National Fuel Gas Company · NYSE:NFG
National Fuel Gas — BMO Capital Markets Unconventional Resource Conference 2012
51 slides from National Fuel Gas's conference presentation, Jan 9, 2012
Slide 1: BMO Capital Markets Unconventional Resource Conference
Exhibit 99 Investor BMO Capital Presentation Markets Unconventional Resource Conference January 10, 2012
Slide 2: Safe Harbor for Forward Looking Statements
National Safe This capital “intends,” outcomes have In compliance employment, differences derivative projects and investments, regional customers locations; cost interest changes increasing ability Forward with probable substantially website For Company’s or (1) (2)addition unavailability toaeconomi
Slide 3: Core Businesses
Core Businesses Integrated Seneca ?Significant Leading Evaluate ?Stable Significant Production NFG Midstream ?Focus ?Cost Energy Protection ?Stable, Supports ?Expand ?Maintain (1) (2) Distribution Control Resources on Oil Predictable Marcellus Utica/Geneseo into Dividend Business Customer Marketing
Slide 4: National Fuel Gas Company Integrated Business Structure
NationalFootnote Integrated (1) (2) Fuel Business Gas#2 #1 Company Structure goes hereJanuary 4 10, 2012
Slide 5: National Fuel Consolidated Capital Expenditures
National Consolidated $1,500 (s) $750 $0 $53 2008 (1) (2) $854 $1,015 $57 Footnote $785 2009 s$56 Utility Footnote Fuel $1,250 $875 2010 $58 #1 Capital Gas Pipeline goes $58 penditure 2011 $1,185 #2 Company $55 goes here Expenditures 2012 &Million 60Storage here Note: $501 Forecast January 5A $500 $
Slide 6: Exploration & Production
Exploration (1) (2) & Production Footnote #1 goes here #2 January 6 10, 2012
Slide 7: Seneca Resources Three-Year Average F&D Cost Improvement
Seneca Continued Three $8.00 ($ 3- 2005 $0.00 $2.00 $2.09 Fiscal (1) $5.35 $6.00 (2)$2.37 2007 $7.38 Year Years Resources CostImprovement 2006 Average $7.63 F&D2008 Footnote #1 January $4.00 /Mcfe) #2 U.S 2007 goesFinding Ye inhere 10, Finding 2009 ar 2012 7& 2008 Development & Development 2010 2009
Slide 8: Seneca Uniquely Positioned in Emerging Shale Plays
Seneca Uniquely ??Held ??Have ??80% ?No ??In ?Utica ?Geneseo Proved (1) (2) royalty lease addition Shale of Resources over Reserves since Positioned acreage Shale expirations 700,000 to added Footnote Marcellus, (Upper Risked #1 is January #2 another held in Marcellus goesPennsylvania Devonian) Pros
Slide 9: Seneca's Marcellus Shale Acreage
Marcellus Seneca’s Eastern Western SRC (1) (2) FeeDevelopment Development Development Acreage Shale January Footnote #1 SRC #2 Area Area Areas Lease goes10, (Mostly (Mostly 2012 hereAcreage 9 Leased) Fee EOG andAcreage HBP)
Slide 10: Marcellus Shale Strategic Development Plan
Marcellus Gross 16 Seneca 12 Count 6 ross 4 2 1.5 4.5 2009Tioga ??Systematically Fiscal (1) (2) Rig 8.5 Resources EOG G2010 5.5 2.5 3and 4.5 Year acreage Shale Count areLycoming 1.5 0that 2011 Strategic ??Aggressively January Rig evaluate ??Begin Joint Footnote “de 2012 Venture #1 #2 8development Co
Slide 11: Marcellus Shale Development Strategy
Marcellus 3 1. ??Frac ??Lateral 3. (2) –well ??Vertical ??3 ??2D 2. ??Landing ??Locations ??Multi ??Crawling ??Batch ??Large ??Water (1)Area Step Shale Optimization Development well and design evaluation scale drill systems Development horizontal length 3D wells depth rigs pads top Footnote January
Slide 12: Marcellus Eastern Development Area Results & Plan Forward
Marcellus Eastern Covington 47 19 Gross DCNR 5 FY SRC (1) (2) Wells Production: Tract Development 2012: Fee Wells LeaseDrilled 2Shale –Acreage Developed 595 100 Drilled Acreage Rigs Footnote January ––#2 1~10 ~100 47 4 #1Full Producing Producing Area MMcf Well goesDevelopment MMcf/d 10, (EDA) 2012 c
Slide 13: Marcellus EDA Segment Typecurve
Marcellus 12.0 EDA Segment Daily Lower 0 (1) 2 4Original (2) Average Typecurve 64.0 Production 8Footnote 8.0 10 2.0 Shale 12 IP 6.0 Daily 14 Rate –January Bcf #1 6.7 Bound 16Production #2 5,400 18 Typecurve Bcfe goes 20 10, 0.0 MMcf/d EUR 22 2012 here 24 Rate 13(Greater Month Current: IP Rate Than C
Slide 14: Marcellus Western Development Area Results & Plan Forward
Marcellus January Western SRC Approx. 200,000 Mt. IPs: Rich Owl’s Drilling 3 Expected Acquiring Boone Testing First Second Punxy FY Gross Seneca EOG SENECA (1) (2) 14Wells Horizontal Footnote 2012: Jewett ~3 well Valley Fee Lease Contributed Contributed Operated: Operated Production Nest –Mountain 5
Slide 15: Breaking Down Our Possible Marcellus Position
Marcellus Breaking Possible Area Covington Other 55,000 Owl’s 30,000 521,500 Punxy 2.0 168,500 (1) (2) 5 Net .0EDA Nest 12,000 315 188 Untested 4,153 919 Wells Acres Down Shale 7,000 /4.0 73 4,000 74 Ridgeway 87 Footnote54 16 5Locations 42 Our January 47 .0 63 #1 Western 15 10 #2Seneca Delineating 4
Slide 16: Seneca Marcellus Well Economics
Seneca Marcellus No 100% Tax P 25% 34% 12% 3.0 49% (1) (2) Royalty 5.0 re- ??Economies 23% 90% ??No 8.0 Resources 50% Pre8% Acreage Economics Gross ??Minimal Tax 18% lease Footnote0%IRR Royalty EUR January expiration #1 #2of Position determined scale for acreage perahere goes 10, Well $6.2 Provides
Slide 17: Marcellus Operational Efficiencies
Marcellus Operational Equipment (Frac (Rig Frac Pads, Increased Improved Proppant Drilling Total 2011 Target (1) (2) Contract Mats, Estimate Tanks, etc…) $378/Ft Total & Wells Efficiency Costs Shale Concrete Ownership Chemical Efficiencies etc…) Completion 4,500’ $1.7 FootnoteNatural January #1Pad #
Slide 18: Upper Devonian Activity
Upper Activity Drilled Mt. DCNR Depth: Peak East 1 12 PGE 2 (1) (2) Jewett Resources Rate: Devonian 5,095’; 5,830’; 001 & WellsWell Summary Completed Vertical 4.5 Horizontal WellsPermitted MMcf/d Thickness: 3 Geneseo PermittedWells #1East (Seneca) Drilled Footnote #2 November (Seneca) December Permi
Slide 19: Utica Activity Summary
Utica Activity Vertical Horizontal 3.1 1,015 Seneca Dry 3.8 9.2 9.5 Chesapeake 1,425 (1) (2) MMcf/d Rex Shale Bbl/d Resources Well Completed Summary Energy Well January Wet 6.4 980 Chesapeake Permit MMcf/d FootnotePermit Horizontal Bbl/d #1 Seneca Chesapeake #2Dry 10, Prep goesDrilled 2012 Gas to Re
Slide 20: Utica Jewett Mt. Seneca Well
UticaJewett Mt. Seneca ?Potential ?Dry ?Moving Wet (1) (2) Dry Gas Shale Resources inpay Vertical January rigspans Footnoteto #2 #1 spud recently Well 10, thehorizontal goes2012 Utica, drilled here Pt. well 20 aPleasant verticaland Utica/Pt. portions Pleasant of the well Trenton in McKean Formations
Slide 21: California Stable Production
California Stable ~1,150 Tulare North ~4,350 Potter Steamflood Sespe South ~800 (1) (2) BOEPD Lost Midway Formation & Production &BOEPD Tulare Etchegoin January Hills Sespe Antelope FootnoteSunset Formation Primary #1 Fields 703 10, #2 Formation 193 Active 2012 goesFormation Active hereWells South 2
Slide 22: California Strong Fiscal 2011 Margins
California Strong Fiscal Income DDA Cash Other $31.88 $10.21 DD&A G&A Net (1) (2) Income Non 13% 3% 6% Year Margins Steam tax Average Steam January 2011 21% 41% Fuel Support Footnote Net Fuel #1 Price #210, 4%Income LOE 2012 ($/BOE) Significant goes Net and here Income 22 = Expenses $77.59 FreeExpen
Slide 23: Seneca Capital Expenditures
Seneca Capital California $1,250 Millions) $1,000 $500 $649 $750 xpenditures $61 $64 $63 2008 (1) (2) Footnote $71 $31(1) $398 2009 Resources Spending $68 $785 Upper 2010 $47 $740 #1875 #2 $45 goes 2011 Devonian 820 Shifting January (55 here $E 2012 $0 $585 (1) of to 10, Marcellus Forecast Cash the
Slide 24: Seneca Ramping Up Production Growth
Seneca Ramping California 125 100 Productio 49.7 25 18.8 (1) (2) 8.7 Annual 20.1 9.3 Resources Up 19.8 50 7.9 Upper production 42.5 Production Footnote619.2 8 Devonian #1 7.9 lJanuary #2 40.8 19 21 87 goes13.4 Growth 0101 10, Marcellus 2008 here35.3 2012 growth 24 2009 14.1Gulf of 2010 13.7 ~30% ofA
Slide 25: Pipeline & Storage / Midstream
PipelineFootnote (1) (2) & Storage#2 #1/ goes Midstream here 25January 10, 2012
Slide 26: Pipeline Positioned to Move Growing Marcellus Production
Pipeline Positioned TIOGA NORTHERN CENTRAL COUNTY LAMONT EXTENSION COVINGTON SYSTEM WEST EXPANSION LINE LEIDY (In (1) (2) Service) “N” TO ACCESS &TROUT EXPANSION COMPRESSOR GATHERING to EAST Storage TIOGA Move STATION GATHERING Footnote #1 OVERBECK RUN January #2Growing goes(In PHASE 2012 10, Servic
Slide 27: Midstream Critical to Boosting Returns
Midstream Critical ??Midstream’s TGP Tioga ??Goal ??History Lycoming ??Continuously (1) (2) 300 County is Tocritical to of County Boosting January first operational Footnote gathering evaluating to work #1unlock #210, Returns to 2012 goessuccess systems assist remote, opportunities in27 here Seneca
Slide 28: National Fuel Targeted Capital Structure
National Targeted Debt Utility Equity 35% E&P All Capital (1) (2) Other 45% 30% Equity 50% P&S Structure Fuel Capital 40% 70% 50% 50% Gas 60% Footnote Structure Long #1 50% #2Company 55% Term goes 65% January Consolidated here 28Debt10, 2012 Targets by Segment Capital Structure Target
Slide 29: Appendix
NationalFootnote (1) Appendix (2) Fuel Gas#2 #1 Company January goes here 29 10, 2012
Slide 30: National Fuel Manageable Debt Maturity Schedule
National Manageable $600 illions) ($500 M Debt $100 $49 700% $0 Fiscal (1) $ $200 (2) 6$300 $50 5$150 2012 7.395% .Year 6250% $400 8aturity Fuel 4Debt Debt M Footnote.Gas 500% $300 Maturity #1 Maturity Company #2 $250 . . 750% goes Paid $250 Schedule January here .30 on 900% November 10, 7.375% 2012
Slide 31: Strong National Fuel Dividend Track Record
Strong National $1.60 Rate Dividen ual Ann $0.20 Annual (1) (2) $0.60 Compound $1.20 5.0% Dividend Rate $0.80 Fuel d$0.00 at $1.00 Gas has FootnoteFiscal Annual Track #1 had Company #2 Year 109 Record goes$0.40 uninterrupted End hereJanuary Growth 31 10, Rate $1.40 2012 years of dividend payments an
Slide 32: National Fuel Hedge Position
National Hedge Hedged As 100% Productio 47% 60% Forecaste 21% 3% 2012 0% Most Fiscal (1) (2) of %2013 hedges January Oil Year 2012 Positions Forecasted Fuel 20% Swaps Natural 2014 eliminate 1.6 35.0 executed Gas 10, Footnote Fiscal $77.03 and $5.89 (MMBbl) #1 2012 Gas Company #2Production Strategy b
Slide 33: National Fuel Capitalization and Liquidity
National Capitalization Short Capital ?Total Debt Shareholders’ ?Committed ?Five ?Uncommitted ?$300.0 $2.981 Fiscal (1) (2) Term year Year Short Billion Resources Includes MM Fuel syndicated Ended Debt Term Credit Commercial Gas 35.2% &Lines Footnote Liquidity 1.3% Current Capacity: Long 2011(1) Com
Slide 34: Pipeline & Storage / Midstream
PipelineFootnote (1) (2) & Storage#2 #1/ goes Midstream here 34January 10, 2012
Slide 35: Pipeline Expansion Capacity
Pipeline Expansion Capacity Project Lamont Tioga Received Line Marketing Central Total Capital (1) (2) “N” Firm County Name Investment: Tioga Compressor Phase &Est. Expansion 2012 Certificate continues Initiatives Capacity: Storage In Market County Extension IIExpansion Footnote Service Project #1Ja
Slide 36: Midstream Expansion Capacity
Midstream Expansion Capacity Project Completed Covington Trout Jewett Total (1) (2) Firm Run Gathering Name Est. Gathering Initiatives Gathering Capacity: Corporation – Flowing In Market Footnote Service System #1 goes #2 ~906,000 System System Status into January 170,000 TGP (Dth/D) here466,000 Wil
Slide 37: Utility
Utility January National (1) (2) Fuel Gas 10,#2 Footnote #1Distribution 2012 Corporation goes here 37
Slide 38: Utility O&M Expense Control
Utility Continued All $350 (Millions) $27 $100 O&M 2007 $0 $50 Fiscal (1) $200 (2) Other $25 $14 $178 2008 Year $176 $191 January $181 $11 $250 O&M Cost 2009 $164 $179 Expense Footnote10, $203 Control Expenses 2010 #1 $167 #22012 $$150 2011 $203 $168 goes $30038O&M Expense Uncollectibles here
Slide 39: Utility Financial Stability and Allowed Returns
Utility Financial 30.0% Allowed quity 10.9% 9.8% 2008 0.0% Fiscal Rate ??Low ??Choice ??Merchant ??Revenue ??90/10 ??Weather (1) (2) Mechanisms 2009 20.0% Return Year NY 10.6% January Income Sharing ROE Program/POR Stability Normalization PA 2010 Decoupling Function 18.8% 10.0% 10.5% NY FootnoteRate
Slide 40: Exploration & Production
Exploration (1) (2) & Production Footnote #1 goes here #2 January, 40 10 2012
Slide 41: Marcellus Geotechnical Keys to Success
Marcellus Geotechnical 1. ??Attribute 2. 3. 4. ??Impacts 5. ??Cost (1) (2)Target 3D Seismic Natural Stress Optimize versus Regime Zone Fractures Shale surface Initial IP completion and Lateral & Keys IP/EUR Data FootnoteEUR fracture January, Production #1 location, #2to Length per Success efficiency
Slide 42: Marcellus Expanding 3D Seismic Coverage
Marcellus Expanding DCNR Owl’s Punxy (1) (2) Nest Completed 001 595Shale 3D DCNR Seismic FootnoteJanuary #1 –100 #2007 190,000 Coverage Mt. goes10,Jewett 2012 ac42 here In Progress West Branch – 128,000 Covington ac
Slide 43: Importance of 3D Seismic Prior to Drilling
Marcellus Importance Drilled Well TGP DCNR (1) (2) Test: 300007 prior Shale 2Tioga 5H of MMcf/d to3D FootnoteWell 3D January, #1 County Seismic #2Seismic goes 10 inacquisition here2012 Identifying 43 Fractures
Slide 44: Marcellus 3D Seismic Identifying Fractures
Marcellus 3D In Major 5H Fault DCNR Remainder Tioga Evidence (1) (2)aSeismic localized County Fractures 007for Shale of 5H Analysis: significant area DCNR FootnoteWell January #1 with #2 Tract Fracture minimal goesnatural 10,007 2012 here Patterns? 44fractures fractures
Slide 45: Marcellus Importance of Closure Stress
Marcellus Importance ?High Impacts ?Currently Target Best Higher Closure “pinch Owl’s (1) (2) zone Nest Closure Zones point” Stress frac aShale optimizing Elk of function initiation in Footnoteand Closure & rock Stress County each January Target #1 stress #2 quality, of area. & Stress goesZone regim
Slide 46: Owl's Nest Moving Target Zone
Marcellus Owl’s Moving 3H Treated Peak 3 Production Rate: Nest Lateral: “Narrowed” Cherry Onondaga 5,800’ Frac 11 (1) (2) of Day into Stages 20 Shale 4.47 –Union 5,750’Avg.: Full Improved Stages CarbResults MMcf/d 4,396’ January Development 4.25 Valley Footnotein#1 Union #2 MMcf/d IP’s 10, Springs g
Slide 47: Marcellus Multi-Well Pad Cost Savings
Marcellus 1 Location ?Rig (2) Well ??$600,000 ?Ancillary ??$150,000 ?Frac ??$7,000 ?Water ??$200,000 Cost (1) Shale Savings per from Mobilization Footnote January, Mobilization Hauling & per Pad Drilling Road per well of well vs. Pad #1 Multi Costs6 Wells ??$1,200 #2?Rig Costs ?Frac Well 10 2012 per
Slide 48: Marcellus Water Management
Marcellus Water Coal Permitted Recycled ?Water Instituted Recycle Centralized Installing Investigating Seneca (1) (2) mine Management Sourcing: Management: isFootnote Marcellus water committed new afreshwater Shale runoff “Zero water underground evaporative January #1 Surface handing flowback #2Prog
Slide 49: Marcellus Zero Discharge Operation
Marcellus “Zero ?Utilizing Building Removes Has End Non Clean (1) (2) the products: hazardous Liquid water ability centrally all Shale a state vapor liquids Discharge Footnote to solidified January of be #1 located emissions #2 the from powered art Operation” goes 10, salt the units evaporative 2012
Slide 50: Comparable GAAP Financial Measures
National Comparable This reconciliations The the presentation (1) (2) performance Company presentation Fuelof GAAP Gas Footnotebelieves are non of#2 #1 contains Company provided the GAAP Financial Company’s that goes certain financial its in hereJanuary Measure non the non 50 slides ongoing GAAP mea
Slide 51: Reconciliation of Segment Capital Expenditures to Consolidated
Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ($ Thousands) FY 2012 FY 2008 FY 2009 FY 2010 FY 2011 Forecast Capital Expenditures from Continuing Operations Exploration & Production Capital Expenditures $192,187 $188,290 $398,174 $648,815 $ 785,000-875,000 Pipel
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