National Fuel Gas Company · NYSE:NFG
National Fuel Gas — Investor Presentation (May 2013)
60 slides from National Fuel Gas's investor presentation, May 3, 2013
Slide 1: National Fuel Gas Company Investor Presentation May 2013
National Fuel Gas Company Investor Presentation May 2013 Exhibit 99
Slide 2: Safe Harbor For Forward Looking Statements
2 May 2013 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, an
Slide 3: Our Business Mix Leads to Long-Term Value Creation
3 Upstream Crude Oil Midstream Downstream Upstream Natural Gas May 2013 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 National
Slide 4: Integrated Businesses with Significant Marcellus Exposure
4 May 2013 National Fuel Gas Company Integrated Businesses with Significant Marcellus Exposure…
Slide 5: And Exposure to Growth from the Utica Shale
5 May 2013 National Fuel Gas Company …And Exposure to Growth from the Utica Shale
Slide 6: EBITDA Growth Driven by Stability and Continued Success
6 $164 28% $167 26% $169 25% $160 23% $171 22% $131 23% $121 19% $ 111 17% $137 19% $153 20% $280 48% $327 52% $377 57% $397 56% $427 56% May 2013 National Fuel Gas Company EBITDA Growth Driven by Stability and Continued Success $581 $632 $668 $704 $768 $0 $250 $500 $750 $1,000 2009 2010 2011 2012 1
Slide 7: Capital Spending Flexibility to Maintain Financial Strength
7 $56 $58 $58 $58 $65-$70 $65-$70 $53 $38 $129 $144 $70-$90 $80-$100 $81 $50-$75 $75-$125 $188 $398 $649 $694 $525- $585 $550- $650 May 2013 National Fuel Gas Company Capital Spending Flexibility to Maintain Financial Strength Note: A reconciliation to Capital Expenditures as presented on the Consol
Slide 8: Strong Balance Sheet and Liquidity Position
Total Debt (1) 45% 8 Debt / Adjusted EBITDA Capitalization The Company has a total short-term debt capacity of $1.085 billion of which all remains available May 2013 Shareholders’ Equity 55 % National Fuel Gas Company Strong Balance Sheet and Liquidity Position $3.691 Billion As of March 31, 2013 No
Slide 9: Forecasted Cash Flow Position for Fiscal Year 2013
9 $765 $123 $421 May 2013 National Fuel Gas Company Forecasted Cash Flow Position for Fiscal Year 2013 Fiscal 2013 Cash from Operations will likely equal or exceed Capital Expenditures $775 $ 495 $0 $500 $1,000 $1,500 Debt Repayment Dividend CapEx Cash on Hand New Financing Asset Sales & Other Cash
Slide 10: Dividend Consistency
10 Dividend Consistency May 2013 National Fuel Gas Company Dividend Track Record Current Dividend Yield (1) 2.3% Consecutive Dividend Payments 110 Years Consecutive Dividend Increases 42 Years Current Annualized Dividend Rate $1.46 per Share (1) As of April 30, 2013 $0.00 $0.50 $1.00 $1.50 $2.00 Ann
Slide 11: Exploration & Production
May 2013 11 Exploration & Production
Slide 12: Efficiently Deploying Capital Towards the Best Opportunities
May 2013 12 $31 $28 $47 $63 $80-$110 $90-$130 Seneca Resources Efficiently Deploying Capital Towards the Best Opportunities $139 $356 $596 $631 $445- $475 $460- $520 $188 (1) $398 $649 $694 $525-$585 $550-$650 $0 $250 $500 $750 $1,000 2009 2010 2011 2012 2013 Forecast 2014 Forecast Fiscal Year Gulf
Slide 13: Production Continues to Grow
May 2013 13 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 90-96 111–119 13.7 13.3 5.2 42.5 49.6 67.6 83.4 - 132-142 2009 2010 2011 2012 2013 Forecast 2014 Forecast Fiscal Year Gulf of Mexico (Divested in 2011) East Division (Appalachia) West Divisio
Slide 14: Continuing to Focus on Improving Its Cost Structure
May 2013 14 $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. (1) Represents the midpoint of cur
Slide 15: California: Stable Production and Increasing Cash Flows
May 2013 15 Rank Company California 2012 BOEPD (1) 7 Seneca Resources 10,154 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 187,376 Chevron 160,611 Aera (Shell/Exxon) 143,983 Plains E
Slide 16: California: Stable Production Fields
May 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 ~1,100 BOEPD Tulare & Etchegoin Formation Primary & Steamflood 175 Active Wells North Midway Sunset ~4,100 BOEPD Potter & Tulare Formation St
Slide 17: California: Strong Margins Support Significant Free Cash Flow
May 2013 17 Seneca Resources California: Strong Margins Support Significant Free Cash Flow Average Revenue (12 Months Ended 3/31/13) $85.90 per BOE $9.78 $3.35 $3.44 $2.28 $1.20 $65.85 Non-Steam Fuel LOE Steam Fuel G&A Production & Other Taxes Other Operating Costs Adjusted EBITDA Adjusted EBITDA pe
Slide 18: California: Midway Sunset South Activity Update
May 2013 18 California: Midway Sunset South Activity Update Seneca Resources ? 500’ 2012 Drill Program: 21 Wells / 3 Injectors 2013 Drill Program: 23 Wells / 5 Injectors 2014 Drill Program: 23 Wells / 4 Injectors 0 ft 50 ft 100 ft 100 ft 50 ft 50 ft Antelope “A-1” and “A-2” Sands Antelope “B” and “C
Slide 19: California: Sespe Field Drilling Programs and Results
19 May 2013 WS 48-33 IP: 80 BOEPD Oil “X” SANDS ISOCHORE (Thickness) Seneca Resources California: Sespe Field – Drilling Programs and Results 1 Mile Oak Flat 1-31 IP: 110 BOEPD Oil 08/12 FA 502-33 IP: 75 BOEPD Oil 1/13 FA 501-33 IP: 100 BOEPD Oil 1/13 Oak Flat 2-31 IP: 100 BOEPD Oil 08/12 TG 562-29
Slide 20: California: East Coalinga Overview
May 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) ~350 BOPD (Up from 230 BOPD on 1/30/13) $30 million capital commitment over first three years $100 million of potential opportu
Slide 21: California: Recent Initiatives Driving Near-Term Growth
May 2013 21 Seneca Resources California: Recent Initiatives Driving Near-Term Growth Forecast Key Areas of Focus in 2013 1. South Midway Sunset Field Extensions 2. Sespe Infill Drill Program 3. East Coalinga Evaluation 6,500 7,000 7,500 8,000 8,500 9,000 9,500 10,000 6,000
Slide 22: Expansive Pennsylvania Acreage Position
May 2013 22 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 Count
Slide 23: Eastern Development Area (EDA)
May 2013 23 Covington – Fully Developed Gross Production: ~60 MMcf per Day 47 Wells Drilled and Producing Seneca Resources Eastern Development Area (EDA) DCNR Tract 595 Gross Production: ~80 MMcf per Day 34 Wells Drilled 26 Wells Producing DCNR Tract 100 Gross Production: ~155 MMcf per Day 33 Wells
Slide 24: Lycoming and Tioga Counties Are Highly Productive Areas
May 2013 24 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 County
Slide 25: Western Development Area Marcellus Delineation Program
May 2013 25 Owl’s Nest 2 Wells Drilled 3D Seismic Coverage Complete Church Run 1 Well Drilled Ridgway 1 Well Drilled Rich Valley (1 Well) Peak 7-Day IP: 7.8 MMcf per Day 30-Day Rate: 6.7 MMcf per Day Estimated EUR: 7 Bcf Clermont Two Wells Drilled Tionesta 1 Well Planned Seneca Resources Western Dev
Slide 26: Rich Valley/Clermont Marcellus Development Area
May 2013 26 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 p
Slide 27: Clermont / Rich Valley Pilot Development Project
May 2013 27 Rich Valley 27H 7-day IP: 7.8 MMcf/d 30-day IP: 6.7 MMcf/d Pad A: 2 Wells Production: Q4 FY13 Pad N: 3 Wells Production: Q3/Q4 FY14 Rich Valley 2 Well Production: Q1/Q2 FY14 Pad E: 3 Wells Production: Q3/Q4 FY14 nd Marcellus Shale Clermont / Rich Valley Pilot Development Project Clermont
Slide 28: Rich Valley 27H Type Curve
May 2013 28 Seneca Resources Rich Valley 27H Type Curve Lateral Length: 6,300’ Completion Stages: 42 (Reduced Cluster Spacing) 0.0 2.0 4.0 6.0 8.0 10.0 Months Rich Valley 27H 7 Bcf Typecurve
Slide 29: Ongoing Production Growth in the East Division
May 2013 29 Seneca Resources Ongoing Production Growth in the East Division Forecast Tract 100 (Lycoming) Tract 595 (Tioga) Covington (Tioga) WDA/Other EOG JV Shallow Devonian (Historical Production)
Slide 30: Utica Shale – Activity Summary
May 2013 30 Seneca Resources Utica Shale – Activity Summary Permitted Drilled/Drilling Completed Producing Range Resources 1.4 MMcfd “Not Effectively Stimulated” Mt. Jewett Tested 3 Frac Stages at 1.6 MMcfd (Typical Well: 17 Frac Stages) nd Horizontal: Moving in Rig Rex 9.2 MMcfd Henderson Vertical
Slide 31: Initial Entry into the Mississippian Lime Play in Kansas
May 2013 31 Seneca Resources Initial Entry into the Mississippian Lime Play in Kansas Total Net Acres: 9,300 Unit 30-day IP: 352 BOED (92% Oil/NGLs) The initial entry into the Mississippian Lime play furthers the Company’s goal of maintaining a significant contribution from oil-producing properties
Slide 32: Midstream Businesses: Pipeline & Storage/NFG Midstream
32 May 2013 Midstream Businesses Pipeline & Storage/NFG Midstream
Slide 33: Pipeline Expansions to Transport Appalachian Production
May 2013 33 Line N Corridor Expansions Gathering Marcellus Production Shipping Gas to Canada & Northeast Midstream Businesses Pipeline Expansions to Transport Appalachian Production
Slide 34: A Closer Look at the Expansion Progress
May 2013 34 LINE “N” 2013 EXPANSION (Nov. 2013) LINE “N” EXPANSION (In-Service) MERCER EXPANSION PROJECT (Nov. 2014) WEST SIDE EXPANSION (2015) LINE “N” 2012 EXPANSION (In-Service) TIONESTA GATHERING SYSTEM (In-Service) NORTHERN ACCESS EXPANSION (In-Service) TIOGA COUNTY EXTENSION (In-Service) CENTR
Slide 35: Slide 35
Slide 36: NFG Midstream is Focused on Serving Appalachian Producers
May 2013 36 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 expandi
Slide 37: Utility
May 2013 37 Utility
Slide 38: New York Service Territory
May 2013 38 Total Customers: 520,000 Rate Mechanisms: Revenue Decoupling Weather Normalization Low Income Rates Choice Program/Purchase of Merchant Function Charge 90/10 Sharing (Large Customers) Natural Gas Vehicle Pilot Program Allowed ROE: 9.1% Utility New York Service Territory (Uncollectibles A
Slide 39: New York - Earnings Sharing Proposal and Show Cause Order
May 2013 39 Utility New York - Earnings Sharing Proposal and Show Cause Order 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 estab
Slide 40: Pennsylvania Service Territory
May 2013 40 Utility Pennsylvania Service Territory Total Customers: 213,000 Rate Mechanisms: Low Income Rates Choice Program/Purchase of Merchant Function Charge Allowed ROE: N/A (1) (1) Black Box Settlement Return on Equity Fiscal Year Receivables (POR)
Slide 41: Consistently Delivering Excellent Customer Service
May 2013 41 Study Year (March) Customer Satisfaction Study Rank Utility Consistently Delivering Excellent Customer Service National Fuel has ranked nd among Gas Utilities in the East Region for business customer service in each of the past three years and continues to focus on safety, corporate citi
Slide 42: Lower Natural Gas Prices Led to Increased Normalized Usage
May 2013 42 Utility Lower Natural Gas Prices Led to Increased Normalized Usage Residential Industrial (1) Weighted Average of New York and Pennsylvania service territories (assumes normal weather) Industrial load increasing slightly for Fiscal Year 2013 Twelve Months Ended March 31 Twelve Months End
Slide 43: Continued Cost Control Helps Provide Earnings Stability
43 $178 $164 $167 $168 $168 $168 May 2013 Utility Continued Cost Control Helps Provide Earnings Stability Low natural gas prices, combined with a focus on cost control, continue to help reduce expenses $25 $27 $14 $11 $9 $7 $203 $191 $181 $179 $177 $175 $0 $50 $100 $150 $200 $250 2008 2009 2010 2011
Slide 44: Strong Commitment to Safety
44 May 2013 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 $45.1 $44.4
Slide 45: Capital Deployment Has Led to Significant Accomplishments
45 May 2013 136% Increase in Proved Reserves Since 2009 96% Production Growth Since 2009 37% Increase in Pipeline & Storage Adjusted EBITDA since Fiscal 2011 44.3 Bcfe in 2012 NFG Midstream Gathering Volumes National Fuel Gas Company Capital Deployment Has Led to Significant Accomplishments Note: A
Slide 46: Appendix
46 May 2013 National Fuel Gas Company Appendix
Slide 47: Fiscal Year 2013 Earnings Guidance Drivers
47 2013 Forecast May 2013 National Fuel Gas Company Fiscal Year 2013 Earnings Guidance Drivers GAAP Earnings per Share $2.95 - $3.10 Exploration & Production Drivers Total Production (Bcfe) 110 - DD&A Expense (per Mcfe) $2.05 - $2.15 LOE Expense (per Mcfe) $0.95 - $1.05 G&A Expense $60 - $62 MM Pipe
Slide 48: No Debt Maturities Until Fiscal 2018
May 2013 48 In February, the Company Issued $500 million in 10-year notes at 3.75% National Fuel Gas Company No Debt Maturities Until Fiscal 2018 Embedded Cost of Long-Term Debt 5.58%
Slide 49: Midstream Businesses Appendix
49 May 2013 Midstream Businesses Appendix
Slide 50: Regulated Interstate Expansion Initiatives (Pipeline & Storage)
May 2013 50 Project Name Capacity (Dth/D) Est. CapEx In-Service Market Status 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 Fully
Slide 51: Gathering Expansion Initiatives (NFG Midstream)
May 2013 51 Project Name Capacity (Mcf/D) Est. CapEx In-Service Date Market Comments Midstream Businesses Gathering Expansion Initiatives (NFG Midstream) Covington Gathering System 220,000 $40 MM Multiple Phases - Most In-Service Capacity Available [Marketing to Third Parties] Completed – Flowing in
Slide 52: Exploration & Production Appendix
52 May 2013 Exploration & Production Appendix
Slide 53: Another Strong Year of Reserve Growth
May 2013 53 Fiscal Years 3-Year F&D Cost (1) ($/Mcfe) Seneca Resources Another Strong Year of Reserve Growth 2006-2008 $7.63 2007-2009 $5.35 2008-2010 $2.37 2009-2011 $2.09 2010-2012 $1.87 Seneca has more than doubled its proved reserves since 2009, while maintaining a relatively high percentage of
Slide 54: Hedge Positions and Strategy
May 2013 54 Natural Gas Swaps Volume (Bcf) Average Hedge Price Oil Swaps Volume (MMBbl) Average Hedge Price Seneca Resources Hedge Positions and Strategy Fiscal 2013 38.7 $4.49 / Mcf Fiscal 2014 62.7 $4.28 / Mcf Fiscal 2015 39.7 $4.27 / Mcf Fiscal 2016 37.3 $4.35 / Mcf Fiscal 2017 23.0 $4.19 / Mcf F
Slide 55: Operational Efficiencies Continue to Drive Production Growth
May 2013 55 Seneca Resources Operational Efficiencies Continue to Drive Production Growth Ongoing efficiency allows for more activity with a flat rig count (1) RCS – Reduced Cluster Spacing (2) Drilling pace represents the average feet drilled per day from the time the well is spud until it reaches
Slide 56: Targeting Continued Cost Reductions
May 2013 56 Marcellus Shale Targeting Continued Cost Reductions (1) Completion Cost per Stage is for horizontal wells completed utilizing a standard completion design, not a Reduced Cluster Spacing (RCS) completion design.
Slide 57: Comparable GAAP Financial Measure Slides and Reconciliations
May 2013 57 National Fuel Gas Company Comparable GAAP Financial Measure Slides and Reconciliations This presentation contains certain non-GAAP financial measures. For pages that contain non-GAAP financial measures, pages containing the most directly comparable GAAP financial measures and reconciliat
Slide 58: Reconciliation of E&P West Division Adjusted EBITDA
May 2013 58 Reconciliation of Exploration & Production West Division Adjusted EBITDA to Exploration & Production Segment Net Income ($ Thousands) 12 Months Ended March 31, 2013 Exploration & Production - West Division Adjusted EBITDA 218,842 $ Exploration & Production - All Other Divisions Adjusted
Slide 59: Reconciliation of Adjusted EBITDA to Consolidated Net Income
May 2013 59 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 $ 218,842 $ Exploration & Production - All Other Divisions Adjusted EBITDA 108,139 139
Slide 60: Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures
May 2013 60 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 $ $525,00