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Capitalization and Short-Term Borrowings | 12 Months Ended
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Sep. 30, 2024
Capitalization, Long-Term Debt and Equity [Abstract] |
Capitalization and Short-Term Borrowings | Capitalization and Short-Term Borrowings Summary of Changes in Common Stock Equity
| Common Stock |  | Paid In Capital |  | Earnings Reinvested in the Business |  | Accumulated Other Comprehensive Income (Loss)
Shares |  | Amount |
| (Thousands, except per share amounts)
Balance at September 30, 2021 | 91,182 |  |  | $ | 91,182 |  |  | $ | 1,017,446 |  |  | $ | 1,191,175 |  |  | $ | (513,597) |
Net Income Available for Common Stock |  |  |  |  |  |  | 566,021 |  |  |
Dividends Declared on Common Stock ($1.86 Per Share) |  |  |  |  |  |  | (170,111) |  |  |
Other Comprehensive Loss, Net of Tax |  |  |  |  |  |  |  |  | (112,136) |
Share-Based Payment Expense(1) |  |  |  |  | 17,699 |  |  |  |  |
Common Stock Issued (Repurchased) Under Stock and Benefit Plans | 296 |  |  | 296 |  |  | (8,079) |  |  |  |  |
Balance at September 30, 2022 | 91,478 |  |  | 91,478 |  |  | 1,027,066 |  |  | 1,587,085 |  |  | (625,733) |
Net Income Available for Common Stock |  |  |  |  |  |  | 476,866 |  |  |
Dividends Declared on Common Stock ($1.94 Per Share) |  |  |  |  |  |  | (178,095) |  |  |
Other Comprehensive Income, Net of Tax |  |  |  |  |  |  |  |  | 570,673 |
Share-Based Payment Expense(1) |  |  |  |  | 18,746 |  |  |  |  |
Common Stock Issued (Repurchased) Under Stock and Benefit Plans | 341 |  |  | 341 |  |  | (5,051) |  |  |  |  |
Balance at September 30, 2023 | 91,819 |  |  | 91,819 |  |  | 1,040,761 |  |  | 1,885,856 |  |  | (55,060) |
Net Income Available for Common Stock |  |  |  |  |  |  | 77,513 |  |  |
Dividends Declared on Common Stock ($2.02 Per Share) |  |  |  |  |  |  | (185,220) |  |  |
Other Comprehensive Income, Net of Tax |  |  |  |  |  |  |  |  | 39,584 |
Share-Based Payment Expense(1) |  |  |  |  | 19,868 |  |  |  |  |
Common Stock Issued (Repurchased) Under Stock and Benefit Plans | 333 |  |  | 333 |  |  | (1,955) |  |  |  |  |
Share Repurchases Under Repurchase Plan | (1,146) |  |  | (1,146) |  |  | (13,187) |  |  | (50,823) |  |  |
Balance at September 30, 2024 | 91,006 |  |  | $ | 91,006 |  |  | $ | 1,045,487 |  |  | $ | 1,727,326 |  | (2) | $ | (15,476) |
(1)Paid in Capital includes compensation costs associated with performance shares and/or restricted stock awards. The expense is included within Net Income Available for Common Stock, net of tax benefits. (2)The availability of consolidated earnings reinvested in the business for dividends payable in cash is limited under terms of the indentures covering long-term debt. At September 30, 2024, $1.6 billion of accumulated earnings was free of such limitations. Common Stock The Company has various plans which allow shareholders, employees and others to purchase shares of the Company common stock. The National Fuel Gas Company Direct Stock Purchase and Dividend Reinvestment Plan allows shareholders to reinvest cash dividends and make cash investments in the Company’s common stock and provides investors the opportunity to acquire shares of the Company common stock without the payment of any brokerage commissions in connection with such acquisitions. The 401(k) plans allow employees the opportunity to invest in the Company common stock, in addition to a variety of other investment alternatives. Generally, at the discretion of the Company, shares purchased under these plans are either original issue shares purchased directly from the Company or shares purchased on the open market by an independent agent. During 2024, the Company did not issue any original issue shares of common stock for the Direct Stock Purchase and Dividend Reinvestment Plan or the Company’s 401(k) plans. During 2024, the Company issued 115,337 original issue shares of common stock for restricted stock units that vested and 251,255 original issue shares of common stock for performance shares that vested. Holders of stock-based compensation awards will often tender shares of common stock to the Company for payment of applicable withholding taxes. During 2024, 78,141 shares of common stock were tendered to the Company for such purposes. The Company considers all shares tendered as cancelled shares restored to the status of authorized but unissued shares, in accordance with New Jersey law. The Company also has a director stock program under which it issues shares of Company common stock to the non-employee directors of the Company who receive compensation under the Company’s 2009 Non-Employee Director Equity Compensation Plan, including the reinvestment of dividends for certain non-employee directors who elected to defer their shares pursuant to the dividend reinvestment feature of the Company’s Deferred Compensation Plan for Directors and Officers (the “DCP”), as partial consideration for the directors’ services during the fiscal year. Under this program, the Company issued 36,078 original issue shares of common stock during 2024. In addition, the Company issued 8,318 original issue shares of common stock to officers of the Company who elected to defer their shares pursuant to the dividend reinvestment features of the Company’s DCP during 2024. On March 8, 2024, the Company’s Board of Directors authorized the Company to implement a share repurchase program, whereby the Company may repurchase outstanding shares of common stock, up to an aggregate amount of $200 million in the open market or through privately negotiated transactions, including through the use of trading plans intended to qualify under SEC Rule 10b5-1, in accordance with applicable securities laws and other restrictions. During 2024, the Company executed transactions to repurchase 1,146,259 shares at an average price of $56.32 per share. With broker fees and excise taxes, the total cost of these repurchases amounted to $65.2 million. Share repurchases that settled during 2024 were funded with cash provided by operating activities and/or short-term borrowings. In the future, it is expected that this share repurchase program will continue to be funded with cash provided by operating activities and/or through the use of short-term borrowings. Stock Award Plans The Company has various stock award plans which provide or provided for the issuance of one or more of the following to key employees: SARs, incentive stock options, nonqualified stock options, restricted stock, restricted stock units, performance units or performance shares. Stock-based compensation expense for the years ended September 30, 2024, 2023 and 2022 was approximately $19.8 million, $18.6 million and $17.6 million, respectively. Stock-based compensation expense is included in operation and maintenance expense on the Consolidated Statements of Income. The total income tax benefit related to stock-based compensation expense during the years ended September 30, 2024, 2023 and 2022 was approximately $2.5 million, $2.4 million and $2.5 million, respectively. A portion of stock-based compensation expense is subject to capitalization under IRS uniform capitalization rules. Stock-based compensation of $0.1 million was capitalized under these rules during each of the years ended September 30, 2024, 2023 and 2022. The tax benefit related to stock-based compensation exercises and vestings was $0.3 million for the year ended September 30, 2024. Pursuant to registration statements for these plans, there were 3,889,027 shares available for future grant at September 30, 2024. These shares include shares available for future options, SARs, restricted stock and performance share grants. Restricted Stock Units Transactions for 2024 involving nonperformance-based restricted stock units for all plans are summarized as follows:
| Number of Restricted Stock Units |  | Weighted Average Fair Value per Award
Outstanding at September 30, 2023 | 342,186 |  |  | $ | 49.63 |
Granted in 2024 | 220,778 |  |  | $ | 42.44 |
Vested in 2024 | (115,337) |  |  | $ | 46.92 |
Forfeited in 2024 | (9,434) |  |  | $ | 50.43 |
Outstanding at September 30, 2024 | 438,193 |  |  | $ | 46.70 |
The Company also granted 133,173 and 128,950 nonperformance-based restricted stock units during the years ended September 30, 2023 and 2022, respectively. The weighted average fair value of such nonperformance-based restricted stock units granted in 2023 and 2022 was $58.10 per share and $54.10 per share, respectively. As of September 30, 2024, unrecognized compensation expense related to nonperformance-based restricted stock units totaled approximately $9.2 million, which will be recognized over a weighted average period of 3.0 years. Vesting restrictions for the nonperformance-based restricted stock units outstanding at September 30, 2024 will lapse as follows: 2025 — 129,688 units; 2026 — 111,557 units; 2027 — 86,667 units; 2028 — 34,757 units; 2029 — 19,228 units; and 56,296 units thereafter. Performance Shares Transactions for 2024 involving performance shares for all plans are summarized as follows:
| Number of Performance Shares |  | Weighted Average Fair Value per Award
Outstanding at September 30, 2023 | 586,791 |  |  | $ | 55.46 |
Granted in 2024 | 361,729 |  |  | $ | 44.23 |
Vested in 2024 | (251,255) |  |  | $ | 38.62 |
Forfeited in 2024 | (35,357) |  |  | $ | 46.49 |
Change in Units Based on Performance Achieved | 57,669 |  |  | $ | 37.36 |
Outstanding at September 30, 2024 | 719,577 |  |  | $ | 54.69 |
The Company also granted 202,259 and 195,397 performance shares during the years ended September 30, 2023 and 2022, respectively. The weighted average grant date fair value of such performance shares granted in 2023 and 2022 was $64.28 per share and $65.39 per share, respectively. As of September 30, 2024, unrecognized compensation expense related to performance shares totaled approximately $15.7 million, which will be recognized over a weighted average period of 2.4 years. Vesting restrictions for the outstanding performance shares at September 30, 2024 will lapse as follows: 2025 — 177,118 shares; 2026 — 188,767 shares; 2027 — 297,392 shares; 2028 - zero; 2029 - zero; and 56,300 shares thereafter. The performance shares granted during the years ended September 30, 2024, 2023 and 2022 include awards that must meet a performance goal related to either relative return on capital over a three-year or five-year performance cycle (“ROC performance shares”), methane intensity and greenhouse gas emissions reductions over a three-year performance cycle (“ESG performance shares”) or relative shareholder return over a three-year or five-year performance cycle (“TSR performance shares”). The performance goal over the respective performance cycles for the ROC performance shares granted during 2024, 2023 and 2022 is the Company’s total return on capital relative to the total return on capital of other companies in a group selected by the Compensation Committee (“Report Group”). Total return on capital for a given company means the average of the Report Group companies’ returns on capital for each twelve-month period corresponding to each of the Company’s fiscal years during the performance cycle, based on data reported for the Report Group companies in the Bloomberg database. The number of these ROC performance shares that will vest and be paid will depend upon the Company’s performance relative to the Report Group and not upon the absolute level of return achieved by the Company. The fair value of the ROC performance shares is calculated by multiplying the expected number of shares that will be issued by the average market price of Company common stock on the date of grant reduced by the present value of forgone dividends over the vesting term of the award. The fair value is recorded as compensation expense over the vesting term of the award. The performance goal over the respective performance cycles for the ESG performance shares granted during 2024, 2023 and 2022 consists of two parts: reductions in the rates of intensity of methane emissions for each of the Company’s operating segments, and reduction of the consolidated Company’s total greenhouse gas emissions. The Company’s Compensation Committee set specific target levels for methane intensity rates and total greenhouse gas emissions, and the performance goal is intended to incentivize and reward performance to the extent management achieves methane intensity and greenhouse gas reduction targets making progress towards the Company’s 2030 goals. The number of these ESG performance shares that will vest and be paid out will depend upon the number of methane intensity segment targets achieved and whether the Company meets the total greenhouse gas emissions target. The fair value of these ESG performance shares is calculated by multiplying the expected number of shares that will be issued by the average market price of Company common stock on the date of grant reduced by the present value of forgone dividends over the vesting term of the award. The fair value is recorded as compensation expense over the vesting term of the award. The performance goal over the respective performance cycles for the TSR performance shares granted during 2024, 2023 and 2022 is the Company’s three-year (or five-year) total shareholder return relative to the three-year (or five-year) total shareholder return of the other companies in the Report Group. Three-year (or five-year) total shareholder return for a given company will be based on the data reported for that company (with the starting and ending stock prices over the performance cycle calculated as the average closing stock price for the prior calendar month and with dividends reinvested in that company’s securities at each ex-dividend date) in the Bloomberg database. The number of these TSR performance shares that will vest and be paid will depend upon the Company’s performance relative to the Report Group and not upon the absolute level of return achieved by the Company. The fair value price at the date of grant for the TSR performance shares is determined using a Monte Carlo simulation technique, which includes a reduction in value for the present value of forgone dividends over the vesting term of the award. This price is multiplied by the number of TSR performance shares awarded, the result of which is recorded as compensation expense over the vesting term of the award. In calculating the fair value of the award, the risk-free interest rate is based on the yield of a Treasury Note with a term commensurate with the remaining term of the TSR performance shares. The remaining term is based on the remainder of the performance cycle as of the date of grant. The expected volatility is based on historical daily stock price returns. For the TSR performance shares, it was assumed that there would be no forfeitures, based on the vesting term and the number of grantees. The following weighted average assumptions were used in estimating the fair value of the TSR performance shares at the date of grant:
| Year Ended September 30
| 2024 |  | 2023 |  | 2022
Risk-Free Interest Rate | 4.36 | % |  | 4.03 | % |  | 0.85 | %
Remaining Term at Date of Grant (Years) | 2.98 |  | 2.80 |  | 2.80
Expected Volatility | 23.9 | % |  | 31.6 | % |  | 29.7 | %
Expected Dividend Yield (Quarterly) | N/A |  | N/A |  | N/A
Redeemable Preferred Stock As of September 30, 2024, there were 10,000,000 shares of $1 par value Preferred Stock authorized but unissued. Long-Term Debt The outstanding long-term debt is as follows:
| At September 30
| 2024 |  | 2023
| (Thousands)
Medium-Term Notes(1): |  |  |
7.38% due June 2025 | $ | 50,000 |  |  | $ | 50,000 |
Notes(1)(2)(3): |  |  |
2.95% to 5.50% due July 2025 to March 2031 | 2,350,000 |  |  | 2,350,000 |
Delayed Draw Term Loan(4): |  |  |
Variable Rate due February 2026 | 300,000 |  |  | — |
Total Long-Term Debt | 2,700,000 |  |  | 2,400,000 |
Less Unamortized Discount and Debt Issuance Costs | 11,757 |  |  | 15,515 |
Less Current Portion(5) | 500,000 |  |  | — |
| $ | 2,188,243 |  |  | $ | 2,384,485 |
(1)The Medium-Term Notes and Notes are unsecured. (2)The holders of these notes may require the Company to repurchase their notes at a price equal to 101% of the principal amount in the event of both a change in control and a ratings downgrade to a rating below investment grade. (3)The interest rate payable on $300.0 million of 4.75% notes, $300.0 million of 3.95% notes, $500.0 million of 2.95% notes and $300.0 million of 5.50% notes will be subject to adjustment from time to time, with a maximum of 2.00%, if certain change of control events involving a material subsidiary result in a downgrade of the credit rating assigned to the notes to below investment grade (or if the credit rating assigned to the notes is subsequently upgraded). The interest rate payable on $500.0 million of 5.50% notes will be subject to adjustment from time to time, with a maximum adjustment of 2.00%, such that the coupon will not exceed 7.50%, if there is a downgrade of the credit rating assigned to the notes to a rating below investment grade. A downgrade with a resulting increase to the coupon does not preclude the coupon from returning to its original rate if the Company’s credit rating is subsequently upgraded. (4)The interest rate on the delayed draw term loan is a weighted average SOFR interest rate of 6.71% that was locked in from April 2024 until the beginning of October 2024. The current locked in interest rate is 4.62% for $200.0 million until December 2024 and 4.58% for the remaining $100.0 million until January 2025. (5)Current Portion of Long-Term Debt at September 30, 2024 consisted of $50.0 million of 7.38% medium-term notes and $450.0 million of 5.20% notes. None of the Company’s long-term debt as of September 30, 2023 had a maturity date within the following twelve-month period. On February 14, 2024, the Company entered into a Term Loan Agreement (the “Term Loan Agreement”) with six lenders, all of which are lenders under the Credit Agreement. The Term Loan Agreement provides a $300.0 million unsecured committed delayed draw term loan facility with a maturity date of February 14, 2026, and the Company has the ability to select interest periods of one, three or six months for borrowings. In April 2024, pursuant to the delayed draw mechanism, the Company elected to draw a total of $300.0 million under the facility. After deducting debt issuance costs, the net proceeds to the Company amounted to $299.4 million. The Company used the proceeds for general corporate purposes, which included the redemption of outstanding commercial paper. Borrowings under the Term Loan Agreement currently bear interest at a rate equal to SOFR for the applicable interest period, plus an adjustment of 0.10%, plus a spread of 1.375%. On May 18, 2023, the Company issued $300.0 million of 5.50% notes due October 1, 2026. After deducting underwriting discounts, commissions and other debt issuance costs, the net proceeds to the Company amounted to $297.3 million. The proceeds of this debt issuance were used for general corporate purposes, including to repay all indebtedness under a $250.0 million unsecured committed delayed draw term loan under a previous 364-Day Credit Agreement. As of September 30, 2024, the aggregate principal amounts of long-term debt maturing during the next five years and thereafter are as follows: $500.0 million in 2025, $800.0 million in 2026, $600.0 million in 2027, $300.0 million in 2028, zero in 2029, and $500.0 million thereafter. Short-Term Borrowings The Company historically has obtained short-term funds either through bank loans or the issuance of commercial paper. On February 28, 2022, the Company entered into a Credit Agreement (as amended from time to time, the “Credit Agreement”) with a syndicate of twelve banks. The Credit Agreement replaced the previous Fourth Amended and Restated Credit Agreement and a previous 364-Day Credit Agreement. As initially entered, the Credit Agreement provided a $1.0 billion unsecured committed revolving credit facility with a maturity date of February 26, 2027. In February 2024, the Company and eleven of the banks in the syndicate consented to an extension of the maturity date of the Credit Agreement from February 26, 2027 to February 25, 2028. In May 2024, three of the banks in the syndicate assumed the commitments of the sole non-extending lender such that the Company has aggregate commitments available under the Credit Agreement in the full amount of $1.0 billion to February 25, 2028. The total amount available to be issued under the Company’s commercial paper program is $500.0 million. The commercial paper program is backed by the Credit Agreement. The Company also has uncommitted lines of credit with financial institutions for general corporate purposes. Borrowings under these uncommitted lines of credit would be made at competitive market rates. The uncommitted credit lines are revocable at the option of the financial institution and are reviewed on an annual basis. The Company anticipates that its uncommitted lines of credit generally will be renewed or substantially replaced by similar lines. Other financial institutions may also provide the Company with uncommitted or discretionary lines of credit in the future. At September 30, 2024, the Company had outstanding commercial paper of $90.7 million with a weighted average interest rate on the commercial paper of 5.30%. At September 30, 2023, the Company had outstanding commercial paper of $287.5 million with a weighted average interest rate on the commercial paper of 6.13%. The Company did not have any outstanding short-term notes payable to banks at September 30, 2024 and 2023. Debt Restrictions Both the Credit Agreement and the Term Loan Agreement provide that the Company’s debt to capitalization ratio will not exceed 0.65 at the last day of any fiscal quarter. For purposes of calculating the debt to capitalization ratio, the Company’s total capitalization will be increased by adding back 50% of the aggregate after-tax amount of non-cash charges directly arising from any ceiling test impairment occurring on or after July 1, 2018, not to exceed $400 million. Since that date, the Company recorded non-cash, after-tax ceiling test impairments totaling $717.9 million. As a result, at September 30, 2024, $358.9 million was added back to the Company’s total capitalization for purposes of calculating the debt to capitalization ratio under the Credit Agreement and the Term Loan Agreement. In addition, for purposes of calculating the debt to capitalization ratio, the following amounts included in Accumulated Other Comprehensive Income (Loss) on the Company’s consolidated balance sheet will be excluded from the determination of comprehensive shareholders’ equity: all unrealized gains or losses on commodity-related derivative financial instruments, and up to $10 million in unrealized gains or losses on other derivative financial instruments. As a result of these exclusions, such unrealized gains or losses will not positively or negatively affect the calculation of the debt to capitalization ratio. At September 30, 2024, the Company’s debt to capitalization ratio, as calculated under the Credit Agreement and the Term Loan Agreement was 0.47. The constraints specified in the agreements would have permitted an additional $3.07 billion in short-term and/or long-term debt to be outstanding at September 30, 2024 (further limited by the indenture covenants discussed below) before the Company’s debt to capitalization ratio exceeded 0.65. A downgrade in the Company’s credit ratings could increase borrowing costs, negatively impact the availability of capital from banks, commercial paper purchasers and other sources, and require the Company’s subsidiaries to post letters of credit, cash or other assets as collateral with certain counterparties. If the Company is not able to maintain investment grade credit ratings, it may not be able to access commercial paper markets. However, the Company expects that it could borrow under its credit facilities or rely upon other liquidity sources. The Credit Agreement and the Term Loan Agreement each contain a cross-default provision whereby the failure by the Company or its significant subsidiaries to make payments under other borrowing arrangements, or the occurrence of certain events affecting those other borrowing arrangements, could trigger an obligation to repay any amounts outstanding under the Credit Agreement or Term Loan Agreement, as applicable. In particular, a repayment obligation could be triggered if (i) the Company or any of its significant subsidiaries fails to make a payment when due of any principal or interest on any other indebtedness aggregating $40.0 million or more or (ii) an event occurs that causes, or would permit the holders of any other indebtedness aggregating $40.0 million or more to cause, such indebtedness to become due prior to its stated maturity. The Company’s present liquidity position is believed to be adequate to satisfy known demands. In order to issue incremental long-term debt, the Company must meet an interest coverage test under its existing indenture covenants. In general, the Company’s operating income, subject to certain adjustments, over a consecutive 12-month period within the 15 months preceding the debt issuance, must be not less than two times the total annual interest charges on the Company’s long-term debt, taking into account the incremental issuance. In addition, taking into account the incremental issuance, and using a pro forma balance sheet as of the last day of the 12-month period used in the interest coverage test, the Company must maintain a ratio of long-term debt to consolidated assets (as defined under the indenture) of not more than 60%. Under the Company’s 1974 indenture, given the impairments of exploration and production properties the Company recognized during the year ended September 30, 2024, the indenture covenants would preclude the Company from issuing incremental long-term debt beginning January 2025, for a period likely extending to June 2025, when the remaining debt outstanding under the 1974 indenture matures. The indenture covenants do not, however, prevent the Company from issuing new long-term debt to replace existing long-term debt, including borrowings under the Term Loan Agreement, or from issuing additional short-term debt. Please refer to Part II, Item 7, Critical Accounting Estimates section above for a sensitivity analysis concerning commodity price changes and their impact on the ceiling test. As of September 30, 2024, the Company has $50.0 million in principal and $3.2 million in interest payments remaining related to long-term debt issued under the 1974 indenture. Currently, the Company does not anticipate a need to issue incremental long-term debt and only has plans for new long-term debt to replace maturing long-term debt. To the extent a need arises to issue incremental long-term debt, the Company expects to be able to place future principal and interest payments in trust for the benefit of bondholders pursuant to the terms of the 1974 indenture. Depositing the future principal and interest payments in trust would effectively relieve the Company from its obligations to comply with the 1974 indenture’s restrictions, including those on the issuance of incremental long-term debt. In addition to the covenants noted above, the Company’s 1974 indenture contains a cross-default provision whereby the failure by the Company to perform certain obligations under other borrowing arrangements could trigger an obligation to repay the debt outstanding under the indenture. In particular, a repayment obligation could be triggered if the Company fails (i) to pay any scheduled principal or interest on any debt under any other indenture or agreement, or (ii) to perform any other term in any other such indenture or agreement, and the effect of the failure causes, or would permit the holders of the debt to cause, the debt under such indenture or agreement to become due prior to its stated maturity, unless cured or waived.

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