National Fuel Gas Company · NYSE:NFG
National Fuel Gas — IPAA OGIS NY Energy Conference 2011
55 slides from National Fuel Gas's conference presentation, Apr 12, 2011
Slide 1: IPAA OGIS NY Energy Conference April 12, 2011
IPAA OGIS NY Energy Conference April 12, 2011 Exhibit 99
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 Publicly Traded Holding Company NYSE symbol - NFG Reporting Segments Operating Subsidiaries
Slide 4: National Fuel Gas Operating Area
Lake Ontario @) nations eves NATIONAL FUEL GAS OPERATING AREA [NATIONAL FUEL GAS SUPPLY CORPORATION 'SEMPIRE PIPELINE. INC_TRANSMISSION
Slide 5: Net Income from Continuing Operations Excluding Items Impacting Comparability
Net Income from Continuing Operations Excluding Items Impacting Comparability (1) National Fuel Gas Company A reconciliation to GAAP Net Income is included at the end of this presentation. $213.5 Million Twelve Months Ended December 31, 2010 E&P $110.1 MM 51.6%
Slide 6: Capital Expenditures from Continuing Operations
National Fuel Gas Company Capital Expenditures(1) from Continuing Operations A reconciliation to Capital Expenditures as presented on the Consolidated Statement of Cash Flows is included at the end of this presentation.
Slide 7: Capital Structure
National Fuel Gas Company Capital Structure $2.824 Billion(1) at December 31, 2010 Forecasted Capital Structure(2) at September 30, 2011 At December 31, 2010, Comprehensive Shareholders' Equity, Long-Term Debt and the Current Portion of Long-Term Debt totaled $2.824 Billion as presented on the Compa
Slide 8: Exploration & Production: Seneca Resources Corporation
Exploration & Production Seneca Resources Corporation
Slide 9: Fiscal Year End Proved Reserves
Exploration & Production Fiscal Year End Proved Reserves(1) West - California Reserves: 333 Bcfe (47%) (55.5 MMBoe) Gulf of Mexico Reserves: 34 Bcfe (5%) East - Appalachia Reserves: 333 Bcfe (48%) At September 30, 2010 Total Proved Reserves: 700 Bcfe
Slide 10: Fiscal 2010 Oil/Gas Mix
Exploration & Production Fiscal 2010 Oil/Gas Mix 700 Bcfe(1) At September 30, 2010 49.7 Bcfe $425.6 Million
Slide 11: Capital Expenditures by Region
Exploration & Production Capital Expenditures by Region Does not include the $34.9MM acquisition of Ivanhoe's US-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. (1)
Slide 12: Annual Production by Region
Exploration & Production Annual Production by Region 36% 36% Marcellus production in Fiscal 2012 could equal the entire company production in Fiscal 2011
Slide 13: Exploration & Production: California
Exploration & Production California
Slide 14: Seneca's California Properties
Seneca's California Properties South Lost Hills 1,830 BOEPD Monterey Shale Primary 216 Active Wells Sespe 990 BOEPD Sespe Formation Primary 193 Active Wells North Lost Hills 1,235 BOEPD Tulare & Etchegoin Formation Primary & Steamflood 181 Active Wells North Midway Sunset 4,050 BOEPD Potter & Tulare
Slide 15: California Average Daily Production
California Average Daily Production Modest capital spending to maintain production Pursue additional bolt-on acquisitions 2011 Plans: CapEx - $40 MM 50 Development wells Two 5-acre in-fill wells at Sespe
Slide 16: Fiscal Year 2011 Sespe Field Development Plans
California Fiscal Year 2011 Sespe Field Development Plans First drilling for Seneca at Sespe since 1991 Will drill six wells during this fiscal year Wells to be drilled at 10-acre spacing: 4 wells Test wells to be drilled at 5-acre spacing: 2 wells If successful, 5-acre down-spacing could add substa
Slide 17: Gulf of Mexico Exploration & Production
Gulf of Mexico Exploration & Production
Slide 18: Planned Divestiture of Offshore Assets
Gulf of Mexico Planned Divestiture of Offshore Assets On March 9, 2011, Seneca entered into an agreement to sell its offshore Gulf of Mexico oil and natural gas producing properties Sale price: $70 million Effective Date: January 1, 2011 Gulf offshore proven reserves at January 1, 2011: ~30 Bcfe Exp
Slide 19: East Division Exploration & Production
East Division Exploration & Production
Slide 20: East Division Average Daily Production
East Division Average Daily Production Rapid growth in the East Division as Marcellus is ramping up
Slide 21: Seneca's Pennsylvania Acreage
Marcellus Shale Seneca's Pennsylvania Acreage Seneca Resource Acreage Position 745,000 Net Acres in the heart of the PA Marcellus fairway Risked Resource Potential: 8-15 TCFE 80% Fee - Seneca owns the minerals No lease expiration 94% Average NRI SRC Fee Acreage
Slide 22: Seneca's Development Areas
Marcellus Shale Seneca's Development Areas SRC Fee Acreage Eastern Development Area (Mostly Leased) Western Development Area (Mostly Fee and HBP)
Slide 23: Eastern Development Area
Marcellus Shale Eastern Development Area Covington Area - Full Development 37 Wells Drilled; 27 Producing Gross Prod: (As of 3/22/11): 110 MMCFD 2011: 16 Wells Planned DCNR Block 100 1st Well IP: 15.8 MMCFD 2011: 6 Wells Planned First Production: Fall 2011 Initial Test Wells Drilling / Fracing SRC F
Slide 24: Longer Lateral EDA Wells Outpacing Bcf Typecurve
Marcellus Shale Longer Lateral EDA Wells Outpacing 6 Bcf Typecurve Chart data represents horizontal well production from wells with lateral lengths greater than 3,500 feet (1)
Slide 25: Western Development Area - Activity
Marcellus Shale Western Development Area - Activity EOG Contributed JV Acreage SRC Contributed JV Acreage Seneca Operated EOG Operated Punxy Area - Full Development EOG Operated 35 Wells Drilled; 21 Producing Gross Production (As of 3/22/11): 45 MMCFD 2011: 30+ Wells Planned Owl's Nest Area Seneca O
Slide 26: Marcellus Shale Target Zone Example
87 Marcellus Shale Target Zone Example Gamma Ray Pay/Res Resistivity Density/Neutron Phi/Sw/TOC Mineralogy Brittleness Ko Optimal Target Zone Marcellus Interval Important to Find Ideal Target Must account for the variable rock quality and geomechanical profile Major factor in quality of Fracture Sti
Slide 27: Owl's Nest: Pad B 3H - Target Landing Depth
87 Marcellus Shale Owl's Nest: Pad B 3H - Target Landing Depth 11 of 20 Stages in Target Interval 15' Target Interval Wellbore in zone Frac Stages
Slide 28: Marcellus Net Production
Marcellus Shale Marcellus Net Production Seneca Operated EOG JV In early March 2011, Marcellus net production reached: 120 MMcfe per day
Slide 29: Centralized Water System
Marcellus Shale Centralized Water System Recovering water discharged from an abandoned coal mine which was adversely impacting a local trout stream Authorized by SRBC to withdraw approximately 500,000 gallons per day of mine discharge Water pipeline system supplies frac water for Seneca in Tioga Cou
Slide 30: Utica Shale
Utica Shale Source rock maturation status based on combined CAI to Ro regression equation. (Trenton-Black River Research Consortium, 2006) Seneca Acreage
Slide 31: Evaluation of JV Opportunities
Seneca Resources Evaluation of JV Opportunities Seneca's Marcellus joint venture goals: Ramp up development faster than current growth plans Bring forward the earnings stream, where a minority-interest partner pays a significant portion of the early drilling costs, enhancing shareholder value Contin
Slide 32: Key Takeaways
National Fuel Gas Company Key Takeaways High-Quality Marcellus Acreage Position 745,000 net acres with a resource potential of 8-15 Tcfe Fee ownership results in superior economics Rapid Growth: 0 - 120 MMCFD in 18 months Balanced Business Model Regulated segments support dividend and are not sensit
Slide 33: Appendix
Appendix
Slide 34: Corporate & Financial Highlights
Corporate & Financial Highlights National Fuel Gas Company
Slide 35: Dividend Growth
National Fuel Gas Company Dividend Growth $1.38 $0.19 Compound Annual Growth Rate 5.1% National Fuel has had 108 uninterrupted years of dividend payments and has increased its dividend for 40 consecutive years
Slide 36: Peer Group Comparisons
National Fuel Gas Company Peer Group Comparisons National Fuel's diversified business model continues to generate long-term outperformance versus its peer groups by limiting downside risk through economically challenging times and capturing upside growth in an expanding market 1-Year Total Return Pe
Slide 37: Fiscal Year 2011 Earnings Guidance - Key Drivers
National Fuel Gas Company Fiscal Year 2011 Earnings Guidance - Key Drivers(1) FY 2011 EPS $2.70 to $2.95 Utility Operating Expense: ? 3% to 5% PA Normal Weather Pipeline & Storage Operating Expense: ? 3% to 5% Transportation Revenue: ? $7.5 Million Project Development Costs (O&M): $7 Million Explora
Slide 38: Seneca Oil and Gas Hedge Positions
National Fuel Gas Company Seneca Oil and Gas Hedge Positions For fiscal year 2011, Seneca has hedged 56% of its remaining forecasted production NYMEX Strip Prices (at 03/08/11) Natural Gas Oil Fiscal 2011(1) $3.98 $95.53 Fiscal 2012 $4.59 $105.74 Fiscal 2013 $5.04 $102.93 The NYMEX strip prices for
Slide 39: Utility Segment: National Fuel Gas Distribution Corporation
Utility Segment National Fuel Gas Distribution Corporation
Slide 40: Utility Return on Equity
(1) Calculated using Average Total Comprehensive Shareholder Equity. Utility Return on Equity (1)
Slide 41: Utility Rate Mechanisms
New York Revenue Decoupling Customer Choice / POR Merchant Function Charge 90/10 Sharing (large volume users) Weather Normalization Low Income Rates Pennsylvania Low Income Rates Customer Choice / POR Merchant Function Charge Under Consideration: Revenue Decoupling Rate Mechanisms Utility
Slide 42: Pipeline & Storage / Midstream
National Fuel Gas Supply Corporation Empire Pipeline, Inc. National Fuel Gas Midstream Corporation Pipeline & Storage / Midstream
Slide 43: Pipeline & Storage / Midstream Expansion Initiatives Map
LAMONT COMPRESSOR STATION PHASE I & II COVINGTON GATHERING SYSTEM TROUT RUN GATHERING SYSTEM WEST TO EAST OVERBECK TO LEIDY LAMONT COMPRESSOR STATION PHASE I & II TIOGA COUNTY EXTENSION LINE "N" EXPANSION PIPELINE & STORAGE / MIDSTREAM EXPANSION INITIATIVES NORTHERN ACCESS EXPANSION Seneca Drilling
Slide 44: Pipeline & Storage/Midstream Expansion Initiatives
Pipeline & Storage/Midstream Expansion Initiatives Project Name Capacity (Dth/D) Est. CapEx In-Service Date Market Status Covington Gathering System 145,000 $16 MM 11/17/09 Fully Subscribed Completed - Flowing into TGP 300 Line Lamont Compressor Station 40,000 $6 MM 6/15/10 Fully Subscribed Complete
Slide 45: Pipeline & Storage Challenges & Opportunities
Pipeline & Storage Challenges & Opportunities NFGSC Contract Turnbacks Supply has received capacity turnbacks on expiring contracts, decreasing future revenue by: FY11: ~$7.5 Million FY12: ~$4-6 Million Empire Unsold Capacity ~100,000 Dth/d of capacity remains unsold after the construction of the Em
Slide 46: Trout Run Gathering System - Lycoming County
Midstream Corporation Trout Run Gathering System - Lycoming County Capacity: 300,000 Dth/d Will Interconnect with Transco Pipelines in Lycoming County Seneca Resources will be the anchor shipper Estimated In-Service: Fall 2011 Interstate Pipeline Gathering System Transco
Slide 47: Exploration & Production: Seneca Resources Corporation
Exploration & Production Seneca Resources Corporation
Slide 48: Fiscal 2010 Annual Production
Exploration & Production Fiscal 2010 Annual Production West - California Production: 19.8 Bcfe (40%) (3.3 MMBoe) Gulf of Mexico Production: 13.4 Bcfe (27%) East - Appalachia Production: 16.5 Bcfe (33%) Total Production: 49.7 Bcfe
Slide 49: Pennsylvania Acreage Holdings
Marcellus Shale Pennsylvania Acreage Holdings EOG Contributed JV Acreage SRC Contributed JV Acreage
Slide 50: Gross Horizontal Wells Drilled per Year and Rig Count
Marcellus Shale Gross Horizontal Wells Drilled per Year Marcellus Horizontal Rig Count Current Rig Count: Seneca : 4 Rigs EOG : 2 Rigs Additional Seneca Rigs Scheduled: 5th Rig: Spring/Summer 2011 6th Rig: Fall 2011
Slide 51: Marcellus Shale Transportation Capacity
Marcellus Shale Transportation Capacity Eastern Development Area Covington Gathering System: 150,000 Dth/d into TGP 300 Provides capacity for DCNR Tract 595 and Covington in Tioga county Firm sales of 100,000 Dth/d thru October 31, 2011 Trout Run Gathering System: 200,000 - 250,000 Dth/d into Transc
Slide 52: Decline Curve - 6.0 BCF EUR
Marcellus Shale Decline Curve - 6.0 BCF Estimated Ultimate Recovery (EUR) Category Type Curve Parameters Initial Rate 7,250 MCF/D Average first year decline 72% Final decline 6% Hyperbolic Coefficient 1.4 Abandonment rate 60 MCF/D Average first month rate 6,670 MCF/D Average first year rate 3,560 MC
Slide 53: Pre-Tax IRR Comparison at NYMEX of $4.00/MMBtu
Marcellus Shale Pre-Tax IRR Comparison at NYMEX of $4.00/MMBtu Description EUR Net Working Interest Net Revenue Interest Well Costs ($ Millions) Well Costs ($ Millions) Description EUR Net Working Interest Net Revenue Interest $6.0 $6.4 Seneca - EDA Well 8 Bcf 100% 85% 73% 63% Seneca - EDA Well 6 Bc
Slide 54: Water Handling & Recycling Characterization
Marcellus Shale Water Handling & Recycling Characterization Centralized Impoundment Stream Coal Mine Drainage Water Well Well 1 Well 2 Well 3 Frac Tanks Flowback Well 4 Well 5 Well 6 Production Tank Etc. Etc. Treatment Landfill Disposal of Solids Freshwater sources are piped to a centralized impound
Slide 55: 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
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