National Fuel Gas explores options for $5 billion natural gas production business, sources say

A divestment would grant National Fuel focus and cash to grow its utility business, at a time when power demand across the United States is soaring due to the boom in infrastructure supporting artificial intelligence build-out and wider industrial electrification efforts. The utility operations are also regulated, meaning their earnings are more stable and predictable to investors than natural gas production, which is governed by market prices for the commodity.

Seneca Resources is a Houston-based exploration and production company focused on natural gas, with operations across the Marcellus and Utica shale formations in Appalachia. It produces around 1.1 billion cubic feet per day of natural gas, according to National Fuel's July earnings presentation. Energy infrastructure operator National Fuel Gas Midstream Company supports Seneca by transporting gas from well sites to larger pipelines that carry it to end consumers.

Seneca and the associated infrastructure constitute a considerable amount of National Fuel's earnings — around 69% of adjusted earnings before interest, tax, depreciation and amortization (EBITDA), per the July presentation — meaning any divestment would have to be weighed carefully to ensure it does not undermine National Fuel's remaining business, the sources said.