputes or grievances were to
      occur; or changes in accounting principles or the application of such
      principles to the Company.  The Company disclaims any obligation to
      update any forward-looking statements to reflect events or circumstances
      after the date hereof or to reflect the occurrence of unanticipated
      events.
 
 
                             NATIONAL FUEL GAS COMPANY
                                  AND SUBSIDIARIES
 
     (Thousands of Dollars, except per share amounts)
 
                                  Three Months Ended       Six Months Ended
                                      March 31,               March 31,
                                     (Unaudited)             (Unaudited)
     SUMMARY OF OPERATIONS            2001        2000        2001        2000
     Operating Revenues           $879,869    $517,810  $1,439,373    $894,798
 
     Operating Expenses:
       Purchased Gas               544,525     218,939     817,605     347,029
       Fuel Used in Heat and
        Electric Generation         21,161      18,887      37,225      36,667
       Operation Expense and
        Maintenance                 88,655      90,593     189,946     173,272
       Property, Franchise and
        Other Taxes                 27,473      23,610      48,925      46,401
       Depreciation, Depletion
        and Amortization            41,965      33,886      81,101      67,602
       Income Taxes - Current       51,804      44,660      72,704      52,406
     - Deferred                        714      (3,882)     13,173      10,110
                                   776,297     426,693   1,260,679     733,487
 
     Operating Income              103,572      91,117     178,694     161,311
     Other Income                    1,498       4,151       9,662       5,365
 
     Income Before Interest
      Charges and Minority
       Interest in Foreign
        Subsidiaries               105,070      95,268     188,356     166,676
 
     Interest Charges               28,494      22,852      57,881      48,081
     Minority Interest in
      Foreign Subsidiaries          (1,301)     (1,365)     (2,216)     (2,676)
 
     Net Income Available for
      Common Stock                 $75,275     $71,051    $128,259    $115,919
 
     Earnings Per Common Share:
        Basic                        $1.91       $1.82       $3.25       $2.97
        Diluted                      $1.87       $1.81       $3.19       $2.94
 
     Weighted Average Common
      Shares:
       Used in Basic
        Calculation             39,489,133  39,076,668  39,430,321  38,999,490
       Used in Diluted
        Calculation             40,151,332  39,347,942  40,157,794  39,372,508
 
 
                            NATIONAL FUEL GAS COMPANY
                                 AND SUBSIDIARIES
 
                               SEGMENT INFORMATION
                              (Thousands of Dollars)
 
 
                                                   Three Months Ended
                                                       March 31,
                                                      (Unaudited)
 
                                                                    Increase
                                              2001        2000     (Decrease)
     Operating Revenues
     Utility                                 $577,999    $346,374    $231,625
     Pipeline and Storage                      44,642      43,196       1,446
     Exploration and Production                98,451      50,350      48,101
     International                             38,582      39,609      (1,027)
     Energy Marketing                         129,374      53,733      75,641
     Timber                                    14,635      11,531       3,104
        Total Reportable Segments             903,683     544,793     358,890
     All Other                                 16,251       3,785      12,466
     Intersegment Eliminations                (40,065)    (30,768)     (9,297)
        Total Consolidated                   $879,869    $517,810    $362,059
 
     Operating Income (Loss)
      Before Income Taxes
     Utility                                  $74,513     $73,931        $582
     Pipeline and Storage                      28,175      19,132       9,043
     Exploration and Production                40,447      19,775      20,672
     International                              9,349      10,818      (1,469)
     Energy Marketing                           1,447       2,306        (859)
     Timber                                     5,409       4,843         566
        Total Reportable Segments             159,340     130,805      28,535
     All Other                                 (3,642)      1,094      (4,736)
     Corporate                                    392          (4)        396
        Total Consolidated                   $156,090    $131,895     $24,195
 
     Net Income
     Utility                                  $39,442     $41,525     $(2,083)
     Pipeline and Storage                      14,765      10,156       4,609
     Exploration and Production                16,567       7,879       8,688
     International                              2,781       4,317      (1,536)
     Energy Marketing                             525       1,465        (940)
     Timber                                     2,725       4,090      (1,365)
        Total Reportable Segments              76,805      69,432       7,373
     All Other                                 (2,474)        672      (3,146)
     Corporate                                    944         947          (3)
        Total Consolidated                    $75,275     $71,051      $4,224
 
 
                           NATIONAL FUEL GAS COMPANY
                                 AND SUBSIDIARIES
 
                               SEGMENT INFORMATION
                              (Thousands of Dollars)
 
 
                                                   Six Months Ended
                                                       March 31,
                                                      (Unaudited)
 
                                                                   Increase
                                              2001        2000    (Decrease)
     Operating Revenues
     Utility                                  $932,166   $579,590   $352,576
     Pipeline and Storage                       87,306     86,361        945
     Exploration and Production                199,706    100,368     99,338
     International                              69,807     77,682     (7,875)
     Energy Marketing                          177,560     82,908     94,652
     Timber                                     25,572     20,271      5,301
        Total Reportable Segments            1,492,117    947,180    544,937
     All Other                                  17,549      5,011     12,538
     Intersegment Eliminations                 (70,293)   (57,393)   (12,900)
        Total Consolidated                  $1,439,373   $894,798   $544,575
 
     Operating Income (Loss)
      Before Income Taxes
     Utility                                  $113,140   $116,442    $(3,302)
     Pipeline and Storage                       38,473     37,351      1,122
     Exploration and Production                 90,633     40,289     50,344
     International                              15,989     19,791     (3,802)
     Energy Marketing                            3,862      2,251      1,611
     Timber                                      8,309      7,353        956
        Total Reportable Segments              270,406    223,477     46,929
     All Other                                  (4,665)       924     (5,589)
     Corporate                                  (1,170)      (574)      (596)
        Total Consolidated                    $264,571   $223,827    $40,744
 
     Net Income
     Utility                                   $57,729    $63,278    $(5,549)
     Pipeline and Storage                       21,360     19,438      1,922
     Exploration and Production                 39,568     15,884     23,684
     International                               5,021      9,000     (3,979)
     Energy Marketing                            1,869      1,448        421
     Timber                                      5,121      5,020        101
        Total Reportable Segments              130,668    114,068     16,600
     All Other                                  (3,205)       527     (3,732)
     Corporate                                     796      1,324       (528)
        Total Consolidated                    $128,259   $115,919    $12,340
 
 
 
                           NATIONAL FUEL GAS COMPANY
                                AND SUBSIDIARIES
 
                        SEGMENT INFORMATION (Continued)
                             (Thousands of Dollars)
 
 
                                               Three Months Ended
                                                 March 31,
                                                (Unaudited)
 
                                                                 Increase
                                        2001            2000    (Decrease)
 
 
     Depreciation, Depletion
      and Amortization:
     Utility                          $8,837          $9,014        $(177)
     Pipeline and Storage              6,556           5,957           599
     Exploration and Production       22,465          15,605         6,860
     International                     3,254           2,824           430
     Energy Marketing                     56              47             9
     Timber                              767             418           349
         Total Reportable Segments    41,935          33,865         8,070
     All Other                            29              20             9
     Corporate                             1               1            --
         Total Consolidated          $41,965         $33,886        $8,079
 
     Expenditures for
      Long-Lived Assets
     Utility                          $8,757         $12,282      $(3,525)
     Pipeline and Storage              7,031          17,226      (10,195)
     Exploration and Production       47,454          21,165        26,289
     International                       362           1,061         (699)
     Energy Marketing                     32              --            32
     Timber                            2,194             838         1,356
         Total Reportable Segments    65,830          52,572        13,258
     All Other                           363           2,604       (2,241)
         Total Consolidated          $66,193         $55,176       $11,017
 
 
                                            Six Months Ended
                                                 March 31,
                                               (Unaudited)
 
                                                                 Increase
                                        2001            2000    (Decrease)
 
 
     Depreciation, Depletion
      and Amortization:
     Utility                         $18,061         $18,029           $32
     Pipeline and Storage             12,443          11,909           534
     Exploration and Production       42,912          31,114        11,798
     International                     5,958           5,713           245
     Energy Marketing                    116              99            17
     Timber                            1,548             692           856
     Total Reportable Segments        81,038          67,556        13,482
     All Other                            62              45            17
     Corporate                             1               1            --
     Total Consolidated              $81,101         $67,602       $13,499
 
     Expenditures for
      Long-Lived Assets
     Utility                         $18,873         $28,609      $(9,736)
     Pipeline and Storage             13,473          24,425      (10,952)
     Exploration and Production       90,200          50,103        40,097
     International                     9,809           4,081         5,728
     Energy Marketing                     32              --            32
     Timber                            2,783           4,276       (1,493)
         Total Reportable Segments   135,170         111,494        23,676
     All Other                           372           3,604       (3,232)
         Total Consolidated         $135,542        $115,098       $20,444
 
 
     DEGREE DAYS
 
                                                    Percent Colder
                                                    (Warmer) Than:
     Three Months Ended March 31
 
                       Normal       2001    2000   Normal Last Year
 
     Buffalo, NY        3,386      3,236   3,058    (4.4)       5.8
     Erie, PA           3,176      3,112   2,789    (2.0)      11.6
 
                             NATIONAL FUEL GAS COMPANY
                                  AND SUBSIDIARIES
 
                       EXPLORATION AND PRODUCTION INFORMATION
 
 
                                  Three Months Ended       Six Months Ended
                                      March 31,               March 31,
                                               Increase               Increase
                                              (Decrease)             (Decrease)
                                 2001    2000             2001   2000
 
     Gas Production/Prices:
     Production (MMcf)
       Gulf Coast                6,987   8,142  (1,155) 13,416  16,087  (2,671)
       West Coast                1,052   1,126     (74)  2,097   2,243    (146)
       Appalachia                1,064   1,045      19   2,106   2,152     (46)
       Canada                      108      --     108     230      --     230
                                 9,211  10,313  (1,102) 17,849  20,482  (2,633)
     Average Prices (Per  Mcf)
       Gulf Coast                $7.18   $2.59   $4.59   $6.57   $2.58   $3.99
       West Coast                15.04    2.61   12.43   12.21    2.75    9.46
       Appalachia                 5.99    2.89    3.10    5.09    2.89    2.20
       Canada                     5.18     --     5.18    4.95     --     4.95
         Weighted Average         7.92    2.62    5.30    7.04    2.63    4.41
         Weighted Average after
          Hedging                 5.24    2.77    2.47    4.51    2.70    1.81
 
     Oil Production/Prices:
     Production (Thousands of
      Barrels)
       Gulf Coast                  468     331     137     824     653     171
       West Coast                  714     707       7   1,459   1,392      67
       Appalachia                    1       1      --       3       5      (2)
       Canada                      777      --     777   1,518      --   1,518
                                 1,960   1,039     921   3,804   2,050   1,754
 
     Average Prices (Per Barrel)
       Gulf Coast               $27.86  $28.67  $(0.81) $29.56  $26.05   $3.51
       West Coast                23.79   23.88   (0.09)  25.40   21.96    3.44
       Appalachia                29.90   25.10    4.80   30.53   22.58    7.95
       Canada                    23.38    --     23.38   25.64    --     25.64
         Weighted Average        24.60   25.41   (0.81)  26.40   23.26    3.14
         Weighted Average after
          Hedging                20.81   19.12    1.69   21.88   18.26    3.62
 
                             NATIONAL FUEL GAS COMPANY
                                  AND SUBSIDIARIES
 
 
     Utility Throughput - (millions of cubic feet - MMcf)
 
                                Three Months Ended        Six Months Ended
                                    March 31,                March 31,
                                             Increase                  Increase
                                            (Decrease)               (Decrease)
                               2001    2000             2001     2000
         Residential Sales    33,847  30,994   2,853   57,848   51,460   6,388
         Commercial Sales      6,849   5,841   1,008   11,300    9,518   1,782
         Industrial Sales        986   1,093    (107)   2,659    2,079     580
                              41,682  37,928   3,754   71,807   63,057   8,750
          Off-System Sales     4,302   5,860  (1,558)   7,483    8,620  (1,137)
         Transportation       23,850  26,850  (3,000)  41,365   43,659  (2,294)
                              69,834  70,638    (804) 120,655  115,336   5,319
 
 
     Pipeline & Storage Throughput- (MMcf)
                               Three Months Ended         Six Months Ended
                                    March 31,                March 31,
                                             Increase                Increase
                                            (Decrease)              (Decrease)
                              2001     2000             2001     2000
         Firm Transportation
          - Affiliated        51,288   47,293  3,995   92,708   81,366  11,342
         Firm Transportation
          - Non-Affiliated    54,367   54,816   (449) 102,489  103,373    (884)
         Interruptible
          Transportation       2,667    2,206    461    8,617    2,448   6,169
                             108,322  104,315  4,007  203,814  187,187  16,627
 
 
 
     Energy Marketing Volumes
 
                                           Three Months Ended
                                              March 31,
                                                                  Increase
                                        2001            2000    (Decrease)
     Natural Gas (MMcf)               14,800          13,101         1,699
 
     International Sales Volumes
                                           Three Months Ended
                                               March 31,
                                                                  Increase
                                        2001            2000    (Decrease)
     Heating (Gigajoules)          4,280,832       4,296,704      (15,872)
     Electricity (Megawatt hours)    291,906         322,042      (30,136)
 
     Timber Board Feet (Thousands)
                                          Three Months Ended
                                             March 31,
                                                                  Increase
                                        2001            2000    (Decrease)
     Log Sales                         3,087           2,574           513
     Green Lumber Sales                2,817           2,160           657
     Kiln Dry Lumber Sales             2,185           1,690           495
                                       8,089           6,424         1,665
 
 
 
     Energy Marketing Volumes
 
                                            Six Months Ended
                                                March 31,
                                                                  Increase
                                        2001            2000    (Decrease)
     Natural Gas (MMcf)               23,031          22,263           768
 
     International Sales Volumes
                                              Six Months Ended
                                                  March 31,
                                                                 Increase
                                        2001            2000    (Decrease)
     Heating (Gigajoules)          7,613,783       8,264,472     (650,689)
 
     Electricity (Megawatt hours)    621,930         639,697      (17,767)
 
     Timber Board Feet (Thousands)
                                            Six Months Ended
                                              March 31,
                                                                 Increase
                                        2001            2000    (Decrease)
     Log Sales                         5,148           5,108            40
     Green Lumber Sales                5,083           4,154           929
     Kiln Dry Lumber Sales             4,253           3,297           956
                                      14,484          12,559         1,925
 
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SOURCE National Fuel Gas Company
    BUFFALO, N.Y., April 25 /PRNewswire/ -- National Fuel Gas Company
 ("National Fuel" or the "Company")  (NYSE:   NFG) today reported earnings for
 the second quarter ended March 31, 2001 of $75.3 million, or $1.91 per share
 ($1.87 per share on a diluted basis).  This compares with earnings of
 $71.1 million, or $1.82 per share ($1.81 per share on a diluted basis), for
 the quarter ended March 31, 2000.
     Earnings for the first six months of fiscal 2001 were $128.3 million, or
 $3.25 per share ($3.19 per share on diluted basis).  This compares with
 earnings of $115.9 million, or $2.97 per share ($2.94 per share on a diluted
 basis), for the first six months of fiscal 2000.
     Bernard J. Kennedy, Chairman and Chief Executive Officer, stated: "We are
 encouraged by our year-to-date performance, which shows we are well on the way
 to deliver our estimated record basic earnings this year of $4.25 to $4.35 per
 share."*  The Company's earnings estimate for fiscal 2001 assumes an expense
 for stock appreciation rights ("SARs") based on the stock returning to a price
 of $63.00 at year end and other factors including, but not limited to,
 achieving certain oil and gas production volumes and realizing certain
 commodity prices.  Furthermore, this projection also assumes that no material
 acquisitions or divestitures will occur during the remainder of fiscal 2001.
 
     DISCUSSION OF SECOND QUARTER RESULTS
     The increase in earnings of $4.2 million for the quarter as compared with
 the prior year's quarter was the result of higher earnings in the Exploration
 and Production and the Pipeline and Storage segments.  These higher earnings
 were offset in part by lower earnings in the Utility, International, Timber
 and Energy Marketing segments.  Increased earnings were also offset by a net
 loss in the All Other category compared with net income in the prior year's
 quarter.
     In the Exploration and Production segment, earnings for the quarter ended
 March 31, 2001 were $16.6 million, up $8.7 million from the prior year's
 second quarter. An 89% increase in oil production, largely attributable to
 production from National Fuel's Canadian properties acquired last June,
 combined with higher commodity prices were the main reasons for higher
 earnings.
     Included in this segment's results is a $2.2 million (after tax) negative
 valuation in the second quarter of no cost collars used for hedging oil and
 gas prices.  This represents a portion of the expected reversal of the
 positive valuation of $3.8 million (after tax) recorded in the first quarter.
 A reversal of SARs expense was also included in this segment's earnings (see
 discussion below).  Additional details on the activities of Seneca Resources
 Corporation (Seneca Resources) can be found in the separate press release
 issued today by Seneca Resources.
     Mr. Kennedy added: "Another of the bright spots in the Exploration and
 Production segment that should not be overlooked is the 91% drilling success
 rate this quarter, with a number of successful exploration wells having been
 completed in the Gulf Coast region.  We are also proud that Seneca Resources
 was recently recognized by the Minerals Management Service of the United
 States Department of the Interior for its safe drilling operations in the Gulf
 area.  This commitment to safety, combined with Seneca Resources' continued
 emphasis on cost reduction, will ensure this segment's strong contribution to
 this year's earnings results."*
     The Utility segment's second quarter fiscal 2001 earnings were
 $39.4 million, or $2.1 million less when compared with the second quarter of
 fiscal 2000.  A primary factor in this quarter's lower earnings is the
 $10.0 million decrease in rates for the Utility's New York customers that went
 into effect October 1, 2000 in connection with the three year rate settlement
 agreement reached with the New York State Public Service Commission.  This
 rate decrease was provided in the form of a bill credit included in rates
 during the November 1 through March 31 heating season. Colder weather in the
 Utility's Pennsylvania service territory and the continuing efforts to control
 Operating and Maintenance expenses and improve efficiencies offset to a
 certain extent the full impact of the New York base rate reduction.  While
 benefiting the Utility segment in the future, another significant factor
 regarding the lower earnings was the $3.6 million (after tax) expense incurred
 in connection with an early retirement offer accepted by 119 employees in New
 York.* Earnings were also impacted by the reversal of SARs expense previously
 recorded.
     In the Pipeline and Storage segment, earnings of $14.8 million for the
 quarter ended March 31, 2001 were up $4.6 million compared to the second
 quarter of fiscal 2000.  The primary reasons for the increase were the
 reversal of SARs expense and higher efficiency gas revenues compared to a year
 ago.
     The International segment's earnings for the second quarter of fiscal 2001
 of $2.8 million were $1.5 million lower than the earnings in the prior year's
 quarter. The decrease can be attributed chiefly to a decline in electric
 revenues as a result of the scheduled shutdown of a generating turbine and a
 decline in electric rates. Decreases in Operating and Maintenance expenses
 were a partial offset.
     The Timber segment's second quarter earnings of $2.7 million were
 $1.4 million less than the prior year's second quarter.  This decrease is the
 result of a gain realized on the sale of timber properties in last year's
 second quarter.
     The Energy Marketing segment's second quarter fiscal 2001 earnings of
 $0.5 million were $0.9 million less than last year's second quarter.  This
 primarily reflects lower sales margins and higher interest expense during the
 quarter.
     The All Other category incurred a second quarter net loss of $2.5 million
 compared to $0.7 million of earnings during the second quarter last year.  The
 loss is the result of a natural gas inventory write-down by National Fuel's
 wholly-owned subsidiary Upstate Energy Inc. (Upstate).  This subsidiary is
 engaged in stored gas trading.
     The decrease in the market price of National Fuel's stock from $62.94 at
 December 31, 2000 to $53.58 at March 31, 2001 resulted in the reversal of
 $9.7 million (after tax) of previously recorded expense for SARs.  This
 reversal of expense was spread across all segments with the greatest impact on
 Pipeline and Storage.
 
     DISCUSSION OF SIX MONTHS RESULTS
     The increase in earnings of $12.3 million for the six months ended March
 31, 2001 as compared with the prior year's period was mainly the result of
 higher earnings in the Exploration and Production segment as the increase in
 oil production combined with higher commodity prices drove up earnings.  These
 higher earnings were offset in part by lower earnings in the Utility and
 International segments and a net loss in the All Other category.  In the
 Utility segment, the decrease in rates in the New York jurisdiction, the first
 quarter early retirement expense in Pennsylvania and the second quarter early
 retirement expense in New York were the factors leading to lower earnings.  In
 the International segment, lower heat and electric margins have had a negative
 impact on earnings.  In the All Other category, the net loss is primarily the
 result of Upstate's inventory write-down.
     The Company will host a conference call on Thursday, April 26, 2001 at
 2:00 p.m. (Eastern Time) to discuss this announcement.  There are two ways to
 access this call; first you may go to the Company's home page at its Internet
 Web site http://www.nationalfuelgas.com and click on the words "Conference
 Call", and second, for those without Internet access, a toll free number may
 be used.  Please call 1-888-455-5419 and use the passcode "National Fuel" to
 listen to the live call.  For those unable to listen to the live broadcast, a
 replay will be available at the above-mentioned Internet Web site beginning
 about one hour after the call.  In addition, the call will be recorded and a
 toll-free replay will be available for playback by telephone approximately one
 hour after the call is completed at 1-888-568-0673 (no passcode is required).
 National Fuel is an integrated energy company with $3.5 billion in assets
 comprised of the following six operating segments: Utility, Pipeline and
 Storage, Exploration and Production, International, 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 "*", are "forward-looking statements" as defined by
      the Private Securities Litigation Reform Act of 1995 and 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 economic conditions or weather conditions; changes
      in the availability or price of natural gas and oil; significant changes
      in competitive conditions affecting the Company; governmental/regulatory
      actions, initiatives and proceedings, including those affecting
      acquisitions, financings, allowed rates of return, industry and rate
      structure, franchise renewal, and environmental/safety requirements;
      significant changes from expectations in actual capital expenditures and
      operating expenses and unanticipated project delays or changes in project
      costs; the nature and projected profitability of pending and potential
      projects and other investments; uncertainty of oil and gas reserve
      estimates; ability to successfully identify and finance oil and gas
      property acquisitions and ability to operate 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 foreign trade and monetary policies, laws, and regulations
      related to foreign operations, political and governmental changes,
      inflation and exchange rates, taxes and operating conditions; significant
      changes in tax rates or policies or in rates of inflation or interest;
      significant changes in the Company's relationship with its employees and
      the potential adverse effects if labor disputes or grievances were to
      occur; or changes in accounting principles or the application of such
      principles to the Company.  The Company disclaims any obligation to
      update any forward-looking statements to reflect events or circumstances
      after the date hereof or to reflect the occurrence of unanticipated
      events.
 
 
                             NATIONAL FUEL GAS COMPANY
                                  AND SUBSIDIARIES
 
     (Thousands of Dollars, except per share amounts)
 
                                  Three Months Ended       Six Months Ended
                                      March 31,               March 31,
                                     (Unaudited)             (Unaudited)
     SUMMARY OF OPERATIONS            2001        2000        2001        2000
     Operating Revenues           $879,869    $517,810  $1,439,373    $894,798
 
     Operating Expenses:
       Purchased Gas               544,525     218,939     817,605     347,029
       Fuel Used in Heat and
        Electric Generation         21,161      18,887      37,225      36,667
       Operation Expense and
        Maintenance                 88,655      90,593     189,946     173,272
       Property, Franchise and
        Other Taxes                 27,473      23,610      48,925      46,401
       Depreciation, Depletion
        and Amortization            41,965      33,886      81,101      67,602
       Income Taxes - Current       51,804      44,660      72,704      52,406
     - Deferred                        714      (3,882)     13,173      10,110
                                   776,297     426,693   1,260,679     733,487
 
     Operating Income              103,572      91,117     178,694     161,311
     Other Income                    1,498       4,151       9,662       5,365
 
     Income Before Interest
      Charges and Minority
       Interest in Foreign
        Subsidiaries               105,070      95,268     188,356     166,676
 
     Interest Charges               28,494      22,852      57,881      48,081
     Minority Interest in
      Foreign Subsidiaries          (1,301)     (1,365)     (2,216)     (2,676)
 
     Net Income Available for
      Common Stock                 $75,275     $71,051    $128,259    $115,919
 
     Earnings Per Common Share:
        Basic                        $1.91       $1.82       $3.25       $2.97
        Diluted                      $1.87       $1.81       $3.19       $2.94
 
     Weighted Average Common
      Shares:
       Used in Basic
        Calculation             39,489,133  39,076,668  39,430,321  38,999,490
       Used in Diluted
        Calculation             40,151,332  39,347,942  40,157,794  39,372,508
 
 
                            NATIONAL FUEL GAS COMPANY
                                 AND SUBSIDIARIES
 
                               SEGMENT INFORMATION
                              (Thousands of Dollars)
 
 
                                                   Three Months Ended
                                                       March 31,
                                                      (Unaudited)
 
                                                                    Increase
                                              2001        2000     (Decrease)
     Operating Revenues
     Utility                                 $577,999    $346,374    $231,625
     Pipeline and Storage                      44,642      43,196       1,446
     Exploration and Production                98,451      50,350      48,101
     International                             38,582      39,609      (1,027)
     Energy Marketing                         129,374      53,733      75,641
     Timber                                    14,635      11,531       3,104
        Total Reportable Segments             903,683     544,793     358,890
     All Other                                 16,251       3,785      12,466
     Intersegment Eliminations                (40,065)    (30,768)     (9,297)
        Total Consolidated                   $879,869    $517,810    $362,059
 
     Operating Income (Loss)
      Before Income Taxes
     Utility                                  $74,513     $73,931        $582
     Pipeline and Storage                      28,175      19,132       9,043
     Exploration and Production                40,447      19,775      20,672
     International                              9,349      10,818      (1,469)
     Energy Marketing                           1,447       2,306        (859)
     Timber                                     5,409       4,843         566
        Total Reportable Segments             159,340     130,805      28,535
     All Other                                 (3,642)      1,094      (4,736)
     Corporate                                    392          (4)        396
        Total Consolidated                   $156,090    $131,895     $24,195
 
     Net Income
     Utility                                  $39,442     $41,525     $(2,083)
     Pipeline and Storage                      14,765      10,156       4,609
     Exploration and Production                16,567       7,879       8,688
     International                              2,781       4,317      (1,536)
     Energy Marketing                             525       1,465        (940)
     Timber                                     2,725       4,090      (1,365)
        Total Reportable Segments              76,805      69,432       7,373
     All Other                                 (2,474)        672      (3,146)
     Corporate                                    944         947          (3)
        Total Consolidated                    $75,275     $71,051      $4,224
 
 
                           NATIONAL FUEL GAS COMPANY
                                 AND SUBSIDIARIES
 
                               SEGMENT INFORMATION
                              (Thousands of Dollars)
 
 
                                                   Six Months Ended
                                                       March 31,
                                                      (Unaudited)
 
                                                                   Increase
                                              2001        2000    (Decrease)
     Operating Revenues
     Utility                                  $932,166   $579,590   $352,576
     Pipeline and Storage                       87,306     86,361        945
     Exploration and Production                199,706    100,368     99,338
     International                              69,807     77,682     (7,875)
     Energy Marketing                          177,560     82,908     94,652
     Timber                                     25,572     20,271      5,301
        Total Reportable Segments            1,492,117    947,180    544,937
     All Other                                  17,549      5,011     12,538
     Intersegment Eliminations                 (70,293)   (57,393)   (12,900)
        Total Consolidated                  $1,439,373   $894,798   $544,575
 
     Operating Income (Loss)
      Before Income Taxes
     Utility                                  $113,140   $116,442    $(3,302)
     Pipeline and Storage                       38,473     37,351      1,122
     Exploration and Production                 90,633     40,289     50,344
     International                              15,989     19,791     (3,802)
     Energy Marketing                            3,862      2,251      1,611
     Timber                                      8,309      7,353        956
        Total Reportable Segments              270,406    223,477     46,929
     All Other                                  (4,665)       924     (5,589)
     Corporate                                  (1,170)      (574)      (596)
        Total Consolidated                    $264,571   $223,827    $40,744
 
     Net Income
     Utility                                   $57,729    $63,278    $(5,549)
     Pipeline and Storage                       21,360     19,438      1,922
     Exploration and Production                 39,568     15,884     23,684
     International                               5,021      9,000     (3,979)
     Energy Marketing                            1,869      1,448        421
     Timber                                      5,121      5,020        101
        Total Reportable Segments              130,668    114,068     16,600
     All Other                                  (3,205)       527     (3,732)
     Corporate                                     796      1,324       (528)
        Total Consolidated                    $128,259   $115,919    $12,340
 
 
 
                           NATIONAL FUEL GAS COMPANY
                                AND SUBSIDIARIES
 
                        SEGMENT INFORMATION (Continued)
                             (Thousands of Dollars)
 
 
                                               Three Months Ended
                                                 March 31,
                                                (Unaudited)
 
                                                                 Increase
                                        2001            2000    (Decrease)
 
 
     Depreciation, Depletion
      and Amortization:
     Utility                          $8,837          $9,014        $(177)
     Pipeline and Storage              6,556           5,957           599
     Exploration and Production       22,465          15,605         6,860
     International                     3,254           2,824           430
     Energy Marketing                     56              47             9
     Timber                              767             418           349
         Total Reportable Segments    41,935          33,865         8,070
     All Other                            29              20             9
     Corporate                             1               1            --
         Total Consolidated          $41,965         $33,886        $8,079
 
     Expenditures for
      Long-Lived Assets
     Utility                          $8,757         $12,282      $(3,525)
     Pipeline and Storage              7,031          17,226      (10,195)
     Exploration and Production       47,454          21,165        26,289
     International                       362           1,061         (699)
     Energy Marketing                     32              --            32
     Timber                            2,194             838         1,356
         Total Reportable Segments    65,830          52,572        13,258
     All Other                           363           2,604       (2,241)
         Total Consolidated          $66,193         $55,176       $11,017
 
 
                                            Six Months Ended
                                                 March 31,
                                               (Unaudited)
 
                                                                 Increase
                                        2001            2000    (Decrease)
 
 
     Depreciation, Depletion
      and Amortization:
     Utility                         $18,061         $18,029           $32
     Pipeline and Storage             12,443          11,909           534
     Exploration and Production       42,912          31,114        11,798
     International                     5,958           5,713           245
     Energy Marketing                    116              99            17
     Timber                            1,548             692           856
     Total Reportable Segments        81,038          67,556        13,482
     All Other                            62              45            17
     Corporate                             1               1            --
     Total Consolidated              $81,101         $67,602       $13,499
 
     Expenditures for
      Long-Lived Assets
     Utility                         $18,873         $28,609      $(9,736)
     Pipeline and Storage             13,473          24,425      (10,952)
     Exploration and Production       90,200          50,103        40,097
     International                     9,809           4,081         5,728
     Energy Marketing                     32              --            32
     Timber                            2,783           4,276       (1,493)
         Total Reportable Segments   135,170         111,494        23,676
     All Other                           372           3,604       (3,232)
         Total Consolidated         $135,542        $115,098       $20,444
 
 
     DEGREE DAYS
 
                                                    Percent Colder
                                                    (Warmer) Than:
     Three Months Ended March 31
 
                       Normal       2001    2000   Normal Last Year
 
     Buffalo, NY        3,386      3,236   3,058    (4.4)       5.8
     Erie, PA           3,176      3,112   2,789    (2.0)      11.6
 
                             NATIONAL FUEL GAS COMPANY
                                  AND SUBSIDIARIES
 
                       EXPLORATION AND PRODUCTION INFORMATION
 
 
                                  Three Months Ended       Six Months Ended
                                      March 31,               March 31,
                                               Increase               Increase
                                              (Decrease)             (Decrease)
                                 2001    2000             2001   2000
 
     Gas Production/Prices:
     Production (MMcf)
       Gulf Coast                6,987   8,142  (1,155) 13,416  16,087  (2,671)
       West Coast                1,052   1,126     (74)  2,097   2,243    (146)
       Appalachia                1,064   1,045      19   2,106   2,152     (46)
       Canada                      108      --     108     230      --     230
                                 9,211  10,313  (1,102) 17,849  20,482  (2,633)
     Average Prices (Per  Mcf)
       Gulf Coast                $7.18   $2.59   $4.59   $6.57   $2.58   $3.99
       West Coast                15.04    2.61   12.43   12.21    2.75    9.46
       Appalachia                 5.99    2.89    3.10    5.09    2.89    2.20
       Canada                     5.18     --     5.18    4.95     --     4.95
         Weighted Average         7.92    2.62    5.30    7.04    2.63    4.41
         Weighted Average after
          Hedging                 5.24    2.77    2.47    4.51    2.70    1.81
 
     Oil Production/Prices:
     Production (Thousands of
      Barrels)
       Gulf Coast                  468     331     137     824     653     171
       West Coast                  714     707       7   1,459   1,392      67
       Appalachia                    1       1      --       3       5      (2)
       Canada                      777      --     777   1,518      --   1,518
                                 1,960   1,039     921   3,804   2,050   1,754
 
     Average Prices (Per Barrel)
       Gulf Coast               $27.86  $28.67  $(0.81) $29.56  $26.05   $3.51
       West Coast                23.79   23.88   (0.09)  25.40   21.96    3.44
       Appalachia                29.90   25.10    4.80   30.53   22.58    7.95
       Canada                    23.38    --     23.38   25.64    --     25.64
         Weighted Average        24.60   25.41   (0.81)  26.40   23.26    3.14
         Weighted Average after
          Hedging                20.81   19.12    1.69   21.88   18.26    3.62
 
                             NATIONAL FUEL GAS COMPANY
                                  AND SUBSIDIARIES
 
 
     Utility Throughput - (millions of cubic feet - MMcf)
 
                                Three Months Ended        Six Months Ended
                                    March 31,                March 31,
                                             Increase                  Increase
                                            (Decrease)               (Decrease)
                               2001    2000             2001     2000
         Residential Sales    33,847  30,994   2,853   57,848   51,460   6,388
         Commercial Sales      6,849   5,841   1,008   11,300    9,518   1,782
         Industrial Sales        986   1,093    (107)   2,659    2,079     580
                              41,682  37,928   3,754   71,807   63,057   8,750
          Off-System Sales     4,302   5,860  (1,558)   7,483    8,620  (1,137)
         Transportation       23,850  26,850  (3,000)  41,365   43,659  (2,294)
                              69,834  70,638    (804) 120,655  115,336   5,319
 
 
     Pipeline & Storage Throughput- (MMcf)
                               Three Months Ended         Six Months Ended
                                    March 31,                March 31,
                                             Increase                Increase
                                            (Decrease)              (Decrease)
                              2001     2000             2001     2000
         Firm Transportation
          - Affiliated        51,288   47,293  3,995   92,708   81,366  11,342
         Firm Transportation
          - Non-Affiliated    54,367   54,816   (449) 102,489  103,373    (884)
         Interruptible
          Transportation       2,667    2,206    461    8,617    2,448   6,169
                             108,322  104,315  4,007  203,814  187,187  16,627
 
 
 
     Energy Marketing Volumes
 
                                           Three Months Ended
                                              March 31,
                                                                  Increase
                                        2001            2000    (Decrease)
     Natural Gas (MMcf)               14,800          13,101         1,699
 
     International Sales Volumes
                                           Three Months Ended
                                               March 31,
                                                                  Increase
                                        2001            2000    (Decrease)
     Heating (Gigajoules)          4,280,832       4,296,704      (15,872)
     Electricity (Megawatt hours)    291,906         322,042      (30,136)
 
     Timber Board Feet (Thousands)
                                          Three Months Ended
                                             March 31,
                                                                  Increase
                                        2001            2000    (Decrease)
     Log Sales                         3,087           2,574           513
     Green Lumber Sales                2,817           2,160           657
     Kiln Dry Lumber Sales             2,185           1,690           495
                                       8,089           6,424         1,665
 
 
 
     Energy Marketing Volumes
 
                                            Six Months Ended
                                                March 31,
                                                                  Increase
                                        2001            2000    (Decrease)
     Natural Gas (MMcf)               23,031          22,263           768
 
     International Sales Volumes
                                              Six Months Ended
                                                  March 31,
                                                                 Increase
                                        2001            2000    (Decrease)
     Heating (Gigajoules)          7,613,783       8,264,472     (650,689)
 
     Electricity (Megawatt hours)    621,930         639,697      (17,767)
 
     Timber Board Feet (Thousands)
                                            Six Months Ended
                                              March 31,
                                                                 Increase
                                        2001            2000    (Decrease)
     Log Sales                         5,148           5,108            40
     Green Lumber Sales                5,083           4,154           929
     Kiln Dry Lumber Sales             4,253           3,297           956
                                      14,484          12,559         1,925
 
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 SOURCE  National Fuel Gas Company