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The AGA Financial Forum – National Fuel Gas Co.

National Fuel Gas Co. · May 15, 2011 · 66 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. The AGA Financial Forum – National Fuel Gas Co. – slide 1
    AGA Financial Forum May 1517, 2011
  2. The AGA Financial Forum – National Fuel Gas Co. – slide 2
    National Fuel Gas Company Business Segment Reporting Publicly Traded y National Fuel Gas Company Holding Company NYSE symbol NFG Reporting i Exploration & Pipeline & Energy Utility Segments Production Storage Marketing…
  3. The AGA Financial Forum – National Fuel Gas Co. – slide 3
    National Fuel Gas Company Our Businesses Utility Pipeline & Storage Exploration & Production p 9 Appalachia, California, Gulf of Mexico Energy Marketing gy g Midstream Sawmills Landfill Gas Gas Fired Generation GasFired…
  4. The AGA Financial Forum – National Fuel Gas Co. – slide 4
    55 AGA Financial Forum May 1517, 2011
  5. The AGA Financial Forum – National Fuel Gas Co. – slide 5
    66 AGA Financial Forum May 1517, 2011
  6. The AGA Financial Forum – National Fuel Gas Co. – slide 6
    77 AGA Financial Forum May 1517, 2011
  7. The AGA Financial Forum – National Fuel Gas Co. – slide 7
    National Fuel Gas Company Net Income from Continuing Operations Excluding Items Impacting Comparability (1) 300 266 3 266.3 P&S 210.5 219.1 33.4 MM 15.4% 200 146.6 E&P Millions) 98.0 112.5 Utility 116.0 MM 62.3 MM…
  8. The AGA Financial Forum – National Fuel Gas Co. – slide 8
    National Fuel Gas Company Capital Expenditures(1) from Continuing Operations Utility Pipeline & Storage Exploration & Production All Other 1,250 1,000 Millions) 8451,010 780895 Capital Expenditures ( M 750 501…
  9. The AGA Financial Forum – National Fuel Gas Co. – slide 9
    National Fuel Gas Company Capital Expenditures(1) An Appalachian Focus (2) (3) 1,250 Appalachian Growth E&P Appalachian Growth Infrastructure Other Spending 1,000 Millions) 8451,010 780895 115140 Capital Expenditures (…
  10. The AGA Financial Forum – National Fuel Gas Co. – slide 10
    National Fuel Gas Company Capital Structure ShortTerm Debt 2% LongTerm LongTerm Debt Shareholders Debt Shareholders Sh h ld 37% Equity 35% Equity 63% 63% 2.866 Billion(1) Forecasted Capital at March 31, 2011…
  11. The AGA Financial Forum – National Fuel Gas Co. – slide 11
    National Fuel Gas Company Dividend Growth National Fuel has had 108 uninterrupted 1.38 f di id d dh i d years of dividend payments and has increased its dividend for 40 consecutive years Compound Annual Growth Rate 5.1% %…
  12. The AGA Financial Forum – National Fuel Gas Co. – slide 12
    National Fuel Gas Company Natural Gas Industry 5Year Total Return 175% 150% National Fuel Gas Company has i l lG C h consistently generated longterm 125% total returns that outperform its natural gas industry peers g yp…
  13. The AGA Financial Forum – National Fuel Gas Co. – slide 13
    National Fuel Gas Company Peer Group Comparisons 1Year 1 Year Total Return Total Return 3Year 3 Year Total Return Total Return 5Year 5 Year Total Return Total Return Peer Group Total Return Peer Group Total Return Peer Group…
  14. The AGA Financial Forum – National Fuel Gas Co. – slide 14
    Utility Segment N i National Fuel Gas Distribution Corporation l F l G Di ib i C i 15 AGA Financial Forum May 1517, 2011
  15. The AGA Financial Forum – National Fuel Gas Co. – slide 15
    Utility Keys to Continued Success Provide Stable Earnings Excellent Strong Operate Safe Control Costs Customer Regulatory System Service Strategy 16 AGA Financial Forum May 1517, 2011
  16. The AGA Financial Forum – National Fuel Gas Co. – slide 16
    Utility Capital Spending 75 NY PA pending ( Millions) 60 57.5 58.0 56.2 54.4 54.2 18.3 18 0 18.0 16.0 18.4 45 18.1 30 Capital Sp 38.4 39.2 37.8 40.0 36.1 15 0 2006 2007 2008 2009 2010 Fiscal Year 17 AGA…
  17. The AGA Financial Forum – National Fuel Gas Co. – slide 17
    Utility O&M Expense 250 NY PA 204.3 203.0 202.7 Millions) 200 191.2 181.3 63.8 63.8 62.1 O&M Exxpense ( M 60.7 150 56.3 100 140.5 139.2 140.6 130.5 125.0 50 0 2006 2007 2008 2009 2010 Fiscal Year 18 AGA…
  18. The AGA Financial Forum – National Fuel Gas Co. – slide 18
    Utility Excellent Customer Service NY NY PA C Customer Service Performance S i P f G l Goal A l(1) Actual A l(1) Actual Telephone Response (within 30 seconds) 74.0% 90.0% 89.0% Customer Satisfaction: Residential 85.1% 92.2%…
  19. The AGA Financial Forum – National Fuel Gas Co. – slide 19
    Utility Rate Mechanisms New York y Pennsylvania Revenue Decoupling Low Income Rates Conservation Incentive Program Conservation Incentive Program Choice Program/POR Ch i P /POR Merchant Function Charge Merchant Function Charge…
  20. The AGA Financial Forum – National Fuel Gas Co. – slide 20
    Utility Return on Equity (1) 20.0 NY PA uity (%) 14.7 15.0 14.0 13.2 urn on Equ 11.8 10.9 10.6 10.3 9.8 10.0 9.1 Retu 6.3 5.0 0.0 2006 2007 2008 2009 2010 Fiscal Year (1) Calculated using Average Total…
  21. The AGA Financial Forum – National Fuel Gas Co. – slide 21
    Utility Diluted Earnings per Share 1.00 (Before Items Impacting Comparability) Diluted Eaarnings per Share 0.73 0.76 0.75 0.73 0.60 (1) 0.55 0.50 0.25 0.00 2006 2007 2008 2009 2010 Fiscal Year (1) Excludes…
  22. The AGA Financial Forum – National Fuel Gas Co. – slide 22
    Utility 2011 Provide Stable Earnings Excellent Strong Operate Safe Control Costs Customer Regulatory System Service Strategy 23 AGA Financial Forum May 1517, 2011
  23. The AGA Financial Forum – National Fuel Gas Co. – slide 23
    Pipeline & Storage / Midstream National Fuel Gas Supply Corporation Empire Pipeline, Inc. National Fuel Gas Midstream Corporation 24 AGA Financial Forum May 1517, 2011
  24. The AGA Financial Forum – National Fuel Gas Co. – slide 24
    PIPELINE & STORAGE / MIDSTREAM EXPANSION INITIATIVES NORTHERN ACCESS EXPANSION TIOGA COUNTY EXTENSION CENTRAL TIOGA LAMONT COUNTY COMPRESSOR EXTENSION STATION PHASE I & II COVINGTON G GATHERINGG SYSTEM TROUT…
  25. The AGA Financial Forum – National Fuel Gas Co. – slide 25
    Exploration & Production S Seneca Resources Corporation R C i 26 AGA Financial Forum May 1517, 2011
  26. The AGA Financial Forum – National Fuel Gas Co. – slide 26
    Exploration & Production Fiscal Year End Proved Reserves(1) East Appalachia 600 Natural Gas Provved Reserves (Bcf) R 333 B f (48%) Reserves: 333 Bcfe (48%) 428 400 226 249 200 0 2008 2009 2010 At September 30…
  27. The AGA Financial Forum – National Fuel Gas Co. – slide 27
    Exploration & Production Historical Daily Production 250 West Upper Devonian Upper Devonian Gulf Marcellus 200 mcfe/d) duction (Mm 150 100 100 Daily Prod 50 28 AGA Financial Forum May 1517, 2011
  28. The AGA Financial Forum – National Fuel Gas Co. – slide 28
    Exploration & Production Capital Expenditures by Region 1,000 West Upper Devonian Gulf of Mexico Marcellus Millions) 685800 750 nditures ( M 600 655 600655 500 398 398 Capital Expen 640740 560600 250 192 188…
  29. The AGA Financial Forum – National Fuel Gas Co. – slide 29
    Exploration & Production Annual Production by Region 100 West Upper Devonian Gulf of Mexico Marcellus 83100 Marcellus production in 80 Fiscal 2012 could equal 6671 duction (Bcffe) the entire company p y production in…
  30. The AGA Financial Forum – National Fuel Gas Co. – slide 30
    Exploration & Production C lif i California 31 AGA Financial Forum May 1517, 2011
  31. The AGA Financial Forum – National Fuel Gas Co. – slide 31
    Senecas California Properties North Lost Hills 1,235 BOEPD South Lost Hills Tulare & Etchegoin Formation Tulare & Etchegoin Formation 1,830 BOEPD Primary & Steamflood Monterey Shale 181 Active Wells Primary 216 Active Wells…
  32. The AGA Financial Forum – National Fuel Gas Co. – slide 32
    California Average Daily Production 10,000 0,000 Modest capital spending 9,500 to maintain production Pursue additional bolton 9,000 acquisitions BOE/Day 8,500 2011 Plans: CapEx p 40 MM 8,000 50 Development wells…
  33. The AGA Financial Forum – National Fuel Gas Co. – slide 33
    California Fiscal Year 2011 Sespe Field Development Plans First drilling for Seneca at Sespe d ll f since 1991 Will drill six wells during this fiscal year Wells to be drilled at 10acre spacing: 4 wells Test wells to be drilled…
  34. The AGA Financial Forum – National Fuel Gas Co. – slide 34
    Exploration & Production E Di i i East Division 35 AGA Financial Forum May 1517, 2011
  35. The AGA Financial Forum – National Fuel Gas Co. – slide 35
    East Division Average Daily Production 150 Upper Devonian Marcellus Mcfe/Day) 125 erage Daily Prroduction (MM 100 Rapid growth in the East 75 Division as Marcellus is ramping up ramping up 50 25 Ave 0…
  36. The AGA Financial Forum – National Fuel Gas Co. – slide 36
    Marcellus Shale Senecas Pennsylvania Acreage Seneca Resource Acreage Position 9 745,000 Net Acres in the heart of the PA Marcellus fairwayy 9 Risked Resource Potential: 815 TCFE 9 80% Fee Seneca owns the minerals No lease…
  37. The AGA Financial Forum – National Fuel Gas Co. – slide 37
    Marcellus Shale Senecas Development Areas Eastern Development Area (Mostly Leased) Western Development Area Western Development Area (Mostly Fee and HBP) SRC Fee Acreage SRC L SRC Lease Acreage A 38 AGA Financial…
  38. The AGA Financial Forum – National Fuel Gas Co. – slide 38
    Marcellus Shale Eastern Development Area DCNR Block 001 Covington Area Full Development 9 1st Marcellus Well IP: 4.5 MMCFD 9 43 Wells Drilled; 24 Producing (3 ShutIn) 9 1st Geneseo Test IP: 3 MMCFD 9 Gross Prod: (As of 5/10/11): 90…
  39. The AGA Financial Forum – National Fuel Gas Co. – slide 39
    Marcellus Shale Longer Lateral EDA Wells Outpacing 6 Bcf Typecurve 8,000 Average EDA Production per Well (1) 6B fT 6 Bcf Typecurve 6,000 Gas Rate (Mcf/d) 4,000 2,000 0 0 30 60 90 120 150 180 210 240 270 300 330…
  40. The AGA Financial Forum – National Fuel Gas Co. – slide 40
    Marcellus Shale Western Development Area Activity SRC Fee Acreage Approx. Outline of JV Acreage SRC Lease Acreage 9 200,000 Gross Acres 200 000 Gross Acres SRC Contributed JV Acreage 9 Seneca 50% W.I. (Avg. 58% NRI) EOG…
  41. The AGA Financial Forum – National Fuel Gas Co. – slide 41
    Marcellus Shale Target Zone Example Important to Find Ideal Target 9 Must account for the variable rock quality and geomechanical profile 9 Major factor in quality of Fracture Stimulation Marcellus Interval Optimal…
  42. The AGA Financial Forum – National Fuel Gas Co. – slide 42
    Marcellus Shale Marcellus Net Production 150 EOG JV Eastern Development Area Western Development Area 125 n (MMcfe) 100 00 Marcellus Dailyy Net Production Seneca 75 Operated 50 25 25 EOG JV 43…
  43. The AGA Financial Forum – National Fuel Gas Co. – slide 43
    Marcellus Shale Centralized Water System Recovering water discharged from an abandoned coal mine which was adversely b d d l i hi h d l impacting a local trout stream Authorized by SRBC to withdraw approximately 500,000 gallons…
  44. The AGA Financial Forum – National Fuel Gas Co. – slide 44
    Utica Shale Seneca Seneca Acreage Source rock maturation status based on combined CAI to Ro regression equation. (TrentonBlack River Research Consortium, 2006) 45 AGA Financial Forum May 1517, 2011
  45. The AGA Financial Forum – National Fuel Gas Co. – slide 45
    Seneca Resources Evaluation of JV Opportunities Senecas Marcellus joint venture goals: 9 Ramp up development faster than current growth plans 9 Bring forward the earnings stream, where a minorityinterest partner pays a significant…
  46. The AGA Financial Forum – National Fuel Gas Co. – slide 46
    National Fuel Gas Company Key Takeaways HighQuality Marcellus Acreage Position g Q y g 9 745,000 net acres with a resource potential of 815 Tcfe 9 Fee ownership results in superior economics 9 Rapid Growth: 0 120 MMCFD in 18…
  47. The AGA Financial Forum – National Fuel Gas Co. – slide 47
    48 AGA Financial Forum May 1517, 2011
  48. The AGA Financial Forum – National Fuel Gas Co. – slide 48
    49 AGA Financial Forum May 1517, 2011
  49. The AGA Financial Forum – National Fuel Gas Co. – slide 49
    National Fuel Gas Company Corporate & Financial Highlights Corporate & Financial Highlights 50 AGA Financial Forum May 1517, 2011
  50. The AGA Financial Forum – National Fuel Gas Co. – slide 50
    National Fuel Gas Company Fiscal Year 2011 Earnings Guidance Key Drivers(1) Exploration & Production Production P d i 38% DD&A: 2.17 Area per Mcfe LOE: 0.95 to 1.05 per Mcfe G&A: 41 44 Million FY 2011 FY 2011 FY2010 Pipeline…
  51. The AGA Financial Forum – National Fuel Gas Co. – slide 51
    National Fuel Gas Company Seneca Oil and Gas Hedge Positions Natural Gas Natural Gas Volume Average Average Volume Average Average Swaps (Bcf) Hedge Price Oil Swaps (MMBbl) Hedge Price Fiscal 2011 14.6 6.05 / Mcf Fiscal 2011…
  52. The AGA Financial Forum – National Fuel Gas Co. – slide 52
    Pipeline & Storage / Midstream National Fuel Gas Supply Corporation Empire Pipeline, Inc. National Fuel Gas Midstream Corporation 53 AGA Financial Forum May 1517, 2011
  53. The AGA Financial Forum – National Fuel Gas Co. – slide 53
    PIPELINE & STORAGE / MIDSTREAM EXPANSION INITIATIVES NORTHERN ACCESS EXPANSION TIOGA COUNTY EXTENSION CENTRAL TIOGA LAMONT COUNTY COMPRESSOR EXTENSION STATION PHASE I & II COVINGTON G GATHERINGG SYSTEM TROUT…
  54. The AGA Financial Forum – National Fuel Gas Co. – slide 54
    Pipeline & Storage/Midstream Expansion Initiatives Capacity Est. InService Project Name Market Status (Dth/D) CapEx Date Covington Gathering 145,000 16 MM 11/17/09 Fully Subscribed Completed Flowing into TGP 300 Line System Lamont…
  55. The AGA Financial Forum – National Fuel Gas Co. – slide 55
    Pipeline & Storage Challenges & Opportunities Challenges Opportunities NFGSC Contract Turnbacks Expansion Projects Supply has received capacity Both Supply and Empire have turnbacks on expiring contracts, on expiring contracts…
  56. The AGA Financial Forum – National Fuel Gas Co. – slide 56
    Midstream Corporation Trout Run Gathering System Lycoming County Capacity: 300,000 Dth/d Will Will Interconnect with Transco Interconnect with Transco Pipelines in Lycoming County Seneca Resources will be the anchor shipper…
  57. The AGA Financial Forum – National Fuel Gas Co. – slide 57
    Exploration & Production S Seneca Resources Corporation R C i 58 AGA Financial Forum May 1517, 2011
  58. The AGA Financial Forum – National Fuel Gas Co. – slide 58
    Marcellus Shale Pennsylvania Acreage Holdings SRC Fee Acreage SRC Lease Acreage SRC Contributed JV Acreage EOG Contributed JV Acreage 59 AGA Financial Forum May 1517, 2011
  59. The AGA Financial Forum – National Fuel Gas Co. – slide 59
    Marcellus Shale Decline Curve 6.0 BCF Estimated Ultimate Recovery (EUR) 8,000 Category Type Curve Parameters Initial Rate Initial Rate 7 250 MCF/D 7,250 MCF/D 7,000 Average first year decline 72% Final decline 6% 6,000 yp MCF/D…
  60. The AGA Financial Forum – National Fuel Gas Co. – slide 60
    Marcellus Shale PreTax IRR Comparison at NYMEX of 4.00/MMBtu Eastern Development Area Net Net Net Net Well Costs ( Millions) Well Costs ( Millions) Working Revenue Description EUR Interest Interest 6.0 6.4 Seneca EDA Well 8…
  61. The AGA Financial Forum – National Fuel Gas Co. – slide 61
    Marcellus Shale Gross Horizontal Wells Drilled per Year EOG JV Horizontal Wells Seneca Horizontal Wells 150 Marcellus Horizontal Rig Count 125 Current Rig Count: 115140 9 Seneca : 4 Rigs 9 EOG : 2 Rigs g 85110 ells Drilled…
  62. The AGA Financial Forum – National Fuel Gas Co. – slide 62
    Marcellus Shale Transportation Capacity Eastern Development Area 9 Covington Gathering System: 150,000 Dth/d into TGP 300 Provides capacity for DCNR Tract 595 and Covington in Tioga county Firm sales of 100,000 Dth/d thru October…
  63. The AGA Financial Forum – National Fuel Gas Co. – slide 63
    National Fuel Gas Company Comparable GAAP Financial Measure bl l Slides and Reconciliations This presentation contains certain nonGAAP financial measures. For pages that contain nonGAAP financial measures, pages containing the most…
  64. The AGA Financial Forum – National Fuel Gas Co. – slide 64
    Reconciliation of GAAP Net Income to Income From Continuing Operations Excluding Items Impacting Comparability ( Thousands) 12 Mos. Ended FY 2008 FY 2009 FY 2010 3/31/2011 GAAP Net Income E&P Segment GAAP Net Income 146,612 (10,238)…
  65. The AGA Financial Forum – National Fuel Gas Co. – slide 65
    Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ( Thousands) FY 2011 FY 2012 FY 2007 FY 2008 FY 2009 FY 2010 Forecast Forecast Capital Expenditures from Continuing Operations Exploration &…
  66. The AGA Financial Forum – National Fuel Gas Co. – slide 66
    Reconciliation R ili ti off Appalachian A l hi Growth G th Capital C it l Expenditures E dit to t Consolidated Capital Expenditures ( Millions) FY 2011 FY 2012 FY 2007 FY 2008 FY 2009 FY 2010 Forecast Forecast Appalachian Growth…

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