National Fuel Gas Company · NYSE:NFG
National Fuel Gas — Investor Presentation (April 2013)
53 slides from National Fuel Gas's investor presentation, Apr 15, 2013
Slide 1: National Fuel Gas Company Investor Presentation April 2013
National Fuel Gas Company Investor Presentation April 2013 Exhibit 99
Slide 2: Safe Harbor For Forward Looking Statements
April 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
April 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 Nationa
Slide 4: Integrated Businesses with Significant Marcellus Exposure
April 2013 4 National Fuel Gas Company Integrated Businesses with Significant Marcellus Exposure…
Slide 5: And Exposure to Growth from the Utica Shale
April 2013 5 National Fuel Gas Company …And Exposure to Growth from the Utica Shale
Slide 6: EBITDA Growth Driven by Stability and Continued Success
April 2013 6 $164 28% $167 26% $169 25% $160 23% $164 23% $131 $121 19% $111 17% $137 19% $146 20% $280 48% $327 52% $377 57% $397 56% $404 56% 23% National Fuel Gas Company EBITDA Growth Driven by Stability and Continued Success $0 $250 $500 $750 $1,000 2009 2010 2011 2012 12 Months Ended 12/31/201
Slide 7: Capital Spending Flexibility to Maintain Financial Strength
April 2013 7 $56 $58 $58 $58 $65- $70 $65-$70 $53 $38 $129 $144 $70- $80- $100 $188 $398 $649 $694 $480- $560 $550- $650 $81 $50- $75 $75- $125 $90 National Fuel Gas Company Capital Spending Flexibility to Maintain Financial Strength $501 $854 $977 $665- $795 $770- $945 $0 $250 $500 $750 $1,000 $1,2
Slide 8: Strong Balance Sheet and Liquidity Position
April 2013 8 Capital Resources Total Short-Term Capacity: $1,085 Million Committed Credit Facility: $750 Million Syndicated facility extends until January 6, 2017 Uncommitted Lines of Credit: $335 Million $18.0 million of outstanding short- term notes payable to banks as of December 31, 2012 Shareho
Slide 9: Midstream Businesses
April 2013 9 Midstream Businesses Pipeline & Storage/NFG Midstream
Slide 10: Pipeline Expansions to Transport Appalachian Production
April 2013 10 Gathering Marcellus Production Shipping Gas to Canada & Northeast Line N Corridor Expansions Midstream Businesses Pipeline Expansions to Transport Appalachian Production
Slide 11: Exploration & Production
April 2013 11 Exploration & Production
Slide 12: Another Strong Year of Reserve Growth
April 2013 12 46.2 46.6 45.2 43.3 42.9 226 249 428 675 988 Fiscal Years 3-Year F&D Cost (1) ($/Mcfe) Seneca Resources Another Strong Year of Reserve Growth Seneca has more than doubled its proved reserves since 2009, while maintaining a relatively high percentage of proved developed reserves (67%),
Slide 13: Operational Efficiencies Continue to Drive Production Growth
April 2013 13 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 reache
Slide 14: Increased Oil Spending and Tempered Marcellus Spending
April 2013 14 $31 $28 $47 $63 $80-$110 $90-$130 Seneca Resources Increased Oil Spending and Tempered Marcellus 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 Flow
Slide 15: Production Continues to Grow
April 2013 15 20.1 19.8 19.2 20.5 20-22 21-23 Seneca Resources Production Continues to Grow 8.7 16.5 43.2 62.9 82-90 105–115 13.7 13.3 5.2 42.5 49.6 67.6 83.4 102-112 126-138 2009 2010 2011 2012 2013 Forecast 2014 Forecast Fiscal Year Gulf of Mexico (Divested in 2011) East Division (Appalachia) West
Slide 16: California: Stable Production Fields
April 2013 16 South Lost Hills ~1,500 BOEPD Monterey Shale Primary 219 Active Wells Sespe ~1,100 BOEPD Sespe Formation Primary 172 Active Wells North Lost Hills ~1,200 BOEPD Tulare & Etchegoin Formation Primary & Steamflood 175 Active Wells North Midway Sunset ~4,100 BOEPD Potter & Tulare Formation
Slide 17: California: Strong Margins Support Significant Free Cash Flow
April 2013 17 Seneca Resources California: Strong Margins Support Significant Free Cash Flow Average Revenue (12 Months Ended 12/31/12) $85.69 per BOE $9.40 $3.35 $3.06 $2.32 $1.11 $66.45 Non - Steam Fuel LOE Steam Fuel G&A Production & Other Taxes Other Operating Costs Adjusted EBITDA Adjusted EBIT
Slide 18: California: Midway Sunset South Activity Update
April 2013 18 California: Midway Sunset South Activity Update Seneca Resources 500’ 2012 Drill Program: 21 Wells / 3 Injectors 2013 Drill Program: - Wells / - Injectors 0 ft 50 ft 100 ft 100 ft 50 ft 50 ft Antelope “A-1” and “A-2” Sands Antelope “B” and “C” Sands Antelope “A-1” Sand Seneca 232M Exte
Slide 19: California: Sespe Field – Drilling Programs and Results
19 April 2013 Seneca Resources California: Sespe Field – Drilling Programs and Results 1 Mile 2011 Sespe Wells (5) 2012 Sespe Wells (6) 2013 Sespe Wells (6) TG 53-29 90 BOEPD Oil TG 562-29 190 BOEPD Oil FA 502-33 75 BOEPD Oil FA 501-33 100 BOEPD Oil 1/13 WS 48-33 80 BOEPD Oil 09/12 Oak Flat 2-31 100
Slide 20: California: East Coalinga Overview
April 2013 20 Seneca Resources California: East Coalinga Overview Seneca became operator on January 30, 2013 Previous Operator: Chevron 7,764 net acres ~170 wells (60 active) ~250 BOPD $30 million capital commitment over first three years $100 million of potential opportunities over the next five to
Slide 21: Expansive Pennsylvania Acreage Position
April 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 Cou
Slide 22: Eastern Development Area (EDA)
April 2013 22 Covington – Fully Developed Gross Production: ~65 MMcf per Day 47 Wells Drilled and Producing Seneca Resources Eastern Development Area (EDA) DCNR Tract 595 Gross Production: ~85 MMcf per Day 34 Wells Drilled 26 Wells Producing DCNR Tract 100 Gross Production: ~165 MMcf per Day 31 Well
Slide 23: Lycoming and Tioga Counties Are Highly Productive Areas
April 2013 23 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 Lycoming and Tioga Counties Are Highly Productive Areas Covington Tioga Coun
Slide 24: Western Development Area Marcellus Delineation Program
April 2013 24 Owl’s Nest 2 Wells Drilled 3D Seismic Coverage Complete Church Run 1 Well Drilled Ridgway 1 Well Drilled Clermont Currently Drilling the 2nd of 2 Wells Tionesta 1 Well Planned Rich Valley (1 Well) Peak 7-Day IP: 7.8 MMcf per Day Estimated EUR: 7 Bcf Seneca Resources Western Development
Slide 25: Rich Valley/Clermont Marcellus Development Area
April 2013 25 Seneca Resources Rich Valley/Clermont Marcellus Development Area Rich Valley/Clermont Development Area Area of high porosity and GIP 150-200 Horizontal Locations Anticipated EURs: 5-8 Bcf WDA Pilot Development Program Upon completion of initial delineation drilling, a pilot development
Slide 26: Utica Shale – Activity Summary
April 2013 26 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) nd Horizontal: FY 2013 Henderson Vertical Well: Tested Tionesta Horizontal: Completed Fall 2012 Peak 24-Hour Rate:
Slide 27: Initial Entry into the Mississippian Lime Play in Kansas
April 2013 27 Seneca Resources Initial Entry into the Mississippian Lime Play in Kansas The initial entry into the Mississippian Lime play furthers the Company’s goal of maintaining a significant contribution from oil-producing properties Unit 30-day IP: 352 BOED (92% Oil/NGLs) 100% working interest
Slide 28: Capital Deployment Has Led to Significant Accomplishments
28 136% Increase in Proved Reserves Since 2009 96% Production Growth Since 2009 31% Increase in Pipeline & Storage Adjusted EBITDA since Fiscal 2011 44.3 Bcfe in 2012 NFG Midstream Gathering Volumes April 2013 National Fuel Gas Company Capital Deployment Has Led to Significant Accomplishments Note:
Slide 29: Appendix
April 2013 29 National Fuel Gas Company Appendix
Slide 30: Fiscal Year 2013 Earnings Guidance Drivers
30 2013 Forecast April 2013 National Fuel Gas Company Fiscal Year 2013 Earnings Guidance Drivers $2.75 - $3.00 102 - $2.10 - $2.25 $0.90 - $1.10 $58 - $62 MM +3% $255 - $265 MM +3% $5 - $10 MM GAAP Earnings per Share Exploration & Production Drivers Total Production (Bcfe) DD&A Expense LOE Expense G
Slide 31: Dividend Consistency
31 Dividend Consistency April 2013 National Fuel Gas Company Dividend Track Record (1) As of March 12, 2013 Consecutive Dividend Payments Consecutive Dividend Increases Current Annualized Dividend Rate 110 Years 42 Years $1.46 per Share Current Dividend Yield (1) 2.5% $2.00 $1.50 $1.00 $0.00 $0.50 A
Slide 32: No Debt Maturities Until Fiscal 2018
In February, the Company Issued $500 million in 10-year notes at 3.75% $49 $500 3.750% April 2013 32 National Fuel Gas Company No Debt Maturities Until Fiscal 2018 Embedded Cost of Long-Term Debt 5.58% $600 $500 $400 $300 $200 $100 $0 $300 $250 $500 $549 $50 7.395% 7.375% Fiscal Year
Slide 33: Midstream Businesses Appendix
33 April 2013 Midstream Businesses Appendix
Slide 34: A Closer Look at the Expansion Progress
34 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 (2015/2016) LINE “N” 2012 EXPANSION (In-Service) MERCER EXPANSION PROJECT (Nov
Slide 35: vv
vv
Slide 36: Regulated Interstate Expansion Initiatives (Pipeline & Storage)
Project Name Capacity (Dth/D) Est. CapEx In-Service Market Status 36 April 2013 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 $22 MM 10/2011 Ful
Slide 37: NFG Midstream is Focused on Serving Appalachian Producers
37 April 2013 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 expan
Slide 38: Gathering Expansion Initiatives (NFG Midstream)
(1) Footnote #1 goes here April 2013 38 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 Par
Slide 39: Exploration & Production Appendix
April 2013 39 Exploration & Production Appendix
Slide 40: Hedge Positions and Strategy
April 2013 40 Natural Gas Swaps Volume (Bcf) Average Hedge Price Oil Swaps Volume (MMBbl) Average Hedge Price Seneca Resources Hedge Positions and Strategy Fiscal 2013 51.4 $4.55 / Mcf Fiscal 2014 62.7 $4.28 / Mcf Fiscal 2015 31.9 $4.21 / Mcf Fiscal 2016 19.7 $4.11 / Mcf Fiscal 2017 17.9 $4.07 / Mcf
Slide 41: Continuing to Focus on Improving Its Cost Structure
April 2013 41 $1.36 $1.27 $1.24 $1.08 $1.00 1.00 $ (2) Seneca Resources Continuing to Focus on Improving Its Cost Structure Even after the new Pennsylvania Impact Fee, 2012 unit cash costs decreased from the prior year. We expect this trend to continue in Fiscal 2013. $0.60 $0.69 $0.64 $0.73 $0.65 0
Slide 42: California: Stable Production and Increasing Cash Flows
April 2013 42 Rank Company California 2011 BOEPD 7 Seneca Resources 9,209 Seneca Resources California: Stable Production and Increasing Cash Flows Net Acreage: 18,418 Acres Net Wells: 1,478 Oil Gravity: 12 – 37° Api NRI: 87.64 Occidental 164,796 Chevron 163,153 Aera (Shell/Exxon) 149,974 Plains Expl
Slide 43: California: Recent Initiatives Driving Near-Term Growth
April 2013 43 Seneca Resources California: Recent Initiatives Driving Near-Term Growth Key Areas of Focus in 2013 1. South Midway Sunset Field Extensions 2. Sespe Infill Drill Program 3. East Coalinga Evaluation Forecast
Slide 44: Ramping Marcellus Shale Production
April 2013 44 Seneca Resources Ramping Marcellus Shale Production
Slide 45: Targeting Continued Cost Reductions
April 2013 45 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 46: Utility
April 2013 46 Utility
Slide 47: Providing Financial Stability
April 2013 47 New York & Pennsylvania Low Income Rates Choice Program/POR Merchant Function Charge New York only Revenue Decoupling 90/10 Sharing Weather Normalization Utility Providing Financial Stability Rate Mechanisms
Slide 48: Continued Cost Control Helps Provide Earnings Stability
April 2013 48 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 49: Strong Commitment to Safety
April 2013 49 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 50: Comparable GAAP Financial Measure Slides and Reconciliations
April 2013 50 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 reconcili
Slide 51: Reconciliation of E&P West Division Adjusted EBITDA to Segment Net Income
April 2013 51 Reconciliation of Exploration & Production West Division Adjusted EBITDA to Exploration & Production Segment Net Income ($ Thousands) 12 Months Ended December 31, 2012 Exploration & Production - West Division Adjusted EBITDA 224,201 $ Exploration & Production - All Other Divisions Adju
Slide 52: Reconciliation of Adjusted EBITDA to Consolidated Net Income
April 2013 52 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 $ 224,201 $ Exploration & Production - All Other Divisions Adjusted EBITDA 108,139 1
Slide 53: Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures
April 2013 53 Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ($ Thousands) FY 2013 FY 2009 FY 2010 FY 2011 FY 2012 Forecast Capital Expenditures from Continuing Operations Exploration & Production Capital Expenditures 188,290 $ 398,174 $ 648,815 $ 693,810 $ $480,
National Fuel Gas — Investor Presentation (April 2013) on 6ix