National Fuel Gas Company · NYSE:NFG
National Fuel Gas — Howard Weil 40th Annual Energy Conference 2012
54 slides from National Fuel Gas's conference presentation, Mar 26, 2012
Slide 1: Investor Presentation, Howard Weil 40th Annual Energy Conference
Investor Presentation Howard Weil 40 th Annual Energy Conference March 26-28, 2012 Exhibit 99
Slide 2: Safe Harbor For Forward Looking Statements
March 26-28, 2012 2 National Fuel Gas Company Safe Harbor For Forward Looking Statements www.nationalfuelgas.com . You can also obtain this form on the SEC’s website at www.sec.gov . This presentation may contain “forward-looking statements” as defined by the Private Securities Litigation Reform Act
Slide 3: Core Businesses and Integrated Business Structure
March 26-28, 2012 3 Utility Exploration & Production Pipeline & Storage Energy Marketing NFG Distribution Corp. Focus on Customer Service and Safety Cost Control and Revenue Protection Stable, Predictable Earnings Supports Dividend and Credit Profile NFG Midstream Corp. Appalachian Gathering Growth
Slide 4: Integrated Business Structure
March 26-28, 2012 4 National Fuel Gas Company Integrated Business Structure
Slide 5: Our Business Mix Leads to Long-Term Value Creation
March 26-28, 2012 5 National Fuel Gas Company Our Business Mix Leads to Long-Term Value Creation The strategic and financial benefits created by the integrated mix of businesses has continued to generate significant long-term value for the Company The mix of rate-regulated and non-regulated business
Slide 6: Consolidated Capital Expenditures
March 26-28, 2012 6 National Fuel Gas Company Consolidated Capital Expenditures Note: A reconciliation to Capital Expenditures as presented on the Consolidated Statement of Cash Flows is included at the end of this presentation.
Slide 7: Pipeline & Storage / Midstream
March 26-28, 2012 7 Pipeline & Storage / Midstream
Slide 8: Positioned to Move Growing Marcellus Production
March 26-28, 2012 8 COVINGTON GATHERING SYSTEM (In-Service) TROUT RUN GATHERING SYSTEM WEST TO EAST OVERBECK TO LEIDY LAMONT COMPRESSOR STATION PHASE I & II (In-Service) TIOGA COUNTY EXTENSION (In-Service) LINE “N” EXPANSION (In-Service) NORTHERN ACCESS EXPANSION CENTRAL TIOGA COUNTY EXTENSION LINE
Slide 9: Critical To Boosting Returns in the Marcellus
March 26-28, 2012 9 TGP 300 Transco Tioga County Lycoming County Midstream Critical To Boosting Returns in the Marcellus Midstream’s gathering systems are critical to unlock remote, but highly productive Marcellus acreage Goal is to first work to assist Seneca and then gather rd party producer volum
Slide 10: Exploration & Production
March 26-28, 2012 10 Exploration & Production
Slide 11: Response to Low Gas Prices
March 26-28, 2012 11 Seneca Resources Reduced Seneca-operated rig count from 6 rigs to 4 rigs Curtailing production in excess of firm sales into TGP 300 Production currently curtailed: ~15 MMcf per day TGP 300 firm sales volumes: Current: 115 MMcf per day Starting April 1, 2012: 132.5 MMcf per day D
Slide 12: Net Rig Count (Working Interest)
March 26-28, 2012 12 Seneca Resources Net Rig Count (Working Interest) Fiscal 2013 rig count range depends on participation in EOG JV wells
Slide 13: Ramping Marcellus Shale Production
13 March 26-28, 2012 Seneca Resources Ramping Marcellus Shale Production Covington DCNR 595 DCNR 100 EOG JV WDA/Other Forecast
Slide 14: Pennsylvania Acreage Position
March 26-28, 2012 14 Seneca Resources Pennsylvania Acreage Position
Slide 15: Eastern Development Area (EDA) – Results & Plan Forward
March 26-28, 2012 15 Seneca Resources Eastern Development Area (EDA) – Results & Plan Forward SRC Lease Acreage SRC Fee Acreage DCNR Tract 595 FY2012: 1 Rig Operating FY2013: 0-1 Rigs Operating 2012 IP rates: 7- 8.8 MMcf per Day Covington – Fully Developed 47 Wells Drilled and Producing Production:
Slide 16: Seneca Resources
eS SENECA RESOURCES
Slide 17: Slide 17
Slide 18: Western Development Area (WDA) – Results & Plan Forward
March 26-28, 2012 16 Marcellus Shale Western Development Area (WDA) – Results & Plan Forward SRC Lease Acreage SRC Fee Acreage EOG Contributed JV Acreage SRC Contributed JV Acreage Seneca Operated EOG Operated Approx. Outline of JV Acreage 200,000 Gross Acres Seneca 50% W.I. (Avg. 58% NRI) Punxy (EO
Slide 19: Evaluating Marcellus Wet Gas Potential
March 26-28, 2012 17 Seneca Resources Evaluating Marcellus Wet Gas Potential More than 100,000 acres with BTU 1100-1200 Need cryogenic plant only for “ethane rejection mode” processing $0.50 - $0.70 per Mcf uplift from sale of NGLs
Slide 20: Targeting Continued Cost Reductions
March 26-28, 2012 18 Marcellus Shale Targeting Continued Cost Reductions
Slide 21: Utica Shale – Activity Summary
March 26-28, 2012 19 Utica Shale – Activity Summary Seneca Resources
Slide 22: California: Stable Production and Strong Cash Flows
March 26-28, 2012 20 Rank Company California 2010 BOEPD 7 Seneca Resources 9,041 California Stable Production and Strong Cash Flows Chevron 174,856 Aera (Shell/Exxon) 158,786 Occidental 151,584 Plains Exploration 36,488 Venoco Inc. 19,121 Berry Petroleum 18,513 Breitburn Energy 7,414 MacPherson 7,18
Slide 23: Strong Margins Support Significant Free Cash Flow
March 26-28, 2012 21 California Strong Margins Support Significant Free Cash Flow Average Revenue in 2012 1 Quarter $86.85 per BOE Steam Fuel Production & Other Taxes G&A Other Operating Costs EBITDA Non-Steam Fuel LOE Fiscal Year 2012 (1 Quarter) EBITDA per BOE st $69.65 Note: A reconciliation of E
Slide 24: West Division – Modest Production Growth
March 26-28, 2012 22 Seneca Resources West Division – Modest Production Growth 8,000 8,500 9,000 9,500 10,000 Actual Forecast Production Increase Drivers 1. North MWSS Steaming 2. South MWSS Field Extensions 3. Sespe Infill Drill Program
Slide 25: MWSS South Update
March 26-28, 2012 23 MWSS South Update Seneca Resources
Slide 26: Sespe Field – 2011 Drill Plan & Results
March 26-28, 2012 24 350’ Thick (Medium Blue) 800’ Thick (Dark Red) ~550’ Thick (Green) White Star – 5 Acre Tests Powell – 10 Acre Tests Powell 4 61 BOEPD 1 Oil WS 534-33 42 BOEPD 1 Oil White Star – 10 Acre Test WS 48-33 Completion Begins April 2012 White Star 533-33 Qr T X Base X WS 533-33 88 BOEPD
Slide 27: Sespe Field – 2012 Drill Plan
March 26-28, 2012 25 Seneca Resources 350’ Thick (Medium Blue) ~550’ Thick (Green) 800’ Thick (Dark Red) White Star 533-33 X CW Base X Qr T X Base X Frankel A (5) Type Log for Frankel A Wells Proposed Bottom Hole Locations Thornbury (10/5) Coldwater Tests 6 Wells 140 - 170 MBoe/Well 1 Mile Oak Flat
Slide 28: Monterey Shale Play
March 26-28, 2012 26 Producing (Gross): 50 BOPD 3-4 Delineation Wells Planned AMI Outlines Seneca Resources Monterey Shale Play Gross Thickness of Monterey Interval Monterey Shale Play Belridge Field 5 AMIs across the field Seneca WI: 12.5% Seneca NRI: 11.1%
Slide 29: Reduced Capital Spending
March 26-28, 2012 27 Seneca Resources Reduced Capital Spending (1) Does not include the $34.9 MM acquisition of Ivanhoe’s U.S.-based assets in California, as this was accounted for as an investment in subsidiaries on the Statement of Cash Flows, and was not included in Capital Expenditures
Slide 30: Production Still Growing
March 26-28, 2012 28 20.1 19.8 19.2 8.7 9.3 7.9 19-21 19-21 6-8 5-7 Seneca Resources Production Still Growing 2009 2010 2011 2012 Forecast 2013 Forecast Fiscal Year California Upper Devonian Marcellus/Utica Gulf of Mexico 7.2 35.3 13.7 13.3 5.2 42.5 49.6 67.6 56-61 88-98 81-90 112-126
Slide 31: Appendix
March 26-28, 2012 29 National Fuel Gas Company Appendix
Slide 32: Hedge Positions and Strategy
March 26-28, 2012 30 Natural Gas Swaps Volume (Bcf) Average Hedge Price Oil Swaps Volume (MMBbl) Average Hedge Price National Fuel Gas Company Hedge Positions and Strategy Fiscal 2012 (1) 26.2 $5.89 / Mcf Fiscal 2013 37.1 $5.02 / Mcf Fiscal 2014 17.8 $4.37 / Mcf Fiscal 2012 (1) 1.2 $77.03 / Bbl Fisc
Slide 33: Strong Dividend Track Record
March 26-28, 2012 31 National Fuel Gas Company Strong Dividend Track Record Compound Annual Growth Rate 5.0% National Fuel has had 109 uninterrupted years of dividend payments and has increased its dividend for 41 consecutive years $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60 Annual Rate at
Slide 34: Manageable Debt Maturity Schedule
March 26-28, 2012 32 National Fuel Gas Company Manageable Debt Maturity Schedule Paid at Maturity on November 21, 2011 $150 $250 $300 $250 $500 $49 $50 7.395% 7.375% $0 $100 $200 $300 $400 $500 $600 Fiscal Year
Slide 35: Capitalization & Liquidity
March 26-28, 2012 33 Shareholders’ Equity 57.5% Long-Term Debt 41.9% Capital Resources Total Short-Term Capacity: $1,085 Million Committed Credit Facility: $750 Million Five-year syndicated facility entered into January 6, 2012 Uncommitted Lines of Credit: $335 Million $300.0 Million Commercial Pape
Slide 36: Targeted Capital Structure
March 26-28, 2012 34 Debt 35% - 45% Equity 55% - 65% 40% 30% 50% 50% 60% 70% 50% 50% National Fuel Gas Company Targeted Capital Structure Long-Term Consolidated Capital Structure Target Capital Structure Targets by Segment All Other E&P P&S Utility Debt Equity
Slide 37: Exploration & Production Appendix
March 26-28, 2012 35 Exploration & Production Appendix
Slide 38: Continued Improvement in Finding & Development Costs
March 26-28, 2012 36 Seneca Resources Continued Improvement in Finding & Development Costs
Slide 39: Expanding 3D Seismic Coverage
March 26-28, 2012 37 Punxy West Branch Mt. Jewett DCNR 001 DCNR 007 Covington DCNR 595 DCNR 100 Owl’s Nest Marcellus Shale Expanding 3D Seismic Coverage
Slide 40: Covington Typecurve
March 26-28, 2012 38 Current: 1 Segment Current: Compression Segment Original 6.0 Bcf Typecurve st Marcellus Shale Covington Typecurve – 6.7 Bcfe EUR (Greater Than 3,500’ Lateral) IP Rate 5,400 MMcf/d Hyp. Coeff. 1.25 Decline 65.5% Limit 6 Mo. IP Rate 3,800 MMcf/d Hyp. Coeff. 1.25 Decline 48% Exp. T
Slide 41: Breaking Down Our Acreage Position
March 26-28, 2012 39 Area Net Acres Possible Locations Wells Drilled Wells Completed EUR (Bcfe) Status Developed Marcellus Shale Breaking Down Our Acreage Position Eastern Development Area (EDA) Covington 7,000 5.5 6,000 7.0 Full Development 10,000 8.0 Full Development 15,000 3.0 - 5.0 Delineating 1
Slide 42: California: Stable Production Fields
March 26-28, 2012 40 South Lost Hills ~1,700 BOEPD Monterey Shale Primary 215 Active Wells Sespe ~1,200 BOEPD Sespe Formation Primary 188 Active Wells North Midway Sunset ~4,400 BOEPD Potter & Tulare Formation Steamflood 728 Active Wells South Midway Sunset ~1,000 BOEPD Antelope Formation Steamflood
Slide 43: Water Management Program
March 26-28, 2012 41 Marcellus Shale Water Management Program Water Sourcing: Coal mine runoff Permitted freshwater sources Recycled water Water Management: Instituted a “Zero Surface Discharge” policy Recycle Marcellus flowback and produced water Centralized water handling in development areas Tiog
Slide 44: Zero Liquid Discharge Operation
March 26-28, 2012 42 Marcellus Shale “Zero Liquid Discharge Operation” Utilizing a state-of-the-art evaporative technology to ensure no liquid is discharged at the surface Building centrally located units in the Western Development Area (WDA) and the Eastern Development Area (EDA) Removes all liquid
Slide 45: Pipeline & Storage / Midstream Appendix
March 26-28, 2012 43 Pipeline & Storage / Midstream Appendix
Slide 46: Positioned to Move Growing Marcellus Production
March 26-28, 2012 44 COVINGTON GATHERING SYSTEM (In-Service) TROUT RUN GATHERING SYSTEM WEST TO EAST OVERBECK TO LEIDY LAMONT COMPRESSOR STATION PHASE I & II (In-Service) TIOGA COUNTY EXTENSION (In-Service) LINE “N” EXPANSION (In-Service) NORTHERN ACCESS EXPANSION CENTRAL TIOGA COUNTY EXTENSION LINE
Slide 47: Pipeline & Storage Expansion Initiatives
March 26-28, 2012 45 Project Name Capacity (Dth/D) Est. CapEx In-Service Date Market Status Pipeline & Storage Expansion Initiatives Lamont Compressor Station 40,000 $6 MM 6/2010 Fully Subscribed Completed Lamont Phase II Project 50,000 $7.6 MM 7/2011 Fully Subscribed Completed Line “N” Expansion 16
Slide 48: Critical To Boosting Returns in the Marcellus
March 26-28, 2012 46 TGP 300 Transco Tioga County Lycoming County Midstream Critical To Boosting Returns in the Marcellus Midstream’s gathering systems are critical to unlock remote, but highly productive Marcellus acreage Goal is to first work to assist Seneca and then gather rd party producer volu
Slide 49: Midstream Corporation Expansion Initiatives
March 26-28, 2012 47 Project Name Capacity (Mcf/D) Est. CapEx In-Service Date Market Comments Midstream Corporation Expansion Initiatives Covington Gathering System 220,000 $54 MM Multiple Phases - Most In-Serivce Fully Subscribed Completed – Flowing into TGP 300 Line. This includes $32 million of s
Slide 50: Deploying Significant Growth Capital
March 26-28, 2012 48 48 Pipeline & Storage Growth Deploying Significant Growth Capital Capital spending is increasing to fund system expansion and assuming recently allowed industry average ROE and capital structure targets, this segment can achieve significant growth with a rapid increase in contra
Slide 51: Utility Appendix
March 26-28, 2012 49 Utility Appendix
Slide 52: Continued Cost Control
March 26-28, 2012 50 Utility Continued Cost Control
Slide 53: Financial Stability
March 26-28, 2012 51 Utility Financial Stability Rate Mechanisms New York & Pennsylvania Low Income Rates Choice Program/POR Merchant Function Charge New York only Revenue Decoupling 90/10 Sharing Weather Normalization
Slide 54: Comparable GAAP Financial Measure Slides and Reconciliations
March 26-28, 2012 52 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 most directly comparable GAAP financial measures and re
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