National Fuel Gas Company · NYSE:NFG
National Fuel Gas — Investor Presentation (September 2006)
57 slides from National Fuel Gas's investor presentation, Sep 7, 2006
Slide 1: National Fuel Gas Company
National Fuel Gas Company .. Philip C. Ackerman Chairman & CEO
Slide 2: Safe Harbor
Safe Harbor NOTE: This presentation contains certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements concerning plans, objectives, goals, projections, strategies and future events or
Slide 3: Corporate Objective
Grow shareholder value through timely investment in the energy industry. National Fuel Gas Company Corporate Objective
Slide 4: Dividend Growth
'70 0.19 '71 0.2 '72 0.205 '73 0.215 '74 0.225 '75 0.235 '76 0.245 '77 0.255 '78 0.27 '79 0.2875 '80 0.3075 '81 0.33 '82 0.36 '83 0.39 '84 0.47 '85 0.52 '86 0.57 '87 0.6 '88 0.63 '89 0.67 '90 0.71 '91 0.73 '92 0.75 '93 0.77 '94 0.79 '95 0.81 '96 0.84 '97 0.87 '98 0.9 '99 0.93 '00 0.96 '01 1.01 '02 1
Slide 5: Book Value per Common Share
'70 '71 '72 '73 '74 '75 '76 '77 '78 '79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 3.23 3.36 3.58 3.64 3.8 3.94 4.06 4.21 4.39 4.63 4.82 5.18 5.54 5.75 6.31 6.76 7.07 7.61 7.83 8.22 8.48 8.76 9.34 10.04 10.47 10.69 11.31 11.97 11.57 12.09
Slide 6: Capitalization
* Long-term Debt includes Current Portion of Long-term Debt. ** Includes Discontinued Operations. $2.51 Billion at June 30, 2005** Long-Term Debt Short-Term Debt Shareholder Equity Capitalization 1137 49.6 1325.8 Short-Term Debt 1.9% Shareholder Equity 52.8% Long-Term* Debt 45.3% $2.46 Billion at Ju
Slide 7: Net Plant by Segment
$2.9 Billion At June 30, 2006 Utility P&S E&P All Other Net plant 1.1 0.7 1 0.1 National Fuel Gas Company Net Plant by Segment
Slide 8: Net Income from Continuing Operations
$194.0 Million* 12 Months Ended June 30, 2006 Utility P&S E&P Timber Energy Mkt. Corp. & Other NI 45.2 64.3 79.3 6.1 6.1 -7 National Fuel Gas Company Net Income from Continuing Operations * Excludes oil and gas impairment of $39.5 million.
Slide 9: Expenditures for Long-Lived Assets
$ Millions Fiscal Year 2001 2002 2003 2004 2005 2006E 2007E Utility 42.4 51.5 49.9 55.5 50.1 56 58 P & S 26 30.3 199.4 23.2 21.1 34 65 E & P 296.4 114.6 75.8 77.7 122.4 208 212 Energy Mkt. 0.116 0.1 0.2 0.0102 0 0 0 Timber 3.7 25.6 3.5 2.8 18.9 2 2 Corp & All Other 16.537 10.8 52.6 24 7 2.5 2 $385.1
Slide 10: 9
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Slide 11: Utility Diluted Earnings per Share
Fiscal Year 2002 2003 2004 2005 9 Mos Ended 6/30/06 Earnings 0.62 0.7 0.59 0.46 0.59 a Excludes SFAS 88 settlement loss of -$0.03 a Fiscal Year Utility Diluted Earnings per Share
Slide 12: Utility Capital Expenditures and Depreciation Expense
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 Capital Spending 66.1 64.9 65.7 61.8 61.7 64.8 63.7 66.9 50.7 47 55.8 42.4 51.5 49.9 55.5 50.1 Depreciation Expense 20.8 22.9 25 27.1 28.2 30 31.5 33 33.5 34.2 35.8 36.6 37.4 38.2 39.1 40.2 $ Millions Fiscal Year Utility Capital Expendi
Slide 13: Utility Accounts Receivable - Customer
At 06/30/03 At 06/30/04 At 06/30/05 At 06/30/06 30-59 days 15.2 13.64 17.23 16.44 60-89 days 15.57 13.81 15.53 16.94 90-119 days 13.15 11.25 12.8 15.08 120 days & over 29.95 39.4 43.03 54.81 Reserve for Bad Debt 17.17 15.16 18.13 32.21 Utility Accounts Receivable - Customer $ Millions
Slide 14: Utility Bad Debt Tracking
New York Merchant Function Charge Varies with Cost of Gas Rates Include Allowance Attributable to Uncollectible Expense Residential Non-Residential 2.742% .304% Multiplied by Gas Supply Cost Rate Utility Bad Debt Tracking
Slide 15: Utility Average Use Per Residential Customer
'73 '74 '75 '76 '77 '78 '79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 12 180.205 173.305 173.431 170.237 164.955 156.044 156.898 152.605 153.207 145.597 132.388 134.153 131.672 132.194 131.12 135.531 132.77 130.829 133.551 128.393 127.036
Slide 16: Utility Rate Case Settlements
Utility Rate Case Settlements New York Pennsylvania Approximate Rate Base $640-$650 MM $270 MM Approximate Rate Base Revenue Increase $21 MM $12 MM Effective Date 08/01/2005 04/12/2005 Next Possible Filing Date 09/01/2006 05/31/2006
Slide 17: Utility Pennsylvania Jurisdiction
Utility Pennsylvania Jurisdiction On May 31, 2006 the Utility filed a rate case with the Pennsylvania PUC, to increase revenues by $25.9 million. Based on a typical rate proceeding, the case may not be completed until March, 2007. Contributing Factors Include, in part: An ongoing construction progra
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Slide 19: Pipeline & Storage Diluted Earnings per Share
a Excludes impairment of Independence Pipeline of -$0.12 b Excludes SFAS 88 settlement loss of -$0.02 c Excludes base gas sale of $0.03 and gain associated with insurance proceeds of $0.05 Fiscal Year Pipeline & Storage Diluted Earnings per Share Fiscal Year 2002 2003 2004 2005 9 Mos Ended 6/30/06 E
Slide 20: Pipeline Operating Statistics
2,972 Miles of System Pipeline 15 Compressor Stations Totaling 39,606 Horsepower Transportation Volume for Fiscal 2005: 372.4 Bcf $121.6 MM in Revenues for Fiscal 2005 Pipeline & Storage Pipeline Operating Statistics
Slide 21: Storage Operating Statistics
32 Underground Natural Gas Storage Fields (4 Co-owned with Nonaffiliated Companies) 15 Compressor Stations Totaling 35,475 Horsepower 73.4 Bcf of Working Storage Capacity $65.6 MM in Revenues for Fiscal 2005 Pipeline & Storage Storage Operating Statistics
Slide 22: Proposed Empire Connector
78 MILES of 24" 20,700 HP COMPRESSION APPROX. $143 MILLION COST TARGET IN-SERVICE DATE 11/07 EMPIRE PIPELINE PROPOSED EMPIRE CONNECTOR Update Pending from Tim Driscoll
Slide 23: Our Prime Location
Our Prime Location Niagara CANADA Lake Ontario Lake Erie Leidy Ellisburg NY PA PA OH TRANSCANADA UNION GAS Chippawa Corning A-5 Line Independence MILLENNIUM Empire Connector Project 250 MDth/Day Cost: Approx. $144 Million NFGSC Tuscarora Extension Project Will Interconnect with both Millennium and E
Slide 24: Pipeline & Storage FERC Proceeding
4/7/06: Complaint & Motion for Summary Disposition filed against Supply Corp. by NYPSC, PaPUC and Pennsylvania OCA (FERC Docket No. RP06-298-000) Complainants allege that Supply's rates are unjust and unreasonable and challenge Supply's fuel retainage level Supply is vigorously opposing these action
Slide 25: Exploration & Production Reserves by Region
Canada - 9% 56.3 BCFE NY PA Gulf Coast - 8% 46.2 BCFE East - 14% 84.2 BCFE CA - 69% 413 BCFE Total: 599.7 BCFE Oil: 60% Gas: 40% Exploration & Production Reserves by Region (at 9/30/05)
Slide 26: Exploration & Production Diluted Earnings per Share
Fiscal Year 2002 2003 2004 2005 9 Mos Ended 6/30/06 Earnings 0.33 0.46 0.61 0.6 0.785 a b a Excludes oil & gas impairment, loss on sale and cum. effect of change in acctg of - $0.85 b Excludes SFAS 88 settlement loss of -$0.01 and Adjustment of loss on sale of oil and gas assets of +$0.06 c Excludes
Slide 27: Exploration & Production Nine Month Results
Expenses Actual Amount $/Mcfe LOE $42,151,000 $1.19 DD&A $70,655,000 $2.00 General and Administrative $18,465,000 $0.52 Exploration & Production Nine Month Results at June 30, 2006 Production Number of Wells Drilled Operating Revenue EBITDA Net Income Diluted Earnings per Share 35.3 Bcfe 209 $257.4
Slide 28: Exploration & Production Capital Expenditures by Division
2002 2003 2004 2005 2006E 2007E East 8.4 9.4 9.5 12.5 27 35.5 West 34.4 11.4 17.4 29.6 44 42.5 Canada 27 30.8 31.4 38.5 46 34.5 Gulf 44.8 24.2 19.4 41.8 90 99.5 $114.6 $75.8 $77.7 $122.4 $207.0 Fiscal Year $US Millions Exploration & Production Capital Expenditures by Division $210-$214
Slide 29: Exploration & Production Estimated Capital Expenditures
$US Millions Exploration & Production Estimated Capital Expenditures 2006 Gulf West East Canada Exploration Drlg. 43.9 0 1.2 21.2 G&G 9 0 0.1 2.5 Development New 0 0 22.8 4.2 Development Proved 2.2 30.9 0 0 Facilities 28.2 7.9 1.7 10.2 Leasehold Acquisition 6.1 0 0.8 6.8 Other 0.3 5.7 0.5 1.5 $89.7
Slide 30: Exploration & Production Total Production by Division
2004 2005 2006E 2007E East 5.25 4.9 5.4 6 West 19.957 19.3 19.4 19.5 Canada 8.2 9.8 10 9.25 Gulf 26.8 18.4 13.2 14.75 BCFE Fiscal Year Exploration & Production Total Production by Division 46 - 48 52.4 60.2 47 - 52
Slide 31: 2006 Exploration and Exploitation Opportunities
Gulf East West Canada High Low Risk Reserve Potential High Low **Well plans as of 8/29/06 Anticipated Well Drilling Well Successful Well P & A Well Sukunka #93-D (#5) Drumheller (15) Westline/Kinzua (70) Muzette (20) PineCreek #3-22 High Island 24L Viosca Knoll 256 #1 Bonanza #12-23 Vermilion 342 #1
Slide 32: Impact Wells Production & Reserves Fiscal 2006
High Island 37 #A-5 On Production 78% Medium Sukunka #77-D (#6) P & A 20% High Sukunka #93-D (#5) On Production 20% High Sukunka #66-E (#4) P & A 20% High Pine Creek 3-22 Evaluate Tie-in Options 60% Low Bonanza 12-23 Completing 65% Medium Lambert 6-28 Completing 19% High Viosca Knoll 256 #1 P & A 47
Slide 33: 2007 Exploration and Exploitation Opportunities
Gulf East West Canada High Low Risk Reserve Potential High Low **Well plans as of 8/29/06 Anticipated Well Drilling Well Successful Well P & A Well Sukunka #8 2007 Exploration and Exploitation Opportunities** Sukunka 69-C #7 Peppers #16-16 West Cameron 96 #2 High Island 37 #B-2 High Island A-306/315
Slide 34: Impact Wells Production & Reserves Fiscal 2007
Fiscal 2007 Sukunka c-69-C #7 Drilling 20.0% High Sukunka Well #8 Planning Stage 20.0% High Peppers 16-16 Planning Stage 19.0% Medium Peppers 12-12 Licensing Stage 18.0% Medium West Cameron 96 #2 Partner Approval 11.5% Medium East Cameron 34 #1 Waiting on Rig 15.0% Medium High Island 37 #B-2 Partner
Slide 35: Sukunka Wells
Seneca's Working Interest: 20% Sukunka b-60-E Production Commenced on December 13, 2004 Current Sales Rate up to 60 MMcf/d * Sukunka d-93-D Well Successfully Completed Production Tests at Rates up to 33 MMcf/d * Exploration & Production Sukunka Wells * Third Party Processing Facilities Limit Product
Slide 36: Sukunka Area Land Map
0 15 miles (2nd Well) (3rd Well) (5th Well) (4th Well) (6th Well) AREA OF MUTUAL INTEREST Gas Wells Drilling Wells Working interest lands Lands to be earned by drilling 66-E 79-J 50-C 93-D (1st Well) 60-E Sukunka Area Land Map Monkman P & A'd 77-D (7th Well) 69-C
Slide 37: National Fuel Mineral Interests
935,000 Total Net Acres 778,000 in PA 157,000 in NY National Fuel Mineral Interests
Slide 38: Timber Diluted Earnings per Share
Fiscal Year 2002 2003 2004 2005 9 Mos Ending 6/30/2006 Earnings 0.12 0.12 0.07 0.06 0.061 a b a Excludes gain from timber sale of +$1.26 b Excludes adj. of gain on timber sale of -$0.01 Fiscal Year Timber Diluted Earnings per Share
Slide 39: Energy Marketing Diluted Earnings per Share
Energy Marketing Diluted Earnings per Share Fiscal Year 2002 2003 2004 2005 9 Mos Ending 6/30/2006 Earnings 0.11 0.07 0.07 0.06 0.069 Fiscal Year
Slide 40: Share Buyback
National Fuel Gas Company Share Buyback Date Authorized: December 8, 2005 Authorized Amount: Up to 8 Million Shares As of 6/30/06: 2,284,350 Shares Repurchased
Slide 41: National Fuel Gas Company As a Value Company
National Fuel Gas Company As a Value Company Financially Strong Diversified Asset Base Prime Location: Proximity to Canada Undeveloped Storage Pipeline Corridor to East Coast Strong Dividend Record
Slide 42: Appendix
APPENDIX &)) national fuet
Slide 43: Major Business Segments
National Fuel Gas Company Energy Mktg. Timber E&P P&S Utility National Fuel Gas Distribution Corporation National Fuel Gas Supply Corporation and Empire State Pipeline Seneca Resources Corporation Highland Forest Resources, Inc. and NE Div. Of Seneca Resources Corporation National Fuel Resources, In
Slide 44: NFG Shares Outstanding and Market Capitalization
National Fuel Gas Company New York Stock Exchange NFG Shares Outstanding (Approx.) (As of 06/30/06) 83.3 Million Average Daily Trading Volume (12 Months Ended 08/31/06) 451,616 Market Capitalization (Approx.) (As of 08/31/06) $3.2 Billion $1.20 Annual Dividend Rate (At 06/30/06) September Fiscal Yea
Slide 45: 1/1/1970 2/1/1970 3/1/1970 4/1/1970 5/1/1970 6/1/1970 7/1/1970 8/1/1970 9/1/1970 10/1/1970 11/1/1970 12/1/1970 1/1/19…
1/1/1970 2/1/1970 3/1/1970 4/1/1970 5/1/1970 6/1/1970 7/1/1970 8/1/1970 9/1/1970 10/1/1970 11/1/1970 12/1/1970 1/1/1971 2/1/1971 3/1/1971 4/1/1971 5/1/1971 6/1/1971 7/1/1971 8/1/1971 9/1/1971 10/1/1971 11/1/1971 12/1/1971 1/1/1972 2/1/1972 3/1/1972 4/1/1972 5/1/1972 6/1/1972 7/1/1972 8/1/1972 9/1/19
Slide 46: NFG Debt Ratings
Standard & Poor's Moody's Fitch, Inc. Long-Term Debt BBB+ Baa1 A- Outlook Stable Stable Stable Commercial Paper A-2 P-2 F2 NFG Debt Ratings
Slide 47: Capital Resources
Commercial Paper Program And Bilateral Credit Facilities - Aggregate Of $745 MM $0 MM borrowed at August 31, 2006 $300.0 MM Committed Credit Facility Through September 30, 2010 $0 borrowed Universal Shelf Registration on File - Additional $550 MM Can Be Issued As Debt Or Equity Securities Any offer
Slide 48: Earnings vs. Dividends Paid
Earnings * Dividends Paid 85 0.95 0.48 86 0.88 0.53 87 0.88 0.58 88 0.83 0.61 89 0.97 0.64 90 0.92 0.68 91 0.82 0.72 92 0.97 0.74 93 1.08 0.76 94 1.16 0.78 95 1.02 0.8 96 1.39 0.82 97 1.49 0.85 98 1.44 0.88 99 1.47 0.91 '00 1.61 0.94 '01 2.11 0.97 '02 1.58 1.02 '03 1.89 1.05 '04 1.98 1.09 '05 2.15 1
Slide 49: Exploration & Production Hedging Summary
Exploration & Production Hedging Summary at 06/30/06 $15.47 / MCF $8.28 / MCF 1.1 BCF Gas Ceiling Price Floor Price Volume No-cost Collars $6.20 /MCF 2.3 BCF Gas $35.33 / BBL 0.5 MMBBL Oil Average Hedge Price Volume Swaps Remainder of Fiscal 2006 $77.00 / BBL $70.00 / BBL 0.2 MMBBL Oil $17.45 / MCF
Slide 50: Comparable GAAP Financial Measure Slides And Reconciliations
Comparable GAAP Financial Measure Slides And Reconciliations
Slide 51: Net Income from Continuing Operations
$154.4 Million 12 Months Ended June 30, 2006 Utility P&S E&P Timber Energy Mkt. Corp. & Other NI 45.2 64.3 39.8 6 6.1 -7 National Fuel Gas Company Net Income from Continuing Operations
Slide 52: Utility vs. Consolidated NFG Diluted Earnings per Share
Fiscal Year Utility vs. Consolidated NFG Diluted Earnings per Share 2002 2003 2004 2005 9 Mos Ended 6/30/06 Utility 0.62 0.7 0.56 0.46 0.59 All Other Segments 0.84 1.5 1.45 1.77 0.99 $1.46 $2.20 $2.01 $2.23 $1.58
Slide 53: Pipeline & Storage vs. Consolidated NFG Diluted Earnings per Share
2002 2003 2004 2005 9 Mos Ended 6/30/06 Pipeline & Storage 0.37 0.56 0.58 0.71 0.53 All Other Segments 1.09 1.64 1.43 1.52 1.05 $1.46 $2.20 $2.01 $2.23 Fiscal Year Pipeline & Storage vs. Consolidated NFG Diluted Earnings per Share $1.58
Slide 54: Exploration & Production vs. Consolidated NFG Diluted Earnings per Share
2002 2003 2004 2005 9 Mos Ended 6/30/06 Exploration & Production 0.33 -0.39 0.66 0.6 0.33 All Other Segments 1.13 2.59 1.35 1.63 1.25 $1.46 $2.20 $2.01 $2.23 Fiscal Year Exploration & Production vs. Consolidated NFG Diluted Earnings per Share $1.58
Slide 55: Timber vs. Consolidated NFG Diluted Earnings per Share
Fiscal Year Timber vs. Consolidated NFG Diluted Earnings per Share 2002 2003 2004 2005 9 Mos Ending 6/30/2006 Timber 0.12 1.38 0.06 0.06 0.06 All Other Segments 1.34 0.82 1.95 2.17 1.52 $1.46 $2.20 $2.01 $2.23 $1.58
Slide 56: Energy Marketing vs. Consolidated NFG Diluted Earnings per Share
2002 2003 2004 2005 9 Mos Ending 6/30/2006 Energy Marketing 0.11 0.07 0.07 0.06 0.07 All Other Segments 1.35 2.13 1.94 2.17 1.51 Fiscal Year $1.46 $2.20 $2.01 $2.23 $1.58 Energy Marketing vs. Consolidated NFG Diluted Earnings per Share
Slide 57: Earnings vs. Dividends Paid
Earnings Dividends Paid 85 0.95 0.48 86 0.88 0.53 87 0.88 0.58 88 0.83 0.61 89 0.97 0.64 90 0.92 0.68 91 0.82 0.72 92 0.97 0.74 93 1.08 0.76 94 1.16 0.78 95 1.02 0.8 96 1.39 0.82 97 1.49 0.85 98 0.3 0.88 99 1.47 0.91 '00 1.61 0.94 '01 0.82 0.97 '02 1.46 1.02 '03 2.2 1.04 '04 2.01 1.09 '05 2.23 1.13
National Fuel Gas — Investor Presentation (September 2006) on 6ix