U.S. company National Fuel Gas is exploring various strategic alternatives for its integrated natural gas production business, a unit that could reach a valuation close to $5 billion.
According to people familiar with the deliberations cited by Reuters, the analysis includes a full or partial sale, a merger with another publicly traded U.S. producer, or a spin-off to create an independent company.
The review includes Seneca Resources and National Fuel Gas Midstream Company, two businesses that concentrate a significant portion of the group’s gas production and transport activity.
Seneca Resources concentrates natural gas production
For its part, Seneca Resources carries out natural gas exploration and production activities in the Marcellus and Utica shale formations in the Appalachians.
The company produces approximately 1.1 billion cubic feet of natural gas per day, according to National Fuel’s earnings presentation for July.
Additionally, National Fuel Gas Midstream Company provides infrastructure services to move gas from production areas to higher-capacity pipelines that subsequently supply consumers.
Seneca and related infrastructure represent nearly 69% of National Fuel’s adjusted EBITDA, according to the same corporate presentation cited by Reuters. This share requires the company to cautiously evaluate any eventual asset separation.
National Fuel Gas evaluates options for its gas business
Furthermore, National Fuel is working with financial advisors, including Goldman Sachs, to study possible scenarios related to this unit.
Sources consulted noted that alternatives include a full or partial divestiture, a combination with another U.S. producer, or a spin-off through the creation of an independent publicly traded company.
However, the strategic review does not guarantee that a transaction will take place. The process reportedly gained momentum after National Fuel received an expression of interest for its natural gas production business in early 2026. The identity of the potential interested party and the scope of those contacts were not disclosed.
Regulated business gains weight in strategy
On the other hand, an eventual divestiture could free up capital to expand National Fuel’s regulated utility business.
Regulated operations offer more predictable revenues than natural gas production, the profitability of which depends more heavily on energy market prices.
This point gains relevance in the United States given the growth in electricity demand associated with data centers, artificial intelligence infrastructure, and industrial electrification processes.
National Fuel could also use the proceeds from a possible transaction to fund growth, reduce debt, or strengthen its position within the gas distribution business.
National Fuel compares different market valuations
The company’s current structure combines natural gas production, midstream infrastructure, and regulated utilities.
According to LSEG data cited by Reuters, National Fuel trades at around 11.2 times its earnings, while some specialized natural gas utilities exceed 16 times.
In contrast, the major U.S. shale gas producers analyzed by LSEG trade in an approximate range of between 8 and 12.4 times their earnings.
This difference helps explain why separating assets could modify National Fuel’s financial profile. Even so, Seneca Resources’ strong contribution to the group’s results makes any decision a process with significant effects on the remaining business.
Marcellus and Utica remain core assets
Finally, Seneca Resources’ weight in the Marcellus and Utica keeps these formations as central elements of any strategic scenario.
Shale Directories also highlighted the potential sale of Seneca Resources and National Fuel Gas Midstream Company within its coverage of major U.S. shale gas basins.
For now, National Fuel has not announced a definitive transaction, and alternatives remain under evaluation.
Source: Energy Now
Photo: Shutterstock
