National Fuel Gas Company (NYSE:NFG) Q4 2019 Earnings Conference Call Transcript
Nov 01, 2019 • 11:00 am ET
Ladies and gentlemen, thank you for standing by and welcome to the National Fuel Gas Company Q4 2019 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand your conference over to your speaker today, Ken Webster, Director of Investor Relations. Please go ahead, sir.
Thank you, Marcella, 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 Dave Bauer, President and Chief Executive Officer; Karen Camiolo, 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 fourth quarter fiscal 2019 earnings release and October 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.
With that, I'll turn it over to Dave Bauer.
David P. Bauer
Thank you, Ken and good morning, everyone. National Fuel ended its fiscal year with a strong fourth quarter. Record production at Seneca and its corresponding impact on our Gathering segment offset the impact of lower realized natural gas prices and contributed to a 10% increase in year-over-year consolidated operating results. Operationally, we had a really good quarter across the system. Seneca brought on two new pads, one each in the EDA and WDA. Both pads exceeded our expectations.
Cash unit costs were down meaningfully year-over-year, a trend we expect will continue as Seneca's base of production grows. Seneca is currently operating three rigs in Pennsylvania. As I said on last quarter's call, we plan to release one of those rigs once it's done drilling a six well pad in Tioga County, which should be sometime in the middle of our second fiscal quarter. I expect it'll stay at that reduced level of activity for the near future. Even at a two-rig program, Seneca will see production growth of nearly 15% next year and single-digits the following year. Any further activity changes will obviously be dependent on pricing. As we move through the winter season, we'll continue to watch prices and reassess our activity level for 2021 and beyond.
Seneca's operational success continues to directly benefit our Gathering segment, which on the strength of record throughput, saw revenue growth of approximately 18% over last year. We expect future Gathering throughput will grow in lockstep with Seneca's production, which should translate into annual revenue growth of approximately 10% on average in the near term.