Announcement Overview
National Fuel Gas Company (NYSE:NFG) disclosed that its board of directors has approved a plan to spin off its Integrated Upstream and Gathering (IUG) business into an independent publicly traded entity. The spin‑off will be executed through a tax‑free distribution of IUG shares to existing shareholders, with at least 80.1% of the IUG shares to be allocated on a pro‑rata basis and the company retaining up to 19.9% for a subsequent tax‑efficient disposal.
Timeline and Conditions
The separation is targeted for completion in the second half of 2027, subject to the satisfaction of several conditions, including required SEC filings, the arrangement of financing, and final approval by the board of directors.
Post‑Spin‑Off Structure of National Fuel Gas
After the spin‑off, National Fuel Gas will continue as a fully regulated natural‑gas utility with an approximate rate base of $5 billion. It will serve roughly 1.1 million utility customers across Ohio, New York, and Pennsylvania. The company's pipeline and storage operations will provide nearly 5 billion cubic feet per day (Bcf/d) of contracted transportation capacity and 77 billion cubic feet of contracted storage services.
Profile of the New IUG Entity
The newly independent IUG entity will operate as an Appalachian natural‑gas producer, encompassing about 1.2 million net acres. It is expected to generate approximately 1.1 Bcf/d of net production and hold around 5 trillion cubic feet of proved natural‑gas reserves. Justin I. Loweth, presently president of Seneca Resources and NFG Midstream, will assume the role of chief executive officer of IUG.
Management Continuity at National Fuel Gas
David P. Bauer will remain president and chief executive officer of National Fuel Gas, while Timothy J. Silverstein will continue as treasurer and chief financial officer.
Market Reaction
Following the announcement, National Fuel Gas shares rose 1.6%.