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Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co.

National Fuel Gas Co. · Mar 31, 2015 · 58 slides

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Slides

  1. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 1
    National Fuel Gas Company Investor Presentation Scotia Howard Weil 43rd Annual Energy Conference - March 2015 1
  2. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 2
    Quality Assets, Exceptional Location, Unique Integration Corporate 800,000 Net Acres in Pennsylvania 3 Million BBls of Crude Oil Production 1.914 Tcfe of Proved Reserves 260 Million of Midstream Adjusted EBITDA 3
  3. Scotia Howard Weil 43rd Annual Energy Conference – 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. Scotia Howard Weil 43rd Annual Energy Conference – 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. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 5
    EBITDA Growth by Segment Corporate 1,250 Exploration & Production Segment Gathering Segment Pipeline & Storage Segment Utility Segment 963 1,000 Energy Marketing & Other 953 852 Adjusted EBITDA (Millions) 750 704 668 539…
  6. Scotia Howard Weil 43rd Annual Energy Conference – 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. Scotia Howard Weil 43rd Annual Energy Conference – 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 1.75 x 1.77 x 1.80 x Average Debt /Adjusted EBITDA Total Debt(1) 1.5 Shareholders 41% Equity 1.0 59%…
  8. Scotia Howard Weil 43rd Annual Energy Conference – 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. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 9
    Upstream Overview Exploration & Production 10
  10. Scotia Howard Weil 43rd Annual Energy Conference – 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. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 11
    Delivering Tremendous Production Growth Upstream 225 Gulf of Mexico (Divested in 2011) East Division West Division 155-190 160.5 150 Annual Production (Bcfe) 120.7 83.4 134-167 139.3 75 67.6 100.7 49.6 62.9 13.3…
  12. Scotia Howard Weil 43rd Annual Energy Conference – 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. Scotia Howard Weil 43rd Annual Energy Conference – 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. Scotia Howard Weil 43rd Annual Energy Conference – 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. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 15
    Marcellus Well Results Upstream EDA Development Wells: Producing Well Peak 24-Hour Average Average Treatable Area Count Rate (MMcfd) 7-Day (MMcf/d) Lateral Length (ft) Covington Tioga 47 5.2 4.7 4,023 County Tract 595 Tioga…
  16. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 16
    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…
  17. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 17
    Focusing on WDA Development Upstream Senecas Tier I Acreage: 200,000 Acres 2-4 BCF/well 6-8 Bcfe EUR Wells Economic at 2.60 to 4.00/MMbtu CRV Hemlock Ridgeway 4 - 6 BCF/well 2-4 BCF/well 6 - 8 BCF/well 4 - 6…
  18. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 18
    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…
  19. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 19
    2,000 Economic WDA Locations Below 4/MMBtu Upstream Locations Completed EUR 4.50 4.00 15% IRR(1) Prospect Product Remaining to Lateral Length Assumption BTU Dawn/Nymex Dawn/Nymex Realized Price Be Drilled (ft) (MMcf) (% IRR) (%…
  20. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 20
    WDA Mineral Interests Significantly Enhance Returns Upstream Clermont/Rich Valley Example The Seneca Producer Advantage Paying (/Mcf) 0% Royalty 15% Royalty Realized Price 2.60 2.60 Less: Royalty Payment (0.00) (0.39) Less:…
  21. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 21
    How Does Seneca Sell its Production Upstream Contracted Basis Differential 3rd Party Marketer (or spot market) Gathering System Interconnection Well Head with Interstate Spot Market Pipeline Network Firm Transport FT…
  22. Scotia Howard Weil 43rd Annual Energy Conference – 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. Scotia Howard Weil 43rd Annual Energy Conference – 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. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 24
    Reaching High Value Markets Upstream Seneca FT Capacity by Fiscal 2018 (Dth per day) To Canadian Markets Canadian Markets 558,000 Mid-Atlantic, Southeast & Other + 341,405 Total Firm Transport Capacity 899,405 To…
  25. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 25
    Firm Sales Provide Market for Appalachian Production Upstream 500,000 Fixed Price Dominion South Point Values shown represent the price or differential to a reference Long-Term Firm Gross Sales (Avg Dth per Day) NYMEX price…
  26. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 26
    Current Natural Gas Hedge Positions Upstream 100 NYMEX Dominion Dawn & MichCon SoCal 75 Natural Gas Swaps (Million MMBtu) 68.7 65.7 18.6 14.5 50 46.8 18.8 11.0 12.7 25 49.1 32.4 23.1 5.6 5.6 0 2015(1) 2016 2017…
  27. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 27
    FY 2015 Production Firm Sales & Spot Exposure Upstream 200.0 Firm Sales with Price Certainty Spot Price Exposure 76.5 Bcf at 3.70/Mcf 27 Bcf at 2.00-2.25/Mcf (1) 134-167 Bcf 150.0 18.6 Bcf Total Production (Bcfe) 11.1 Bcf…
  28. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 28
    FY 2016 Productive Capacity(1) Upstream 250.0 FY 2016 Productive Capacity Summary Total Hedged Firm Sales / FT 78 Bcf East Division Unhedged Firm Sales / FT(2) 36 Bcf Productive Capacity 200.0 Productive Capacity Exposed to Spot…
  29. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 29
    Utica/Point Pleasant: Industry Activity Upstream Seneca Mt. Jewett PGE IP: 8.9 MMcfd 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. Scotia Howard Weil 43rd Annual Energy Conference – 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. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 31
    California: Stable Production; Modest Growth Upstream 6,000 FY 2010 Gross Operated Daily Production (Boe/d) 4,500 TTM 12/31/14 East Coalinga 4,000 4,500 Temblor Formation Primary 3,000 1,750 1,700 1,600…
  32. Scotia Howard Weil 43rd Annual Energy Conference – 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 16X Pool 600 400 97X Pool Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11…
  33. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 33
    California: East Coalinga Summary Upstream Production has increased from 214 BOPD to 750 BOPD Drilled 31 new producers and 1 water disposal well in 2014 Plan to drill 5 wells in 2015 Evaluating potential of undeveloped Upper…
  34. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 34
    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…
  35. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 35
    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…
  36. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 36
    Strong Margins Support Significant Free Cash Flow Upstream Q1 Fiscal 2015 West Division EBITDA per BOE Non-Steam Fuel LOE 11.64 Steam Fuel 4.43 Average Revenue for Q1 FY2015(1) G&A 4.27 74.26 per BOE Production & Other Taxes…
  37. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 37
    Midstream Overview Pipeline & Storage Gathering 38
  38. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 38
    Gathering is the First Step to Reaching a Market Midstream Gathering Segment Revenue 120 TGP 200 75 - 95 Revenue (Millions) 90 70.6 60 34.8 30 0 (1) 2010 2011 2012 2013 2014 2015E Fiscal Year Clermont Gathering…
  39. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 39
    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…
  40. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 40
    Clermont Gathering System has Large Expandability Midstream C Compressor Station Clermont Gathering System C Interconnect In-Service: July 2014 Ultimate Trunkline Capacity: 1+ Bcf per day Interconnects o TGP 300 (current)…
  41. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 41
    Positioned to Serve Growing Production in Appalachia Midstream NFG is focused on expanding our pipeline systems to support the growing needs of Appalachian producers and shippers 42
  42. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 42
    Major Expansion Designed for Canadian Deliveries Midstream Northern Access 2015 Northern Access 2015 Customer: Seneca Resources (November 2015) In-Service: November 2015 System: NFG Supply Corp. Capacity: 140,000 Dth per day…
  43. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 43
    Northern Access 2016 Provides Access to Canada Midstream Northern Access 2016 Customer: Seneca Resources In-Service: November 2016 target Capacity: 490,000 Dth/d Interconnects: o TransCanada Chippawa Northern (350,000 Dth/d)…
  44. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 44
    Recent 3rd Party Expansions Highly Successful Midstream Completed Expansions Capacity (Dth/day) Northern Access 2012 320,000 Tioga County Ext. & Lamont 440,000 Tioga County Northern Extension Line N & Mercer Expansion 458,000…
  45. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 45
    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…
  46. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 46
    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 o…
  47. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 47
    Significant Expansions Are Driving Growth Midstream Delivering Gas North Tioga County Extension Northern Access 2012 Other Projects Completed Projects (Since 2009) Northern Access 2015 Northern Access 2016 Lamont Compressor Recent…
  48. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 48
    Downstream Overview Utility Energy Marketing 49
  49. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 49
    New York & Pennsylvania Service Territories Downstream New York Total Customers: 524,300 Rate Mechanisms: o Revenue Decoupling o Weather Normalization o Low Income Rates o Merchant Function Charge (Uncollectibles Adj.) o 90/10…
  50. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 50
    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 December 31…
  51. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 51
    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 10 14 11 6 O&M Expense (Millions) 9 31 20 33 13 16 16 150 100…
  52. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 52
    Utility: Strong Commitment to Safety Downstream 150 Capital Expenditures for Safety Total Capital Expenditures 115 - 130 120 Capital Expenditures (Millions) 88.8 90 Near-term increase due 72.0 to 60MM upgrade of the…
  53. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 53
    Appendix 54
  54. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 54
    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 49,130…
  55. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 55
    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 108,000 92.10 36,000 92.10 -…
  56. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 56
    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…
  57. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 57
    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 12/31/14 Exploration & Production - West Division Adjusted EBITDA…
  58. Scotia Howard Weil 43rd Annual Energy Conference – National Fuel Gas Co. – slide 58
    National Fuel Gas Company Appendix Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ( Thousands) FY 2015 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Forecast Capital Expenditures from Continuing…

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