National Fuel Gas Company · NYSE:NFG
National Fuel Gas — Investor Presentation (March 2014)
70 slides from National Fuel Gas's investor presentation, Mar 24, 2014
Slide 1: Investor Presentation March 2014
Investor Presentation March 2014 National Fuel Gas Company Exhibit 99
Slide 2: Safe Harbor For Forward Looking Statements
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, objectives, goals, projections, estimates of oil
Slide 3: Exceptional Assets, Focused on Execution
1.549 Tcfe of Proved Reserves (1) 800,000 Net Acres in Pennsylvania 2.8 MMBbl of Crude Oil Production (2) $207 Million of Midstream Adjusted EBITDA (2) National Fuel Gas Company Exceptional Assets, Focused on Execution (1) As of September 30, 2013 (2) 12 months ended December 31, 2013
Slide 4: Targeting Sustained Growth Over the Next Five Years
National Fuel Gas Company Targeting Sustained Growth Over the Next Five Years 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. – 10-15% Forecasted Adjusted EBITDA CAGR
Slide 5: Capital Spending Adjusts to Capitalize on Opportunities
National Fuel Gas Company Capital Spending Adjusts to Capitalize on Opportunities 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 Corporation’s acqu
Slide 6: Maintaining a Strong Balance Sheet
Total Debt (1) 42% Debt / Adjusted EBITDA Capitalization National Fuel Gas Company Maintaining a Strong Balance Sheet $3.900 Billion As of December 31, 2013 Note: A reconciliation of Adjusted EBITDA to Net Income is included at the end of this presentation (1) Long-Term Debt of $1.649 billion
Slide 7: Dividend Track Record
National Fuel Gas Company Dividend Track Record (1) As of March 18, 2014 Current Dividend Yield (1) 2.0% Annual Rate at Fiscal Year End
Slide 8: Exploration & Production Overview
Exploration & Production Overview
Slide 9: Proven Record of Growth
Seneca Resources Proven Record of Growth (1) Represents a three-year average U.S. finding and development cost 2013 F&D Cost = $1.31 Marcellus F&D: $0.99 Doubled Proved Reserves Since 2010 71% Proved Developed
Slide 10: Delivering Tremendous Production Growth
Seneca Resources Delivering Tremendous Production Growth
Slide 11: Disciplined Capital Spending
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: LOE: Operating Costs Down; Transportation Costs Up
Seneca Resources LOE: Operating Costs Down; Transportation Costs Up (1) Represents the midpoint of current General & Administrative Expense guidance of $0.40 to $0.45 per Mcfe for fiscal 2014 (2) The total of the two Lease Operating Expense components represents the midpoint of current Lease Operati
Slide 13: Prolific Pennsylvania Acreage
Marcellus Shale Prolific Pennsylvania Acreage
Slide 14: EDA Delivering Significant Growth
Marcellus Shale EDA Delivering Significant Growth (1) One well included in this total is producing from the Geneseo Shale
Slide 15: EDA – Historical Well Results Are Exceptional
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) Marcellus Shale EDA – Historical Well Results Are Exceptional Covington Tioga County 5.2 4.7 4.1 5.8 4,023’
Slide 16: Seneca's Lycoming Economics are in the Top
Marcellus Shale Seneca’s Lycoming Economics are in the Top 3 Source: ITG IR, raw data provided by didesktop and state agencies There are an additional 109 breakeven data points greater than $3.69/Mcf
Slide 17: Huge Position – Understanding Seneca's 780,000 Net Acres
Marcellus Shale Huge Position – Varies in Understanding Understanding Seneca’s 780,000 Net Acres
Slide 18: 2013 & 2014 WDA Delineation Program
Marcellus Shale 2013 & 2014 WDA Delineation Program
Slide 19: Strong Wells Across WDA Acreage
Well Name Completion Design Treatable Lateral Length Stages Peak 24-Hour Rate (MMcfd) Peak 7-Day Rate (MMcfd) EUR (Bcf) Status Marcellus Shale Strong Wells Across WDA Acreage (1) RCS – Reduced Cluster Spacing Clermont 9H RCS 1 5,500’ 11.4 10.0 8.6 Producing Clermont 10H Non-RCS 5,565’ 8.1 7.3 6.6 Pr
Slide 20: Clermont Wells Improved from Early Non-Op JV Wells
Marcellus Shale Clermont Wells Improved from Early Non-Op JV Wells Clermont 5H & 6H (Non-op wells) Avg. lateral length: 3,344’ Small casing: 4.5” Restricted pump rates Wide stage spacing: 350’ No “soaking”, low Sw’s Clermont 9H & 10H (Seneca wells) Avg. lateral length: >5,500’ Larger casing: 5.5” In
Slide 21: Rich Valley/Clermont is in Full Development Mode
Rich Valley 2 Well 7-day IP: 4.5 MMcf/d Lateral Length: 4,492’ 200-250 Horizontal Locations Pad N: Spacing Test 9 of 9 Wells Drilled JV Wells Pad D Pad E Pad O Clermont RCS: 9H 7-day IP: 10.0 MMcf/d (EUR: 8.6 Bcf) Non-RCS: 10H 7-day IP: 7.3 MMcf/d Rich Valley 7-day IP: 7.8 MMcf/d EUR: 7.4 BCF Latera
Slide 22: 200,000 Acres With 6-8 Bcfe EUR Wells
Marcellus Shale 200,000 Acres With 6-8 Bcfe EUR Wells Note: Assumes 6,000’ treated lateral length
Slide 23: ~2,000 Economic Locations at $2.00 to $3.80/Mcfe
Prospect County Product Approx. Remaining Locations EUR (Bcfe) BTU IRR (1) @ $4/MMBtu 15% IRR (1) Breakeven Price ($/Mcf) Marcellus Shale ~2,000 Economic Locations at $2.00 to $3.80/Mcfe Tract 100 Lycoming Dry Gas 11.5-12.5 1,030 90% $1.92 Gamble Lycoming Dry Gas 10-11 1,030 77% $2.05 Tract 595 Tiog
Slide 24: How Does Seneca Sell its Production?
Natural Gas Marketing How Does Seneca Sell its Production?
Slide 25: Adding Long-Term Firm Transport to the Portfolio
Project Volume (Dth/d) In-Service Date Comments Project Volume (Dth/d) Target In- Service Date Comments Natural Gas Marketing Adding Long-Term Firm Transport to the Portfolio Northeast Supply Diversification Project (TGP) 50,000 Executed firm sales agreements for entire capacity over 15 years Niagar
Slide 26: Firm Sales Provide a Market for Appalachian Production
26 Natural Gas Marketing Firm Sales Provide a Market for Appalachian Production (1) Long-term firm sales represent gross volumes
Slide 27: Current Natural Gas Hedge Positions
Natural Gas Marketing Current Natural Gas Hedge Positions (1) 2014 hedge positions are for the remaining nine months of the fiscal year
Slide 28: Current Hedge Book has Seneca Positioned Very Well
Crude Oil $100.22/Bbl $95.27/Bbl $92.97/Bbl $92.30/Bbl $91.00/Bbl Natural Gas Marketing Current Hedge Book has Seneca Positioned Very Well (1) 2014 hedge positions are for the remaining nine months of the fiscal year Note: Hedge positions for fiscal years 2016-2018 reflect the midpoint of Seneca’s t
Slide 29: FY 2014 Production – Firm Sales & Hedge Composition
Natural Gas Marketing FY 2014 Production – Firm Sales & Hedge Composition
Slide 30: Path to Geneseo Development – 2018/2019 Start
Geneseo Shale Path to Geneseo Development – 2018/2019 Start st Well (Tract 100 – Pad N) Peak IP: 14.1 MMcf per day 30-Day Average Rate: 8.6 MMcf per day Estimated EUR: 7.0 Bcf Lateral Length: 4,920’ Frac Stages: 33 stages Current developed infrastructure from DCNR 100 & Gamble: 14 well pads 3 compre
Slide 31: Industry Activity & 2014 Appraisal Program
Point Pleasant & Utica Shale Industry Activity & 2014 Appraisal Program
Slide 32: Stable Production Fields; Modest Growth Potential
California Stable Production Fields; Modest Growth Potential
Slide 33: East Coalinga Summary
California East Coalinga Summary Production has increased from 214 BOPD to 559 BOPD • Highest on leases since 2000 Drilled 12 evaluation wells in 2013 • 9 of 12 new wells are on line and making ~200 BOPD Plan to drill 28 new producers and 2 water disposal wells in 2014
Slide 34: South Midway Sunset Has Delivered Significant Growth
California South Midway Sunset Has Delivered Significant Growth Highlights Since Acquisition Increased daily production by 130% Drilled 80 new producers Added 3.3 MMBO of proven reserves Increased steam capacity by 280% Identified opportunities for additional pool development 252 Pool 97X Pool SE Po
Slide 35: Evaluating the Monterey Shale at South Lost Hills
California Evaluating the Monterey Shale at South Lost Hills
Slide 36: Limited Growth Opportunities, But Strong Economics
Field Average Well Cost Average EUR (MBO) Estimated IRR @$100/Bbl Fiscal 2014 Locations California Limited Growth Opportunities, But Strong Economics South Midway Sunset $250,000 75% East Coalinga $400,000 50% Sespe – Coldwater $2,800,000 35%
Slide 37: Modest Growth Anticipated in 2014 and 2015
California Modest Growth Anticipated in 2014 and 2015
Slide 38: Outstanding Cash Flow
California Outstanding Cash Flow (1) (1) Adjusted EBITDA and Capital Expenditures represent Seneca Resources Corporation’s West Division, which includes its activity in Kansas
Slide 39: Looking Forward
California Looking Forward 1. Manage decline of base production 2. Pursue and develop opportunities for growth from current assets Sespe East Coalinga South Midway Sunset 3. Continue to pursue additional acquisition and farm-in opportunities
Slide 40: Commenced Evaluation Program in Fiscal 14
Mississippian Lime Commenced Evaluation Program in Fiscal 2014 Total Net Acres: 13,615 100% working interest in 4,400 gross acres 55% net working interest in 17,365 gross acres Negotiated an increase in Seneca’s working interest and have taken over as operator - Mississippian Rocks Absent Drilled an
Slide 41: What Will Seneca Look Like Moving Forward?
Consistent Production Growth: 15-25% CAGR Driven by a very large, high-quality Appalachian acreage position Maintain Oil Production Expand When Possible Excellent operator and significant cash flow generation Disciplined Spending Driven by Rates of Return Pace of development adapts to changing marke
Slide 42: Midstream Businesses Overview
Midstream Businesses Overview
Slide 43: Positioned to Serve Seneca's Rapidly Growing Production
Midstream Businesses Positioned to Serve Seneca’s Rapidly Growing Production
Slide 44: Gathering is the First Step to Reaching a Market
Gathering Gathering is the First Step to Reaching a Market
Slide 45: Existing Systems Supporting Seneca's Near-Term Growth
Gathering Existing Systems Supporting Seneca’s Near-Term Growth Covington Gathering System In-service date: November 2009 Capacity: 220,000 Dth per day Interconnect: TGP 300 Capital expenditures (to date): $28.3 million Capital expenditures (future): $7.5 million Trout Run Gathering System In-servic
Slide 46: Clermont Gathering System has Large Expandability
Clermont Gathering System Gathering Clermont Gathering System has Large Expandability In-Service: Ongoing build-out Ultimate Trunkline Capacity: 700 to 1,000 MMcf per day Interconnects TGP 300 and National Fuel Gas Supply Corporation (anticipated) Capital: 2014: $60- $92 million 2015: $75 - $125 mil
Slide 47: Capital Deployment Will Deliver Long-Term Growth
Gathering Capital Deployment Will Deliver Long-Term Growth Revenue Growth (2013 to 2015): ~60% CAGR Capital Investment (2013 to 2015): ~60% CAGR
Slide 48: Project Opportunities to Support WDA Growth
Develop multiple outlets to high-value markets Pipeline & Storage Project Opportunities to Support WDA Growth
Slide 49: Northeast PA Spot Markets are Heavily Discounted
Pipeline & Storage Northeast PA Spot Markets are Heavily Discounted
Slide 50: Expansions to Move Gas from the WDA are Significant
Projects to Support WDA Growth Pipeline & Storage Expansions to Move Gas from the WDA are Significant Project Capacity (Dth/day) Northern Access 2015 140,000 Northern Access 2016 350,000 Total New Capacity 490,000 Project Capital Cost Northern Access 2015 $67 million Northern Access 2016 $360 millio
Slide 51: Major Expansion Designed for Canadian Deliveries
Northern Access 2015 Pipeline & Storage Major Expansion Designed for Canadian Deliveries In-Service: November 2015 System: NFG Supply Corp. Capacity: 140,000 Dth per day Lease to TGP (Kinder) as part of their Niagara Expansion project Interconnect Niagara (TransCanada) Total Cost: $67 Million Major
Slide 52: Northern Access 2016 Provides Additional Access to Canada
Northern Access 2016 (1) Pipeline & Storage Northern Access 2016 Provides Additional Access to Canada In-Service: 2016 System: NFG Supply Corp. & Empire Pipeline, Inc. Capacity 350,000 Dth per day Interconnect Chippawa (TransCanada) Total Cost: ~$360 Million Northern Access 2016 (2016) Clermont (1)
Slide 53: Recent 3rd Party Expansions Have Been Highly Successful
Completed Expansions for 3 rd Parties Pipeline & Storage Recent 3 rd Party Expansions Have Been Highly Successful Project Capacity (Dth/day) Northern Access 2012 320,000 Tioga County Extension 350,000 Line N (2011, 2012 & 2013) 353,000 Total New Capacity 1,023,000 Project Capital Cost Northern Acces
Slide 54: Additional Line N Expansions Planned for the Future
Mercer Expansion Pipeline & Storage Additional Line N Expansions Planned for the Future In-Service: November 2014 System: NFG Supply Corp. Capacity: 105,000 Dth per day Precedent agreements signed for all available capacity Interconnect Mercer (TGP Station 219) Total Cost: $34 Million Expansion: $30
Slide 55: Pairing Line N Expansions with System Modernization
Westside Expansion & Modernization Mercer (TGP Station 219) Pipeline & Storage Pairing Line N Expansions with System Modernization In-Service: November 2015 System: NFG Supply Corp. Capacity: 175,000 Dth per day Precedent agreements signed for all available capacity Interconnect Mercer (TGP Station
Slide 56: Developing Unique Solutions for Shippers
Tuscarora Lateral Pipeline & Storage Developing Unique Solutions for Shippers In-Service: November 2015 System: NFG Supply & Empire Pipeline New No-Notice Services Preserving 172,500 Dth per day (RG&E) Preserving 20,000 Dth per day (NYSEG) Retained Storage: 3.3 Bcf New Incremental Transportation Cap
Slide 57: Significant Expansions Are Driving Growth
Completed Projects (Since 2009) Line N Corridor Line “N” Expansion Line “N” 2012 Expansion Line “N” 2013 Expansion Mercer Expansion West Side Expansion Total Capacity 633 MDth/d Delivering Gas North Tioga County Extension Northern Access 2012 Northern Access 2015 Northern Access 2016 (1) Total Capac
Slide 58: Expansion Project Revenue Growth
Larger projects under consideration for fiscal 2016 and 2017 will drive significant revenue growth Pipeline & Storage Expansion Project Revenue Growth
Slide 59: Utility
uransumog 710s PRA
Slide 60: New York & Pennsylvania Service Territories
Utility New York & Pennsylvania Service Territories New York Total Customers: 522,000 Rate Mechanisms: Revenue Decoupling Weather Normalization Low Income Rates Choice Program/Purchase of Receivables Merchant Function Charge (Uncollectibles Adjustment) 90/10 Sharing (Large Customers ) Natural Gas Ve
Slide 61: Customer Usage
Utility Customer Usage (1) Weighted Average of New York and Pennsylvania service territories (assumes normal weather)
Slide 62: Continued Cost Control Helps Provide Earnings Stability
Utility Continued Cost Control Helps Provide Earnings Stability
Slide 63: Capital Spending Largely Focused on Maintenance
Utility Capital Spending Largely Focused on Maintenance
Slide 64: Achieved a Settlement in New York
Utility Achieved a Settlement in New York 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 establish “temporary rates” June 1, 2013
Slide 65: National Fuel
National Fuel b) aynodm3 710s PRA
Slide 66: rgpuaddy 710s PRA
rgpuaddy 710s PRA
Slide 67: Current Hedge Positions
Fiscal Year NYMEX Volume (Bcf) Average Price ($/Mcf) Dominion Volume (Bcf) Average Price ($/Mcf) SoCal Volume (Bcf) Average SoCal Price Total Volume (Bcf) Average Price ($/Mcf) Fiscal Year MWSS Volume (MMBbl) Average Price ($/Bbl) Brent Volume (MMBbl) Average Price ($/Bbl) NYMEX Volume (MMBbl) Avera
Slide 68: Comparable GAAP Financial Measure Slides and Reconciliations
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 reconciliations are pro
Slide 69: Reconciliation of Adjusted EBITDA to Consolidated Net Income
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 $ 215,042 $ 212,540 $ Exploration & Production - All Other Divisions Adjusted EBITDA 108,139 139,6
Slide 70: Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures
Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ($ Thousands) FY 2014 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Forecast Capital Expenditures from Continuing Operations Exploration & Production Capital Expenditures 188,290 $ 398,174 $ 648,815 $ 693,810 $ 533,129 $ $
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