Tumbling oil and natural gas prices took a toll on National Fuel Gas Co.'s fourth-quarter

profits.

The Amherst-based energy company's earnings slid by 31 percent and fell 3 cents short of

analyst forecasts as the price of the oil and natural gas produced at its oil and gas drilling

business dropped by an average of 28 percent.

But National Fuel executives remain bullish on the oil and gas production portion of the

business, which is expanding its drilling operations in the potentially lucrative Marcellus

Shale region of northwestern Pennsylvania.

The company said it is speeding up its plans to drill new wells in the Marcellus Shale,

with 50 to 60 new horizontal wells now expected to be drilled in the region next year between

National Fuel's own exploration program and a joint venture it operates with EOG Resources.

As a result, National Fuel hiked its estimate of the amount of oil and natural gas it

expects to produce during the fiscal year that began in October to between the equivalent of

42 million barrels of oil and 50 million barrels, which is more than the top end of its

previous prediction of 48 million barrels.

National Fuel also increased the top end of its earnings guidance for the fiscal year,

saying it now expects to earn $2.30 per share to $2.65 per share, which increases the upper

range of its forecast by 5 cents. National Fuel earned $2.60 per share during the fiscal year

that ended in September.

During the fourth quarter, National Fuel's profits dropped to $27 million, or 33 cents

per share, from $43.3 million, or 52 cents per share, mainly because of the impact the lower

commodity prices had on its oil and gas drilling business. Analysts had expected the company

would earn 36 cents per share.

Earnings at its exploration and production segment dropped by 26 percent to $28.1 million,

or 34 cents per share, as the decline in commodity prices offset a more than 20 percent

increase in oil and gas production.

Operating profits at National Fuel's pipeline and natural gas storage business dropped by

56 percent because of the lower commodity prices and declining efficiency gas revenues. The

company's utility business in Western New York and northwestern Pennsylvania, which typically

has its weakest results during the summer months, lost $1.6 million, or 2 cents per share,

during the quarter.