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Q1 Fiscal 2020 – National Fuel Gas Co.

National Fuel Gas Co. · Jan 30, 2020 · 66 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. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 1
    Investor Presentation Q1 Fiscal 2020 Update January 30, 2020
  2. Q1 Fiscal 2020 – 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. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 3
    NFG: A Diversified, Integrated Natural Gas Company Upstream Developing our large, high quality Exploration & acreage position in Marcellus & Utica Production shales(1) 45% of NFG 785,000 590 MMcf/day Net acres in Net Appalachian…
  4. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 4
    Why National Fuel Diversified Assets Provide Stability and Long-Term Growth Opportunities 4
  5. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 5
    1 Integrated Model Enhances Shareholder Value . . . Benefits of National Fuels Geographic and Operational Integrated Structure: Upstream Integration Drives Synergies: Exploration & Ability to adjust to changing Production Upstream…
  6. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 6
    . . . and Drives Organic Growth Opportunities Near Term Strategy Leverages Integration Across the Value Chain Exploration & Pipeline & Gathering Utility Production Storage Integrated Upstream and Midstream development of 785,000…
  7. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 7
    2 Impressive Dividend History 49 Years 117 Years 1.74 per share 4.0% yield(1) Consecutive Dividend Increases Consecutive Payments 3.1 Billion Dividend payments since 1970 0.19 per share Annual Rate at Fiscal Year…
  8. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 8
    3 Responsible Capital Allocation and Asset Development E&P Maintaining Focus on Balance Sheet, With . . . While Generating Steady Production, and Reductions in E&P Activity in Response to Optimizing Significant Firm Sales Portfolio…
  9. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 9
    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…
  10. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 10
    5 1 Billion+ Backlog in Pipeline & Storage Projects 150 Million in Potential Annual Expansion Revenues: Northern Access Empire North Delivery: Canada & NY Delivery: Canada & NY Line N to Monaca: 5 MM 490,000 Dth/d 205,000 Dth/d…
  11. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 11
    First Quarter Fiscal 2020 Financial Highlights 11
  12. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 12
    First Quarter Fiscal 2020 Results and Drivers Adjusted Operating Results (/share)(1) Q1 FY 2019 Q1 FY 2020 Drivers 1.12 Oil and Gas Oil Prices Pricing(2) 1.01 61.70 62.92 Utility 2.61 0.30 2.32 Natural Gas Prices…
  13. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 13
    Earnings Guidance FY2019 Adjusted Operating Results FY2020 Earnings Guidance Key Guidance Drivers 3.45/share(1) 2.95 to 3.15/share Seneca Net Production: 235 to 245 Bcfe Production & Gathering Throughput Gathering Revenues:…
  14. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 14
    Exploration & Production and Gathering Overview Seneca Resources Company, LLC National Fuel Gas Midstream Company, LLC 14
  15. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 15
    E&P and Gathering Proved Reserves Total Proved Reserves (Bcfe) 3-Year Average F&D Cost (/Mcfe) 3,500 1.50 1.32 Natural Gas (Bcf) Crude Oil (MMbbl) 3,099 0.98 3,000 1.00 0.74 2,523 0.56 2,500 0.50 2,154 2,000 1,849 0.00…
  16. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 16
    E&P and Gathering Growing Production within Disciplined Capital Program E&P Net Capital Expenditures ( millions)(1) Near-Term Strategy 600 Appalachia 492 Further reduce activity to 1-rig 500 West Coast (California) 375-410…
  17. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 17
    E&P and Gathering Significant Appalachian Acreage Position Western Development Area (WDA) Average gross production(1): 357 MMcf/d WDA - 715,000 Acres EDA - 70,000 Acres Over 1,000 potential Marcellus & Utica locations 90…
  18. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 18
    E&P and Gathering Western Development Area Marcellus Core Acreage WDA Highlights vs. Utica Appraisal Trend(1) Area of Re-Development Large well inventory: 70-75 remaining Utica locations on existing Marcellus pads Marcellus…
  19. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 19
    E&P and Gathering WDA-CRV Utica Results and Type Curve WDA-CRV Utica Appraisal Update WDA-CRV Types Curves Normalized to 9,000 Tested / producing from 29 Utica wells in WDA-CRV 9.0 WDA-CRV Utica Type Curve Drawdown management…
  20. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 20
    E&P and Gathering WDA: CRV Return Trips Drive Utica Economics Clermont Rich Valley Utica Development Utilizes Existing Gathering, Water & Pad Infrastructure WDA-CRV Marcellus WDA-CRV Utica Existing Line Producing Existing Line…
  21. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 21
    E&P and Gathering Limited New Infrastructure Needed to Support Production Growth Leveraging Existing Gathering, Water and Pad Infrastructure Enhances Returns WDA Well Costs(1) WDA EURs WDA-CRV Consolidated Economics Total cost…
  22. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 22
    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 Capacity: 470 MMcf per day…
  23. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 23
    E&P and Gathering WDA Firm Transportation and Sales Capacity WDA Exit Capacity Supports Production and Enhances Consolidated Returns WDA Gas Marketing Strategy WDA Contracted Firm Transport and Gross Sales Volumes (MDth/d) 600…
  24. Q1 Fiscal 2020 – 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) Utica development resumed in third quarter fiscal 2018 35-40 remaining Utica locations 1 Gathering…
  25. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 25
    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…
  26. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 26
    E&P and Gathering EDA Utica: Tioga County Development Development Focused on Tract 007 Production Area, with Production Underpinned by Firm Sales EDA TGP 300 Firm Contracts UPDATE DCNR Tract 007 150 Gross Firm Volumes…
  27. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 27
    E&P and Gathering EDA Utica: Tioga County Development Tract 007 Utica Wells Brought Online in Q2 Fiscal 2019 Tracking Best Industry Results to Date Tract 007 Utica Development Update Tract 007 Utica Well Results vs. Industry…
  28. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 28
    E&P and Gathering Integrated Development EDA Gathering Systems Gathering Segment Supporting Seneca and Third-Party Production & Future Development Wellsboro Gathering System Total Investment (to date): 22 million Capacity: up…
  29. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 29
    E&P and Gathering Long-term Contracts Supporting Appalachian Production Seneca continues to layer-in firm sales contracts to lock-in drilling economics and minimize spot exposure ahead of firm transportation in-service dates…
  30. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 30
    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) NYMEX Dawn Other Fixed Price 611,900 573,500 590,400…
  31. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 31
    E&P and Gathering California Oil Stable Oil Production Minimal Capital Investment Steady Free Cash Flow 1 Avg. Daily Production Location Formation Production Method (net Boe/d)(1) East Coalinga/ 1 Temblor Primary 494…
  32. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 32
    E&P and Gathering California Capital Expenditures vs. Production West Division Annual Capital Expenditures ( MM)(1) West Division Average Net Daily Production (Boe) Sespe Sale Closed on 5/1/18 (reduced production by 900 Boe/d)…
  33. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 33
    E&P and Gathering California Development Activities North Seneca West Economics North Sec. 17N MWSS Project IRRs at 55/Bbl(1) Acreage 55% 41% 29% Pioneer NMWSS & 17N SMWSS & Pioneer East Coalinga East Coalinga South…
  34. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 34
    E&P and Gathering Fiscal 2020 Production and Price Certainty 145 Bcf of Appalachian Production Protected by Firm Sales 102 Bcf locked-in realizing net 2.28/Mcf (1) 43 Bcf of additional basis protection 280 12 Bcfe 235-245 Bcfe…
  35. Q1 Fiscal 2020 – 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) 2,500 275 NYMEX Swaps Dawn Swaps Fixed Price (1) Brent NYMEX Physical Sales 2,250…
  36. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 36
    E&P and Gathering Seneca Operating Costs Appalachia LOE & Gathering California LOE Total Seneca Cash OpEx /Mcfe /Boe UPDATE /Mcfe 20.81 20.40 1.40 1.32 1.26 17.91 0.14 0.69 0.67 0.69 0.14 0.11 0.09 0.07 0.08 0.34 (1) 0.30…
  37. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 37
    Pipeline and Storage Overview National Fuel Gas Supply Corporation Empire Pipeline, Inc. 37
  38. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 38
    Pipeline & Storage Pipeline & Storage Segment Overview National Fuel Gas Supply Corporation Contracted Capacity(1): Empire Pipeline Firm Transportation: 3,078 MDth per day Firm Storage: 70,693 Mdth (fully subscribed) Rate…
  39. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 39
    Pipeline & Storage Empire North Project Fully Subscribed Project will Provide 205,000 Dth/day of Incremental Firm Transportation Target in-service: fourth quarter fiscal 2020 (construction underway) Est. capital cost: 145…
  40. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 40
    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…
  41. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 41
    Pipeline & Storage FM100 Project Significant Investment by Supply Corp. Estimated capital cost: 279 million Expansion facilities: 159 million Modernization facilities: 120 million Facilities (all in Pennsylvania) include:…
  42. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 42
    Pipeline & Storage Continued Expansion of the NFG Supply System Line N to Monaca Project Project: Firm transportation service to a new ethane cracker facility being built by Shell Chemical Appalachia, LLC In-service date:…
  43. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 43
    Pipeline & Storage Northern Access Project Total cost: 500 MM(1) (57 MM spent to date) Estimated annual revenues: 84 million Delivery points: 350,000 Dth/d to Chippawa (TCPL interconnect) 140,000 Dth/d to East Aurora (TGP 200…
  44. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 44
    Pipeline & Storage Pipeline & Storage Customer Mix Customer Transportation by Shipper Type(1) Affiliated Customer Mix (Contracted Capacity) 3.9 MMDth/d Affiliated Non-Affiliated Outside End User Pipeline 6% 7% 28% 56%…
  45. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 45
    Utility Overview National Fuel Gas Distribution Corporation 45
  46. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 46
    Utility New York & Pennsylvania Service Territories New York Total Customers(1): 531,400 ROE: 8.7% (NY PSC Rate Case Order, April 2017) Rate Mechanisms: o Revenue Decoupling o Weather Normalization o Low Income Rates o…
  47. Q1 Fiscal 2020 – 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. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 48
    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…
  49. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 49
    Utility Accelerating Pipeline Replacement & Modernization Utility Mains by Material(1) Miles of Utility Main Pipeline Replaced Wrought 159 158 Iron 146 144 Coated Bare Cast Iron 130 NY 9,738 miles Plastic Wrought Bare…
  50. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 50
    Utility A Proven History of Controlling Costs (1) Utility O&M Expense and Non-Service Pension Costs ( millions) 250 O&M Expense (GAAP) Non-Service Pension Costs 200 195 197 196 189 196 200 31 28 27 150 169 168 166…
  51. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 51
    Consolidated Financial Overview Upstream I Midstream I Downstream 51
  52. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 52
    Diversified, Balanced Earnings and Cash Flows Adjusted Operating Results ( per share)(1) Adjusted EBITDA ( millions)(2) 4.00 785 788 3.45 800 2.95 to 3.15 3.00 1.26 Exploration & 351 353 600 Production 2.00 Gathering 0.67…
  53. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 53
    Disciplined, Flexible Capital Allocation Capital Expenditures by Segment ( millions)(1) (2) 1,250 Exploration & Production Gathering Pipeline & Storage Utility 970 1,001 1,000 781 695-785 750 557 603 583 492 375-410 500…
  54. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 54
    Maintaining Strong Balance Sheet & Liquidity Net Debt / Adjusted EBITDA(1) Capitalization 2.61 x 2.72 x 2.51 x 2.45 x 2.47 x Total Equity Total Debt 51% 49% 2016 2017 2018 2019 TTM 12/31/19 4.3 Billion Total Capitalization…
  55. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 55
    Appendix 55
  56. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 56
    Appendix Consolidated Seneca and Gathering Economics Average Realized Pricing (2) Locations Average 15% IRR (3) Completed EUR Prospect Reservoir Remaining CAPEX 2.50 2.25 2.00 Realized Lateral (Bcf/1000') to Be Drilled…
  57. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 57
    Appendix Hedge Positions and Prices Natural Gas Volumes in thousand MMBtu; Prices in /MMBtu Fiscal 2020 Fiscal 2021 Fiscal 2022 Avg. Avg. Avg. Volume Price Volume Price Volume Price NYMEX Swaps 66,150 2.69 14,750 2.73 200…
  58. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 58
    Appendix EDA Type Curves Lycoming 007 Utica 16 14 Cumulative Production (BCF) 12 10 8 Estimated Cumulative Volumes (Bcf) 6 Lycoming Tract 007 Year Marcellus Utica (5,800') (8,700') 4 1 3.2 5.3 5 8.6 12.6 2 10…
  59. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 59
    Appendix WDA-CRV Type Curves CRV Utica Return Trip CRV Marcellus Return Trip 9 8 7 Cumulative Production (BCF) 6 5 4 Estimated Cumulative Volumes (Bcf) WDA-CRV WDA-CRV 3 Year Utica Marcellus (9,500') (9,000') 2 1…
  60. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 60
    Appendix Firm Transportation Commitments Volume Delivery Demand Charges Production Source Gas Marketing Strategy (Dth/d) Market (/Dth) Firm Sales Contracts Northeast Supply EDA -Tioga County Canada 0.50 50,000 Dth/d…
  61. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 61
    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…
  62. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 62
    Appendix Non-GAAP Reconciliations Adjusted EBITDA Reconciliation of Adjusted EBITDA to Consolidated Net Income ( Thousands) (1) (1) 12-Months FY 2016 FY 2017 FY 2018 FY 2019 Ended 12/31/19 Total Adjusted EBITDA Exploration &…
  63. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 63
    Appendix Non-GAAP Reconciliations Adjusted EBITDA, by Segment Reconciliation of Adjusted EBITDA to Net Income, by Segment ( Thousands) FY20 FY19 12-Months FY 2019 FYTD FYTD Ended 12/31/19 Exploration and Production Segment Reported…
  64. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 64
    Appendix Non-GAAP Reconciliations Adjusted Operating Results 65
  65. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 65
    Appendix Non-GAAP Reconciliations Capital Expenditures Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ( Thousands) FY 2020 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Forecast Capital…
  66. Q1 Fiscal 2020 – National Fuel Gas Co. – slide 66
    Appendix Non-GAAP Reconciliations E&P Operating Expenses Twelve Months Ended Twelve Months Ended September 30, 2019 September 30, 2018 (2) Appalachia West Coast Total E&P Appalachia West Coast(2) Total E&P Appalachia West…

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