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Second Quarter Update – National Fuel Gas Co.

National Fuel Gas Co. · May 9, 2014 · 70 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. Second Quarter Update – National Fuel Gas Co. – slide 1
    National Fuel Gas Company Investor Presentation May 2014
  2. Second Quarter Update – National Fuel Gas Co. – slide 2
    Corporate National Fuel Gas Company Exceptional Assets, Focused on Execution 1.549 Tcfe of Proved Reserves(1) 2.9 MMBbl of Crude Oil Production(2) 800,000 Net Acres in Pennsylvania 221 Million of Midstream Adjusted EBITDA(2) May…
  3. Second Quarter Update – National Fuel Gas Co. – slide 3
    Corporate National Fuel Gas Company Targeting Sustained Growth Over the Next Five Years 1,250 Exploration & Production Segment Gathering Segment Pipeline & Storage Segment Utility Segment 1,000 Energy Marketing & Other 934 2014…
  4. Second Quarter Update – National Fuel Gas Co. – slide 4
    Corporate National Fuel Gas Company Capital Spending Adjusts to Capitalize on Opportunities 1,500 Exploration & Production Segment Gathering Segment Pipeline & Storage Segment 1,065- 1,250 1,275 Utility Segment Energy Marketing &…
  5. Second Quarter Update – National Fuel Gas Co. – slide 5
    Corporate National Fuel Gas Company Maintaining a Strong Balance Sheet Debt / Adjusted EBITDA Capitalization 2.5 2.02 x Average Debt / Adjusted EBITDA 1.98 x 2.0 1.89 x 1.89 x 1.75 x 1.76 x 1.5 Total Debt(1)…
  6. Second Quarter Update – National Fuel Gas Co. – slide 6
    Corporate National Fuel Gas Company Dividend Track Record 2.00 Dividend Consistency Consecutive Dividend Payments 111 Years Consecutive Dividend Increases 43 Years Annual Dividend Rate 1.50 Current Annualized Dividend Rate 1.50…
  7. Second Quarter Update – National Fuel Gas Co. – slide 7
    Upstream Exploration & Production Overview May 2014 8
  8. Second Quarter Update – National Fuel Gas Co. – slide 8
    Upstream Seneca Resources Proven Record of Growth 2000 3-Year Natural Gas (Bcf) Fiscal F&D Cost(1) Crude Oil (MMbbl) Years (/Mcfe) 1,549 2006-2008 7.63 1500 2007-2009 5.35 Total Proved Reserves (Bcfe) 1,246 2008-2010 2.37…
  9. Second Quarter Update – National Fuel Gas Co. – slide 9
    Upstream Seneca Resources Delivering Tremendous Production Growth 225 Gulf of Mexico (Divested in 2011) East Division (Appalachia) 180-220 West Division (California/Kansas) 155-165 Annual Production (Bcfe) 150 120.7…
  10. Second Quarter Update – National Fuel Gas Co. – slide 10
    Upstream Seneca Resources Disciplined Capital Spending 1,000 Gulf of Mexico (Divested in 2011) East Division (Appalachia) West Division (California/Kansas) 800 Capital Expenditures ( Millions) 694 650-750 649 550-625 600…
  11. Second Quarter Update – National Fuel Gas Co. – slide 11
    Upstream Seneca Resources LOE: Operating Costs Down; Transportation Costs Up 4.50 Property, Franchise & Other Taxes Seneca expects to convert its long-term firm Other O&M Expense transport (FT) contracts into firm sales (FS) General…
  12. Second Quarter Update – National Fuel Gas Co. – slide 12
    Upstream Marcellus Shale Prolific Pennsylvania Acreage Seneca Fee Seneca Lease 720,000 Acres 60,000 Acres Eastern Development Area (EDA) Mostly leased (16-18% royalty) Western Development Area (WDA) No near-term lease…
  13. Second Quarter Update – National Fuel Gas Co. – slide 13
    Upstream Marcellus Shale EDA Delivering Significant Growth Covington Fully Developed Gross Production: 50 MMcf per Day 47 Wells Drilled and Producing DCNR Tract 595 Gross Production: 80 MMcf per Day 39 Wells Drilled (52 Total…
  14. Second Quarter Update – National Fuel Gas Co. – slide 14
    Upstream Marcellus Shale EDA Historical Well Results Are Exceptional Average EUR per Average Average Average EUR Average 1,000 of Producing IP Rate 7-Day 30-Day per Well Lateral Lateral Development Area Well Count (MMcf/d) (MMcf/d)…
  15. Second Quarter Update – National Fuel Gas Co. – slide 15
    Upstream Marcellus Shale Senecas Lycoming Economics are in the Top 3 5.00 Top Marcellus Breakevens by Operator & County (Source: ITG Investment Research) There are an additional 109 breakeven data points greater than 3.69/Mcf…
  16. Second Quarter Update – National Fuel Gas Co. – slide 16
    Upstream Marcellus Shale Huge Position Varies in Understanding Seneca Fee Seneca Lease Understanding Senecas Size of combined EDA 780,000 Net Acres current development areas Northeast Core 30,000 acres in NE Core Tier I Acres…
  17. Second Quarter Update – National Fuel Gas Co. – slide 17
    Upstream Marcellus Shale 2013 & 2014 WDA Delineation Program Clermont Full Development SRC Fee Acreage 2 Wells Completed Rich Valley Full Development SRC Lease Acreage 9H: 7-Day IP of 10 MMcf/d & EUR of 8.6 Bcf 2 Wells Completed…
  18. Second Quarter Update – National Fuel Gas Co. – slide 18
    Upstream Marcellus Shale Strong Wells Across WDA Acreage Peak Peak Treatable 24-Hour 7-Day Completion Lateral Rate Rate EUR Well Name Design Length Stages (MMcfd) (MMcfd) (Bcf) Status Clermont 9H RCS1 5,500 37 11.4 10.0 8.6…
  19. Second Quarter Update – National Fuel Gas Co. – slide 19
    Upstream Marcellus Shale Clermont Wells Improved from Early Non-Op JV Wells SRC Clermont vs. Non-Op JV Clermont 10,000 9H 10H COP 2316 5H COP 2316 6H 9,000 Clermont 5H & 6H (Non-op wells) Avg. lateral length: 3,344 9H: RCS…
  20. Second Quarter Update – National Fuel Gas Co. – slide 20
    Upstream Marcellus Shale Clermont/Rich Valley RCS Wells Outperforming Typecurve 12,000 Rich Valley 27H - 6,372 FT - RCS 11,000 Clermont 9H - 5,500 FT - RCS Clermont 10H - 5,565 FT - non RCS 10,000 Typecurve - 6,000 FT - 6.9 Bcf…
  21. Second Quarter Update – National Fuel Gas Co. – slide 21
    Upstream Marcellus Shale CRV is in Full Development Mode Marcellus Faults Marcellus & Basement Faults Clermont Rich Valley RCS: 9H 7-day IP: 10.0 MMcf/d 7-day IP: 7.8 MMcf/d (EUR: 8.6 Bcf) EUR: 7.4 BCF Non-RCS: 10H 7-day IP:…
  22. Second Quarter Update – National Fuel Gas Co. – slide 22
    Upstream Marcellus Shale 200,000 Acres With 6-8 Bcfe EUR Wells SRC Fee Acreage SRC Lease Acreage EOG Earned JV Acreage 2-4 BCF/well 2014 Appraisal Program 2015+ Locations 6 - 8 BCF/well 4 - 6 BCF/well 2-4 BCF/well 4…
  23. Second Quarter Update – National Fuel Gas Co. – slide 23
    Upstream Marcellus Shale 2,000 Economic Locations at 2.00 to 3.80/Mcfe Approx. 15% IRR(1) Remaining EUR IRR(1) Breakeven Price Prospect County Product Locations (Bcfe) BTU 4/MMBtu (/Mcf) Tract 100 Lycoming Dry Gas 28 11.5-12.5 1,030…
  24. Second Quarter Update – National Fuel Gas Co. – slide 24
    Corporate Natural Gas Marketing How Does Seneca Sell its Production Contracted Basis Differential 3rd Party Marketer (or spot market) Gathering System Interconnection Well Head with Interstate Spot Market Pipeline Network…
  25. Second Quarter Update – National Fuel Gas Co. – slide 25
    Corporate Natural Gas Marketing Adding Long-Term Firm Transport to the Portfolio Agreements Executed Volume In-Service Project (Dth/d) Date Comments Northeast Supply Executed firm sales agreements for entire 50,000 2012…
  26. Second Quarter Update – National Fuel Gas Co. – slide 26
    Corporate Natural Gas Marketing Significant Base of Long-Term Firm Contracts 1,000 Over time, Seneca plans to convert most or all of its Atlantic Sunrise firm transportation capacity to firm sales agreements Northern Access 2016…
  27. Second Quarter Update – National Fuel Gas Co. – slide 27
    Corporate Natural Gas Marketing Firm Sales Provide a Market for Appalachian Production 500,000 Fixed Price Sale Values shown represent the price or differential to a reference Long-Term Firm Gross Sales (MMBtu per Day) Dawn price…
  28. Second Quarter Update – National Fuel Gas Co. – slide 28
    Corporate Natural Gas Marketing Current Natural Gas Hedge Positions 125 Dominion NYMEX SoCal 100 Natural Gas Swaps (Million MMBtu) 89.5 75 59.1 56.6 69.6 50 43.8 44.1 37.7 25.0 25 18.7 18.8 18.8 5.6 14.4 0…
  29. Second Quarter Update – National Fuel Gas Co. – slide 29
    Corporate Natural Gas Marketing Current Hedge Book has Seneca Positioned Very Well 100% Hedging Policy Range Oil Hedges Natural Gas Hedges 80% 73% 65% 60% % Hedged 52% 47% 42% 40% 25% 20% 16% 13% 3% 2% 0% Fiscal…
  30. Second Quarter Update – National Fuel Gas Co. – slide 30
    Corporate Natural Gas Marketing FY 2014 Production Firm Sales & Hedge Composition 150 Seneca has an additional 13 Bcf of NYMEX hedges to help mitigate 135-143 commodity exposure on its sales 11 Bcf 120 0.5 Bcf 13.5 Bcf 7.3 Bcf…
  31. Second Quarter Update – National Fuel Gas Co. – slide 31
    Corporate Natural Gas Marketing FY 2015 Production Firm Sales & Hedge Composition 200 Seneca will continue to pursue firm sales agreements to mitigate spot 159-197 market exposure during the year 36 Bcf 150 Total Production…
  32. Second Quarter Update – National Fuel Gas Co. – slide 32
    Upstream Geneseo Shale Path to Geneseo Development 2018/2019 Start Tract 100/Gamble (Lycoming County) 1st Well (Tract 100 Pad N) Peak IP: 14.1 MMcf per day 30-Day Average Rate: 8.6 MMcf per day Estimated EUR: 7.0 Bcf Lateral…
  33. Second Quarter Update – National Fuel Gas Co. – slide 33
    Upstream Point Pleasant & Utica Shale Industry Activity & 2014 Appraisal Program MT JEWETT Horizontal: Completed September 2013 Peak 24-Hour Rate: 8.5 MMcf/d RANGE RESOUCES 1.4 MMcf/d Not Effectively HALCON Stimulated 6.6…
  34. Second Quarter Update – National Fuel Gas Co. – slide 34
    Upstream California Stable Production Fields; Modest Growth Potential 6,000 2010 4,500 East Coalinga Q1 2014 4,100 Temblor Formation Gross Operated Daily 4,500 Production (Boe/d) Primary 3,000 1,900…
  35. Second Quarter Update – National Fuel Gas Co. – slide 35
    Upstream California East Coalinga Summary 2014 Location 2013 Well Production has increased from 214 BOPD to Active Well 849 BOPD Idle Well P&A Highest on leases since 2000 Seneca Lease Drilled 12 evaluation wells in 2013 Field…
  36. Second Quarter Update – National Fuel Gas Co. – slide 36
    Upstream California South Midway Sunset Has Delivered Significant Growth South Midway Sunset Daily Oil Production 2,000 Seneca Acquired in June 2009 1,500 B Pool A Pool BOPD 1,000 500 16X Pool 0 97X Pool…
  37. Second Quarter Update – National Fuel Gas Co. – slide 37
    Upstream California Evaluating the Monterey Shale at South Lost Hills GR Brittleness Oil SP ResD Gas Truman 2H Lower Reef Ridge Waiting on Completion Seneca Lease 1000 Upper Antelope A Truman 1H 2013 Upper Antelope B 190…
  38. Second Quarter Update – National Fuel Gas Co. – slide 38
    Upstream California Limited Growth Opportunities, But Strong Economics Average Estimated Average EUR IRR Fiscal 2014 Field Well Cost (MBO) 100/Bbl Locations South Midway Sunset 250,000 30 75% 23 East Coalinga 400,000 40 50%…
  39. Second Quarter Update – National Fuel Gas Co. – slide 39
    Upstream California Modest Growth Anticipated in 2014 and 2015 Forecast 10,000 Average Daily Net Production (BOE per Day) 9,322 9,056 9,078 9,000 8,773 8,000 7,000 6,000 2010 2011 2012 2013 2014 2015 (Est.)…
  40. Second Quarter Update – National Fuel Gas Co. – slide 40
    Upstream California Outstanding Cash Flow(1) 250 Capital Expenditures 226.9 Adjusted EBITDA 215.0 200 187.8 187.6 171.6 150 Millions 104.6 100 62.9 47.4 50 31.4 27.6 0 2009 2010 2011 2012 2013 Fiscal Year May…
  41. Second Quarter Update – National Fuel Gas Co. – slide 41
    Upstream California Looking Forward 1. Manage decline of base production 2. Pursue and develop opportunities for growth from current assets Sespe East Coalinga South Midway Sunset 3. Continue to pursue additional acquisition…
  42. Second Quarter Update – National Fuel Gas Co. – slide 42
    Upstream Seneca Resources What Will Seneca Look Like Moving Forward Consistent Production Growth: 15-25% CAGR Driven by a very large, high-quality Appalachian acreage position Disciplined Spending Driven by Rates of Return Pace…
  43. Second Quarter Update – National Fuel Gas Co. – slide 43
    Midstream Midstream Businesses Overview May 2014 44
  44. Second Quarter Update – National Fuel Gas Co. – slide 44
    Midstream Midstream Businesses Positioned to Serve Senecas Rapidly Growing Production May 2014 45
  45. Second Quarter Update – National Fuel Gas Co. – slide 45
    Midstream Gathering Gathering is the First Step to Reaching a Market Gathering Segment Revenue 80- 100 TGP 200 95 67- Revenue ( Millions) 75 72 50 34.8 25 17.5 0 2009 2010 2011 2012 2013 2014E 2015E Clermont Fiscal…
  46. Second Quarter Update – National Fuel Gas Co. – slide 46
    Midstream Gathering Existing Systems Supporting Senecas Near-Term Growth Covington Gathering System In-service date: November 2009 Capacity: 220,000 Dth per day Interconnect: TGP 300 Capital expenditures (to date): 31.2 million…
  47. Second Quarter Update – National Fuel Gas Co. – slide 47
    Midstream Gathering Clermont Gathering System has Large Expandability CC Compressor Station Clermont Gathering Interconnect System In-Service: Ongoing build-out Ultimate Trunkline Capacity: 700 to 1,000 MMcf per day…
  48. Second Quarter Update – National Fuel Gas Co. – slide 48
    Midstream Gathering Capital Deployment Will Deliver Long-Term Growth 500 150 Revenue Cumulative Capital Invested 368-463 400 120 Capital Expenditures ( Millions) Revenue Growth (2013 to 2015): 60% CAGR 268-313 80-95…
  49. Second Quarter Update – National Fuel Gas Co. – slide 49
    Midstream Pipeline & Storage Project Opportunities to Support WDA Growth Develop multiple outlets to high-value markets May 2014 50
  50. Second Quarter Update – National Fuel Gas Co. – slide 50
    Midstream Pipeline & Storage Expansions to Move Gas from the WDA are Significant Projects to Support WDA Growth Northern Project Capacity (Dth/day) Access 2015 (November 2015) Northern Access 2015 140,000 Northern Access 20161…
  51. Second Quarter Update – National Fuel Gas Co. – slide 51
    Midstream Pipeline & Storage Major Expansion Designed for Canadian Deliveries Northern Access 2015 Northern In-Service: November 2015 Access 2015 (November 2015) System: NFG Supply Corp. Capacity: 140,000 Dth per day Lease to TGP…
  52. Second Quarter Update – National Fuel Gas Co. – slide 52
    Midstream Pipeline & Storage Northern Access 2016 Provides Additional Access to Canada Northern Access 2016(1) In-Service: 2016 System: NFG Supply Corp. & Empire Pipeline, Inc. Capacity 350,000 Dth per day Interconnect Chippawa…
  53. Second Quarter Update – National Fuel Gas Co. – slide 53
    Midstream Pipeline & Storage Recent 3rd Party Expansions Have Been Highly Successful Completed Expansions for 3rd Parties Capacity Project (Dth/day) Tioga County Northern Access 2012 320,000 Northern Extension Tioga County…
  54. Second Quarter Update – National Fuel Gas Co. – slide 54
    Midstream Pipeline & Storage Additional Line N Expansions Planned for the Future Mercer Expansion In-Service: November 2014 System: NFG Supply Corp. Capacity: 105,000 Dth per day Precedent agreements signed for all available…
  55. Second Quarter Update – National Fuel Gas Co. – slide 55
    Midstream Pipeline & Storage Pairing Line N Expansions with System Modernization Westside Expansion & Modernization In-Service: November 2015 System: NFG Supply Corp. Capacity: 175,000 Dth per day Precedent agreements signed for…
  56. Second Quarter Update – National Fuel Gas Co. – slide 56
    Midstream Pipeline & Storage Developing Unique Solutions for Shippers Tuscarora Lateral In-Service: November 2015 System: NFG Supply & Empire Pipeline New No-Notice Services Preserving 172,500 Dth per day (RG&E) Preserving 20,000…
  57. Second Quarter Update – National Fuel Gas Co. – slide 57
    Midstream Pipeline & Storage Significant Expansions Are Driving Growth Completed Projects (Since 2009) Delivering Gas North Tioga County Extension 1,113,000 Recent Capacity Additions Northern Access 2012 Dth/day Northern Access…
  58. Second Quarter Update – National Fuel Gas Co. – slide 58
    Midstream Pipeline & Storage Expansion Project Revenue Growth Annual Expansion Revenue 200 Projects Placed in Service Since Fiscal 2011 Expansion Project Revenue ( Millions) 150 100 91 60 65 59 50 37 Larger projects…
  59. Second Quarter Update – National Fuel Gas Co. – slide 59
    May 2014 Downstream Utility Overview 60
  60. Second Quarter Update – National Fuel Gas Co. – slide 60
    Downstream Utility New York & Pennsylvania Service Territories New York Total Customers: 522,000 Rate Mechanisms: Revenue Decoupling Weather Normalization Low Income Rates Choice Program/Purchase of Receivables Merchant…
  61. Second Quarter Update – National Fuel Gas Co. – slide 61
    Downstream Utility Customer Usage 120 Residential Usage 35 Industrial Usage Usage Per Account(1) (MMcf) Usage Per Account(1) (Mcf) 110 30 100 25 90 20 80 15 12-Months Ended March 31 12-Months Ended March…
  62. Second Quarter Update – National Fuel Gas Co. – slide 62
    Downstream Utility Ongoing Cost Control Helps Provide Earnings Stability 250 203 200 191 185 O&M Expense ( Millions) 25 181 179 177 178 7 27 14 11 9 6 150 100 178 164 167 168 168 178 172 50 0 2008 2009 2010…
  63. Second Quarter Update – National Fuel Gas Co. – slide 63
    Downstream Utility Capital Spending Largely Focused on Maintenance 100 90-100 Capital Expenditures for Safety 85-95 Total Capital Expenditures Capital Expenditures ( Millions) 80 72.0 56.2 58.0 58.4 58.3 60 48.1 44.4…
  64. Second Quarter Update – National Fuel Gas Co. – slide 64
    Downstream Utility Achieved a Settlement in New York April 19, 2013 June 1, 2013 NY PSC issued an OTSC July 26, 2013 Order to Show Cause suggests Settlement (OTSC) commencing temporary discussions a proceeding to rates could…
  65. Second Quarter Update – National Fuel Gas Co. – slide 65
    Corporate National Fuel Gas Company A History of Success & A Future of Opportunity A History of Success A Future of Opportunity Adjusted EBITDA 10% CAGR Adjusted EBITDA 10-15% CAGR Growth Since 2009 Growth 2014 to 2018…
  66. Second Quarter Update – National Fuel Gas Co. – slide 66
    May 2014 Appendix Appendix 67
  67. Second Quarter Update – National Fuel Gas Co. – slide 67
    Appendix National Fuel Gas Company Current Hedge Positions Natural Gas Hedges NYMEX Average Dominion Average SoCal Average Total Average Fiscal Volume Price Volume Price Volume Price Volume Price Year (MMBtu) (/MMBtu) (MMBtu)…
  68. Second Quarter Update – National Fuel Gas Co. – slide 68
    Appendix National Fuel Gas Company Comparable GAAP Financial Measure Slides and Reconciliations This presentation contains certain non-GAAP financial measures. For pages that contain non-GAAP financial measures, pages containing the…
  69. Second Quarter Update – National Fuel Gas Co. – slide 69
    Appendix Reconciliation of Adjusted EBITDA to Consolidated Net Income ( Thousands) 12-Months FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Ended 3/31/14 Exploration & Production - West Division Adjusted EBITDA 171,572 187,838 187,603…
  70. Second Quarter Update – National Fuel Gas Co. – slide 70
    Appendix Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ( Thousands) FY 2014 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Forecast Capital Expenditures from Continuing Operations Exploration &…

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