National Fuel Gas Company · NYSE:NFG
National Fuel Gas — Investor Presentation (September 2012)
51 slides from National Fuel Gas's investor presentation, Sep 4, 2012
Slide 1: National Fuel Gas Company Investor Presentation September 2012
National Fuel Gas Company Investor Presentation September 2012 Exhibit 99
Slide 2: Safe Harbor For Forward Looking Statements
September 2012 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 structu
Slide 3: Our Business Mix Leads to Long-Term Value Creation
September 2012 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 Nat
Slide 4: Integrated Business Mix Provides Financial Balance
September 2012 4 National Fuel Gas Company Integrated Business Mix Provides Financial Balance Note: A reconciliation of EBITDA to Net Income as presented on the Consolidated Statement of Income and Earnings is included at the end of this presentation.
Slide 5: Highly Integrated Assets with Significant Marcellus Exposure
September 2012 5 National Fuel Gas Company Highly Integrated Assets with Significant Marcellus Exposure…
Slide 6: Exposure to Growth from the Utica Shale
September 2012 6 National Fuel Gas Company …And Exposure to Growth from the Utica Shale
Slide 7: Capital Spending Flexibility to Maintain Financial Strength
September 2012 7 September 2012 National Fuel Gas Company Capital Spending Flexibility to Maintain Financial Strength Note: A reconciliation to Capital Expenditures as presented on the Consolidated Statement of Cash Flows is included at the end of this presentation. To the extent additional infrastr
Slide 8: Strong Balance Sheet and Liquidity Position
September 2012 8 Capital Resources Shareholders’ Equity 57.5 % Long-Term Debt 40.5% 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 $20.2 million of outstanding short-term no
Slide 9: Dividend Consistency
September 2012 9 Dividend Consistency National Fuel Gas Company Dividend Track Record Current Dividend Yield (1) 2.9% Consecutive Dividend Payments 110 Years Consecutive Dividend Increases 42 Years Current Annualized Dividend Rate $1.46 per Share (1) As of August 28, 2012
Slide 10: Pipeline & Storage / Midstream
September 2012 10 Pipeline & Storage / Midstream
Slide 11: Ongoing Expansion to Transport Appalachian Production
September 2012 11 Gathering Marcellus Production Serving Southwest PA Producers Longer-Term Infrastructure Expansions Shipping Gas to Canada & Northeast Midstream Businesses Ongoing Expansion to Transport Appalachian Production
Slide 12: A Closer Look at the Expansion Progress
September 2012 12 COVINGTON GATHERING SYSTEM (In-Service) TROUT RUN GATHERING SYSTEM (In-Service ) WEST TO EAST OVERBECK TO LEIDY TIOGA COUNTY EXTENSION (In-Service) LINE “N” EXPANSION (In-Service) NORTHERN ACCESS EXPANSION (Under Construction) CENTRAL TIOGA COUNTY EXTENSION (2014/2015) LINE “N” 201
Slide 13: Using a History of Excellence to Serve Appalachian Producers
September 2012 13 TGP 300 Transco Tioga County Lycoming County NFG Midstream Using a History of Excellence to Serve Appalachian Producers Midstream’s gathering systems are critical to unlock remote, but highly productive Marcellus acreage History of operational success and efficiency within Pennsylv
Slide 14: Regulatory Rate Filings
September 2012 14 Pipeline & Storage Regulatory Rate Filings National Fuel Gas Supply Corporation Empire Pipeline, Inc. Filed a general rate case with FERC on October 31, 2011 as part of an agreement from a 2006 rate settlement On April 14, 2012 an agreement in principle was reached to settle the ra
Slide 15: Utility
September 2012 15 Utility
Slide 16: Providing Financial Stability
September 2012 16 Utility Providing Financial Stability 9.8% 10.6% 10.5% 10.9% 13.2% 14.7% 18.8% 12.4% 0.0% 10.0% 20.0% 30.0% 2009 2010 2011 TME 6/30/2012 Fiscal Year Return on Equity NY PA Allowed ROE - NY Approx. Settled ROE - PA Rate Mechanisms New York & Pennsylvania Low Income Rates Choice Prog
Slide 17: Continued Cost Control Helps Provide Earnings Stability
September 2012 17 $178 $164 $167 $168 $168 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 $203 $191 $181 $179 $177 $0 $50 $100 $150 $200 $250 2008 2009 2010 2011 12 Mon
Slide 18: Strong Commitment to Safety
September 2012 18 Utility Strong Commitment to Safety The anticipated increase in 2013 capital expenditures is largely due to the implementation of a new Customer Information System $42.8 $45.1 $44.4 $45.0 $44.3 $54.2 $57.5 $56.2 $58.0 $58.4 $60 $70 $0 $20 $40 $60 $80 2007 2008 2009 2010 2011 2012 F
Slide 19: Exploration & Production
September 2012 19 Exploration & Production
Slide 20: Ongoing Strategic Responses to Low Gas Prices
September 2012 20 Ongoing Delineation in Appalachia Maintain Focus on California Crude Oil Delaying Marcellus Completions Reduction in Rig Count Production Curtailment Seneca Resources Ongoing Strategic Responses to Low Gas Prices Generated $175 million of EBITDA in the first nine months of fiscal 2
Slide 21: Increased California Spending with Ongoing Marcellus Cuts
September 2012 21 $31 $31 (1) $47 ~$50 $70-$90 $68 Seneca Resources Increased California Spending with Ongoing Marcellus Cuts (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 Cas
Slide 22: Production Still Growing
September 2012 22 20.1 19.8 19.2 20 - 21 20 - 22 8.7 9.3 7.9 7 5-7 Seneca Resources Production Still Growing 7.2 35.3 - - 13.7 13.3 5.2 42.5 49.6 67.6 - - 2009 2010 2011 2012 Forecast 2013 Forecast Fiscal Year California Shallow Appalachia / Other Marcellus/Utica Gulf of Mexico
Slide 23: Continuing to Focus on Improving Its Cost Structure
September 2012 23 Seneca Resources Continuing to Focus on Improving Its Cost Structure The new Pennsylvania Impact Fee led to a slight increase in 2012 unit cash costs, however, costs are expected to decrease ~10% per unit from 2012 to 2013 (1) Represents the midpoint of current General & Administra
Slide 24: California: Stable Production and Increasing Cash Flows
September 2012 24 Rank Company California 2011 BOEPD 7 Seneca Resources 9,209 California Stable Production and Increasing Cash Flows Net Acreage: 11,833 Acres Net Wells: 1,322 Oil Gravity: 12 – 37° Api NRI: 87.64 Occidental 164,796 Chevron 163,153 Aera (Shell/Exxon) 149,974 Plains Exploration 36,775
Slide 25: California Stable Production Fields
September 2012 25 South Lost Hills ~1,700 BOEPD Monterey Shale Primary 215 Active Wells Sespe ~1,200 BOEPD Sespe Formation Primary 188 Active Wells North Lost Hills ~1,200 BOEPD Tulare & Etchegoin Formation Primary & Steamflood 181 Active Wells North Midway Sunset ~4,300 BOEPD Potter & Tulare Format
Slide 26: Strong Margins Support Significant Free Cash Flow
September 2012 26 California Strong Margins Support Significant Free Cash Flow Average Revenue in First Nine Months of Fiscal 2012 $86.23 per BOE $8.64 $2.83 $2.60 $2.37 $1.03 $67.64 Non-Steam Fuel LOE Steam Fuel G&A Production & Other Taxes Other Operating Costs EBITDA Fiscal Year 2012 (First Nine
Slide 27: California – Recent Initiatives Driving Near-Term Growth
September 2012 27 Seneca Resources California – Recent Initiatives Driving Near-Term Growth 1. North Midway Sunset Steaming 2. South Midway Sunset Field Extensions 3. Sespe Infill Drill Program Production Increase Drivers
Slide 28: Midway Sunset South Activity Update
September 2012 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 Western Minerals 2
Slide 29: Sespe Field – 2011 & 2012 Drilling Programs and Results
September 2012 29 350’ Thick (Medium Blue) 800’ Thick (Dark Red) ~550’ Thick (Green) Powell 4 61 BOEPD Oil WS 534-33 42 BOEPD WS 48-33 Production August 2012 WS 533-33 88 BOEPD “X” SANDS ISOCHORE (Thickness) Seneca Resources Sespe Field – 2011 & 2012 Drilling Programs and Results Powell 3 136 BOEPD
Slide 30: Monterey Shale Play
September 2012 30 Producing (Gross): 50 BOPD 3-4 Delineation Wells Planned AMI Outlines Seneca Resources Monterey Shale Play Monterey Shale Play Belridge Field 5 AMIs across the field Seneca WI: 12.5% Seneca NRI: 11.1% Gross Thickness of Monterey Interval
Slide 31: Expansive Pennsylvania Acreage Position
September 2012 31 Seneca Resources Expansive Pennsylvania Acreage Position SRC Lease Acreage SRC Fee Acreage NFG Storage Acreage Evaluating Marcellus rich-gas and Utica Shale potential Ongoing development drilling in Tioga and Lycoming Counties Eastern Development Area Net Acreage: 55,000 acres Most
Slide 32: Net Rig Count (Working Interest)
September 2012 32 1.0 1.0 1.0 1.0 5.0 3.0 2.0 2.0 2.0 1.5 1.5 1.5 0.5 Seneca Resources Net Rig Count (Working Interest) Seneca anticipates minimal joint venture activity in fiscal 2013 7.5 5.5 4.5 2.5 3.0 Fiscal 2012 - Q1 Fiscal 2012 - Q2 Fiscal 2012 - Q3 Current Fiscal 2013 Rig Count Forecast - - D
Slide 33: Eastern Development Area – Results & Plan Forward
September 2012 33 47 Wells Drilled and Producing Gross Production: ~80 MMcf per Day Covington – Fully Developed Seneca Resources Eastern Development Area (EDA) – Results & Plan Forward SRC Lease Acreage SRC Fee Acreage IPs: 10 – 15 MMCFD Gross Production: ~30-35 MMcf per Day 19 Wells Drilled 5 Wells
Slide 34: Lycoming and Tioga Counties Are Highly Productive Areas
September 2012 34 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 Seneca Resources Lycoming and Tioga Counties Are Highly Productive Areas Covington (Tioga County
Slide 35: TGP Pricing Dynamics Led to Production Curtailments
September 2012 35 Seneca Resources TGP 300 Pricing Dynamics Led to Production Curtailments When TGP Zone 4 pricing was below $2.30, Seneca’s production was limited to its ~130 MMcf/d of firm sales commitments at prices more favorable than the spot market In August, price improvements limited curtail
Slide 36: Ramping Marcellus Shale Production
September 2012 36 Seneca Resources Ramping Marcellus Shale Production Forecast The gray bar represents potential production into TGP 300 curtailed, in excess of firm sales volumes, during the month due to local spot prices below $2.30/MMBtu TGP 300 Curtailed Volumes WDA/Other EOG JV Lycoming DCNR 59
Slide 37: Evaluating Marcellus Wet Gas Potential
September 2012 37 Church Run (1 Well) Owl’s Nest (2 Wells) Ridgway (1 Well) Seneca Resources Evaluating Marcellus Wet Gas Potential SRC Lease Acreage SRC Fee Acreage Proposed Hz Well More than 100,000 acres within the targeted window of 1,100 Btu to 1,200 Btu Will need cryogenic processing plant run
Slide 38: Utica Shale – Activity Summary
September 2012 38 Dry Wet Utica Shale – Activity Summary Seneca Resources Chesapeake 9.5 MMCFD 1,425 BLPD Chesapeake 3.8 MMCFD 980 BLPD Chesapeake 3.1 MMCFD 1,015 BLPD Hess 11 MMCFD Chesapeake 6.4 MMCFD Rex 9.2 MMCFD Vertical Well Drilled Horizontal Well Permit Horizontal Well Drilled Mt. Jewett Ver
Slide 39: Appendix
September 2012 39 National Fuel Gas Company Appendix
Slide 40: 2013 Forecast: Earnings Guidance Drivers
September 2012 40 2013 Forecast National Fuel Gas Company Fiscal Year 2013 Earnings Guidance Drivers GAAP Earnings per Share $2.45 - $2.75 Exploration & Production Drivers Total Production (Bcfe) 92 - DD&A Expense $2.30 - $2.40 LOE Expense $0.90 - $1.10 G&A Expense $59 - $63 MM Pipeline & Storage Dr
Slide 41: Manageable Debt Maturity Schedule
September 2012 41 National Fuel Gas Company Manageable Debt Maturity Schedule $250 $300 $250 $500 $49 $50 7.395% 7.375% $0 $100 $200 $300 $400 $500 $600 Fiscal Year
Slide 42: Targeted Capital Structure
September 2012 42 Debt 35% - 45% Equity 55% - 65% 40% 50% 50% 70% 50% 30% 60% 50% National Fuel Gas Company Targeted Capital Structure Long-Term Consolidated Capital Structure Target Capital Structure Targets by Segment All Other E&P P&S Utility Debt Equity
Slide 43: Pipeline & Storage / Midstream Appendix
September 2012 43 Pipeline & Storage / Midstream Appendix
Slide 44: Pipeline & Storage Expansion Initiatives
September 2012 44 Project Name Capacity (Dth/D) Est. CapEx In-Service Market Status Pipeline & Storage Expansion Initiatives Lamont Compressor Station 40,000 $6 MM 6/2010 Fully Subscribed Completed Lamont Phase II Project 50,000 $7.6 MM 7/2011 Fully Subscribed Completed Line “N” Expansion 160,000 $2
Slide 45: Midstream Corporation Expansion Initiatives
September 2012 45 Project Name Capacity (Mcf/D) Est. CapEx In-Service Date Market Comments Midstream Corporation Expansion Initiatives Covington Gathering System 220,000 $54 MM Multiple Phases - Most In-Service Capacity Available [Marketing to Third Parties] Completed – Flowing into TGP 300 Line. Th
Slide 46: Exploration & Production Appendix
September 2012 46 Exploration & Production Appendix
Slide 47: Hedge Positions and Strategy
September 2012 47 Natural Gas Swaps Volume (Bcf) Average Hedge Price Oil Swaps Volume (MMBbl) Average Hedge Price National Fuel Gas Company Hedge Positions and Strategy Fiscal 2012 (1) 12.4 $4.99 / Mcf Fiscal 2013 46.7 $4.82 / Mcf Fiscal 2014 27.4 $4.26 / Mcf Fiscal 2015 17.8 $4.07 / Mcf Fiscal 2016
Slide 48: Targeting Continued Cost Reductions
September 2012 48 Marcellus Shale Targeting Continued Cost Reductions $200 $300 $400 $500 $600 $700 $800 2010 2011 2012 Forecast 2013 Target Drilling Cost per Lateral Foot WDA/DCNR 595 DCNR 100 $100 $150 $200 $250 $300 $350 $400 2010 2011 2012 Forecast 2013 Target Completion Cost per Stage ($000) WD
Slide 49: Water Management Program
September 2012 49 Marcellus Shale Water Management Program Water Sourcing: Coal mine runoff Permitted freshwater sources Recycled water Water Management: Instituted a “Zero Surface Discharge” policy Recycle Marcellus flowback and produced water Centralized water handling in development areas Tioga C
Slide 50: Zero Liquid Discharge Operation
September 2012 50 Marcellus Shale “Zero Liquid Discharge Operation” Utilizing a state-of-the-art evaporative technology to ensure no liquid is discharged at the surface Building a centrally located unit in Eastern Development Area (EDA) Removes all liquids from the production stream Has the ability
Slide 51: Comparable GAAP Financial Measure Slides and Reconciliations
September 2012 51 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 recon
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