National Fuel Gas Company · NYSE:NFG
National Fuel Gas — BMO Capital Markets 2010 Unconventional Resource Conference
32 slides from National Fuel Gas's conference presentation, Jan 12, 2010
Slide 1: BMO Capital Markets 2010 Unconventional Resource Conference
The BMO Capital Markets 2010 Unconventional Resource Conference January 12, 2010 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: Exploration & Production: Seneca Resources Corporation
Exploration & Production Seneca Resources Corporation
Slide 4: Exploration & Production Marcellus Shale
Exploration & Production Marcellus Shale Accelerate development; convert resource potential to reserves Appalachian Upper Devonian Region Drill 150-200 wells per year Proved Reserves California Continue to operate as a low-cost producer Gulf of Mexico Develop and produce existing reserves 721 Bcfe 4
Slide 5: Exploration & Production Proved Reserves
Exploration & Production Proved Reserves (CHART) Proved Reserves @ 9/30 491 Bcfe 503 Bcfe 528 Bcfe West - California Reserves: 342 Bcfe (64%) (57 Mmboe) FY '09 Production: 20.1 Bcfe (47%) Gulf of Mexico Reserves: 35 Bcfe (7%) FY '09 Production: 13.7 Bcfe (32%) East - Appalachia Reserves: 151 Bcfe (2
Slide 6: Exploration & Production Capital Expenditures
Exploration & Production Capital Expenditures (CHART) Fiscal 2009 does not include the $34.9MM acquisition of Ivanhoe's US-based assets in California, as this is accounted for as an investment in subsidiaries on the Statement of Cash Flows, and is not included in capital expenditures. (1)
Slide 7: Exploration & Production Annual Production by Region
Exploration & Production Annual Production by Region (CHART)
Slide 8: Finding & Development Cost
Exploration & Production (CHART) Finding & Development Cost (1) 2006 - 2008 finding and development cost information was obtained from IHS Herold, Inc. 2009 finding and development cost was calculated internally. National Fuel's 2007 finding and development cost is adjusted for revisions due to a ch
Slide 9: Marcellus Shale Exploration & Production
Marcellus Shale Exploration & Production
Slide 10: Marcellus Shale Acreage per Share Comparison
Marcellus Shale Company Net Acres Shares Outstanding (MM) Acres/1K Shares Seneca Resources 720,000 79.5 9.05 Atlas Energy Resources LLC 546,000 63.4 8.61 Range Resources 900,000 157.3 5.72 EQT Corporation 400,000 130.9 3.06 Chesapeake Energy 1,300,000 626.2 2.08 EXCO Resources Inc. 360,000 211.1 1.7
Slide 11: Seneca Acreage Position
Marcellus Shale Seneca Acreage Position Cabot SRC Fee/Lease Range Resources Chesapeake EOG/Seneca Seneca Seneca
Slide 12: EOG Marcellus Shale Joint Venture
SRC Fee/Lease EOG Marcellus Shale EOG Joint Venture Approx. Outline of JV Acreage 200,000 Gross Acres Seneca 50% W.I. (Avg. 58% NRI) EOG 50% W.I. (40% NRI) EOG Acreage Contributed ~120,000 Gross Acres Seneca 50% W.I. (40% NRI)
Slide 13: Horizontal Development Drilling Program
SRC Fee/Lease EOG Seneca Horizontal Development Drilling Program 1st Seneca Rig arrived in July 2009 2nd Seneca horizontal rig arrived in November '09 EOG JV (CHART) Marcellus Shale
Slide 14: Marcellus Shale Horizontal Drilling Results
SRC Fee/Lease EOG Marcellus Shale Horizontal Drilling Results EOG Operated 10 Horizontals Drilled 5 Frac'd IP: 1 - 4 MMCFD Not yet producing Seneca Operated 7 Horizontals Drilled 3 Frac'd IP: 5 - 10 MMCFD Net Production 8.0 MMCFD EOG Operated 4 Horizontals Drilled 4 Frac'd IP: 2 - 4 MMCFD Net Produc
Slide 15: Fiscal 2010 Marcellus Shale Drilling Plan
Fiscal 2010 Marcellus Shale Drilling Plan Develop JV focus area (EOG Operated) 25-35 wells September 2010 net production 15-25 Mmcfd Develop Tioga focus area (Seneca Operated) 15-20 wells September 2010 net production 15-25 Mmcfd De-risk and prioritize additional areas: 15-20 wells (includes some ve
Slide 16: Wells Drilled per Year
Wells Drilled per Year (CHART) Marcellus Shale
Slide 17: Marcellus Shale Decline Curve - 3.0 BCF EUR
Marcellus Shale Decline Curve - 3.0 BCF Estimated Ultimate Recovery (EUR) (CHART) Category Type Curve Parameters Initial Rate 3,550 MCF/D Average first year decline 68% Final decline 6% Hyperbolic Coefficient 1.6 Abandonment rate 10 MCF/D Average first month rate 3,090 MCF/D Average first year rate
Slide 18: Pre-tax IRR: 3.0 BCF EUR; $4.0 MM Well Cost
Marcellus Shale Pre-tax IRR: 3.0 BCF EUR; $4.0 MM Well Cost (CHART) JV Wells on Seneca Mineral Fee 100% Wells on Seneca Mineral Fee Typical 15% Royalty Rate
Slide 19: Seneca Full-Cycle Economics Superior to Most Competitors
Seneca Full-Cycle Economics Superior to Most Competitors Minimal Acreage Cost Mostly Fee (Seneca owns minerals) Average cost < $100/acre Low Royalty Mostly Fee (0% royalty) Acres contributed to EOG JV have 50% WI/ 58% NRI Rode the Learning Curve at minimal cost Early EOG JV wells at no cost to Senec
Slide 20: Marcellus Shale Resource Potential
Marcellus Shale Resource Potential Net resource potential of 4 to 8 trillion cubic feet Assumptions: Average EUR of 2 to 3 Bcfe/well Average Risk Factor of 30% to 40% Anticipated well costs of $3.5 to $4.0 MM per horizontal in a development program 100 acre well spacing
Slide 21: Seneca Resources Summary
Seneca Resources Summary Redeploy excess cash flow from California Maintain production Low-cost leadership Produce-out Gulf of Mexico Minimal Capex Expect fairly robust production in fiscal 2010 Focus on the Marcellus 7-day IPs averaging 5.3 MMCFD on Seneca operated wells Plan 40-60 horizontal wells
Slide 22: Pipeline & Storage
National Fuel Gas Supply Corporation Empire Pipeline, Inc. Pipeline & Storage
Slide 23: Pipeline & Storage / Midstream Expansion Initiatives
WEST TO EAST PHASE 1 & PHASE 2 APPALACHIAN LATERAL LAMONT COMPRESSOR STATION COVINGTON GATHERING SYSTEM TIOGA COUNTY EXTENSION LINE "N" EXPANSION TUSCARORA STORAGE GALBRAITH STORAGE EAST BRANCH STORAGE PIPELINE & STORAGE / MIDSTREAM EXPANSION INITIATIVES 23 WEST TO EAST EXPANSION HORIZONTAL DRILLING
Slide 24: Appalachian Lateral / West to East Expansion Key Statistics
WEST TO EAST PHASE 1 & PHASE 2 APPALACHIAN LATERAL LAMONT COMPRESSOR STATION COVINGTON GATHERING SYSTEM TIOGA COUNTY EXTENSION LINE "N" EXPANSION TUSCARORA STORAGE GALBRAITH STORAGE EAST BRANCH STORAGE PIPELINE & STORAGE / MIDSTREAM EXPANSION INITIATIVES 24 WEST TO EAST EXPANSION HORIZONTAL DRILLING
Slide 25: West to East Expansion Phase I Key Statistics
WEST TO EAST PHASE 1 & PHASE 2 APPALACHIAN LATERAL LAMONT COMPRESSOR STATION COVINGTON GATHERING SYSTEM TIOGA COUNTY EXTENSION LINE "N" EXPANSION TUSCARORA STORAGE GALBRAITH STORAGE EAST BRANCH STORAGE PIPELINE & STORAGE / MIDSTREAM EXPANSION INITIATIVES 25 WEST TO EAST EXPANSION HORIZONTAL DRILLING
Slide 26: West to East Expansion Phase II Key Statistics
WEST TO EAST PHASE 1 & PHASE 2 APPALACHIAN LATERAL LAMONT COMPRESSOR STATION COVINGTON GATHERING SYSTEM TIOGA COUNTY EXTENSION LINE "N" EXPANSION TUSCARORA STORAGE GALBRAITH STORAGE EAST BRANCH STORAGE PIPELINE & STORAGE / MIDSTREAM EXPANSION INITIATIVES 26 WEST TO EAST EXPANSION HORIZONTAL DRILLING
Slide 27: Lamont Compressor Station Key Statistics
WEST TO EAST PHASE 1 & PHASE 2 APPALACHIAN LATERAL LAMONT COMPRESSOR STATION COVINGTON GATHERING SYSTEM TIOGA COUNTY EXTENSION LINE "N" EXPANSION TUSCARORA STORAGE GALBRAITH STORAGE EAST BRANCH STORAGE PIPELINE & STORAGE / MIDSTREAM EXPANSION INITIATIVES 27 WEST TO EAST EXPANSION HORIZONTAL DRILLING
Slide 28: Tioga County Extension Key Statistics
WEST TO EAST PHASE 1 & PHASE 2 APPALACHIAN LATERAL LAMONT COMPRESSOR STATION COVINGTON GATHERING SYSTEM TIOGA COUNTY EXTENSION LINE "N" EXPANSION TUSCARORA STORAGE GALBRAITH STORAGE EAST BRANCH STORAGE PIPELINE & STORAGE / MIDSTREAM EXPANSION INITIATIVES 28 WEST TO EAST EXPANSION HORIZONTAL DRILLING
Slide 29: Line N Expansion Key Statistics
WEST TO EAST PHASE 1 & PHASE 2 APPALACHIAN LATERAL LAMONT COMPRESSOR STATION COVINGTON GATHERING SYSTEM TIOGA COUNTY EXTENSION LINE "N" EXPANSION TUSCARORA STORAGE GALBRAITH STORAGE EAST BRANCH STORAGE PIPELINE & STORAGE / MIDSTREAM EXPANSION INITIATIVES 29 WEST TO EAST EXPANSION HORIZONTAL DRILLING
Slide 30: Storage Expansion Key Statistics
WEST TO EAST PHASE 1 & PHASE 2 APPALACHIAN LATERAL LAMONT COMPRESSOR STATION COVINGTON GATHERING SYSTEM TIOGA COUNTY EXTENSION LINE "N" EXPANSION TUSCARORA STORAGE GALBRAITH STORAGE EAST BRANCH STORAGE PIPELINE & STORAGE / MIDSTREAM EXPANSION INITIATIVES 30 WEST TO EAST EXPANSION HORIZONTAL DRILLING
Slide 31: Covington Gathering System Phase I Key Statistics
WEST TO EAST PHASE 1 & PHASE 2 APPALACHIAN LATERAL LAMONT COMPRESSOR STATION COVINGTON GATHERING SYSTEM TIOGA COUNTY EXTENSION LINE "N" EXPANSION TUSCARORA STORAGE GALBRAITH STORAGE EAST BRANCH STORAGE PIPELINE & STORAGE / MIDSTREAM EXPANSION INITIATIVES 31 WEST TO EAST EXPANSION HORIZONTAL DRILLING
Slide 32: Questions
Questions Reconciliation of Exploration & Production Segment Capital Expenditures to Consolidated Capital Expenditures ($000s) 2010 2007 2008 2009 Forecast Exploration & Production Capital Expenditures (Contiunuing Operations) $ 146,687 $ 192,187 $ 188,290 $ 245,000-293,000 Exploration & Production
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