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With more natural gas flowing from the Marcellus Shale region in Pennsylvania, and prices inching higher, National Fuel Gas Co. is reaping the benefits.

The Amherst-based energy company said Friday that its third-quarter profits jumped by 35 percent as its oil and natural gas drilling business and its utility operations both enjoyed big jumps in their earnings.

National Fuel’s earnings were stronger than analysts had forecast, and the company said it expects its profits during the coming fiscal year to grow by about 4 percent as its oil and natural gas drilling business is forecast to boost its production by about 16 percent.

And in the longer term, National Fuel executives said the results from the first wells that the company has drilled in the western portion of its lightly developed land holdings in Pennsylvania have shown strong results that indicate those holdings could become an important part of its drilling program in the years to come.

“We had a great quarter,” said Ronald J. Tanski, National Fuel’s president and chief executive officer, during a conference call. “All of our business segments delivered impressive operating results.”

National Fuel’s profits jumped to $58.5 million, or 69 cents per share, during the quarter that ended in June, up from $43.2 million, or 52 cents per share, a year ago. The earnings easily topped the 65 cents per share that analysts were expecting. National Fuel’s shares closed down 56 cents on Friday, at $62.03.

The company also said it expects its earnings this year to fall within the higher end of its earlier forecast. National Fuel said it now expects its profits during the fiscal year that ends in September to range between $3 and $3.10 per share, which is at the high end of its previous forecast of between $2.90 and $3.10 per share.

National Fuel said it expects profits to grow during the coming fiscal year, rising to between $3.05 and $3.30 per share, which is in line with analyst forecasts of $3.16 per share.

Much of National Fuel’s strength during the third quarter came from its oil and gas drilling business, which increased its profits by 45 percent to $31.7 million, fueled by a 54 percent jump in its overall production, which rose to the equivalent of 34.1 billion cubic feet of natural gas.

Higher energy prices also bolstered the drilling business’ profits, with the price National Fuel received for its natural gas rising by an average of 2 percent, after hedging, and oil prices increasing by an average of 9 percent.

The company said it expects its production during the next fiscal year to rise by about 16 percent to between 134 billion and 146 billion cubic feet of natural gas, up from an estimated 118 billion to 121 billion cubic feet during the current fiscal year, as it continues to expand its drilling operations in the Marcellus Shale region in Pennsylvania.

National Fuel can produce natural gas profitably from its Marcellus wells with commodity prices as low as $3.50 to $4 per 1,000 cubic feet, said Mathew D. Cabell, who runs the company’s oil and gas drilling business.

In the coming quarters, National Fuel, which currently has three drilling rigs operating in the Marcellus region, may consider expanding its drilling program if it appears commodity prices will be high enough to merit the investment. If that happens, the company “would strongly consider” forming master limited partnerships – a financing vehicle the company considered and ultimately rejected several years ago – to help raise the money it would need to pay for the additional drilling, Tanski said.

“We are not considering a spin-off or divestiture of the utility,” he said.

Earnings from the company’s utility business, which covers much of Western New York and portions of northwestern Pennsylvania, jumped by 49 percent to $7.6 million, mainly because of colder temperatures in Pennsylvania and increased gas usage by consumers.

Profits from the company’s natural gas pipeline and storage business rose by 11 percent to $14.1 million, primarily because of higher revenues from two pipeline expansion projects that came on line during the winter. National Fuel has brought five regulated pipeline projects into operation over the last three years, costing nearly $250 million, along with three gathering system projects, valued at $227 million, to capitalize on the need to bring gas produced by often-remote Marcellus wells to higher-capacity pipelines nearby.

email: drobinson@buffnews.com