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Q3 2016 Fiscal Update – National Fuel Gas Co.

National Fuel Gas Co. · Aug 4, 2016 · 56 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. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 1
    Investor Presentation Q3 Fiscal 2016 Update August 2016
  2. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 2
    National Fuel Gas Company Quality Assets Exceptional Location Unique Integration Upstream 2.3 Tcfe Proved Reserves (1) 785,000 net acres in Marcellus Shale 3 million Bbls/year of crude oil production in California Midstream 267…
  3. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 3
    Integrated Vision for Long-term Growth in Appalachia Exploration & Production 1 Long-term, return- driven approach to developing vast Marcellus & Utica acreage position 3 Gathering Northern Access projects to 2 transport 660…
  4. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 4
    FY 2017 Capital Budget and Operating Plan Capital Expenditures by Segment (MM) FY2017 Operating Plan Highlights Upstream 1,500 Exploration & Production Segment (1) Gathering Segment Appalachia: 1-rig program / daylight-only frac…
  5. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 5
    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…
  6. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 6
    Appalachia Overview Exploration & Production Gathering Pipeline & Storage 7
  7. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 7
    Significant Appalachian Acreage Position Exploration & Production Appalachia Eastern Development Area (EDA) Western Development Area (WDA) 70,000 Acres 715,000 Acres 153 wells able to produce 280 MMcf/d 50-60 remaining…
  8. Q3 2016 Fiscal 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 o 1,100 locations economic < 2.00/MMBtu realized…
  9. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 9
    Seneca WDA Joint Development Agreement Exploration & Production Appalachia On June 13, 2016, Seneca announced the extension of asset-level joint development agreement with IOG CRV - Transaction Marcellus Capital, LLC, an affiliate of…
  10. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 10
    Integrated WDA Development - Upstream Exploration & Production Appalachia Clermont/Rich Valley Development Map CRV Development Summary Current: 103 wells able to produce 280 MMcf/d Dropped to 1 rig in March 2016 (down from 3 rigs to…
  11. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 11
    Best in Class Marcellus Well Costs Exploration & Production Appalachia WDA Acreage Position & Operational Efficiencies Driving Best-in-Class Well Costs in Marcellus Marcellus Drilling Cost per Foot Marcellus Completion Cost per Stage…
  12. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 12
    Integrated WDA Development - Gathering Gathering Appalachia Gathering System Build-Out Tailored to Accommodate Senecas WDA Development Clermont Gathering System Map Current System In-Service 67 miles of pipe/26,220 HP of compression…
  13. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 13
    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:…
  14. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 14
    Integrated WDA Development - Interstate Pipelines Pipeline & Storage Appalachia Northern Access 2016 to Increase Transport Capacity Out of WDA by 490,000 Dth/d by FY18 Northern Access 2016 Customer: Seneca Resources (NFG)…
  15. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 15
    Marcellus Shale: Eastern Development Area Exploration & Production Appalachia EDA Highlights EDA Acreage 70,000 Acres 1 Covington & DCNR Tract 595 (Tioga) o Marcellus locations fully developed o 92 wells(1) with 90 MMcf/d…
  16. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 16
    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…
  17. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 17
    Utica Shale Opportunities in WDA Exploration & Production Appalachia 1st Clermont Rich Valley Utica Well Test On Trend with Northeast Pa. Results CRV Utica Test Well Results Seneca tested 1st Utica well off 10-well Marcellus…
  18. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 18
    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…
  19. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 19
    Planned Empire System Expansion Pipeline & Storage Appalachia Providing Optionality for Northeast Pennsylvania Producers Empire North Expansion Project Target In-Service: Fiscal 2019 System: Empire Pipeline Target Market: o…
  20. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 20
    2015 Pipeline Expansion Projects In-Service Pipeline & Storage Appalachia Westside Expansion & Modernization 2015 Completed Pipeline Expansion Projects In-Service (October 2015) Total Cost: 82.3 million o Expansion: 43.3 million o…
  21. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 21
    Pipeline & Storage Customer Mix Pipeline & Storage Appalachia Contracted Transportation FT Capacity - Marketers by Shipper Type(1) FT Capacity - Producers 4.1 MMDth/d Outside End User 6% Pipeline 1% 23% 6% 77% Marketer 94%…
  22. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 22
    Production and Marketing Exploration & Production 23
  23. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 23
    Proved Reserves & Development Costs Production & Marketing 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…
  24. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 24
    Seneca Production Production & Marketing Seneca Resources Net Production (Bcfe) JDA tempers net production growth in FY17 250 (1) Gross production expected to grow 10% Appalachia Growth is largely being generated from joint…
  25. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 25
    Significant Base of Long-Term Firm Contracts Production & Marketing FY 2016 to FY2017 Fiscal 2018 and beyond 465,000+ Dth/d 914,405 Dth/d 1,000 Atlantic Sunrise (Transco) Delivery Markets: Mid-Atlantic & Southeast U.S. 189,405…
  26. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 26
    Firm Transportation Commitments Production & Marketing Production Volume Delivery Demand Charges Gas Marketing Strategy Source (Dth/d) Market (/Dth) Northeast Supply EDA -Tioga Firm Sales Contracts Currently In-Service…
  27. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 27
    Firm Sales Provide Market for Appalachian Production Production & Marketing FY 2016 and FY 2017 Net Firm Sales by Fiscal Quarter Pricing Index Key: Fixed Price Net Contracted Volumes (Dth per day) Dawn Contracted Index Price…
  28. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 28
    Strong Hedge Book in Fiscal 2016 and 2017 Production & Marketing Natural Gas Swap & Fixed Physical Sales Contracts (Million MMBtu) 150.0 124.3 Remaining FY 2016 Natural Gas Production 90% hedged(1) at 3.31 per MMBtu Fiscal…
  29. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 29
    Fiscal 2017 Production and Price Certainty Production & Marketing Remaining Fiscal 2016 Production Fiscal 2017 Production Remaining FY16 Natural Gas Price Certainty FY17 Natural Gas Price Certainty 34 Bcf realizing net 3.10/Mcf(1)…
  30. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 30
    Operating Costs Production & Marketing Appalachia LOE & Gathering California LOE Seneca Resources Consolidated /Mcfe /Boe /Mcfe 1.70 1.55 1.58 0.81 17.88 0.22 0.73 0.72 0.20 0.20 16.17 15.06 0.25 0.14 0.11 0.42 (1) 0.38 (1)…
  31. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 31
    California Overview Exploration & Production 32
  32. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 32
    California Upstream Stable Oil Production Minimal Capital Investment Free Cash Flow Positive East Coalinga 6,000 FY 2010 Gross Operated Daily Production 4,500 4,350 Temblor Formation FY 2015 Primary 4,500 (Boe/d)…
  33. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 33
    Economic Development Focused on Midway Sunset Upstream North Midway Sunset Economics North MWSS Project IRRs at 50/Bbl(1) Sec. 17N MWSS Acreage 49% 37% 30% NMWSS SMWSS Farm-in Projects Hoyt FY16 Budgeted D&C Portfolio…
  34. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 34
    California Average Daily Net Production Upstream 35-45 Million Annual Capital Spending Expected to Keep CA Production Flat 10,000 9,699 9,674 9,600 9,322 9,400 9,078 7,500 (BOE per Day) 5,000 2,500 0 2012 2013…
  35. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 35
    Strong Margins Support Significant Free Cash Flow Upstream West Division Adjusted EBITDA per BOE(1) Trailing 12-months Ended 6/30/16 Non-Steam Fuel LOE 11.79 Steam Fuel 3.19 California Margins (per BOE) Average Revenue 54.81…
  36. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 36
    Downstream Overview Utility Energy Marketing 37
  37. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 37
    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…
  38. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 38
    New York Rate Case Downstream On April 28, 2016, National Fuel Gas Distribution Corporation filed a request with the New York Background Public Service Commission (NY PSC) to amend its tariff and increase its base rates. National…
  39. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 39
    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 June 30…
  40. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 40
    A Proven History of Controlling Costs Downstream 250 All Other O&M Expenses O&M Pension Expense O&M Uncollectible Expense 200 195 200 193 179 9 7 177 178 10 28 24 O&M Expense (Millions) 11 9 6 (1) 20 33 16 16 150…
  41. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 41
    Utility: Strong Commitment to Safety Downstream 150.0 Capital Expenditures for Safety Recent increase due to 60MM upgrade Total Capital Expenditures of the Utilitys Customer Information System and anticipated acceleration of…
  42. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 42
    Consolidated Financial Overview Upstream Midstream Downstream 43
  43. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 43
    Capital Expenditures by Segment Corporate 1,500 Exploration & Production Segment (1) Gathering Segment Pipeline & Storage Segment Utility Segment Energy Marketing & Other Capital Expenditures (Millions) 977 970 1,001…
  44. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 44
    EBITDA Contribution by Segment Corporate 1,250 Exploration & Production Segment Gathering Segment Pipeline & Storage Segment Utility Segment 1,000 Energy Marketing & Other 953 852 843 Adjusted EBITDA (Millions) 772 750…
  45. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 45
    Financial Position & Liquidity Corporate Debt/Adjusted EBITDA Capitalization 2.72 x 2.27 x 1.89 x 1.89 x 1.77 x Total Equity Total Debt 42% 58% 3.6 Billion Total Capitalization 2012 2013 2014 2015 TTM as of June 30, 2016…
  46. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 46
    Dividend Track Record Corporate 2.00 Dividend Consistency Consecutive Dividend Payments 114 Years Consecutive Dividend Increases 46 Years 1.50 Current Annualized Dividend Rate 1.62 per Share Annual Dividend Rate 1.00…
  47. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 47
    Appendix 48
  48. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 48
    Total Seneca Capital Spending by Division Appendix 800 Appalachia (1) (2) West Coast (California) 694 603 600 557 Capital Expenditures (Millions) 533 400 631 520 428 500 200 160-200 120-135 125-155 85-100 105…
  49. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 49
    Marcellus Operated Well Results Appendix 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) & Hemlock 101(1) 6.9 5.2…
  50. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 50
    Marcellus Shale Program Economics Appendix 1,100 WDA Locations Economic Below 2.00/MMBtu NYMEX / DAWN Pricing Net Realized Locations Completed (2) Anticipated Average Price Prospect Product Remaining Lateral 3.00 2.75 2.50…
  51. Q3 2016 Fiscal 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. Q3 2016 Fiscal 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 51,000 94.06 123,000 92.27 24,000 91.00 NYMEX Swaps…
  53. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 53
    National Fuel Gas Company Appendix Reconciliation of Adjusted EBITDA to Consolidated Net Income ( Thousands) 12-Months FY 2012 FY 2013 FY 2014 FY 2015 Ended 6/30/16 Total Adjusted EBITDA Exploration & Production Adjusted EBITDA…
  54. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 54
    National Fuel Gas Company Appendix Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ( Thousands) FY 2016 FY 2017 FY 2012 FY 2013 FY 2014 FY 2015 Forecast Forecast Capital Expenditures from…
  55. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 55
    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 Twelve Months Ended…
  56. Q3 2016 Fiscal Update – National Fuel Gas Co. – slide 56
    National Fuel Gas Company Appendix Reconciliation of Exploration & Production Segment Operating Expenses by Division (000s unless noted otherwise) Twelve Months Ended Twelve Months Ended September 30, 2015 September 30, 2014…

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