National Fuel Gas Company · NYSE:NFG
National Fuel Gas — Q1 FY2009 Earnings Presentation
60 slides from National Fuel Gas's earnings presentation, Mar 4, 2009
Slide 1: Fiscal Year 2009, 1st Quarter Review
Fiscal Year 2009, 1st Quarter Review March 2009
Slide 2: Safe Harbor For Forward Looking Statements
Safe Harbor For Forward Looking Statements This presentation may contain "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995, including statements regarding future prospects, plans, performance and capital structure, anticipated capital expenditures and co
Slide 3: Business Segment Reporting
National Fuel Gas Company Business Segment Reporting
Slide 4: Net Income from Continuing Operations
National Fuel Gas Company Net Income from Continuing Operations(1) (CHART) (CHART) Energy Mkt. $5.5 MM 2.1% $261.8 Million (1) 12 Months Ended 12/31/08 Excludes non-cash impairment charge of $108.2 MM to write down the book value of oil and natural gas producing properties as a result of significant
Slide 5: Net Plant by Segment
National Fuel Gas Company Net Plant by Segment (CHART) $3,044 Million At December 31, 2008 All Other $104 MM 4%
Slide 6: Expenditures for Long-Lived Assets
National Fuel Gas Company Expenditures for Long-Lived Assets(1) (1) Capital Expenditures exclude all Discontinued Operations (2) Amount for quarter and year ended September 30, 2008 includes $16.8 MM of accrued capital expenditures related to the Empire Connector project. This amount has been exclud
Slide 7: Capital Expenditures by Segment
National Fuel Gas Company Capital Expenditures(1) by Segment Utility Pipeline & Storage Exploration & Production (1) Capital Expenditures exclude all expenditures associated with Discontinued Operations
Slide 8: Capitalization
National Fuel Gas Company Capitalization (CHART) Short-Term Debt 2% $2.76 Billion At December 31, 2008 Long-Term Debt (1) 40% Shareholder Equity 58% (1) Includes $100 MM current portion of long-term debt
Slide 9: Dividend Growth
National Fuel Gas Company Dividend Growth Compound Annual Growth Rate 5.2% $1.30 $0.19
Slide 10: Public Utilities Fortnightly Ranking
National Fuel Gas Company Public Utilities Fortnightly Ranked the 3rd best energy company in 2008 Based on the 3-year averages of: Profit Margin Dividend Yield FCF, ROE, ROA Sustainable Growth Consistently in the Top 10 best energy companies (2006-2008) "National Fuel Gas ... strongly positioned in
Slide 11: Exploration & Production: Seneca Resources Corporation
Exploration & Production Seneca Resources Corporation
Slide 12: Exploration & Production: Seneca Resources
Exploration & Production Seneca Resources
Slide 13: Exploration & Production Balanced Portfolio
Exploration & Production Balanced Portfolio 57 MMBOE (339 Bcfe) - Proved Reserves 51.5 Mmcfe/d - Daily Production Balanced Portfolio East Region West Region Gulf of Mexico 131 Bcfe - Proved Reserves 234 Bcfe - 3P Reserves (Prvd + Prob + Poss) 670 Bcfe - Upper Devonian prospective resources 725,000 A
Slide 14: Proved Reserves
Exploration & Production Proved Reserves @9/30 491 Bcfe 503 Bcfe West - California Reserves: 339 Bcfe (67%) Prod: 52 Mmcfed (8,600 Boepd) (46%) Gulf of Mexico Reserves: 33 Bcfe (7%) Production: 38.5 Mmcfed (34%) East - Appalachia Reserves: 131 Bcfe (26%) Production: 22 Mmcfed (20%)
Slide 15: Exploration & Production Capital Expenditures
Exploration & Production Capital Expenditures Major shift in capital allocation from higher-risk exploration to lower-risk development will lead to improved Finding & Development costs East 2006 2007 2008 2009E 13% 22% 34% 78% West 2006 2007 2008 2009E 17% 24% 33% 14% Gulf of Mexico 2006 2007 2008 2
Slide 16: Annual Production by Division
Exploration & Production Annual Production by Division
Slide 17: Exploration & Production: Appalachian Basin
Exploration & Production Appalachian Basin
Slide 18: Appalachian Basin Upper Devonian - Development Drilling
Appalachian Basin Upper Devonian - Development Drilling
Slide 19: Upper Devonian Drilling Program
Appalachian Basin 19 Upper Devonian Drilling Program Detailed Geologic work has improved per well reserves and success rates Accelerating Reserve additions each year (excludes PUDs): 2005 - 5.8 Bcfe 2006 - 11.8 Bcfe 2007 - 20.8 Bcfe 2008 - 24.2 Bcfe
Slide 20: Marcellus Shale Recent Daily Production Rates
Marcellus Shale Recent Daily Production Rates Cabot 6.4 MMCFD All production figures from individual company disclosures Marcellus Outcrop Seneca Fee Acreage Seneca Lease Acreage EOG/Seneca Resources 1.4 MMCFD (25 days) Atlas Energy Multiple Verticals: 1-3 MMCFD Chesapeake 2 Well Avg.: 4.5 MMCFD Ran
Slide 21: Marcellus Shale 3rd Largest Acreage Holder
Marcellus Shale 3rd Largest Acreage Holder Company Acres Chesapeake 1,200,000 Range 900,000 Seneca 725,000 Atlas 580,000 ("under control") Equitable 400,000 Chief 350,000 XTO 280,000 Exco 276,000 EOG 220,000 All acreage positions taken from most recent individual company disclosures, available from
Slide 22: Marcellus Shale EOG JV Drilling Update
Marcellus Shale EOG JV Drilling Update Well # IP Rate Details 1 350 Mcf/d Ineffective Frac Job 2 400 Mcf/d Short lateral - 1,500' 3 1,400 Mcf/d 3,500' lateral 4-6 TBD 3,800' - 5,700' laterals 7 TBD Drilling Horizontal Well Summary Drilling Summary(1) Well Type # of Wells Vertical 5 Horizontal 7 2009
Slide 23: Seneca Resources-EOG Joint Venture
Marcellus Shale Seneca Resources-EOG Joint Venture Joint Venture Terms JV Agreement Originated November, 2006, 10 Year Term tied to a Continuous Drilling commitment. Total Acreage EOG can earn 50% WI in 200,000 Seneca acres.Seneca can earn 50% WI in ~120,000 EOG acres. Prospect Selection EOG prospec
Slide 24: Marcellus Shale Log and Core Evaluation
Marcellus Shale Log and Core Evaluation Depth TVD: 5,000' - 8,000' Thickness 50' - 200' Total Organic Content (TOC) 2% - ^ 10% Thermal Maturity 1% - 3% Effective Porosity 3% - 12% Pressure (psi/foot) 0.43 - 0.65 Water Saturation 12% - 35% Gas-in-Place (Bcfe/Section) 30 - 150 Anticipated EUR/Horizont
Slide 25: PA State (DCNR) Lease Sale
Marcellus Shale PA State (DCNR) Lease Sale - 9/3/08 Company Total Acreage Seneca Resources 23,988 ExxonMobil 19,439 Anadarko E&P 17,189 Fortuna Energy 9,339 Hunt Oil 4,068 Seneca was the high bidder on 4 of 6 tracts Total of the 4 high bids - $74 million 10-year lease terms Lycoming & Tioga Counties
Slide 26: Marcellus Shale Seneca Operations
Marcellus Shale Seneca Operations New DCNR Leases Adjusted EOG JV Terms Seneca as a major Marcellus Operator ~525,000 net acres to evaluate as operator Plan to drill 6-8 vertical "test" wells this fiscal year Begin horizontal program in July '09 Marcellus acreage prioritized by: Geology Lease Terms
Slide 27: Marcellus Summary
Marcellus Summary Seneca is the third largest acreage holder in the Marcellus Shale play EOG Joint Venture Initial exploration at minimal cost Gained experience of an industry leader 2009 is a big year Development drilling on Joint Venture acreage Independent Seneca drilling operations commence
Slide 28: Exploration & Production: California
Exploration & Production California
Slide 29: California Lifting Cost - Peer Comparison
California Lifting Cost - Peer Comparison Seneca is a low-cost operator in California, with Lifting Costs consistently outperforming its peers Source: HIS Herold, Inc. and Seneca Financial Reports
Slide 30: California 2008 Highlights
California 2008 Highlights Monterey Shale Drilling at Lost Hills Drilled 4 wells Added 300 Boepd Marvic Sand Development at MWSS Drilled 11 wells in 2008 3.3 Bcfe @ $1.58 F&D Cost Additional wells planned in 2009 Increased Production 500 Boepd
Slide 31: Exploration & Production Long-Term Outlook
Exploration & Production Long-Term Outlook
Slide 32: Pipeline & Storage
Pipeline & Storage National Fuel Gas Supply Corporation Empire State Pipeline
Slide 33: Pipeline & Storage Diluted Earnings per Share
Pipeline & Storage (1) Excludes SFAS 88 settlement loss of -$0.02 (2) Excludes base gas sale of $0.03 and gain associated with insurance proceeds of $0.05 (3) Excludes reversal of reserve for preliminary project costs of $0.06, and discontinuance of Hedge Accounting of $0.02 (CHART) Diluted Earnings
Slide 34: Empire Connector and Pipeline Projects
34 Empire Connector In-service as of December 2008 Storage Expansion Increase Storage Capacity by 8.5 Bcf West to East / Appalachian Lateral Proposed pipeline project Millennium Pipeline
Slide 35: Empire Connector Key Highlights & Statistics
Pipeline & Storage Empire Connector Key Highlights & Statistics Key Highlights & Statistics Design Capacity 250,000 Dth/day KeySpan Capacity 150,750 Dth/day In-Service Date December 2008 Length of 24" Pipe (1,440 psig) 77 Miles Total Compression 20,620 HP Capital Expenditures(As of 12/31/08) $181.7
Slide 36: Utility Segment
Utility Segment National Fuel Gas Distribution Corporation
Slide 37: Utility Diluted Earnings per Share
Utility (1) Excludes SFAS 88 settlement loss of -$0.03 (2) Excludes out-of-period adjustment to symmetrical sharing of $0.03 Diluted Earnings per Share (Before Items Impacting Comparability) (CHART)
Slide 38: Utility Territory
CANADA Utility Te: National Fuel Gas rritory
Slide 39: Utility Average Use per Residential Customer
Utility Average Use per Residential Customer
Slide 40: Utility Accounts Receivable - Average Annual Residential Bill
Utility Accounts Receivable - Customer Average Annual Residential Bill
Slide 41: Utility Keys to Continued Success
Utility Keys to Continued Success Conservation Incentive Program
Slide 42: Appendix
Appendix
Slide 43: Corporate Overview Key Information & Statistics
National Fuel Gas Company Corporate Overview Key Information & Statistics Key Information & Statistics New York Stock Exchange NFG Fiscal Year End September Shares Outstanding (Approx.)(As of 12/31/08) 79.1 Million Average Daily Trading Volume(12 Months Ended 12/31/08) 712,355 Market Capitalization
Slide 44: 2009 EPS Guidance & Sensitivity
National Fuel Gas Company 2009 EPS Guidance & Sensitivity Fiscal 2009 Earnings per Share (Diluted) Guidance(1) Consolidated Earnings $1.10 - $1.30(2) Earnings per Share Sensitivity to Changes from $5.50/ MMBtu for natural gas and $45/Bbl for crude oil(1) $1 change per $5 change per MMBtu Gas Bbl Oil
Slide 45: Net Plant by Segment
National Fuel Gas Company Net Plant by Segment $3.0 B
Slide 46: Capital Resources
National Fuel Gas Company Capital Resources $300.0 MM Commercial Paper Program And Uncommitted Credit Facilities - Aggregate Of $720.0 MM $66 MM borrowed at December 31, 2008 $300.0 MM Committed Credit Facility Through September 2010 - backs commercial paper program $0 borrowed at December 31, 2008
Slide 47: Debt Ratings
National Fuel Gas Company Debt Ratings - As of March 2, 2009 Standard & Poor's Moody's Fitch, Inc. Long-Term Debt BBB Baa1 A- Outlook Stable Stable Stable Commercial Paper A-2 P-2 F2
Slide 48: Exploration & Production Fiscal 2008 Highlights
Exploration & Production Fiscal 2008 Highlights
Slide 49: Appalachian Basin Continued Upper Devonian Success
Appalachian Basin Continued Upper Devonian Success 2008 Shallow Drilling Program
Slide 50: Exploration & Production: Gulf of Mexico
Exploration & Production Gulf of Mexico
Slide 51: Gulf of Mexico Discoveries since April 2007
Gulf of Mexico Discoveries since April 1st, 2007 Recent Discovery HI 24L North Disc. (Q3 '07) Producing: 35 Mmcf/d WI: 35% HI 23L Prospect (Q2 '08) 60' Pay WI: 55% ; Paid 35% Producing: 14 Mmcf/d ; 1,800 BCPD WC 96 Disc. (Q4 '07) Producing: 9 Mmcf/d WI: 11% Cyclops (Q2 '08) 1st Well: 106' Pay 2nd We
Slide 52: Gulf of Mexico Fiscal 2008 Exploration Program
Gulf of Mexico Fiscal 2008 Exploration Program 3 Discoveries, 1 Dry Hole 5 discoveries in 18 months since implementing new strategy Fiscal '08 Net 2P Reserves Added: 23.7 Bcfe (13.9 Proved) 2P Program F&D Cost: $2.61/Mcfe ($4.44 Proved)
Slide 53: Pipeline Overview Key Statistics
Pipeline & Storage Pipeline Overview Key Statistics Key Statistics System Pipeline Mileage 2,877 Miles Transportation Volume (2008) 358.4 Bcf Pipeline Revenue (2008) $126.7 MM Total Compressor Stations 15 Total Horsepower 39,779 HP
Slide 54: Storage Overview Key Statistics
Pipeline & Storage Storage Overview Key Statistics Key Statistics Underground Nat. Gas Storage Fields 31(1) Total Compressor Stations 15 Total Horsepower 35,475 HP Working Storage Capacity 78.3 Bcf Storage Revenue (2008) $67.0 MM (1) Includes 4 storage fields co-owned with non-affiliated companies
Slide 55: Pipeline & Storage Upcoming Projects
Pipeline & Storage Upcoming Projects West to East & Appalachian Lateral Project Pipeline Length: 324 Miles Starting Location: Rockies Express (REX) - Clarington, OH Ending Location: Millennium Pipeline - Corning, NY Receipts From: REX (~555,000 to 750,000 Dth/d) Local Production Cove Point Gas at Le
Slide 56: Utility Segment Overview Key Statistics
Utility Segment Overview Key Statistics Key Statistics Average Number of Customers 726,863 Total Utility Volumes 135,271 MMcf Utility Revenue (2008) $1,121 MM Utility Pipeline Mileage (2008) 14,819 Miles Diluted EPS (2008) $0.73 Average Annual Residential Bill (2008) $1,479
Slide 57: Utility Rate Case Activity
Utility Rate Case Activity 11/30/06: The Pennsylvania PUC approved the Settlement Agreement reached in the Delivery Service Charge Rate Case Effective Date: 1/1/07 Revenue Increase: $14.3 MM Revenue Decoupling: Initially proposed by the Utility in this case. Will instead be pursued via active partic
Slide 58: Utility Rate Cases
Utility Rate Cases Pennsylvania New York Rate Case Result Rate Case Result Settled Adjudicated Approximate Rate Base Approximate Rate Base $280 - 290 MM(1) $699 MM Approximate Base Rate Revenue Increase Approximate Base Rate Revenue Increase $14.3 MM $1.8 MM Conservation Incentive Program Conservati
Slide 59: Marketing Diluted Earnings per Share
Marketing (CHART) (1) Excludes resolution of a purchased gas contingency of +$0.03 Diluted Earnings per Share (Before Items Impacting Comparability)
Slide 60: Comparable GAAP Financial Measure Slides and Reconciliations
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 reconciliations are pro