Overall production of natural gas and crude oil for the current quarter of 24.5 Bcfe increased approximately 6.3 Bcfe, or 34.4 percent, compared to the prior year’s first quarter. Production from Seneca’s Appalachia properties increased approximately 48.3 percent, mainly due to a 6.5 Bcfe, or 57.5 percent increase in production from Marcellus wells. California production of 5.0 Bcfe was consistent with the prior year’s first quarter.
Changes in commodity prices realized after hedging also impacted earnings. The weighted average natural gas price received by Seneca (after hedging) for the quarter ended December 31, 2012, was $4.09 per thousand cubic feet (“Mcf”), a decrease of $0.69 per Mcf compared to the prior year’s first quarter. Higher crude oil prices realized after hedging increased earnings. The weighted average oil price received by Seneca (after hedging) for the quarter ended December 31, 2012, was $96.69 per Bbl, an increase of $5.31 per Bbl.
Depletion and lease operating expenses (“LOE”) for the current year’s first quarter increased over last year’s first quarter due to the higher production activity discussed above. On a per unit basis, depletion decreased $0.15 per thousand cubic feet equivalent (“Mcfe”) due to higher crude oil and natural gas reserve balances at December 31, 2012, compared to the prior year. LOE increased $0.03 per Mcfe mainly due to higher transportation costs in the East and higher well repair costs in California. Earnings were also reduced by higher interest expense, due to a higher outstanding debt balance.
Pipeline and Storage SegmentThe Pipeline and Storage segment operations are carried out by National Fuel Gas Supply Corporation (“Supply Corporation”) and Empire Pipeline, Inc. (“Empire”). The Pipeline and Storage segment provides natural gas transportation and storage services to affiliated and non-affiliated companies through an integrated system of pipelines and underground natural gas storage fields in western New York and western Pennsylvania.
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