UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-K/A

(Amendment No. 1)



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2011

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

Commission file number: 001-34585





GAS NATURAL
INC.

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Ohio                                                           |  | 27-3003768                          
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. employer Identification no.)

1 First Avenue South

Great Falls, Montana 59401

(Address of principal executive offices,
including zip code)

(800) 570-5688

(Registrants telephone number, including area code)

Securities
Registered Pursuant to Section 12(b) of the Act:



|                                 |  |                                          
|-------------------------------- |  | -----------------------------------------
|Title of Each Class              |  | Name of Each Exchange on Which Registered
|Common, par value $.15 per share |  | NYSE Amex Equities                       

Securities registered pursuant to Section 12(g) of the Act:

None





Indicate by check mark if the
registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities
Act.    Yes   ̈    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange
Act.    Yes   ̈    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files.)    Yes  x    No   ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated Filer |  |  ̈ |  | Accelerated Filer         |  |  ̈
|                        |  |   | 
|Non-Accelerated Filer   |  |  ̈ |  | Smaller Reporting Company |  | x

Indicate by check mark whether the registrant is a shell company.    Yes   ̈    No  x

The
aggregate market value of the registrants common stock held by non-affiliates as of June 30, 2011 was $70,262,323.

The number of
shares outstanding of the registrants common stock as of March 21, 2012 was 8,155,051 shares.









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Explanation of Amendment

Gas Natural Inc. is filing this Form 10-K/A as Amendment No. 1 (the Amendment) to its Annual Report on Form 10-K for the year ended December 31, 2011 (the Annual Report)
filed with the Securities and Exchange Commission on April 10, 2012 for the purpose of including the following portions of Gas Naturals Annual Report that were incorporated by reference:

Item 10Directors, Executive Officers and Corporate Governance

Item 11Executive Compensation

Item 12Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters

Item 13Certain Relationships and Related Transactions, and
Director Independence

Item 14Principal Accountant Fees and Services

Except as described above, no other amendments are being made to the Annual Report. This Amendment does not reflect events occurring after the April 10, 2012 filing of the Annual Report, or modify or
update the disclosure contained in the Annual Report in any way other than as required to reflect the additions discussed above and reflected below.



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PART III



|ITEM 10. | Directors, Executive Officers and Corporate Governance
|-------- | ------------------------------------------------------

Directors and Executive Officers. Below are the names, ages, positions and certain other information concerning our current directors and executive officers:

W. E. Gene Argo, 70, has been a director since 2002. He retired in 2004 as the president and general manager of Midwest Energy, Inc.,
a gas and electric cooperative in Hays, Kansas, in which capacity he had served since 1992. Over the course of Mr. Argos long tenure on our board, he has developed a detailed knowledge and understanding of Gas Natural and he provides our
board with continuity that contributes to our long term success. His past experience in energy and utility related industries also imparts insight into our industry.

Wade F. Brooksby, 67, joined the board in 2010. His extensive background includes various executive management positions in public and private companies with his career beginning as a public
accountant with then PriceWaterhouse & Co. Mr. Brooksby has served as chief executive officer, chief financial officer and consultant to energy exploration, production and marketing companies, and from 2004 through 2006 he served as
chief financial officer of Gas Naturals wholly-owned and largest subsidiary, Energy West, Incorporated. From 2006 through 2009 he served as vice president, chief financial officer and a director of InNexus Biotechnology Inc., a publicly-held
drug development company. In 2008 and 2009 he also served as a director of Zila, Inc., a publicly-held biotechnology company specializing in dental diagnostic equipment. We believe Mr. Brooksbys financial expertise and extensive industry
experience enable him to make consistently strong and dependable contributions to the board.

Nicholas U. Fedeli, 26, joined the board
in 2010. He began his career with The Fedeli Group in 2006 and has served as vice president since 2008. The Fedeli Group is an insurance brokerage and consulting services company, where he manages client relationships and leads new business
development. He is actively involved in many charitable, political, and community organizations in Northeast Ohio. We believe that his knowledge of finance provides our board with critical expertise, and that as a relative newcomer to our board, he
introduces a fresh dynamic and perspective to board discussions.

John R. Jack Male, 64, joined the board in 2010. He
previously served as chairman and chief executive officer of PVF Capital Corp., a publicly-traded bank holding company for Park View Federal Savings Bank in Solon, Ohio, where he had worked since 1971. He was named president and chief executive
officer of Park View Federal Savings Bank in 1986 and president and chief executive officer of PVF Capital Corp. upon its organization in 1994. He retired from these positions in 2009. He currently serves on the Board of Trustees of Geauga Hospital,
and has served as a trustee for various charitable organizations. Mr. Males substantial experience in finance and accounting and as



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chairman and chief executive officer of a publicly-traded bank holding company are highly beneficial to Gas Natural.

Gregory J. Osborne, 33, has served as a director since September 2009 and was appointed president and chief operating officer of Energy West Resources, Inc., our marketing and production
subsidiary, in February 2012. He previously served as president, chief operating officer and a director of John D. Oil and Gas Company, a publicly-held oil and gas exploration company, from 2006 until January 2012. In November 2011, the United
States District Court issued an order appointing a receiver to marshal and maintain the value of the assets of John D. in connection with an action brought by one of the companys creditors. In January 2012, John D. filed a voluntary petition
for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court. The bankruptcy proceeding is currently ongoing. From 2003 until joining John D., he was president of Great Plains Exploration LLC, an oil and gas exploration
company based in Mentor, Ohio that owns and operates oil and gas wells. From 2001 until joining Great Plains, he served as executive vice president of Orwell Natural Gas Company, a natural gas distribution company acquired by us in January 2010.
From April 2009 to September 2010, he was director of Corning Natural Gas Corporation, a publicly-held public utility company in Corning, New York, and a trustee of the Ohio Oil and Gas Association. He is the son of Richard Osborne, our chairman and
chief executive officer. Gregory Osbornes managerial experience and service on the board of various energy related companies provides our board with a wide range of industry specific knowledge.

Richard M. Osborne, 66, has been a director since 2003, chairman of the board since 2005 and chief executive officer since November 2007. He is
the president and chief executive officer of OsAir, Inc., a company he founded in 1963, which operates as a property developer and manufacturer of industrial gases for pipeline delivery, and chairman of each of Northeast Ohio Natural Gas Corporation
and Orwell Natural Gas Company, natural gas distribution companies acquired by us in January 2010. Since 1998, Mr. Osborne has been chairman of the board, chief executive officer and a director of John D. Oil and Gas Company, a publicly-held
oil and gas exploration company in Mentor, Ohio. From 2006 to February 2009 he was a director of Corning Natural Gas Corporation, a publicly-held public utility company in Corning, New York and from September 2008 to January 2009 he was a director
of PVF Capital Corp., a publicly-held holding company for Park View Federal Savings Bank in Solon, Ohio. In November 2011, the United States District Court issued an order appointing a receiver to marshal and maintain the value of the assets of John
D. Oil and Gas Company and Great Plains Exploration, LLC and Oz Gas, Ltd., companies owned by the Richard M. Osborne Trust, of which Mr. Osborne is trustee, in connection with an action brought by one of the companies creditors. In
January and February 2012, Great Plains Exploration, Oz Gas and John D. filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court. The bankruptcy proceedings are ongoing. Richard
Osbornes background as chairman and chief executive officer of various public companies and many years of experience owning and managing companies in energy and



4



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utility related industries provides our board with invaluable management and operational direction as well as a unique insight in considering growth opportunities for the company.

Thomas J. Smith, 68, has served as a director since December 2003 and was appointed our vice president and chief financial officer in November
2007. He also served as our interim president from August 2007 to November 2007. From 1998 to 2006, he was the president, chief operating officer and a director of John D. Oil and Gas Company, a publicly-held oil and gas exploration company in
Mentor, Ohio, of which he remains a director. In November 2011, the United States District Court issued an order appointing a receiver to marshal and maintain the value of the assets of John D. in connection with an action brought by one of the
companys creditors. In January 2012, John D. filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court. The bankruptcy proceeding is currently ongoing. Since 2003, he has been president
of Northeast Ohio Natural Gas Corporation, and since 2002 he has been president of Orwell Natural Gas Company, natural gas distribution companies acquired by us in January 2010. From December 2006 to September 2010, he was also a director of Corning
Natural Gas Corporation, a publicly-held utility company in Corning, New York. From November 2009 to April 2010, he was a director of PVF Capital Corp., a publicly-held bank holding company for Park View Federal Savings Bank in Solon, Ohio.
Mr. Smiths financial and disclosure experience gained as the chief financial officer of publicly-held companies, including Gas Natural, as well as his experience as a director of energy and utility related companies provides extensive
specialized knowledge and expertise to our board.

Michael T. Victor, J.D., L.L.D, 50, has served as a director since December 2008.
Since 2006, he has been the president of Lake Erie College, a private liberal arts college located in Painesville, Ohio. From 1988 through 2000, he served as the CEO of Pyramid Industries Inc., a national manufacturer of telecom conduit systems.
From 2002 through 2005, he served as dean of the Walker School of Business, Communication and Hotel, Restaurant and Institutional Management at Mercyhurst College, a private liberal arts college located in Erie, Pennsylvania. Since 2005
Mr. Victor has served as the chair of Fralo Industries. Mr. Victor also serves as a trustee of the Ohio Foundation of Independent Colleges and Universities. Mr. Victors executive and managerial roles in academia enable him to
add a unique perspective and insight to our boards discussions.

Kevin J. Degenstein, 53, was appointed our president and chief
operating officer in June 2008. Previously, he served as our senior vice president of operations since 2006. Prior to joining us, Mr. Degenstein held various operating positions at Nicor Gas, a natural gas utility in Illinois, including Chief
Engineer from 1982 through 2001. He is a Registered Professional Engineer. Mr. Degenstein was also employed by EN Engineering, an engineering consulting firm, as vice president of distribution from 2002 until 2003 and vice president of
technology from 2004 until 2006.

David C. Shipley, 51, has served as our vice president of eastern operations since May 2007. He also
serves as president of our east coast companies in Maine and North Carolina. Prior to joining us, Mr. Shipley was employed by Nicor Gas, a natural gas



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utility in Illinois, from 1985 to 2007 serving in various management capacities including management and supervision of underground natural gas storage, construction and maintenance, customer
service field operations, research and development, quality control, workload management, alliance development and procurement.

Jed D.
Henthorne, 52, was appointed vice president of administration in 2006. He has been employed by us since 1988 and has served in professional and management capacities related to customer service, information technology and accounting.

Jonathan A. Harrington, 33, joined us as corporate controller in February 2011. Mr. Harrington is responsible for the management and control
of our accounting processes. From 2003 until he joined Gas Natural, Mr. Harrington was a manager with Maloney + Novotny LLC, certified public accountants, and served as a member of the firms oil and gas industry practice, covering an
array of areas including attestation, financial reporting and consulting, and tax regulations. Mr. Harrington is an active Certified Public Accountant licensed by the Accountancy Board of Ohio, and is a current member of the American Institute
of Certified Public Accountants, the Ohio Society of Certified Public Accountants, and the Ohio Oil and Gas Association.

Section 16(a) Beneficial Ownership Reporting Compliance.Section 16(a) of the Securities Exchange Act of 1934, as
amended (The Exchange Act), requires our directors and executive officers, and persons who own more than 10% of our common stock, to file with the Securities and Exchange Commission (the SEC) initial reports of ownership and reports of changes in
ownership of our common stock. Our officers, directors and greater than 10% shareholders are required by the SEC to furnish us with copies of all Section 16(a) forms they file. In 2011 Thomas J. Smith, our chief financial officer, failed to
timely file a Form 4 on three occasions reporting the monthly issuance of shares to him for compensatory purposes. All reports were subsequently filed. Based solely on review of copies of reports furnished to us or written representations that no
reports were required, we believe that all other Section 16(a) filing requirements were met in the last fiscal year.



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Code of Business Conduct and Ethics. Gas Natural has adopted a corporate code of business conduct
that applies to all our employees and directors, including our principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions. Our code of business conduct fully complies with the
requirements of the Sarbanes-Oxley Act of 2002. Specifically, the code is reasonably designed to deter wrongdoing and promote



| |  |  | honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships,
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | full, fair, accurate, timely and understandable disclosure in public reports,
| | - |  | -----------------------------------------------------------------------------



| |  |  | compliance with applicable governmental laws, rules and regulations,
| | - |  | --------------------------------------------------------------------



| |  |  | prompt internal reporting of code violations to an appropriate person identified in the code, and
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | accountability for adherence to the code.
| | - |  | -----------------------------------------

A copy of the code is available on our website at www.ewst.com. Any amendments or waivers to the code that apply to our principal executive officer, principal financial officer, principal accounting
officer, and persons performing similar functions will be promptly disclosed to our shareholders.

Audit Committee. Gas
Natural Inc. has an audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The audit committee is currently comprised of Mr. Brooksby, the committees chairman, Mr. Male and Mr. Victor. The
audit committees current composition satisfies the regulations of the NYSE Amex governing audit committee composition, including the requirement that all audit committee members be independent directors as defined in NYSE Amex
listing standards. In addition, each member of the audit committee is able to read and understand financial statements, including balance sheets, income statements and cash flow statements. The board has determined that Mr. Brooksby is an
audit committee financial expert under applicable SEC rules through his experience as a public accountant and as the former principal financial officer of Gas Naturals subsidiary, Energy West, Incorporated, and InNexus
Biotechnology Inc. In addition, Mr. Brooksby is deemed to be financially sophisticated under applicable NYSE Amex rules. The audit committee reviews and reassesses its charter at least annually and will obtain the approval of the
board for any proposed changes to its charter.



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|ITEM 11. | Executive Compensation.
|-------- | -----------------------

Summary
Compensation Table.The following table summarizes the compensation paid by us to our chairman and chief executive officer and our most highly compensated executive officers, referred to as our named executive officers, as determined in
accordance with SEC rules, for the years ended December 31, 2011 and December 31, 2010.



|                                                               |  |      |          |  |        |   |                |       |  |   |                |  |  |                 |              |  |                       |   |         |       |  |   |              |  |  |   |                | 
|-------------------------------------------------------------- |  | ---- | -------- |  | ------ | - | -------------- | ----- |  | - | -------------- |  |  | --------------- | ------------ |  | --------------------- | - | ------- | ----- |  | - | ------------ |  |  | - | -------------- | 
|Name and Principal Position                                    |  | Year |          |  | Salary |   |                | Bonus |  |   | StockAwards(1) |  |  | OptionAwards(2) |              |  | All OtherCompensation |   |         | Total | 
|Richard M. Osborne,
Chairman and Chief Executive Officer(3)    |  |      | 20112010 |  |        | $ | 250,000250,000 |       |  | $ |              |  |  | $               |            |  |                       | $ |       |       |  | $ | 43,20037,200 |  |  | $ | 293,200287,200 | 
|                                                               |  |      |          |  |        |   |               
|Kevin J. Degenstein,
President and Chief Operating Officer(4)  |  |      | 20112010 |  |        |   | 201,450194,550 |       |  |   | 59,40057,330   |  |  |                 |            |  |                       |   | 14,100 |       |  |   | 15,77215,978 |  |  |   | 276,622281,958 | 
|                                                               |  |      |          |  |        |   |               
|Thomas J. Smith,
Vice President and Chief Financial Officer(5) |  |      | 20112010 |  |        |   | 192,300185,064 |       |  |   | 56,70040,000   |  |  |                 | 50,22048,705 |  |                       |   |       |       |  |   | 69,33766,854 |  |  |   | 368,557340,623 | 



|(1) | Amount represents shares of our common stock received by Mr. Smith for compensation. The amount reflects the value of the number of shares issued using the closing
market price on the date of issuance.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Amounts represent the FASB ASC Topic 718 compensation expense recognized on outstanding stock option awards. We use the Black-Scholes option pricing model to estimate
compensation cost for stock option awards. The assumptions used in the model are included in footnotes to our audited financial statements for the year ended December 31, 2011 included in our Annual Report on Form 10-K filed with the SEC on
April 10, 2012.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | All other compensation includes (i) fees paid to Mr. Osborne for service as a director in the amount of $30,000 in 2011 and $24,000 in 2010 and
(ii) the value of a Gas Natural provided automobile in the amount of $13,200 (based on the incremental cost to Gas Natural, calculated as a portion of the amortized cost of the car). The value of the automobile has not been reduced to reflect
the costs attributable to business use.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | All other compensation includes (i) cash profit sharing contributions and company matching contributions in the form of shares of our common stock as
part of our 401(k) plan and (ii) the value of a Gas Natural provided automobile in the amount of $5,022 (based on the incremental cost to Gas Natural, calculated as a portion of the amortized cost of the car). The value of the automobile has
not been reduced to reflect the costs attributable to business use.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | All other compensation includes (i) cash payments equal to the value of the shares of our common stock issued to Mr. Smith of $50,220 in 2011 and
$48,705 in 2010 as a component of his compensation package, (ii) cash profit sharing contributions and company matching contributions in the form of shares of our common stock as part of our 401(k) plan and (iii) the value of a Gas Natural
provided automobile in the amount of $11,050 (based on the incremental cost to Gas Natural, calculated as a portion of the amortized cost of the car). The value of the automobile has not been reduced to reflect the costs attributable to business
use.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Outstanding Equity Awards at December 31, 2011.The following table summarizes information with
respect to the stock options held by our most highly compensated executive officers as of the end of the past fiscal year.



|                    |  |                                                            |        |  |                                                              |  |       |                     |  |   |                      |  |  |  |            |    
|------------------- |  | ---------------------------------------------------------- | ------ |  | ------------------------------------------------------------ |  | ----- | ------------------- |  | - | -------------------- |  |  |  | ---------- | ---
|Name                |  | Number
ofSecuritiesUnderlyingUnexercisedOptionsExercisable |        |  | Number ofSecuritiesUnderlyingUnexercisedOptionsUnexercisable |  |       | OptionExercisePrice |  |   | OptionExpirationDate | 
|Kevin J. Degenstein |  |                                                            | 10,000 |  |                                                              |  | 0     |                     |  | $ | 7.10                 |  |  |  | 12/01/2018 | (1)
|                    |  |                                                            |        | 
|                    |  |                                                            | 7,500  |  |                                                              |  | 2,500 |                     |  | $ | 8.85                 |  |  |  | 12/01/2019 | (2)
|                    |  |                                                            |        | 
|                    |  |                                                            | 5,000  |  |                                                              |  | 5,000 |                     |  | $ | 10.15                |  |  |  | 11/30/2020 | (3)



|(1) | The option is exercisable as follows: 25% of the shares on 12/1/2008; 25% of the shares on 12/1/2009; 25% of the shares on 12/1/2010 and 25% of the shares on 12/1/2011.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The option is exercisable as follows: 25% of the shares on 12/1/2009; 25% of the shares on 12/1/2010; 25% of the shares on 12/1/2011 and 25% of the shares on 12/1/2012.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The option is exercisable as follows: 25% of the shares on 12/1/2010; 25% of the shares of 12/1/2011; 25% of the shares on 12/1/2012 and 25% of the shares on 12/1/2013.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Employment and Separation Agreements.

Richard M. Osborne. Mr. Osborne has been the chairman of our board since 2005 and our chief executive officer since November 2007. Prior to 2010, we did not compensate Mr. Osborne for
serving as our chairman or chief executive officer. Mr. Osborne has been, and continues to be, a significant shareholder of Gas Natural who benefitted from the improvement of the business and financial performance of Gas Natural.

On January 5, 2010, we completed the acquisition of three natural gas distribution companies in Ohio and Pennsylvania which were owned primarily by
Mr. Osborne. As a result of the acquisition, we increased the number of our customers by more than 50%. The successful integration of these companies and running them on an ongoing basis increased Mr. Osbornes duties as our chief
executive officer. As a result, on July 28, 2010, upon the recommendation of our compensation committee, our board of directors approved an annual salary of $250,000 for Mr. Osborne beginning retroactively on January 1, 2010. The
compensation paid to Mr. Osborne is not pursuant to a written contract or plan.

Kevin J. Degenstein. On
August 25, 2006, we entered into an employment agreement with Mr. Degenstein to serve as senior vice president of operations. On June 12, 2008, Mr. Degenstein was named president and chief operating officer. The term of
Mr. Degensteins employment agreement commenced on September 18, 2006 and will continue until terminated as a result of Mr. Degensteins death or disability, by us for cause (as defined in the employment
agreement), by us without cause, or by Mr. Degenstein, either with or without good reason, as defined in the employment agreement.



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Mr. Degenstein is eligible to receive a base salary of $150,000 per year pursuant to his employment
agreement, subject to increase at the discretion of the board. For 2011, the compensation committee of the board agreed to increase Mr. Degensteins annual salary to $201,450 as a result of Mr. Degensteins performance. The
compensation committee also determined that Mr. Degenstein will be eligible to receive a bonus of up to 50% of his annual salary depending on the companys net income, subject to modification upon the recommendation of our chief executive
officer with the approval of the compensation committee or the entire board.

Mr. Degenstein is eligible to receive option grants under
our stock option plans and to participate in all other savings, retirement, and welfare plans that are applicable generally to our employees and senior executive officers. The compensation committee has approved the award to Mr. Degenstein of
options to purchase 10,000 shares of our common stock in each of 2008, 2009, and 2010. Mr. Degenstein is also entitled to receive vacation and fringe benefits in accordance with our plans, practices, programs, and policies.

Upon termination of employment for any reason, we will pay Mr. Degenstein a lump sum of cash equal to his unpaid salary through the date of
termination plus accrued but unpaid vacation pay. In addition, we will provide benefit continuation or conversion rights, as provided under our benefit plans, and vested benefits under our benefit plans. If the employment agreement is terminated by
us without cause or terminated by Mr. Degenstein for good reason (if we change his title, materially reduce his duties or authority, assign duties inconsistent with his duties, or require him to relocate from the Great Falls area),
Mr. Degenstein will be entitled to severance compensation equal to his annual base salary payable monthly for 12 months following the date of termination. Payment of these severance benefits is expressly conditioned upon receipt by the company
of an enforceable waiver and release from Mr. Degenstein in a form reasonably satisfactory to the company.

The employment agreement also
includes provisions that (1) prohibit Mr. Degenstein from disclosing our confidential information, (2) require him to avoid conflicts of interest and disclose to the board any facts that might involve a conflict of interest with the
company, and (3) prohibit him from soliciting employees, customers, or clients of the company during the term of the agreement and for a period of two years following the termination of the agreement.

Long-Term Incentives

Long-term
incentives are awarded in an effort to



| |  |  | keep our executive officers aligned with the long-term objectives of Gas Natural, and
| | - |  | -------------------------------------------------------------------------------------



| |  |  | attract and retain executive officers of outstanding ability.
| | - |  | -------------------------------------------------------------

We believe that long-term incentives should be awarded only with the achievement of specific goals and, accordingly, are used sparingly. We have adopted the 2002 Stock



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Option Plan, which allows for the issuance of incentive and non-statutory stock options. The compensation committee, in consultation with executive management, is charged with designating those
persons to whom options are to be granted and determining the terms of the option grant.

Options granted under the 2002 Stock Option Plan
have been made with an exercise price equal to the closing price on the day of grant, and the options vest ratably over various periods. We did not grant any option in 2011. For additional information regarding our long-term incentive plans, see
Equity Compensation Plan Information below.

Benefit Plans.

401(k) Plan. We maintain a tax-qualified profit sharing plan under Section 401(k) of the tax code that covers substantially all of our employees. The plan generally provides for voluntary
employee pre-tax contributions of employee compensation, a profit sharing contribution of 3% allocated to each employee based on compensation and a discretionary profit sharing contribution of up to 7% of employee compensation. Profit sharing
contributions are approved by our board of directors. The plan also provides a company matching contribution in the form of shares of our common stock equal to 10% of each employees elective deferrals in the plan. In 2011, we made total profit
sharing contributions of $400,588 and contributed shares of our common stock valued at $37,244.

Employee Stock Ownership Plan. We
maintain an Employee Stock Ownership Plan (ESOP) that covers substantially all of our employees. The ESOP receives contributions of our common stock from Gas Natural each year as determined by our board of directors. The contribution, if any, is
recorded based on the current market price of our common stock. We did not make any contributions to the ESOP in the last fiscal year.

Retiree Health Plan. We sponsored a defined post-retirement health benefit plan providing health and life insurance benefits to eligible retirees.
The plan pays eligible retirees (post-65 years of age) $125 per month in lieu of contracting for health and life insurance benefits. The amount of this payment is fixed and will not increase with medical trends or inflation. In addition, the plan
allows retirees between the ages of 60 and 65 and their spouses to remain on the same medical plan as active employees by contributing 125% of the current COBRA rate to retain this coverage. The 25% in excess of the current COBRA rate is held in a
VEBA trust account, and benefits for this plan are paid from assets held in the VEBA trust account. In 2006, we discontinued contributions to the plan and are no longer required to fund the plan. As of December 31, 2011, the value of the plan
assets was $182,931. The assets remaining in the VEBA trust account will be used to fund the plan until these assets are exhausted.

Dividend Reinvestment Policy. We have a policy that provides for any employee who owns shares of our common stock in our 401(k) plan or ESOP the
opportunity to reinvest any dividends for additional shares of our common stock.



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Director Compensation. We currently pay each non-employee board member a monthly fee of $3,500
regardless of board or committee meetings held. We also reimburse all directors for expenses incurred in connection with their service as directors, including travel, meals and lodging.

The following table summarizes information with respect to the compensation paid to our directors during 2011. The table does not include Richard M. Osborne and Thomas J. Smith who both serve as executive
officers. The compensation of these executive officers is disclosed with the other executive officers beginning on page 8.



|                    |  |                           |        |  |             |  |   |                       |  |  |       |  |  |   |        | 
|------------------- |  | ------------------------- | ------ |  | ----------- |  | - | --------------------- |  |  | ----- |  |  | - | ------ | 
|Name                |  | Fees Earnedor Paid inCash |        |  | StockAwards |  |   | All OtherCompensation |  |  | Total | 
|W.E. Gene Argo    |  | $                         | 30,000 |  |             |  |  |                       |  |  |      |  |  | $ | 30,000 | 
|                    |  |                           |        | 
|Wade F. Brooksby    |  |                           | 30,000 |  |             |  |  |                       |  |  |      |  |  |   | 30,000 | 
|                    |  |                           |        | 
|Nicholas U. Fedeli  |  |                           | 30,000 |  |             |  |  |                       |  |  |      |  |  |   | 30,000 | 
|                    |  |                           |        | 
|John R. Jack Male |  |                           | 30,000 |  |             |  |  |                       |  |  |      |  |  |   | 30,000 | 
|                    |  |                           |        | 
|Gregory J. Osborne  |  |                           | 30,000 |  |             |  |  |                       |  |  |      |  |  |   | 30,000 | 
|                    |  |                           |        | 
|Michael T. Victor   |  |                           | 30,000 |  |             |  |  |                       |  |  |      |  |  |   | 30,000 | 



|ITEM 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|-------- | ----------------------------------------------------------------------------------------------

The following table sets forth, as of April 12, 2012, information regarding the beneficial ownership of our common stock by



| |  |  | each shareholder known by us to be the beneficial owner of more than 5% of the stock,
| | - |  | -------------------------------------------------------------------------------------



| |  |  | each director and director nominee,
| | - |  | -----------------------------------



| |  |  | each named executive officer in our summary compensation table,
| | - |  | ---------------------------------------------------------------



| |  |  | all our current directors and officers as a group.
| | - |  | --------------------------------------------------



|                       |  |                         |           |  |                 |  |        |       |  |  |            |  |  |  |       |  
|---------------------- |  | ----------------------- | --------- |  | --------------- |  | ------ | ----- |  |  | ---------- |  |  |  | ----- | -
|                       |  | Beneficial
Ownership(1) |          
|Names and
Address(2)   |  | CommonStock             |           |  | StockOptions(3) |  |        | Total |  |  | Percentage | 
|Richard M. Osborne(4)  |  |                         | 1,991,911 |  |                 |  |       |       |  |  | 1,991,911  |  |  |  | 24.43 | %
|                       |  |                         |           | 
|Thomas J. Smith(5)     |  |                         | 57,082    |  |                 |  |       |       |  |  | 57,082     |  |  |  |       | *
|                       |  |                         |           | 
|Kevin J. Degenstein(6) |  |                         | 803       |  |                 |  | 22,500 |       |  |  | 23,303     |  |  |  |       | *
|                       |  |                         |           | 
|Michael T. Victor(7)   |  |                         | 5,800     |  |                 |  |       |       |  |  | 5,800      |  |  |  |       | *
|                       |  |                         |           | 
|W.E. Gene Argo       |  |                         | 1,275     |  |                 |  |       |       |  |  | 1,275      |  |  |  |       | *
|                       |  |                         |           | 
|Wade F. Brooksby       |  |                         |          |  |                 |  |       |       |  |  |           |  |  |  |      |  
|                       |  |                         |           | 
|Nicholas U. Fedeli     |  |                         |          |  |                 |  |       |       |  |  |           |  |  |  |      |  



12



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|                                                                 |  |                         |           |  |                 |  |        |       |  |  |            |  |  |  |       |  
|---------------------------------------------------------------- |  | ----------------------- | --------- |  | --------------- |  | ------ | ----- |  |  | ---------- |  |  |  | ----- | -
|                                                                 |  | Beneficial
Ownership(1) |          
|Names and
Address(2)                                             |  | CommonStock             |           |  | StockOptions(3) |  |        | Total |  |  | Percentage | 
|John R. Jack Male                                              |  |                         |          |  |                 |  |       |       |  |  |           |  |  |  |      |  
|                                                                 |  |                         |           | 
|Gregory J. Osborne                                               |  |                         |          |  |                 |  |       |       |  |  |           |  |  |  |      |  
|                                                                 |  |                         |           | 
|All directors and executive officers as a group (12 individuals) |  |                         | 2,071,334 |  |                 |  | 22,500 |       |  |  | 2,093,834  |  |  |  | 25.42 | %



|* | Less than 1%
|- | ------------

|(1) | Unless otherwise indicated, we believe that all persons named in the table have sole investment and voting power over the shares of stock owned.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Unless otherwise indicated, the address of each of the beneficial owners identified is c/o Gas Natural Inc., 1 First Avenue South, Great Falls, Montana 59401.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Shares of common stock the beneficial owners have the right to acquire through stock options that are or will become exercisable within 60 days.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Shares owned by Richard M. Osborne, Trustee.
|--- | --------------------------------------------

|(5) | Includes 213 shares of common stock held in our 401(k) plan. Pursuant to the terms of the plan, each participant has the right to direct the voting of the shares held
by the plan.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Shares of common stock are held in our 401(k) plan. Pursuant to the terms of the plan, each participant has the right to direct the voting of the shares held by the
plan.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Shares are held by Michael T. Victor Revocable Trust HDI U/A DTD 12/15/2000.
|--- | ----------------------------------------------------------------------------



13



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Equity Compensation Plan Information. The Gas Natural Inc. 2002 Stock Option Plan provides for the
issuance of up to 300,000 shares of common stock to certain key employees. As of December 31, 2011, there were 35,000 options outstanding and the maximum number of shares available for future grants under the plan was 58,000 shares. Under the
option plan, the option price may not be less than 100% of the common stock fair market value on the date of grant (in the event of incentive stock options, 110% of the fair market value if the employee owns more than 10% of our outstanding common
stock). Options granted under the plan vests over four to five years and are exercisable over a five to ten year period from the date of issuance.



|                                                            |  |                                                                                           |        |  |                                                                           |   |      |                                                                                                                                               |  |  |               | 
|----------------------------------------------------------- |  | ----------------------------------------------------------------------------------------- | ------ |  | ------------------------------------------------------------------------- | - | ---- | --------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ------------- | 
|Plan category                                               |  | Number of securitiesto 
be issued upon exerciseof outstanding options,warrants and rights |        |  | Weighted-averageexercise 
price ofoutstanding options,warrants and rights |   |      | Number of securities remainingavailable for future
issuanceunder equity compensation plans(excluding securities reflected inthe first column) | 
|Equity compensation plans approved by security holders      |  |                                                                                           | 35,000 |  |                                                                           | $ | 8.66 |                                                                                                                                               |  |  | 58,000        | 
|                                                            |  |                                                                                           |       
|Equity compensation plans not approved by security holders* |  |                                                                                           | N/A    |  |                                                                           |   | N/A  |                                                                                                                                               |  |  | Indeterminate | 
|                                                            |  |                                                                                           |       
|Total                                                       |  |                                                                                           | 35,000 |  |                                                                           | $ | 8.66 |                                                                                                                                               |  |  | 58,000        | 



|* | We issue 375 shares of our common stock a month to Thomas J. Smith, our vice president and chief financial officer, as a component of his compensation package. The
number of shares to be issued to Mr. Smith in the future will depend on his tenure with us and cannot be determined at this time.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ITEM 13. | Certain Relationships and Related Transactions and Director Independence
|-------- | ------------------------------------------------------------------------

Certain Relationships and Related Transactions.

Our Acquisition of the Ohio Utilities

On January 5, 2010, we expanded into Ohio and Western Pennsylvania by acquiring several utilities owned primarily by our chairman and
chief executive officer, Richard M. Osborne. The acquisition was reviewed and discussed by a special committee of our board of directors and approved by our full board. Through the acquisition, we acquired Lightning Pipeline Company, Inc. (Lightning
Pipeline) and Great Plains Natural Gas Company (Great Plains), which are the parent companies of Orwell Natural Gas Company (Orwell) and Northeast Ohio Natural Gas Corp. (NEO), Brainard Gas Corp. (Brainard) and Great Plains Land Development Co.,
Ltd. (GPL). The acquisition price was $37.9 million, which consisted of approximately $20.8 million in debt of the acquired companies with the remainder of the purchase price paid in unregistered shares of our common stock. For additional details
regarding the acquisition, see our report on Form 8-K filed with the Securities and Exchange Commission on January 11, 2010.



14



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Promissory Notes to Osborne and the Osborne Trust

On January 3, 2010, Lightning Pipeline issued to the Richard M. Osborne Trust (Osborne Trust) an amended and restated promissory note in the
principal amount of $2,051,969 (and approximately $295,000 of accrued interest from the original note) to evidence amounts previously loaned by the Osborne Trust. The amended and restated notes interest rate was 6.0% per annum, payable
monthly, and the note had a maturity date of January 3, 2014. The note was repaid in 2010.

Brainard had an outstanding loan from
Mr. Osborne personally in the principal amount of $49,361, which was evidenced by a demand cognovit note dated August 6, 2008. The note bore interest at the prime rate was due on demand. The note was repaid in May 2011.

Guaranties by Osborne

On
January 5, 2010, Great Plains, NEO and GPL had a credit facility with Citizens Bank, N.A. The Citizens credit facility consisted of (i) a revolving line of credit in the amount of $2.1 million and a term loan in the amount of $7.8 million
to NEO, (ii) a term loan in the principal amount of $2.6 million to Great Plains and (iii) a term loan in the principal amount of $892,000 to GPL. When we acquired our Ohio subsidiaries, continuing previously provided guaranties,
Mr. Osborne guaranteed the Citizens credit facility both individually and as trustee of the Osborne Trust. The guaranty agreements were originally entered into on July 3, 2008 and were absolute and unconditional guarantees to Citizens Bank
of the full and prompt payment and performance of the obligations under the Citizens credit facility.

For the year ended December 31,
2010, the weighted average interest rate on the Citizens Bank term loans was 5%, resulting in $479,000 of interest expense. These loans were repaid in May 2011. NEOs revolving credit line matured on November 29, 2010 and was repaid and
extinguished at that time. For the year ended December 31, 2010, the weighted average interest rate on the revolving line of credit was 5%, resulting in $98,000 of interest expense.

On December 31, 2009, Orwell entered into an amended and restated short-term credit facility with The Huntington National Bank, N.A. The Huntington credit facility consisted of a line of credit in
the amount of $1.5 million and a term loan in the amount of $4.6 million.

When we acquired the Ohio utilities, continuing previously provided
guaranties, the Huntington credit facility was guaranteed by Mr. Osborne and Lightning Pipeline II, Inc. and ONG Marketing, Inc., which are owned and controlled by Mr. Osborne. The guaranty agreement was entered into on December 31,
2009 and was an absolute and unconditional guaranty to Huntington of the full and prompt payment and performance of the obligations under the credit facility. Pursuant to the requirements of the Huntington credit facility, Mr. Osborne executed
a pledge agreement dated December 31, 2009



15



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pursuant to which he pledged shares of our common stock having a market value of $3.0 million as collateral to secure the obligations under the Huntington credit facility.

The line of credit and the term loan matured on November 28, 2010 and were repaid and extinguished at that time. For the year ended
December 31, 2010, the weighted average interest rate on the term note was 4%, resulting in $166,000 of interest expense. The weighted average interest rate on the line of credit was 4%, resulting in $59,000 of interest expense.

Leases with Companies Controlled by Osborne

Energy West, Incorporated, Orwell and NEO lease multiple spaces in Mentor, Ohio under triple net lease agreements. Orwell has lease agreements with the Osborne Trust and Station Street Partners, LLC and
OsAir, Inc., both of which are owned by the Osborne Trust. Richard Osborne is president and chief executive officer of OsAir. Energy West and NEO have a lease agreement with OsAir. Each lease agreement was effective on July 1, 2008 and has a
term of 15 years, however, one of the lease agreements between Energy West and OsAir expired in August 2011. Orwell also leases space in Orwell, Ohio for its operations from the Osborne Trust. Net rent for all six leased properties totaled $212,000
as of December 31, 2011. The leases are subject to adjustment every five years for the consumer price index.

All lease arrangements
described above were reviewed and discussed by a disinterested committee of our board of directors and approved by our board of directors.

Gas Sale and Management Agreements with Companies Controlled by Osborne

Gas Sales Agreements. In July 2008, NEO, Orwell and Brainard each entered fifteen-year agreements with John D. Oil and Gas Marketing Company, LLC (JDOG Marketing) for the exclusive supply and
delivery of locally-produced natural gas. The Osborne Trust owns approximately 86% of JDOG Marketing. These agreements were replaced in February 2011 by new agreements for gas purchases by our Ohio utilities through our subsidiary Gas Natural
Services Company, LLC (GNSC). Pursuant to an Order of the Public Utilities Commission of Ohio (PUCO) in December 2011, adopting a stipulation between our Ohio utilities, the commissions staff and the Office of the Ohio Consumers Counsel,
these agreements were terminated. However, until the date of initiation of gas procurement services and/or asset management services by the successful bidder in a competitive bid process, these utilities continue purchases of local gas supplies
through GNSC from JDOG Marketing subject to PUCO review. Gas purchases for the Ohio utilities from JDOG Marketing in 2011 totaled approximately $3.6 million.

NEO, Orwell and Brainard had entered contracts for the sale and purchase of natural gas with Great Plains Exploration, LLC, a company owned by the Osborne Trust, in 2011. These agreements were replaced by
a new contract with GNSC effective April 1, 2011. GNSC and our Ohio utilities were charged approximately $1.4 million for natural gas purchased from Great Plains Exploration during 2011. GNSC also entered into contracts for the sale and
purchase of natural gas with John D. Oil and Gas Company, a publicly-



16



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held oil and gas exploration company of which Mr. Osborne is chairman and CEO and a significant shareholder (effective November 25, 2011), OsAir (effective November 25, 2011), John
D. Resources, LLC, a company owned by Mr. Osborne (effective November 25, 2011), and Mentor Energy and Resources Company, a company owned by Mr. Osborne (effective December 28, 2011). GNSC was charged approximately $179,000 in
the aggregate for natural gas purchased from these companies during 2011. Each of the gas sale and purchase agreements may be terminated by either party with 30 days written notice. In addition to the cost of the natural gas, JDOG Marketing was paid
an agent fee by the Ohio utilities and GNSC under the agreements described below in connection with the natural gas purchased from Great Plains Exploration, John D. Oil and Gas, OsAir, John D. Resources and Mentor Energy and Resources. Thomas J.
Smith, our vice president and chief financial officer and a director, is a director of John D. Oil and Gas Company. Gregory J. Osborne, a member of our board and president and chief operating officer of Energy West Resources, Inc., our marketing and
production subsidiary, previously served as president, chief operating officer and a director of John D. Oil and Gas Company.

Asset
Management Agreements. In January 2011, NEO and Orwell each entered into agreements with JDOG Marketing providing for release of capacity rights on interstate pipelines to JDOG Marketing. These agreements could be terminated upon the mutual
written consent of the parties, and the agreements were assigned by JDOG Marketing to GNSC in February 2011. The new agreements commenced on February 24, 2011 and could be terminated upon the mutual agreement of the parties or unilaterally upon
30 days written notice by JDOG Marketing to GNSC. There were no fees payable to any of the parties under the agreements. Pursuant to the Stipulation, these asset management agreements were terminated in December 2011.

Appointment of Natural Gas Agent. In January 2010, NEO, Orwell and Brainard each appointed JDOG Marketing as its agent for procuring supplies of
natural gas in the interstate market at a fee of $0.15 per dekatherm. This agreement was replaced in February 2011 by an agreement for agency services by JDOG Marketing to GNSC for these utilities. Fees paid under the agreement totaled approximately
$364,000 in 2011. Pursuant to the Stipulation, the appointment of JDOG Marketing as agent was terminated in December 2011.

The agreements
with JDOG Marketing described above were reviewed and discussed by an independent committee of our board of directors and approved by our board of directors.

Term Sheet to Acquire JDOG Marketing

On April 18, 2012, we entered into a non-binding
term sheet to acquire JDOG Marketing. Pursuant to the term sheet, the consideration for the purchase of JDOG Marketing would be paid in shares of common stock of Gas Natural with an initial issuance of common stock valued at $2,875,000 and
additional issuances of common stock based on the achievement of certain financial milestones by JDOG Marketing. The transaction is subject to completion of a definitive agreement and other customary terms and



17



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conditions, including approval by our shareholders. For additional details regarding the term sheet, see our report on Form 8-K filed with the Securities and Exchange Commission on April 24,
2012.

The JDOG Marketing term sheet was reviewed and approved by a disinterested and independent special committee of our board of directors.

Agreements with Gas Pipeline Companies Controlled by Osborne

Natural Gas Transportation Agreements. Orwell and Brainard have an agreement with Orwell-Trumbull Pipeline Co., LLC (Orwell-Trumbull), which is owned by the Osborne Trust, for transportation
service on its intrastate pipeline in Northeastern Ohio. The charge on the Orwell-Trumbull pipeline is a volumetric rate of $0.95 per thousand cubic feet (Mcf) plus shrinkage. Charges for transportation services under this agreement totaled
approximately $282,000 for 2011. This agreement has a current term of 15 years that began on July 1, 2008.

Additionally, NEO, Orwell and
Brainard have transportation agreements with COBRA Pipeline Co., Ltd., which is owned by the Osborne Trust, for transportation on its intrastate pipeline in Northeastern Ohio. The price on the Cobra pipeline is a commodity rate of $0.50 per Mcf plus
shrinkage. Additional treating fees may be applied at $0.25 per Mcf. Charges for transportation services under these agreements were approximately $299,000 for 2011. The agreements have 15 year terms that began July 1, 2008.

Pipeline Lease Agreement and Related Note Receivable. Orwell entered a lease agreement with ONG Marketing, Inc. for utilization of pipelines in
Trumbull, Geauga and Ashtabula counties in Ohio for the transportation of natural gas. Lease payments are $1,100 per month for 15 years beginning January 1, 2001. Orwell holds a corresponding note issued by ONG Marketing with a maturity date of
December 31, 2016 and an annual interest rate of 7.0% evidencing $121,000 loaned to ONG Marketing to finance the acquisition of the pipelines. At the time the lease and the note were entered, ONG Marketing was owned by the Osborne Trust. In
July 2009, ONG Marketing transferred all of its rights and duties under the lease and the note to JDOG Marketing, which is also owned by the Osborne Trust.

Electronic Metering Service and Operation Agreements. Orwell, NEO and Brainard each have agreements with Cobra for the maintenance and operation of electronic metering points for the transportation
of natural gas. Orwell also has an agreement with Orwell-Trumbull for the same purpose. Each of the four agreements has a term of three years from the date of the installation of the electronic metering equipment and thereafter for successive one
year terms until terminated. Each agreement provides for the payment of $125 per location per month as a fee for the operating and general maintenance of the gas metering and communication equipment. Services provided under these agreements totaled
approximately $36,000 in 2011.



18



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All agreements described above were reviewed and discussed by a disinterested and independent special
committee of our board of directors and approved by our board of directors.

Other Related Party Transactions

Real Estate Transaction. On December 20, 2011, we acquired 9.24 acres of land in Violet Township, Fairfield County, Ohio, for $600,000 from
Black Bear Realty, Ltd., an Ohio limited liability company owned and controlled by Richard Osborne. We intend to use the land acquired from Black Bear to construct an operating facility for NEO. The transaction was approved by the independent
members of our board.

Kykuit Resources.Through our subsidiaries Energy West Resources, Inc. and Energy West, Incorporated, Gas
Natural Inc. owns a 24.5% interest in Kykuit Resources, LLC, a developer of oil, gas and mineral leases in which it holds ownership interests. Certain related persons also have interests in Kykuit.



| |  |  | Richard Osborne owns a 26.4% membership interest in Kykuit.
| | - |  | -----------------------------------------------------------



| |  |  | John D. Oil and Gas Company (JDOG), a publicly-held oil and gas exploration company, is the managing member of Kykuit and owns 23.2% of the membership
interests. Richard Osborne is the chairman of the board and chief executive officer of JDOG. Our director and president and chief operating officer of Energy West Resources, Inc., Gregory Osborne, was president, chief operating officer and a
director of JDOG until January 2012. Our chief financial officer, vice president and director, Thomas J. Smith, is a director of JDOG.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The loss on our equity investment in Kykuit for 2011 include an impairment charge of approximately $790,000 due to the write-off of drilling costs related to dry holes.

Gas Naturals investment in Kykuit was ratified by two disinterested and independent directors as well as all other members of our board of
directors.

Parts and Equipment Supply Transactions. NEO, Orwell, Bangor Gas Company, LLC and Spelman Pipeline Holdings, LLC purchase
parts and equipment for construction and maintenance of their distribution facilities from Big Oats Oil Field Supply Company, LLC, a company owned by the Osborne Trust. Purchases from this supply company totaled approximately $1.7 million in
2011. These transactions are not approved in advance by our board of directors, but are reviewed, discussed and ratified at monthly meetings of our board by disinterested and independent directors as well as other board members.

Construction and Other Support Services. We provide construction and maintenance support to several companies owned and controlled by Richard
Osborne. An employee of Energy West Resources renders services to various companies owned or controlled by Mr. Osborne for the construction or maintenance of gas gathering systems and other gas-related facilities. During 2011 we charged
companies affiliated with Mr. Osborne approximately $38,000 for the services of this employee. Great Plains Exploration



19



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provided construction services to NEO and Orwell during 2011 for which we were charged approximately $529,000. Orwell-Trumbull provided administrative services to NEO, Orwell and Brainard during
2011 for which we were charged approximately $183,000. Cobra provided administrative services to NEO, Orwell, Brainard and Spelman during 2011 for which we were charged approximately $77,000. John D. Oil and Gas Company, JDOG Marketing and OsAir
provided administrative services to NEO, Orwell, Brainard and Spelman during 2011 for which we were charged approximately $18,000 in the aggregate. These transactions are not approved in advance by our board of directors, but are reviewed, discussed
and ratified at monthly meetings of our board by disinterested and independent directors as well as other board members.

Payments by or on
behalf of Osbornes Affiliates.Prior to the acquisition of our Ohio utilities, Richard Osborne and companies owned or controlled by Mr. Osborne had provided funding to Orwell and NEO from time to time. These advances were repaid in
the first quarter of 2010. In addition, Orwell, NEO and Brainard had made payments on behalf of companies owned or controlled by Mr. Osborne from time to time. These transactions were discontinued in April 2010 and all outstanding amounts were
repaid in 2010. These transactions were not approved in advance by our board of directors, but were subsequently reviewed, discussed and ratified at a meeting of our board by disinterested and independent directors as well as other members of our
board.

Employment of Osbornes Sons. Gregory Osborne is the son of Richard Osborne, our chairman of the board and chief executive
officer. Gregory Osborne joined our board in 2009 and was appointed president and chief operating officer of Energy West Resources, Inc., our marketing and production subsidiary, in February 2012. Richard Osborne Jr. is also the son of
Mr. Osborne. In early 2010, Richard Osborne Jr. began working for us as an independent contractor providing management services and received compensation in the amount of approximately $2,700. In August 2010, he became a part-time employee
receiving an annual salary of $80,000 and the use of company-provided automobile.

Related Person Transaction Policy

We believe that the terms of the transactions and the agreements described above are on terms at least as favorable as those which we could have obtained
from unrelated parties. In accordance with our written policy adopted by the board of directors, on-going and future transactions with related parties will be:



| |  |  | on terms at least as favorable as those that we would be able to obtain from unrelated parties;
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | for bona fide business purposes; and
| | - |  | ------------------------------------



| |  |  | reviewed and approved by the audit committee or other independent directors in accordance with applicable law after full disclosure of the existence
and nature of the conflicting interest in the related party transaction by the director involved in the transaction.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



20



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Director Independence. The board of directors has determined and confirmed that each of
Mr. Argo, Mr. Victor, Mr. Brooksby, Mr. Fedeli and Mr. Male do not have a material relationship with Gas Natural that would interfere with the exercise of independent judgment and are independent pursuant to applicable laws
and regulations and the listing standards of the NYSE Amex.



|ITEM 14. | Principal Accountant Fees and Services
|-------- | --------------------------------------

On June 3, 2011 we engaged ParenteBeard LLC to serve as the companys independent accountants and dismissed Hein & Associates LLP, our
former independent accountants.

ParenteBeard LLC

Principal Accountant Firm Fees and Services. The following is a summary of the aggregate fees billed to us for the year ended December 31, 2011 by our independent registered public accountant,
ParenteBeard LLC, and their affiliates.



|                   |  |                             |         | 
|------------------ |  | --------------------------- | ------- | 
|                   |  | Year
endedDecember 31, 2011 |        
|Audit Fees         |  | $                           | 394,801 | 
|Audit-Related Fees |  |                             |        | 
|Tax Fees           |  |                             | 8,000   | 
|All Other Fees     |  |                             |        | 
|                   |  |                             |         | 
|Total              |  | $                           | 402,801 | 
|                   |  |                             |         | 

Audit Fees.These fees are for professional services rendered by ParenteBeard LLC for the audit of our annual
consolidated financial statements, the review of financial statements included in our quarterly reports on Form 10-Q, and services that are typically rendered in connection with statutory and regulatory filings or engagements.

Tax Fees.These are fees for professional services rendered by ParenteBeard LLC with respect to advisory services related to the preparation of
income tax returns.

Hein & Associates LLP

Principal Accountant Firm Fees and Services. The following is a summary of the aggregate fees billed to us for the years ended December 31, 2011 and December 31, 2010 by our former
independent registered public accountant, Hein & Associates LLP, and their affiliates.



|                   |  |                             |         |  |                             |   |         | 
|------------------ |  | --------------------------- | ------- |  | --------------------------- | - | ------- | 
|                   |  | Year
endedDecember 31, 2011 |         |  | Year
endedDecember 31, 2010 |  
|Audit Fees         |  | $                           | 47,200  |  |                             | $ | 405,000 | 
|Audit-Related Fees |  |                             |        |  |                             |   | 788     | 
|Tax Fees           |  |                             | 54,250  |  |                             |   | 62,550  | 
|All Other Fees     |  |                             |        |  |                             |   |        | 
|                   |  |                             |         |  |                             |   |         | 
|Total              |  | $                           | 101,450 |  |                             | $ | 468,338 | 
|                   |  |                             |         |  |                             |   |         | 

Audit Fees.These fees are for professional services rendered by Hein & Associates for the audit of our
annual consolidated financial statements, the review of financial statements included in our quarterly reports on Form 10-Q, and services that are typically rendered in connection with statutory and regulatory filings or engagements.



21



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Audit-Related Fees.These are fees for Federal Energy Regulatory Commission audits of a subsidiary
company.

Tax Fees.These are fees for professional services rendered by Hein & Associates with respect to advisory services
related to the preparation of income tax returns.

Pursuant to the written charter of our audit committee, the committee must pre-approve all
audit and non-audit services provided by our independent auditors. The audit committee pre-approved all services performed by Hein & Associates and ParenteBeard and authorized us to pay the fees billed to us by Hein & Associates
and ParenteBeard in 2010 and 2011.



|ITEM 15. | Exhibits and Financial Statement Schedules.
|-------- | -------------------------------------------



|31.1 | Principal Executive Officers Certification pursuant to Section 302 of the Sarbanes Oxley Act
|---- | ---------------------------------------------------------------------------------------------



|31.2 | Principal Financial Officers Certification pursuant to Section 302 of the Sarbanes Oxley Act
|---- | ---------------------------------------------------------------------------------------------



22



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



|                    |  |  |  |                     |  |                                                                
|------------------- |  |  |  | ------------------- |  | ---------------------------------------------------------------
|                    |  |  |  |                     |  | GAS NATURAL INC.                                               
|                    |  | 
|Date April 30, 2012 |  |  |  | /s/ Thomas J. Smith
|                    |  |  |  |                     |  | By: Thomas J. Smith, Vice President and Chief Financial Officer
|                    |  |  |  |                     |  | (Principal Financial and Accounting Officer)                   

KNOW ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Thomas
J. Smith, his true and lawful attorney-in-fact and agents, with full power of substitution, for him in any and all capacities, to sign any and all amendments to this Report on Form 10-K/A, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Amendment No. 1 to Annual Report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.



|                    |  |                                              |  |               
|------------------- |  | -------------------------------------------- |  | --------------
|RICHARD M. OSBORNE* |  | Chief Executive Officer                      |  |               
|Richard M. Osborne  |  | (Principal Executive Officer)                |  | April 30, 2012
|                    |  |                                             
|/s/ Thomas J. Smith |  | Chief Financial Officer                      |  |               
|Thomas J. Smith     |  | (Principal Financial and Accounting Officer) |  | April 30, 2012
|                    |  |                                             
|W.E. ARGO*          |  |                                              |  |               
|W.E. Argo           |  | Director                                     |  | April 30, 2012
|                    |  |                                             
|NICHOLAS U. FEDELI* |  |                                              |  |               
|Nicholas U. Fedeli  |  | Director                                     |  | April 30, 2012
|                    |  |                                             
|JOHN R. MALE*       |  |                                              |  |               
|John R. Male        |  | Director                                     |  | April 30, 2012
|                    |  |                                             
|MICHAEL T. VICTOR*  |  |                                              |  |               
|Michael T. Victor   |  | Director                                     |  | April 30, 2012
|                    |  |                                             
|WADE F. BROOKSBY*   |  |                                              |  |               
|Wade F. Brooksby    |  | Director                                     |  | April 30, 2012
|                    |  |                                             
|GREGORY J. OSBORNE* |  |                                              |  |               
|Gregory J. Osborne  |  | Director                                     |  | April 30, 2012



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---

|                     |  | 
|-------------------- |  | 
|/s/ Thomas J. Smith 
|*By: Thomas J. Smith
|Attorney-in-Fact    



24