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Fitch affirms National Fuel's BBB rating on business model, strategic position

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Fitch affirms National Fuel's BBB rating on business model, strategic position

Fitch Ratings on Oct. 1 affirmed National Fuel Gas Co.'s long-term issuer default rating and senior unsecured debt at BBB, giving the local gas distributor a stable outlook.

Fitch attributed the affirmed ratings to National Fuel's diversified and integrated business model, low-cost operations positioned for growth, low debt and a large capital expenditure program dedicated to the company's expansion projects.

The company's approximately $2.4 billion capex budget for 2019-2021 will go toward developments in National Fuel's position in the Appalachian Basin and in two major pipeline expansion projects, Fitch said. The upstream and midstream areas would get 57% and 25% of the capex budget, respectively.

National Fuel's business covers exploration and production, pipeline and storage, regulated utility and gathering segments. Fitch said these business segments should do well, including National Fuel's upstream operations in the Marcellus and Utica shale basins. Fitch expects National Fuel's debt metrics to hold out, despite it being partially affected by the large capex.

The rating agency also affirmed National Fuel's short-term issuer default rating and commercial paper rating at F2.