National Fuel Gas Company · NYSE:NFG
National Fuel Gas — Scotia Howard Weil 43rd Annual Energy Conference - March 2015
66 slides from National Fuel Gas's conference presentation, Mar 23, 2015
Slide 1: National Fuel Gas Company Investor Presentation
National Fuel Gas Company Investor Presentation Scotia Howard Weil 43 rd Annual Energy Conference - March 2015 1 Exhibit
Slide 2: Forward-looking statements
Corporate This presentation may contain “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995, including statements regarding future prospects, plans, objectives, goals, projections, estimates of oil and gas quantities, strategies, future events or performan
Slide 3: Quality Assets, Exceptional Location, Unique Integration
Corporate 3 Million BBls of Crude Oil Production $260 Million of Midstream Adjusted EBITDA 800,000 Net Acres in Pennsylvania 1.914 Tcfe of Proved Reserves Quality Assets, Exceptional Location, Unique Integration
Slide 4: The National Fuel Value Proposition
Corporate Creating sustainable value for shareholders remains our #1 priority Unique Integrated Business Model Provides Competitive Advantage The National Fuel Value Proposition 800,000 net acres in Pennsylvania – nd largest acreage position in Marcellus Shale (1) WDA mineral ownership = no royalty
Slide 5: Gesrtisig
Gesrtisig ty) National Fuel
Slide 6: EBITDA Growth by Segment
Corporate EBITDA Growth by Segment Note: A reconciliation of Adjusted EBITDA to Net Income as presented on the Consolidated Statement of Income and Earnings Reinvested in the Business is included at the end of this presentation.
Slide 7: Adjusting Capex to Capitalize on Opportunities
Corporate Adjusting Capex to Capitalize on Opportunities Note: A reconciliation to Capital Expenditures as presented on the Consolidated Statement of Cash Flows is included at the end of this presentation.
Slide 8: Maintaining a Strong Balance Sheet
Corporate Total Debt (1) 41% Maintaining a Strong Balance Sheet Note: A reconciliation of Adjusted EBITDA to Net Income is included at the end of this presentation. (1) Long-term debt of $1.649 billion and short-term debt of $172.9 million. $4.4 Billion As of December 31, 2014 Debt/Adjusted EBITDA C
Slide 9: Dividend Consistency
Corporate Dividend Consistency Dividend Track Record (1) As of March 18, 2015. Current Dividend Yield (1) 2.5% Consecutive Dividend Payments 112 Years Consecutive Dividend Increases 44 Years Current Annualized Dividend Rate $1.54 per Share
Slide 10: Overview Exploration & Production
Upstream Overview Exploration & Production
Slide 11: Proven Record of Reserve Growth
Upstream Fiscal Years 3-Year F&D Cost (1) ($/Mcfe) Proven Record of Reserve Growth (1) Represents a three-year average U.S. finding and development cost. 2007-2009 $5.35 2008-2010 $2.37 2009-2011 $2.09 2010-2012 $1.87 2011-2013 $1.67 2012-2014 $1.38 • 2014 F&D Cost = $1.15 • Marcellus F&D: $1.00 • 3
Slide 12: Delivering Tremendous Production Growth
Upstream Delivering Tremendous Production Growth
Slide 13: Disciplined Capital Spending
Upstream Disciplined Capital Spending
Slide 14: Highly Competitive Cost Structure
Upstream (1) (2) (2) Highly Competitive Cost Structure (1) Represents the midpoint of current General & Administrative Expense guidance of $0.40 to $0.45 per Mcfe for fiscal 2015. (2) The total of the two LOE components represents the midpoint of current LOE guidance of $1.00 to $1.10 per Mcfe for f
Slide 15: Seneca Resources
SENECA, RESOURCES.
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Slide 18: Marcellus Shale: Prolific Pennsylvania Acreage
Upstream Eastern Development Area (EDA) • Mostly leased (16-18% royalty) • No near-term lease expiration • Limited development drilling until firm transportation capacity on Atlantic Sunrise becomes available in late 2017 o Drilling activity will HBP key acreage Western Development Area (WDA) • Aver
Slide 19: Marcellus Well Results
Upstream Area Producing Well Count Peak 24-Hour Rate (MMcfd) Average 7-Day (MMcf/d) Average Treatable Lateral Length (ft) Area Producing Well Count Peak 24-Hour Rate (MMcfd) Average 7-Day (MMcf/d) Average Treatable Lateral Length (ft) Marcellus Well Results (1) Does not include a well drilled into a
Slide 20: EDA Delivering Significant Growth
Upstream EDA Delivering Significant Growth (1) One well included in this total is drilled into and producing from the Geneseo Shale.
Slide 21: Seneca Resources
SENECA, RESOURCES.
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Slide 24: %
%
Slide 25: Focusing on WDA Development
Upstream Seneca’s Tier I Acreage: • 200,000 Acres • 6-8 Bcfe EUR Wells • Economic at $2.60 to $4.00/MMbtu CRV Hemlock Ridgeway Focusing on WDA Development Note: Assumes 6,000’ treated lateral length. 4 - 6 BCF/well 4 - 6 BCF/well 6 - 8 BCF/well 2-4 BCF/well SRC Lease Acreage SRC Fee Acreage EOG Earn
Slide 26: Clermont/Rich Valley (CRV) Area
Upstream Clermont/Rich Valley (CRV) Area
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Slide 28: WDA Mineral Interests Significantly Enhance Returns
Upstream ($/Mcf) The Seneca Advantage 0% Royalty A producer burdened by a 15% royalty would require a $0.46 higher realized price to achieve same level of economics as Seneca Resources Producer Paying 15% Royalty WDA Mineral Interests Significantly Enhance Returns (1) Internal Rate of Return (IRR) i
Slide 29: How Does Seneca Sell its Production?
Upstream Well Head Interconnection with Interstate Pipeline Network 3rd Party Marketer (or spot market) Firm Transport Demand Center (firm sales or spot market) Spot Market How Does Seneca Sell its Production? Gathering System Contracted Basis Differential FT Rate Breakeven economics based on a real
Slide 30: Adding Long-Term Firm Transport to the Portfolio
Upstream Project (Counterparty) In- Service Date Contract Term Delivery Market FT Capacity (Dth/day) Matched Firm Sales Contracts Fiscal 2015 Fiscal 2016 Fiscal 2017 Fiscal 2018 Adding Long-Term Firm Transport to the Portfolio (1) A large majority of the executed firm sales agreements continue for t
Slide 31: Significant Base of Long-Term Firm Contracts
Upstream Atlantic Sunrise Williams Co. (Transco) 189,405 Dth/d Northern Access 2016 NFG & TransCanada 490,000 Dth/d Niagara Expansion TGP & NFG 170,000 Dth/d Significant Base of Long-Term Firm Contracts (1) Includes base firm sales contracts not tied to firm transportation capacity. Current Firm Sal
Slide 32: OSENEC.
OSENEC. RESO al yh S ~~] —— NATIONAL FUEL UAJOR TRANSMISSION PIPELINES TMB s=n04 ReouRCES ACREAGE
Slide 33: Firm Sales Provide Market for Appalachian Production
Upstream 50,000 Fixed $3.77 50,000 Fixed $3.77 50,000 Fixed $3.77 Dominion 95,327 Less: $0.42 Dominion 85,000 Less: $0.47 Dominion 85,000 Less: $0.47 NYMEX 236,198 Less: $0.51 NYMEX 205,036 Less: $0.59 NYMEX 205,036 Less: $0.59 Firm Sales Provide Market for Appalachian Production (1) EDA and WDA car
Slide 34: Current Natural Gas Hedge Positions
Upstream Current Natural Gas Hedge Positions (1) For the remaining nine months of fiscal 2015.
Slide 35: FY 2015 Production – Firm Sales & Spot Exposure
Upstream FY 2015 Production – Firm Sales & Spot Exposure (1) Spot price assumptions reflected in fiscal 2015 earnings guidance range. (2) Indicates firm sales not backed by financial hedges. Non-hedged DOM firm sales include 5.6 Bcf of non-operated production volumes. Firm Sales with Price Certainty
Slide 36: FY 2016 Productive Capacity Summary
Upstream FY 2016 Productive Capacity Summary FY Productive Capacity (1) (1) Productive capacity reflects firm sales commitments and assumes no price-related curtailments on projected production exposed to local Appalachian spot pricing. Productive capacity is not intended to reflect production guida
Slide 37: Utica/Point Pleasant: Industry Activity
Upstream PGE Seneca - DCNR 007 IP: 22.7 MMcfd Seneca – Mt. Jewett IP: 8.9 MMcfd Utica/Point Pleasant: Industry Activity Range 59 Mmcf/d Rice Mmcf/d Shell 26.5 Mmcf/d PGE Permitted Permitted Drilling Drilling Completed Completed Production Production Seneca Vert. Seneca Vert. Seneca Horiz. Seneca Hor
Slide 38: Utica/Point Pleasant Shale: EDA Opportunities
Upstream Utica/Point Pleasant Shale: EDA Opportunities
Slide 39: California: Stable Production; Modest Growth
Upstream California: Stable Production; Modest Growth
Slide 40: SENECA,
SENECA, RESOURCES. or-uer rH R | fw 3, | sea S lies I 6o-uer so-uer q cover s0-uer GREER GEES
Slide 41: BOPD
1,000 BOPD 200 Jan-09 Jukoo Jan-10 Juk10 Jan-11 Juba Jan-12 dubz Jan-13 Juba Jan-14 Juba SENECA, RE SOURCES 2015 Location 2013-2014 Well © Active Well © Idle Well PBA [Dseneca Lease 7 Field Boundary 8 9 19S 15E
Slide 42: Focused on High Return Opportunities
Upstream CALIFORNIA Field Average Well Cost Average EUR (MBO) Estimated IRR @$55/Bbl Fiscal 2015 Locations Focused on High Return Opportunities South Midway Sunset $250,000 57% North Midway Sunset $300,000 25% East Coalinga $420,000 15%
Slide 43: California: Modest Growth Anticipated in 2015
Upstream California: Modest Growth Anticipated in 2015
Slide 44: Strong Margins Support Significant Free Cash Flow
Upstream Strong Margins Support Significant Free Cash Flow Average Revenue for Q1 FY2015 (1) $74.26 per BOE (1) Includes impact of hedging.
Slide 45: Midstream Overview Pipeline & Storage Gathering
Midstream Overview Pipeline & Storage Gathering
Slide 46: Gathering is the First Step to Reaching a Market
Midstream Covington Gathering System (In-Service) Clermont Gathering System (In-Service) Trout Run Gathering System (In-Service) Gathering is the First Step to Reaching a Market (1) Fiscal estimated revenue reflects projected throughput based on the range of Seneca’s Fiscal production guidance (155-
Slide 47: Gathering Supporting Seneca's EDA Production
Midstream Covington Gathering System Trout Run Gathering System Gathering Supporting Seneca’s EDA Production (1) Fiscal 2015 estimated throughput reflects the midpoint of Seneca’s Fiscal 2015 production guidance range (155-190 Bcfe). • In-Service Date: November 2009 • Capacity: 220,000 Dth per day •
Slide 48: Clermont Gathering System has Large Expandability
Midstream Clermont Gathering System • In-Service: July 2014 • Ultimate Trunkline Capacity: 1+ Bcf per day • Interconnects o TGP 300 (current) o NFG Supply Corporation (Northern Access 2016) • Capital Expenditures: o To date: $115 Million o (1) : $95 - $135 Million Clermont Gathering System has Large
Slide 49: Positioned to Serve Growing Production in Appalachia
Midstream NFG is focused on expanding our pipeline systems to support the growing needs of Appalachian producers and shippers Positioned to Serve Growing Production in Appalachia
Slide 50: Northern Access 2015
Midstream Northern Access 2015 Major Expansion Designed for Canadian Deliveries • Customer: Seneca Resources • In-Service: November 2015 • System: NFG Supply Corp. • Capacity: 140,000 Dth per day o Lease to TGP as part of their Niagara Expansion project • Interconnect o Niagara (TransCanada) • Total
Slide 51: Northern Access 2016
Midstream Northern Access 2016 Northern Access 2016 Provides Access to Canada • Customer: Seneca Resources • In-Service: November 2016 target • Capacity: 490,000 Dth/d • Interconnects: o TransCanada – Chippawa (350,000 Dth/d) o TGP 200 – East Aurora (140,000 Dth/d) • Total Cost: ~$451 Million • FERC
Slide 52: Recent Third Party Expansions Highly Successful
Midstream Completed Expansions Northern Access 2012 Tioga County Extension Line N Projects Recent rd Party Expansions Highly Successful Capacity (Dth/day) Northern Access 2012 320,000 Tioga County Ext. & Lamont 440,000 Line N & Mercer Expansion 458,000 Total New Capacity 1,218,000 Capital Cost ($Mil
Slide 53: Westside Expansion & Modernization
Midstream Westside Expansion & Modernization Westside Expansion & Modernization Mercer (TGP Station 219) Pairing Line N Expansions with System Modernization • In-Service: November 2015 • System: NFG Supply Corp. • Capacity: 175,000 Dth per day o Range Resources (145,000 Dth/d) o Seneca Resources (30
Slide 54: Tuscarora Lateral
Midstream Tuscarora Lateral Tuscarora Lateral Developing Unique Solutions for Shippers • In-Service: November 2015 • System: NFG Supply & Empire Pipeline • New No-Notice Services o Precedent agreements executed with RG&E, NYSEG & NFG Utility o Preserving 172,500 Dth per day (RG&E) o Preserving 20,00
Slide 55: Significant Expansions Are Driving Growth
Midstream Completed Projects (Since 2009) Total Expansion (2009-2016+) Planned Projects (2015+) Precedent Agreements Executed Recent Capacity Additions 1,218,000 Dth/day Significant Expansions Are Driving Growth Capacity Additions 2,072,000 Dth/day In-Service 2015 364,000 Dth/day In-Service 2016+ 49
Slide 56: Downstream Overview Utility Energy Marketing
Downstream Overview Utility Energy Marketing
Slide 57: New York & Pennsylvania Service Territories
Downstream New York Pennsylvania New York & Pennsylvania Service Territories Total Customers: 524,300 Rate Mechanisms: o Revenue Decoupling o Weather Normalization o Low Income Rates o Merchant Function Charge (Uncollectibles Adj.) o 90/10 Sharing (Large Customers) NY PSC Rate Case Settlement, May 2
Slide 58: Utility: Shifting Trends in Customer Usage
Downstream Utility: Shifting Trends in Customer Usage (1) Weighted Average of New York and Pennsylvania service territories (assumes normal weather). Residential Usage Industrial Usage
Slide 59: A Proven History of Controlling Costs
Downstream A Proven History of Controlling Costs
Slide 60: Utility: Strong Commitment to Safety
Downstream The Utility remains focused on maintaining the ongoing safety and reliability of its system Utility: Strong Commitment to Safety Near-term increase due to ~$60MM upgrade of the Utility’s Customer Information System and ~$25MM NRG Dunkirk power plant project
Slide 61: National Fuel
OG National Fuel
Slide 62: Natural Gas Hedge Positions
Appendix Fiscal 2015 (1) Fiscal 2016 Fiscal 2017 Fiscal 2018 Volume Avg. Price Volume Avg. Price Volume Avg. Price Volume Avg. Price Natural Gas Hedge Positions (1) For the remaining nine months of fiscal 2015. (Volumes in thousands Mmbtu; Prices in $/Mmbtu) NYMEX Swaps 49,130 $4.18 32,350 $4.24 23,
Slide 63: Crude Oil Hedge Positions
Appendix Fiscal 2015 (1) Fiscal 2016 Fiscal 2017 Fiscal 2018 Volume Avg. Price Volume Avg. Price Volume Avg. Price Volume Avg. Price Crude Oil Hedge Positions (1) For the remaining nine months of fiscal 2015. Midway Sunset (MWSS) Swaps 108,000 $92.10 36,000 $92.10 - - - - Brent Swaps 765,000 $98.32
Slide 64: WDA Delineation Well Results
Appendix Area Producing Well Count Peak 24-Hour Rate (MMcfd) Average 7-Day (MMcf/d) Average Treatable Lateral Length (ft) WDA Delineation Well Results Ridgway Elk County 7.1 6.4 5,537’ Church Run Elk & Jefferson counties 4.8 4.5 4,690’ Hemlock Elk County 5.4 5.2 7,067’ Owl’s Nest Elk & Forest counti
Slide 65: Reconciliation of Adjusted EBITDA to Consolidated Net Income
Appendix National Fuel Gas Company Reconciliation of Adjusted EBITDA to Consolidated Net Income ($ Thousands) FY 2010 FY 2011 FY 2012 Exploration & Production - West Division Adjusted EBITDA 187,838 $ 187,603 $ 226,897 $ 215,042 $ 217,150 $ 206,875 $ Exploration & Production - All Other Divisions Ad
Slide 66: Reconciliation of Segment Capital Expenditures
Appendix National Fuel Gas Company Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ($ Thousands) FY 2015 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Forecast Capital Expenditures from Continuing Operations Exploration & Production Capital Expenditures 398,174 $ 648,81
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