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Q4 Fiscal 2020 Update – National Fuel Gas Co.

National Fuel Gas Co. · Nov 5, 2020 · 64 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. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 1
    Investor Presentation Q4 Fiscal 2020 Update November 5, 2020
  2. Q4 Fiscal 2020 Update – 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 review our Corporate Responsibility…
  3. Q4 Fiscal 2020 Update – 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) 40% of NFG 1.2 Million 1 Bcf/day Net acres in Gross…
  4. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 4
    Why National Fuel Diversified Assets Provide Stability and Long-Term Growth Opportunities 4
  5. Q4 Fiscal 2020 Update – 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. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 6
    . . . 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…
  7. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 7
    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 175…
  8. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 8
    3 Significant Interstate Pipeline Growth Supply Corp. Rate Case Settlement: Northern Access 35 million increase in base rates Delivery: NY & Canada Empire North (effective February 2020) 490,000 Dth/d Delivery: Canada & NY (remains…
  9. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 9
    4 Half Century of Dividend Growth 50 Years 118 Years 1.78 per share 4.3% yield(1) Consecutive Dividend Increases Consecutive Payments 3.2 Billion Dividend payments since 1970 0.19 per share Annual Rate at Fiscal…
  10. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 10
    5 Focused on Corporate Responsibility and Sustainability Initial Corporate Responsibility Report Published in September 2020 Based on feedback from stakeholders, report was developed using the Sustainability Accounting Standards Board…
  11. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 11
    Fourth Quarter and Fiscal 2020 Financial Highlights 11
  12. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 12
    Fourth Quarter Fiscal 2020 Results and Drivers Adjusted Operating Results (/share)(1) Q4 FY 2019 Q4 FY 2020 Major Drivers Decrease Driven 0.54 Primarily by Oil and Gas Natural Gas Prices Pricing(2) Commodity Prices 61.00…
  13. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 13
    Fiscal 2020 Highlights Adjusted EBITDA 785 million(1) Flat vs. FY19 despite significantly lower commodity prices(1) Dividend 1.78 per share Grew shareholder distribution for 50th consecutive year Up 14% vs. FY19; highest output in…
  14. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 14
    Earnings Guidance FY2020 Adjusted Operating Results FY2021 Earnings Guidance Key Guidance Drivers 2.92/share(1) 3.55 to 3.85/share Net Production 305-335 Bcfe (up 33% vs. FY20) 2.25/Mcf(2) (vs. 2.07/Mcf in FY20)…
  15. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 15
    Exploration & Production and Gathering Overview Seneca Resources Company, LLC National Fuel Gas Midstream Company, LLC 15
  16. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 16
    E&P and Gathering Growing Production within Disciplined Capital Program E&P Net Production (Bcfe) Near-Term Strategy 350 305-335 Appalachia Expect to add 2nd drilling rig in early calendar 300 California 241.5 2021 (additional…
  17. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 17
    E&P and Gathering Significant Appalachian Acreage Position Eastern Development Area (EDA) Average Seneca gross production(1): 546 MMcf/d WDA 915,000 Acres 300 potential Utica and Marcellus locations Large, highly-contiguous…
  18. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 18
    E&P and Gathering Eastern Development Area Seneca EDA Highlights EDA 270,000 Acres 1 Tioga County, PA 180 undeveloped Utica locations, including 40 return trip locations 90 undeveloped Marcellus locations Gathering…
  19. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 19
    E&P and Gathering EDA: Tioga County Development Synergistic Acquisition Provides Highly-Economic Utica and Marcellus Inventory Tioga Development Plan Significant Tioga County Acreage Position Acquired assets are contiguous to…
  20. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 20
    E&P and Gathering Integrated Development EDA Tioga Gathering NFG Tioga Gathering Systems Support Growing Seneca Production Current Systems In-Service Tioga County Gathering Systems Map Tioga Gathering System Empire Capacity: up…
  21. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 21
    E&P and Gathering EDA: 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 production…
  22. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 22
    E&P and Gathering EDA: Lycoming County Development Marcellus Development in Lycoming County Fully Utilizes Firm Transportation Prolific Marcellus acreage with peer-leading well results 30 remaining Marcellus locations breakeven…
  23. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 23
    E&P and Gathering Integrated Development EDA Lycoming Gathering NFG Trout Run Gathering System Supports Seneca and Future Third-Party Development Current System In-Service Trout Run Gathering System Map Total Investment (to…
  24. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 24
    E&P and Gathering Western Development Area Marcellus Core Acreage vs. Utica Trend(1) WDA Highlights Large well inventory: Marcellus Shale: 600+ well locations remaining / 200,000 acres Utica Shale: 500+ potential locations…
  25. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 25
    E&P and Gathering WDA Development Plan Beechwood Development Area Provides 100 Potential Utica Locations with Strong Economics WDA Development Update WDA Potential RV-Beechwood Development Area WDA-CRV Area: producing from both…
  26. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 26
    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…
  27. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 27
    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…
  28. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 28
    E&P and Gathering Long-term Contracts Supporting Appalachian Production Seneca Appalachia Natural Gas Marketing Firm Contract Volumes (MDth/day) 1,200 1,000 Leidy South (Transco & NFG - Supply) Dominion 100,000 Dth/d(1)…
  29. Q4 Fiscal 2020 Update – 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) NYMEX Dawn Other Fixed Price 932,600 16,800 (0.84)…
  30. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 30
    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) East Coalinga/ 1 Temblor Primary 614 Other…
  31. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 31
    E&P and Gathering Fiscal 2021 Production and Price Certainty 275 Bcf of Appalachian Production Protected by Firm Sales 209 Bcf locked-in realizing net 2.19/Mcf (1) 25 Bcf of no-cost collars with 2.89/Mcf ceiling(2) 41 Bcf of…
  32. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 32
    E&P and Gathering Hedge Positions and Prices Production Supported by Strong Hedge Positions in Fiscal 2021 and 2022 (1) Reflects percentage of remaining projected production for FY21 hedged at the midpoint of the production…
  33. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 33
    E&P and Gathering Acquisition Drives Expected Decrease in E&P Operating Costs Increased Scale and Highly-Synergistic Operations Expected to Drive Lower Cash Unit Costs Seneca Cash OpEx (/Mcfe) Appalachia LOE (/Mcfe)(3)…
  34. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 34
    Pipeline and Storage Overview National Fuel Gas Supply Corporation Empire Pipeline, Inc. 34
  35. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 35
    Pipeline & Storage Pipeline & Storage Segment Overview National Fuel Gas Supply Corporation Contracted Capacity(1): Firm Transportation: 3,443 MDth per day Firm Storage: 70,693 Mdth (fully subscribed) Rate Base(2): 944 million…
  36. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 36
    Pipeline & Storage Empire North Project Fully Subscribed Project Provides 205,000 Dth/day of Incremental Firm Transportation In-service date: September 15, 2020 Est. capital cost: 129 million Annual revenues: 27 million…
  37. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 37
    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…
  38. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 38
    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:…
  39. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 39
    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:…
  40. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 40
    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…
  41. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 41
    Pipeline & Storage Pipeline & Storage Customer Mix Customer Transportation by Shipper Type(1) Affiliated Customer Mix (Contracted Capacity) (2) 4.4 MMDth/d Affiliated Non-Affiliated End User Outside 8% Pipeline 9% 26%…
  42. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 42
    Utility Overview National Fuel Gas Distribution Corporation 42
  43. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 43
    Utility New York & Pennsylvania Service Territories New York Total Customers(1): 534,000 ROE: 8.7% (NY PSC Rate Case Order, April 2017) Rate Mechanisms: o Revenue Decoupling o Weather Normalization o Low Income Rates o…
  44. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 44
    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…
  45. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 45
    Utility Utility Continues its Significant Investments in Safety Ongoing system modernization program drives increased rate base, with tracker in NY allowing recovery of pipeline replacement costs 125.0 Capital Expenditures for…
  46. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 46
    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…
  47. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 47
    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 200 206 195 197 196 200 189 27 31 28 169 179 150 166…
  48. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 48
    Consolidated Financial Overview Upstream I Midstream I Downstream 48
  49. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 49
    Diversified, Balanced Earnings and Cash Flows Adjusted Operating Results ( per share)(1) Adjusted EBITDA ( millions)(2) 785 785 4.00 3.55 to 3.85 800 2.92 312 3.00 E&P 351 600 0.68 2.00 Gathering 400 120 0.73 108…
  50. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 50
    Disciplined, Flexible Capital Allocation Capital Expenditures by Segment ( millions)(1) 1,000 (2) (3) Exploration & Production Gathering Pipeline & Storage Utility 781 720-830 750 719 583 350-390 492 384 500 455 366 356…
  51. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 51
    Maintaining Strong Balance Sheet & Liquidity Net Debt / Adjusted EBITDA(1) Capitalization Includes only 2 months of EBITDA from acquisition 3.08 x Total Equity Total 2.51 x 2.45 x 2.47 x 2.61 x 43% Debt Expect 57% reduction…
  52. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 52
    Appendix 52
  53. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 53
    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,…
  54. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 54
    Appendix Consolidated Seneca and Gathering Economics (2) Average Realized Pricing Locations Average 15% IRR (3) Completed EUR Prospect Reservoir Remaining CAPEX 2.50 2.25 2.00 Realized Lateral (Bcf/1000') to Be Drilled…
  55. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 55
    Appendix Hedge Positions and Prices Natural Gas Volumes in thousand MMBtu; Prices in /MMBtu Fiscal 2021 Fiscal 2022 Fiscal 2023 Avg. Avg. Avg. Volume Price Volume Price Volume Price NYMEX Swaps 149,160 2.63 128,530 2.65 23,240…
  56. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 56
    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…
  57. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 57
    Appendix EDA Type Curves Lycoming Marcellus Tioga Utica 18 16 14 Cumulative Production (Bcf) 12 10 8 Estimated Cumulative Volumes (Bcf) Lycoming Tioga 6 Year Marcellus Utica (5,800') (10,000') 4 1 3.1 6.0 5 8.3…
  58. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 58
    Appendix WDA Type Curves (1) RV/Beechwood Utica CRV Marcellus 12 Estimated Cumulative Volumes (Bcf) Utica Marcellus Year (10,000') (9,000') 10 1 2.7 1.6 5 7.8 4.2 Cumulative Production (Bcf) 10 10.5 5.9 8 EUR (Bcf)…
  59. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 59
    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…
  60. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 60
    Appendix Non-GAAP Reconciliations Adjusted EBITDA Reconciliation of Adjusted EBITDA to Consolidated Net Income ( Thousands) (1) (1) FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Total Adjusted EBITDA Exploration & Production…
  61. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 61
    Appendix Non-GAAP Reconciliations Adjusted EBITDA, by Segment Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ( Thousands) FY 2021 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Guidance Capital…
  62. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 62
    Appendix Non-GAAP Reconciliations Adjusted Operating Results Three Months Ended Fiscal Year Ended September 30, September 30, (in thousands except per share amounts) 2020 2019 2020 2019 Reported GAAP Earnings (145,545) 47,281…
  63. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 63
    Appendix Non-GAAP Reconciliations Capital Expenditures Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ( Thousands) FY 2021 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Guidance Capital Expenditures…
  64. Q4 Fiscal 2020 Update – National Fuel Gas Co. – slide 64
    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, 2020…

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