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3Q 2018 Investor Presentation – National Fuel Gas Co.

National Fuel Gas Co. · Aug 2, 2018 · 60 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. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 1
    Investor Presentation Q3 Fiscal 2018 Update August 2, 2018
  2. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 2
    NFG: A Diversified, Integrated Natural Gas Company Developing our large, high quality acreage position in Marcellus & Utica Upstream shales E&P 785,000 445 MMcf/day Net acres in Net Appalachian natural Appalachia gas production…
  3. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 3
    Why National Fuel Strategy For Creating Long-term, Sustainable Shareholder Value 1 Geographic and operational integration lowers costs and drives financial efficiencies Unique Integration Significant base of stable, regulated earnings…
  4. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 4
    Benefits of Integration Unique Geographic and Operational Integration Drives Synergies that Maximize Shareholder Value Utility and Pipeline & Storage Upstream and Midstream Benefits of Operational Efficiencies Strategic Development NFG…
  5. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 5
    Diversified, Balanced Earnings and Cash Flows Adjusted Operating Results ( per share)(1) Adjusted EBITDA ( millions)(2) 4.00 1,000 Decrease in EBITDA 3.30 to 3.60 primarily due to roll off 3.30 3.30 to 3.40 of favorable hedges 777…
  6. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 6
    Near-Term Growth Strategy Exploration & Production Gathering Pipeline and Storage Utility 3-rig program designed to grow Pursue and execute opportunities for Continue to invest in pipeline Marcellus and Utica production and…
  7. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 7
    Disciplined, Flexible Capital Allocation Capital Expenditures by Segment ( millions)(1) (2) Exploration & Production 1,250 Gathering 1,001 Pipeline & Storage 1,000 970 Utility 745-845 750 557 603 585-645 460-500 500 455…
  8. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 8
    Maintaining Strong Balance Sheet & Liquidity Net Debt / Adjusted EBITDA(1) Capitalization 2.51 x 2.45 x 2.48 x 2.18 x 1.72 x Total Equity Total Debt 48% 52% 2014 2015 2016 2017 TTM 4.0 Billion Total Capitalization Fiscal…
  9. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 9
    Dividend Track Record 48 Years 116 Years 1.70 per share 3.2% yield(1) Consecutive Dividend Increases Consecutive Payments 2.9 Billion Dividend payments since 1970 0.19 per share Annual Rate at Fiscal Year End (1) As…
  10. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 10
    Q3 Fiscal 2018 Financial Highlights 11
  11. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 11
    Third Quarter Fiscal 2018 Results and Drivers Operating Results (/share)(1) Q3 FY 2017 Q3 FY 2018 Drivers 0.73 0.69 Oil and Gas Pricing(2) Utility 0.05 Oil Prices Utility 0.05 53.02 58.74 2.94 2.43 Natural Gas Prices…
  12. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 12
    Impact of Federal Tax Reform Exploration & Production and Gathering Non-Rate Positive ongoing earnings impact expected from reduction in federal income tax rate from 35% to 21% Regulated (blended 24.5% in FY 2018) Segments…
  13. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 13
    Earnings Guidance FY2018 Earnings Guidance(1) FY2019 Earnings Guidance Key Guidance Drivers 3.30 to 3.40 /share 3.30 to 3.60 /share Non-regulated Seneca Net Production: 210 to 230 Bcfe Production & Gathering Throughput Businesses…
  14. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 14
    Exploration & Production and Gathering Overview Seneca Resources Company, LLC National Fuel Gas Midstream Company, LLC 15
  15. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 15
    E&P and Gathering 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…
  16. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 16
    E&P and Gathering Growing Production within Disciplined Capital Program E&P Net Capital Expenditures(1) ( millions) Senecas Near-term Operational Plan 600 Appalachia West Coast (California) Appalachia Natural Gas 460-500 3-rig…
  17. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 17
    E&P and Gathering Significant Appalachian Acreage Position Western Development Area (WDA) Fee Acreage Lease Acreage Current gross production: 322 MMcf/d EDA - 70,000 Acres Large inventory of high quality Marcellus WDA -…
  18. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 18
    E&P and Gathering Western Development Area Marcellus Core Acreage vs. Utica Appraisal Trend(1) Significant multi-zone drilling inventory economic at 2.00 /Mcf Marcellus Shale: 600+ well locations remaining / 200,000 acres Area of…
  19. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 19
    E&P and Gathering WDA Utica Appraisal Results and Initial Type Curve WDA Utica Appraisal Update WDA-CRV Type Curves Wells(1) Normalized to 8,000' Tested / producing from 10 Utica wells in WDA-CRV WDA Type Utica Utica Curve Type…
  20. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 20
    E&P and Gathering Transitioning to Utica Development in CRV WDA Utica Development Will Utilize Existing Pad, Water, and Gathering Infrastructure to Drive Economics WDA Utica Transition Plan WDA-CRV Marcellus WDA-CRV Utica (Depth…
  21. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 21
    E&P and Gathering 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 / 36,220 HP of…
  22. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 22
    E&P and Gathering WDA Development Consolidated Economics Leveraging Existing Gathering Infrastructure Enhances Consolidated Returns WDA Well Costs(1) WDA EURs WDA Consolidated Economics Total cost per well expected 60-70% EUR…
  23. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 23
    E&P and Gathering WDA Firm Transportation and Sales Capacity WDA Exit Capacity Supports Long-term Production Growth and Protects Consolidated Returns WDA Gas Marketing Strategy WDA Contracted Firm Transport and Sales Volumes…
  24. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 24
    E&P and Gathering Eastern Development Area EDA Highlights EDA Acreage 70,000 Acres 1 DCNR Tract 007 (Tioga Co., Pa) 1 Utica and 1 Marcellus producing well Utica 30-day IP = 15.8 MMcf/d Utica development resumed in third…
  25. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 25
    E&P and Gathering 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 Existing Line…
  26. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 26
    E&P and Gathering EDA Utica: Tioga County Development Utica Development in Tioga County Tract 007 Development Resumed in Q3 FY18 Inventory: 47 locations economic at 1.75 /Mcf Tract 007 Utica Appraisal Well Results vs. Industry…
  27. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 27
    E&P and Gathering 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…
  28. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 28
    E&P and Gathering Long-term Contracts Supporting Appalachian Growth Seneca continues to layer-in firm sales contracts with attractive realizations at regional pricing points to lock-in drilling economics and minimize spot exposure…
  29. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 29
    E&P and Gathering Near-term Firm Sales Provide Market & Price Certainty Net Contracted Firm Sales Volumes (Dth per day) Contracted Index Price Differentials ( per Dth)(1) Fixed Price Dawn 512,500 512,500 485,500 NYMEX…
  30. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 30
    E&P and Gathering California Oil Stable Oil Production Minimal Capital Investment Steady Free Cash Flow 1 FY17 Daily Production Location Formation Production Method (net Boe/d) 1 East Coalinga Temblor Primary 570 2 North…
  31. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 31
    E&P and Gathering California Capital Expenditures vs. Production West Division Annual Capital Expenditures (MM)(1) West Division Average Net Daily Production (BOE/D) Sespe Sale 9,674 9,341 900 boe/d(2) 57 8,863 8,200 7,800…
  32. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 32
    E&P and Gathering Future Development Focused on Midway Sunset North Midway Sunset Economics North MWSS MWSS Project IRRs at 65 /Bbl(1) Sec. 17N Acreage 84% 56% 47% Pioneer NMWSS & Sec. 17N Pioneer SMWSS South MWSS…
  33. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 33
    E&P and Gathering Fiscal 2018 Production 39 Bcf Protected by Firm Sales for Remainder of Year 34 Bcf locked-in realizing net 2.40/Mcf (1) 5 Bcf of additional basis protection 200 4.2 Bcfe 175-180 Bcfe 5 Bcf (2) 3.5 +/- Bcf…
  34. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 34
    E&P and Gathering Fiscal 2019 Production 176 Bcf of Appalachian Production Protected by Firm Sales 140 Bcf locked-in realizing net 2.44/Mcf (1) 36 Bcf of additional basis protection 240 210 230 Bcfe 17 Bcfe 200 27+/- Bcf 72%…
  35. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 35
    E&P and Gathering Strong Hedge Book Natural Gas Swap & Fixed Physical Sales Contracts (Millions MMBtu) Crude Oil Swap Contracts (Thousands Bbls) 2,500 250 NYMEX Swaps Dawn Swaps Fixed Price (1) NYMEX (WTI) Brent Physical Sales…
  36. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 36
    E&P and Gathering Seneca Operating Costs Appalachia LOE & Gathering California LOE Total Seneca Cash OpEx /Mcfe /Boe /Mcfe 17.46 17.80 17.60 1.47 1.39 0.71 0.70 0.68 0.17 1.32 0.14 0.14 0.11 0.10 0.07 (1) 0.34 0.33 0.30…
  37. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 37
    Pipeline and Storage Overview National Fuel Gas Supply Corporation Empire Pipeline, Inc. 38
  38. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 38
    Pipeline & Storage Pipeline & Storage Segment Overview National Fuel Gas Supply Corporation Contracted Capacity(1): Empire Pipeline Firm Transportation: 3,157 MDth per day Firm Storage: 68,042 Mdth (fully subscribed) Rate…
  39. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 39
    Pipeline & Storage FM100 Project Provides Consolidated Benefit Project expected to provide long term earnings 300,000 Dth/d of new transportation capacity from uplift to Seneca, Supply Corp. and Gathering WDA and EDA acreage…
  40. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 40
    Pipeline & Storage FM100 Project Expansion component of pending FM100 Project will provide significant incremental revenues for Supply Target In-Service: late calendar year 2021 Facilities (all in Pennsylvania): Approximately 30…
  41. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 41
    Pipeline & Storage Empire North Project Fully Subscribed Project will Provide 205,000 Dth/day of Incremental Firm Transportation Target In-Service: Second half of fiscal 2020 Est. Capital Cost: 145 million Est. Annual Revenues:…
  42. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 42
    Pipeline & Storage Northern Access Project Status National Fuel Remains Committed to Building the Northern Access Project Capacity: 490,000 Dth/day Total Expected Cost: 500MM (75.5MM spent to date, with minimal remaining…
  43. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 43
    Pipeline & Storage Continued Expansion of the NFG Supply System Line N Expansion Opportunities Line N to Monaca Project Project: Firm transportation service to a new ethylene cracker facility being built by Shell Chemical…
  44. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 44
    Pipeline & Storage 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…
  45. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 45
    Utility Overview National Fuel Gas Distribution Corporation 46
  46. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 46
    Utility 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…
  47. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 47
    Utility 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 Requirement:…
  48. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 48
    Utility Utility: Strong Commitment to Safety Capital Expenditures ( millions)(1) Capital Expenditures for Safety 125.0 Total Capital Expenditures 98.0 100.0 94.4 90-100M 80-90M 80.9 75.0 61.8 63.6 54.4 50.0 The…
  49. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 49
    Utility Accelerating Pipeline Replacement & Modernization Utility Mains by Material Miles of Utility Main Pipeline Replaced(1) Wrought 161 Iron Bare Coated 128 135 Cast Iron NY 112 115 9,723 miles Plastic Bare…
  50. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 50
    Utility A Proven History of Controlling Costs O&M Expense ( millions) 250 All Other O&M Expenses O&M Pension Expense O&M Uncollectible Expense 200 195 195 200 193 189 9 6 7 10 7 28 22 19 33 23 150 100 163 160 167 169…
  51. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 51
    Appendix 52
  52. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 52
    Appendix Hedge Positions and Prices Natural Gas Volumes in thousand MMBtu; Prices in /MMBtu Fiscal 2018 (last 3 mos.) Fiscal 2019 Fiscal 2020 Fiscal 2021 Fiscal 2022 Avg. Avg. Avg. Avg. Avg. Volume Price Volume Price Volume…
  53. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 53
    Appendix Appalachia Drilling Program Economics Large Inventory of Marcellus and Utica Location Economic Below 2.00/MMBtu(1) (2) Internal Rate of Return % Realized (1) Locations Completed Price Anticipated Remaining Lateral EUR…
  54. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 54
    Appendix 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…
  55. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 55
    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…
  56. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 56
    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 6/30/18 Total Adjusted EBITDA Exploration & Production…
  57. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 57
    Appendix Non-GAAP Reconciliations Adjusted EBITDA, by Segment Reconciliation of Adjusted EBITDA to Net Income, by Segment ( Thousands) FY18 FY17 12-Months ( Thousands) FY18 FY17 12-Months FY 2017 FYTD FYTD Ended 6/30/18 FY 2017…
  58. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 58
    Appendix Non-GAAP Reconciliations Adjusted Operating Results Three Months Ended Nine Months Ended June 30, June 30, (in thousands except per share amounts) 2018 2017 2018 2017 Reported GAAP Earnings 63,025 59,714 353,527 237,906…
  59. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 59
    Appendix Non-GAAP Reconciliations Capital Expenditures Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ( Thousands) FY 2018 FY 2019 FY 2014 FY 2015 FY 2016 FY 2017 Forecast Forecast Capital…
  60. 3Q 2018 Investor Presentation – National Fuel Gas Co. – slide 60
    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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