National Fuel Gas Company (NYSE:NFG) Q1 2015 Earnings Conference Call - Final Transcript
Jan 30, 2015 • 11:00 am ET
Good day, ladies and gentlemen, and welcome to the first quarter 2015 National Fuel Gas Company earnings conference call. My name is Katina, and I'll be your coordinator for today. At this time all participants are in listen only mode. Later we will facilitate a question and answer session. (Operator Instructions)
I would now like to turn the presentation over to your host for today's call, Mr. Brian Welsch, Director of Investor Relations.
Thank you, Katina, 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 Matt Cabell, President of Seneca Resources Corporation. At the end of the prepared remarks, we will open the discussion to questions. This morning, we posted a new slide deck to our Investor Relations website. We may refer to it during today's call.
(Forward-Looking Cautionary Statements)
I'll turn it over to Ron Tanski.
Thanks, Brian. Good morning, everyone. Well, for the first quarter of our 2015 fiscal year, everything went pretty much according to plan, except for commodity prices. Build activities in all of our operating companies have been generally moving along according to design.
In our upstream business, Seneca continues to drill and complete wells. Our midstream companies continue to install gathering lines and plan for large diameter transmissions projects that will provide an outlet for Marcellus production. And despite a like effect snow storm that piled up five to seven feet of snow across a band of our utility service territory over a few days in November, our utility employees have managed to keep the gas flowing to all of our customers.
Focusing on our quarterly earnings, there was increased throughput in our gathering business and additional short-term contracts in our gas transmission business that pushed our earnings above last year's levels. Part of the throughput increase was due to the completion of our Mercer compression project
that went into service on November 1 as planned. That project has 105,000 dekatherms a day of throughput for a third-party and should generate annual revenues of $5.3 million. Throughput also increased in our gathering systems, where Seneca's production increased as more wells along our Trout Run Gathering System were brought online. In our downstream marketing company, lower commodity prices helped National Fuel Resources achieve higher margins during the quarter.
On the flipside, there was lower average commodity prices during the quarter that reduced earnings at Seneca. Looking forward to the rest of the fiscal year, because of the lower prices we're seeing in the forward commodities strips, we've lowered our capital spending plans accordingly.
Matt and Dave will give a little more color on the revised CapEx budget that we highlighted in the table in last evening's release. But in a nutshell, we're reducing our CapEx as a result of the lower expected cash flows for the year. Our basic