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Q3 2020 Investor Presentation – National Fuel Gas Co.

National Fuel Gas Co. · Aug 6, 2020 · 69 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. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 1
    Investor Presentation Q3 Fiscal 2020 Update August 6, 2020
  2. Q3 2020 Investor Presentation – 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. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 3
    A message from David Bauer, President and CEO of National Fuel Gas Company, on NFGs COVID-19 response During these unprecedented times, the safety and well-being of our workforce, customers, and communities in which we operate is our…
  4. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 4
    NFG: A Diversified, Integrated Natural Gas Company Upstream Developing our large, high quality Exploration & acreage position in Marcellus & Utica Production shales(1) 42% of NFG 1.2 Million 800 MMcf/day Net acres in Net…
  5. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 5
    Why National Fuel Diversified Assets Provide Stability and Long-Term Growth Opportunities 5
  6. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 6
    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…
  7. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 7
    . . . and Continues to Drive Growth Opportunities Near Term Strategy Leverages Integration Across the Value Chain Exploration & Pipeline & Gathering Utility Production Storage Acquisition of significant flowing production and…
  8. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 8
    Appalachian Acquisition Strengthens Integrated Model . . . . . . And is Expected to Deliver Meaningful Free Cash Flow Generation, While Maintaining Significant Contribution from Regulated Businesses Contiguous upstream assets, with…
  9. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 9
    2 Appalachian Program Expected to Generate Free Cash Flow . . . . . . In Fiscal 2021 at Natural Gas Prices . . . While Generating Strong Consolidated Well Below Current NYMEX Strip. . . Returns Across Senecas Acreage Footprint 250…
  10. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 10
    L3 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…
  11. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 11
    4 Significant Expected Interstate Pipeline Growth Supply Corp. Rate Case Settlement: Northern Access 35 million increase in base rates Delivery: NY & Canada Empire North (effective 2/1/20) 490,000 Dth/d Delivery: Canada & NY (remains…
  12. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 12
    5 Half Century of Dividend Growth 50 Years 118 Years 1.78 per share 4.2% yield(1) Consecutive Dividend Increases Consecutive Payments 3.1 Billion Dividend payments since 1970 0.19 per share Annual Rate at Fiscal…
  13. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 13
    Third Quarter Fiscal 2020 Financial Highlights 13
  14. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 14
    Third Quarter Fiscal 2020 Results and Drivers Adjusted Operating Results (/share)(1) Q3 FY 2019 Q3 FY 2020 Major Drivers 0.71 Decrease Driven Oil and Gas Primarily by Natural Gas Prices Pricing(2) Commodity Prices 62.92…
  15. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 15
    Earnings Guidance FY2020 Adjusted Operating Results FY2021 Earnings Guidance Key Guidance Drivers 2.75 to 2.85/share(1) 3.40 to 3.70/share Seneca Net Production: 305-335 Bcfe (up 32% vs. FY20E) Production / Gathering Throughput…
  16. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 16
    Exploration & Production and Gathering Overview Seneca Resources Company, LLC National Fuel Gas Midstream Company, LLC 16
  17. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 17
    E&P and Gathering Proved Reserves Total Proved Reserves (Bcfe) 3-Year Average F&D Cost (/Mcfe) 4,000 1.50 1.32 Natural Gas (Bcf) Acquisition adds 700 Bcfe of net Crude Oil (MMbbl) proved developed reserves(1) 3,500 0.98 1.00…
  18. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 18
    E&P and Gathering Growing Production within Disciplined Capital Program E&P Net Capital Expenditures ( millions)(1) Near-Term Strategy 600 Appalachia 500 492 Reduced activity to 1-rig development California 375-395 program in…
  19. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 19
    E&P and Gathering Significant Appalachian Acreage Position Western Development Area (WDA) Average Seneca gross production(1): 372 MMcf/d WDA 915,000 Acres Over 1,000 potential Marcellus & Utica locations 80 locations where…
  20. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 20
    E&P and Gathering Western Development Area Marcellus Core Acreage WDA Highlights vs. Utica Appraisal Trend(1) Area of Re-Development Large well inventory: 60-65 remaining Utica locations on existing Marcellus pads Marcellus…
  21. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 21
    E&P and Gathering WDA-CRV Results and Type Curves WDA-CRV Development Update WDA-CRV Types Curves Normalized to 9,000 Currently producing from both Utica and 9.0 Marcellus wells in WDA-CRV area WDA-CRV Utica Type Curve 8.0…
  22. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 22
    E&P and Gathering Limited New Infrastructure Needed to Support Utica Return Trips Leveraging Existing Gathering, Water and Pad Infrastructure Enhances Returns WDA Well Costs(1) WDA EURs WDA-CRV Consolidated Economics Total cost…
  23. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 23
    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…
  24. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 24
    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…
  25. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 25
    E&P and Gathering Eastern Development Area Seneca EDA Highlights EDA 270,000 Acres 1 Tioga County, PA - DCNR Tract 007, Covington, and Acquisition Senecas Utica Development resumed in fiscal 2018 185 Undeveloped Utica locations…
  26. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 26
    E&P and Gathering EDA Utica: Tioga County Development Acquisition Provides Significant Inventory and Drives Synergies with Existing Operations Tioga County Acquisition Development Benefits Significant Tioga County Acreage…
  27. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 27
    E&P and Gathering EDA Utica: Tioga County Development Strong Tioga County Utica Economics Tioga County Utica Type Curve 16 47% consolidated Seneca/Gathering IRR at Identical Expected Utica 2.00 realized price Development Type…
  28. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 28
    E&P and Gathering EDA Utica: Tioga County Development Production Underpinned by Firm Sales and Firm Transportation Contracts Tioga County Gas Marketing Strategy Tioga County Gross Firm Contract Volumes (MDth/d) Acquired…
  29. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 29
    E&P and Gathering EDA Marcellus: Lycoming County Development Marcellus Development in Lycoming County Fully Utilizes Firm Transportation Prolific Marcellus acreage with peer-leading well results 30-35 remaining Marcellus…
  30. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 30
    E&P and Gathering Integrated Development EDA Gathering Systems Gathering Segment Supporting Seneca and Third-Party Production, and Future Development 1 Tioga County Gathering Systems Wellsboro Gathering System Total Investment (to…
  31. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 31
    E&P and Gathering Long-term Contracts Supporting Appalachian Production Seneca Appalachia Natural Gas Marketing Firm Contract Volumes (MDth/day) 1,200 Leidy South (Transco & NFG - Supply) 1,000 Transco Zone 6 NNY 330,000…
  32. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 32
    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 (2) Other Fixed Price 16,800 (0.84) 809,600…
  33. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 33
    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 641…
  34. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 34
    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…
  35. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 35
    E&P and Gathering Fiscal 2020 Production and Price Certainty 64 Bcf of Appalachian Production Protected by Firm Sales 45 Bcf locked-in realizing net 2.10/Mcf (1) 19 Bcf of additional basis protection 280 4 Bcfe 240-245 Bcfe…
  36. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 36
    E&P and Gathering Fiscal 2021 Production and Price Certainty 278 Bcf of Appalachian Production Protected by Firm Sales 177 Bcf locked-in realizing net 2.16/Mcf (1) 25 Bcf of floor protection at 2.37/Mcf (2) 76 Bcf of additional…
  37. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 37
    E&P and Gathering Hedge Positions and Prices Pro Forma Natural Gas - MMDth, /MMBtu Crude Oil - MBbl, /Bbl Fiscal 2020 Fiscal 2020 46.4 24.8 2.68 466 385 62.31 MMDth MBbl 21.6 2.13 69% 80% 81 50.52 - - Hedged(1)…
  38. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 38
    E&P and Gathering Seneca Operating Costs Appalachia LOE & Gathering California LOE Total Seneca Cash OpEx /Mcfe /Boe UPDATE /Mcfe 20.81 20.50 1.32 0.70 0.71 18.50 1.23 1.17 0.67 0.14 0.12 0.11 0.07 0.08 0.09 0.30 (1) 0.26…
  39. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 39
    Pipeline and Storage Overview National Fuel Gas Supply Corporation Empire Pipeline, Inc. 39
  40. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 40
    Pipeline & Storage Pipeline & Storage Segment Overview National Fuel Gas Supply Corporation Contracted Capacity(1): Firm Transportation: 3,078 MDth per day Firm Storage: 70,693 Mdth (fully subscribed) Rate Base(2): 944 million…
  41. Q3 2020 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: late fourth quarter fiscal 2020 (partial in-service as of 7/11/20) Est. capital…
  42. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 42
    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…
  43. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 43
    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:…
  44. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 44
    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:…
  45. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 45
    Pipeline & Storage Northern Access Project Delivery points: 350,000 Dth/d to Chippawa (TCPL interconnect) 140,000 Dth/d to East Aurora (TGP 200 line) Regulatory/legal status: To Dawn Feb. 2017 FERC 7(c) certificate issued…
  46. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 46
    Pipeline & Storage Pipeline & Storage Customer Mix Customer Transportation by Shipper Type(1) Affiliated Customer Mix (Contracted Capacity) (2) 3.9 MMDth/d Affiliated Non-Affiliated Outside End User Pipeline 6% 7% 28% 56%…
  47. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 47
    Utility Overview National Fuel Gas Distribution Corporation 47
  48. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 48
    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…
  49. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 49
    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…
  50. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 50
    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…
  51. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 51
    Utility Ongoing 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…
  52. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 52
    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 200 195 197 196 203 200 189 28 27 31 150 169 176 166…
  53. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 53
    Consolidated Financial Overview Upstream I Midstream I Downstream 53
  54. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 54
    Diversified, Balanced Earnings and Cash Flows Adjusted Operating Results ( per share)(1) Adjusted EBITDA ( millions)(2) 4.00 785 783 3.40 to 3.70 800 3.45 3.00 2.75 to 2.85 E&P 1.26 351 326 600 E&P 2.00 Gathering 0.67…
  55. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 55
    Disciplined, Flexible Capital Allocation Capital Expenditures by Segment ( millions)(1) 1,000 Exploration & Production (2) Gathering Pipeline & Storage Utility 781 750 680-740 660-770 583 290-330 492 375-395 500 455 366…
  56. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 56
    Maintaining Strong Balance Sheet & Liquidity Net Debt / Adjusted EBITDA(1) Capitalization 2.51 x 2.61 x 2.65 x 2.45 x 2.47 x Total Total Equity Debt 46% 54% 2016 2017 2018 2019 TTM 6/30/20 4.9 Billion Total Capitalization…
  57. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 57
    Appendix 57
  58. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 58
    Appendix Safe Harbor For Forward Looking Statements This presentation may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995, including statements regarding future prospects, plans,…
  59. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 59
    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…
  60. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 60
    Appendix Hedge Positions and Prices (1) (1) Fixed price physical sales exclude joint development partners share of fixed price contract WDA volumes as specified under the joint development agreement. 60
  61. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 61
    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…
  62. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 62
    Appendix EDA Type Curves Lycoming Tioga 007 Utica Utica 16 14 Cumulative Production (BCF) 12 10 8 Estimated Cumulative Volumes (Bcf) 6 Lycoming Tioga Year Marcellus Utica (5,800') (8,700') 4 1 3.2 5.3 5 8.6…
  63. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 63
    Appendix Firm Transportation Commitments Volume Delivery Demand Charges Production Source Gas Marketing Strategy (Dth/d) Market (/Dth) Northeast Supply Firm Sales Contracts Canada 0.50 Diversification EDA Tioga 50,000…
  64. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 64
    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…
  65. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 65
    Appendix Non-GAAP Reconciliations Adjusted EBITDA Reconciliation of Adjusted EBITDA to Consolidated Net Income ( Thousands) (1) 12-Months (1) FY 2016 FY 2017 FY 2018 FY 2019 Ended 6/30/20 Total Adjusted EBITDA Exploration &…
  66. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 66
    Appendix Non-GAAP Reconciliations Adjusted EBITDA, by Segment Reconciliation of Adjusted EBITDA to Net Income, by Segment ( Thousands) FY20 FY19 12-Months 3-Months FY 2019 FYTD FYTD Ended 6/30/20 Ended 6/30/20 Exploration and…
  67. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 67
    Appendix Non-GAAP Reconciliations Adjusted Operating Results 67
  68. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 68
    Appendix Non-GAAP Reconciliations Capital Expenditures Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ( Thousands) FY 2020 FY 2021 FY 2016 FY 2017 FY 2018 FY 2019 Forecast Forecast Capital…
  69. Q3 2020 Investor Presentation – National Fuel Gas Co. – slide 69
    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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