Buffalo-based National Fuel Gas Co. reported for the fiscal year ended Sept. 30, 2001 earnings of $169.5 million, or $2.11 per diluted share, a 33% increase over fiscal 2000 earnings of $127.2 million, or $1.61 per diluted share the previous year. The 2001 results were exclusive of a non-cash write-down of subsidiary Seneca Resources Corp.’s oil and gas assets in the amount of $104 million after tax, or $1.29 per diluted share.

“Our earnings results this year continue to demonstrate the value of being an integrated energy company,” Philip C. Ackerman, CEO of National Fuel. “Strong performance in our major business segments provided sound returns for our shareholders, as we continue to meet the challenges of an increasingly competitive marketplace.”

For the fourth quarter, the company posted earnings of $4.7 million, or $0.06 per diluted share, exclusive of the oil and gas write-down mentioned above. This compares with earnings of $2.2 million, or $0.03 per diluted share, for the same quarter last year.

Bational Fuel said the increase in earnings of $2.5 million for the quarter was the result of a smaller loss in the utility segment, which typically incurs a loss in the summer quarter, and higher earnings in the pipeline and storage segment. These increased earnings were offset in part by losses in the energy marketing and international segments. Earnings in the exploration and production segment, excluding the write-down of oil and gas properties, were slightly lower than the prior year’s quarter.

Earnings for the fiscal year increased by $42.3 million from the prior fiscal year, exclusive of the write-down of oil and gas properties. The increase was the result of higher earnings in the exploration and production, utility, pipeline and storage, and timber segments. Earnings were also positively impacted by a lower loss in the energy marketing segment. Higher earnings were offset by losses in the international and all other categories, the company reported.

The write-down stems from Seneca Resources, which follows the full-cost method of accounting for its oil and gas operations and is required to perform a quarterly ceiling test. “Under the ceiling test, the present value of future revenues from Seneca’s oil and gas reserves is compared (on a country by country basis) with the book value of those reserves at the balance sheet date,” National Fuel said. “If the book value of the reserves in any country exceeds the present value of the associated future revenues, a non-cash charge must be recorded to write down the book value of the reserves to their present value. As a result of low oil and gas prices at Sept. 30, Seneca was required to recognize a non-cash impairment relating to its Canadian properties of $180.8 million (pre-tax) or $104.0 million (after tax).”

Looking forward, National Fuel said it expects earnings for the fiscal year ending Sept. 30, 2002 to fall within the range of $1.70 to $1.80 per diluted share. The lowered earnings guidance reflects the recent dramatic decrease in oil and gas prices.

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