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Capturing Alpha: Scouring Social Media To Gain An Edge

Company news posted via social media can precede press releases. Social media can be used as a tool to establish company relationships. In rare cases, it can even provide tools for uncovering hard financial data. Gaining an edge in the market is hard, especially for an individual investor. There are people making good money and working long hours analyzing economic data and crunching numbers based off of 10ks , so how are you supposed to compete? Maybe by looking at different information altogether. For small and micro cap companies, it seems that more and more opportunities are presenting themselves via social media. This medium can break news that might never show up in a PR, yet it may fall outside the scope of the professionals. I observed this phenomena first hand with a holding in Digimarc (NASDAQ: DMRC ), a tech company looking to partner with major retailers. One Monday, the CEO of Walmart, Doug McMillon, posted a picture to his Instagram account acknowledging that the company was experimenting with Digimarc technology. At the time, the account didn’t even have one thousand followers, and Digimarc wasn’t mentioned directly in the posting. For these reasons, people paying attention found themselves with a great opportunity. Instead of blasting off, the stock seemed to climb as the news spread, eventually peaking at $49 (click to enlarge) Ultimately, events like those will probably be exceedingly rare. There has to be a small company, involved with a large company, where information comes from a verifiable source with a small following. With a little more legwork though, there are still opportunities to uncover information that may be significant to company developments. What follows are two examples of the type of this type of research. The first deals with determining relationships, while the second is the holy grail of this sort of research and yields hard data on company financials. The first instance involves Digimarc again. The company held an online seminar where they explained the capabilities of their technology and took technical questions from potential users of their products. In the chat box, many participants identified themselves and the city from which they were logging in. The benefit of having this information is that the names could then be cross referenced against LinkedIn profiles to get a sense of potential customers for Digimarc. Included in the chat were the following people. Person Company Notes Jeff Rosenzweig Zaptivity Managing Director Klaudia Campos Peel Plastic Products “For over 30 years, Peel Plastics Products Ltd. has been a recognized leader in flexible packaging solutions and process innovation.” Brian Novotny Schwan Food Company Represents lots of brands besides Schwan’s® including Red Baron® , Tony’s® , Freschetta® , Pagoda® , Edwards® , Mrs. Smith’s® Shasta Blaustein Dollar Shave Club Bill Belias Ergonix Company President Ultimately, this information is neat, but it is neither breaking news nor hard data. Digimarc has said that it is basically in discussions with everyone in the industry, and discussions aren’t dollars. Still, that this type of information can be gleaned at all is something to constantly be thinking about. What if this had been a smaller company and the chat had been full of people working for FritoLay? If you turn over enough stones, eventually you’ll find something. The grail of any analysis goes beyond uncovering relationships and into ferreting out actual revenues and expenses. These opportunities are rare, but I came upon one recently. Wizard World ( OTCQB:WIZD ), an events company that holds comic cons all over the country, has recently begun attempting to diversify its revenue stream. One of its new products is the Comic Con Box. A thirty dollar subscription service similar to Birch Box, but which delivers nerdy t-shirts and toys to people on a monthly basis. Massive competitors in the space exist, most notably LootCrate, but Wizard World’s celebrity and artist relationships as well as its brick and mortar conventions give it advantages which could allow it to catch up and emerge as a contender. At the LD Micro Conference in June, CEO John Macaluso mentioned that some day in the distant future the box business could be the company’s leading revenue generator. Since the company’s comic cons are generating more than twenty million dollars annually, this certainly made it sound like early results were promising. The most recently released quarter, however, only captured a fleeting look at Comic Con Box data. Its figures comprised the initial small launch plus one month. Investors following the company were informed that the company had made $132 thousand on sales of the Comic Con Box. A slightly deeper dive into the 10Q, however, showed that the unearned revenue from the sale of future boxes was $124 thousand. Regarding what goes into that number, Wizard World states that, “Unearned ConBox revenue is non-refundable up-front payments for services. These payments are initially deferred and subsequently recognized over the subscription period, typically three months, and upon shipment of the product.” In other words, the $124 thousand represented essentially all July sales plus the remainder of funds garnered from long term subscriptions. Single month recurring subscriptions were not included nor were, obviously, purchases from new buyers occurring after the period closed. At the time three months was the longest possible subscription so it was a guarantee that all of that $124 thousand would be recognized during the next quarter. Additionally, the bottom line prospects were good a well as the p ress release for second quarter results states, “We are now planning to ramp up the volume of boxes shipped monthly, and anticipate this recurring, higher margin revenue stream to continue to grow.” Growth was clearly ramping, and every single box was selling out, but how much was Wizard World increasing the supply by each month? If there was a way to acquire early data points a person could hold a major advantage. At $30 a box, if they had grown to 5,000 units by the end of the quarter, that would represent an annualized figure of close to two million and growing fast. Then I saw this photo posted to Instagram. A celebrity had signed 1,200 items to be placed in future boxes. This certainly wasn’t going to be enough for everyone to get one based solely on the initial revenue figures, but it created a chance for analysis. All that had to be known was whether the 1,200 would be distributed in a single box or across several and the rate at which they were distributed. Luckily, a later post confirmed that the 1,200 would be placed during a single months mailing. From there, all that was left was to determine the percentage of boxes that held the autograph. Uncovering this figure was tedious, but in no way actually difficult. The key to figuring things out was that Comic Con Box encourages people to post videos to YouTube of themselves reacting in real time to the items they’ve received. Watch enough of these, and you have a random sample. (I actually believe that, including prior months where I was simply watching to see people’s reviews of the items, I most likely have watched more of these than anyone else in the world) It’s the same as sneaking into the Comic Con Box warehouse, opening a bunch of boxes, and extrapolating data directly. The only thing to be careful about is that the boxes are truly unopened. Anyone posting a review with the box already open is biased by its content: They may only be posting to show off their autographed memorabilia. The results were as follows: Videos 56 Autographs 22 Percentage 39.29% Projected Boxes Sold 3055 Monthly Revenue $91,636.36 Annualized Revenue $1,099,636.36 Elements that could have skewed that data were if people were more likely to post their videos if they received the autograph (or more likely to post them sooner as I went with the very first uploads) or if this was a particularly popular or unpopular box. It did get supported by a DC Comics tweet which is an account with around a million and a half followers. Ultimately, the fact that around three thousand people received the most recent Comic Con Box isn’t terribly actionable information. It’s slightly below my expectations, but since boxes are selling out this is more a sign of cautious management rather than limited demand. Additionally, this is the sort of exercise that it is useful to make a habit. The idea isn’t that you will be able to make great investments off of every social media investigation. It’s that, as the Digimarc-Walmart event proved, the opportunities are out there, and if you don’t put in this sort of work, you’re guaranteeing you’ll miss out. Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks. Disclosure: I am/we are long DMRC, WIZD. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Spark Energy’s (SPKE) CEO Nathan Kroeker on Q2 2015 Results – Earnings Call Transcript

Spark Energy (NASDAQ: SPKE ) Q2 2015 Earnings Conference Call August 13, 2015, 11:00 AM ET Executives Andy Davis – Head of Investor Relations Nathan Kroeker – Director, President and Chief Executive Officer Georganne Hodges – Chief Financial Officer Analysts Selman Akyol – Stifel Operator Good morning, ladies and gentlemen. Welcome to the Spark Energy, Inc.’s second quarter 2015 earnings conference call. My name is Shannon, and I’ll be your operator for today. [Operator Instructions] I would now like to turn the conference over to Mr. Andy Davis, Head of Investor Relations for Spark Energy, Inc. Please go ahead. Andy Davis Good morning and welcome to Spark Energy, Inc. second quarter 2015 earnings call. This morning’s call is being broadcast live over the phone and via webcast, which can be located under Events and Presentations in the Investor Relations section of our website at www.sparkenergy.com. With us today from management is our President and CEO, Nathan Kroeker; and our CFO, Georganne Hodges. Please note that today’s discussion may contain forward-looking statements, which are based on assumptions that we believe to be reasonable as of this date. Management may make forward-looking statements concerning future expectations, projections of our operations, economic performance and financial condition. These statements are subject to risks and uncertainties that could cause actual results to differ materially from these statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we give no assurance that such expectations will be realized. We urge everyone to review the Safe Harbor statement provided in yesterday’s earnings release as well as the risk factors contained in our SEC filings. We undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise except as required by law. During this morning’s call, we will refer to both GAAP and non-GAAP financial measures of the company’s operating and financial results. For information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures, please refer to yesterday’s earnings release. With that, I’ll turn the call over to Nathan Kroeker, our President and Chief Executive Officer. Nathan Kroeker Thank you, Andy. I’d like to welcome our shareholders and analysts to Spark’s second quarter 2015 conference call. I will make a few opening remarks about our operating results and the two acquisitions we closed recently. And then our Chief Financial Officer, Georganne Hodges, will provide some detail on the financial results. We will then conclude with questions from analysts. Georganne will give you the financial details of our second quarter results in a moment, but I will tell you that we are very pleased with these results. We saw enhanced unit margins in both our Retail Natural Gas and Retail Electricity segments during the second quarter. This was a result of margin expansion, coupled with declining wholesale prices and our ability to capture higher margins on our variable book. In terms of customer count, we saw organic growth of 4% in the second quarter, driven by strong success with our electric sales campaigns in PPL and NSTAR as well as consumers in PG&E on the natural gas side and dual fuel offerings in [indiscernible]. I will discuss our two recent acquisitions in a moment, but I will say that I’m very excited about the addition of 20 new markets from these acquisitions. In the first few weeks, we have launched several dual fuel products where, for example, we are now selling Oasis electricity combined with Spark gas in the same customer sales experience. In addition, we are in the process of broadening our broker relationships, providing brokers new electric and gas markets, leveraging our suite of brand. As we signaled last quarter, we continued to see the heightened level of attrition in Southern California, as a result of our more aggressive collection efforts in that market. In line with our expectations with the closing of the Entrust acquisition, we saw higher attrition as a result of required customer communications, as those customers came on flow in the second quarter. We have taken a series of steps, aimed at reducing attrition, and we are already seeing success. If you dig into the second quarter, attrition was at its highest point in April, and has been trending down through June, and we’re seeing this trend continue in the early part of the third quarter. While I expect our attrition to continue to improve over the next few quarters, I don’t expect it to return to the levels of a few years ago, as the composition of our business has shifted overtime at higher-margin lower-volume customers that tend to experience higher attrition levels. All of this attrition is factored into our pricing strategies and our customer likes on value analysis. On July 8, we acquired CenStar Energy, a retail energy company with approximately 75,000 RCEs across 20 utilities in New York, New Jersey and Ohio. CenStar provides us with the access to 13 new utilities service territories as well as several new products to support our continued organic growth efforts. Censtar has a strong brand as well as a number of broker infinity relationships that we intend to leverage, as we grow this business. On July 31, we completed our Oasis Energy acquisition. Oasis operates in six states across 18 utilities and has approximately 40,000 natural gas and electricity customers. Oasis provides the seven new utilities, providing additional organic growth opportunities for Spark. As discussed on the last call, we intend to maintain the Oasis brand in sales and marketing operations, given their ability to add customers at a competitive cost, and realize electricity unit margin that are significantly higher than our historical margins, while only experiencing slightly higher attrition rates. We expect both businesses to be accretive through adjusted EBITDA in 2015, inclusive of integration costs expected in the third and fourth quarters. On June 15, we paid a quarterly cash dividend for the first quarter of $0.3625 per share. More recently, on July 23, we announced that our second quarter dividend of $0.3625 per share will be paid on September 14. We expect to pay this quarterly dividend on a go-forward basis. And as we have previously communicated, we expect 2015 adjusted EBITDA to exceed our planned 2015 dividends and all required distributions and tax payments. And now with our two recent acquisitions, our adjusted EBITDA should be further increased by a meaningful amount. And I want to reiterate that management does not anticipate any changes to the dividend policy in 2015. Thanks for your attention. And with that, I will now turn the call over to Georganne Hodges, our Chief Financial Officer, for more financial review. Georganne? Georganne Hodges Thank you, Nathan. Strong unit margins underpinned by lower supply costs across several of our market led to an adjusted EBITDA of $4.6 million for the second quarter. This compared to $1.4 million for the second quarter of 2014. Retail gross margin was $23.1 million compared to $17.9 million in 2014. This increase was driven by increased unit margins across both our retail natural gas and electricity segments. Although, customer account was 17% higher in the second quarter of 2015 as compared to 2014, our gas volumes were slightly lower reflecting a shift in our overall geographic mix. G&A expenses for the quarter were $13 million compared to $9.7 million in 2014. This increase is primarily due to increased billing and other variable costs associated with customer account growth and increased costs associated with being a public company. Customer acquisition spending for the quarter was $6.2 million compared to $6.4 million spent in the second quarter of ’14. Approximately, 82,000 new customers came on flow in the quarter, which includes approximately 25,000 from our Entrust acquisition, which we closed in the first quarter. Our net income for the quarter was $4.6 million compared to $200,000 in 2014. Our EPS for the quarter was $0.23, which was positively impacted $0.02 by an unrealized gain on our hedges of future supply positions. In the second quarter, we paid down our working capital facility by $11 million, ending the quarter with a loan balance of $9 million. On July 8, we amended and restated our senior credit facility to include a $25 million secured revolving line of credit to be used specifically for the financing of permitted acquisitions, along with our revolving working capital facility of $60 million. As of today, the loan balance on the revolving acquisition tranche is $21.2 million, while the balance on the working capital facility is $20.3 million. I would point out that the balance on the working capital facility reflects the purchase of working capital for both CenStar and the Oasis acquisitions. Additionally, on July 8 and July 31, in conjunction with the closing of these acquisitions, we executed a total of $7.1 million of convertible subordinated debt with an affiliate of our founder. That concludes my prepared remarks. I’ll now turn the call back over to Nathan. Nathan Kroeker Thanks, Georganne. In summary, we are very pleased with the strong adjusted EBITDA and retail gross margin we realized in the second quarter. As we move through the third quarter, we are very focused on the integration of our two new acquisitions, taking advantage of the new market opportunities for organic customer acquisitions. We will now open up the line for questions from our analysts. Operator? Question-and-Answer Session Operator [Operator Instructions] Our first question comes from Selman Akyol with Stifel. Selman Akyol As we sit there and look at the gross margin, and I know represented in your early comments that you had, I guess, favorable supply contracts on as well. How long do those — is the gross margin due to the acquisitions, higher selling prices? Is it due more to the favorable acquisition prices of energy? And if so, how long do those contracts run for? Just trying to get a feel for how durable those margins are? Nathan Kroeker Let me make sure I understand your question, Selman. So you’re asking how much of it is due to us increasing revenue and how much of it is due to us having lower costs and how long can we expect that to continue for? Selman Akyol That’s a very good summary of it, yes. Nathan Kroeker It’s really a combination of both. So on the supply side, we saw commodity prices coming down through the quarter. And when we see commodity prices coming down like that, it gives us the opportunity to expand our unit margins in that period of time. Similarly, we do have a pretty significant portion of our book that’s on variable price contracts. With milder weather in the quarters, smaller builds for consumers, we were able to have slightly higher variable margins, raise the revenue on those customers. So it’s really a combination of both. I don’t think it has much to do with the supply hedges out into the future as it is the situation in the quarter. That said, I mean I think we’ve proven that we can achieve higher unit margins than what we had last year, and we expect to continue to manage the business in a similar way going forward. So I definitely think you’re going to see higher unit margins even through the balance of the year than we had last year. Selman Akyol And then, can you talk about attrition within the quarter? Georganne Hodges We saw attrition numbers — you saw attrition numbers, they were higher than we would like. Within that, it has been trending down throughout the second quarter. And as I said a moment ago, I mean also trend it down even in the first part of the third quarter. Full quarter number was 7.7. Our June attrition, on a standalone basis for the month of June, was actually 6.8, and we see that trend continuing in July. I don’t necessarily see attrition getting all the way back down to the historical levels that we had a couple of years ago, because the makeup of our customer book has changed, really shifted a lot of our focus to higher margin, lower volume customers. And those customers tend to have inherently higher attrition. But as I also said a moment ago, I mean all of that attrition is factored into our pricing decisions, our pricing models and our lifetime value strategies. So I think we have done a pretty good job of managing it. Selman Akyol And then last one from me, just on sort of the acquisition outlook. So are you seeing lot of opportunities out there? Nathan Kroeker Absolutely, I mean I will say the management team is very focused on integrating the two deals we just did in July. But we do have a founder that’s very committed to helping us grow through M&A, willing to continue to leverage his balance sheet in order to do that. So we’re absolutely continuing to look at additional opportunities. Whether there would be something we do directly in Spark or whether it’s something that we do with the parent company and then leverage subordinated debt in order to drop those down at a later date, but we’re willing to look at pretty much anything that we think is on strategy for us. Operator We have no further questions at this time. I would now like to turn the call back over to Nathan Kroeker for closing remarks. End of Q&A Nathan Kroeker Thanks everybody for participating in today’s call. And we look forward to talking to you soon. Operator Ladies and gentlemen, this concludes today’s conference. Thanks for your participation and have a wonderful day. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. 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National Fuel Gas’ (NFG) CEO Ron Tanski on Q3 2015 Results – Earnings Call Transcript

National Fuel Gas Company (NYSE: NFG ) Q3 2015 Earnings Conference Call August 07, 2015 11:00 AM ET Executives Brian Welsch – IR Ron Tanski – CEO Dave Bauer – Treasurer and Principal Financial Officer Matt Cabell – President of Seneca Resources Corporation Analysts Becca Followill – U.S. Capital Advisors Holly Stewart – Howard Weil Chris Tillett – Jefferies Operator Good day, ladies and gentlemen, and welcome to the Q3 2015 National Fuel Gas Company Earnings Conference call. My name is Halley, and I am your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of this conference. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I’d now like to turn the call over to Mr. Brian Welsch, Director of Investor Relations. Please proceed, sir. Brian Welsch Thank you, Halley, and good morning. We appreciate you joining us on today’s conference call for a discussion of last evening’s earnings release. With us on the call from National Fuel Gas Company are Ron Tanski, President and Chief Executive Officer; Dave Bauer, Treasurer and Principal Financial Officer; and Matt Cabell, President of Seneca Resources Corporation. At the end of the prepared remarks, we will open up the discussion to questions. The third quarter earnings release and August inventor presentation have been posted on our Investor Relations website. We may refer to these materials during today’s call. We would also like to remind you that today’s teleconference will contain forward-looking statements. While National Fuel’s expectations, beliefs and projections are made in good faith and are believed to have a reasonable basis, actual results may differ materially. These statements speak only as of the date on which they are made, and you may refer to last evening’s earnings release for a listing of certain specific risk factors. With that, I’ll turn it over to Ron Tanski. Ron Tanski Thanks Brian and good morning everyone. Operating earnings are $0.55 per share for the third quarter or $0.18 per share lower than the last year’s third quarter. If you look at the drivers of that decrease that we breakout on page 11 of the earnings release it’s easy to see that three items in our exploration and production segment explain most all of the year-to-year decrease. Those items were lower commodity prices, decreased production and offsetting the first two items the reduction in our DD&A rate. The decrease in production is largely a result of our shutting in wells in Appalachian when the spot prices are too low. We continue to look for opportunities to sale our spot production at acceptable prices but there is simply too much gas and not enough pipeline infrastructures to move those supplies to attractive price points. As we pointed out in the release we curtailed approximately 12.5 Bcf of production during the quarter. Lower commodity prices have obviously been the story for most energy companies this earning season and we’ve seen some firms make major reductions in their capital expenditure budgets. We’re watching our spending too, but I’ll remind everyone that our CapEx plans have always been relatively conservative. Our current rig scheduling and drilling programs are designed to bring on enough production to fill the pipelines that we’re building to move their production to better pricing points. We continue to move forward with our plans to build the pipelines to help move production out of the basin both for owned Seneca Resources and for third party producers. Construction is underway on three of our interstate pipeline projects. Our West Side expansion project along our line and corridor, our Tuscarora Lateral project in the more central portion of our system and our Northern Access 2015 project, all of these projects are moving along on schedule and we expect that they will all be in service in the last quarter — calendar quarter of this year. The Northern Access 2015 project will allow Seneca to move140,000 dekatherms per day of gas to Canada at the Niagara interaction with TransCanada and the West Side expansion will allow Seneca to flow an additional 30,000 dekatherms per day, a portion moving to Canada and the remainder to Texas Eastern. We have shown Seneca’s transportation capacity graphically on Page 24 of our Investor Relations slide deck on our website. When combining this 170,000 dekatherms of near term capacity with the 490,000 dekatherms per day of capacity, that Seneca has in our Northern Access 2016 project you can see that we’ve got a substantial growth trajectory moving forward from our current productive capacity of 150,000 dekatherms per day in our western development area. Both Matt and Dave will give some more color on our marketing activities and hedging positions. But I am pleased to say there ongoing approach of regularly layering in hedges has put us in good shape with respect to revenue certainty for a good portion of our firms sales for the rest of this year and next fiscal year. Lower commodity prices have obviously cut into our earnings but our diversified model continues to produce healthy cash flow. Our balance sheet is in good shape but I don’t see any need to alter our strategy to build more pipelines and drilled the wells necessary to fill those pipelines. These investments help us accomplished two goals they generate significant cash flows for at least the next 15 years and they provide Seneca’s with the ability to move gas to our market with significantly better pricing. This integrated approach to developing our assets combined with the flexibility offered by our fee mineral acreage position is allowing us to deal with the current pricing challenges and puts us in a great position for continued growth. Our financing requirements for 2015 and 2016 are meaningful but our outspend is driven almost entirely by our investments and our long term midstream infrastructure. Dave will talk about the debt financing we completed in June to cover our 2015 capital program. And looking ahead in next fiscal year as we’ve said in the past the MLP structure is an option that we’re evaluating for our midstream business and given the right market condition we think it’s a very good option. The MLP market and frankly the entire energy space is under pressure right now but markets go up and down and just because there is a dislocation today doesn’t mean it will continue forever. And MLP is not only option, there are number of ways to finance our business. We’re certainly aware of our capital needs in fiscal 2016 and we’ll pick the financing option that we think is best for our shareholders. One thing is clear, there is lot of capital looking to be put to work in the midstream space. We have a great set of assets a great management team and a great plan to grow the business. In the end those are key to attracting the best sources of capital. Now I’ll turn the call over to Matt Cabell to give Seneca update. Matt Cabell Thanks Ron and good morning everyone. For the fiscal third quarter Seneca produced 36.2 Bcfe which is 11% or 4 Bcfe less than last year’s third quarter. However during this year’s third quarter we sold only our firm volumes in the Marcellus and curtailed 12.5 Bcf or approximately 140 million cubic feet per day of potential spot sales due to low prices. Absent those curtailments production would have been up 20%. In California our 2015 drilling programs have had good results and provide attractive returns even at today’s low prices. At $50 oil we earn returns of 30% to 40% on wells we drilled in the North Midway, South Midway and East Coalinga areas which represents the majority of our current and fiscal 2016 capital budget. We are also feeling good about our opportunities to grow California production over the next several years due to opportunities we see at East Coalinga and add two additional farm-in deals that are near in completion. I hope to have these two deals inked by the next call and we’ll provide some details then. Moving on to the Marcellus development in the Clermont Rich Valley areas is going well with 52 Clermont area wells drilled in the first nine months of fiscal ’15 and 24 completed. Our most recent completion in the North half of our E9E pad came on at rates ranging from 8.5 million to 10 million cubic feet per day. IP rates and EURs have been remarkably consistent in the CRB area. We also continue to drive down drilling and completion cost. Our average fiscal 2015 development well cost was $5.8 million for a 36 stages well with 7,000 foot lateral length. On the marketing front we continue to take a portfolio approach to our marketing arrangements. Optimizing the value of our firm transportation while minimizing risks through a series of firm’s sales. For example this November the Northern access 2015 project will go into service we have 140,000 dekatherms of firm transport capacity locked up under firm sales contracts with Dawn Index pricing. Dawn continues to trade a premium, so we were able to convert a portion of the Dawn sales contracts to NYMEX plus $0.35 per MMBtu for November 1 through March 31. In addition, we recently requested proposals to purchase a portion of the gas we will transport in the Northern Access 2016 project. We were pleased with the diversity and number of parties that participated and are currently negotiating a mix of Dawn Indexed and fixed price deals tied to a portion of our capacity on the project. Our active marketing and hedging program has gone long way to insulate Seneca from low natural gas prices. For the third quarter our average after hedging sales price was $3.32 per Mcf, which is over a $1 higher than the pre-hedged price. Looking forward to fiscal 2016 we now have a 114 Bcf of our gas production locked in both physically and financially at an average price of $3.50 per Mcf so we are well positioned should low prices persist in to next year. Moving now to the Utica, I am sure that many of you saw the high rate test that we announced by our peers in Westmoreland and Green Counties. We have two Utica test planned that should connect the trend between these recent wells and Tioga County where our recent Utica well tested 22.7 million cubic feet per day. As I mentioned on our last call the planned wells will be drilled in conjunction with our ongoing Marcellus development in the Clermont area. The rig is just moved to the E9-M pad where we plan to drill 10 Marcellus wells and one Utica. This will be a 5,500 foot lateral with an expected total cost of about $12 million. We expect to frac this pad in the third quarter of fiscal ‘16 and should have a test rate shortly thereafter. Given our larger contiguous fee acreage position a successful Clermont area Utica test could have a major impact on Seneca’s overall resource potential. In summary, our development program continues to show consistent predictable results. We are driving down costs and locking in margins through firm sales and hedging, although we’re dropping a rig early in ‘16 and reducing our capital spending from 2015 to 2016. We are on track to fully utilize the 700,000 dekatherms of firm transportation that we’ll have in 2017 and in addition to thousands of de-risked Marcellus well locations. We are optimistic about the potential for Utica development across a broad swap of our acreage. With that I’ll turn it over to Dave. Dave Bauer Thank you, Matt. Good morning everyone. Ron hit on the major drivers for the quarter’s earnings and other than the impairment charge there really wasn’t anything unusual on the quarter. Last night release explains the major variances in earnings, so I won’t repeat them again here. Instead I will focus on our expectations for the remainder of the fiscal year and our initial guidance for next year. With respect to 2015 our updated earnings guidance is $2.90 to $3 per share excluding ceiling test impairments. That’s up from our previous range of $2.75 to $2.90 mostly due to lower expected DD&A expense. As a result of the third quarter ceiling test charge we expect Seneca’s per unit DD&A rate for the fourth quarter will be in the $1.35 per Mcfe area. That will lower the full year DD&A rate to about $1.55 per Mcfe at the low end of our previous guidance of $1.55 to $1.65. Production for the year is now expected to be 155 to 160 Bcfe. The midpoint is the level should achieve assuming we don’t sale any spot volumes in August and September. We haven’t produced above our level of firms sales commitments for the better part of the calendar year and based on the prices we’ve seen thus far we don’t think it’s likely we’ll have meaningful spot sales in the remainder of the fourth quarter. However should prices improved, we have the ability to produce about 4 Bcf per month into the spot markets. In terms of pricing we’re assuming Henry Hub price for natural gas of $2.75 per Mcf. However because all of the 2 Bcf of our firm sales for the quarter are hedged changes in natural gas price saw minimal impact on our earnings. For crude oil we’re assuming WTI price of $50 a barrel. That’s little higher than the current IMX [ph] prices, we are better than 60% hedge for the fourth quarter. Looking to next year our preliminary earnings guidance for fiscal ‘16 is a range of $3 to $3.30 per share excluding any ceiling test impairment charges. In terms of pricing we’re assuming a Henry Hub gas price of $3.25 per Mcf and a WTI crude oil price of $55 a barrel. In addition we’re assuming we’ll receive $1.75 per Mcf for Marcellus spot buy-ins. There has been considerable volatility in commodity prices particularly with respect to crude oil and we expect to refine our pricing assumptions as we move into the fiscal year. Seneca’s production forecast of 158 to 232 Bcfe has a wider than normal range which reflects the uncertainty around Appalachian gas pricing and our ability to sell spot volumes at an acceptable price. We’re optimistic that Seneca will have spot sales, but want to manage expectations given our recent experience. Therefore, we’re presenting a full range of potential outcomes. If we saw a 100% of our expected spot volumes will be at the high end of the range, if we don’t sale any spot volumes will be at the low end. From an expense standpoint the ranges you see on page 25 of last night’s release are all based on the 195 Bcfe mid-point of our production forecast. The improvements in per unit LOE, G&A and production tax expenses compared to our third quarter rates are attributable to the expected increase in Seneca’s production volumes. As you’d expect our DD&A rate will decrease sharply as a result of the ceiling test impairments. So we excluded our future ceiling test charges themselves from our earnings guidance. We have tried to estimate with the DD&A rate will look post impairments. However given number of variable that go into that calculation it’s possible the range will change meaningfully in the coming quarters. As you can see from pages 56 to 57 of our new IR deck we’re well hedged for fiscal ’16 and as Matt said earlier, we’ve locked in 114 Bcf of natural gas production at a price of about $3.50 per Mcf. And that equates to about 80% of our firm sales volumes and at the midpoint of our production forecast about 65% of our expected natural gas production. On the oil side we have about 1.3 million barrels hedged at $93 barrel which represents about 45% of our expected oil production. Together the excitement earnings and cash flow should track the increase in Seneca’s volumes. For fiscal ’16 assuming the midpoint of Seneca’s production forecast we expect the gathering excitements revenues will be about $95 million up from the 75 million to 80 million we forecast for fiscal ’15. As we add compression to Clermont system operating and depreciation expenses will increase meaningfully relative to their current levels. But a large portion of the revenue increase should fall to the bottom line. Turning to the regulated businesses fiscal ’16 should be a good year for the pipeline and storage segment. This fall the Northern Access 15, West Side expansion and Tuscarora Lateral projects go into service adding $27 million of incremental revenues in 2016. However that increase will be likely offset in part by a variety of smaller items including some typical re-contract again both pipeline system and a decrease in short term transportation revenue is somewhat weather related and recall the last winter was significantly colder than normal. Our forecast for 2016 assumes normal weather. Considering those items we expect pipeline and storage revenue for fiscal ’16 will be in the range of $300 million to $310 million. We expect ONM expense in this segment will increase to about $85 million to $90 million part of that increase relates to higher operating cost associated with our recent expansion projects and part relates to an expected $4 million increase in the retirement benefit cost which is driven by some anticipated changes in our plans actuarial assumptions. Lastly with respect to the utility, we’re expecting a decline in that segment earnings in fiscal ’16 for two reasons. First as I just mentioned our forecast assumes normal weather. In fiscal ’15 colder than normal weather contributed about $0.05 per share at earnings. Additionally, as you recall in the second quarter of fiscal ’15 an audit in the New York division of the utility resulted in an adjustment to benefited earnings by about $0.04 of share. And we don’t expect that adjustment will recur in 2016. Turning to capital spending page 7 of our new IR deck contains our updated capital spending estimates for fiscal ’15. We narrowed our consolidated guidance to a range of 990 million to 1.045 billion at the midpoint of $55 million decrease from our previous guidance. About half of the decrease is related to the timing and spending between fiscal years in the E&P gathering and pipeline segments. The other half relates to the utility Dunkirk project at the timing of which is become less clear. The owner of the power plant that would be served by the project is facing some legal and regulatory challenges with respect to its repurchasing of the plant. We stand ready to build the project once those challenges are resolved but given the uncertainty we are removing the project form our capital budget. For fiscal ’16 our consolidated range is now 1.1 billion to 1.3 billion, up modestly from our previous guidance. There aren’t any major changes in our spending plans the variation are mostly attributable to timing. Given the changes in our earnings and capital spending guidance we now expect and outspend in fiscal ’15 that’s just under $400 million. In June we issued $450 million of long term debt to fund that outspend. Looking to next year we expect our capital expenditures and dividend, we’ll exceed cash from operations in the range of 500 million to 600 million. We have short term credit facilities to initially finance that outspend if it’s necessary and as you know we’re evaluating longer term financing alternatives. As a place older our earnings guidance for fiscal ’16 assume we use terms we used short term debt and we’ll obviously updates that guidance we refine our ultimate financing finance. With that, I’ll close and ask the operator to open the line for questions. Question-and-Answer Session Operator [Operator Instruction] Our first question comes from Becca Followill, U.S. Capital Advisors. Please go ahead. You are now live in the call. Becca Followill Couple of questions for you, one I know that you sounded you’ve taken off some of the list in the short term in the Dawn hedges in favor of a higher NYMEX price. What we’re seeing so far is what we have tried to estimate with the DD&A rate will look post impairments. However given number of variable that go into that calculation it’s possible the range will change meaningfully in the coming quarters. As you can see from pages 56 to 57 of our new IR deck we’re well hedged for fiscal ’16 and as Matt said earlier, we’ve locked in 114 Bcf of natural gas production at a price of about $3.50 per Mcf. And that equates to about 80% of our firm sales volumes and at the midpoint of our production forecast about 65% of our expected natural gas production. On the oil side we have about 1.3 million barrels hedged at $93 barrel which represents about 45% of our expected oil production. Together the excitement earnings and cash flow should track the increase in Seneca’s volumes. For fiscal ’16 assuming the midpoint of Seneca’s production forecast we expect the gathering excitements revenues will be about $95 million up from the 75 million to 80 million we forecast for fiscal ’15. As we add compression to Clermont system operating and depreciation expenses will increase meaningfully relative to their current levels. But a large portion of the revenue increase should fall to the bottom line. Turning to the regulated businesses fiscal ’16 should be a good year for the pipeline and storage segment. This fall the Northern Access 15, West Side expansion and Tuscarora Lateral projects go into service adding $27 million of incremental revenues in 2016. However that increase will be likely offset in part by a variety of smaller items including some typical re-contract again both pipeline system and a decrease in short term transportation revenue is somewhat weather related and recall the last winter was significantly colder than normal. Our forecast for 2016 assumes normal weather. Considering those items we expect pipeline and storage revenue for fiscal ’16 will be in the range of $300 million to $310 million. We expect ONM expense in this segment will increase to about $85 million to $90 million part of that increase relates to higher operating cost associated with our recent expansion projects and part relates to an expected $4 million increase in the retirement benefit cost which is driven by some anticipated changes in our plans actuarial assumptions. Lastly with respect to the utility, we’re expecting a decline in that segment earnings in fiscal ’16 for two reasons. First as I just mentioned our forecast assumes normal weather. In fiscal ’15 colder than normal weather contributed about $0.05 per share at earnings. Additionally, as you recall in the second quarter of fiscal ’15 an audit in the New York division of the utility resulted in an adjustment to benefited earnings by about $0.04 of share. And we don’t expect that adjustment will recur in 2016. Turning to capital spending page 7 of our new IR deck contains our updated capital spending estimates for fiscal ’15. We narrowed our consolidated guidance to a range of 990 million to 1.045 billion at the midpoint of $55 million decrease from our previous guidance. About half of the decrease is related to the timing and spending between fiscal years in the E&P gathering and pipeline segments. The other half relates to the utility Dunkirk project at the timing of which is become less clear. The owner of the power plant that would be served by the project is facing some legal and regulatory challenges with respect to its repurchasing of the plant. We stand ready to build the project once those challenges are resolved but given the uncertainty we are removing the project form our capital budget. For fiscal ’16 our consolidated range is now 1.1 billion to 1.3 billion, up modestly from our previous guidance. There aren’t any major changes in our spending plans the variation are mostly attributable to timing. Given the changes in our earnings and capital spending guidance we now expect and outspend in fiscal ’15 that’s just under $400 million. In June we issued $450 million of long term debt to fund that outspend. Looking to next year we expect our capital expenditures and dividend, we’ll exceed cash from operations in the range of 500 million to 600 million. We have short term credit facilities to initially finance that outspend if it’s necessary and as you know we’re evaluating longer term financing alternatives. As a place older our earnings guidance for fiscal ’16 assume we use terms we used short term debt and we’ll obviously updates that guidance we refine our ultimate financing finance. With that, I’ll close and ask the operator to open the line for questions. Question-and-Answer Session Operator [Operator Instruction] Our first question comes from Becca Followill, U.S. Capital Advisors. Please go ahead. You are now live in the call. Becca Followill Couple of questions for you, one I know that you sounded you’ve taken off some of the list in the short term in the Dawn hedges in favor of a higher NYMEX price. What we’re seeing so far is what direct reversal completion that just trying to get basis for in Chicago, can you talk little bit about your capacity going to Dawn on and how much you have hedged. In the out years thoughts which is short debt maybe 17, 18, 19? Ron Tanski You have referenced from the slide deck. Back on page 27 is our IR deck is our hedge positions going out. We don’t have a larger amount of longer term hedges in place for 2016 we have 19 Bcf at Dawn, 2017, 22 Bcf and a more modest amount financially hedged that fit on. Becca Followill Is there enough liquidity to hedge out some of this in future years? Dave Bauer We are looking at that and we haven’t looked much beyond 2018 but we haven’t had really any difficulty executing trades in the closer years. Becca Followill And what did some other spreads look like relative to historical, are they already reflecting some pressure on that basis? Dave Bauer Well, the trade that we’ve done have generally than it a premium to NYMEX, obviously you go further out the liquidity discount gets to be a bit greater so for example in the near years we may be doing at a full year NYMEX plus 10 to 20 or so but then as you’ve move towards the 18 time period that roads to more NYMEX flat type level. And as you move beyond that, we do get indicative levels but the liquidity premium tends to increase quite a bit. Becca Followill Thank you. That’s helpful. On the well cost for Utica the 12 million that you’ve talked about the new well that you’re going to drill, what’s the depth on that in some of the early wells that we’ve seen, I know you’ve drilled a couple already but some of the early ones that we’ve seen from ECTE and coming in much, much higher than that? Ron Tanski Yes, depth for our Clermont Utica well is on the order of 10,500 feet true vertical depth. So it’s a little shallower. But I would say the bigger factor is that we’re drilling this on an existing Clermont Marcellus pad. So the infrastructures there its sharing pad cost with 10 other wells. Our water handling is all in place you don’t have to truck water from the long distance. So there is a big, big benefit to developing something like this as part of an existing development rather than one-off well that’s far from everything else. Becca Followill Got you. Thank you. And then will that 12 million include some of the normal science cost that happen with early wells to drive that up a little but higher? Ron Tanski Yes, there isn’t a whole lot of additional science in this particular well and I would also say that well cost estimate is probably on the conservative side. I hope we can do cheaper than that. Becca Followill Right, thank you. And then on the financing for 2016 the short fall of $500 million to $600 million, I know maybe you said you’re going to — right now in the plan it’s short term debt, at what point or what’s the timeframe if you’re looking to make a decision on whether or not you’ll financial it differently? Ron Tanski Well, as Ron said we’ve been evaluating NPL and other structures and as we move through the year and start to spend dollars on Northern Access, we’ll be announcing our definitive financing plans. Becca Followill The changes in what happened with NLPs lately and then downturn cause you in that anyway? Ron Tanski Well, not really Becca, we had just given the previous schedule we’ve talked about with respect to receiving the first certificate and when construction activity actually begin hasn’t changed. So we’ve got some time, obviously the market is going to do something, what it’s going to do we’re not sure, but we think no one is going to try to call a bottom here anytime soon but we may have already passed that, but that’s far enough out, that to talk about it in any kind of detail, would just to be able to bit premature. Becca Followill Understand. Thank you, guys. Operator We have no further questions. [Operator Instructions] We have another question and it comes from the line of Holly Stewart of Howard Weil Please go ahead. Holly Stewart Matt, maybe just one or two for you, several of your peers I guess have been talking about deferring completions as they’re heading into 2016 just to have that baseline of production growth and you’ve got quite a bit of volume curtail. But curious how you’re thinking about different completion as you kind of exit the year into ’16. Matt Cabell Yes so as I mentioned in my prepared comments at Clermont we drilled 52 wells, only completed 24. We expect to end the year — to end ’16 was about 50 wells that are drilled, but not completed. Although I think that number may include a handful that are completed and just not online at that time. Holly Stewart Is that in ’15 or in ’16 sorry? Matt Cabell The end of fiscal ’15. At the end of fiscal ’16 or best guess is about 65 wells that are drilled but not completed. Recognizing that with Northern Access 16 coming on at the end of the year we’ll probably have a fairly big slug of completion in that time frame just right after the end of fiscal ’16. Holly Stewart Okay so that kind of what bridge is that gap if you look at slide 18, I think it where it says the firm sales to future SE capacity and going from the 220 to 660. So that’s really what’s helping get you up to that rate as you enter into fiscal ’17? I’m assuming. Matt Cabell I’m finding the reference on the slide — you mean the gap between fiscal ’16 and fiscal ’17. Yes there is a big slug of completions for us. And the other thing that happens is we go from an assumption of some curtailments of spot volumes to not really having to curtail any more spot because we’ve got the firm transportation in fiscal ’17. Holly Stewart And maybe just kind of along the same lines, just kind of curious as your macro view. You’ve obviously got a lot shut in, but you also have from a spot fill standpoint, there’s the potential to shutdown lot more in 2016. So is there anything that you’re seeing out there as you look into your crystal ball and just ended 2016 from a Northeast PA standpoint, that there could be some pricing or release? Ron Tanski As we look at the projects coming on there is two projects that come on kind of late this year. Sort of the beginning of the winter that should de-bottle neck Northeast Pennsylvania to some degree. And our view is that winter spot pricing given normal weather and it may at least be acceptable such that we’ll be selling some spot this winter. It’s difficult to predict that Holly but there is our best guess. I would expect that that would be a winter phenomenon though, not necessarily for the full year. Operator Our next question comes from the line of Chris Sighinolfi from Jefferies. Please go ahead. Chris Tillett This is Chris Tillett on for Chris Sighinolfi how are you? Just a follow up on Becca’s question obviously the MLP has been on the lot of investors mind recently and given the kind of the turn-in in outlook in the market. I’d just be curious to hear your thoughts on some of the alternatives you’re considering and how you think about approaching this process in a non-MLP world. Matt Cabell I think if you obviously it’s a rather recent phenomena with respect to the MLP market. But I was thinking and really hasn’t changed all that much. And as I said it really would be premature to be talking about us pulling the trigger on any particular type of financing. Since we’ve given our schedule and given our timing we’ve have plenty of time to see how the market sort this self out. I guess that’s about all I’m prepare to say at this point. Operator We have no further questions. I would now like to turn the call over to Mr. Brian Welsch for closing remarks. Thank you. Brian Welsch Thank you, Halley. We’d like to thank everyone for taking the time to be with us today. A replay of this call will be available at approximately 3 pm Eastern Time on both our website and by telephone and will run through the close of business on Friday, August 15, 2015. To access the replay online, please visit our Investor Relations website at investor.nationalfuelgas.com. And to access by telephone, call 1-888-286-8010, and enter passcode 97670814. This concludes our conference call for today. Thank you and goodbye. Operator Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a great day. 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