National Fuel Gas Co. is cutting the cord on its Pennsylvania timber business as it doubles down on its natural gas drilling operations in the state.
The Amherst-based energy company said it has sold most of the timber it controls, mostly on land where it holds drilling rights, for $116 million. That sale will help National Fuel pay for its $504 million purchase of much of the natural gas fields that Buffalo Bills and Sabres owner Terry Pegula sold to Royal Dutch Shell a decade ago for a much higher price.
That deal will expand National Fuel’s drilling capacity in Pennsylvania, even as the company has dropped its drilling operations in the state down to a single rig because of low prices.
But National Fuel executives believe the expanded acreage will allow the company to increase production and boost its profits by increasing usage of the gathering pipelines it already has in place throughout the region to collect the gas produced there and transfer it to larger-capacity interstate pipelines.
As a result, National Fuel boosted its earnings forecast for the fiscal year that begins in October. The company, which expects to earn around $2.80 per share during the current fiscal year, now expects its profits to rise to between $3.40 and $3.55 per share next year, topping analyst forecasts of $3.26.
The company’s third-quarter profits, which were 57 cents per share after adjustments, topped analyst forecasts by a penny.
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