National Fuel Gas Company · NYSE:NFG
National Fuel Gas — Investor Presentation (November 2013)
49 slides from National Fuel Gas's investor presentation, Nov 8, 2013
Slide 1: National Fuel Gas Company Investor Presentation
Exhibit 99 National Fuel Gas Company Investor Presentation November 2013
Slide 2: Safe Harbor For Forward Looking Statements
National Fuel Gas Company November 2013 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
National Fuel Gas Company November 2013 Our Business Mix Leads to Long-Term Value Creation Upstream Upstream Midstream Downstream Crude Oil Natural Gas Seneca Resources Seneca Resources National Fuel Gas National Fuel Gas Corporation Corporation Distribution Supply Corporation (West Division) (East
Slide 4: Integrated Businesses with Significant Marcellus Exposure
National Fuel Gas Company November 2013 Integrated Businesses with Significant Marcellus Exposure… 4
Slide 5: Exposure to Growth from the Utica Shale
National Fuel Gas Company November 2013 …And Exposure to Growth from the Utica Shale 5
Slide 6: EBITDA Growth Driven by Stability and Ongoing Success
National Fuel Gas Company November 2013 EBITDA Growth Driven by Stability and Ongoing Success $1,000 Exploration & Production Segment Gathering Segment Pipeline & Storage Segment $852 Utility Segment Energy Marketing & Other $750 $704 $668 $632 $581 $492 58% $397 $500 $327 $377 $280 56% 52% 57% $30
Slide 7: Capital Spending Flexibility to Maintain Financial Strength
National Fuel Gas Company November 2013 Capital Spending Flexibility to Maintain Financial Strength $1,250 Exploration & Production Segment Gathering Segment Pipeline & Storage Segment $1,000 $977 Utility Segment $845-$1,025 Energy Marketing & Other $854 $750 $717 $550- $694 $650 $501 $649 $500 $533
Slide 8: Strong Balance Sheet and Liquidity Position
National Fuel Gas Company November 2013 Strong Balance Sheet and Liquidity Position Debt / Adjusted EBITDA Capitalization 2.5 2.02 1.98 2.0 1.89 1.89 1.75 1.5 Total Debt(1) Shareholders’ 43% Equity 1.0 57% 0.5 0.0 2009 2010 2011 2012 2013 Fiscal Year $3.843 Billion As of September 30, 2013 The Compa
Slide 9: No Debt Maturities Until Fiscal 2018
National Fuel Gas Company November 2013 No Debt Maturities Until Fiscal 2018 $600 In February, the Company issued $500 million in $549 10-year notes at 3.75% $500 $500 $400 $300 $300 Embedded Cost of $500 $250 3.750% Long-Term Debt $200 5.58% $100 $50 7.375% 7.395% $49 $0 Fiscal Year 9
Slide 10: Dividend Track Record
National Fuel Gas Company November 2013 Dividend Track Record $2.00 Dividend Consistency Consecutive Dividend Payments 111 Years Consecutive Dividend Increases 43 Years $1.50 Current Annualized Dividend Rate$1.50 per Share $1.00 Current $0.50 Dividend Yield (1) 2.1% $0.00 Annual Rate at Fiscal Year
Slide 11: Exploration & Production
Exploration & Production November 2013 11
Slide 12: Another Strong Year of Reserve Growth
Seneca Resources November 2013 Another Strong Year of Reserve Growth 2,000 3-Year Natural Gas (Bcf) Fiscal F&D Cost(1) Crude Oil (MMbbl) Years ($/Mcfe) 1,549 2006-2008 $7.63 1,500 2007-2009 $5.35 1,246 2008-2010 $2.37 2009-2011 $2.09 1,000 935 2010-2012 $1.87 1,300 700 988 2011-2013 $1.67 503 528 67
Slide 13: Disciplined Capital Spending
Seneca Resources November 2013 Disciplined Capital Spending $1,000 Gulf of Mexico (Divested in 2011) East Division (Appalachia) West Division (California/Kansas) $750 $694 $649 $550-$650 $533 $500 $398 $631 $460- $596 $520 $428 $250 $188(1) $356 $139 $105 $90-$130 $31 $28 $47 $63 $0 2009 2010 2011 2
Slide 14: Production Continues to Grow
Seneca Resources November 2013 Production Continues to Grow 175 Gulf of Mexico (Divested in 2011) East Division (Appalachia) 145-165 150 West Division (California/Kansas) 125 120.7 100 83.4 125-143 75 67.6 5.2 100.8 49.6 50 42.5 62.9 13.3 43.2 13.7 25 16.5 8.7 20.1 19.8 19.2 20.5 19.9 20-22 0 2009 2
Slide 15: Driving Down Costs
Seneca Resources November 2013 Driving Down Costs $4.50 Property, Franchise & Other Taxes Other O&M Expense General & Administrative Expense Lease Operating & Transportation Expense (Transportation Only) Lease Operating & Transportation Expense (Excl. Transportation) $3.00 $2.57 $2.42 $0.28 $2.22 $0
Slide 16: Expansive Pennsylvania Acreage Position
Seneca Resources November 2013 Expansive Pennsylvania Acreage Position SRC Fee Acreage SRC Lease Acreage NFG Storage Acreage WesternDevelopmentArea EasternDevelopmentArea Net acreage: ~720,000 acres Net Acreage: 60,000 acres Own most mineral rights Mostly leased (16-18% royalty) Minimalroyalty oblig
Slide 17: Eastern Development Area (EDA)
Seneca Resources November 2013 Eastern Development Area (EDA) Covington – FullyDeveloped Gross Production: ~60 MMcf per Day 47 Wells Drilled and Producing DCNRTract595 Gross Production: ~100 MMcf per Day 34 Wells Drilled 26 Wells Producing DCNRTract100 Gross Production: ~240 MMcf per Day 40 Wells Dr
Slide 18: Strong Results in Lycoming and Tioga Counties
Seneca Resources November 2013 Strong Results in Lycoming and Tioga Counties Average EUR per Producing Average Average Average EUR Average 1,000’of Well IP Rate 7-Day 30-Day per Well Lateral Lateral Development Area Count (MMcf/d) (MMcf/d) (MMcf/d) (Bcf) Length (Bcfe) Covington Tioga 47 5.2 4.7 4.1
Slide 19: Continued Steep Growth in the Marcellus Forecast
Seneca Resources November 2013 Continued Steep Growth in the Marcellus 450 Forecast Tract 100 (Lycoming) 400 Tract 595 (Tioga) Covington (Tioga) 350 Clermont/Other EOG JV 300 250 200 150 100 50 0 19
Slide 20: Firm Sales in Place for Appalachian Production
Seneca Resources November 2013 Firm Sales in Place for Appalachian Production 400,000 Prices shown represent the sales (netback Other (Transco) price) at the first non-affiliated interstate Dominion South Point pipeline , including the cost of all related 350,000 NYMEX downstream transportation. 307
Slide 21: Successful Delineation Across a Large Acreage Position
Seneca Resources November 2013 Successful Delineation Across a Large Acreage Position Rich Valley (1 Well) Owl’s Nest (2 Wells) Peak 7-Day IP: 7.8 MMcfd 54H Peak 7-day IP: 5.8 MMcfd 30-Day Rate: 6.7MMcfd Estimated EUR: 7.4 Bcf Tionesta 1 Well Drilled Clermont (2 Wells) 9H (RCS) Peak 7-day IP: 10.0 M
Slide 22: Delineation Well Test Data Provides Positive Data Points
Seneca Resources November 2013 Delineation Well Test Data Provides Positive Data Points Peak Peak Treatable 24-Hour 7-Day Completion Lateral Rate Rate EUR Well Name Design Length Stages (MMcfd) (MMcfd) (Bcf) Status Rich Valley 27H RCS 1 6,372’ 42 8.1 7.8 7.4 Producing Clermont 9H RCS 5,500’ 37 11.4
Slide 23: Rich Valley/Clermont: Moving Forward with Full Development
Seneca Resources November 2013 Rich Valley/Clermont: Moving Forward with Full Development Marcellus Faults Marcellus & Basement Faults Drilled Well Planned Well PadN (9 Wells) Clermont Spud Q4 FY2013 RichValley 9H (RCS) 7-Day Sales Rate: 10.0 MMcf/d 7-day IP: 7.8 MMcf/d 10H (Non-RCS) 7-Day Sales Rat
Slide 24: Utica Shale – Activity Summary
Seneca Resources November 2013 Utica Shale –Activity Summary Halcon Permitted Range Resources 6.6 MMcf/d, Drilled/Drilling 1.4 MMcf/d 750 Bbls/d Completed “Not Effectively Stimulated” Producing Mt. Jewett Horizontal: completed September 2013 Halcon Peak 24-Hour Rate: 8.5 MMcf/d 2.5 MMcf/d, 360 Bbls/
Slide 25: California: Seventh Largest Producer in the State
Seneca Resources November 2013 California: Seventh Largest Producer in the State California 2012 Rank Company BOEPD (1) 1 Occidental 187,376 2 Chevron 160,611 3 Aera (Shell/Exxon) 143,983 4 Plains Exploration 36,365 5 Berry Petroleum 19,589 6 Macpherson Oil 10,416 7 Seneca Resources 10,154 8 Venoco
Slide 26: California: Stable Production Fields
Seneca Resources November 2013 California: Stable Production Fields EastCoalinga ~240 BOEPD Temblor Formation NorthLostHills Primary SouthLostHills ~1,100 BOEPD ~1,500 BOEPD Tulare & Etchegoin Formation Monterey Shale Primary & Steamflood Primary 175 Active Wells 222 Active Wells NorthMidwaySunset ~
Slide 27: California: Strong Margins Provide Significant Free Cash Flow
Seneca Resources November 2013 California: Strong Margins Provide Significant Free Cash Flow Adjusted EBITDA per BOE (1) (Fiscal Year Ended September 30, 2013) Non-Steam Fuel LOE $11.36 Steam Fuel $4.27 Average Revenue (Fiscal Year Ended 9/30/13) G&A $4.10 $88.67 per BOE Production & Other Taxes $2.
Slide 28: California: Midway-Sunset South Activity Update
Seneca Resources November 2013 California: Midway-Sunset South Activity Update 28
Slide 29: California: Sespe Field Drilling Programs and Results
Seneca Resources November 2013 California: Sespe FieldDrilling – Programs and Results 2011 Sespe Wells (5) TG 53-29 TC 524-28 IP: 100 BOEPD 2012 Sespe Wells (6) IP:st90 BOEPD 1st Oil 10/13 1 Mile 1 Oil 3/13 2013 Sespe Wells (6) TG 562-29 IP: 190 BOEPD TC 525-28 2014 Sespe Wells (4) 1st Oil 2/13 IP:
Slide 30: California: East Coalinga Overview
Seneca Resources November 2013 California: East Coalinga Overview Seneca became operator on January 30, 2013 Previous Operator: Chevron 7,764 net acres 90 active wells Gross Production: 530 BOPD Up from 230 BOPD on 1/30/13 $30 million capital commitment over first three years $100 million of potenti
Slide 31: California: Delivering Steady Results
Seneca Resources November 2013 California: Delivering Steady Results Key Areas of Focus in 2014 1. East Coalinga Evaluation 10,000 2. South Midway Sunset Extensions Forecast 3. Sespe Coldwater Evaluation 9,500 9,000 8,500 8,000 7,500 7,000 6,500 6,000 31
Slide 32: Initial Entry into the Mississippian Lime Play in Kansas
Seneca Resources November 2013 Initial Entry into the Mississippian Lime Play in Kansas Total Net Acres: 13,615 Unit 100% working interest in 4,400 gross 30-day IP: acres 352 BOED (92% Oil/NGLs) 55% net working interest in 17,365 gross acres Negotiated an increase in Seneca’s working interest and ha
Slide 33: Hedge Positions and Strategy
Seneca Resources November 2013 Hedge Positions and Strategy Seneca has hedged approximately 67% of its forecasted production for Fiscal 2014 Natural Gas Volume Average Hedge Volume Average Swaps (Bcf) Price Oil Swaps (MMBbl) Hedge Price Fiscal 2014 91.3 $4.25 / Mcf Fiscal 2014 2.0 $100.22 / Bbl Fisc
Slide 34: Midstream Businesses
Midstream Businesses November 2013 Pipeline & Storage/NFG Midstream 34
Slide 35: Pipeline Expansions to Transport Appalachian Production
Midstream Businesses November 2013 Pipeline Expansions to Transport Appalachian Production Shipping Gas to Canada & Northeast Gathering Marcellus Production Line N Corridor Expansions 35
Slide 36: A Closer Look at the Expansion Progress
Midstream Businesses November 2013 A Closer Look at the Expansion Progress NORTHERN ACCESS EXPANSION (In-Service) CLERMONT GATHERING SYSTEM TIOGA (Q4 FY2014) COUNTY TIONESTA EXTENSION GATHERING SYSTEM (In-Service) (In-Service) CENTRAL TIOGA COUNTY EXTENSION (2016) MERCER EXPANSION PROJECT COVINGTON
Slide 37: NFG Midstream is Focused on Serving Appalachian Producers
Midstream Businesses November 2013 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: Regulated Interstate Expansion Initiatives
Midstream Businesses November 2013 Regulated Interstate Expansion Initiatives (Pipeline & Storage) Capacity Est. Project Name In-Service Market Status (Dth/D) CapEx Lamont Compressor Station 90,000 $14 MM 2010/2011 Fully Subscribed Completed– TwoPhases Line “N”Expansion 160,000 $61 MM(1) 10/2011 Ful
Slide 39: Gathering Expansion Initiatives (NFG Midstream)
Midstream Businesses November 2013 Gathering Expansion Initiatives (NFG Midstream) Capacity Est. In-Service Project Name Market Comments (Mcf/D) CapEx Date Multiple Capacity Available Completed– Flowing into TGP Phases - Covington Gathering System 220,000 $36 MM 300 Line. $26 million spent to Most [
Slide 40: Utility
Utility November 2013 40
Slide 41: New York Service Territory
Utility November 2013 New York Service Territory Total Customers: 520,000 Rate Mechanisms: Revenue Decoupling Weather Normalization Low Income Rates Choice Program/Purchase of Receivables (POR) Merchant Function Charge (Uncollectibles Adjustment) 90/10 Sharing (Large Customers) Natural Gas Vehicle P
Slide 42: New York - Earnings Sharing Proposal and Show Cause Order
Utility November 2013 New York -Earnings Sharing Proposal and Show Cause Order April19,2013 NY PSC issued an Order to Show Cause (OTSC) June 1, 2013 July 26, 2013 commencing a OTSC suggests Settlement discussions proceeding to establish “temporary rates”could commence for “temporary rates” become ef
Slide 43: Pennsylvania Service Territory
Utility November 2013 Pennsylvania Service Territory Total Customers: 213,000 Rate Mechanisms: Low Income Rates Choice Program/Purchase of Receivables (POR) Merchant Function Charge (1) Allowed ROE: N/A (1) Black Box Settlement 43
Slide 44: Continued Cost Control Helps Provide Earnings Stability
Utility November 2013 Continued Cost Control Helps Provide Earnings Stability Low natural gas prices, $250 combined with a focus on cost control, continue to $203 help reduce expenses $200 $191 $25 $181 $179 $177 $178 $27 $14 $11 $9 $6 $150 $100 $178 $164 $167 $168 $168 $172 $50 $0 2008 2009 2010 20
Slide 45: Strong Commitment to Safety
Utility November 2013 The increase in capital Strong Commitment to Safety expenditures is largely due to the implementation of a new Customer Information System $100 Capital Expenditures for Safety Total Capital Expenditures $80-$90 $80 $72.0 $56.2 $58.0 $58.4 $58.3 $60 $48.1 $44.4 $45.0 $44.3 $43.8
Slide 46: Comparable GAAP Financial Measure Slides and Reconciliations
National Fuel Gas Company November 2013 Comparable GAAP Financial Measure Slides and Reconciliations This presentation contains certain non-GAAP financial measures. For pages that contain non-GAAP financial measures, pages containing the most directly comparable GAAP financial measures and reconcili
Slide 47: Reconciliation of E&P West Division Adjusted EBITDA to Segment Net Income
November 2013 Reconciliation of Exploration & Production West Division Adjusted EBITDA to Exploration & Production Segment Net Income ($ Thousands) FY 2013 Exploration & Production - West Division Adjusted EBITDA $ 215,042 Exploration & Production - All Other Divisions Adjusted EBITDA 277,341 Total
Slide 48: Reconciliation of Adjusted EBITDA to Consolidated Net Income
November 2013 Reconciliation of Adjusted EBITDA to Consolidated Net Income ($ Thousands) FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Exploration & Production - West Division Adjusted EBITDA $ 171,572 $ 187,838 $ 187,603 $ 226,897 $ 215,042 Exploration & Production - All Other Divisions Adjusted EBITDA 1
Slide 49: Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures
November 2013 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 $ 693,8
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