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National Fuel Gas (NFG) to Gain From Acquisitions & Investments

National Fuel Gas Company’s NFG strong presence in the Appalachian region, acquisition of Shell’s assets and consistency in capital investments will boost its performance.  National Fuel Gas Company’s expanding upstream and midstream operations are tailwinds.

However, this Zacks Rank #3 (Hold) stock has to face strong competition from providers of natural gas and other sources of energy.

Tailwinds

National Fuel Gas Company’s involvement in upstream, midstream and downstream activities of natural gas value chain, gives it a competitive advantage and allows it to lower operating costs. The completion of the highly-accretive acquisition of Appalachian upstream and midstream gathering assets, boosted production levels and proved reserves of the company. NFG has invested $2.4 billion in midstream operations to expand and modernize its pipeline infrastructure for gaining access to Appalachian production. The company has a planned investment of more than $500 million over the next five years, for the modernization of pipeline transportation and distribution systems.

National Fuel Gas’ acquisition of Royal Dutch Shell’s upstream and midstream assets in Pennsylvania, proved to be beneficial for its earnings and production. This acquisition added 684 billion cubic feet of natural gas reserves to the company.

NFG is also investing to lower greenhouse gas emissions from its delivery system. It aims to lower emissions by 75% in 2030 and by 90% in 2050, from the 1990 levels.
Expanding operations of National Fuel Gas Company enables it to generate a stable cash flow. NFG reported net cash provided by operating activities for first-quarter fiscal 2023 at $327.4 million, up 90.9% from $171.5 million in the year-ago period.

Headwinds

National Fuel Gas Company’s competition, stringent regulations, dependence on the performance of its subsidiaries to meet financial obligations and weather variations might be unfavorable for its performance.

Stocks to Consider

Some better-ranked stocks from the same industry are MDU Resources Group MDU, New Jersey Resources NJR, and Spire Inc. SR, each holding a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for MDU Resources Group, New Jersey Resources and Spire Inc.’s 2023 earnings per share (EPS) indicates an increase of 13.9%, 2% and 8.81%, respectively.

Long-term (three- to five-year) earnings growth of MDU Resources Group, New Jersey Resources and Spire Inc. is pegged at 5.99%, 6% and 4.22%, respectively.

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