National Fuel Gas Company · NYSE:NFG
National Fuel Gas — Investor Presentation (August 2013)
54 slides from National Fuel Gas's investor presentation, Aug 9, 2013
Slide 1: National Fuel Gas Company Investor Presentation August 2013
National Fuel Gas Company Investor Presentation August 2013 Exhibit 99
Slide 2: Safe Harbor For Forward Looking Statements
August 2013 2 National Fuel Gas Company 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,
Slide 3: Our Business Mix Leads to Long-Term Value Creation
August 2013 3 Upstream Crude Oil Midstream Downstream Upstream Natural Gas National Fuel Gas Company Our Business Mix Leads to Long-Term Value Creation National Fuel Gas Supply Corporation Empire Pipeline, Inc. National Fuel Gas Midstream Corporation National Fuel Gas Distribution Corporation Nation
Slide 4: Integrated Businesses with Significant Marcellus Exposure
August 2013 4 National Fuel Gas Company Integrated Businesses with Significant Marcellus Exposure…
Slide 5: And Exposure to Growth from the Utica Shale
August 2013 5 National Fuel Gas Company …And Exposure to Growth from the Utica Shale
Slide 6: EBITDA Growth Driven by Stability and Ongoing Success
August 2013 6 National Fuel Gas Company EBITDA Growth Driven by Stability and Ongoing Success Note: A reconciliation of Adjusted EBITDA to Net Income as presented on the Consolidated Statement of Income and Earnings is included at the end of this presentation.
Slide 7: Capital Spending Flexibility to Maintain Financial Strength
August 2013 7 National Fuel Gas Company Capital Spending Flexibility to Maintain Financial Strength Note: A reconciliation to Capital Expenditures as presented on the Consolidated Statement of Cash Flows is included at the end of this presentation. (1) Does not include the $34.9 MM Seneca Resources
Slide 8: Strong Balance Sheet and Liquidity Position
August 2013 Total Debt (1) 44% 8 Debt / Adjusted EBITDA Capitalization The Company has a total short-term debt capacity of $1.085 billion of which all remains available National Fuel Gas Company Strong Balance Sheet and Liquidity Position $3.786 Billion As of June 30, 2013 Note: A reconciliation of
Slide 9: Dividend Consistency
August 2013 9 Dividend Consistency National Fuel Gas Company Dividend Track Record Current Dividend Yield (1) 2.2% (1) As of August 5, 2013 Consecutive Dividend Payments 111 Years Consecutive Dividend Increases 43 Years Current Annualized Dividend Rate $1.50 per Share
Slide 10: Exploration & Production
August 2013 10 Exploration & Production
Slide 11: Disciplined Capital Spending
August 2013 11 Seneca Resources Disciplined 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 12: Production Continues to Grow
August 2013 12 Seneca Resources Production Continues to Grow
Slide 13: Driving Down Costs
August 2013 13 Seneca Resources Driving Down Costs (1) Represents the midpoint of current General & Administrative Expense guidance of $0.50 to $0.55 per Mcfe for fiscal 2013 and $0.45 to $0.50 per Mcfe for fiscal 2014 (2) The total of the two Lease Operating Expense components represents the midpoi
Slide 14: California: Seventh Largest Producer in the State
August 2013 14 Rank Company California 2012 BOEPD (1) 7 Seneca Resources 10,154 Seneca Resources California: Seventh Largest Producer in the State Net Acreage: 18,418 Acres Net Wells: 1,485 Oil Gravity: 12 – 37° Api NRI: 87.64 Occidental 187,376 Chevron 160,611 Aera (Shell/Exxon) 143,983 Plains Expl
Slide 15: California: Stable Production Fields
August 2013 15 East Coalinga ~120 BOEPD Temblor Formation Primary South Lost Hills ~1,500 BOEPD Monterey Shale Primary 222 Active Wells Sespe ~1,100 BOEPD Sespe Formation Primary 172 Active Wells South Midway Sunset ~1,200 BOEPD Antelope Formation Steamflood 120 Active Wells North Midway Sunset ~4,0
Slide 16: California: Strong Margins Provide Significant Free Cash Flow
August 2013 16 Seneca Resources California: Strong Margins Provide Significant Free Cash Flow Average Revenue (12 Months Ended 6/30/13) $87.51 per BOE (1) Total production from the Exploration & Production segment’s properties in California was 3,308 Mboe for the 12 months ended June 30, 2013. Note:
Slide 17: California: Midway-Sunset South Activity Update
August 2013 17 Seneca Resources California: Midway-Sunset South Activity Update
Slide 18: California: Sespe Field – Drilling Programs and Results
August 2013 18 WS 48-33 IP: 80 BOEPD 1 st Oil 09/12 “X” SANDS ISOCHORE (Thickness) Seneca Resources California: Sespe Field – Drilling Programs and Results 1 Mile Oak Flat 1-31 IP: 110 BOEPD 1 st Oil 08/12 FA 502-33 IP: 75 BOEPD 1 st Oil 1/13 FA 501-33 IP: 100 BOEPD 1 st Oil 1/13 Oak Flat 2-31 IP: 1
Slide 19: California: East Coalinga Overview
August 2013 19 Seneca Resources California: East Coalinga Overview Seneca became operator on January 30, 2013 Previous Operator: Chevron 7,764 net acres 90 active wells ~380 BOPD (Up from 230 BOPD on 1/30/13) $30 million capital commitment over first three years $100 million of potential opportuniti
Slide 20: California: Delivering Steady Results
August 2013 20 Seneca Resources California: Delivering Steady Results Key Areas of Focus in 2014 1.East Coalinga Evaluation 2.South Midway Sunset Extensions 3.Sespe Coldwater Evaluation
Slide 21: Expansive Pennsylvania Acreage Position
August 2013 21 Seneca Resources Expansive Pennsylvania Acreage Position SRC Lease Acreage SRC Fee Acreage Eastern Development Area Net Acreage: 55,000 acres Mostly leased (16-18% royalty) No near-term lease expiration First large expiration: 2018 Ongoing development drilling in Tioga and Lycoming Co
Slide 22: Firm Sales in Place for Appalachian Production
August 2013 22 Seneca Resources Firm Sales in Place for Appalachian Production Prices shown represent the sales (netback price) at the first non-affiliated interstate pipeline , including the cost of all related downstream transportation. (1) Long-term firm sales represent gross volumes
Slide 23: Eastern Development Area (EDA)
August 2013 23 Covington – Fully Developed Gross Production: ~60 MMcf per Day 47 Wells Drilled and Producing Seneca Resources Eastern Development Area (EDA) SRC Lease Acreage SRC Fee Acreage DCNR Tract 595 Gross Production: ~75 MMcf per Day 34 Wells Drilled 26 Wells Producing DCNR Tract 100 Gross Pr
Slide 24: Strong Results in Lycoming and Tioga Counties
August 2013 24 Development Area Producing Well Count Average IP Rate (MMcf/d) Average 7-Day (MMcf/d) Average 30-Day (MMcf/d) Average EUR per Well (Bcf) Average Lateral Length EUR per 1,000’ of Lateral (Bcfe) Seneca Resources Strong Results in Lycoming and Tioga Counties Covington Tioga County 5.2 4.
Slide 25: Successful Delineation Across a Large Acreage Position
August 2013 25 Owl’s Nest 2 Wells Drilled Testing: August 2013 Church Run (1 Well) IP : 4.8 MMcfd Ridgway (1 Well) IP: 7.1 MMcfd Rich Valley (1 Well) Peak 7-Day IP: 7.8 MMcfd 30-Day Rate: 6.7MMcfd Estimated EUR: 7.4 Bcf Clermont (2 Wells) 9H (RCS) IP: 8.9 MMcfd 10H (Non-RCS) IP: 6.6 MMcfd Tionesta 1
Slide 26: Delineation Well Test Data Provides Positive Data Points
August 2013 26 Well Name RCS (1) / Non-RCS Treatable Lateral Length Stages Peak IP Rate (MMcfd) 7-Day Rate (MMcfd) Normalized 7-Day Rate (MMcfd per 1,000’) 7-Day Rate (MMcfd) 30-Day Rate (MMcfd) EUR (Bcf) Seneca Resources Delineation Well Test Data Provides Positive Data Points Completion Design Ini
Slide 27: Rich Valley/Clermont: Moving Forward with Full Development
August 2013 27 Rich Valley 7-day IP: 7.8 MMcf/d EUR: 7.4 BCF Rich Valley 2 nd Well Currently Drilling Pad N (9 Wells) Spud Q4 FY2013 Clermont 9H 7-day Flow back: 8.6 MMcf/d 10H 7-day Flow back: 6.3 MMcf/d Seneca Resources Rich Valley/Clermont: Moving Forward with Full Development Clermont Rich Valle
Slide 28: Ongoing Production Growth in the East Division
August 2013 28 Seneca Resources Ongoing Production Growth in the East Division
Slide 29: Utica Shale – Activity Summary
August 2013 29 Seneca Resources Utica Shale – Activity Summary Permitted Drilled/Drilling Completed Producing Mt. Jewett Tested 3 Frac Stages at 1.6 MMcfd (Typical Well: 17 Frac Stages) 2 nd Horizontal: Completed (Soaking) Henderson Vertical Well: Tested Tionesta Horizontal: Completed Fall 2012 Peak
Slide 30: Initial Entry into the Mississippian Lime Play in Kansas
August 2013 30 Seneca Resources Initial Entry into the Mississippian Lime Play in Kansas Total Net Acres: 13,615 Negotiated an increase in Seneca’s working interest and have taken over as operator Will drill up to 5 evaluation wells in 2014 The initial entry into the Mississippian Lime play furthers
Slide 31: Midstream Businesses: Pipeline & Storage/NFG Midstream
August 2013 31 Midstream Businesses Pipeline & Storage/NFG Midstream
Slide 32: Pipeline Expansions to Transport Appalachian Production
August 2013 32 Gathering Marcellus Production Shipping Gas to Canada & Northeast Line N Corridor Expansions Midstream Businesses Pipeline Expansions to Transport Appalachian Production
Slide 33: A Closer Look at the Expansion Progress
August 2013 33 COVINGTON GATHERING SYSTEM (In-Service) TROUT RUN GATHERING SYSTEM (In-Service ) TIOGA COUNTY EXTENSION (In-Service) LINE “N” EXPANSION (In-Service) NORTHERN ACCESS EXPANSION (In-Service) CENTRAL TIOGA COUNTY EXTENSION (2016) LINE “N” 2012 EXPANSION (In-Service) MERCER EXPANSION PROJE
Slide 34: NFG Midstream is Focused on Serving Appalachian Producers
August 2013 34 Midstream Businesses NFG Midstream is Focused on Serving Appalachian Producers Midstream’s gathering systems are critical to unlock remote, but highly productive Marcellus acreage History of operational success and efficiency within Pennsylvania Current focus is on developing and expa
Slide 35: Utility
August 2013 35 Utility
Slide 36: New York Service Territory
August 2013 36 Total Customers: 520,000 Rate Mechanisms: Revenue Decoupling Weather Normalization Low Income Rates Choice Program/Purchase of Receivables (POR) Merchant Function Charge (Uncollectibles Adjustment) 90/10 Sharing (Large Customers) Natural Gas Vehicle Pilot Program Allowed ROE: 9.1% Uti
Slide 37: New York - Earnings Sharing Proposal and Show Cause Order
August 2013 37 Utility New York - Earnings Sharing Proposal and Show Cause Order March 27, 2013 Filed a plan with the NY PSC to adopt an earnings sharing and stabilization mechanism on earnings above a 9.96% ROE April 19, 2013 NY PSC issued an Order to Show Cause (OTSC) commencing a proceeding to es
Slide 38: Pennsylvania Service Territory
August 2013 38 Utility Pennsylvania Service Territory Total Customers: 213,000 Rate Mechanisms: Low Income Rates Choice Program/Purchase of Receivables (POR) Merchant Function Charge Allowed ROE: N/A (1) (1) Black Box Settlement
Slide 39: Continued Cost Control Helps Provide Earnings Stability
August 2013 39 Utility Continued Cost Control Helps Provide Earnings Stability Low natural gas prices, combined with a focus on cost control, continue to help reduce expenses
Slide 40: Strong Commitment to Safety
August 2013 40 Utility Strong Commitment to Safety The anticipated increase in 2013 capital expenditures is largely due to the implementation of a new Customer Information System The Utility remains focused on consistent spending to maintain the ongoing safety and reliability of its system
Slide 41: Appendix
August 2013 41 National Fuel Gas Company Appendix
Slide 42: No Debt Maturities Until Fiscal 2018
August 2013 42 In February, the Company Issued $500 million in 10-year notes at 3.75% National Fuel Gas Company No Debt Maturities Until Fiscal 2018
Slide 43: Midstream Businesses Appendix
August 2013 43 Midstream Businesses Appendix
Slide 44: Regulated Interstate Expansion Initiatives (Pipeline & Storage)
August 2013 44 Project Name Capacity (Dth/D) Est. CapEx In-Service Market Status Midstream Businesses Regulated Interstate Expansion Initiatives (Pipeline & Storage) Lamont Compressor Station 90,000 $14 MM 2010/2011 Fully Subscribed Completed – Two Phases Line “N” Expansion 160,000 $61 MM (1) 10/201
Slide 45: Gathering Expansion Initiatives (NFG Midstream)
August 2013 45 Project Name Capacity (Mcf/D) Est. CapEx In-Service Date Market Comments Midstream Businesses Gathering Expansion Initiatives (NFG Midstream) Covington Gathering System 220,000 $40 MM Multiple Phases - Most In-Service Capacity Available [Marketing to Third Parties] Completed – Flowing
Slide 46: Exploration & Production Appendix
August 2013 46 Exploration & Production Appendix
Slide 47: Another Strong Year of Reserve Growth
August 2013 47 Fiscal Years 3-Year F&D Cost (1) ($/Mcfe) Seneca Resources Another Strong Year of Reserve Growth 2006-2008 $7.63 2007-2009 $5.35 2008-2010 $2.37 2009-2011 $2.09 2010-2012 $1.87 Seneca has more than doubled its proved reserves since 2009, while maintaining a relatively high percentage
Slide 48: Hedge Positions and Strategy
August 2013 48 Natural Gas Swaps Volume (Bcf) Average Hedge Price Oil Swaps Volume (MMBbl) Average Hedge Price Seneca Resources Hedge Positions and Strategy Fiscal 2013 19.4 $4.49 / Mcf Fiscal 2014 63.8 $4.28 / Mcf Fiscal 2015 42.5 $4.29 / Mcf Fiscal 2016 38.2 $4.35 / Mcf Fiscal 2017 38.8 $4.45 / Mc
Slide 49: Operational Efficiencies Continue to Drive Production Growth
August 2013 49 Seneca Resources Operational Efficiencies Continue to Drive Production Growth Ongoing efficiency allows for more activity with a flat rig count (1) RCS – Reduced Cluster Spacing (2) Drilling pace represents the average feet drilled per day from the time the well is spud until it reach
Slide 50: Targeting Continued Cost Reductions
August 2013 50 Marcellus Shale Targeting Continued Cost Reductions (1) Completion Cost per Stage is for horizontal wells completed utilizing a standard completion design, not a Reduced Cluster Spacing (RCS) completion design.
Slide 51: Comparable GAAP Financial Measure Slides and Reconciliations
August 2013 51 National Fuel Gas Company Comparable GAAP Financial Measure Slides and Reconciliations This presentation contains certain non-GAAP financial measures. For pages that contain non-GAAP financial measures, pages containing the most directly comparable GAAP financial measures and reconcil
Slide 52: Reconciliation of E&P West Division Adjusted EBITDA
August 2013 52 Reconciliation of Exploration & Production West Division Adjusted EBITDA to Exploration & Production Segment Net Income ($ Thousands) 12 Months Ended June 30, 2013 Exploration & Production - West Division Adjusted EBITDA 215,766 $ Exploration & Production - All Other Divisions Adjuste
Slide 53: Reconciliation of Adjusted EBITDA to Consolidated Net Income
August 2013 53 Reconciliation of Adjusted EBITDA to Consolidated Net Income ($ Thousands) FY 2009 FY 2010 FY 2011 FY 2012 Exploration & Production - West Division Adjusted EBITDA 171,572 $ 187,838 $ 187,603 $ 226,897 $ 215,766 $ Exploration & Production - All Other Divisions Adjusted EBITDA 108,139
Slide 54: Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures
August 2013 54 Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ($ Thousands) FY 2013 FY 2014 FY 2009 FY 2010 FY 2011 FY 2012 Forecast Forecast Capital Expenditures from Continuing Operations Exploration & Production Capital Expenditures 188,290 $ 398,174 $ 648,815
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