Good morning. My name is Adam, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q1 2019 National Fuel Gas Company Earnings Conference Call. All lines have been placed on mute to prevent any background noise. And after the speaker’s remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Ken Webster, Director of Investor Relations, you may begin your conference.

Thank you, Adam, and good morning. We appreciate you joining us on today’s conference call for a discussion of last evening’s earnings release. With us on the call from National Fuel Gas Company, are Ron Tanski, President and Chief Executive Officer; Dave Bauer, Treasurer and Principal Financial Officer; and John McGinnis, President of Seneca Resources. At the end of the prepared remarks, we will open the discussion to questions. The first quarter fiscal 2019 earnings release and January investor presentation have been posted on our Investor Relations website. We may refer to these materials during today’s call. We would like to remind you that today’s teleconference will contain forward-looking statements. While National Fuel’s expectations, beliefs and projections are made in good faith and are believed to have a reasonable basis, actual results may differ materially. These statements speak only as of the date on which they are made, and you may refer to last evening’s earnings release for a listing of certain specific risk factors. National Fuel will be participating in the Scotia Howard Weil Energy Conference in March. If you plan on attending, please contact me or the conference planners to schedule a meeting with the management team. With that, I’ll turn it over to Ron Tanski.

Thanks, Ken. Good morning, everyone. Thanks for joining us. Just a quick word on logistics today to avoid travel complications due to weather in the Midwest and Northeast, I asked John McGinnis to stay safely in Houston and call in from the office there. And now on to our earnings release, where you can see that we had a really good opening quarter for our 2019 fiscal year. Our operating plans that I laid out during our call last November are moving along right on target. Our steady approach and our upstream drilling business is working out quite well. We continue to fill the firm transportation capacity that we have lined up, and we don't have to drill an excessive number of wells to hold expiring leases. Early results in our Utica development show that production is right in line with our initial projections and that has helped us to increase our overall production level with just the three rigs that we have active. In our Gathering operations, which were on pretty much in lockstep with Seneca, our capital expenditures will be lower this year since we're revisiting existing Marcellus pads to drill deeper Utica wells and only minor additions to the Gathering infrastructure are necessary to take in production from the newer Utica wells. In our interstate pipeline business, there have been no major changes to the status of our pipeline projects. We're almost ready to kick off construction of our Line N to Monaca lateral that will be used to provide operational gas to the Shell petrochemical plant being built in Beaver County, Pennsylvania. With respect to our other expansion projects, our engineers are busy working on the details of our Empire North project, which still has a target in-service date for the second half of fiscal 2020.…

Thanks, Ron, and good morning from Houston everyone. Seneca had a great first quarter. We produced 49.2 Bcfe compared to 40.1 Bcfe in last year's first quarter, an increase of almost 10 Bcfe or 23%. In Pennsylvania, we produced 45.3 Bcfe, up by 28% compared to last year's Q1. On a sequential basis, quarterly production increased by around 2 Bcfe or around 4%. As a result of maintaining a steady three-rig pace in Pennsylvania, we should continue to see quarter-over-quarter production growth through the remainder of the year. We have marketing curtailment early in the quarter, just over 0.2 Bcf related primarily to delays in the Atlantic Sunrise in-service date. But spot prices quickly rebounded and have been strong since ranging in the plus/minus $3 neighborhood. Our fiscal 2019 CapEx and production guidance remain the same with capital expenditures ranging from $460 million to $495 million and production ranging between 210 to 230 Bcfe. And please recall this assumes no significant marketing curtailment for the remainder of the year. During the quarter, we brought online seven new Utica wells in the WDA, three at the end of November, and another four at the last week of December. The completed lateral length related to these wells average well over 9,000 feet, so they are taking a bit longer to clean up, but very early results suggest that these seven wells are all in line with our WDA Utica type curve expectations. We now have 17 Utica wells online in the WDA with an additional 10 Utica wells remaining later during the year. Our type curve remains at 1.7 Bcf per thousand foot and this curve can be compared to our 17 well average in our most recent investor presentation on page 18. Once all 27 wells have been online for a…

Thanks, John. Good morning, everyone. Overall, the first quarter was a good one for National Fuel, with each of our major operating segments delivering increased earnings over the last year. Consolidated GAAP net income was $1.18 per share. Adjusting for items impacting comparability, operating results for the first quarter were $1.12 per share, up 10% compared to last year's first quarter. To echo Ron's earlier comments, our focus in 2019 is on execution. With line upside on future pipeline capacity out of the basin, our plan has us growing the upstream and midstream portions of our business, while living within cash flows over the medium and long-term. First quarter was right on track with that plan. Production and capital met expectations and we had a nice tailwind from natural gas prices. Our first quarter results had a fair amount of accounting noise related to tax reform, hedging ineffectiveness, and changes in accounting standards. First, as you may recall, tax reform made AMT credits refundable subject to sequestration. Past fiscal year when we recorded a receivable for those AMT credits, we booked a $5 million reserve for that sequestration. This past December, the Office of Management and Budget determined that sequestration would not apply to AMT refunds, so we reversed the reserve in this quarter's results. The second item impacting comparability relates to a $6.5 million unrealized gain from ineffectiveness associated with hedges of our California oil production. The financial hedging market at Midway Sunset is fairly a liquid, so instead we used a combination of WTI and Brent contracts to hedge that production. Over the past few quarters, the spread between Midway Sunset and WTI pricing has tightened considerably, so much so that we've experienced ineffectiveness on a portion of our WTI hedges. In other words, the value of our…

[Operator Instructions] And your first question does come from Holly Stewart of Scotiabank Weil. Holly, your line is open.

Good morning gentlemen. Maybe the first one for John. John I think you kind of talked about the new EDA production coming on in 2Q, 2019 but you went pretty fast. Can you give us those well numbers again?

Sure. Good morning Holly. We have two wells in this quarter, fiscal two quarter. We have two wells that will come on in Lycoming, Marcellus wells, and four wells that will come on in Tioga and there'll be four Utica wells.

And that's all in 2Q?

And that's all in Q2.

Okay great. And then maybe as it relates to that are you full on your Atlantic Sunrise capacity today?

Yes.

Okay, great. Thank you. And then maybe one for Dave or John just thinking about basis here going forward, I think the basis for the quarter was a little weaker than our expectations. So don't know if that's firm sales running through there or if that's just the addition of the Atlantic Sunrise capacity. Could you just help us think about that going forward?

I mean it was certainly stronger than we expected during the early winter months and -- but it has fallen back. And I think it's just that production is so high in Pennsylvania these days; and with the bearish storage report, I just think we've seen a bit of a falloff related to basis in that area. It's hard for me to really predict how it's going to look going forward to tell you the truth.

Okay. All right great. Thanks guys. That’s all I had.

Your next question comes from Chris Sighinolfi from Jefferies. Chris, your line is open.

Yes. Thanks a lot. Following from Holly's questions, maybe just to start on firm sales, it looks like we added a bunch in the period at least since the December deck or the back half of this year and early fiscal 2019. So John I'm just curious is that something that you had stated as an ambition to fill that wedge over time? And we are obviously paying attention to the dialing back in ambitions from some of your gas E&P peers in the Northeast. Just wondering how that market is shaping up for you? Is that sort of consistent with prior expectations or have you done arguably more to date than you thought you would at this point?

I think it was consistent. Definitely the increase in prices as we moved into November helped a little bit. But as they did run up in mid-November, we added a portfolio of firm sales both a combination of fixed basis and also fixed price, and really our focus was the back half of fiscal 2019 going into 2020. Our 2019 is in great shape as I stated before, we're about 85% hedged-plus, and so we're fine there. We'll continue to focus on fiscal '20. But I think it was in line with what we're thinking our expectations. I think we added if I remember correctly, is about 50 a day this summer in the fiscal 2019.

Yes that looks like the delta from -- at least from the presentation slides, so okay. That's helpful. And then I guess switching gears a little bit, Dave I appreciate the color on the Empire settlement. I realized it's not fully signed and sealed by the FERC yet, but you've mentioned that in line just to confirm the expansion project that you have there that's entirely negotiated, is that right? And it's not impactful at all any outcome change?

The Empire North project?

Yeah.

Yeah, yeah, that's an un-negotiated rate deal.

Okay. And then Dave, I saw on in – this is just a point of clarification or curiosity from my perspective, I saw about $8 million in what you say is net share repurchase in the quarter. Is that just to satisfy year-end equity grants?

I believe so. Yes, I believe that's the case. We'll double check that, and if it's not, Ken will get back to you.

Okay. It just was something that stood out and I haven't seen that number in a little bit. So just figured I would ask about it. And then maybe the final question. The issues from ConAd in Westchester County, you mentioned sort of the costing items that wanted to have a renewable portfolio. Can't help but notice if that's part of what they're discussing in California that pertains to problematic PPA agreements that PCG has that maybe started some of their financial issues. Obviously, the issues had gotten worse with the fires, but other than identifying has there been any tangible discussions with the commission about either what New York or Pennsylvania does in regard to approaching this?

No, I think that's the struggle, Chris is there's all these pronouncements, but when it comes time to actually getting renewable plant on the ground, frankly those developers are having as much trouble citing their new -- either wind turbines or solar farms as much as we are getting pipelines on the ground. There seems to be -- no matter where someone wants to put something up, there's somebody going to be complaining about it or they don't want it in their backyard. So I think it is going to be a struggle to just to get those sources developed, but what would be nice is they'd be able to have a discussion about it rather than like things these days so much being very polarized and just instead of shouting matches, we just need to talk and have everyone understand what those costs are going to be.

Okay. That’s great. Thanks a lot for the color. Bye guys, appreciate it.

[Operator Instructions] And we do have Chris Sighinolfi back from Jefferies. Chris, your line is open again.

Hey, thanks, guys. I was going to get back in the queue, but I'm the only one there. Dave, one question, follow-up question I did have, you were discussing impact fee tiers. I am less versed -- well-versed in sort of where those different tier points hit you. Can you just describe that a little bit or revisit in a little bit more detail?

Yeah, I am pretty sure Chris that it's -- the $3 is a line in the sand. For us, this past year, it was -- $3 was the tier. John, honestly I don't remember how the tiers move from that. John, do you know?

Yeah, actually I do. Actually the ranges above $3 in year one it's about $50,000; below $3 it drops $5,000. So it is a range that goes from $2.26 to $2.99 that for each well both producing and drilled it will drop that impact fee by $5,000. So it adds up again we have quite a few wells.

Yeah, sure and that's the realized price on average in the first year at that point?

Yes, that's the annual average not the realized price. It's the average Henry Hub NYMEX across that calendar year.

Okay, wonderful. Thanks a lot guys. I appreciate the added color.

And we have no further questions at this time. So I'll turn the call back over to Ken Webster for some closing remarks.

Thank you, Adam. We'd like to thank everyone for taking the time to be with us today. A replay of this call will be available at approximately 3:00 P.M. Eastern Time on both our website and by telephone and will run through the close of business on Friday, February 8th. To access to replay online, please visit our Investor Relations' website at investor.nationalfuelgas.com and to access by telephone call 1800-585-8367 and enter a conference ID number 7996513. This concludes our conference call for today. Thank you and goodbye.

And thank you for your participation. You may now disconnect.