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Investor Presentation – National Fuel Gas Co.

National Fuel Gas Co. · Aug 8, 2014 · 67 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. Investor Presentation – National Fuel Gas Co. – slide 1
    National Fuel Gas Company Investor Presentation August 2014
  2. Investor Presentation – National Fuel Gas Co. – slide 2
    Corporate National Fuel Gas Company Exceptional Assets, Focused on Execution 1.549 Tcfe of Proved Reserves(1) 3.0 MMBbl of Crude Oil Production(2) August 2014 800,000 Net Acres in Pennsylvania 235 Million of Midstream Adjusted…
  3. Investor Presentation – National Fuel Gas Co. – slide 3
    Corporate National Fuel Gas Company Targeting Sustained EBITDA Growth Over the Next Five Years 1,250 Exploration & Production Segment Gathering Segment Pipeline & Storage Segment Utility Segment 1,000 Energy Marketing & Other 939…
  4. Investor Presentation – 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 1,070- 1,250 1,280 Utility Segment Energy Marketing &…
  5. Investor Presentation – 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. Investor Presentation – National Fuel Gas Co. – slide 6
    Corporate National Fuel Gas Company Dividend Track Record 2.00 Dividend Consistency Consecutive Dividend Payments 112 Years Consecutive Dividend Increases 44 Years Annual Dividend Rate 1.50 Current Annualized Dividend Rate 1.54…
  7. Investor Presentation – National Fuel Gas Co. – slide 7
    Upstream Exploration & Production Overview August 2014 8
  8. Investor Presentation – 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. Investor Presentation – 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) 160-168 Annual Production (Bcfe) 150 120.7 159-197 83.4…
  10. Investor Presentation – 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) 800 Capital Expenditures ( Millions) 694 650-750 649 575-625 600 533 398…
  11. Investor Presentation – 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 match its long-term firm Other O&M Expense transport (FT) contracts with firm sales (FS) General &…
  12. Investor Presentation – 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. Investor Presentation – 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 45 Wells Drilled(1) (52 Total…
  14. Investor Presentation – 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. Investor Presentation – National Fuel Gas Co. – slide 15
    Upstream Marcellus Shale Huge High Quality Position 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 200,000…
  16. Investor Presentation – National Fuel Gas Co. – slide 16
    Upstream Marcellus Shale 2014 & 2015 WDA Delineation Program SRC Fee Acreage SRC Lease Acreage Beechwood Marcellus Horizontal EOG Earned JV Acreage West Branch 1 Well Drilled Marcellus Horizontal Beechwood Marcellus…
  17. Investor Presentation – National Fuel Gas Co. – slide 17
    Upstream Marcellus Shale Strong Wells Across WDA Acreage WDA Development Areas: Peak Producing 24-Hour Rate Average Average Treatable Area Well Count (MMcfd) 7-Day (MMcf/d) Lateral Length Clermont/Rich Valley Elk, Cameron & McKean…
  18. Investor Presentation – National Fuel Gas Co. – slide 18
    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…
  19. Investor Presentation – National Fuel Gas Co. – slide 19
    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…
  20. Investor Presentation – National Fuel Gas Co. – slide 20
    Upstream Marcellus Shale CRV is in Full Development Mode Marcellus Faults 200-250 Horizontal Locations Marcellus & Basement Faults Planned Wells Drilled Wells Producing Wells Pad C08-D Clermont RCS: 9H 7-day IP: Rich Valley…
  21. Investor Presentation – National Fuel Gas Co. – slide 21
    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…
  22. Investor Presentation – National Fuel Gas Co. – slide 22
    Upstream Marcellus Shale Position Offers Attractive Economics 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) EASTERN DEVELOPMENT AREA (EDA)…
  23. Investor Presentation – National Fuel Gas Co. – slide 23
    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…
  24. Investor Presentation – National Fuel Gas Co. – slide 24
    Corporate Natural Gas Marketing Adding Long-Term Firm Transport to the Portfolio FT Capacity (Dth/day) In- Project Service Contract Delivery Fiscal Fiscal Fiscal Fiscal (Counterparty) Date Term Market 2015 2016 2017 2018 Matched…
  25. Investor Presentation – National Fuel Gas Co. – slide 25
    Corporate Natural Gas Marketing Significant Base of Long-Term Firm Contracts 1,000 Over time, Seneca plans to enter into firm sales agreements to support all of its firm transportation capacity Atlantic Sunrise Northern Access…
  26. Investor Presentation – National Fuel Gas Co. – slide 26
    Corporate Natural Gas Marketing Firm Sales Provide a Market for Appalachian Production Fixed Price 500,000 Values shown represent the price or differential to a reference NYMEX Long-Term Firm Gross Sales (Avg Dth per Day) price…
  27. Investor Presentation – National Fuel Gas Co. – slide 27
    Corporate Natural Gas Marketing Current Natural Gas Hedge Positions 125 Dominion NYMEX Other 100 90.6 Natural Gas Swaps (Million MMBtu) 75 65.7 9.0 70.7 46.8 50 3.0 37.8 29.8 25.0 25 22.3 18.7 18.8 18.8 5.6 7.2…
  28. Investor Presentation – National Fuel Gas Co. – slide 28
    Corporate Natural Gas Marketing Current Hedge Book has Seneca Positioned Very Well 100% Hedging Policy Range Oil Hedges Natural Gas Hedges 80% 63% 64% 60% % Hedged 50% 48% 40% 34% 29% 20% 17% 9% 1% 2% 0% Fiscal…
  29. Investor Presentation – National Fuel Gas Co. – slide 29
    Corporate Natural Gas Marketing FY 2014 Production Firm Sales & Hedge Composition 150 139-147 5.5 Bcf 9.5 Bcf 3.9 Bcf 120 7.0 Bcf Price Certainty Total Production (Bcfe) 18.3 Bcf Price Certainty 90 60 98.8 Bcf…
  30. Investor Presentation – National Fuel Gas Co. – slide 30
    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 36.8 Bcf 150 Total Production…
  31. Investor Presentation – National Fuel Gas Co. – slide 31
    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…
  32. Investor Presentation – National Fuel Gas Co. – slide 32
    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…
  33. Investor Presentation – National Fuel Gas Co. – slide 33
    Upstream California Stable Production Fields; Modest Growth Potential 6,000 2010 4,500 East Coalinga Q3 2014 4,100 Temblor Formation Gross Operated Daily 4,500 Production (Boe/d) Primary 3,000 1,700…
  34. Investor Presentation – National Fuel Gas Co. – slide 34
    Upstream California East Coalinga Summary 2014 Location 2013 Well Production has increased from 214 BOPD to Active Well 749 BOPD Idle Well P&A Highest on leases since 2000 Seneca Lease Drilled 12 evaluation wells in 2013 Field…
  35. Investor Presentation – National Fuel Gas Co. – slide 35
    Upstream California South Midway Sunset Has Delivered Significant Growth Seneca Acquired B Pool A Pool in June 2009 16X Pool 97X Pool Highlights Since Acquisition 251 Pool 252 Pool Increased daily production 310% to 1000 SE…
  36. Investor Presentation – National Fuel Gas Co. – slide 36
    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…
  37. Investor Presentation – National Fuel Gas Co. – slide 37
    Upstream California Modest Growth Opportunities, But Strong Economics Average Estimated Average EUR IRR Fiscal 2015 Field Well Cost (MBO) 100/Bbl Locations South Midway Sunset 250,000 30 75% 42 East Coalinga 400,000 40 50% 25…
  38. Investor Presentation – National Fuel Gas Co. – slide 38
    Upstream California Modest Growth Anticipated in 2014 and 2015 11,000 Forecast Average Daily Net Production (BOE per Day) 10,000 9,322 9,056 9,078 9,000 8,773 8,000 7,000 6,000 2010 2011 2012 2013 2014 2015…
  39. Investor Presentation – National Fuel Gas Co. – slide 39
    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 August 2014…
  40. Investor Presentation – National Fuel Gas Co. – slide 40
    Upstream California Looking Forward 1. Manage decline of base production 2. Pursue and develop opportunities for growth from current assets East Coalinga Sespe South Midway Sunset 3. Continue to pursue additional acquisition…
  41. Investor Presentation – National Fuel Gas Co. – slide 41
    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…
  42. Investor Presentation – National Fuel Gas Co. – slide 42
    Midstream Midstream Businesses Overview August 2014 43
  43. Investor Presentation – National Fuel Gas Co. – slide 43
    Midstream Midstream Businesses Positioned to Serve Senecas Rapidly Growing Production August 2014 44
  44. Investor Presentation – National Fuel Gas Co. – slide 44
    Midstream Gathering Gathering is the First Step to Reaching a Market Gathering Segment Revenue 120 90- TGP 200 110 Revenue ( Millions) 72 - 90 74 60 34.8 30 17.5 0 2009 2010 2011 2012 2013 2014E 2015E Fiscal Year…
  45. Investor Presentation – National Fuel Gas Co. – slide 45
    Midstream Gathering Gathering Systems Supporting Senecas EDA Production Covington Gathering System In-service date: November 2009 Capacity: 220,000 Dth per day Interconnect: TGP 300 Capital expenditures (to date): 31.3 million…
  46. Investor Presentation – National Fuel Gas Co. – slide 46
    Midstream Gathering Clermont Gathering System has Large Expandability Clermont Gathering CC Compressor Station System Interconnect In-Service: July 2014 Ultimate Trunkline Capacity: 1+ Bcf per day Interconnects TGP 300 and…
  47. Investor Presentation – National Fuel Gas Co. – slide 47
    Midstream Gathering Capital Deployment Will Deliver Long-Term Growth 500 150 Revenue 428-488 Cumulative Capital Invested 400 120 Capital Expenditures ( Millions) Revenue Growth (2013 to 2015): 70% CAGR 90-110 303-313…
  48. Investor Presentation – National Fuel Gas Co. – slide 48
    Midstream Pipeline & Storage Project Opportunities to Support WDA Growth Develop multiple outlets to high-value markets August 2014 49
  49. Investor Presentation – National Fuel Gas Co. – slide 49
    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 2016(1)…
  50. Investor Presentation – National Fuel Gas Co. – slide 50
    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…
  51. Investor Presentation – National Fuel Gas Co. – slide 51
    Midstream Pipeline & Storage Northern Access 2016 Provides Additional Access to Canada Northern Access 2016(1) In-Service: Late 2016 System: NFG Supply Corp. & Empire Pipeline, Inc. Capacity 350,000 Dth per day Interconnect…
  52. Investor Presentation – National Fuel Gas Co. – slide 52
    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…
  53. Investor Presentation – National Fuel Gas Co. – slide 53
    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…
  54. Investor Presentation – National Fuel Gas Co. – slide 54
    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…
  55. Investor Presentation – National Fuel Gas Co. – slide 55
    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…
  56. Investor Presentation – National Fuel Gas Co. – slide 56
    Midstream Pipeline & Storage Significant Expansions Are Driving Growth Completed Projects (Since 2009) Delivering Gas North Tioga County Extension Recent Capacity 1,113,000 Dth/day Northern Access 2012 Additions Northern Access…
  57. Investor Presentation – National Fuel Gas Co. – slide 57
    August 2014 Downstream Utility Overview 58
  58. Investor Presentation – National Fuel Gas Co. – slide 58
    Downstream Utility New York & Pennsylvania Service Territories New York Total Customers: 522,000 Rate Mechanisms: Revenue Decoupling Weather Normalization Low Income Rates Merchant Function Charge (Uncollectibles Adjustment)…
  59. Investor Presentation – National Fuel Gas Co. – slide 59
    Downstream Utility Shifting Trends in 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 June 30…
  60. Investor Presentation – National Fuel Gas Co. – slide 60
    Downstream Utility A Proven History of Controlling Costs 250 203 200 191 188 O&M Expense ( Millions) 25 181 179 177 178 7 27 14 11 9 6 150 100 178 164 167 168 168 181 172 50 0 2008 2009 2010 2011 2012 2013 12…
  61. Investor Presentation – National Fuel Gas Co. – slide 61
    Downstream Utility Capital Spending Largely Focused on Maintenance 95-105 100 Capital Expenditures for Safety 85-90 Total Capital Expenditures Capital Expenditures ( Millions) 80 72.0 Near-term increase in capital…
  62. Investor Presentation – National Fuel Gas Co. – slide 62
    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…
  63. Investor Presentation – National Fuel Gas Co. – slide 63
    August 2014 Appendix Appendix 64
  64. Investor Presentation – National Fuel Gas Co. – slide 64
    Appendix National Fuel Gas Company Current Hedge Positions Natural Gas Hedges (/MMBtu) NYMEX Dominion SoCal MichCon Total Fiscal Volume Avg Volume Avg Volume Avg Volume Avg Volume Avg Year (MMBtu) Price (MMBtu) Price (MMBtu) Price…
  65. Investor Presentation – National Fuel Gas Co. – slide 65
    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…
  66. Investor Presentation – National Fuel Gas Co. – slide 66
    Appendix Reconciliation of Adjusted EBITDA to Consolidated Net Income ( Thousands) 12-Months FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Ended 6/30/14 Exploration & Production - West Division Adjusted EBITDA 171,572 187,838 187,603…
  67. Investor Presentation – National Fuel Gas Co. – slide 67
    Appendix Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ( Thousands) FY 2014 FY 2015 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Forecast Forecast Capital Expenditures from Continuing Operations…

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