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Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co.

National Fuel Gas Co. · Mar 25, 2019 · 63 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. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 1
    Investor Presentation Scotia Howard Weil Energy Conference March 25-27, 2019
  2. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 2
    National Fuel is committed to the safe and environmentally conscious development, transportation, storage, and distribution of natural gas and oil resources. For additional information, please visit our corporate responsibility…
  3. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 3
    Why National Fuel Large Appalachian Footprint Driving Significant Growth 4
  4. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 4
    1 Integrated Model Enhances Shareholder Value . . . Benefits of National Fuels Geographic and Operational Integrated Structure: Upstream Integration Drives Synergies: Exploration & Operational scale Production Upstream and Midstream…
  5. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 5
    . . . and Drives Significant Organic Growth Opportunities Near Term Strategy Leverages Integration Across the Value Chain Exploration & Pipeline & Gathering Utility Production Storage Integrated Upstream and Midstream development…
  6. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 6
    2 Nearly 50 Years of Consecutive Dividend Increases 48 Years 116 Years 1.70 per share 2.8% yield(1) Consecutive Dividend Increases Consecutive Payments 2.9 Billion Dividend payments since 1970 0.19 per share Annual…
  7. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 7
    1 3 Production and Gathering Growth of 15-20% Through 2022 E&P Production Growth Supported by Production Growth Drives Significant Firm Transportation Portfolio Increase in Gathering Revenues 400 15% Annual Growth 250 15% Annual…
  8. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 8
    L4 Leveraging Existing Infrastructure to Enhance Returns Utilization of Existing Infrastructure for Ongoing Utica Development Amplifies Consolidated Returns Utica development on Requires modest investment in Resulting in significant…
  9. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 9
    5 1 Billion+ Backlog in Pipeline & Storage Projects Empire North Line N to Monaca - 23 MM (July 2019)(1) Empire North - 145 MM (second half of fiscal 2020) FM100 - 280 MM (late calendar 2021) FM100 Companion project to…
  10. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 10
    First Quarter Fiscal 2019 Financial Highlights 11
  11. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 11
    First Quarter Fiscal 2019 Results and Drivers Adjusted Operating Results (/share)(1) Q1 FY 2018 Q1 FY 2019 Drivers 1.12 Oil and Gas Oil Prices Pricing(2) 1.02 61.70 2.72 Utility 59.79 2.61 Utility 0.30 Natural Gas…
  12. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 12
    Earnings Guidance FY2018 Adjusted Operating Results FY2019 Earnings Guidance Key Guidance Drivers 3.34 /share(1) 3.45 to 3.65 /share Non-regulated Seneca Net Production: 210 to 230 Bcfe Production & Gathering Throughput…
  13. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 13
    Exploration & Production and Gathering Overview Seneca Resources Company, LLC National Fuel Gas Midstream Company, LLC 14
  14. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 14
    E&P and Gathering Proved Reserves Total Proved Reserves (Bcfe) 3-Year Average F&D Cost (/Mcfe) 3,000 1.50 1.38 Natural Gas (Bcf) 1.32 Crude Oil (MMbbl) 2,523 1.12 2,500 2,344 0.98 2,154 1.00 1,914 0.74 2,000 1,849 0.50…
  15. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 15
    E&P and Gathering Growing Production within Disciplined Capital Program E&P Net Capital Expenditures ( millions)(1) Near-Term Growth Strategy 600 Appalachia West Coast (California) 3 rig development program, with 460-495 second…
  16. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 16
    E&P and Gathering Significant Appalachian Acreage Position Western Development Area (WDA) Average gross production(1): 327 MMcf/d WDA - 715,000 Acres EDA - 70,000 Acres Large inventory of Marcellus & Utica locations economic at…
  17. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 17
    E&P and Gathering Western Development Area Marcellus Core Acreage WDA Highlights vs. Utica Appraisal Trend(1) Area of Re-Development Large well inventory economic at 2.00 /Mcf 120 Utica locations on existing Marcellus pads…
  18. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 18
    E&P and Gathering WDA Utica Appraisal Results and Initial Type Curve WDA Utica Appraisal Update WDA-CRV Utica Wells - Normalized to 9,000 WDA-CRV Utica CurveType Curve(2) Type Utica WDA-CRV CRV Utica Average(3) Utica Average…
  19. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 19
    E&P and Gathering Transitioning to Utica Development in CRV CRV Utica Development Utilizes Existing Pad, Water, and Gathering Infrastructure to Drive Economics CRV Utica Transition Plan WDA-CRV Marcellus WDA-CRV Utica (Depth…
  20. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 20
    Limited New Infrastructure Needed to Support Production Growth Leveraging Existing Gathering, Water and Pad Infrastructure Enhances Returns WDA Well Costs(1) WDA EURs WDA Consolidated Economics Total cost per well expected 60-70%…
  21. Scotia Howard Weil Annual Energy Conference – 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 78 miles of pipe / 36,220 HP of…
  22. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 22
    E&P and Gathering WDA Firm Transportation and Sales Capacity WDA Exit Capacity Supports Long-term Production Growth and Enhances Consolidated Returns WDA Gas Marketing Strategy WDA Contracted Firm Transport and Gross Sales…
  23. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 23
    E&P and Gathering Eastern Development Area EDA Highlights EDA Acreage 70,000 Acres 1 DCNR Tract 007 (Tioga Co., Pa) Utica development resumed in third quarter fiscal 2018 43 remaining Utica locations economic at 1.84 /Mcf 1…
  24. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 24
    E&P and Gathering EDA Marcellus: Lycoming County Development Marcellus Development in Lycoming County has Resumed in Connection with Atlantic Sunrise Existing Line Producing Prolific Marcellus acreage with peer leading well…
  25. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 25
    E&P and Gathering EDA Utica: Tioga County Development Utica Development in Tioga County Tract 007 Development Resumed in Q3 Fiscal 2018 Inventory: 43 locations economic at 1.84 /Mcf Tract 007 Utica Appraisal Well Results vs.…
  26. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 26
    E&P and Gathering Integrated Development EDA Gathering Systems Gathering Segment Supporting Senecas EDA Production & Future Development Wellsboro Gathering System Total Investment (to date): 14 million FY 2019 Estimated Capital…
  27. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 27
    E&P and Gathering Long-term Contracts Supporting Appalachian Growth Seneca continues to layer-in firm sales contracts with attractive realizations to lock-in drilling economics and minimize spot exposure ahead of firm…
  28. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 28
    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 NYMEX 575,700 576,000 568,000 586,200…
  29. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 29
    E&P and Gathering California Oil Stable Oil Production Minimal Capital Investment Steady Free Cash Flow 1 FY18 Daily Production Location Formation Production Method (net Boe/d) East Coalinga/ 1 Temblor Primary 512 Other…
  30. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 30
    E&P and Gathering California Capital Expenditures vs. Production West Division Annual Capital Expenditures ( MM)(1) West Division Average Net Daily Production (Boe) Sepse Sale Closed on 5/1/18 (reduced production by 900 boe/d)…
  31. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 31
    E&P and Gathering California Development Activities North Seneca West Economics North MWSS Project IRRs at 55/Bbl(1) Sec. 17N Acreage 49% 51% 41% Pioneer NMWSS & 17N SMWSS & Pioneer East Coalinga East Coalinga South…
  32. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 32
    E&P and Gathering Fiscal 2019 Production and Price Certainty 143 Bcf of Appalachian Production Protected by Firm Sales for Remainder of Year 114 Bcf locked-in realizing net 2.41/Mcf (1) 29 Bcf of additional basis protection 240…
  33. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 33
    E&P and Gathering Strong Hedge Book Natural Gas Swap & Fixed Physical Sales Contracts (Millions MMBtu) Crude Oil Swap Contracts (Thousands Bbls) 250 NYMEX Swaps 2,500 FY 19 Nat Gas FY 19 Crude Oil NYMEX (WTI) 71% Hedged (2)…
  34. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 34
    E&P and Gathering Seneca Operating Costs Appalachia LOE & Gathering California LOE Total Seneca Cash OpEx /Mcfe /Boe /Mcfe 20.50 17.46 17.91 1.47 1.40 0.71 0.69 0.67 0.17 1.32 0.14 0.11 0.09 0.07 (1) 0.15 0.34 0.34 (1)…
  35. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 35
    E&P and Gathering Senecas Continuing Commitment to the Environment Water and Fluids Management Air Quality and Emissions Seneca Resources Water Operations Seneca Resources Remains Focused Fiscal 2018 on Minimizing GHG…
  36. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 36
    Pipeline and Storage Overview National Fuel Gas Supply Corporation Empire Pipeline, Inc. 37
  37. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 37
    Pipeline & Storage Pipeline & Storage Segment Overview National Fuel Gas Supply Corporation Contracted Capacity(1): Empire Pipeline Firm Transportation: 3,187 MDth per day Firm Storage: 71,938 Mdth (fully subscribed) Rate…
  38. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 38
    Pipeline & Storage FM100 Project - Consolidated Benefit for NFG Project expected to provide long-term earnings 330,000 Dth/d of new transportation capacity from uplift to Seneca, Supply Corp. and Gathering WDA and EDA acreage…
  39. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 39
    Pipeline & Storage FM100 Project Significant Investment by Supply Corp. Estimated Capital Cost: 280 million(1) Facilities (all in Pennsylvania) include: Approximately 30 miles of new pipeline 2 new compressor stations (totaling…
  40. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 40
    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:…
  41. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 41
    Pipeline & Storage National Fuel Remains Committed to Northern Access Project Target In-Service: as early as fiscal 2022 Total Cost: 500MM (76MM spent to date) Estimated Annual Revenues: 84 million Delivery Points: To Dawn 350,000…
  42. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 42
    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 ethane cracker facility being built by Shell Chemical…
  43. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 43
    Pipeline & Storage Pipeline & Storage Customer Mix Customer Transportation by Shipper Type(1) Affiliated Customer Mix (Contracted Capacity) 4.2 MMDth/d Affiliated Non-Affiliated End User Outside 6% Pipeline 9% 34% 59%…
  44. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 44
    Utility Overview National Fuel Gas Distribution Corporation 45
  45. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 45
    Utility New York & Pennsylvania Service Territories New York Total Customers(1): 535,800 ROE: 8.7% (NY PSC Rate Case Order, April 2017) Rate Mechanisms: o Revenue Decoupling o Weather Normalization o Low Income Rates o…
  46. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 46
    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:…
  47. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 47
    Utility Utility Continues its Significant Investments in Safety System modernization tracker in NY allows recovery of pipeline replacement costs, which is expected to drive modest gross margin and rate base growth 125.0 Capital…
  48. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 48
    Utility Accelerating Pipeline Replacement & Modernization Utility Mains by Material(1) Miles of Utility Main Pipeline Replaced Wrought 159 Iron 146 144 Coated Bare Cast Iron 130 NY 120 9,726 miles Plastic Wrought Bare…
  49. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 49
    Utility A Proven History of Controlling Costs (1) O&M Expense ( millions) 250 O&M Expense Non-Service Pension Costs 200 195 197 197 200 189 31 31 150 166 166 100 50 0 2015 2016 2017 2018 TTM 12/31/18 Fiscal Year…
  50. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 50
    Consolidated Financial Overview Upstream I Midstream I Downstream 51
  51. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 51
    Diversified, Balanced Earnings and Cash Flows Adjusted Operating Results ( per share)(1) Adjusted EBITDA ( millions)(2) 4.00 761 775 3.45 to 3.65 800 3.34 3.00 Exploration 728 & 600 318 327 1.25 Production 2.00 0.57…
  52. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 52
    Disciplined, Flexible Capital Allocation Capital Expenditures by Segment ( millions)(1) (2) Exploration & Production 1,250 Gathering 1,001 Pipeline & Storage 1,000 970 Utility 725-810 750 557 603 583 455 460-495 500 366…
  53. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 53
    Maintaining Strong Balance Sheet & Liquidity Net Debt / Adjusted EBITDA(1) Capitalization 2.51 x 2.45 x 2.47 x 2.56 x 2.18 x Total Equity Total Debt 49% 51% 2015 2016 2017 2018 TTM 12/31/18 4.2 Billion Total Capitalization…
  54. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 54
    Appendix 55
  55. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 55
    Appendix Hedge Positions and Prices Natural Gas Volumes in thousand MMBtu; Prices in /MMBtu Fiscal 2019 Fiscal 2020 Fiscal 2021 Fiscal 2022 Avg. Avg. Avg. Avg. Volume Price Volume Price Volume Price Volume Price NYMEX Swaps…
  56. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 56
    Appendix Appalachia Drilling Program Economics Large Marcellus and Utica Inventory Economic at 2.00/MMBtu(1) Internal Rate of Return % (2) Realized Locations Completed Price(1) Anticipated Remaining Lateral EUR / 1000' Well Cost…
  57. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 57
    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…
  58. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 58
    Appendix Non-GAAP Reconciliations Adjusted EBITDA Reconciliation of Adjusted EBITDA to Consolidated Net Income ( Thousands) (1) 12-Months (1) FY 2015 FY 2016 FY 2017 FY 2018 Ended 12/31/18 Total Adjusted EBITDA Exploration &…
  59. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 59
    Appendix Non-GAAP Reconciliations Adjusted EBITDA, by Segment Reconciliation of Adjusted EBITDA to Net Income, by Segment ( Thousands) FY19 FY18 12-Months ( Thousands) FY19 FY18 12-Months FY 2018 FYTD FYTD Ended 12/31/18 FY 2018…
  60. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 60
    Appendix Non-GAAP Reconciliations Adjusted Operating Results Three Months Ended December 31, Fiscal Year Ended (in thousands except per share amounts) 2018 2017 September 30, Reported GAAP Earnings 102,660 198,654 (in thousands…
  61. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 61
    Appendix Non-GAAP Reconciliations Capital Expenditures Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ( Thousands) FY 2019 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Forecast Capital Expenditures…
  62. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 62
    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, 2018…
  63. Scotia Howard Weil Annual Energy Conference – National Fuel Gas Co. – slide 63
    Appendix Non-GAAP Reconciliations Adjusted Operation & Maintenance Expense Reconciliation of Adjusted Operation and Maintenance Expense to Operation and Maintenance Expense, By Segment ( Thousands) FY19 FY18 12-Months FY 2018 FYTD…

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