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Q4 2011 Update – National Fuel Gas Co.

National Fuel Gas Co. · Nov 7, 2011 · 63 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. Q4 2011 Update – National Fuel Gas Co. – slide 1
    Investor Presentation 2011 Fourth Quarter Update November 7, 2011
  2. Q4 2011 Update – National Fuel Gas Co. – slide 2
    Core Businesses November 7, 2011 Integrated Business Structure Seneca Resources Corporation Empire Pipeline & NFG Supply Corp. Significant Appalachian Growth Appalachian Pipeline Growth Leading Marcellus Shale Position Delivery to…
  3. Q4 2011 Update – National Fuel Gas Co. – slide 3
    National Fuel Gas Company November 7, 2011 Significant Growth Related to the Marcellus Shale Marcellus Shale Pipeline & Storage Midstream Exploration & Production (1) Footnote 1 goes here (2) Footnote 2 goes here 4
  4. Q4 2011 Update – National Fuel Gas Co. – slide 4
    National Fuel Gas Company November 7, 2011 2014 Where We Are Headed Significant Ramp Up in Capital Expenditures to Fuel Marcellus Expansion 2011 to 2014: Growing E&P Capital Expenditures at an 18% CAGR 2014 Forecasted Consolidated…
  5. Q4 2011 Update – National Fuel Gas Co. – slide 5
    Exploration & Production November 7, 2011 (1) Footnote 1 goes here (2) Footnote 2 goes here 6
  6. Q4 2011 Update – National Fuel Gas Co. – slide 6
    Seneca Resources November 7, 2011 Our Growth Story Not the same company we were just a few years ago Will continue to grow dramatically Production and reserves expected to triple or quadruple from 2010 to 2014 Held over 700,000…
  7. Q4 2011 Update – National Fuel Gas Co. – slide 7
    Seneca Resources November 7, 2011 Top Tier Acreage and Resource Position Proved Reserves (at Sept. 30, 2011) 54.5 MMBoe California (327 Bcfe) Shallow Devonian 117 Bcfe Marcellus 491 Bcfe Total Reserves 935 Bcfe Prospective…
  8. Q4 2011 Update – National Fuel Gas Co. – slide 8
    Seneca Resources November 7, 2011 Continued Improvement in Finding & Development Costs Three Year Average U.S Finding & Development Cost 8.00 7.63 7.38 3-Year F&D Cost (/Mcfe) 6.00 5.35 4.00 2.37 2.00 0.00…
  9. Q4 2011 Update – National Fuel Gas Co. – slide 9
    Seneca Resources November 7, 2011 Ramping Up Production Growth 225 California Upper Devonian Marcellus Gulf of Mexico Canada Annual production 160-200 growth of 30% to Annual Production (Bcfe) 150 50% is expected 125-155…
  10. Q4 2011 Update – National Fuel Gas Co. – slide 10
    Seneca Resources November 7, 2011 Capital Spending Shifting to the Marcellus 1,250 California Upper Devonian Marcellus Gulf of Mexico Canada 935- 840- 1,145 Capital Expenditures ( Millions) 1,000 1,050 785-875 750 649…
  11. Q4 2011 Update – National Fuel Gas Co. – slide 11
    Marcellus Shale November 7, 2011 Senecas Development Areas Eastern Development Area (Mostly Leased) Western Development Area (Mostly Fee and HBP) SRC Fee Acreage SRC Lease Acreage EOG Acreage (1) Footnote 1 goes…
  12. Q4 2011 Update – National Fuel Gas Co. – slide 12
    Marcellus Shale November 7, 2011 Eastern Development Area (EDA) Results & Plan Forward DCNR Tract 007 - Delineating Covington Developed 1 Well Drilled IP: 2 MMcf/d 47 Wells Drilled 47 Producing Acquired 3D Seismic (July, 11) Gross…
  13. Q4 2011 Update – National Fuel Gas Co. – slide 13
    Marcellus Shale November 7, 2011 EDA Typecurve 6.7 Bcfe EUR (Greater Than 3,500 Lateral) 12.0 Original 6.0 Bcf Typecurve EDA Average Daily Production Rate IP Rate 7,250 MMcf/d 6.7 Bcf Typecurve (40 Year Life) Hyp. Coeff. 1.4…
  14. Q4 2011 Update – National Fuel Gas Co. – slide 14
    Marcellus Shale November 7, 2011 Western Development Area (WDA) Results & Plan Forward Approx. Outline of JV Acreage SRC Fee Acreage 200,000 Gross Acres Seneca 50% W.I. (Avg. 58% NRI) SRC Lease Acreage Mt. Jewett Delineating…
  15. Q4 2011 Update – National Fuel Gas Co. – slide 15
    Seneca Resources November 7, 2011 Marcellus Acreage Position Provides Superior Economics Marcellus Economics for a 6.2 Million Well 125% No Royalty 18% Royalty 100+% 100% Pre-Tax IRR 75% 78% 50% 43% 25% 15% 29%…
  16. Q4 2011 Update – National Fuel Gas Co. – slide 16
    Seneca Resources November 7, 2011 Marcellus Shale Strategic Development Plan Gross Rig Count 16 Seneca EOG Gross Rig Count 12 9.5 10 8 8.5 3 3 Aggressively Develop our excellent 6 4 1.5 3 Tioga and Lycoming County…
  17. Q4 2011 Update – National Fuel Gas Co. – slide 17
    Marcellus Shale November 7, 2011 Breaking Down Our Acreage Position Possible Wells Area Net Acres Locations Wells Drilled Completed EUR (Bcfe) Status Eastern Development Area (EDA) Covington 7,000 47 47 47 5.5 Developed 595…
  18. Q4 2011 Update – National Fuel Gas Co. – slide 18
    Marcellus Shale November 7, 2011 Strategic Plan Moving Forward Fiscal Year 2012 Eastern Development Area Move forward with full development of DCNR 100 (Lycoming) and DCNR 595 (Tioga) Drill several additional delineation wells…
  19. Q4 2011 Update – National Fuel Gas Co. – slide 19
    New Plays November 7, 2011 Geneseo Shale Area Summary East Resources East Resources 3 Wells Permitted Drilled & Completed November 2010 Mt. Jewett Vertical (Seneca) April 2010 Depth: 5,095; Thickness: 110 Avg. Reservoir TOC:…
  20. Q4 2011 Update – National Fuel Gas Co. – slide 20
    New Plays November 7, 2011 Utica Shale Activity Summary Seneca Resources Mt. Jewett Area Drilled: June 2011 Seneca Resources Tionesta Area Spud Date: 2012 Seneca Resources Henderson Area Currently Drilling Vertical…
  21. Q4 2011 Update – National Fuel Gas Co. – slide 21
    New Plays November 7, 2011 Utica Program Update Seneca Resources recently drilled a vertical Utica/Pt. Pleasant strat test in McKean County, PA. Preliminary results are encouraging. 400 feet of gross reservoir at a depth of…
  22. Q4 2011 Update – National Fuel Gas Co. – slide 22
    Marcellus Shale November 7, 2011 Operational Efficiencies Drive Cost Savings Equipment Ownership (Frac Tanks, etc) Pad Cost Reductions Long-Term (Rig Mats, Concrete Frac Contract Pads, etc) Improved Efficiency Increased…
  23. Q4 2011 Update – National Fuel Gas Co. – slide 23
    Marcellus Shale November 7, 2011 Cost Savings from Multi-Well Pad Drilling 1 Well per Pad 6 Wells per Pad Location & Road Costs Location & Road Costs 600,000 per well 100,000 per well Rig Mobilization Rig Mobilization 600,000…
  24. Q4 2011 Update – National Fuel Gas Co. – slide 24
    Marcellus Shale November 7, 2011 Water Management Program Water Sourcing: Coal mine runoff Permitted freshwater sources Recycled water Water Management: Instituted a Zero Surface Discharge policy Recycle Marcellus flowback and…
  25. Q4 2011 Update – National Fuel Gas Co. – slide 25
    California November 7, 2011 Stable Production Fields North Lost Hills 1,150 BOEPD Tulare & Etchegoin Formation South Lost Hills Primary & Steamflood 1,700 BOEPD 181 Active Wells Monterey Shale Primary 216 Active Wells North…
  26. Q4 2011 Update – National Fuel Gas Co. – slide 26
    California November 7, 2011 Strong Margins Support Significant Free Cash Flow Fiscal Year 2011 Net Income and Expenses per BOE Income tax 21% DDA 13% Cash Non-Steam Fuel LOE 12% Net Income Expenses 31.88 35.50 Other 6%…
  27. Q4 2011 Update – National Fuel Gas Co. – slide 27
    Pipeline & Storage / Midstream November 7, 2011 (1) Footnote 1 goes here (2) Footnote 2 goes here 28
  28. Q4 2011 Update – National Fuel Gas Co. – slide 28
    Pipeline & Storage November 7, 2011 Positioned to Move Growing Marcellus Production (1) Footnote 1 goes here (2) Footnote 2 goes here 29
  29. Q4 2011 Update – National Fuel Gas Co. – slide 29
    Pipeline & Storage November 7, 2011 Marcellus Producers Increase Utilization of NFGSC Marcellus Producers Transporting Gas on National Fuel's System 15 Producers Flowing Marcellus Production 11 12 9 6 2 3…
  30. Q4 2011 Update – National Fuel Gas Co. – slide 30
    Pipeline & Storage November 7, 2011 Positioned to Move Growing Marcellus Production NORTHERN ACCESS TIOGA EXPANSION COUNTY EXTENSION CENTRAL TIOGA COUNTY LAMONT EXTENSION COMPRESSOR STATION PHASE I & II COVINGTON…
  31. Q4 2011 Update – National Fuel Gas Co. – slide 31
    Pipeline & Storage November 7, 2011 Expansion Initiatives Capacity Est. In-Service Project Name Market Status (Dth/D) CapEx Date Lamont Compressor Station 40,000 6 MM 6/15/10 Fully Subscribed Completed Flowing into TGP 300 Line…
  32. Q4 2011 Update – National Fuel Gas Co. – slide 32
    Pipeline & Storage Growth November 7, 2011 Deploying Significant Growth Capital Capital spending is ramping up significantly to fund system expansion and assuming recently allowed industry average ROE and capital structure targets,…
  33. Q4 2011 Update – National Fuel Gas Co. – slide 33
    Midstream November 7, 2011 Critical To Boosting Returns in the Marcellus Midstreams gathering systems are TGP 300 critical to unlock remote, but highly productive Marcellus acreage Tioga County Goal is to first work to assist…
  34. Q4 2011 Update – National Fuel Gas Co. – slide 34
    Midstream Corporation November 7, 2011 Expansion Initiatives Capacity Est. In-Service Project Name Market Status (Dth/D) CapEx Date Completed Flowing into TGP Covington Gathering System 100,000 16 MM 11/17/09 Fully Subscribed…
  35. Q4 2011 Update – National Fuel Gas Co. – slide 35
    Midstream November 7, 2011 Future Opportunities for Expansion Will continue to evaluate new gathering infrastructure to alleviate constraints throughout the Marcellus Look to fill existing gathering infrastructure with 3rd party…
  36. Q4 2011 Update – National Fuel Gas Co. – slide 36
    Pipeline, Storage & Midstream November 7, 2011 Significant Throughput Growth Pipeline & Storage Midstream 1,000 800 727 671 Throughput (BCF) 152 600 108 504 55 400 350 308 30 563 575 200 449 301 320 0 2010…
  37. Q4 2011 Update – National Fuel Gas Co. – slide 37
    Utility November 7, 2011 National Fuel Gas Distribution Corporation (1) Footnote 1 goes here (2) Footnote 2 goes here 38
  38. Q4 2011 Update – National Fuel Gas Co. – slide 38
    Utility November 7, 2011 Strong Commitment to Safety 80 Capital Expenditures for Safety Capital spending from 2011 to 2014 is Total Capital Expenditures expected to be between Capital Expenditures ( Millions) 55 and 60…
  39. Q4 2011 Update – National Fuel Gas Co. – slide 39
    Utility November 7, 2011 Continued Cost Control 350 All Other O&M Expenses O&M Expense - Uncollectibles 300 O&M Expense ( Millions) 250 203 203 200 191 179 27 25 181 27 14 11 150 100 178 176 164 167 168 50 0…
  40. Q4 2011 Update – National Fuel Gas Co. – slide 40
    Utility November 7, 2011 Financial Stability Return on Equity 30.0% NY PA Allowed ROE - NY Approx. Settled ROE - PA 18.8% Return on Equity 20.0% 14.0% 14.7% 13.2% 10.9% 10.6% 10.5% 9.8% 10.0% 0.0% 2008 2009…
  41. Q4 2011 Update – National Fuel Gas Co. – slide 41
    National Fuel Gas Company November 7, 2011 Corporate & Financial Overview (1) Footnote 1 goes here (2) Footnote 2 goes here 42
  42. Q4 2011 Update – National Fuel Gas Co. – slide 42
    National Fuel Gas Company November 7, 2011 Consolidated Capital Expenditures 2,000 Utility Pipeline & Storage Exploration & Production Midstream & Other Capital Expenditures ( Millions) 1,295- 1,500 1,570 1,015- 980- 1,290…
  43. Q4 2011 Update – National Fuel Gas Co. – slide 43
    National Fuel Gas Company November 7, 2011 Cash Flow Forecasts 160 Utility Segment 1,250 Exploration & Production Segment Cash Flows ( Millions) Cash Flows ( Millions) 1,000 120 900- 935- 120- 115- 840- 115- 1,100…
  44. Q4 2011 Update – National Fuel Gas Co. – slide 44
    National Fuel Gas Company November 7, 2011 Financing Needs A Consolidated View of Cash Flows Cash from Ops Asset Sales & Other CapEx Dividend Debt Repayment Cash on Hand New Financing 2,000 2012E 2013E 2014E 1,500 128 250…
  45. Q4 2011 Update – National Fuel Gas Co. – slide 45
    National Fuel Gas Company November 7, 2011 Manageable Debt Maturity Schedule 350 300 300 250 250 Debt Maturity ( Millions) 250 200 150 150 100 49 50 50 6.700% 5.250% 6.500% 8.750% 7.395%…
  46. Q4 2011 Update – National Fuel Gas Co. – slide 46
    National Fuel Gas Company November 7, 2011 Strong Dividend Track Record 1.60 National Fuel has had 109 uninterrupted 1.40 years of dividend payments and has increased its dividend for 41 consecutive years 1.20 Annual Dividend…
  47. Q4 2011 Update – National Fuel Gas Co. – slide 47
    National Fuel Gas Company November 7, 2011 Hedge Positions and Strategy Hedged Forecasted Production As of November 3, 2011 Volume Average 100% Oil Swaps (MMBbl) Hedge Price % of Forecasted Production Hedged Fiscal 2012 1.6…
  48. Q4 2011 Update – National Fuel Gas Co. – slide 48
    National Fuel Gas Company November 7, 2011 Targeted Capital Structure Debt Equity Utility 50% 50% Equity P&S 50% 50% 55% - 65% Debt 35% - 45% E&P 30% 70% All Other 40% 60% Capital Structure Long-Term Consolidated…
  49. Q4 2011 Update – National Fuel Gas Co. – slide 49
    National Fuel Gas Company November 7, 2011 Investment Grade Credit Rating Current Credit Ratings Rating Agency Rating Fitch BBB+ Moodys Baa1 Standard & Poors BBB Capital Resources Total Short-Term Capacity: 685 Million…
  50. Q4 2011 Update – National Fuel Gas Co. – slide 50
    National Fuel Gas Company November 7, 2011 Appendix (1) Footnote 1 goes here (2) Footnote 2 goes here 51
  51. Q4 2011 Update – National Fuel Gas Co. – slide 51
    National Fuel Gas Company November 7, 2011 Fiscal Year 2012 Earnings Guidance Drivers 2012 Forecast GAAP Earnings per Share 2.85 - 3.15 Operating Earnings per Share 2.85 - 3.15 11% EPS Growth Exploration & Production Drivers…
  52. Q4 2011 Update – National Fuel Gas Co. – slide 52
    Marcellus Shale November 7, 2011 Ensuring Gas Reaches the Market Tioga County Production and Future Firm Sales 140 Firm Sales Tioga County Production 120 Firm Sales / Production (MMcf per Day) 100 80 60 Firm sales…
  53. Q4 2011 Update – National Fuel Gas Co. – slide 53
    Marcellus Shale November 7, 2011 Geotechnical Keys to Success 1. 3D Seismic Data Impacts surface location, lateral length and target zone by imaging faults and structure Attribute and fracture analyses being conducted to…
  54. Q4 2011 Update – National Fuel Gas Co. – slide 54
    Marcellus Shale November 7, 2011 Expanding 3D Seismic Coverage DCNR 007 DCNR 001 Mt. Jewett West Branch Covington DCNR 595 Owls Nest DCNR 100 Punxy Completed 190,000 ac In Progress 128,000 ac (1) Footnote 1 goes…
  55. Q4 2011 Update – National Fuel Gas Co. – slide 55
    Marcellus Shale November 7, 2011 Importance of 3D Seismic in Identifying Fractures DCNR 007 5H Well Drilled prior to 3D Seismic acquisition Well Test: 2 MMcf/d TGP 300 DCNR 007 Tioga County (1) Footnote 1 goes here (2)…
  56. Q4 2011 Update – National Fuel Gas Co. – slide 56
    Marcellus Shale November 7, 2011 3D Seismic Analysis: Fracture Patterns DCNR 007 5H Well In a localized area with minimal fractures Fault 5H Major Fractures DCNR 007 Remainder of DCNR Tract 007 Tioga County…
  57. Q4 2011 Update – National Fuel Gas Co. – slide 57
    Marcellus Shale November 7, 2011 Importance of Closure Stress & Target Zone Closure Stress & Target Zone High Closure Stress Impacts frac initiation & limits frac width. Avoid high closure stress pinch points. Currently…
  58. Q4 2011 Update – National Fuel Gas Co. – slide 58
    Marcellus Shale November 7, 2011 Owls Nest Improved IPs by Optimizing The Target Zone Moving into Full Development 3H Production Results Treated Lateral: 4,396 Peak Rate: 4.47 MMcf/d 3-Day Avg.: 4.25 MMcf/d Narrowed Union…
  59. Q4 2011 Update – National Fuel Gas Co. – slide 59
    Marcellus Shale November 7, 2011 Understanding Multi-Well Pad Drilling First Production Drill Vertical Section Prep for Completion 8 Days/Well 3.5 Days/Well 48 153 199 0 132 178 194 A typical 6-well pad can take between…
  60. Q4 2011 Update – National Fuel Gas Co. – slide 60
    Marcellus Shale November 7, 2011 Zero Liquid Discharge Operation Utilizing a state-of-the-art evaporative technology to ensure no liquid is discharged at the surface Building centrally located units in the Western Development Area…
  61. Q4 2011 Update – National Fuel Gas Co. – slide 61
    Seneca Resources November 7, 2011 Leading Environmental Commitment www.FracFocus.org Seneca discloses its hydraulic fracturing data Testing Green Fluids Refueling Standards Evaluate shallow geology and shallow water systems…
  62. Q4 2011 Update – National Fuel Gas Co. – slide 62
    National Fuel Gas Company November 7, 2011 Comparable GAAP Financial Measure Slides and Reconciliations This presentation contains certain non-GAAP financial measures. For pages that contain non-GAAP financial measures, pages…
  63. Q4 2011 Update – National Fuel Gas Co. – slide 63
    November 7, 2011 Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ( Thousands) FY 2012 FY 2013 FY 2014 FY 2010 FY 2011 Forecast Forecast Forecast Capital Expenditures from Continuing Operations…

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