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1Q 2018 Fiscal Update – National Fuel Gas Co.

National Fuel Gas Co. · Feb 1, 2018 · 50 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. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 1
    Investor Presentation Q1 Fiscal 2018 Update February 1, 2018
  2. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 2
    NFG: A Diversified Natural Gas Company Developing our large, high quality acreage position in Marcellus & Utica Upstream shales with a focus on returns E&P 785,000 Net acres in Appalachia Expanding and modernizing pipeline…
  3. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 3
    Integrated Across the Natural Gas Value Chain Unique Geographic and Operational Integration Drives Synergies that Maximize Shareholder Value Utility and Pipeline & Storage Upstream and Midstream Benefits of Operational Synergies…
  4. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 4
    Leveraging Our Unique Assets for Future Growth Grow Marcellus and Utica production at a 10%+ CAGR over next 3 years WDA Development (1-rig program) Exploration & Return to developing 100% NRI Seneca wells post-JDA in FY18 Production…
  5. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 5
    Balanced Earnings and Cash Flows Adjusted EBITDA by Segment ( millions)(1) 1,500 Exploration & Production Gathering Pipeline & Storage Utility Energy Marketing & Other 1,000 953 843 789 777 747 539 422 364 361 338 500 64…
  6. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 6
    Disciplined, Flexible Capital Allocation Capital Expenditures by Segment ( millions)(1) (2) 1,250 Exploration & Production Gathering Pipeline & Storage 970 1,001 Utility 1,000 Energy Marketing & Other 750 557 603 560 - 650…
  7. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 7
    Maintaining Strong Balance Sheet & Liquidity Net Debt / Adjusted EBITDA(1) Capitalization 2.51 x 2.61 x 2.45 x 2.18 x 1.72 x Total Equity Total Debt 47% 53% 2014 2015 2016 2017 TTM 3.9 Billion Total Capitalization Fiscal…
  8. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 8
    Committed to Growing the Dividend Annual Dividend Rate ( /share) NFGs Dividend Consistency 2.00 Consecutive 115 Years Payments 1.50 Consecutive 47 Years Increases 1.00 Current Dividend 1.66 per Share Rate 0.50 Current…
  9. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 9
    Upstream Overview Exploration & Production 10
  10. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 10
    Upstream Growing Production within Disciplined Capital Program E&P Net Capital Expenditures(1) ( millions) Senecas Near-term Operational Plan 600 557 Appalachia West Coast (California) Appalachia Natural Gas 2-rig development…
  11. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 11
    Upstream Proved Reserves Total Proved Reserves (Bcfe) 3-Year Average F&D Cost (/Mcfe) 3,000 2.00 Natural Gas (Bcf) 1.67 Crude Oil (MMbbl) 1.50 1.38 1.32 2,500 2,343 2,154 1.12 0.98 1.00 2,000 1,914 1,849 1,549 0.50…
  12. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 12
    Upstream Significant Appalachian Acreage Position Western Development Area (WDA) Fee Acreage Lease Acreage EDA - 70,000 Acres Current gross production: 275 MMcf/d WDA - 715,000 Acres Large inventory of high quality Marcellus…
  13. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 13
    Upstream Western Development Area WDA Core Acreage 200,000 Acres Significant multi-zone drilling inventory economic at 2.00 /Mcf Marcellus Shale : 640 well locations Utica Shale: 125 to 500+ well locations (2) Fee acreage /…
  14. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 14
    Upstream WDA Utica Appraisal Results and Initial Type Curve WDA Utica Appraisal Update WDA-CRV Type Curves(1) 7,500 ft. Laterals Tested / producing from 8 Utica wells in WDA-CRV WDA-CRV Utica WDA-CRV Marcellus 8,000 Higher…
  15. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 15
    Upstream Transitioning to Utica Development in CRV WDA Utica Development Will Reuse Existing Pad, Water, and Gathering Infrastructure to Drive Economics FY 18 WDA Utica Transition Plan WDA-CRV Marcellus WDA-CRV Utica (Depth 7,000…
  16. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 16
    Upstream Eastern Development Area EDA Highlights EDA Acreage 70,000 Acres 1 DCNR Tract 007 (Tioga Co., Pa) 1 Utica and 1 Marcellus producing well 1 Utica 30-day IP = 15.8 MMcf/d Utica development expected to begin in fiscal…
  17. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 17
    Upstream EDA Marcellus: Lycoming County Development Marcellus Development in Lycoming County has Resumed in Anticipation of Atlantic Sunrise Prolific Marcellus acreage with peer leading well results 66 Marcellus wells producing…
  18. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 18
    Upstream EDA Utica: Tioga County Development Utica Development in Tioga County Tract 007 Expected to Begin in 2H FY18 Inventory: 50 locations economic at 1.90 /Mcf Tract 007 Utica Appraisal Well Results vs. Industry Targeting to…
  19. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 19
    Upstream Appalachia Drilling Program Economics Large Inventory of Marcellus and Utica Location Economic Below 2.00/MMBtu(1) Internal Rate of Return % (2) Realized (1) Locations Completed Price Anticipated Remaining Lateral EUR /…
  20. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 20
    Upstream Long-term Contracts Supporting Appalachian Production Seneca continues to layer-in firm sales contracts with attractive realizations at regional pricing points to lock-in drilling economics and minimize spot exposure as…
  21. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 21
    Upstream Firm Transportation Commitments Volume Delivery Demand Charges Production Source Gas Marketing Strategy (Dth/d) Market (/Dth) Firm Sales Contracts Currently In-Service Northeast Supply EDA -Tioga County Canada…
  22. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 22
    Upstream Firm Sales Provide Market for Appalachian Production Net Contracted Firm Sales Volumes (Dth per day) Contracted Index Price Differentials ( per Dth)(1) Fixed Price 508,100 504,100 Dawn 465,100 456,300 NYMEX 451,400…
  23. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 23
    Upstream California Oil Stable Oil Production Minimal Capital Investment Steady Free Cash Flow FY17 Gross Production Daily 1 Location Formation Method Production (Boe/d) East 1 Temblor Primary 711 Coalinga 2 North Lost…
  24. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 24
    Upstream California Capital Expenditures vs. Production West Division Annual Capital Expenditures (MM)(1) West Division Average Net Daily Production (BOE/D) 9,699 9,674 9,341 9,100 8,863 83 57 38 38 20-30 2014 2015…
  25. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 25
    Upstream Future Development Focused on Midway Sunset North Midway Sunset Economics North MWSS MWSS Project IRRs at 60 /Bbl(1) Sec. 17N Acreage 85% 50% 40% Pioneer NMWSS & Sec. 17N Pioneer SMWSS South MWSS Modest…
  26. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 26
    Upstream Strong Hedge Book Natural Gas Swap & Fixed Physical Sales Contracts (Millions MMBtu) Crude Oil Swap Contracts (Thousands Bbls) 200 3,000 FY 18 Nat Gas NYMEX Swaps FY 18 Crude Oil NYMEX (WTI) 175 62% Hedged(2) Dawn…
  27. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 27
    Upstream Fiscal 2018 Production 115 Bcf Protected by Firm Sales for Remainder of Year 83 Bcf locked-in realizing net 2.50/Mcf (1) 250 32 Bcf of additional basis protection 200 180 195 Bcfe 15 Bcfe 17.5+/- Bcf 73% of oil 150…
  28. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 28
    Upstream Seneca Operating Costs Appalachia LOE & Gathering California LOE Total Seneca Cash OpEx /Mcfe /Boe /Mcfe 1.52 1.47 17.46 17.50 1.43 0.73 0.71 0.70 0.17 0.17 14.83 0.15 0.14 0.11 0.09 0.39 (1) (1) 0.34 0.33 (2)…
  29. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 29
    Midstream Businesses 30
  30. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 30
    Midstream Midstream Businesses Midstream Businesses System Map Midstream Businesses Adjusted EBITDA (MM)(1) Pipeline & Storage Segment Gathering Segment 278 275 273 Empire Pipeline, Inc. 250 257 FERC-Regulated NFG Supply…
  31. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 31
    Midstream Integrated Development WDA Gathering System Gathering System Build-Out Tailored to Accommodate Senecas WDA Development Clermont Gathering System Map Current System In-Service 70 miles of pipe / 31,220 HP of compression…
  32. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 32
    Midstream Integrated Development EDA Gathering Systems Gathering Segment Supporting Senecas EDA Production & Future Development Wellsboro Gathering System Total Investment (to date): 7 million FY 2018 Capital Expenditures: 10 MM…
  33. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 33
    Midstream Infrastructure Expansions Bolster Supply Diversity Expanding Our Pipelines to Assure Supply Security for New York Markets Integration of Senecas WDA Production Into Broader Interstate System Northern Access 2015…
  34. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 34
    Midstream Northern Access Project Status National Fuel Remains Committed to Building the Northern Access Pipeline Project Regulatory / Appeal Status US Court of Appeals for the 2nd Circuit: On April 21, 2017, NFG filed appeal of…
  35. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 35
    Midstream Empire System Expansion Foundation Shipper Agreement Provides Major Commitment Needed for the Empire North Project Target In-Service: November 2019 System: Empire Pipeline Estimated Cost: 141 million Receipt Point:…
  36. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 36
    Midstream Continued Expansion of the NFG Supply System Future NFG Supply System Expansions Line D Expansion Project Project Status: In-service on November 1, 2017 Contracted Capacity: 77,500 Dth/d from an interconnect with TGP…
  37. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 37
    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% 9%…
  38. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 38
    Downstream Overview Utility Energy Marketing 39
  39. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 39
    Downstream New York & Pennsylvania Service Territories New York Total Customers(1): 530,400 ROE: 8.7% (NY PSC Rate Case Order, April 2017) Rate Mechanisms: o Revenue Decoupling o Weather Normalization o Low Income Rates o…
  40. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 40
    Downstream New York Rate Case Outcome On April 20, 2017, the New York Public Service Commission issued a Rate Order relating to NFG Distributions rate case (No. 16-G-0257) filed in April 2016. Rate Order Summary: Revenue…
  41. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 41
    Downstream Utility: Shifting Trends in Customer Usage Usage Per Account (1) Residential (Mcf) Industrial (MMcf) 150 40 125 35 100 30 75 25 50 20 12-Months Ended December 31 42 (1) Weighted Average of New York…
  42. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 42
    Downstream Utility: Strong Commitment to Safety Capital Expenditures ( millions)(1) 125.0 Capital Expenditures for Safety Total Capital Expenditures 98.0 95.0 100.0 94.4 88.8 80.9 75.0 61.8 63.6 54.4 49.8 50.0 25.0…
  43. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 43
    Downstream Accelerating Pipeline Replacement & Modernization Utility Mains by Material Miles of Utility Main Pipeline Replaced Wrought Iron 161 Bare Coated Cast Iron 128 135 NY 115 9,723 miles 112 Plastic Bare…
  44. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 44
    Downstream A Proven History of Controlling Costs O&M Expense ( millions) 250 All Other O&M Expenses O&M Pension Expense O&M Uncollectible Expense 200 195 196 200 193 189 9 6 7 10 7 28 22 21 33 23 150 100 163 160 167 168…
  45. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 45
    Appendix 46
  46. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 46
    Appendix Hedge Positions and Prices Natural Gas Volumes in thousand MMBtu; Prices in /MMBtu Fiscal 2018 (last 9 mos.) Fiscal 2019 Fiscal 2020 Fiscal 2021 Fiscal 2022 Avg. Avg. Avg. Avg. Avg. Volume Price Volume Price Volume…
  47. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 47
    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…
  48. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 48
    Appendix Non-GAAP Reconciliations Adjusted EBITDA Reconciliation of Adjusted EBITDA to Consolidated Net Income ( Thousands) 12-Months FY 2014 FY 2015 FY 2016 FY 2017 Ended 12/31/17 Total Adjusted EBITDA Exploration & Production…
  49. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 49
    Appendix Non-GAAP Reconciliations Capital Expenditures Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ( Thousands) FY 2018 FY 2014 FY 2015 FY 2016 FY 2017 Forecast Capital Expenditures…
  50. 1Q 2018 Fiscal Update – National Fuel Gas Co. – slide 50
    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, 2017…

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