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APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co.

National Fuel Gas Co. · Apr 10, 2015 · 57 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. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 1
    National Fuel Gas Company Investor Presentation April 2015 1
  2. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 2
    Quality Assets, Exceptional Location, Unique Integration Corporate 800,000+ Net Acres in Pennsylvania 3 Million BBls of Annual Crude Oil Production 1.9 Tcfe of Proved Reserves(1) 265 Million of Midstream Adjusted EBITDA(2) (1)…
  3. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 3
    The National Fuel Value Proposition Corporate Considerable Upstream and Midstream Growth Opportunities in Appalachia 800,000+ net acres in Pennsylvania 2nd largest acreage position in Marcellus Shale(1) WDA mineral ownership = no…
  4. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 4
    Upstream & Midstream Common Vision For Growth Corporate Western Development Area Tier I Acreage: 200,000 Acres Clermont Gathering System NFG Supply & Other Interconnects High quality Marcellus acreage Northern Access…
  5. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 5
    EBITDA Contribution by Segment Corporate 1,250 Exploration & Production Segment Gathering Segment Pipeline & Storage Segment Utility Segment 1,000 Energy Marketing & Other 953 936 852 Adjusted EBITDA (Millions) 750 704 668…
  6. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 6
    Adjusting Capex to Capitalize on Opportunities Corporate 1,500 Exploration & Production Segment Gathering Segment Pipeline & Storage Segment Utility Segment 1,075 - Energy Marketing & Other 990 - 1,250 1,155 Capital Expenditures…
  7. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 7
    Maintaining a Strong Balance Sheet Corporate Debt/Adjusted EBITDA Capitalization 2.5 1.98 x 2.0 1.89 x 1.89 x 1.85 x 1.75 x 1.77 x Average Debt /Adjusted EBITDA Total Debt(1) 1.5 Shareholders 41% Equity 1.0 59%…
  8. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 8
    Dividend Track Record Corporate 2.00 Dividend Consistency Consecutive Dividend Payments 112 Years Consecutive Dividend Increases 44 Years 1.50 Current Annualized Dividend Rate 1.54 per Share Annual Dividend Rate 1.00…
  9. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 9
    Upstream Overview Exploration & Production 10
  10. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 10
    Proven Record of Reserve Growth Upstream 2,500 Natural Gas (Bcf) Crude Oil (MMbbl) 3-Year Fiscal F&D Cost(1) Years (/Mcfe) 2,000 1,914 2007-2009 5.35 2008-2010 2.37 1,549 Total Proved Reserves (Bcfe) 1,500 2009-2011 2.09…
  11. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 11
    Marcellus Shale Driving Production Growth Upstream 225 Gulf of Mexico (Divested in 2011) East Division West Division 160.5 155-175 150 Annual Production (Bcfe) 120.7 83.4 139.3 134-153 75 67.6 100.7 49.6 62.9 13.3…
  12. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 12
    Disciplined Capital Spending Upstream 1,000 Gulf of Mexico (Divested in 2011) East Division West Division 800 694 649 Capital Expenditures (Millions) 603 525 - 600 575 533 400 - 475 398 400 631 596 520 485 - 428…
  13. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 13
    Highly Competitive Cost Structure Upstream 4.00 Property, Franchise & Other Taxes Other O&M Expense General & Administrative Expense Lease Operating & Transportation Expense (Gathering Only) (3) Lease Operating & Transportation…
  14. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 14
    Marcellus Shale: Prolific Pennsylvania Acreage Upstream Seneca Fee Seneca Lease 720,000 Acres 60,000 Acres Eastern Development Area (EDA) Mostly leased (16-18% royalty) Western Development Area (WDA) No near-term lease…
  15. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 15
    EDA Delivering Significant Growth Upstream Covington Fully Developed DCNR Tract 007 Productive Capacity: 45MMcf per Day Utica exploration well 47 Wells Producing 24-hour peak IP 22.7 MMcf per Day Resource potential 1 Tcf…
  16. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 16
    Focusing on WDA Development Upstream Senecas Tier I Acreage: 200,000 Acres 860+ locations economic at realized 2-4 BCF/well prices 2.30-2.70/MMbtu CRV Hemlock Ridgway 2-4 BCF/well 4 - 6 BCF/well 6 - 8 BCF/well 4 - 6…
  17. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 17
    Clermont/Rich Valley (CRV) Area Upstream Clermont/Rich Valley Area 200-250 Planned Horizontal Locations Current Productive Capacity: 30 Wells; 95 MMcfd IP Range: 5-11 MMcfd Pad D08-G Drilling 11 Wells Pad E8-D Drilling 8 wells…
  18. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 18
    Marcellus Well Results Upstream EDA Development Wells: Producing Well Average IP Rate Average Average Treatable Area Count (MMcfd) 7-Day (MMcf/d) Lateral Length (ft) Covington Tioga 47 5.2 4.7 4,023 County Tract 595 Tioga 43(1)…
  19. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 19
    Marcellus Drilling and Completion Efficiencies Upstream Fiscal 2012 Average Development Well Fiscal 2015(1) Average Development Well 8.7 MM Lateral Length: 5,100 ft Lateral Length: 7,200 ft Well Cost 6.3 MM Measured Depth:…
  20. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 20
    Marcellus Shale Program Economics Upstream 2,000 WDA Locations Economic Below 4/MMbtu (1) Locations Completed Average 4.00 3.50 15% IRR (1) Prospect Product Remaining Lateral EUR BTU Dawn/Nymex Dawn/Nymex Realized Price to Be…
  21. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 21
    WDA Mineral Interests Significantly Enhance Returns Upstream Clermont/Rich Valley Example The Seneca Producer Advantage Paying (/Mcf) 0% Royalty 15% Royalty Realized Price 2.31 2.31 Less: Royalty Payment (0.00) (0.35) Less:…
  22. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 22
    Adding Long-Term Firm Transport to the Portfolio Upstream FT Capacity (Dth/day) In- Project Service Contract Delivery Fiscal Fiscal Fiscal Fiscal Matched Firm (Counterparty) Date Term Market 2015 2016 2017 2018 Sales Contracts…
  23. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 23
    Significant Base of Long-Term Firm Contracts Upstream 1,200 914,405 Dth per day(1) Total Firm Contracts by FY 2018 900 Atlantic Sunrise Williams Co. (Transco) Dth per Day (Thousands) 189,405 Dth/d 600 Northern Access…
  24. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 24
    Reaching High Value Markets Upstream Seneca FT Capacity by Fiscal 2018 To Canadian (Dth per day) Markets Canadian Markets 558,000 Mid-Atlantic, Southeast & Other + 341,405 Total Firm Transport Capacity 899,405 To…
  25. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 25
    Firm Sales Provide Market for Appalachian Production Upstream 600,000 Fiscal 2015 Fiscal 2016 Pricing Index Key: Long-Term Firm Gross Sales (Avg Dth per Day) Fixed Price (1) 500,000 Dawn Dominion SP NYMEX 402,871 408,936…
  26. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 26
    Natural Gas Financial Hedge Positions(1) Upstream 100 NYMEX Dominion Dawn & MichCon SoCal 75 Natural Gas Swaps (Million MMBtu) 65.7 14.5 50 46.8 41.9 18.8 11.0 12.4 12.7 25 28.9 32.4 23.1 5.6 5.6 0 2015(2)…
  27. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 27
    FY 2015 Production Firm Sales & Spot Exposure Upstream 200.0 Firm Sales with Price Certainty 56 Bcf Realizing 3.60/Mcf 4.6 Bcf of Additional Basis Protection 150.0 5.7 Bcf(3) 134-153 Bcf 16.1 Bcf Total Production (Bcfe)…
  28. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 28
    FY 2016 Productive Capacity(1) Upstream 250.0 FY 2016 Productive Capacity Summary Hedged Firm & Fixed Sales 99 Bcf Total Unhedged Firm Sales (2) 34 Bcf East Division Productive Capacity 200.0 Productive Capacity Exposed to Spot…
  29. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 29
    Utica/Point Pleasant: Industry Activity Upstream Seneca Mt. Jewett IP: 8.9 MMcfd PGE Shell 26.5 Mmcf/d Seneca - DCNR 007 IP: 22.7 MMcfd Range 59 Mmcf/d Rice 42 Mmcf/d Seneca Horiz. Seneca Vert. Permitted…
  30. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 30
    Utica/Point Pleasant Shale: EDA Opportunities Upstream Shell: Gee 11.2 Mmcf/d DCNR Tract 001 Future Location Shell: Neal 26.5 Mmcf/d PGE Currently Drilling Covington DCNR Tract 007 Future Location IP: 22.7 MMcfd Lateral…
  31. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 31
    California: Stable Production; Modest Growth Upstream 6,000 FY 2010 Gross Operated Daily Production (Boe/d) East Coalinga 4,500 TTM 3/31/15 4,100 Temblor Formation 4,500 Primary 3,000 1,700 1,700…
  32. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 32
    South Midway Sunset Development Upstream 2,000 1,800 B Pool A Pool 1,600 Seneca Acquired 1,400 in June 2009 1,200 1,000 800 600 16X Pool 400 Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- 06 07…
  33. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 33
    Focused on High Return Opportunities Upstream CALIFORNIA Average Estimated Average EUR IRR Fiscal 2015 Field Well Cost (MBO) 55/Bbl Locations South Midway Sunset 250,000 39 57% 36 North Midway Sunset 300,000 30 25% 15 East…
  34. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 34
    California: Modest Growth Anticipated in 2015 Upstream 11,000 Average Daily Net Production (BOE per Day) 9,800 - 10,000 10,200 9,699 9,322 9,056 9,078 9,000 8,773 8,000 7,000 2010 2011 2012 2013 2014 2015…
  35. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 35
    Strong Margins Support Significant Free Cash Flow Upstream FYTD 2015 West Division EBITDA per BOE(1) Non-Steam Fuel LOE 12.03 Steam Fuel 4.20 Average Revenue for FYTD 2015(1) G&A 4.61 68.34 per BOE Production & Other Taxes…
  36. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 36
    Midstream Overview Pipeline & Storage Gathering 37
  37. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 37
    Gathering is the First Step to Reaching a Market Midstream Gathering Segment Revenue 120 TGP 200 75 - 85 Revenue (Millions) 90 70.6 60 34.8 30 0 (1) 2010 2011 2012 2013 2014 2015E Fiscal Year Clermont Gathering…
  38. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 38
    Gathering Supporting Senecas EDA Production Midstream Covington Gathering System In-Service Date: November 2009 Capacity: 220,000 Dth per day Interconnect: TGP 300 Capital Expenditures (to date): 32 Million Trout Run Gathering…
  39. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 39
    Clermont Gathering System has Large Expandability Midstream C Compressor Station Clermont Gathering System C Interconnect In-Service: July 2014 Ultimate Trunkline Capacity: o Approx. 1 Bcf per day Interconnects: o TGP 300…
  40. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 40
    Pipeline & Storage: Premier Appalachian Position Midstream NEW NFG is uniquely MAP-need positioned to add our regional pipeline systems and to expand in the provide valuable transmission outlets for producers and shippers in…
  41. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 41
    Major Expansion Designed for Canadian Deliveries Midstream Northern Access 2015 Northern Customer: Seneca Resources Access 2015 (November 2015) In-Service: November 2015 System: NFG Supply Corp. Capacity: 140,000 Dth per day…
  42. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 42
    Northern Access 2016 Provides Access to Canada Midstream Northern Access 2016 Customer: Seneca Resources In-Service: Targeting Late 2016 Northern Capacity: 490,000 Dth/d Access 2016 (Late 2016) Interconnects: o TransCanada…
  43. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 43
    Recent 3rd Party Expansions Highly Successful Midstream Completed Expansions Capacity (Dth/day) Northern Access 2012 320,000 Tioga County Ext. & Lamont 440,000 Northern Access 2012 Line N & Mercer Expansion 458,000 Tioga Total…
  44. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 44
    Pairing Line N Expansions with System Modernization Midstream Westside Expansion & Modernization In-Service: November 2015 System: NFG Supply Corp. Capacity: 175,000 Dth per day o Range Resources (145,000 Dth/d) o Seneca…
  45. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 45
    Developing Unique Solutions for Shippers Midstream Tuscarora Lateral In-Service: November 2015 System: NFG Supply & Empire Pipeline New No-Notice Services o Precedent agreements executed with RG&E, NYSEG & NFG Utility…
  46. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 46
    Significant Expansions Are Driving Growth Midstream Other Projects Lamont Compressor Completed Projects (Since 2009) Delivering Gas North Tuscarora Lateral Tioga County Extension Recent Capacity Northern Access 2012 Total…
  47. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 47
    Downstream Overview Utility Energy Marketing 48
  48. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 48
    New York & Pennsylvania Service Territories Downstream New York Total Customers: 524,300 ROE: 9.1% (NY PSC Rate Case Settlement, May 2014) Rate Mechanisms: o Earnings Sharing o Revenue Decoupling o Weather Normalization o Low…
  49. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 49
    Utility: Shifting Trends in Customer Usage Downstream 120 Residential Usage 35 Industrial Usage Usage Per Account(1) (MMcf) 110 30 Usage Per Account(1) (Mcf) 100 25 90 20 80 15 12-Months Ended March 31…
  50. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 50
    A Proven History of Controlling Costs Downstream 250 All Other O&M Expenses O&M Pension Expense O&M Uncollectible Expense 200 193 195 181 179 177 178 10 9 14 11 6 O&M Expense (Millions) 9 30 20 33 13 16 16 150 100…
  51. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 51
    Utility: Strong Commitment to Safety Downstream 150 Capital Expenditures for Safety Total Capital Expenditures 115 - 130 120 Capital Expenditures (Millions) 88.8 90 75-100 72.0 58.3 Near-term increase due 58.0 58.4 to…
  52. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 52
    Appendix 53
  53. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 53
    Natural Gas Hedge Positions Appendix (Volumes in thousands Mmbtu; Prices in /Mmbtu) Fiscal 2015(1) Fiscal 2016 Fiscal 2017 Fiscal 2018 Avg. Avg. Avg. Avg. Volume Price Volume Price Volume Price Volume Price NYMEX Swaps 28,920…
  54. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 54
    Crude Oil Hedge Positions Appendix (Volumes & Prices in Bbl) Fiscal 2015(1) Fiscal 2016 Fiscal 2017 Fiscal 2018 Avg. Avg. Avg. Avg. Volume Price Volume Price Volume Price Volume Price Midway Sunset 182,000 68.62 36,000 92.10 -…
  55. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 55
    WDA Delineation Well Results Appendix Producing Peak 24-Hour Average Average Treatable Area Well Count Rate (MMcfd) 7-Day (MMcf/d) Lateral Length (ft) Ridgway 1 7.1 6.4 5,537 Elk County Church Run Elk & Jefferson 2 4.8 4.5…
  56. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 56
    National Fuel Gas Company Appendix Reconciliation of Adjusted EBITDA to Consolidated Net Income ( Thousands) 12-Months FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Ended 3/31/15 Exploration & Production - West Division Adjusted EBITDA…
  57. APRIL 2015 INVESTOR PRESENTATION – National Fuel Gas Co. – slide 57
    National Fuel Gas Company Appendix Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ( Thousands) FY 2015 FY 2016 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Forecast Forecast Capital Expenditures from…

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