US energy company National Fuel Gas is considering several options for its natural gas production business, which could be valued at about $5 billion, according to people familiar with the matter.
The company is working with financial advisers, including Goldman Sachs, as it reviews the future of the unit, which includes gas producer Seneca Resources and pipeline operator National Fuel Gas Midstream Company.
Options under consideration include selling all or part of the business, merging it with another publicly traded US gas producer or separating it into an independent listed company.
People familiar with the discussions said no deal has been finalised and the review may not result in a transaction.
The process was partly prompted by an unsolicited expression of interest received by National Fuel earlier this year, although the identity of the potential buyer and details of the discussions have not been disclosed.
Seneca Resources, based in Houston, produces about 1.1 billion cubic feet of natural gas per day from operations in the Marcellus and Utica shale formations in the Appalachian region.
Its production activities are supported by National Fuel Gas Midstream, which transports gas from production sites into larger pipeline networks serving consumers.
The natural gas business is a major contributor to National Fuel’s earnings, accounting for about 69% of its adjusted earnings before interest, taxes, depreciation and amortisation, according to the company’s July earnings presentation.
A potential sale could provide National Fuel with additional capital to expand its regulated utility operations and reduce debt.
The company may also benefit from focusing more heavily on its utility business as US electricity demand rises, driven partly by the expansion of artificial intelligence infrastructure and broader industrial electrification.
Unlike gas production, where earnings are exposed to fluctuations in commodity prices, regulated utility operations generally provide more predictable returns.
National Fuel has a market value of about $7.6 billion. Its shares currently trade at roughly 11.2 times earnings, while some natural gas utility companies command higher valuation multiples.
However, selling the gas business would also require the company to consider the loss of earnings and cash flow generated by Seneca Resources, which have helped finance growth projects and debt reduction.
