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First Quarter Update – National Fuel Gas Co.

National Fuel Gas Co. · Feb 17, 2016 · 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. First Quarter Update – National Fuel Gas Co. – slide 1
    National Fuel Gas Company Investor Presentation February 2016
  2. First Quarter Update – National Fuel Gas Co. – slide 2
    National Fuel Gas Company Corporate Quality Assets Exceptional Location Unique Integration Upstream 2.3 Tcfe Proved Reserves (1) 785,000 net acres in Marcellus Shale 3 million Bbls/year California crude oil production…
  3. First Quarter Update – National Fuel Gas Co. – slide 3
    The National Fuel Value Proposition Corporate Considerable Upstream and Midstream Growth Opportunities in Appalachia Fee ownership on 715,000 net acres in WDA = limited royalties or drilling commitments Seneca has 900,000 Dth/day of…
  4. First Quarter Update – National Fuel Gas Co. – slide 4
    Appalachia Overview Exploration & Production Gathering Pipeline & Storage 5
  5. First Quarter Update – National Fuel Gas Co. – slide 5
    Integrated Vision for Long-term Growth Appalachia Exploration & Production 1 Long-term, return- driven approach to developing vast acreage position 3 Gathering Northern Access projects to 2 transport 660 MDth/d of Seneca-…
  6. First Quarter Update – National Fuel Gas Co. – slide 6
    Appalachia Capital Reductions Exploration & Production Appalachia Exercising Capital Flexibility and Discipline to Respond to Commodity Price Environment 1,500 Pipeline & Storage FY2016 Appalachia capital budget cut Gathering 665…
  7. First Quarter Update – National Fuel Gas Co. – slide 7
    Significant Appalachian Acreage Position Exploration & Production Appalachia Seneca Fee Seneca Lease Eastern Development Area (EDA) Western Development Area (WDA) 715,000 Acres 70,000 Acres 153 wells able to produce 350…
  8. First Quarter Update – National Fuel Gas Co. – slide 8
    Marcellus Shale: Western Development Area Exploration & Production Appalachia WDA Tier 1 Acreage 200,000 Acres WDA Highlights Large drilling inventory of quality Marcellus dry gas SRC Fee Acreage o 1,200 locations economic <…
  9. First Quarter Update – National Fuel Gas Co. – slide 9
    Seneca WDA Joint Development Agreement Exploration & Production Appalachia On December 2, 2015, Seneca entered into an asset-level joint development agreement with IOG CRV-Marcellus Transaction Capital, LLC, an affiliate of IOG…
  10. First Quarter Update – National Fuel Gas Co. – slide 10
    Integrated WDA Development - Upstream Exploration & Production Appalachia Clermont/Rich Valley Development Map Clermont/Rich CRV Development Summary Valley Area Current: 62 wells able to produce 200 MMcf/d 200+ MMcf/d gross firm…
  11. First Quarter Update – National Fuel Gas Co. – slide 11
    Integrated WDA Development - Gathering Gathering Appalachia Gathering System Build-Out Tailored to Accommodate Senecas WDA Development Clermont Gathering System Map Current System In-Service 44 miles of pipe/13,800 HP of compression…
  12. First Quarter Update – National Fuel Gas Co. – slide 12
    Integrated WDA Development - Interstate Pipelines Pipeline & Storage Appalachia Expanding Our Interstate Pipelines to Deliver Senecas WDA Production to Canada Northern Access 2015 Customer: Seneca Resources (NFG) In-Service:…
  13. First Quarter Update – National Fuel Gas Co. – slide 13
    Integrated WDA Development - Interstate Pipelines Pipeline & Storage Appalachia Northern Access 2016 to Increase Transport Capacity out of WDA to Canada by 490,000 Dth/d by FY18 Northern Access 2016 Customer: Seneca Resources (NFG)…
  14. First Quarter Update – National Fuel Gas Co. – slide 14
    Marcellus Drilling and Completion Efficiencies Exploration & Production Appalachia Fiscal 2012 Average Development Well(1) Fiscal 2016 Average Development Well(1) 8.7 MM Lateral Length: 5,100 ft Lateral Length: 7,600 ft Well…
  15. First Quarter Update – National Fuel Gas Co. – slide 15
    WDA Upstream & Midstream Development Appalachia While Seneca has consistently driven down its well costs and break-even economics WDA Well Costs WDA Clermont / Rich Valley Economics Normalized for a 8,800 ft. Lateral Length…
  16. First Quarter Update – National Fuel Gas Co. – slide 16
    Marcellus Shale: Eastern Development Area Exploration & Production Appalachia EDA Highlights EDA Acreage 70,000 Acres 1 Covington & DCNR Tract 595 o Tioga County, Pa. o 92 wells(1) with 110 MMcf/d productive capacity 3 o 75…
  17. First Quarter Update – National Fuel Gas Co. – slide 17
    Integrated EDA Development - Gathering Gathering Appalachia Gathering Segment Supporting Senecas EDA Production & Future Development Covington Gathering System In-Service Date: November 2009 Capital Expenditures (to date): 33…
  18. First Quarter Update – National Fuel Gas Co. – slide 18
    Utica/Point Pleasant: Industry Activity Exploration & Production Appalachia Seneca - DCNR 007 IP: 22.7 MMcf/d Shell PGE 26.5 MMcf/d Seneca Mt. Jewett IP: 8.9 MMcf/d Seneca WDA 2 Utica Test Wells Planned for FY16/17 Range…
  19. First Quarter Update – National Fuel Gas Co. – slide 19
    FY 2016 Production - Firm Sales & Spot Exposure Exploration & Production Appalachia 250 Remaining FY16 Production with Price Certainty Appalachia Seneca Total 88.7 Bcf Realizing 3.25/Mcf (1) Productive Productive 4.9 Bcf of…
  20. First Quarter Update – National Fuel Gas Co. – slide 20
    Significant Base of Long-Term Firm Contracts Exploration & Production Appalachia 1,250 914,405 Dth per day 1,000 Total Gross Firm Contracts by FY2018 Atlantic Sunrise (Transco) Delivery Markets: Mid-Atlantic & Southeast U.S.…
  21. First Quarter Update – National Fuel Gas Co. – slide 21
    Strong Hedge Book in Fiscal 2016 and 2017 Exploration & Production Appalachia Natural Gas Swap & Fixed Physical Sales Contracts (Million MMBtu) 150 FY 2016 = 78% hedged(1) at 3.53 per MMBtu 100 92.0 (2) 97.2 30.4 32.9 50…
  22. First Quarter Update – National Fuel Gas Co. – slide 22
    Pipeline & Storage: Premier Appalachian Position Pipeline & Storage Appalachia In addition to serving our own upstream and downstream subsidiaries, NFG is uniquely positioned to expand our regional pipeline systems and provide…
  23. First Quarter Update – National Fuel Gas Co. – slide 23
    Recent 3rd Party Expansions Highly Successful Pipeline & Storage Appalachia Expansions for 3rd Parties since 2010 3rd Party Expansion Capital Cost (MM) 1,442 MDth/d 387 million since FY2010 72 since FY 2010 Northern Access 2012…
  24. First Quarter Update – National Fuel Gas Co. – slide 24
    Planned Empire System Expansion Pipeline & Storage Appalachia Empire North Expansion Project Target In-Service: Late 2018 System: Empire Pipeline Target Market: o Marcellus & Utica producers in Tioga & Potter County, Pa. Open…
  25. First Quarter Update – National Fuel Gas Co. – slide 25
    Midstream Businesses EBITDA Appalachia 300 Gathering Pipeline & Storage 257 252 250 64 69 62 Adjusted EBITDA (Millions) 200 191 30 152 15 121 10 100 188 190 186 161 137 111 0 2011 2012 2013 2014 2015 TTM…
  26. First Quarter Update – National Fuel Gas Co. – slide 26
    Downstream Overview Utility Energy Marketing 27
  27. First Quarter Update – National Fuel Gas Co. – slide 27
    New York & Pennsylvania Service Territories Downstream New York Total Customers(1): 526,323 ROE: 9.1% (NY PSC Rate Case Settlement, May 2014) Rate Mechanisms: o Earnings Sharing o Revenue Decoupling o Weather Normalization o…
  28. First Quarter Update – National Fuel Gas Co. – slide 28
    Utility: Shifting Trends in Customer Usage Downstream Residential Usage Industrial Usage 120 40 Usage Per Account(1) (MMcf) 110 35 Usage Per Account(1) (Mcf) 100 30 90 25 80 20 12-Months Ended December 31…
  29. First Quarter Update – National Fuel Gas Co. – slide 29
    A Proven History of Controlling Costs Downstream 250 All Other O&M Expenses O&M Pension Expense O&M Uncollectible Expense 200 198 200 193 179 9 10 177 178 10 11 6 28 28 O&M Expense (Millions) 9 33 (1) 16 16 20 150…
  30. First Quarter Update – National Fuel Gas Co. – slide 30
    Utility: Strong Commitment to Safety Downstream 150 Capital Expenditures for Safety Near-term increase due to 60MM upgrade of the Utilitys Total Capital Expenditures Customer Information System and anticipated acceleration of…
  31. First Quarter Update – National Fuel Gas Co. – slide 31
    California Exploration & Production 32
  32. First Quarter Update – National Fuel Gas Co. – slide 32
    California: Stable Production; Modest Growth Upstream 6,000 FY 2010 Gross Operated Daily Production (Boe/d) East Coalinga 4,500 FY 2015 4,350 Temblor Formation 4,500 Primary 3,000 1,700 1,650 1,500…
  33. First Quarter Update – National Fuel Gas Co. – slide 33
    California Average Daily Net Production Upstream 40-50 Million Annual Capital Spending to Keep Production Flat 10,000 9,699 9,674 9,560 9,322 9,078 8,773 (BOE per Day) 7,500 5,000 2,500 0 2011 2012 2013 2014…
  34. First Quarter Update – National Fuel Gas Co. – slide 34
    Strong Margins Support Significant Free Cash Flow Upstream West Division Adjusted EBITDA per BOE(1) Trailing 12-months Ended 12/31/15 Non-Steam Fuel LOE 12.74 Steam Fuel 3.37 Average Revenue for TTM 12/31/15(1) G&A 5.56 60.84…
  35. First Quarter Update – National Fuel Gas Co. – slide 35
    Consolidated Financial Overview Upstream Midstream Downstream 36
  36. First Quarter Update – National Fuel Gas Co. – slide 36
    Appalachia Driving Proved Reserve Growth Corporate 3,000 Natural Gas (Bcf) Crude Oil (MMbbl) 3-Year Fiscal F&D Cost(2) 2,500 (1) Years (/Mcfe) 2,344 2008-2010 2.37 2,000 1,914 2009-2011 2.09 Total Proved Reserves (Bcfe)…
  37. First Quarter Update – National Fuel Gas Co. – slide 37
    Seneca Production Corporate 200 Gulf of Mexico (Divested in 2011) Appalachia Division (1) West Coast Division 150 180 Bcfe 160.5 157.8 Appalachia 150 Spot Sales Annual Production (Bcfe) 120.7 100 83.4 139.3 136.6…
  38. First Quarter Update – National Fuel Gas Co. – slide 38
    EBITDA Contribution by Segment Corporate 1,250 Exploration & Production Segment Gathering Segment Pipeline & Storage Segment 1,000 Utility Segment 953 Energy Marketing & Other 852 843 Adjusted EBITDA (Millions) 785 750…
  39. First Quarter Update – National Fuel Gas Co. – slide 39
    Capital Expenditures by Segment Corporate 1,500 Exploration & Production Segment (1) Gathering Segment Pipeline & Storage Segment Utility Segment Energy Marketing & Other 1,001 Capital Expenditures (Millions) 1,000 977…
  40. First Quarter Update – National Fuel Gas Co. – slide 40
    Financial Position & Liquidity Corporate Debt/Adjusted EBITDA Capitalization 2.52 x 2.27 x 1.89 x 1.89 x 1.77 x 1.75 x Total Equity Total Debt 46% 54% 3.9 Billion Total Capitalization 2011 2012 2013 2014 2015 TTM as of…
  41. First Quarter Update – National Fuel Gas Co. – slide 41
    Dividend Track Record Corporate 2.00 Dividend Consistency Consecutive Dividend Payments 113 Years Consecutive Dividend Increases 45 Years 1.50 Current Annualized Dividend Rate 1.58 per Share Annual Dividend Rate 1.00…
  42. First Quarter Update – National Fuel Gas Co. – slide 42
    Appendix 43
  43. First Quarter Update – National Fuel Gas Co. – slide 43
    2015 Pipeline Expansion Projects In-Service Appendix Westside Expansion & Modernization 2015 Completed Pipeline Expansion Projects In-Service (October 2015) Total Cost: 86 million o Expansion: 45 million o Modernization: 41…
  44. First Quarter Update – National Fuel Gas Co. – slide 44
    Total Seneca Capital Spending by Division Appendix 1,000 Gulf of Mexico (Divested in 2011) Appalachia (1) (2) West Coast (California) 800 694 649 Capital Expenditures (Millions) 603 600 533 557 400 631 596 520 428…
  45. First Quarter Update – National Fuel Gas Co. – slide 45
    Marcellus Operated Well Results Exploration & Production Appalachia WDA Development Wells: Producing Well Average IP Rate Average Average Treatable Area Count (MMcfd) 30-Day (MMcf/d) Lateral Length (ft) Clermont/Rich Valley (CRV)…
  46. First Quarter Update – National Fuel Gas Co. – slide 46
    Highly Competitive Cost Structure Appendix 3.00 Property, Franchise & Other Taxes Other O&M Expense General & Administrative Expense Lease Operating & Transportation Expense (Gathering Only) (3) Lease Operating & Transportation…
  47. First Quarter Update – National Fuel Gas Co. – slide 47
    Marcellus Shale Program Economics Appendix 1,200 WDA Locations Economic Below 2.50/MMBtu Locations Completed NYMEX / DAWN Pricing Average 15% IRR (1) Prospect Product Remaining Lateral BTU 3.25 3.00 2.75 EUR (Bcf) (1) (1) (1)…
  48. First Quarter Update – National Fuel Gas Co. – slide 48
    Firm Transportation Portfolio Appendix Gross FT Capacity (Dth/day) In- Demand Project Service Contract Delivery Charge Fiscal Fiscal Fiscal Matched Firm (Counterparty) Date Term Market (/Dth) 2016 2017 2018 Sales Contracts…
  49. First Quarter Update – National Fuel Gas Co. – slide 49
    Firm Sales Provide Market for Appalachian Production Appendix Fiscal 2016 Firm Sales by Fiscal Quarter Gross Contracted Volumes (Dth per day) (1) Pricing Index Key: Fixed Price Contracted Index Price Differentials ( per Dth)(2)…
  50. First Quarter Update – National Fuel Gas Co. – slide 50
    Appalachian Price Realizations & Margins Exploration & Production Appalachia Strong hedge book, firm sales portfolio, and cost discipline generating impressive natural gas price realizations and margins in challenging commodity…
  51. First Quarter Update – National Fuel Gas Co. – slide 51
    Natural Gas Hedge Positions Appendix (Volumes in thousands MMBtu; Prices in /MMBtu) (1) Fiscal 2016 Fiscal 2017 Fiscal 2018 Fiscal 2019 Fiscal 2020 Avg. Avg. Avg. Avg. Avg. Volume Price Volume Price Volume Price Volume Price…
  52. First Quarter Update – National Fuel Gas Co. – slide 52
    Crude Oil Hedge Positions Appendix (Volumes & Prices in Bbl) (1) Fiscal 2016 Fiscal 2017 Fiscal 2018 Avg. Avg. Avg. Volume Price Volume Price Volume Price Brent Swaps 404,000 94.63 231,000 92.14 51,000 91.00 NYMEX Swaps…
  53. First Quarter Update – National Fuel Gas Co. – slide 53
    Utica/Point Pleasant: EDA Opportunities Appendix Shell: Neal Travis Peak: 26.5 MMcf/d Currently Drilling Shell: Gee DCNR Tract 001 11.2 MMcf/d Potential Future Location JKLM Pt Pleasant Test PGE DCNR 595 Vertical Tests…
  54. First Quarter Update – National Fuel Gas Co. – slide 54
    National Fuel Gas Company Appendix Reconciliation of Adjusted EBITDA to Consolidated Net Income ( Thousands) 12-Months FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 Ended 12/31/15 Total Adjusted EBITDA Exploration & Production Adjusted…
  55. First Quarter Update – National Fuel Gas Co. – slide 55
    National Fuel Gas Company Appendix Reconciliation of Exploration & Production - West Coast division Adjusted EBITDA per Mboe of Production ( Thousands) 12-Months Ended 12/31/15 Appalachia Division Adjusted EBITDA 259,134…
  56. First Quarter Update – National Fuel Gas Co. – slide 56
    National Fuel Gas Company Appendix Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ( Thousands) FY 2016 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 Forecast (1) Capital Expenditures from Continuing…
  57. First Quarter Update – National Fuel Gas Co. – slide 57
    National Fuel Gas Company Appendix Reconciliation of Exploration & Production Adjusted EBITDA for Appalachia and West Coast divisions to Exploration & Production Segment Net Income ( Thousands) Three Months Ended Three Months Ended…

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