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Investor Presentation – National Fuel Gas Co.

National Fuel Gas Co. · Jan 14, 2014 · 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. Investor Presentation – National Fuel Gas Co. – slide 1
    National Fuel Gas Company Investor Presentation January 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) 2.8 MMBbl of Crude Oil Production(2) January 2014 800,000 Net Acres in Pennsylvania 191 Million of Midstream…
  3. Investor Presentation – National Fuel Gas Co. – slide 3
    Midstream Gathering Gathering is the First Step to Reaching a Market Gathering Segment Revenue 80- 100 TGP 200 95 Revenue ( Millions) 60- 75 72 50 34.8 25 17.5 0 2009 2010 2011 2012 2013 2014E 2015E Clermont Fiscal…
  4. Investor Presentation – National Fuel Gas Co. – slide 4
    Corporate National Fuel Gas Company Targeting Sustained Growth for the Next Five Years 1,250 Exploration & Production Segment Gathering Segment Pipeline & Storage Segment Utility Segment 1,000 Energy Marketing & Other 2014 2018…
  5. Investor Presentation – National Fuel Gas Co. – slide 5
    Corporate National Fuel Gas Company Capital Spending Adjusts to Capitalize on Opportunities 1,500 Exploration & Production Segment Gathering Segment Pipeline & Storage Segment 1,055- 1,250 1,265 Utility Segment Energy Marketing &…
  6. Investor Presentation – National Fuel Gas Co. – slide 6
    Corporate National Fuel Gas Company Maintaining a Strong Balance Sheet Debt / Adjusted EBITDA Capitalization 2.5 Average Debt / Adjusted EBITDA 2.02 1.98 2.0 1.89 1.89 1.75 1.5 Total Debt(1) Shareholders 43% Equity…
  7. Investor Presentation – National Fuel Gas Co. – slide 7
    Corporate National Fuel Gas Company Dividend Track Record 2.00 Dividend Consistency Consecutive Dividend Payments 111 Years Consecutive Dividend Increases 43 Years Current Annualized Dividend Rate 1.50 per Share Annual Dividend…
  8. Investor Presentation – National Fuel Gas Co. – slide 8
    Upstream Exploration & Production Overview January 2014 9
  9. Investor Presentation – National Fuel Gas Co. – slide 9
    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…
  10. Investor Presentation – National Fuel Gas Co. – slide 10
    Upstream Seneca Resources Delivering Tremendous Production Growth 225 Gulf of Mexico (Divested in 2011) East Division (Appalachia) 180-220 West Division (California/Kansas) 145-165 Annual Production (Bcfe) 150 120.7…
  11. Investor Presentation – National Fuel Gas Co. – slide 11
    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) 694 650-750 649 550-650 600…
  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: 85 MMcf per Day 34 Wells Drilled (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 Senecas Operations 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. Investor Presentation – National Fuel Gas Co. – slide 16
    Upstream Seneca Acreage Huge Position Varies in Understanding Seneca Fee Seneca Lease Understanding Senecas 780,000 Net Acres Northeast Core 30,000 acres in NE Core Tier I Acres 200,000 acres Economic at 2.80 to 3.80/Mcfe…
  17. Investor Presentation – 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. Investor Presentation – 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 Rich Valley 27H RCS1 6,372 42 8.1 7.8 7.4…
  19. Investor Presentation – 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. Investor Presentation – National Fuel Gas Co. – slide 20
    Upstream Marcellus Shale Rich Valley/Clermont is in Full Development Mode Marcellus Faults Marcellus & Basement Faults Pad N: Spacing Test 9 of 9 Wells Drilled Clermont RCS: 9H 7-day IP: 10.0 MMcf/d (EUR: 8.6 Bcf) 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 Hz Appraisal Program 2015+ Locations 6 - 8 BCF/well 4 - 6 BCF/well 2-4…
  22. Investor Presentation – National Fuel Gas Co. – slide 22
    Upstream Marcellus Shale 1,700 To 2,000 Economic WDA Locations Below 4/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 40 11.5 1,030…
  23. Investor Presentation – National Fuel Gas Co. – slide 23
    Upstream Point Pleasant & Utica Shale Continuing to Delineate Range Resources Point Pleasant Permitted 1.4 MMcf/d Northern Boundary Not Effectively Stimulated Drilled/Drilling Completed Producing Mt. Jewett Horizontal: completed…
  24. Investor Presentation – National Fuel Gas Co. – slide 24
    Upstream California Stable Production Fields; Modest Growth Potential 6,000 2010 4,500 East Coalinga 2013 4,000 Temblor Formation Gross Operated Daily 4,500 Production (Boe/d) Primary 3,000 1,700 1,500…
  25. Investor Presentation – National Fuel Gas Co. – slide 25
    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 January 2014…
  26. Investor Presentation – National Fuel Gas Co. – slide 26
    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…
  27. Investor Presentation – National Fuel Gas Co. – slide 27
    Upstream California South Midway Sunset Has Delivered Significant Growth Monthly Production at South Midway Sunset 2,000 Daily Production (Boe per day) Seneca Acquired in 1,500 June 2009 B Pool A Pool 1,000 500 0 16X…
  28. Investor Presentation – National Fuel Gas Co. – slide 28
    Upstream California South MWSS Growth Opportunities Continue into 2014 January 2014 29
  29. Investor Presentation – National Fuel Gas Co. – slide 29
    Upstream California Early Success in Farm-In with Chevron at East Coalinga Returned to Production Monthly Production East Coalinga 2013 Evaluation Wells 750 1-Acre Test Daily Production (Boe per Day) Seneca Lease 48 BOPD…
  30. Investor Presentation – National Fuel Gas Co. – slide 30
    Upstream California Ongoing Evaluation of Long-Term Sespe Potential 2011 Wells (5) TC 524-28 IP: 100 BOEPD 2012 Wells (6) 1 1st Oil 10/13 2013 Wells (6) Mile TC 525-28 2014 Wells (4) IP: 160 BOEPD 1st Oil 10/13 WS 535-33…
  31. Investor Presentation – National Fuel Gas Co. – slide 31
    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% 30…
  32. Investor Presentation – National Fuel Gas Co. – slide 32
    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.)…
  33. Investor Presentation – National Fuel Gas Co. – slide 33
    Upstream Mississippian Lime Commencing Evaluation Program in Fiscal 2014 Total Net Acres: 13,615 Unit 100% working interest in 4,400 30-day IP: gross acres 352 BOED (92% Oil/NGLs) 55% net working interest in 17,365 gross acres…
  34. Investor Presentation – National Fuel Gas Co. – slide 34
    Corporate Hedging Overview 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 Firm…
  35. Investor Presentation – National Fuel Gas Co. – slide 35
    Corporate Hedging Overview Firm Sales Provide a Market for Appalachian Production 500,000 Prices shown represent the sales (netback Other price) at the first non-affiliated interstate NYMEX pipeline, including the cost of all…
  36. Investor Presentation – National Fuel Gas Co. – slide 36
    Corporate Hedging Overview Current Natural Gas Hedge Positions 125 Dominion NYMEX SoCal 103.3 100 Natural Gas Swaps (Bcf) 77.9 75 74.7 53.6 50 58.9 41.7 35.7 23.8 25 27.4 17.8 17.9 17.9 5.3 0 January 2014…
  37. Investor Presentation – National Fuel Gas Co. – slide 37
    Corporate Hedging Overview Current Hedge Book has Seneca Positioned Very Well 100% Hedging Policy Range Oil Hedges Natural Gas Hedges 80% 75% 66% 60% % Hedged 43% 43% 41% 40% 24% 20% 15% 13% 3% 2% 0% Fiscal…
  38. Investor Presentation – National Fuel Gas Co. – slide 38
    Corporate Hedging Overview FY 2014 Production Firm Sales & Hedge Composition 150 Seneca has an additional 19.7 Bcf of NYMEX hedges to help mitigate commodity exposure on its sales 125-143 120 29 Bcf Total Production (Bcfe) 10…
  39. Investor Presentation – National Fuel Gas Co. – slide 39
    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…
  40. Investor Presentation – National Fuel Gas Co. – slide 40
    Midstream Midstream Businesses Overview January 2014 41
  41. Investor Presentation – National Fuel Gas Co. – slide 41
    Midstream Midstream Businesses Positioned to Serve Senecas Rapidly Growing Production January 2014 42
  42. Investor Presentation – National Fuel Gas Co. – slide 42
    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): 28.3 million…
  43. Investor Presentation – National Fuel Gas Co. – slide 43
    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…
  44. Investor Presentation – National Fuel Gas Co. – slide 44
    Midstream Gathering Capital Deployment Will Deliver Long-Term Growth 500 150 Revenue Cumulative Capital Invested 368-468 400 120 Capital Expenditures ( Millions) 268-318 Revenue Growth (2013 to 2015): 60% CAGR 80-95…
  45. Investor Presentation – National Fuel Gas Co. – slide 45
    Midstream Pipeline & Storage Project Opportunities to Support WDA Growth Develop multiple outlets to high-value markets January 2014 46
  46. Investor Presentation – National Fuel Gas Co. – slide 46
    Midstream Pipeline & Storage Northeast PA Spot Markets are Heavily Discounted Eastern Canada (Dawn) is Currently a Premium Priced Market 5.00 Dawn to Dominion South Point Dawn to TGP 300 - Zone 4 4.00 per MMBtu 3.00…
  47. Investor Presentation – National Fuel Gas Co. – slide 47
    Midstream Pipeline & Storage Expansions to Move Gas from the WDA are Significant Projects to Support WDA Growth Project Capacity (Dth/day) Clermont to Northern Access 2015 140,000 Chippawa (2016) Northern Clermont to Chippawa…
  48. Investor Presentation – National Fuel Gas Co. – slide 48
    Midstream Pipeline & Storage Recent 3rd Party Expansions Have Been Highly Successful Expansions for 3rd Parties Capacity Project (Dth/day) Tioga County Northern Access 2013 320,000 Northern Extension Tioga County Extension…
  49. Investor Presentation – National Fuel Gas Co. – slide 49
    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…
  50. Investor Presentation – National Fuel Gas Co. – slide 50
    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…
  51. Investor Presentation – National Fuel Gas Co. – slide 51
    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…
  52. Investor Presentation – National Fuel Gas Co. – slide 52
    Midstream Pipeline & Storage Significant Expansions Are Driving Growth Completed Projects (Since 2009) Delivering Gas North Recent Capacity Additions 1,113,000 Tioga County Extension Northern Access Northern Access 2015 Clermont…
  53. Investor Presentation – National Fuel Gas Co. – slide 53
    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…
  54. Investor Presentation – National Fuel Gas Co. – slide 54
    January 2014 Downstream Utility Overview 55
  55. Investor Presentation – National Fuel Gas Co. – slide 55
    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…
  56. Investor Presentation – National Fuel Gas Co. – slide 56
    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 Sept 30 12-Months Ended Sept 30…
  57. Investor Presentation – National Fuel Gas Co. – slide 57
    Downstream Utility Continued Cost Control Helps Provide Earnings Stability 250 203 200 191 25 181 178 O&M Expense ( Millions) 179 177 27 14 11 9 6 150 100 178 164 167 168 168 172 50 0 2008 2009 2010 2011 2012…
  58. Investor Presentation – National Fuel Gas Co. – slide 58
    Downstream Utility Capital Spending Largely Focused on Maintenance 100 Capital Expenditures for Safety Total Capital Expenditures 80-90 80-90 Capital Expenditures ( Millions) 80 72.0 56.2 58.0 58.4 58.3 60 48.1 44.4 45.0…
  59. Investor Presentation – National Fuel Gas Co. – slide 59
    Downstream Utility Achieved a Settlement in New York April 19, 2013 NY PSC issued an Order to Show Cause (OTSC) June 1, 2013 July 26, 2013 commencing a OTSC suggests Settlement discussions proceeding to establish temporary rates…
  60. Investor Presentation – National Fuel Gas Co. – slide 60
    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…
  61. Investor Presentation – National Fuel Gas Co. – slide 61
    January 2014 Appendix Appendix 62
  62. Investor Presentation – National Fuel Gas Co. – slide 62
    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 SoCal Volume Price Year (Bcf) (/Mcf) (Bcf) (/Mcf) (Bcf)…
  63. Investor Presentation – National Fuel Gas Co. – slide 63
    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…
  64. Investor Presentation – National Fuel Gas Co. – slide 64
    Appendix Reconciliation of Exploration & Production West Division Adjusted EBITDA to Exploration & Production Segment Net Income ( Thousands) FY 2013 Exploration & Production - West Division Adjusted EBITDA 215,042 Exploration…
  65. Investor Presentation – National Fuel Gas Co. – slide 65
    Appendix Reconciliation of Adjusted EBITDA to Consolidated Net Income ( Thousands) FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Exploration & Production - West Division Adjusted EBITDA 171,572 187,838 187,603 226,897 215,042 Exploration…
  66. Investor Presentation – National Fuel Gas Co. – slide 66
    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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