NATIONAL FUEL GAS CO (NFG) stock intrinsic value fair value estimate & owner earnings analysis

National Fuel Gas is four businesses under one roof: Seneca Resources, which produces natural gas from the company's largely fee-owned Marcellus and Utica acreage in Pennsylvania; a gathering system that moves that gas; a federally regulated interstate pipeline and storage business (National Fuel Gas Supply and Empire Pipeline); and regulated gas utilities serving about 765,000 customers in western New York and northwestern Pennsylvania. On October 1, 2026 the company closed its $2.62 billion purchase of CenterPoint's Ohio gas utility (about 335,000 customers around Dayton, roughly $1.6 billion of rate base), doubling its utility rate base. How we measured earning power. We start from cash from operations, strip out working-capital swings and stock compensation, and subtract the capital spending needed to keep the business where it is. That matters enormously here: NFG spent $0.9-1.0 billion a year on capital in fiscal 2023-2025 against about $0.46 billion of depreciation and depletion. Only the part of that spending matched by revenue growth is treated as growth investment; in years when revenue fell (fiscal 2020, 2023 and 2024) all of it counts as the cost of staying in business. Large non-cash write-downs of gas properties ($519 million in fiscal 2024, $142 million in fiscal 2025) are added back because they reflect past spending; the ongoing cost is the drilling capital, which we charge in full. Cash spent plugging old wells and funding pension and regulatory obligations is kept as a real cost. Because we subtract debt separately, we value cash flow before interest. On that basis the business produced between about $114 million (fiscal 2023) and $552 million (fiscal 2025) a year over fiscal 2021-2025, a window that spans a full gas-price cycle for today's Appalachia-only business (the California oil properties were sold in 2022). The middle of that range, about $289 million a year (roughly $3.00 per share on today's 95.8 million shares), is our starting level. Fiscal 2025 rose about 182% as gas prices recovered and natural gas production grew 34 Bcf; we start far below that and grow only 1.5% a year, so a recovery year is not treated as the norm. Base case (about $23 per share). Earning power starts at $289 million and grows 1.5% a year for ten years, reflecting rate-base growth at the New York and Pennsylvania utilities and contracted pipeline projects: the federally certificated Tioga Pathway expansion (190,000 dekatherms a day, targeted for late 2026) and the Shippingport Lateral. Production is held flat, because growth beyond today's level depends on gas prices and new takeaway capacity, which are not secured. Earning power stays level through year 30, supported by about 5.0 trillion cubic feet equivalent of proved reserves at September 30, 2025 and a record of replacing them from owned acreage; after year 30 we credit only the regulated pipeline and utility businesses, at $250 million a year. The Ohio utility is valued at about $2.1 billion: NFG's own utility, with a similar rate base, earned roughly $115 million after tax but before interest in fiscal 2025, and Ohio's capital-recovery mechanisms support modest rate-base growth. In other words, we think NFG paid about $0.5 billion more for Ohio than its regulated earnings are worth at our 6% rate. Total business value is about $7.2 billion; net debt after funding the acquisition is about $5.0 billion, leaving about $2.2 billion, or $23 per share. Bear case (about $0 per share). Gas prices stay where they were in fiscal 2024, holding earning power at about $195 million a year with no growth for 20 years, after which only the regulated businesses remain at about $190 million a year. Ohio is worth about $1.75 billion if regulatory lag holds returns near 6.5% of rate base. The business is then worth about $5.0 billion against about $5.0 billion of net debt: the company would owe roughly what it is worth, leaving essentially nothing for shareholders. In this case pre-interest cash flow of about $300 million barely covers an interest bill of roughly $270 million, so the dividend would likely have to be cut or funded with new shares. Bull case (about $53 per share). Earning power runs at $400 million a year, below what the business actually produced in fiscal 2022 and 2025, and grows 2.5% a year for ten years as Tioga Pathway and utility investment come in on schedule and Seneca keeps adding production. Production persists for 40 years on the owned acreage, after which the regulated businesses carry $300 million a year. Ohio is worth about $2.5 billion, close to the price paid. Business value of about $10.1 billion less $5.0 billion of net debt leaves about $5.1 billion, or $53 per share. Debt. Net debt of about $5.0 billion is the June 30, 2026 balance ($3.57 billion of long-term debt less $1.24 billion of cash, keeping a small operating balance) plus the $2.62 billion acquisition price, which included a $1.2 billion one-year promissory note to CenterPoint at 6.5% that must be refinanced with long-term debt and equity. About 4.5 million new shares have already been issued toward the purchase. Existing notes carry rates close to our 6% rate (for example 5.50% due 2030 and 5.95% due 2035), so we made no adjustment for unusually cheap or expensive debt. The key items to watch are refinancing the promissory note on acceptable terms and whether gas prices stay high enough to carry the larger debt load. Change from our previous view. Our August 2026 estimate put the base value near $47 per share. Three things changed: we now measure earning power as cash left after the capital spending needed to sustain the business rather than as accounting earnings, which lowers it sharply for a company that reinvests nearly all of its operating cash; the Ohio acquisition has closed, adding $2.62 billion of obligations against a utility we value at about $2.1 billion; and we now discount every company at a flat 6%, which raises values and partly offsets the first two. What would make this wrong. If much of Seneca's drilling budget is really expansion rather than upkeep (production kept rising in fiscal 2023 and 2024 even as revenue fell), sustainable earning power is higher than our method credits and the base case is too low. Conversely, a return to fiscal 2019-2020 conditions, when the business generated well under $100 million a year before interest, would leave shareholders with little after the enlarged debt.