National Fuel Gas Company · NYSE:NFG
National Fuel Gas — Q4 2024 Earnings Presentation
58 slides from National Fuel Gas's earnings presentation, Nov 7, 2024
Slide 1: Investor Presentation Fiscal 2024 – 4th Quarter Update
Investor Presentation Fiscal 2024 – 4th Quarter Update November 6, 2024 Fiscal 2024 Q4 Update 1
Slide 2: National Fuel Gas Company agenda
National Fuel Gas Company • Company Overview (3) • Why National Fuel? (8) • Financial Overview (13) • Business Highlights (17) • Supplemental Information • Segment Information (23) • Guidance & Other Financial Information (47) Fiscal 2024 Q4 Update 2
Slide 3: Company Overview
Company Overview Corporate HQ: Buffalo, NY NYSE: NFG ~2,200 employees Market Cap: ~$5.5B 122 Years of consecutive dividend payments >10% Adjusted EPS 54 Years of consecutive Growth FY24-FY27E dividend increases 17% reduction in Investment Grade methane emissions credit rating since 2020 Left picture
Slide 4: History of National Fuel
History of National Fuel Industry Pioneer Born From Rockefeller’s Standard Oil Company Fiscal 2024 Q4 Update 4
Slide 5: A Diversified, Integrated Natural Gas Company
NFG: A Diversified, Integrated Natural Gas Company Developing our large, high-quality Adjusted EBITDA(1) acreage in Marcellus & Utica shales Upstream Exploration & Production ~1.2 Million ~1.0 Bcf/day 49% Net acres in Net total production(2) Appalachia Expanding and modernizing pipeline infrastructu
Slide 6: Non-Regulated Business Overview
Non-Regulated Business Overview Exploration & Production Segment (Upstream) • Seneca Resources Company • Total Net Acres (Pennsylvania): ~1.2 million(1) Western Development Area – ~925,000 Acres • Total Proved Reserves: 4.8 Tcfe(1) • Current Net Production: ~1.0 Bcf/d(2) • Firm Transportation Capaci
Slide 7: Regulated Business Overview
Regulated Business Overview Pipeline & Storage Segment (Midstream) • Regulated by Federal Energy Regulatory Commission (FERC) • Total Rate Base: $1.6 Billion(1) • ~2,600 miles of pipeline / 29 storage fields • National Fuel Gas Supply Corporation: • Firm Contracted Storage Capacity: 71 Bcf • Firm Co
Slide 8: Why National Fuel?
Why National Fuel? Strong Integrated Visibility on Long-Term Long-Standing History Responsibly Responsibly Reducing Reduce Returns EPS & FCF Growth of Shareholder Returns Emissions Emissions Optimized capital Targeting significant 122 years of dividend Continued progress allocation rate base
Slide 9: Integrated Model Drives Strong Returns
Integrated Model Drives Strong Returns NFG’s ROCE outperforms peers and broader market, on average, over a multi-year period Strong Return on Capital Employed(1) Integrated NFG vs. S&P 500 and Industry Peers Integrated Business Model Benefits S&P O&G Returns 20% Index Operations: Lower cost struct
Slide 10: Strong Value Proposition Driven by Earnings & Cash Flow Outlook
Strong Value Proposition Driven by Earnings & Cash Flow Outlook >10% Consolidated 3-Year Adjusted EPS CAGR (FY24-27E) Regulated Businesses Non-Regulated Businesses Strong Increasing EPS Expected to Drive Significant FCF Generation Expected Integrated Future Dividend Growth to Provide Flexibility Ret
Slide 11: Proven Track Record of Returning Capital to Shareholders
Proven Track Record of Returning Capital to Shareholders >$590 Million Returned to Shareholders in Last 3 Years Total Return of Share Strong Dividend Capital (1) Integrated Buyback Yield Returns Yield ~6% Visibility on Stable, Growing Dividend … $2.06 …Plus Share Buyback Long-Term per share EPS & FC
Slide 12: Considerable Progress on Emissions Reductions
Considerable Progress on Emissions Reductions Latest Corporate Responsibility Report Provides Enhanced Disclosures on Sustainability Initiatives Strong Integrated Continued Progress On Our Methane Returns Intensity Targets(1) Responsible gas certifications Visibility on Long-Term Pneumatic devic
Slide 13: Financial Overview
Financial Overview Fiscal 2024 Q4 Update 13
Slide 14: FY2024 Results Demonstrate Resiliency to Commodity Downturns
FY2024 Results Demonstrate Resiliency to Commodity Downturns Growth Catalysts in Each Segment Support Consolidated 3-Year Adj. EPS CAGR >10% (FY24-27E) FY2024 Earnings Highlights Adjusted Operating Results(1) Exploration & Production ($ per share) • Natural gas production increased 5% to 392 Bcf ~$6
Slide 15: Capital Allocation Priorities Drive Spending Levels
Capital Allocation Priorities Drive Spending Levels Capital Expenditures by Segment ($ millions)(1) Capital Allocation Priorities (2) Utility Pipeline & Storage Gathering Exploration & Production • Invest in regulated growth via modernization $973 Organic $936 ~$928 and pipeline expansions Investmen
Slide 16: Balance Sheet Resiliency Through the Commodity Cycle
Balance Sheet Resiliency Through the Commodity Cycle Conservative Leverage Provides for Opportunistic Capital Allocation Net Debt / Adjusted EBITDA(1) Current Credit Rating Capitalization Committed to Investment Grade 3.5 x Downgrade Credit Rating 3.08 x Threshold 2.72 x Investment Grade Equity Tota
Slide 17: Business Highlights
Business Highlights Fiscal 2024 Q4 Update 17
Slide 18: Regulated: Significant Rate Case Activity
Regulated: Significant Rate Case Activity New York: Significant Filed a rate case in October 2023 for new rates effective October 1, 2024 (fiscal 2025) Growth Utility – NY Joint Proposal(1) (JP) filed with NYPSC on September 9, 2024. Key drivers include: ‒ 3-year settlement ‒ Rate base of $1.04B
Slide 19: Regulated: Rate Case Overview
Regulated: Rate Case Overview Recent updates in orange Pipeline & Storage Utility Supply Empire NY(2) PA Regulatory Agency (Governed by) FERC FERC NYPSC PAPUC • Settlement approved by • Rates in effect since • Filed rate case October • Settlement approved FERC June 11, 2024 January 1, 2019 31, 2023
Slide 20: Non-Regulated: EDA Development Creates Differentiated Value
Non-Regulated: EDA Development Creates Differentiated Value Western Development Areas (WDA) Eastern Development Areas (EDA) Legacy Development Area Development Focus Area Primarily Owned in Fee (No Royalty) 10+ Years Low-Risk Inventory EDA Highlights EDA development plan drives higher capital effi
Slide 21: Non-Regulated: EDA Best in Basin Performance & Breakevens
Non-Regulated: EDA Best in Basin Performance & Breakevens >10 years of prolific EDA inventory at expected development pace Program Productivity Increasing Significantly Already Low Breakevens Continue to Improve 600 $3.50 12 M. Cumulative Gas, MCF/1,000(1) 400 $3.00 200 PV-10 Breakeven @ 20:1 WTI: H
Slide 22: Supplemental Information
Supplemental Information Fiscal 2024 Q4 Update 22
Slide 23: Exploration & Production & Gathering Overview
Supplemental Information: Segment Overview Exploration & Production & Gathering Overview Seneca Resources Company, LLC National Fuel Gas Midstream Company, LLC 23 Fiscal 2024 Q4 Update 23
Slide 24: Focused on Capital Efficiency and FCF Generation
E&P and Gathering Focused on Capital Efficiency and FCF Generation Transition to the EDA Drives Growing Production with Decreasing Capital Net Production (Bcfe) WDA – ~925,000 Acres 400-420 392 372 2023 2024 2025E EDA – ~320,000 Acres Capital Expenditures ($ MM)(1) 588 530 495-525 2023 2024 2025E (1
Slide 25: Integration Drives Industry Leading Cost Structure
E&P and Gathering Integration Drives Industry Leading Cost Structure Seneca Cash OpEx ($/Mcfe) Seneca + Gathering Cash OpEx ($/Mcfe) $0.93 $0.94 $0.95 $0.95 $0.07 $0.07 $0.07 (1) $0.18 $0.18 $0.19 (2) $0.11 $0.12 $0.12 $0.10 $0.48 (2) -$0.57 $0.57 $0.57 $0.57 FY 2023 FY2024 FY2025E Less: Intercompan
Slide 26: Long Runway of Development Opportunities in the EDA
E&P and Gathering Long Runway of Development Opportunities in the EDA Upstream Development Program Utica Development Tioga County, PA Low-risk development locations: ~200 Utica, 80 Marcellus ‒ Average total lateral length (TLL) of ~13k feet in the Utica, ~11.5k feet in Marcellus Numerous marketi
Slide 27: High Quality Acreage in WDA, Primarily Owned in Fee
E&P and Gathering High Quality Acreage in WDA, Primarily Owned in Fee Western Development Area (WDA) Highlights Marcellus & Utica Trend Fairways(1) >10 years of fully delineated inventory in the Marcellus and Utica plus significant additional future development potential Large gathering system w
Slide 28: Production Supported by Long-Term Contracts
E&P and Gathering Production Supported by Long-Term Contracts ~1 Bcf/d of Firm Transportation Firm Sales Portfolio 1200 In-Basin Firm Sales (1) 1000 Will continue to layer-in firm sales deals to reduce in-basin spot exposure To Canada, Dawn, TPG-200 Leidy South (Transco & NFG - Supply) Gross Firm Vo
Slide 29: Fiscal 2025 Sales Mix Provides Near-Term Price Certainty
E&P and Gathering Fiscal 2025 Sales Mix Provides Near-Term Price Certainty Firm Sales & Production Cadence(1) Price Realizations with Hedging (Net Bcfe, $ per MMBtu) 48 ~400410 - 420 106 $2.00 ($0.76) ($0.62) ($0.97) ($0.97) 55 ($0.79) Differential to 201 NYMEX ($0.69) ($0.71) NYMEX ($0.71) $2.65 Fl
Slide 30: Hedging Program: Disciplined with Upside Potential
E&P and Gathering Hedging Program: Disciplined with Upside Potential Methodical Approach to Layering in Hedges Over Time Supports the Company’s Investment Grade Rating Long-Term Unhedged Volumes (1) Near-Term Avg. Hedge Price Above Strip 500 Create Opportunity to Capture Higher Prices $4.61 $4.58 $4
Slide 31: Industry-Leading Focus on Sustainability
E&P and Gathering Industry-Leading Focus on Sustainability Responsible Gas Certifications, Emissions Reductions & Biodiversity Equitable Origin – EO100TM Standard for Responsible Emissions Reductions Energy Development Certification (100% of natural gas production certified, re-verified in December
Slide 32: Pipeline & Storage Overview
Supplemental Information: Segment Overview Pipeline & Storage Overview National Fuel Gas Supply Corporation Empire Pipeline, Inc. 32 Fiscal 2024 Q4 Update 32
Slide 33: Pipeline & Storage Segment Overview
Pipeline & Storage Pipeline & Storage Segment Overview National Fuel Gas Supply Corporation Contracted Capacity(1): Firm Transportation: 3,498 MDth per day Firm Storage: 70,693 MDth (fully subscribed) Rate Base(2): ~$1,244 million Empire Pipeline FERC Rate Proceeding Status: Rate case se
Slide 34: Pipeline & Storage Customer Mix
Pipeline & Storage Pipeline & Storage Customer Mix Customer Transportation by Shipper Type(1) Affiliated Customer Mix (Contracted Capacity) Affiliated Non-Affiliated End User 8% 21% Outside Producer Pipeline 52% 28% 15% 80% Marketer 79% 14% LDC 48% 35% 20% LDCs Producers Firm Storage Firm Transport
Slide 35: P&S Capital Expenditures
Pipeline & Storage Pipeline Modernization & Expansion Projects Propel Growth Capex Investments Support Long-Term Rate Base Growth Estimate of ~5-7% P&S Capital Expenditures Organic Growth Drivers Expect long-term capex spend of ~$100-150 MM per year ($ millions) Expansion projects drive further
Slide 36: Tioga Pathway Project Creates Organic Growth
Pipeline & Storage Tioga Pathway Project Creates Organic Growth Long-term revenue growth for Supply, while providing an additional outlet for Seneca’s EDA development Capacity: 190,000 Dth/day Estimated capital cost: ~$100 million A portion of the capital to be allocated to modernization facil
Slide 37: Continued Expansion of the Supply Corp. Line N System
Pipeline & Storage Continued Expansion of the Supply Corp. Line N System Recent Expansion of Line N Over the past four years, the company has successfully placed into service several projects which have added: Mercer Contracted firm transport: 158,000 Dth/d Contracted firm storage: 267,000 Dth
Slide 38: Utility Overview
Supplemental Information: Segment Overview Utility Overview National Fuel Gas Distribution Corporation 38 Fiscal 2024 Q4 Update 38
Slide 39: New York & Pennsylvania Service Territories
Utility New York & Pennsylvania Service Territories New York Last Rate Case: Joint Proposal filed; pending Commission approval Total Customers(1): ~541,000 Allowed ROE: 8.7% (NYPSC Rate Case Order, April 2017) Pending JP ROE: 9.7% (NYPSC Case 23-G-0627) Rate Mechanisms: o Revenue Decoupling o Weathe
Slide 40: NY Utility Rate Case Status
Utility NY Utility Rate Case Status Joint Proposal Filed September 9th, 2024 – Pending NYPSC Approval Filed case on October 31, 2023 requesting base delivery revenue increase of $88.8 million (in RY1) Filed a Joint Proposal(1) (JP) with NYPSC on September 9, 2024 for 3-year settlement Rate Case
Slide 41: NY Utility Regulated Environment
Utility NY Utility Regulated Environment NY Regulatory Environment Continues to Prioritize Access to Safe, Reliable and Affordable Energy First utility in the state to submit a LTP (Long-Term Plan) NYPSC implemented NFG’s LTP with modifications in December 2023 Includes an “All-of-the-Above Pa
Slide 42: Customer Affordability
Utility Customer Affordability New York Pennsylvania #3 #1 Out of 9 Gas Utilities(1) Out of 6 Gas Utilities(2) New York Large Gas Utilities Monthly Bill Pennsylvania Large Gas Utilities Monthly Bill Residential Heating (based on 100 Mcf annually) Residential Heating (based on 15 Mcf monthly) $250 $2
Slide 43: Utility Continues its Significant Investments in Safety
Utility Utility Continues its Significant Investments in Safety Long-Standing Focus on Distribution System Safety and Reliability $180.0 Capital Expenditures for Safety Total Capital Expenditures (1) $184.6 (2) $200.0 $165-$185 $160.0 $180.0 Utility Capital Expenditures ($ millions) $140.0 $160.0 $1
Slide 44: Long-Standing Pipeline Replacement & Modernization
Utility Long-Standing Pipeline Replacement & Modernization Utility Mains by Material(1) Miles of Utility Main Pipeline Replaced(2) Wrought Iron 180 168 Coated 156 161 Bare 160 154 154 NY 140 53 49 9,817 miles 40 43 41 Plastic 120 100 80 Coated Wrought Iron Bare 60 114 115 113 113 112 PA 40 4,832 mil
Slide 45: Utility Targeting Substantial Emissions Reductions
Utility Utility Targeting Substantial Emissions Reductions Significant Reductions in Utility GHG Emissions to Date, GHG Reduction Targets, Continuing Focus on Lowering Driven by System Modernization Efforts Carbon Footprint Utility Mains & Services Emissions(1) Utility GHG Emissions Reduction Target
Slide 46: Promoting Renewable & Certified Natural Gas
Utility Promoting Renewable & Certified Natural Gas RNG (Renewable Natural Gas) Progress: Through Fiscal 2020 July 2021 Currently Future Three site locations under Awarded four RNG grants Advance RNG First on-system project construction. for $1.1 million through the Utility’s Area goes online. Produ
Slide 47: Guidance & Other Financial Information
Supplemental Information Guidance & Other Financial Information Fiscal 2024 Q4 Update 47
Slide 48: Fiscal 2025 Adjusted EPS Guidance
Fiscal 2025 Adjusted EPS Guidance FY2024 Adjusted Operating Results FY2025 Adjusted EPS Guidance +15% $5.01/share(1) $5.50 to $6.00/share(1) NYMEX Earnings Sensitivities FY2025 NYMEX Assumption: $2.50 $5.15 - $5.65 $2.80 / MMBtu $3.00 $5.70 - $6.20 Key Guidance Drivers $3.25 $6.00 - $6.50 Net Produc
Slide 49: 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, objectives, goals, projections, estimates of gas quantities, strategies, f
Slide 50: Hedge Portfolio & Capped Firm Sales
Hedge Portfolio & Capped Firm Sales 1Q 2025 2Q 2025 3Q 2025 4Q 2025 FY 2026 FY 2027 FY 2028 FY 2029 Swaps Units Volume MMBtu 33,730 33,150 30,075 30,075 52,065 36,810 9,630 1,500 Wtd. Avg. Floor $ / MMBtu $3.42 $3.48 $3.47 $3.47 $3.84 $3.92 $3.67 $3.53 Collars Volume MMBtu 11,920 13,305 15,930 15,93
Slide 51: Firm Transportation Commitments
Firm Transportation Commitments Volume Delivery Demand Charges Production Source Gas Marketing Strategy (Dth/d) Market ($/Dth) Northeast Supply Canada Firm Sales Contracts Diversification EDA – Tioga 50,000 $0.46 (3rd party) (Dawn) Dawn/NYMEX Tennessee Gas Pipeline NFG pipelines - $0.24 Niagara Expa
Slide 52: Comparable GAAP Financial Measure Slides & Reconciliations
Comparable GAAP Financial Measure Slides & Reconciliations This presentation contains certain non-GAAP financial measures. For pages that contain non-GAAP financial measures, pages containing the most directly comparable GAAP financial measures and reconciliations are provided in the slides that fol
Slide 53: Non-GAAP Reconciliations – Adjusted EBITDA
Non-GAAP Reconciliations – Adjusted EBITDA Reconciliation of Adjusted EBITDA to Consolidated Net Income ($ Thousands) FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 Total Adjusted EBITDA Exploration & Production Adjusted EBITDA $ 312,166 464,529 656,310 611,782 589,831 Pipeline & Storage Adjusted EBITDA 18
Slide 54: Non-GAAP Reconciliations – Adjusted EBITDA, by Segment
Non-GAAP Reconciliations – Adjusted EBITDA, by Segment Reconciliation of Adjusted EBITDA to Net Income, by Segment ($ Thousands) FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 Exploration and Production Segment Reported GAAP Earnings $ (326,904) $ 101,916 $ 306,064 $ 232,275 (163,954) Depreciation, Depleti
Slide 55: Non-GAAP Reconciliations – Adjusted Operating Results
Non-GAAP Reconciliations – Adjusted Operating Results Three Months Ended Fiscal Year Ended September 30, September 30, (in thousands except per share amounts) 2024 2023 2024 2023 Reported GAAP Earnings $ (167,621) $ 73,677 $ 77,513 $ 476,866 Items impacting comparability: Impairment of assets (E&P/
Slide 56: Non-GAAP Reconciliations – Free Cash Flow
Non-GAAP Reconciliations – Free Cash Flow Reconciliation of Free Cash Flow ($ Thousands) Twelve Months Ended September 30, 2024 2023 Net Cash Provided by Operating Activities $1,065,961 $1,237,075 Less: Net Cash Used in Investing Activities $ 933,905 $ 1,112,347 $ 132,056 $ 124,728 Plus: Acquisition
Slide 57: Non-GAAP Reconciliations – Funds From Operations
Non-GAAP Reconciliations – Funds From Operations Reconciliation of Funds From Operations (FFO) to Net Debt ($ Thousands) September 30 2020 2021 2022 2023 2024 Net Cash Provided by Operating Activities $740,809 $791,553 $812,521 $1,237,075 $1,065,961 Less: Change in Working Capital: Receivables and U
Slide 58: Reconciliation – Capital Expenditures
Reconciliation – Capital Expenditures Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ($ Thousands) FY 2025 FY 2023 FY 2024 Guidance Capital Expenditures Exploration & Production Capital Expenditures $ 737,725 $ 536,349 $495,000 - $525,000 Pipeline & Storage Capit
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