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Q4 Fiscal 2016 Update – National Fuel Gas Co.

National Fuel Gas Co. · Nov 3, 2016 · 57 slides

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Slides

  1. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 1
    Investor Presentation Q4 Fiscal 2016 Update November 3, 2016 1
  2. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 2
    Quality Assets - Exceptional Location - Unique Integration Upstream 1.8 Tcfe Proved Reserves (1) 785,000 net acres in Appalachia - mostly held in fee with no royalty 3 million Bbls per year of crude oil production in California…
  3. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 3
    The National Fuel Value Proposition 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 firm…
  4. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 4
    Balanced Earnings and Cash Flows Adjusted EBITDA by Segment ( millions) (1) 1,500 Exploration & Production Segment Gathering Segment Pipeline & Storage Segment Utility Segment Energy Marketing & Other 1,000 953 852 843 789…
  5. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 5
    Flexibility to Responsibly Deploy Capital Capital Expenditures by Segment ( millions) Exploration & Production Segment (1) 1,500 CapEx Reconciliation for JDA Proceeds Gathering Segment (millions) E&P Total NFG Pipeline & Storage…
  6. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 6
    Strong Balance Sheet & Liquidity Debt/Adjusted EBITDA Capitalization 2.66 x 2.27 x 1.89 x 1.89 x Total Equity 1.77 x 42% Total Debt 58% 3.6 Billion Total Capitalization 2012 2013 2014 2015 2016 Fiscal Year End as of…
  7. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 7
    Dividend Track Record Annual Dividend Rate ( /share) NFGs Dividend Consistency 2.00 Consecutive 114 Years Payments 1.50 Consecutive 46 Years Increases 1.00 Current Dividend 1.62 per Share Rate 0.50 Current Dividend 3.1%…
  8. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 8
    FY 2017 Capital Budget and Operating Plan Capital Expenditures by Segment (MM) FY2017 Operating Plan Highlights 1,000 Exploration & Production Segment (1) Upstream Gathering Segment Appalachia: 1-rig program / daylight-only frac…
  9. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 9
    Appalachia Overview Exploration & Production Gathering Pipeline & Storage 10
  10. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 10
    Integrated Vision for Long-term Growth in Appalachia Exploration & Production 1 Long-term, return-driven approach to developing vast Marcellus & Utica acreage position Gathering 3 2 Northern Access projects to transport 660…
  11. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 11
    Upstream Significant Appalachian Acreage Position Western Development Area (WDA) Fee Acreage Lease Acreage 139 wells able to produce 290 MMcf/d EDA - 70,000 Acres Large inventory of high quality Marcellus WDA - 715,000 Acres…
  12. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 12
    Upstream Marcellus Shale: Western Development Area 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 Fee acreage provides…
  13. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 13
    Upstream WDA Clermont / Rich Valley Development CRV Development Summary 117 wells able to produce 280 MMcf/d Dropped to 1 rig in March 2016 (down from 3 rigs at start of fiscal 2016) Rig additions planned to meet firm…
  14. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 14
    Upstream Seneca WDA Joint Development Agreement On June 13, 2016, Seneca announced the extension of asset-level joint development agreement with IOG CRV Marcellus Transaction Capital, LLC, an affiliate of IOG Capital, LP, and funds…
  15. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 15
    Upstream Marcellus Shale: Eastern Development Area EDA Highlights EDA Acreage 70,000 Acres 1 Covington & DCNR Tract 595 (Tioga Co., Pa.) Marcellus locations fully developed 92 wells(1) with 80 MMcf/d productive capacity 3 70-80…
  16. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 16
    Upstream Best in Class Marcellus Well Costs Marcellus Drilling Cost per Foot Marcellus Completion Cost per Stage (000s) 300 275 300 248 208 200 174 200 153 148 120 110 109 91 100 100 67 58 0 0 2012 2013 2014 2015 2016…
  17. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 17
    Upstream Utica Shale Opportunities 1st Clermont Rich Valley Utica Well Test On Trend with Northeast Pa. Results Northeast Pa. Utica Well Results WDA CRV Test Results EDA Tract 007 Test Results Estimated EUR/1,000 ft(1) 2.6 Bcf…
  18. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 18
    Upstream WDA Utica Appraisal WDA UTICA TESTING TIMELINE Next Steps Pad Wells Status Test Timing (FY) Plan to drill 8 additional Utica appraisal 1 E09-M 1 Producing Initial On-line wells off Marcellus development pads 2 NF-A 1…
  19. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 19
    Midstream Midstream Businesses Midstream Businesses System Map Midstream Businesses Adjusted EBITDA (MM) Pipeline & Storage Segment Gathering Segment Empire Pipeline, Inc. 278 FERC-Regulated 250 257 NFG Supply Corp.…
  20. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 20
    Midstream Integrated Development WDA Gathering System 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…
  21. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 21
    Midstream Integrated Development EDA Gathering Systems Gathering Segment Supporting Senecas EDA Production & Future Development Covington Gathering System In-Service Date: November 2009 Capital Expenditures (to date): 33 Million…
  22. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 22
    Midstream Northern Access Expansions for Seneca Resources Expanding Our Interstate Pipelines to Deliver Senecas WDA Production to Canada Northern Access 2015 Customer: Seneca Resources (NFG) In-Service: November 2015(1) System:…
  23. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 23
    Midstream Northern Access Expansions for Seneca Resources Northern Access 2016 to Increase Transport Capacity Out of WDA by 490,000 Dth/d by FY18 Northern Access 2016 Customer: Seneca Resources (NFG) In-Service: Now targeting…
  24. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 24
    Midstream Recent 3rd Party Expansions Highly Successful Expansions for 3rd Parties since 2010 3rd Party Expansion Capital Cost (MM) 1,442 MDth/d 387 million since Northern since FY2010 72 FY 2010 Access 2012 +320 MDth/d 183 132…
  25. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 25
    Midstream Empire System Expansion Planned Empire Expansion Will Provide Optionality for Northeast Pennsylvania Producers Empire North Expansion Project Target In-Service: Fiscal 2019 System: Empire Pipeline Target Market: o…
  26. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 26
    Midstream 2015 Pipeline Expansion Projects In-Service Westside Expansion & Modernization 2015 Completed Pipeline Expansion Projects In-Service (October 2015) Total Cost: 82.3 million o Expansion: 43.3 million o Modernization:…
  27. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 27
    Midstream Pipeline & Storage Customer Mix Customer Transportation by Shipper Type(1) Affiliated Customer Mix (Contracted Capacity) 4.1 MMDth/d Affiliated Non-Affiliated Outside End User Pipeline 2% 6% 40% Marketer 54% 10%…
  28. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 28
    California Overview Exploration & Production 29
  29. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 29
    Upstream California Stable Oil Production Minimal Capital Investment Free Cash Flow Positive Production Location Formation Method 1 1 East Coalinga Tremblor Primary Tulare & Primary/ 2 North Lost Hills Etchegoin Steamflood 3…
  30. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 30
    Upstream California Average Daily Net Production 35-45 Million Annual Capital Spending Needed to Keep CA Production Flat California Annual Capital Expenditures (MM) California Average Net Daily Production (BOE/D) 9,699 9,674…
  31. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 31
    Upstream Economic Development Focused on Midway Sunset North Midway Sunset Economics North MWSS MWSS Project IRRs at 50/Bbl(1) Sec. 17N Acreage 56% 34% 23% Pioneer NMWSS SMWSS Farm-in Projects South MWSS Modest…
  32. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 32
    Upstream Strong Margins Support Significant Free Cash Flow West Division Adjusted EBITDA per BOE(1) Trailing 12-months Ended 9/30/16 Non-Steam Fuel LOE 11.60 Steam Fuel 3.23 California Margins (per BOE) G&A 4.49 Average…
  33. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 33
    Production and Marketing Exploration & Production 34
  34. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 34
    Upstream Proved Reserves & Development Costs Total Proved Reserves (Bcfe) Natural Gas (Bcf) 3,000 Crude Oil (MMbbl) Fiscal 2016 Proved Reserves Reconciliation (Bcfe) 2,500 2,344 Proved Reserves - FYE '15 2,344 FY '16…
  35. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 35
    Upstream Seneca Production Seneca Resources Net Production (Bcfe) 250 (1) Appalachia Joint Development Agreement West Coast (California) tempers net production growth in FY17 200 Gross production expected to grow 10% 160.5…
  36. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 36
    Upstream Long-Term Contracts Supporting Appalachian Growth Gross Firm Sales and Firm Transport Volumes Under Contract (Thousands Dth per Day) Atlantic Sunrise now 1,000 expected July 2018 Northern Access on track for Nov. 2017…
  37. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 37
    Upstream Firm Transportation Commitments Volume Delivery Demand Charges Production Source Gas Marketing Strategy (Dth/d) Market (/Dth) Currently In-Service Firm Sales Contracts Northeast Supply EDA -Tioga County 50,000…
  38. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 38
    Upstream Firm Sales Provide Market for Appalachian Production FY 17 Net Contracted Volumes (Dth per day) Contracted Index Price Differentials ( per Dth)(1) 355,800 345,400 337,900 325,600 Gross vs. Net Firm Sales Volumes…
  39. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 39
    Upstream Strong Hedge Book in Fiscal 2017 Natural Gas Swap & Fixed Physical Sales Contracts (Millions MMBtu) 150.0 120.5 Fiscal 2017 Natural Gas Production 83% hedged(1) at 3.38 per MMBtu 100.0 56.2 83.1 32.1 50.0 22.1…
  40. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 40
    Upstream Fiscal 2017 Production and Price Certainty FINANCIAL HEDGE + FIRM SALE = PRICE CERTAINTY 116 Bcf realizing net 3.10/Mcf (1) 4 Bcf of Additional Basis Protection 145 170 Bcfe 20-22 Bcfe 4 Bcf(2) 5 - 28 Bcf(3) 116…
  41. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 41
    Upstream Operating Costs Appalachia LOE & Gathering California LOE Seneca Resources Consolidated /Mcfe /Boe /Mcfe 1.70 0.81 1.52 1.58 0.73 17.73 0.22 0.71 16.17 0.17 0.20 0.22 14.83 0.42 0.14 0.12 (1) 0.39 (1) 0.38 (2)…
  42. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 42
    Downstream Overview Utility Energy Marketing 43
  43. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 43
    Downstream New York & Pennsylvania Service Territories New York Total Customers(1): 528,312 ROE: 9.1% (NY PSC Rate Case Settlement, May 2014) Rate Mechanisms: o Earnings Sharing o Revenue Decoupling o Weather Normalization…
  44. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 44
    Downstream New York Rate Case On April 28, 2016, National Fuel Gas Distribution Corporation filed a request with the New York Public Service Commission Background (NY PSC) to amend its tariff and increase its base rates. National…
  45. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 45
    Downstream Utility: Shifting Trends in Customer Usage Usage Per Account (1) Residential (Mcf) Industrial (MMcf) 106 40 104 35 102 100 30 98 96 25 94 92 20 12-Months Ended September 30 46 (1) Weighted Average of…
  46. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 46
    Downstream Utility: Strong Commitment to Safety Capital Expenditures ( millions) 150.0 Capital Expenditures for Safety Recent increase due to 60MM upgrade Total Capital Expenditures of the Utilitys Customer Information System and…
  47. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 47
    Downstream A Proven History of Controlling Costs Capital Expenditures ( millions) 250 All Other O&M Expenses O&M Pension Expense O&M Uncollectible Expense 200 200 193 189 9 177 178 10 7 9 6 28 23 20 33 16 150 100 152 152…
  48. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 48
    Appendix 49
  49. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 49
    Appendix Seneca Resources Capital Expenditures by Division ( millions) Appalachia (1) 800 (2) West Coast (California) 694 603 600 557 533 400 631 520 428 500 180-220 200 99 145-175 105 61 63 83 57 0 38 35-45…
  50. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 50
    Appendix Marcellus Operated Well Results 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 107(1) 6.9 5.2…
  51. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 51
    Appendix Marcellus Shale Program Economics 1,150 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 Delivery…
  52. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 52
    Appendix Hedge Positions Natural Gas Volumes in thousand MMBtu; Prices in /MMBtu Fiscal 2017 Fiscal 2018 Fiscal 2019 Fiscal 2020 Fiscal 2021 Avg. Avg. Avg. Avg. Avg. Volume Price Volume Price Volume Price Volume Price Volume…
  53. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 53
    Appendix Comparable GAAP Financial Measure Slides & Reconciliations This presentation contains certain non-GAAP financial measures. For pages that contain non-GAAP financial measures, pages containing the most directly comparable…
  54. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 54
    Appendix Non-GAAP Reconciliations Adjusted EBITDA Reconciliation of Adjusted EBITDA to Consolidated Net Income ( Thousands) FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Total Adjusted EBITDA Exploration & Production Adjusted EBITDA…
  55. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 55
    Appendix Non-GAAP Reconciliations Capital Expenditures Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ( Thousands) FY 2017 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Forecast Capital Expenditures…
  56. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 56
    Appendix Non-GAAP Reconciliations E&P Adjusted EBITDA Reconciliation of Exploration & Production Adjusted EBITDA for Appalachia and West Coast divisions to Exploration & Production Segment Net Income ( Thousands) Three Months…
  57. Q4 Fiscal 2016 Update – National Fuel Gas Co. – slide 57
    Appendix Non-GAAP Reconciliations E&P Operating Expenses Reconciliation of Exploration & Production Segment Operating Expenses by Division (000s unless noted otherwise) Twelve Months Ended Twelve Months Ended September 30, 2016…

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